By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
The Bahamas’ investment rules are “more ill-defined” than anywhere else in the Caribbean, a consultant for the Chamber of Commerce blasted yesterday.
Ramesh Chaitoo, a trade and investment consultant with Oxford Economics, told a Bahamas Chamber of Commerce and Employers Confederation (BCCEC) breakfast on the World Trade Organisation (WTO) accession that this nation scored “three out of ten” when it came to having an open economy.
He slammed this nation’s lack of predictable and transparent investment regulations, describing the terms on which investors can engage with The Bahamas as “more nebulous” than anywhere in the region.
“On the subject of whether this is an open economy, if I have to give it a grade between one to ten, I would put this economy in terms of openness at perhaps three,” Mr Chaitoo said. “Yesterday we meet with the telecoms regulator [the Utilities Regulation and Competition Authority].
“Under the laws, the processes and procedures of the regulator, the telecoms market is open. It’s also technology neutral, so if a telecoms operator gets a license to supply services, they can use whatever technology is available.
“I asked if there were any new entrants in the market; any new requests. Every time I come to The Bahamas I have struggled with internet access, even to do basic e-mails, in any hotel for the last 15 years. Funnily enough, the regulator said they did give a license, which is a long process, but the investor went to the state and was refused. Would you call that an open economy?”
Mr Chaitoo added: “The terms of engagement in this economy are more nebulous than you would find anywhere in the Caribbean. If you are trying to get in you have no idea the terms of engagement. That’s the problem; the lack of investment rules and regulations. There is no predictability, no consistency and no transparency.”
He said this also worked to the disadvantage of Bahamian companies, and helped to sow discord and claims that some investors - especially foreign competitors - received more favourable treatment, including greater tax breaks and other incentives, from the Government.
“I noted that during recent local consultations, domestic producers have continually argued that the terms of engagement, to them, seems to be different for foreign investors,” Mr Chaitoo said.
“This is the result of investment relationships that are individually carved out so that big guys get special deals and the little guys don’t. That is why you need predictable rules of investment.”
The Government has repeatedly argued that one of the benefits from full WTO membership, which The Bahamas hopes to achieve by mid-2020, is that it will give investors - Bahamian and foreign - more certainty over the regulatory regime for their businesses.
The WTO’s rules-based trading regime will force The Bahamas to codify its existing National Investment Policy in statute law, making it less vulnerable to sudden change at the whim of the existing government and creating a more predictable regime for business.
Successive governments have talked about converting the National Investment Policy into law since the last Ingraham administration, something that was picked up by Ryan Pinder, the former financial services minister who had responsibility for trade.
Now a Graham, Thompson & Company attorney and partner, he argued that there needs to be the “political will” to advance the necessary laws to deal with the issues raised by Mr Chaitoo.
“The investment law is there. Talk to the Government to advance it,” he said. “We need the political will to advance it. The competition law was drafted when I was minister, and the investment law was drafted when I was minister.
“WTO is not an excuse of political will. If you are going to do it, do it. We are a self-governing country for many decades. We can put in whatever laws we want. We do not need WTO to put laws in place. We have to have the political will and willingness to do it. We do not have the political make-up in the country to do it and that is a fact.”
Ava Rodland, a project manager at the Ministry of Financial Services, Trade & Industry and Immigration, agreed that the “greatest barrier” to foreign direct investment entering and participating in the Bahamian economy is the National Investment Policy.
“Right now, any foreign investor has to go through and get approval of Cabinet,” she said. “They go and hire a lawyer, put together a proposal and don’t know how Cabinet is going to respond. That is a disincentive for investment because investors want the security and predictability to know what are the conditions that they have to meet.”
She added: “While tourism and financial services have been targeted for FDI, and perhaps the barriers are lower because government tends to permit entry of those providers, we are not going to experience growth of this economy. At a certain point we are going to plateau. At a certain point the market reaches capacity.
“With tourism and financial services we can see that we are already there. What that means is we have to look at other areas and diversify our economy. We do have a number of impediments in some other areas, with the single biggest one being our investment policy.”
Ms Rodland said she was not advocating for the Government to remove its discretion to review investment proposals, but added that it should start to look at formalising the process and making it more predictable for investors.
“It’s not just going to benefit foreign investors, but would also mean that Bahamians would know the process, what their government is doing and how Cabinet operates,” she added.
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