By NEIL HARTNELL
Tribune Business Editor
A leading developer has warned that the Bahamas could slip further than 77th in the World Bank’s Ease of Doing Business rankings unless it reforms the Planning and Subdivisions Act, as this has “drastically complicated” real estate permitting.
Franklyn Wilson, chairman of Arawak Homes and the Sunshine Group, told Tribune Business that the Government needed to live up to its commitments to “repeal or amend” parts of that Act, as it was costing land developers more time and money.
And, noting the Bahamas’ constant slippage in the annual Ease of Doing Business rankings, Mr Wilson said it indicated this nation was “going in the wrong direction”.
While the reality might not be as bad as the World Bank/International Finance Corporation report sounded, he added that perception was more important, especially given how vital attracting foreign direct investment (FDI) was to the Bahamian economy.
The Bahamas slipped five spots year-over-year in the report’s rankings for the ease of obtaining construction permits, dropping from 63rd to 68th.
Suggesting that the Bahamas might fall further if the report’s authors became aware of other legislative reforms, Mr Wilson urged the Government to focus on “simplifying how we’re getting permits for real estate”.
“The recent passage of the Subdivisions Act will be a significant negative,” he told Tribune Business. “It has complicated drastically the nature of getting permits. The process of getting permits is far more complicated today.
“At the time, the real estate sector as a whole, this was the problem they had with that Act, and that has not gone away.”
The Planning and Subdivisions Act was passed into law under the former Ingraham administration, and Mr Wilson said the newly-elected Christie government had made a manifesto promise to either amend or repeal parts of the legislation.
“The Government has made a commitment to repeal or amend certain aspects of the Subdivision Act precisely because it’s had negative consequences for the permitting process,” Mr Wilson said.
“What it takes to get a permit is so much more time consuming, more costly. That’s a specific thing. There was considerable public comment at the time saying it was not thought through sufficiently, and it’s still not been done sufficiently enough. I still think there’s a need for the matter to be reviewed.”
In assessing how easy it was to obtain construction permits in the Bahamas, the Ease of Doing Business Report looked at the number of procedures, and time taken to obtain them, that would be required to legally build a $1.2 million warehouse on a greenfield site in Nassau.
Based on this, the report found: “According to data collected by Doing Business, dealing with construction permits there requires 14 procedures, takes 178 days and costs 27.8 per cent of income per capita.”
This placed the Bahamas 68th out of 185 countries when it came to the ease of obtaining construction permits, placing it behind the likes of Jamaica (50th) and Barbados (54th), not to mention St Lucia (11th spot) and Antigua and Barbuda in the 24th.
When it came to construction permit procedures, the Bahamas was in line with the Latin American and Caribbean average, although it was starting to slip behind slightly in this area.
However, this nation remained ahead of the region in both the time taken, and cost, categories.
Yet the Ease of Doing Business Report showed that the Bahamas had made no reforms in the area of construction permit processing since it was first published in 2005.
It said the most costly, and time consuming, procedures in the Bahamas were those at the beginning of the process.
Obtaining Town Planning approval ‘in principle’ took an average of 30 days, while getting a building permit from the Ministry of Works’ Building Control unit took another 120 days and cost $3,500 based on the ‘warehouse benchmark’ used by the report.
Obtaining a water and sewage connection was cited as the other major cost, at $2,784 for the ‘warehouse’ project.
Mr Wilson told Tribune Business of the report’s findings: “It tells us we’re going in the wrong direction.
“It’s very significant. Once you complicate the process of getting permits, that means more time, and more time means more money. That’s a negative.”
While arguing that the substance, or reality, on the ground in the Bahamas was likely better than the Ease of Doing Business Report 2013 found, the Arawak Homes chief said perception was more important - especially in the eyes of overseas investors.
“The overall perception is not positive for the country when foreign direct investment is so important to us,” Mr Wilson said of the report’s findings and rankings.
“If you drill down, it may not be as dismal as it first sounds, but it doesn’t mitigate the perception that we’re not doing it the right way, so we can’t ignore that.
“When you are in the business of attracting foreign direct investment, you cannot look at the substance, as we have just done.”
He added that reviewing, and potentially reforming, the Planning and Subdivision Act was something that could be achieved in the short-term.