How multimillion-dollar investments are approved in The Bahamas
We all hear about these multimillion-dollar investments that are approved and done throughout The Bahamas. We see the contract signings, groundbreakings and ribbon cuttings. But most don’t know how it all gets done. We sometimes think it’s beyond our scope of knowledge. But is it really?
All foreign direct investments must go through the Bahamas Investment Authority (BIA), located in the Office of the Prime Minister. A brief history about the BIA is that prior to that, there was a Foreign Investment Board from 1983 to 1993. Subsequent to that, the Bahamas Investment Authority was created in 1993. The authority was established to reduce bureaucratic delays for domestic and international investors. It was intended to be a “one-stop shop” designed to simplify investing in The Bahamas. The BIA now serves as the administrative arm of the National Economic Council (NEC) and Investments Board. It is also responsible for promoting and attracting investments to The Bahamas. There are a few investment incentives that help local and foreign investors that many may not be aware of.
There are three acts that promote economic diversification. Most notable is the Hotels Encouragement Act, which is for hotels of ten rooms or more and was designed to encourage construction by providing exemption from customs duties and relief from certain taxations. Also, the Industries Encouragement Act, which is for approved manufacturers, that provides customs duties exemption, business license fees and real property tax relief for a period of 15 years, to encourage manufacturing. Finally, the Agricultural Manufacturers Act, which is very important as well because this encourages the development of agricultural products by providing customs duties exemptions on machinery, tools, fixtures and supplies.
So now, once an investor is prepared to invest in our country, a proposal must be created and submitted to the BIA. It must include the description of the proposal, principals of the project, the proposed location, capital investment amount, employment projections and financial arrangements to ensure that funds are available for the project. There are a few more items that will be required based on the type of proposed investment, such as an environmental impact assessment (EIA) if the project has a direct link to the environment. Once the proposal has been submitted to the BIA, the project is then vetted and a very detailed synopsis is done by an investment officer, which is then forwarded to the NEC. During this vetting process, vigorous due diligence should be done to ensure that the investor or investors are credible and of good character.
Now, here’s where things get interesting. The NEC is comprised of all the members of the Cabinet and the director of investments for the Commonwealth of The Bahamas. The NEC then reviews the proposal and provides its feedback on each project with possible concerns. Every point is then taken into consideration and if there are pressing concerns from members of the NEC, they must be addressed and then a vote is done to determine if the project will get the go ahead or be denied.
There are certain investment opportunities that are targeted for foreign investors. Resorts, upscale condominiums, light manufacturing, aircraft services, pharmaceutical manufacturing, agro-industries and offshore medical centers are just a few examples. These opportunities do not exclude Bahamians from investing in any of these types of projects, but there are a number of opportunities that are reserved for Bahamians, such as watersport activities, real estate and domestic property management agencies, construction companies (except for special structures for which international expertise is needed), public transportation inclusive of locally solicited charter boat tours and security services.
Most proposals are put together by law firms. But, quite frankly, they can be prepared by most financial professionals with some sort of investment background. The foreign direct investment market in The Bahamas is very vibrant and ripe for opportunities. The reality is that we rely heavily on foreign direct investment and it is needed to sustain our growth as a nation. I leave you with this simple quote: “Investment opportunities don’t favor the weak but reward the strong.”
• Quinton C. Lightbourne is a certified financial planner with the Chartered Institute of Bankers in Scotland and vice president of the Bahamas Investments & Securities Business Association (BISBA). E-mail: quinton_lightbourne@ hotmail.com.