'Uniform investor disappointment' a Chamber concern

As of Wednesday, July 17, 2013

Barry Malcolm

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Chamber of Commerce’s president yesterday described as “a matter of concern” a consultant’s report that international investors were “uniformly disappointed” with the performance of their Bahamian ventures.

Barry Malcolm told Tribune Business that this nation needed to disabuse itself of the notion that business and foreign direct investment (FDI) “have to come to the Bahamas”.

Arguing that “nothing could be further from the truth”, the Chamber president said the fact existing investors held relatively low opinions of the Bahamas was especially worrying, as they should be “ambassadors” for the country in attracting more FDI.

Mr Malcolm was commenting on a column carried in Tribune Business on Page 2B today, which argues that traditional approaches to Freeport’s development need to be abandoned in favour of a new strategy.

Its author, Rob Millard, was engaged by Mr Malcolm’s Global Fulfillment Services to craft a strategy for Freeport’s future development on behalf of Roddie Fleming, the UK investment banker who examined acquiring the Grand Bahama Port Authority (GBPA) in 2008-2009.

Mr Millard today writes that those charged with Freeport’s development - chiefly the collaboration between the GBPA and the Government - appear to be trapped in a cycle of doing the same thing and expecting different results.

Recalling an interview he conducted with an unnamed senior executive of a top global brand, Mr Millard said the person in question was surprised at how his peers told him “how uniformly disappointed they all were with their investments in the Bahamas”.

Responding, Mr Malcolm told Tribune Business: “It is a matter of concern. Clearly, the companies that are already here have invested in bricks and mortar, and people on the ground.

“They know the Bahamas better than prospective investors, and we’d want those companies, those investors, to be really be ambassadors for new businesses.

“They’re the ones that encourage, and who people speak to when they’re looking to invest in the Bahamas.”

Mr Malcolm emphasised that Freeport, and the wider Bahamas, were all competing to attract the same types of business - highly mobile, knowledge-based companies with skilled employees that could establish operations anywhere in the world.

This nation thus had to create the proper enabling environment that would make it stand out from the crowd, and the GB Chamber president said: “That’s what we’re missing.

“We don’t understand that. We have this notion that they have to come to the Bahamas. Nothing could be further from the truth.

“To me, it’s just so clear. We are not going to attract commerce here unless we create an environment that makes them want to come.”

And Mr Malcolm added:  “Freeport’s future really requires focused and innovative thinking on how we position, how we come through by way of infrastructure to be attractive to the international business community.

“That’s an edge that has to be continually maintained, and the obvious indications we’re seeing now in Freeport suggest that we’re not really attractive to business and doing the things to attract business.”

Mr Malcolm called for a “clear policy collaboration” between the Government, GBPA and the latter’s 3,500 licensees that would create an attractive business environment that could be “presented to the world market”.

“What do I mean by that?” he asked rhetorically. “There has to be clarity in manpower - being able to source and place internationally competent manpower to run these enterprises.

“The type of companies we want to attract today are the same type other jurisdictions are looking to attract. But they’re not coming if we don’t make the conditions right - manpower, living conditions, clarity about taxation, structured support from the Government and Port Authority.”

Mr Malcolm emphasised that these did not have to be monetary incentives, but could involve workforce training and reducing energy costs.

In his article today, Mr Millard said turning Freeport into a true national asset was still “eminently achievable” - provided different strategies were adopted.

Suggesting that Fleming’s goal of modelling Freeport along the lines of the Middle East’s trade zones should still be the objective, Mr Millard said: “Our economists estimated that a reconfigured Freeport could create 132,000 jobs and an additional $6.5 billion of GDP, propelling the Bahamas to a position of economic leadership and prosperity in the region.”

He added that the “running battle of attrition” engaged in between the GBPA and the Government, the former’s owners trying to maximise their investment, and the latter seeking to “circumvent and obstruct” the Hawksbill Creek Agreement’s provisions, had to come to an end.

