By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Grand Bahama Port Authority (GBPA) has been urged to stimulate investment by Nassau’s business community, a top QC saying it needed to dispel the notion that Freeport was a “closed shop”.
Calling on the GBPA to reach out to the capital’s private sector, Fred Smith said it had to “proactively sensitise” Nassau companies to Grand Bahama’s “legion of opportunities”.
Suggesting that the GBPA had focused too heavily on attracting foreign direct investment (FDI) to Freeport, the Callenders & Co partner argued that it had “failed to recognise what a vast resource” Nassau could be for economic growth.
Mr Smith, a GBPA licensee himself, also called on the Christie government to extend Freeport’s Business Licence and real property tax exemption beyond their 2015 expiration, and through until 2014.
Implying that this could be justified on the grounds that Freeport generated $150 million in net revenues to the Government annually, despite being a ‘tax free zone’, Mr Smith urged the Christie administration to let the GBPA act as “a one-stop shop” for investment approvals with no interference from Nassau.
Neglecting to promote and explain Freeport, and the Hawksbill Creek Agreement, in Nassau, the QC added, had contributed to a “lack of understanding” that ultimately led to situations such as the current dispute over the Budget’s new and increased taxes.
“The GBPA fails to recognise what a vast resource the Nassau business environment is for promoting investment opportunities in Freeport,” Mr Smith told Tribune Business.
“There is a tremendous amount of wealth, business contacts - both nationally and internationally - through Nassau, and traditionally the Port Authority has been heavily focused on promoting direct investment internationally without recourse to Nassau.
“I would certainly encourage the Port Authority to be more proactive in sensitising the Nassau business environment to opportunities that exist in Freeport.”
The GBPA, together with its affiliates and some prominent licensees, undertook a Nassau ‘roadshow’ to promote Freeport and its investment attractions/opportunities when Julian Francis was chairman.
That promotional effort, though, quickly fizzled out when Mr Francis departed, soon to be followed by the ownership dispute between the Hayward and St George families.
“The business community in Nassau tend to shy away from Freeport, considering it to be a closed shop environment,” Mr Smith told Tribune Business.
“Bahamian business interests simply make no effort to invest in Freeport. It is incumbent on the Port Authority to repeatedly sensitise the Nassau business community by putting on roadshows in Nassau, and by regularly inviting Nassau businesses to touch, see, feel and smell the opportunities in Freeport, which are legion. All around it is a less expensive business environment.”
Mr Smith described these as including the advantages offered by facilities such as the Container Port, airport and other infrastructure; bonded goods warehouses; and untapped resort opportunities.
And he pointed to the absence of Customs Duties and a slew of other taxes, levied elsewhere in the Bahamas, as providing businesses in Freeport with a competitive advantage.
That, though, may have been somewhat eroded by the new Customs-related fees imposed on Freeport in the 2013-2014 Budget, coupled with the uncertainty over Value-Added Tax and the impending 2015 ‘expiration’ of some tax benefits.
Mr Smith added: “People in Nassau, be they businessmen or politicians, generally do not understand the Freeport business environment.
“That hurts us politically, because decisions are made by politicians and Cabinets, both PLP and FNM, which hurt Freeport or do not take Freeport into account, or simply ignore the Freeport environment.
“Freeport is a very different business environment, and the politicians treat it almost as if it does not exist. This is very hurtful to Freeport.”
The well-known attorney called for the Christie administration and GBPA to work together to extend Freeport’s Business Licence and real property tax exemptions “through until 2054”, when the Hawksbill Creek Agreement expires.
Justifying this request, Mr Smith said: “Freeport has for decades suffered under a recession and not had the opportunity to really grow, and in order to set Freeport apart as different and ripe for development, I believe it would behoove the Government to do so.”
With the city generating $150 million in annual tax revenues for the Government, and requiring no public expenditure for its maintenance, Mr Smith told Tribune Business it was “a no brainer to continue the present formula”.
