By NEIL HARTNELL
Tribune Business Editor
The Bahamas Motor Dealers Association's (BMDA) president yesterday warned that the economy "will get worse before it gets better", with a turnaround still "a year or more away".
Fred Albury, speaking after half-year sales trends "unsettled" new auto dealers, told Tribune Business that reviving the Bahamian economy would not be as easy as "turning on a light switch".
He urged the Government to incentivise private sector expansion through Business License fee cuts and other concessions, emphasising that he and other entrepreneurs needed to "see a glimmer of light" before they would be willing to invest.
And the BMDA chief said the Bahamas "might as well dig a plot and bury" its offshore financial services industry, describing the sector as "done".
Giving a somewhat pessimistic near-term outlook following "erratic" sales data for the 2017 first half, Mr Albury said: "Until we see this economy pick up, I anticipate sales being where they are.
"A lot of the vehicles being sold are going out to the Government on lease programmes or to rental car companies who have fleet operations. It's still rough out there. I think we're in for a rough ride for another year or more before we see a turnaround out there."
The BMDA chief added: "The economy is not going to turn on like a light switch. It's going to take time to get this economy going. I think it's going to get a little worse for the economy before it starts to get better.
"The public service is overweight and needs to be cut, and the Government has to create some incentives for the private sector to expand business. I'm not going to expand if I don't see a glimmer of light out there. I've been sitting defensively for the last couple of years, trying to reduce expenditure and keep my head above water."
Mr Albury joined widespread private sector calls for a reduction in the Business License fee rate, describing this as "a very regressive tax" due to being calculated on gross turnover. It can often exceed a company's annual profits, and be the difference between reaching 'the black' or making a loss.
The BMDA chief said annual Business License fees for his Auto Mall group typically ranged from $300,000 to $500,000, and added: "If I didn't have to deal with that, I'd be able to look at expanding the business; I'd have something to put into it."
Mr Albury then told Tribune Business that this nation needed to "start thinking out of the box" to revive the 'two pillars' that have historically been most responsible for the Bahamas' economic advances - tourism and financial services.
"Banking is dead. It's done. They might as well dig a plot at Ebeneezer [Methodist Church] across the road and bury it," Mr Albury said, in remarks set to spark a lively debate.
The BMDA chief made clear he was referring to the Bahamas' international financial services sector, which has been hard hit by an ever-changing regulatory landscape since 2000 as the major industrialised countries sought to crack down on perceived tax evasion.
Former prime minister, Hubert Ingraham, whose government was responsible for implementing the controversial laws that removed the Bahamas from the Financial Action Task Force's (FATF) 'blacklist', last year said that move had merely bought this nation some time.
He told local media that the Bahamas had lost its traditional private banking business as a result, and this country had yet to 'see the worst' in terms of financial services contraction.
However, the industry is far from "dead" based on the latest data from the Central Bank, which shows the Bahamas remains home to 248 banks and trust companies. Yet it is also clear that the sector is now growing, given that the number of jobs it generates fell by 110 or 2.5 per cent in 2016, following a 5.1 per cent fall the prior year.
Brent Symonette, who now has ministerial responsibility for financial services, and industrial professionals have all agreed that the Bahamas needs to reposition its international financial centre (IFC) and develop a new business model.
In particular, Deloitte & Touche's UK arm was last year engaged to conduct a study on whether the Bahamas should shift from a 'no tax' to a 'low tax' structure, and determine if this was a more appropriate model given the international regulatory changes.
As for tourism, Mr Albury said the Bahamas needed to focus on the vacation rental by owner (VRBO) model as a way to attract a new visitor market and spread wealth across the middle class.
"The VRBO model is the way to go," he told Tribune Business, adding that he was "getting ready" to convert his own properties in Hope Town and Abaco, and place them online.
"That would give the middle class person out there extra money, and it's where the market is going," the BMDA chief said. "Big mega resorts will be a thing of the past somewhat."
Mr Albury said reduced unemployment was key to restoring business and consumer confidence, adding that the auto industry was already "pretty much at rock bottom".
"It's made a better person out of me," he said of economic conditions, "managing a business to try and keep it alive. When things are good you put stuff on the backburner, but not any more.
"You have to get lean and mean. I have a machete to chop out the expenses as much as I can. That ends up impacting other businesses."