By NEIL HARTNELL
Tribune Business Editor
A world-renowned equity investor has urged the Bahamas to “think differently” and position itself now for future growth opportunities, rather than become mired in “survival” mode.
Dr Vikram Mansharamani, an investment and business ethics lecturer at Yale University, believes this nation must raise its sights beyond the current world economic volatility and look to exploit emerging global trends.
“You dig a well before you become thirsty,” was his message to RoyalFidelity’s Bahamas Economic Outlook conference, during which he called on this country to look beyond the present in its economic planning.
Yet Dr Mansharamani warned that the Bahamas could not ignore present events, including the upcoming US presidential election and the implications its outcome could have for international financial centres (IFCs).
He said Hillary Clinton, the favourite to win the Democratic presidential nomination, specifically singled out the Bahamas as a nation that facilitates tax evasion during a recent media interview.
She had told MSNBC in a recent interview: “We can go after some of these schemes … the kind of misclassifying of income, trying to make it look like it’s a capital gain, when it’s really ordinary income, going ahead and routing income through the Bahamas or the Cayman Islands or wherever.”
Such comments do not bode well for the Bahamas or other IFCs, and Dr Mansharamani backed this nation’s strategy of seeking out new financial services markets.
In doing so, he suggested the Bahamas exploit emerging global trends, such as the rapidly-expanding middle class in Africa - a development ignored by many businesses and commentators.
“The Bahamas, I think, should pay attention very closely to what is happening with the US [presidential] election,” Dr Mansharamani said.
“Sadly, I think offshore centres have developed some reputation as being a place to evade taxes. That will become a political issue [in the US]. It’s happening. Don’t think it won’t happen. It will occur.”
Dr Mansharamani said Mrs Clinton had “explicitly targeted the Bahamas” in her comments, and he said this nation had a choice between either retrenching or developing legitimate, tax compliant financial services and products.
“There’s a whole world of wealth that has different financial needs,” he said, agreeing that the Bahamas should look beyond the US and traditional financial services source markets.
“There’s a whole world of middle class that is being formed that needs a home, needs money management and financial services. There’s no reason why you should [recoil] from that. There’s a possibility there.”
Dr Mansharamani said the Bahamas also needed to look to the future with its tourism industry, and position the sector now for greater rewards in the future.
“I think tourism is still a huge opportunity,” the former SDK Capital chief executive said. “People will be flying more, and there will be more disposable income. That will be be a benefit for the Bahamas.
“It may not happen this year, next year or in five years. But it’s coming. Now is the time to prepare yourself. You dig a well before you’re a thirsty.”
Dr Mansharamani said the jury was still out on whether Cuba would ultimately become a major competitive threat that undermined the Bahamian tourism model.
“I know all of you think of Cuba as a threat. Maybe, maybe not,” he said, adding that Cuba has “a long way” to travel before realising its tourism potential.
The Bahamas’ western neighbour has yet to develop a truly attractive, predictable investment environment that is guarded by the rule of law, the Yale University lecturer said.
This is likely to deter Western investors and capital for the time being, and Dr Mansharamani implied that all this gave the Bahamas time to prepare for Cuba’s eventual full opening to US tourists.
He suggested that the Bahamas focus on growing niches such as medical tourism, pointing out that the Cayman Islands was investing heavily in the latter sector.
“It’s time to think differently,” Dr Mansharamani told the Bahamas. “You could sit here and say: ‘We’re in trouble, we have to retrench, there’s the US election, and we need to survive’.
“But think differently. Think about the trends which could be very beneficial to the Bahamas. Be more growth oriented.”