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Economy's 'Blood Supply Choked' By Customs Proof Of Exchange Control

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private sector yesterday hailed the Government's decision to abolish a Customs demand that would have "choked off the blood supply" of the Bahamian economy.

Robert Myers, pictured, the Organisation for Responsible Governance's (ORG) principal, told Tribune Business that the Department's proposal for all Customs entries to be accompanied by proof of Central Bank exchange control approval would have "shut down the dock" if implemented.

He added that the Government needed to "think it through properly" before introducing changes that completely disrupted The Bahamas' "ease of doing business", and urged it to fully consult the private sector and civil society on such matters beforehand.

His reaction was echoed by Michael Maura, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, who praised Marlon Johnson, the Ministry of Finance's acting financial secretary, and other officials for deciding to reverse course over the exchange control demand.

Mr Maura, who is also chief executive of Arawak Port Development Company (APD), the operator of Nassau's commercial shipping port, added that the plan would have have totally disrupted import flows and cross-border commerce - something the Bahamas cannot afford.

Both men spoke out after Tribune Business revealed Customs' now-halted plan to require all importers to provide proof of Central Bank exchange control approval for all entries with effgect from this Monday, May 14.

A "public notice", signed by Dr Geannine Moss, the Customs comptroller, stated: "The public is hereby advised that as of the 14th of May 2018, all commercial entries submitted to Bahamas Customs must be submitted with current Business Licence."

Dr Moss said such requirements were enshrined in law by the Customs Management Act's section 208 (2), "item nine", which states that "goods imported for the purpose of any business" can only be cleared by production of a valid Business Licence and "proof that exchange control approval was obtained by the importer from the Central Bank of the Bahamas permitting the expenditure of foreign currency for the purchase of the goods".

Mr Johnson subsequently confirmed that the exchange control 'proof' had been dropped following a backlash from furious businesses who obtained a copy of the 'public notice'.

Tribune Business sources, speaking on condition of anonymity, also suggested Customs had misinterpreted its own Act. They explained that the section cited in the 'notice' applied only to 'restricted or prohibited' goods, not "all commercial entries" - something this newspaper's inspection of the Act and its schedules seemed to bear out.

As a result, the sources said Customs' demand had no basis or justification in law. As a result, they suggested the Department apologise for a "travesty" that had caused unnecessary "confusion" and turmoil within the private sector.

Mr Myers, meanwhile, said the episode again showed the Government's failure to consult and "properly think through" initiatives that threatened to erode the Bahamas' already-weak 'ease of doing business'. He likened it to the ongoing fly fishing controversy, where that sector's new licensing system had not been accompanied by the necessary payment and issuance systems.

"What are you going to do when someone pays by credit card? There's no exchange control approval and the goods are already here," Mr Myers said of one likely dilemma that Customs' approach would have caused.

"We just don't think things through. Use the business community to bounce these ideas off before you effect policy that affects businesses, and take the blood supply out of your economy. Don't sit there and think you have all the answers. Use all the assets in your tool box, speak to the private sector and civil society, then implement the policy and law.

"Don't put the policy in place that disrupts the lifeline of the economy and cause everyone a headache. There are lots of situations where you're not going to have a [bank] draft. Why are we making it more difficult for the formal economy?"

Mr Myers added that the effect of Customs' proposal would have been to "shut the dock down", impeding the timely clearance of imported goods and causing a trailer back-up, with commerce ultimately grinding to a halt.

He added that it would have penalised legitimate businesses and commerce, while failing to combat the 'informal economy' of persons importing goods under their own name and selling them without a valid Business Licence or paying due taxes.

"It's more likely the informal economy is cheating on the invoice values and paying off Customs officers," the ORG chairman said.

Urging the Government to stop making decisions "in a vacuum", Mr Myers added that it and the private sector needed to "learn to talk to each other". "We've got to start being part of the same team, as opposed to government and the private sector being at odds with each other," he said. "Otherwise we're not going to develop as a nation."

Mr Maura voiced similar concerns over Customs' proposal, saying: "We cannot afford disruption at the border if we are to compete globally. That would have made business more difficult,.

"In terms of the Central Bank approval, I see that as a disruptor because not everyone goes to the Central Bank or asks for a bank draft. They use their credit card.

"I'm happy to hear the Financial Secretary and Comptroller of Customs rescinded that requirement. I believe that's the right thing to do."

Mr Maura, though, backed the requirement that all Customs entries be accompanied by a valid Business Licence. "We continue to be challenged in that we have the formal and informal economy, and the informal economy makes it more expensive for the formal economy," he added.

Comments

DDK 2 years, 4 months ago

If Government is truly concerned about persons importing goods under their own name and selling them without a valid Business Licence or paying due taxes, why do the officials of the Business Licence Department, accompanied by police officers, not inspect the premises where business is conducted? If there is no current business licence, the door to the illegal store is closed and the illegal operator is fined. Ditto persons selling on the side of the road or out of their vehicles. These inspections should be random and not publicized. Simple.

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The_Oracle 2 years, 4 months ago

I swear if Bahamas Customs spent half the time they spend "inventing new controls" actually following existing rules they'd be way ahead of the game. They are so clueless. They have "interpreted" themselves into oblivion! So, here we are considering a ban on disposable plastics but lets destroy forests of trees for multiple copies (per entry) of valid business licenses! All the above Points are valid but as it stands GOVERNMENT is the highest and ever increasing cost of doing business in the Bahamas! I don't doubt the Ministry of finance has no clue about the inflows or outflows of foreign currency but this garbage is ludicrous. I suppose this is the result of political appointees and sweethearts, and illiteracy within the upper ranks.

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Sickened 2 years, 4 months ago

All the government needs to do is give the Customs Department online (read only) access to the Business License department!

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proudloudandfnm 2 years, 4 months ago

What happens while you're waiting for this lousy government to process your business license renewal? What do you take with you for those 3 to 6 months?

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The_Oracle 2 years, 4 months ago

Government cannot trust their own records or documents, nor do their various computer or paper systems cross over or mesh. Perfect scenario of graft, fraud, theft, corruption, slight of hand, missing documents, altered documents, Just the way they want it.

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empathy 2 years, 4 months ago

The Minnis Administration needs to take a good look at our Customs processes. There are many policies that are contradictory to the VAT agreements including many of which that are not equally applied. Additionally there are arbitrary charges and unnecessary Red Tape that inhibit business efficiency and development.

A Cabinet White Paper to improve Customs would be a good idea. They should evaluate what Customs does? What is better left to the Tax collectors at Ministry of Finance? What could be abolished? What would make us more competitive as a nation? They should revise the Customs Duty ‘book’ of duty items, which is nearly one thousand pages to a much simpler document. They should aim to reduce the Custums Duty Rates on most of the products listed. Trust me, this would be desired by All! The higher rates could remain for items we may not want imported into the country, like guns, environmental toxins or other non biodegradable or recyclable products (like plastics and styrofoam)🤔

There is much to fix at Custums.

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The_Oracle 2 years, 4 months ago

All duty rates must be reduced to 8-10% by 2025, per WTO agreements for WTO accession. Duty rates have been reduced but in small increments to comply with that. (initially reducing duty rates on items rarely imported in order to technically comply) VAT, Real property tax (across the board and on all properties) and Capital gains personal income etc are coming and are scheduled. But No admin has ever admitted it. Most have concealed it. Customs has had a measure of training but these political appointees and a lack of continuity from political admin to admin has crated these actions of "creative destruction" With no private sector input, irrespective of these so called Consultations. The private sector is still fragmented and scattered in their approach.

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