By Frederick Smith QC
Never mind the naysayers. The progressive spirit behind the Commercial Enterprises Bill (CEB) is exactly what our stagnant, suffocating economy needs right now.
Like several other initiatives either already in the works or which have been foreshadowed by the Minnis administration, this game-changing Bill signals the arrival of a government with the potential to truly transform this country for the better.
In a nutshell, the Bill will make it easier to start and grow businesses, thereby attracting more economic activity to the country and creating jobs, new wealth and – crucially – new cutting-edge skillsets for countless Bahamians. If applied fairly and transparently, it will put The Bahamas on the map as a global hub for several exciting new industries.
A doomed system
For decades, we have been sold the fool’s gold of stingy protectionism; told the way to enrich and empower Bahamians is to jealously guard our economy from foreign interlopers. Almost half a century later, what do we have to show for it?
While a small, politically connected elite has managed to enrich itself and a modest middle class struggles to make ends meet, the majority of Bahamians still continue to suffer daily hardship. Few see any chance that their circumstances will improve and new employment opportunities are increasingly hard to come by. In truth, this system was always doomed to fail and the evolution the CEB represents has been a long time coming.
In its original form, the Bill did contain one glaring deficiency: While it would undoubtedly have led to an injection of economic activity from foreign investors along with all the spin-off benefits for Bahamians, the first Bill would not have privileged local investors. With the recent amendment allowing Bahamians to receive the full benefits of the Bill with no minimum investment, this key weakness has been eliminated.
It has been argued that the $250,000 minimum investment for foreigners is too low, but I disagree – particularly in light of the considerable advantage now enjoyed by Bahamians who can invest as little or as much as they see fit. The overall point is to encourage as much capital flow into businesses as possible, from foreigners and Bahamians alike, thereby injecting new and much-needed life into the economy.
The good life
As expected, the purveyors of doom and gloom warn us a tsunami of foreigners will flood the country, drowning Bahamians in economic and social misery. But where is the evidence to support this? Currently, The Bahamas ranks 54th in the world in terms of economic freedom (essentially, ease of doing business). Countries that top the list – Ireland, Switzerland, Australia, New Zealand, Singapore, Austria, for example – also top global “quality of life” rankings.
Opening up an economy does not necessarily lead to locals being displaced by foreigners after all. More often than not, economic growth and social progress go hand in hand, as dozens of cases in the developed world attest. Of course, this has not always been true in every case and tales of shameful foreign exploitation do exist.
But in general, according to extensive research, the citizenry in open economies enjoy greater prosperity, have more political and civil liberties, and live longer lives. They have more say in how they live and more opportunities to generate wealth for themselves and their families. The Free National Movement government is to be commended for its vision and courage in giving our country a chance to join this elite club and reap the benefits accordingly.
A step in the right direction
If there is to be any criticism of the Bill at all, it is that it doesn’t go far enough. For one thing, while the amended version does give a distinct advantage to Bahamian investors over foreigners, the government could and should do even more to protect local businesses. For example, in a particular category where Bahamians already have a company, any prospective foreign investor should be required to enter into a joint-venture with the local concern, as opposed to competing with them directly.
At the same time, the government should move to dismantle its oppressive anti-business bureaucracy – all the obstacles, hurdles and red tape that currently encumber efforts to set up businesses, companies and joint-ventures. It should be easy for Bahamians to get into business, and we should be allowed to partner with anyone they wish, from anywhere in the world.
The CEB will impact specific cutting-edge industries such as nano-technology, biomedical industries and bioinformatics and analytics. This is commendable, but if The Bahamas is truly to become known around the world as a centre for emerging technologies, the list could be expanded to include industries like robotics, artificial intelligence and crucially, renewable energies and alternative fuels. The Bahamas could become the Silicon Valley of the Caribbean and benefit tremendously from both the technology created here and the cutting-edge skills transfer to Bahamians.
Economic potential held hostage
To truly liberate the economic potential of our people and allow them to benefit from the CEB, the government must also do away with the Exchange Control regulations which prevent Bahamians from tapping into the literally billions of dollars just sitting in the foreign banks headquartered here. This could be lent to local entrepreneurs at a very low interest rate for venture capital opportunities. Bahamians should also be able to own foreign currency bank accounts and boost their financial assets by investing in overseas stock markets.
Exchange Control is a major hurdle to citizen participation in the economy. It has been a key factor in the unfortunate scenario whereby the tourism industry, the main economic driver for the country, is totally dominated by international companies. Bahamians have had their own economic potential artificially capped while at the same time being prevented from even owning shares in the major hotels here. Meanwhile, they have seen the red carpet rolled out for one foreign hotel company after the next – concessions, free crown land, casino taxes waived.
If bringing an immediate end to Exchange Control is a bridge too far, in the short term the government should amend the law to require large foreign investors to register publicly-traded companies on the Bahamas stock exchange (BISX) so that Bahamians can buy shares and thereby a piece of own economic pie.
Either way, we absolutely must bring an end to the current situation in which the citizenry of this country is forced to stand on the sidelines, settling for basic jobs while foreign-owned hotels, casinos, restaurants, souvenir franchises – all of which capitalise on our sun, sand and sea – enjoy tax benefits in their home country and favouritism here, as they make money hand over fist and promptly ship it all out of the country.
All in all though, the CEB is a great start, a pleasantly surprising breath of fresh air and an impressive display of vision and imagination. Along with FNM government’s other revolutionary moves – the Anti-Corruption Bill, Code of Conduct for Ministers, tax-free zones for inner cities, an overarching Environmental Protection Act, etc – it hopefully signals the beginning of a fundamental and much-needed real change for The Bahamas.
The elephant in the room
There remains of course, one very conspicuous elephant in the room, whose looming shadow darkens an otherwise bright outlook. Even as it opens the economy for the benefit of locals and foreigners alike, this FNM quite paradoxically insists on continuing to persecute, abuse, victimise, alienate, hunt and destroy the lives of thousands upon thousands of people born in The Bahamas who have a constitutional right to be registered as citizens.
These individuals cannot get the immigration status owed to them by this country because of the inefficiencies and corruption at the Immigration Department. As a result, they cannot get a legal job, business licence, National Insurance card or bank account. Nor can they get a marriage licence, birth certificates for their children, access to public school, even cable or telephone service. They are, without question, economic and social outcasts in their own country.
This shameful reality has always been swept under the rug, conveniently hidden from view while an entire category of individuals with a birthright in this country, who have broke no laws, are routinely lumped in with those who entered the country illegally. The result has been the creation of an economic underclass, the members of which are forced to survive by whatever means necessary and suffer all manner of degradation and injustice imaginable on a daily basis.
Indeed they are treated with less respect than foreigners. Under the former PLP administration, an official policy was adopted to deny these children the right to attend public school. And so earlier this year, when the prime minister made his gracious and humane offer to educate the displaced children of Dominica, there was the very real possibility of foreign students being educated ahead of children born right here in The Bahamas. It is hard to imagine anything more perverse!
Thankfully, the FNM government has declared this reprehensible policy null and void. We ask them, in the spirit of the CEB, to go further and declare that all individuals born in The Bahamas, as Citizens in Waiting, have a right to fully participate not just in public education, but also in the economy. In the name of true economic freedom and openness, allow these unfairly marginalised individuals to contribute their skills, expertise and enthusiasm to a growing and reinvigorated economy. Give them the tools necessary to reap the rewards of their labour and ideas, while creating new businesses and jobs to the ultimate benefit of all who call The Bahamas home.