Bahamas committed FDI ‘sins in the past’
Minister of State for Investments Khaalis Rolle, focusing on foreign direct investment (FDI) developments, said The Bahamas has “committed many sins” in the past, and given the national conversation about importing foreign labor, asserted that The Bahamas by now “should be able to build things”.
Rolle would not confirm for Guardian Business the terms of an alleged heads of agreement between the government and investors in the Four Seasons resort in Cotton Bay, Eleuthera, but instead focused on why – if such an agreement existed – the government might be compelled to sign one.
“The fundamentals of any economy is based on foreign direct investment. No matter how you start to analyze and attribute or apportion the major inputs to economic development, FDI will be the underlying engine. So we can’t escape that.
“And we’re in a very competitive environment. Everyone will tell you people are running to The Bahamas, and yes, people are running to The Bahamas, but the prime ministers and ministers and businesspeople in other jurisdictions are saying ‘forget about The Bahamas and come here’.”
Rolle reported that he’d once had an investor demand a guaranteed approval within 14 days or else he would go to St. Kitts and Nevis, which was a bit more aggressive with its concession terms.
“Other jurisdictions are being very, very competitive.
“We’re not a rubber-stamp jurisdiction, and we’ve committed many sins in the past… When I say that, I mean that we’ve not been as thorough as we should in analyzing investment. If you go back to the technical cooperation with the Inter-American Development Bank (IDB), we identified the lack of capacity to evaluate the net benefit of many of these investments to the Bahamian economy over a long period,” he said.
We must extract more value
Rolle reiterate his assertion that, given the amount of foreign direct investment inflows into The Bahamas over the years, the economic impact the FDI has had on small and medium-sized enterprises has been woefully inadequate.
“We have to find ways to extract more benefit for the country,” he said.
“We’re negotiating with cruise lines, where they come in and say they want an island and they’re only going to pay $10 a year for a 99-year lease. And oh, by the way we’ll give you some tax dollars and that’s it… We have to rethink our investment model. All those sins we have committed in the past, we have to now try and correct.”
Rolle said the economy has not been managed well enough, citing the state of small and medium-sized enterprises (SMEs), the education system and unemployment as a few markers. To drive the point further, Rolle questioned how many Bahamian SMEs could successfully compete in the liberalized trading environment of the World Trade Organization (WTO), to which The Bahamas is still working out the terms of its accession.
Questioned about whether Baha Mar might be considered one of those “sins we have committed in the past”, Rolle said he felt that if the present situation is managed correctly, there is still an opportunity to extract benefits out of Baha Mar moving forward.
“During the construction phase, we know we didn’t get as much benefit as we could have, but that has been true with Crystal Palace, that has been true with Atlantis, and it remains true with Baha Mar,” he said.
The minister took a cursory look at the labor component of those resorts: one in the 1980s, one in the 1990s and the other in the 2000s.
“In the 80s, we imported labor from India to build the Crystal Palace, a significant amount of labor. No skills transfer. So you know what happened? In the 90s, because the skills transfer did not occur, we had to import labor from Mexico. And guess what? Major project, no skills transfer. So, 2000, we’re building another mega-resort, and we’re importing labor from China.
“We have to be able to provide – reasonably priced, highly skilled and in large numbers – a labor force that foreign direct investors would need so that they don’t come to the government and say the only way they can get their development done on budget and in a reasonable time is if they import this cadre of labor.
“At this stage in our development, we should be able to build things.”
Rolle also pointed to the matter of the management contract negotiations for the Bahamas Electricity Corporation (BEC), and the larger privatization process.
“There were a number of U.S. companies that complained that the government didn’t give them a contract, or isn’t giving them a contract.
“There were a number of Bahamian companies that had bids in that wanted to do business: I don’t care who they are, Bahamian companies have the first right of refusal, plain and simple.”
So how then did the government arrive at the selection of PowerSecure?
“When you work your way through the process, they were determined to be – based on the selection process – the ones that should manage BEC. And if they complain that they are not getting a response that they want in the time that they want, that is of no consequence, because a process is a process, and everyone has an equal opportunity to the process including citizens of The Bahamas,” Rolle said.