“Those provisions that could have driven economic growth in Freeport, had interference not occurred, appear to have been emasculated,” Mr Millard writes.

“Many of Freeport’s key assets have been sold off, leading to some unfortunate third party monopolies. Pity the poor GBPA licensees in the middle, trying to do business and survive with regulatory uncertainty on the one hand and supply chain inefficiencies and general economic stagnation on the other.

“Small wonder that so many investors have come to Freeport over the years with hopeful eyes and willing cheque books, only to leave disappointed. A transformational policy change is needed if this is to reverse.”

The solution, Mr Millard suggests, lies in striking a balance between tourism, industry and commerce, plus a more accommodating Immigration policy for high income, top skilled expatriate workers.

“They would live in Freeport and spend much of their income in Freeport’s shops, restaurants and service businesses for some years and then move on,” he added.

“These local businesses, most of which are and would continue to be owned by Bahamians, would in turn prosper. Business travellers would revitalise Freeport’s hotels. Increased demand for utilities and services would justify investment in more capacity and greater reliability. Empty lots along the deserted streets would fill with houses built by Bahamian builders. The shuttered and derelict buildings that characterise this sad and battered city would disappear.

“With thoughtful planning and careful controls, Freeport could become a model city with world-class architecture and uniquely Bahamian, 21st century character and a global leader in so-called ‘triple bottom line’ (economic, social and environmental) sustainability.”

john33xyz 10 years, 9 months ago

Excellent thinking Mr. Malcolm. However, that would require the Government giving up majority rule (in their minds) - and they would rather have citizens standing in soup lines on the streets than to do that.

The economy will eventually solve the problem, and the Government will give in and agree to abide by the Agreement. However, I believe much more starvation and murder will occur over the next year or two before they come to that realization.

SP 10 years, 9 months ago

AMEN!...Mr. Barry Malcolm has indeed said a mouthful, is absolutely correct, but still only scratches the surface with this story.

The stagnating circumstances in Freeport are well known, and have been stifling growth there for decades.

Nassau and the rest of the country however are no different. Foreign and local Investors alike are frustrated to no end trying to do business in this country.

Governments' investment board machinery simply does not function.

Investors with experience and fully capitalized projects and proposals are unable to even get a response or acknowledgment from government on projects.

The Sony Corp' debacle is a prime example of governments' incompetence in dealing with potential investors, and there are many more I know of personally that simply throw their hands up in total frustration and move onto other jurisdictions.

This situation is not new. Both PLP and FNM are guilty of gross negligence in dealing with investors. This gross incompetence is the main reason why the Bahamas has fallen from the number one sun destination in the region to no position at all.

Prime Minister Christie was on the right track in his first term in office by implementing and investment board authority. Then along came Hubert Ingraham who dismantled the investment board as one of his very first acts as new Prime Minister...a stupid, dumb decision that cost us greatly as the country fell farther and farther behind in tourism, banking and foreign direct investment.

The PLP are literally inundated to date with investment proposals of which they have proven to be totally incapable of remotely dealing with even a small fraction of.

Government should pull their heads out of their ass's, acknowledge they are overwhelmed, and utilize the services of some of the local accounting firms to assist in vetting investment proposals instead of burying their heads in the sand and causing perfectly good potential to simply walk away.

It is totally unacceptable that Bahamians are starving while the country continue to lose investors, business and jobs because government is too arrogant seek help.

Mr. Barry Malcolm and other capable Bahamians should be retained to assist government in breaking the gridlock with investment proposals.