Extending the exemptions now, he said, would give existing and potential Freeport businesses more certainty about their future, and they could plan accordingly.
Mr Smith also called on Nassau to relax its attempted ‘grip’ on Freeport’s governance.
“I would urge the PLP to let the Port Authority resume its role as the one-stop shop for investment in Freeport, with no interference by the central government,” he told Tribune Business.
All new business licence applications still have to be approved in Nassau, Mr Smith said, also citing restrictions imposed by Customs, Immigration, exchange controls and the Bahamas Investment Authority (BIA).
“With the illegal central government interference, we continue to have the jurisdictional authority of the Port Authority respected more in breach than in observance,” he said.
Comments
TalRussell 10 years, 8 months ago
Give it a rest Comrade QC. When it broke it broke. Red or gold shirts it amounts to the same things repeated, where only the political players change. Where poor decisions, or outright indecisions, continue to be the order of business. Think about it. The honest truth is that successive red/gold shirt administrations have come and gone and come back, yet not only has Freeport been all but economically forgotten, but still the same goes for ALL of Grand Bahama. So many years have passed, where still some private corporation and their elite owners, oversees a city, that is so far divorced from an independent nation's reality. Comrade QC are we rally an independent people, still begg'in the elite powers for our rights? Yet, they are being encouraged on by the likes of the Comrade QC. I have NEVER once heard a Freeporter, ever describe themselves as a Grand Bahamian? Maybe the gates and the German Shepard's that once divided Freeport and West End no longer exists in the physical sense, but much mental evidence exists that the cruel mentality lives on. Unless there is some plan by PM Christy to bring clarity, the only counterbalance may be to nationalize the Port Authority. Look at how Hubert's regime went out of their way, often with great media fanfare, to bring Freeport, and all of Grand Bahama to its economic knees. Though I seriously doubt PM Christie or his cabinet colleagues have the will to do what his former law partner failed all Grand Bahama's in doing. Send the Port Authority a pack'in?
The_Oracle 10 years, 8 months ago
That the noble intent of the H.C.A. has been breached is beyond doubt, That both FNM and PLP have used it as a whipping post and slush fund source is also beyond doubt. But also beyond doubt is the potential being far greater today than ever envisioned in the original by Wallace Groves. As for the "gate" and German shepherds, this is absolutely false, and perhaps indicative of the ignorance of most, which served Pindling and Co very well. The checkpoint was Bahamas Customs trying to prevent non customs duty paid materials from exiting Freeport proper. If allowed, Eight Mile rock would have superseded Freeport in growth! This has even been refuted by politicians of the day, in the present day cocktail circuit. Unfortunately none has the moral fortitude to publicly state that fact. That Nassau-centric business and Government and most Bahamians do not understand it, can be attributed to their disbelief that their current economic picture (world) can ever change, and that the HCA in current practice does not accurately resemble the written document/agreement. Also, they fear anything that threatens the Nassau power base, both political and economic.
TalRussell 10 years, 8 months ago
Comrade it's not just political propaganda when a struggling Taxi owner operating out of West End must pay heavy import taxes before they can clear their vehicles through customs, but not car rental firms operating an entire fleet of cars in Freeport? My understanding is tourists renting there duty-free cars are warned not to dare cross over into West End? How in hell can this be a tourist economic booster for Westenders? Go ask Grand Bahamians, if they truly believe the economic mental gates no longer exists. At minimum the Port authority should be read more than another toothless "bend or break speech. As far as I'm concerned, while Pindling may have started off on the right footing to either bend your ways, or he'd break the Hawksbill Act, he failed all Bahamians by not sticking to his guns. But much to my disappointment PM Christie has been running scared from all the red shirts media friends squealing whenever he threatens to do what is right for all Bahamalanders.Like like Pindling and Hubert, PM Christie doesn't possess the balls to "break" the Hawskbill Act. Yet, the Comrade QC thinks all it will take is just a little tweaking by the Port Authority in the wording of the act. Get real QC!
banker 10 years, 8 months ago
The trouble with the GBPA is that they are stuck in the past. Every new licensee is seen as a mark to pluck with the most fees possible. They do not understand that it is better to get a little money from a lot of people, than to get a lot of money from few people.
