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Business Ease Slump A 'Recipe For Recession'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ latest eight-position slump in the World Bank’s Ease of Doing Business rankings was last night greeted with dismay by the private sector, which branded the decline as “a recipe for a prolonged recession” and loss of economic competitiveness.

The 2014 rankings, released yesterday, showed the Bahamas falling from 76th position last year to 84th out of 189 nations this time, dropping in seven out of the 10 categories in which countries are assessed.

While this nation was given credit for reducing the top Stamp Duty rate on real estate transactions to 10 per cent, and reforming its corporate insolvency laws, neither did anything to improve the Bahamas’ rankings.

The country remained at a lowly 182nd for the ease of registering property, with no change, and stuck firmly at 32nd for ‘resolving insolvency’.

And, in what is likely to be greeted with ironic cheers by the Bahamian private sector, given the impending introduction of Value-Added Tax (VAT), the only category where this nation showed improvement was in the ‘ease of paying taxes’ - where it moved from 50th to 45th spot.

The latest rankings also go against repeated promises by both the current government and former Ingraham administration that they were/are implementing reforms to improve the ease of doing business in the Bahamas - something identified by the Christie administration as a policy priority.

Michael Halkitis, minister of state for finance, did not respond to Tribune Business e-mails seeking comment, but the Bahamian private sector said the latest ranking slide could have implications for both domestic businesses and this nation’s attractiveness for foreign investors.

Chester Cooper, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, told Tribune Business: “It is noteworthy that the areas of greatest decline are dealing with construction permits, starting a business, trading across borders and getting credit.

“All of these activities help drives the economy. This is surely a recipe for a prolonged recession and negatively impacts the competitiveness of our country.”

And he added: “To the extent that investors seeking a home for their capital seek out reports like this one to decide on whether to go to St Lucia and Antigua, the Dominican Republic or Cuba, we ought to be concerned as we seek out FDI, in particular.”

The Bahamas fell nine spots year-over-year, from 66th to 75th, when it came to the ease of obtaining construction permits.

And it dropped from 78th to 83rd on the ability of entrepreneurs to start a business, a drop of five positions. A fall of the same magnitude, from 67th to 72nd, was suffered on the ‘ease of trading across borders’, while the Bahamas also dropped by four places - from 82nd to 86th - on the ease of getting credit.

The 2014 report indicates, both from the reality on the ground and outside perceptions, that the Bahamas continues to gradually slide downwards when it comes to competitiveness.

Many of the category drops are likely to be due to other countries making reforms and bypassing the Bahamas, while this nation stands still in comparison.

Mr Cooper added: “Clearly, a complete overhaul of the public service is required. We must do so one department at a time to improve the customer’s experience and our reputation of ‘rolling out the red carpet’.

“Ask any business person which government department or corporation gives efficient service, and watch them struggle to name one. Many businesses opine that the many unnecessary bureaucratic hurdles encourage corruptions.

“It saddens me when business persons opine that you have to ‘tip’ a public servant to get things done. This is not a stigma that people who love the Bahamas want associated with it. This must be stamped out. This is not only a problem for Government to solve; every Bahamian in the system or using the system must demand a higher standard.”

The BCCEC chairman called on the Government to “find the political will” to implement the efficiencies needed to modernise the Bahamian economy.

He added: “We cannot accept the status quo if we wish to progress as a nation. Receiving a response to a letter several weeks later cannot be considered acceptable in a modern, ‘Internet ready’, Bahamas.

  • On the issue of ‘trading across borders’, I highlight exchange controls as one of the major impediments to Bahamian businesses expanding outside of the Bahamas.

“Although sympathetic to the need to protect foreign reserves, it is counter intuitive that I can more easily get exchange control approval to buy a mega yacht than approval to invest abroad. No similar ‘investment currency premium’ on the mega yacht spending either.”

Mr Cooper said the BCCEC’s ‘Innovation and Competitiveness” committee had recently surveyed its membership, with a view to compiling a report of ‘Vexing Business Issues’ for consideration by the Government.

Mr Cooper was backed by Raymond Winder, managing partner at Deloitte & Touche (Bahamas), who told Tribune Business: “It’s unfortunate that the world sees the Bahamas as not improving in terms of the ease of doing business.

“It’s clearly time we as a country took note of these things and seek to improve in the categories where we have slipped.”

Mr Winder, himself a former Chamber of Commerce president, called for the Government and private sector to create a ‘strategic committee’ that would identify areas of weakness, and recommend improvements, to “make it better to do business and attract business into the Bahamas”.