Unbelievable levels of incompetence abounds in both PLP and FNM administrations.

concernedcitizen 10 years, 9 months ago

goverment does want to get out of approving projects ,how else would they shake down investors and make them give shares to people like tiger the ex talior as their front ,,,the only thing we got lately is the Chinese that went all over the region trying to buy votes in the united nation,,and we sold them ours ,,

Bahamianpride 10 years, 9 months ago

Mr. MALCOM FOR PRIME MINISTER , Finally someone willing to address the situation of idiotic internal government policies and business incompotence of our leaders.. Tax and spend is all they know how to do.. the government is like a vampire sucking the life out of us.. Mr. Malcom it good to know there are free thinking Free market capitalist willing to speak up..

concernedcitizen 10 years, 9 months ago

when 1 in 4 work for the public purse you have to tax and borrow like vultures ,,,you can,t keep making and "graduating " more undereducated children then the economy can absorb and expect not to turn out like Jamaica and Haiti ,,and lets not babble on about imaginary unfeasible industries ,the proof is before our eyes all over the region ,,,

SP 10 years, 9 months ago

I highly second Mr. Malcolm for Prime Minister. However the PLP and FNM are long played out.

We need to look to Bermudas' as an example of creating a 3rd party and what needs to done politically in this country to get moving again.

Thank you PLP & FNM for all you have done. However, both of you are dead in the water and proven incapable of doing what is necessary to the country forward.

concernedcitizen 10 years, 9 months ago

see above post ,,,,then compare to countries w / stable birthrates ,,2 or 3 children per couple ,,ie netherlands etc ,,,,,,then look at crime and poverty w / countries and people w/ high illegitamacy ,duckin daddy birthrates ,,the numbers don,t lie ,,

jackflash 10 years, 9 months ago

All who have posted above need to go back and read the article again.

It is M. Rob Millard who has made the majority of the recommendations.

Yes Mr. Malcolm has made some good points but Rob Millard has also done so.

It is a shame that they were not successful in their bid to take over shares in the GBPA,

Freeport may have been a different place today..

RobMillard 10 years, 9 months ago

@ Jackflash. Thank you sincerely for the acknowledgement, for which I am truly grateful …. but the work was VERY MUCH a team effort. What I did was to design and facilitate a strategic planning process that combined widespread grassroots consultation with detailed desktop and field research with some quite complex and intense financial and economic modeling. Credit for the recommendations must be heavily shared with Barry Malcolm and many other Bahamians who contributed very substantively to executing that process …. some openly; others unfortunately only upon condition that their contributions remained anonymous. (These were difficult times. Litigation between the GBPA owners was in full swing. Hutchison Whampoa sought to buy the same assets. The Prime Minister was not favourably disposed towards our client. So, it was difficult for some to be open about their views on the future of Freeport.)

Of all the wonderful memories that I have of the work we did, some of the most humbling and meaningful are those of grassroots meetings in church halls and other community venues with quiet, serious-faced everyday Bahamians whose greatest concerns were about getting food onto their tables and raising their children with the right values and giving them a better chance in life. These discussions left the whole project team determined that the Freeport that we sought to design for our client was specifically focused on their needs, too. To his/their credit, our client had very clearly told us, repeatedly, that what they wanted to achieve had to significantly benefit the lives of everyday Bahamians too, so we were able to build that overtly into the plan.

None of this would have been possible without Barry. He had to withdraw professionally from the project when he became CEO of ScotiaBank Bahamas, in order to protect his new employer’s interests and because of his fiduciary duty to focus exclusively on that role. His wisdom and insight remained an essential ingredient in the work, though. So too that of Sarah Kirkby, Janet Albury, Dr Olivia Saunders and Michael Rolle, amongst others. Also that of NERA, PwC and others who contributed key economic and financial perspectives. Regarding Barry Malcolm personally, I should add that in my opinion, he has as deep an understanding of Bahamian politics and economics, coupled with as deep a love of the Bahamas and his fellow-Bahamians, as anybody that I have ever met.

Yes, it is a pity that the global financial crisis of 2009 coupled with the level of resistance to his efforts that he encountered put paid to our client’s initiative. That does not mean that the opportunity to progress what was started then is also gone, though. In the words of John F Kennedy: “Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.”

Mayaguana34 10 years, 2 months ago

@Rob - Where can I get a copy?

The Tribune