So anyone who wants to set up in Freeport has huge upfront fees and investments. If the GBPA threw open their doors like the Cayman Islands Special Economic Zone, then businesses would flood into Freeport, creating a vibrant economy, and filling the coffers much better than the few big businesses who want to pay the upfront fees to the GBPA.
If they threw open the doors and attracted the tech sector for free, they would have hordes of app developers wanting to live on the beach, and generating incredible incomes which would stick to the local economy instead of being repatriated as foreign profits.
The Port Authority is stuck in the dark ages, cutting steaks out of any racehorse that wants to land there. Instead they should make a low-business barrier path and they will prosper faster than they have in their chequered career.
The_Oracle 10 years, 8 months ago
Quite frankly, the death knell for Freeport was the sale of Assets to Hutchinson Whampoa for short term cash needs. Freeport isn't even a blip on their Balance sheet. Middle "maintenance" managers can make no decisions locally. Tal, those "economic mental gates" exist in most of us regardless of Freeport or the H.C.A. Why doesn't the West End Taxi driver establish a freeport Company to operate his taxi through? There is no legitimate law or rule in the H.C.A. stopping him, nor stopping him or rentals from driving the length of the Island. Customs arbitrary rules are stopping him, already dealt with in the Supreme courts. Who runs Customs? Who instructs them to ignore court rulings? BTW, if we can throw out Agreements at will, why write any to start with? Do you really want to be totally subject to the whim and will of Elected Rulers, more so than we are already? Reeks of Duvalier and Mugabe to me.....
TalRussell 10 years, 8 months ago
It's been a few years since I updated my info but it has been my understanding that if you import a duty-free vehicle into Freeport, customs will cease the vehicle if you cross into West End. i await a knowledgeable correction to the contrary?
banker 10 years, 8 months ago
I think the word is "seize" instead of "cease", and I think that you are right. It's not only customs, but the po-po will stop you as well. There used to be a small tourist operation run by Bahamians right on the edge of the bonded area in Freeport, right on the beach. It was a bar and restaurant and it burned down a couple of years ago. Not sure if they rebuilt. I actually saw this while sitting having a beer with the owner. A truck was parked in front of a house next door to it with the bonded plates (the driver lived there), and the neighbours called the po-po. The truck was maybe 30 feet over the bonded area line. The police would have seized the vehicle, but it belonged to his employer. The poor guy got sacked from his job for taking the truck over the line.
I might point out that the GBPA does not exist for the benefit of Bahamians on GB.
TalRussell 10 years, 8 months ago
Thanks "Teacher" Banker for don't you just hate it when myths are being spread. I find it so weird that the port be allowed to act as "Louie" the middle monies man, between Freeporters and the government. For a Prime Minister that seems so hell bent on holding referendums, why isn't PM Christie proposing one for keeping or ditching the1960 Hawksbill Creek Agreement Act. it has long outlived its intent in an independent Bahamaland. Not sure if its intent was ever truthful? A piece of fiction to many. Nationalize it and put a stop to the continued greed. Comrades it aint like the Port's owners are owed anything, including tons of land, from Bahamalanders.Fine, keep your profits and return all the land. And, where does the Comrade QC's support lie when we really need his legal brain? Not with keeping the Port's status qua ... I damn well hope not?
banker 10 years, 8 months ago
I don't mind if they make it a true economic zone, but it ain't. It's like a private club with a stiff entrance fee. While temporarily stationed with the bank in Canada, I thought that I would like to join a golf course near Toronto. Well sir, they wanted an initiation fee, they wanted a membership fee, they wanted a bar and hospitality fee of $5,000 ( meaning that you had to pay the five grand up front, and you had to use it up in drinks and food, and if you didn't, they kept the balance). It was the price of being in an exclusive club. The GBPA operates the same way. Those dinosaurs don't realise that the world doesn't operate that way any more. The world operates on the principle that if everyone is making money on a fair and level playing field, then everybody wins. The GBPA is acting like an agent who takes a cut of the pie and gives nothing back.
