The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

A FREEPORT businessman yesterday warned the city is “going to die on the vine” unless it becomes easier and cheaper to do business, adding: “We can be the most amazing island in The Bahamas if you let us do some things.”

Paul Mellor, vice-president of Executive Marine Management, told Tribune Business he had created his own blueprint for reforming Freeport’s governance, and how the city should function (see article on Page 2B), after becoming “sick of people complaining” about the city’s decline but failing to offer any solutions.

Emphasising that he was seeking to spark debate on Freeport’s future path, now that the Government has launched its ‘Green Paper’ and consultation on Grand Bahama-wide governance and administrative reform, he backed the push for change as the city is “dying” and he had “never seen it so bad”.

Mr Mellor’s proposal, detailed in a 25-page ‘Freeport Transformation’ paper submitted as part of the Government’s consultation process, effectively calls for the city to go back to its roots by embracing the economic model set out in its founding treaty, the Hawksbill Creek Agreement, which provided the platform for its development from a barren pine forest.

Calling for The Bahamas to retain the best elements of the Hawksbill Creek Agreement, especially those that have been proven to work, he argued that these should supplemented by adopting policies and initiatives introduced by rival free trade zones that have enjoyed much faster growth in recent decades - the likes of Singapore, Dubai and China’s Shenzhen.

And, also urging that existing Grand Bahama Port Authority (GBPA) licensees retain all their present benefits, rights and concessions, and these be guaranteed for a further 25 years by the Government, Mr Mellor argued that Freeport needs to return to the one-stop shop approvals regime envisaged by the Hawksbill Creek Agreement.

This has become, in effect, a two-stop process with investors and businesses having to seek permits from both Nassau and the GBPA. However, Mr Mellor is calling for the “governance” to change, with responsibility for licensing, planning and building approvals taken away from the GBPA and, instead, handed to a newly-created Grand Bahama Economic Authority.

His plan calls for the Authority, which would have far more power and responsibility than the Government’s proposed Grand Bahama Development Council, to be an “accountable public body” that would approve all business and investment decisions via “one window and one decision”. If it fails to answer within 30 days, proposals would be considered automatically approved.

Mr Mellor, who described his model as one “built on growth, not fees”, explained it was focused on attracting the businesses, investments and residents that Freeport needs to finally build critical mass. He said this cannot be done by imposing fees as they enter but, rather, the growth stimulated will increase the Government’s VAT collections and it will earn more in taxes on the back end.

“Freeport is dead. It’s dying,” Mr Mellor told Tribune Business. “I’ve been here my entire life, and I had a friend recently come into town and say ‘What can I do in Freeport?’ That’s a very good question. We have few hotels, very few restaurants and everyone complains but no one is coming up with solutions.

“I’ve never seen it so bad. Freeport is in dire straits. I’ve been here 55 years. I was born in Grand Bahama. I’m a Grand Bahamian. I’ve seen the ups and downs, the good times and the bad. Right now, the Government and Grand Bahama Port Authority are bickering and fighting each other. That’s not helping. We need to have someone with vision.”

Mr Mellor said that, having listened to the two combatants, “I kind of agree with the Government. The Port Authority, for lack of a better word, has been neutered. They really cannot do much. All their power has diminished”. As a result, he signalled that he backs the Government’s plan for it to regain governance of Freeport from the GBPA but leave its owners in charge of the assets.

These would include the 50 percent ownership interests in Freeport Harbour Company and Grand Bahama Development Company (DevCO), plus other entities such as Freeport Commercial & Industrial, Grand Bahama Utility Company, Sanitation Services and Lucayan Services Company (LUSCO), in the hands of Hayward and St George families.

Explaining his ‘Freeport Transformation’ proposal, Mr Mellor said it seeks to “draw on the best of the Hawksbill Creek Agreement and on what has worked in Singapore, Dubai, Ireland, Shenzhen, Cayman, Bermuda, Mauritius and Estonia”.