Comments

banker 6 years ago

In other countries an entrepreneur can have a corporation, a business licence and a bank account in the same day. The first two can be done online in an hour. Then the papers are printed and taken to the bank. Cost -- less than $200.

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SP 6 years ago

The Bahamas has been on a constant downward spiral for 3 decades.

We were # 1 in tourism for the region in the late 70's but did nothing to improve the country as a resort destination.

In the late 70's Key West and Nassau were very similar in many respects.....Look at Key West today and compare Nassau....We have not progressed.

When Cancun, Dominican Republic, Negril Jamaica and others were bush....The Bahamas were beating our chest about being # 1........Now they have all long surpassed us. WHY?

Everyone know several old tales of Investors showing interest in the Bahamas being given the run around between PLP & FNM lawyers who milked them like cows and frustrated their efforts for approvals until the investors simply walked away, cut their losses’ and moved onto other countries in the region to do their business.

Pindling vowed to break Bay Street and Freeport and succeeded!..... However, he did not have a plan as to what to replace them with.

Despite being told hundreds of times that the tourism product was dying, both PLP and FNM administrations totally ignored calls by those with knowledge in the sector to do something about the lack of nightlife and fun activities for visitors....No point trying to talk sense to anyone called a MINISTER or MP.

Countries with far less volume of tourism realize much more spend from their tourism product because they made sure there were lots for tourist to do in their resort destinations.

Case in point....There is more night life and activity in two city blocks of Havana Cuba than in the entire Bahamas combined. Jamaica, Dominican Republic and Mexico do all they can to develop and promote local entertainment, craft and production of everything possible….We do nothing except blah, blah, blah.

The Bahamas has been killed by a lack of vision and government stupidity. Those voices in the wilderness over the decades working at hands on level in the tourist sector were begging and pleading with the PLP and FNM for decades to pay attention to our tourism product.

NEITHER DID A DAM THING.

Both governments did not understand tourism and had no idea what a sun and fun resort destination entailed. Both were too pigheaded to listen to the man in the street and thought bringing in higher volumes by cruise ships would be the answer....WRONG!

The Minister of tourism under this PLP government is just now beginning to understand that higher volumes without higher spend is meaningless to the bottom line.

God help us….Please!

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SP 6 years ago

Typical Bahamian.......You know not what you speak about so eloquently!

Firstly, I have lived or in Cuba, Dominican Republic and Mexico. The average Cuban earn less than $25.00 monthly at any level of society.

Cuba is a socialist/communist country. Every enterprise is state owned for the most part and heavily regulated by the government in every aspect imaginable. Free enterprise is a very new concept in Cuba, just being slowly implemented in the last few years.

Least some conveniently forget in order to shield their red and gold shirt parties decades of stupidity and failure, EVERYTHING related to business in Cuba is carefully manipulated by the government.......especially ways and means of extracting hard currencies from the pockets of tourist.

Entertainment in Cuba targeting tourism is not for the local population. The vast majority of Cuba's population for the most part could NEVER----EVER afford the luxury of enjoying nightlife and entertainment geared for tourism.

Sticking our heads in the sand and ass's in the air protecting our red and gold shirt parties is what got us in the predicament we now find ourselves in.

The PLP and FNM were never held accountable for anything. They both F-A-I-L-E-D… at… EVERYTHING, leading the country to this cesspool over run with illegal’s, out of control crime, dysfunctional education AND judicial systems, broken banking and insurance industries and a nowhere to be proud of ranking in tourism.....AND FALLING!

Blaming "we the people" is asinine....As "we the people" are not in charge of making policy and laws. "We the people" did not decide to give all incentives and free land to foreign investors only. "We the people" did not grant work permits to 25,000+ blue collar workers to displace our brothers and sisters from domestic and unskilled jobs. "We the people" did not allow Dominican fisherman to catch everything and anything in our waters 24/7-365. "We the people" did not negotiate mining contracts for aragonite, salt and sand for peanuts.....etc...etc...etc...etc...etc...etc...etc...40 years of pure BULLSHIT.

No matter how the dice fall...PLP & FNM SUNSHINE BOYS WIN....Flowers is a joke!....It is way past time to hold these jackass's and pirates we have for politicians accountable and send them to jail for wrong doing like any other country.

Bermuda had the EXACT SAME PROBLEM until December 2012.....When they voted out both corrupt parties and went with a new 3rd party.....WE NEED TO DO THE SAME!

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