By NATARIO McKENZIE
THE Government has been urged to extend the Commercial Enterprises Bill’s benefits to Bahamian-owned firms and ensure they remain on a ‘level playing field’ with foreign rivals.
While backing the Minnis administration’s bid to drive economic growth and job creation through the attraction of more foreign direct investment (FDI), the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) said this needed to be “balanced” with support for Bahamian-owned small and medium-sized businesses (SMEs).
The private sector organisation, while welcoming the Bill’s intent, also expressed concern that Bahamian-owned businesses already operating in the sectors targeted by the legislation will be unable to compete on a ‘level playing field’ against the foreign entities it hopes to attract.
Edison Sumner, the Chamber’s chief executive, said it understood that foreign-owned businesses deemed non-resident for exchange control purposes will pay a nominal Business License fee of $300 per annum compared to the thousands of dollars, based on gross turnover, that a Bahamian-owned firm will pay regardless of whether it makes a profit.
Citing this as one example of the Chamber’s concerns, Mr Sumner added that the $250,000 minimum investment threshold for foreign companies applying under the Bill may be too low. He also questioned whether the Bill’s provisions applied to Bahamian-owned companies as well. “We support any move to increase foreign direct investment in the country,” he told Tribune Business. “We believe that it is necessary to grow the economy, and without it we could face stagnation.
“What we would like to see happen is that same level of concierge treatment and expediency included in the provisions of the Bill be extended to Bahamian businesses as well. Many of our members are still having challenges with Business License processes.”
Mr Sumner said the Chamber was already receiving calls from international companies who have expressed interest in doing business in the Bahamas, and suggested that the Government may need to copy the Bill’s ‘fast track’ work permit process by legislating similar improvements in other government services.
Outlining its concerns, the Chamber said in a statement: “The BCCEC wishes the attraction of foreign investment to be balanced with the support of local businesses, particularly small and medium-sized enterprises which are the backbone of the local economy.
“Wholly-owned Bahamian businesses are not currently required to apply for Investments Board approval. In order to take advantage of benefits contemplated by the Bill, a newly-established, wholly Bahamian-owned business would be required to apply for approval from the Board.”
The Chamber continued: “Incentivising Bahamian businesses in these sectors and addressing the ease of doing business is also of paramount importance for the growth and diversification of the economy.
“Further, the cost of labour, capital, human resources and energy is higher in the Bahamas. Bahamian-owned businesses in certain sectors, for example mutual fund administration, wealth management, boutique health facilities will be disadvantaged and will not be able to compete.
“For example, a foreign-owned business, which is non-resident for exchange control purposes, pays a nominal Business License tax whilst a Bahamian-owned business serving the same non-resident clients must pay Business License tax on their gross turnover whether or not they make a profit.”
The Minnis administration has said the Commercial Enterprises Bill will ensure “that Bahamians are the priority”, despite the fact it will “liberalise the granting of work permits” to foreign companies.
Officially known as an Act for the Designation of Specified Commercial Enterprises and Specified Economic Zones in the Bahamas, the Commercial Enterprises Bill “seeks to liberalise the granting of work permits to an enterprise that wishes to establish itself in the Bahamas, and requires work permits for its management team and key personnel”.
The company’s investment, however, must be a minimum of $250,000. As previously reported by Tribune Business, if passed into law as is, the legislation would enable a “specified commercial enterprise” to obtain an Investments Board certificate granting it a specific number of work permits for certain positions.
The certificate, which will initially be issued for one year and can be renewed, would allow key personnel to set up the company’s physical operations in the Bahamas before they obtained a work permit. Such a permit must be applied for within 30 days of their entry, and the bill mandates the Director of Immigration to make a decision on approval within 14 days of receiving the application.
If the director does not respond within that timeframe, the work permit will be “automatically deemed to have been granted”. Work permits issued under the Bill’s provisions will be for a three-year period, and are renewable for the same duration.
“They can only be revoked on grounds of “public safety, public morality or national security”.