By NEIL HARTNELL
Tribune Business Editor
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”.