By NEIL HARTNELL
Tribune Business Editor
The deputy prime minister yesterday pledged "drastic improvement" after the World Bank concluded it was easier to do business in the war-torn West Bank and Gaza Strip than The Bahamas.
KP Turnquest, pictured, told Tribune Business that planned reforms to the Government's processes and interaction with the private sector, driven by the increasing use of technology, would warrant "a significant upgrade" to The Bahamas' 118th spot in the World Bank's "ease of doing business" index.
While that represented an improvement of just one spot from last year's 119th position, the World Bank still put The Bahamas two places behind the 116th-ranked West Bank and Gaza Strip - the Palestinian territories regularly subjected to bombardments, economic blockades and lengthy power outages as a result of conflict with Israel.
Mr Turnquest, though, said The Bahamas was frequently "short changed" by assessments from the World Bank and other international agencies, which often failed to account for improvements and reforms enacted by this nation.
He added that the Government will initiate legal reforms to give effect to recommendations from its own "Ease of Doing Business" committee, chaired by Lynn Holowesko, when the mid-year budget is unveiled in the House of Assembly in early 2019.
The Minnis administration's critics, though, are likely to seize on the World Bank's latest findings to argue that its much-touted "ease of doing business" focus has yet to bear fruit, with The Bahamas effectively "treading water" and going nowhere fast in terms of improving its competitiveness and attraction for foreign direct investment (FDI).
In truth, both the Government and its political opponents can use the latest World Bank index - with its rankings for 2019 - to make their rival cases. The latest rankings do represent an improvement, albeit the smallest possible upgrade, and provide further evidence that The Bahamas' has "bottomed out" by arresting multiple years of slippage in the index.
The Bahamas' lowest-ever ranking came in 2016, when it fell to 121st spot, prompting alarm among the private sector and swift pledges of fundamental reform by the then-Christie administration to turn the situation around.
Its successor can point to initiatives such as the Commercial Enterprises Act, which streamlined the Immigration regime for approved companies in targeted industries, and introduction of the "single portal" Internet window for start-ups' Business Licence applications as moves that could have merited a much higher upgrade from the World Bank.
The reality, though, is this nation has only improved by three places over two years, and remains a long way short of its former "ease of doing business" slot in the 60s and 70s spots - a position that once placed it in the world's top-third.
The Bahamas' ranking below West Bank and the Gaza Strip is likely to be both alarming and embarrassing, although some aspects of the Palestinian territories' ratings appear questionable - especially their 54th spot for "ease of trading across borders", given that the latter area is currently blockaded by both Israel and Egypt.
Mr Turnquest, while arguing that the World Bank and other agencies often fail to give due reward for implementing reforms, yesterday conceded that The Bahamas has to go further in protecting its economic and investment reputation.
"It's typical that they don't give you the credit but, by the same token, we still recognise we have some work to do," the Deputy Prime Minister told Tribune Business. "Hopefully in the next update we will see some further improvement.
"There are some legal changes, and the implementation of technology solutions, that we think will bring about drastic improvements that warrant a significant upgrade."
Mr Turnquest identified these as "the single [Internet] portal for doing business with the Government from a business point of view, as well as technology upgrades we are looking at for government services as a whole".
He declined to identify those specific "upgrades" and "services", as they did not fall under his Ministry, but promised they would lead to "modernisation throughout the system and the way the citizen interacts with the Government and maintains its records".
The Government is already exploring the use of blockchain technology for maintaining Bahamians' education records, and Mr Turnquest said the Minnis administration was "going to do our best" to eliminate the "red tape" and bureaucracy frequently encountered by Bahamians.
"All this goes to our reputation and our attractiveness as an investment destination," he acknowledged of The Bahamas' "stand still" in the "ease of business" index. "Obviously we are keenly interested in ensuring The Bahamas is best positioned, particularly among our regional peers, as the preferred and easy destination in which to do business."
While The Bahamas ranked above Barbados, St Vincent and the Grenadines, Guyana, St Kitts and Nevis and Grenada in the latest World Bank rankings, it was behind Jamaica, Trinidad & Tobago, the Dominican Republic, Dominica, and Antigua and Barbuda. Jamaica led the Caribbean in 75th spot, an area once inhabited by The Bahamas.
Mr Turnquest, meanwhile, confirmed the Government's "ease of doing business" committee, headed by Mrs Holowesko and attorney Bryan Glinton, had submitted their final report.
"We are in the process of evaluating all the recommendations that have been made, and are providing and drafting legislative amendments that are necessary to give effect to some of what has been made," he told Tribune Business.
Mr Turnquest said these changes will be unveiled with the mid-year Budget, and emphasised that the Government planned to press on with reform regardless of how The Bahamas is ranked by the World Bank and others.
"Generally speaking, all of these ratings people have short-changed us with respect to the tremendous effort made, and improvements made, to various systems," he said. "We continue to press on, recognising no one is going to give us anything, and that we're going to have to go out and demonstrate and prove it.
"There's definitely keen interest in this area. It is the focus of the Government, and I'm confident we'll achieve the necessary results. The fact we have not dropped in the rankings is a significant achievement. The fact we are making changes is a net positive."
The World Bank's latest index did give The Bahamas credit for reforms that made it easier to pay taxes and obtain credit. The former referred to the online system for filing and paying Value-Added Tax (VAT), while the latter was boosted by the passage of legislation that governs the proposed Credit Bureau.
And The Bahamas' achieved a modest improvement in its scores in six of the 10 categories in which itself and 189 countries were rates. The improved scores were obtained in the categories of paying taxes; starting a business; dealing with construction permits; getting electricity; registering property; and resolving insolvency.
Together, this contributed to a modest rise in The Bahamas' overall score, but was not enough to alter its "inertia" in the World Bank rankings. And many Bahamian consumers and businesses are likely to regard it as ironic that the category in which this nation is ranked highest, at 50th in the world, is "paying taxes". This represented an improvement on the prior year's 55th spot.
The Bahamas also saw modest year-over-year improvement on "starting a business", where it rose from 108th to 105th, while it moved upwards on the "ease of getting electricity" - from 117th to 87th.
But, in the other categories, the only way appeared to be down. The Bahamas fell from 86th to 91st for "dealing with construction permits"; from 142nd to 114th on the "ease of getting credit"; from 167th to 169th on the "ease of registering property"; from 157th to 161st in "trading across borders"; from 129th to 132nd on minority investor protection; and from 74th to 84th on enforcing contracts.
The World Bank's annual 'ease of doing business' index is used as a key indicator by international investors to guide them in their decision-making, as it enables them to gauge how easy it is to conduct commerce in a particular nation.
Smooth regulatory processes are especially important to a Bahamian economy positioned as an international financial and business centre (IFC), but investors will be especially wary of allocating capital to projects in low-ranked nations, or those that have suffered consecutive falls such as the Bahamas, as this gives them the impression that their investments will be unsafe, and caught up in too much bureaucracy and red tape.