I say, legislate an end to the Hawksbill and create an economic zone that benefits Bahamians.
The_Oracle 10 years, 8 months ago
Not so simple to just legislate an end to it, It's end must be mutually agreed between Licensees, Port ownership and Govt. but it does have a clause to turn it over to a "Local Authority" NOT LOCAL GOVT! This was created long after the HCA. The Licensees should have created such an association to assume control. Some licensees have tried but sadly, being 80% Bahamian it will never happen. In the Beginning, it was 90% Foreign, but is no longer. Yes, Customs will seize a bonded vehicle going beyond the "boundaries, In defiance of court rulings. Seems they are above the law..... Maybe it should be read by those wishing to discuss it...... or end it.
RobMillard 10 years, 8 months ago
The most important observation here is that Freeport is completely dysfunctional as a free zone. How can it be that it only generates $150 million p.a. in revenues to the national Treasury? A properly configured, well managed Special Economic Zone (SEZ) such as Freeport could and should be would be generating many multiples of that for the wider Bahamian nation. Freeport should be a source of great national pride to Bahamians; not a source of dissent and controversy.
The concept of 'free zones' / SEZs such as Freeport is neither new nor unusual. The International Labour Organization (a specialist UN agency) tracks >3,500 of them across the world - some dating back to even before the Hawksbill Creek Agreement was signed in 1955. Countries as diverse as China, Mauritius, Bangladesh, Panama, Dominica, Honduras and the United States of America, amongst many others, have used them successfully as tools to drive inward investment, economic growth and job creation. Why not Freeport?
Many reasons can be listed. At their root lies that over the recent decades, Freeport has evolved into a fiefdom of disparate interests, most of whom could survive quite happily in the limited economy driven by minor tourism and the harbour. As a now-deceased senior GBPA executive is reported to have said, they like it just the way it is (or perhaps the way that it was prior to 2009 and before that hurricanes Frances and Jeanne.) Combined with that, immigration and other government policies (both red and gold) have made it well-nigh impossible to emulate the more successful free zones elsewhere in the world, anyway. An environment has evolved in Freeport that repels rather than attracts most international investment; that does not create anything more than relatively few and mostly unskilled or semi-skilled jobs; that has led to a stagnating local economy. In order for Freeport to be successful, going forward, all this needs to change.
In the new world that has emerged since the 2009 crash, that need for that change has become desperate. Fixing Freeport is no longer just about delivering modest revenues to government and creating a couple of thousand new low-paying jobs. It should be recognized for what it is, namely the single most promising opportunity that the country has to reverse the current trajectory on which it finds itself, of spiraling national debt and deepening economic stagnation.
To an outsider, it seems that the only really compelling obstacle to this, is the will to make it so.
banker 10 years, 8 months ago
Co-sign. This is the truth.
TalRussell 10 years, 8 months ago
Only in Bahamaland you say would Grand Bahamians consecutive "representative" governments have sat idly by on the curbside, whilst the two warring families for years battled through the courts, over who were the legal beneficiaries of the controlling shares, in not just any privately owned corporation but one enthroned as the invisible government over Freeport, whilst the paychecks and assets of business owners were threatened with a growing economic paralysis. In the case of the Hubert regime, they went even further. They dosed a city burning economically with kerosene. I had often asked the red shirts regime via The Tribune's blog pages, if they could kindly tell Bahamalanders, exactly what ever happened to the Shares in the Port, issued and legally owned by Bahamaland's government? I now pose the same question to PM Christie and his cabinet colleagues. What in the hell happened to the Shares? If they're not in the possession of the government, then who sold them? Where in the hell did all the millions go?
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