By NEIL HARTNELL
Tribune Business Editor
THE Government was yesterday urged to find its “political courage” and create “a volcanic boom” by liberalising the Bahamian economy beyond the Commercial Enterprises Bill.
Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the Minnis administration could repeat “the success of Freeport in the 1950s and 1960s” throughout the Bahamas if it enacted other key reforms and ensured a ‘level playing field’ for domestic investors.
Arguing that the Bill “doesn’t go far enough” in freeing the economy from government control, Mr Smith said the Government also needed to eliminate exchange controls and remove the ‘taboo’ associated with Bahamians ‘fronting’ for foreign investors.
He argued that economic liberalisation would also reduce the potential for political-related corruption, and added that all publicly-traded companies doing business in the Bahamas should be required to dual-list on BISX so locals could invest in them directly following exchange control relaxation.
Mr Smith said the Commercial Enterprises Bill also highlighted the need to ensure all children born in the Bahamas gained citizenship, as the legislation would potentially give foreigners greater economic rights under the Government’s present approach.
“I support the Government’s efforts to liberalise the investment and Immigration environment,” the well-known QC told Tribune Business. “This was the key to the success of Freeport in the 1950s and 1960s, and if only this government would have the political courage to repeat the Freeport experience, there would be a volcanic boom in this nation’s economy.”
The Commercial Enterprises Bill is designed to liberalise the granting of work permits by allowing senior executives and specialist personnel in targeted industries to enter the Bahamas without first obtaining such approvals.
They must apply for the necessary work permits within 30 days of arriving, and the Bill mandates that if the Immigration Department fails to approve them within 14 days of application receipt they will be deemed as automatically approved.
The ‘fast track’ work permit scheme has attracted criticism from former prime minister Hubert Ingraham and the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), as well as the Government’s political opponents.
However, describing the Bahamas as “a very under-populated nation”, Mr Smith told Tribune Business that it needed to attract more businesses, people and economic activity.
“There’s no sense in Bahamians struggling to eat crumbs from a tiny pie when, with a bit of political innovation, and Immigration and investment reform, we could make the pie so big for all Bahamians to gorge on it until they could eat no more,” he said.
“Freeport is sitting here with hundreds of thousands of acres, four-lane highways and roads leading to nowhere, like they have in Saudi Arabia, another desert with no one to occupy them.”
Mr Smith said that while the Commercial Enterprises Bill was a welcome start, more was required to free the Bahamian economy from government control and over-regulation that has stifled its growth for decades.
“I applaud the Government for bringing this progressive Bill, but it doesn’t go far enough,” he told Tribune Business.
Mr Smith urged the creation of a ‘level playing field’ so that both Bahamian and foreign-owned companies and investors “can play in a liberalised investment environment” on the same terms, and with access to the same benefits and incentives.
This, he added, needed to be facilitated by the elimination of exchange control regulations to allow Bahamians access to capital at the same cost (interest rates) and terms as foreign rivals.
In turn, he argued that this would also enable foreign companies in the Bahamas to dual-list on BISX and provide direct ownership and wealth-creating opportunities for Bahamians.
“Government should also get rid of this fronting boogeyman, and expand the Commercial Enterprises Bill to say Bahamians can joint venture with every company that comes in,” Mr Smith said. “Fronting is not illegal. It’s perfectly legitimate for Bahamians to joint venture with foreigners, but it has been given a negative stigma, particularly by the PLP.
“This will allow Bahamians to have a bigger piece of our own economic pie, and the Bill should also be expanded to allow Bahamian companies and investors to get work permits like the foreign investor.”
The Government says it has done just that. As for ‘fronting’, numerous allegations are thrown about over Bahamians performing such services for foreigners, especially in areas reserved for foreign ownership, but few such claims have been proven over the years.
Mr Smith, meanwhile, said economic liberalisation of the nature planned by the Minnis administration would also “help to eliminate corruption, and create opportunities for Bahamians generally; not just political acolytes”.
He added: “There’s a call to kill this Bill, but I say expand the Bill to level the playing field between Bahamians and foreigners so the entire economy is liberalised for opportunities for everybody.”