Does The Bahamas need foreign investment or local investment to manufacture and produce for local consumption and export?
Do we understand the negative effect on our economy if foreign investors are persuaded to lend to us, like the Chinese, or participate and lend with equity participation in new or existing businesses in The Bahamas?
For every foreign dollar lent, the fact is that it must be repaid with interest, reducing the profits and earnings staying in this country.
Why is our government complaining that 95 percent of business costs is salaries, leaving no net profits to be used to repay finance costs? It is because the costs of imports eat up all the business costs before the salaries are deducted.
I write to express my deep concern that this country is setting itself up to enter the deepest depression it has ever seen, leaving the majority of the population unable to afford electricity and food.
As a long-term resident with the right to own my own business, my attempts to finance a new business or obtain a bank loan secured on my own house have met nothing but negative responses.
My existing business as a financial and corporate services provider has seen at least 80 percent of its clients cease their use of The Bahamas as a location for their international business companies (IBCs). In many cases, they choose to form a Delaware-based company over the Internet, at a cost of under $200 each, where no details of the owners are required. Such companies can open bank accounts in the USA and elsewhere with minimal deposits and documentary requirements. This business used to be the lifeblood of the financial industry in The Bahamas. No foreign owner will allow his IBC to have a local director who must produce accounts. He will move his assets in the company to Delaware, as thousands have already done so.
What is our government thinking? What benefits do we receive for agreeing to cooperate with the World Trade Organization’s (WTO) and the European Union’s (EU) financial codes on know-your-customer (KYC) procedures? We are a sovereign nation fighting to protect our borders and our valuable airspace, yet shooting ourselves in the foot.
Will unregulated crypto currencies take more and more money out of The Bahamas, to be lost in scandals and fraud involving crypto wallets said to hold the crypto currency in an Internet account. See what happens when one man controls a wallet, and like the young Englishman reported dead in India, leaves no trace of the millions on his crypto currency, as reported by the BBC.
Consider these issues:
1. We repeal the IBC Act and replace it with a new Companies Act to apply to all new companies. It is too late to apply it to existing companies, most of which have left this jurisdiction or closed their Bahamas bank accounts.
2. To bring accountants, lawyers and all financial institutions into a full reporting regime will be inflationary and result in increased fees, turning more and more investors away from this jurisdiction and resulting in more job losses for well-paid professionals, which in turn causes less available salaries to buy local goods and go to local restaurants. It is a recipe for economic collapse or devaluation of the currency. Each law firm will need to employ so-called compliance officers? Why? If a foreigner wants to buy a Bahamas property the Investment Board must receive the KYC documents as it is at present. Why change this system?
3. Are mutual fund managers or mutual fund companies with thousands of shareholders caught by the new proposals? Are the Cayman Islands profiting via this loophole, not being required to check every investor?
4. Are the Cayman Islands, British Virgin Islands and Turks and Caicos Islands facing the same rules imposed by the EU and thinking of leaving the protection of being a privileged colony of Great Britain because they are threatened, like The Bahamas, in breaching their citizens’ own constitutional rights?
Doing business in The Bahamas
A foreign investor, when asked if he would invest in a Bahamas business, said no, because of the corruption and time it takes to get an approval.
Most businesses in The Bahamas pay six taxes:
i) Customs duties
ii) Value-added tax
iii) Business license tax
iv) Property tax
v) Stamp tax
vi) National Insurance contributions.
And still to come is the national health tax.
In all, these can add up to almost 30 percent of gross revenue before salaries.
VAT is being abused; talk to shop-keepers, the honest ones and the greedy ones.
Some just add 12 percent to every invoice from the import price, to the wholesale price to the sales price, not passing on the credit which they receive when calculating their VAT tax returns.
So to set up a new business to manufacture things like a bike stand made out of recycled plastic bumpers, or a new product to clean the residue left in yacht and RV septic tanks manufactured entirely out of Bahamian ingredients like salt and aragonite, which is more than 60 percent-owned by citizens and permanent residents of The Bahamas with the right to own their own business, has proved an almost impossible task. No one believes The Bahamas can manufacture and export anything. We may have to start production in Canada.
What a pity! This item, if made in The Bahamas would involve all sales being paid in foreign currency and banked here, with net profits staying in The Bahamas and being spent here, for the benefit of the local economy.
If foreigners were enticed to invest in this business here, all profits would go to them and little advantage would go to The Bahamas’ economy, except for the jobs and the bank accounts.
All these questions need answering before The Bahamas decides to give up its own sovereignty.
The only gainers in this saga will be the lawyers, employed to challenge all the breaches of our constitutional rights to privacy, amongst other things.
– Anthony Howorth