He added: “Its central idea is simple: Grand Bahama should be the easiest and cheapest place in the region to start a business, hire the right people and settle, and government should earn its return from the growth that follows, not from fees charged at the door.

“The Hawksbill Creek Agreement turned scrubland into our second city because its economics were right: Duty-free business inputs, no property or capital gains tax for licensees, and a long-term promise investors could bank on. Those promises should carry forward, island-wide, with a 25-year guarantee written into law. No existing licensee should lose a right it holds today.

“What should change is the governance. Licensing, planning and building approvals should move from a private company to one accountable public body, a Grand Bahama Economic Authority, with one application, one window and one decision. If government misses its deadline, the application is approved. The Port Authority keeps its land and investments….”

Expanding on this theme, Mr Mellor told Tribune Business: “My concept is to keep the fees and create success. We do exactly the opposite. We make it extremely expensive and very difficult to do business here. The red tape is astronomical, and nobody can get anything done. It’s the exact opposite of what we need.

“What happens is that the Government is charging all these fees, and a lot of these businesses do not come to fruition. Zero plus zero equals zero. That’s what’s happening.” As examples, he pointed to the Government increasing fees on visiting private planes and boats, adding that neither move had produced increased arrivals and visitor spending.

Mr Mellor’s plan targets industries that have been eyed for Grand Bahama and Freeport before, such as medical tourism and its potential combination with developing a hub for wealthy retirees to come and live on the island. “We need to create opportunities; opportunities for new investment, especially medical tourism,” he told this newspaper.

“I was at a restaurant the other day, and heard someone say they are going to Cleveland to get a procedure done. They should be saying: ‘I’m going to Freeport because they have the best medicine in the world’. We also have the biggest retirement body sitting 75 miles away in Florida.

“Everybody retires in Florida. If we had first-class medical care at a competitive price, we can entice them to come here, especially if we also offer 50 percent off on VAT on a home, plus household goods and their first car.”

Mr Mellor’s framework outlines a concept of “open the door, and train Bahamians through it”. He proposes making Grand Bahama a ‘Special Immigration Zone’, using a three-year pilot to allow persons bringing a business, investment or retirement income to “settle” with minimal government contact apart from required security and wealth sources vetting.

“Openness must benefit Bahamians or it will not last,” he added. “Every role is advertised to Bahamians first, every specialist permit carries a Bahamian trainee or a training contribution, and in a downturn permit holders go before Bahamians.”

The plan also proposes opening restaurants to foreign ownership, with licences issued within 30 days of application and work permits for foreign chiefs tied to each training a Bahamian apprentice. Mr Mellor said small Bahamian tourism businesses, such as taxis and straw vendors, will remain exclusively reserved for local ownership.

To address the Grand Bahama Shipyard’s labour needs, he is proposing a Skilled Trades Track where work permit fees would be discounted according to how many Bahamians are trained by foreign welders, fitters and riggers.

Mr Mellor, describing Freeport and Grand Bahama as “unique” due to the Hawksbill Creek Agreement, argued that “we don’t make it very hospitable; that’s what everyone complains about” for incoming businesses and investors. He added that the Government and others alike could be “pleasantly surprised” if Freeport was to be used “as a testing facility to see what actually works”.

He added: “Right now, it’s not working. It’s my island and I want to see this island successful, but the road we’re going, it’s not going to happen. There are too many obstacles. If the Government, frankly, gets out of the way of business people and let’s us do what we need to do, it would be wonderful, but we get obstacles every time we try to do something new, innovative.

“We need to think out of the box, and we are not thinking out of the box. We have to quit talking. We could be one of the most successful islands in the nation. We need people to take chances. The definition of insanity is doing the same thing over and over again and expecting a different result. Right now, what we are doing is not working.

“We can be the most amazing island in The Bahamas if you let us do some of these things,” Mr Mellor said. “Let us try something new. Don’t be afraid of trying something new. It cannot be much worse than it is now. Freeport is in dire straits. It’s bad, very bad.

“We have to make it easy and efficient to do business otherwise we are going to die on the vine because we are competing with the rest of the world.”