Aimed at incentivizing increased domestic and foreign investment, the Economic Recovery Committee (ERC) made close to two dozen recommendations on ways to transform the investment regime, including the establishment of an entrepreneur visa, limiting approvals needed from the National Economic Council (NEC) for projects under $10 million and creating special economic zones on lesser developed Family Islands.
Regarding foreign direct investments (FDIs), the ERC proposed that only the largest or most complex projects be processed under the NEC and that those projects valued under $20 million should be processed under established standard operating procedures.
Prime Minister Dr. Hubert Minnis confirmed yesterday that applications under $10 million will not be required to be submitted to the NEC.
“Consistent with the recommendations of the ERC, we will expedite the processing of the Bahamian and foreign direct investments currently before the government,” he said when presenting the ERC’s recommendations to Parliament yesterday.
In addition to proposing a restructuring of the NEC to be comprised of public and private sector representatives and stakeholders, the ERC recommended changes to the Bahamas Investment Authority, using it only as a promotional arm of Invest Bahamas – a proposed new independent statutory body that would facilitate the investment process from conception to implementation.
The ERC’s executive summary report proposed that the government also “revise the current concession/incentive regime, reduce concessions in developed industries – i.e. reduce the real property tax extension provision in the Hotels Encouragement Act; and amend the government’s ‘FDI mandate’ to include provisions that promote confidentiality, transparency and efficiency in the investment process. In addition, make corporate social responsibility a requirement for the approval of FDI projects”.
Regarding domestic investment, the ERC recommended legislation be drafted that makes way for crowd sourcing and the creation of junior stock markets in an effort to expand access to capital by Bahamian businesses.
The ERC also suggested government adjust the requirement for classification of a Bahamian-owned business from 60 percent of common ownership to 50 percent of common ownership, to allow Bahamians to have greater opportunities to access international capital.
“Make the less-developed islands of The Bahamas into special economic zones for an initial period of 10 years. Under these provisions, special tax and land access concessions will be provided for investors in those islands, including lower or no real property tax, business license fees or duty on commercial assets and supplies,” the ERC executive summary report states.
“Within the mentioned special economic zones only, adjust the requirement for classification of a Bahamian-owned business from 60 percent of common ownership to one with 30 percent of common ownership to incentivize greater investment capital inflows in these zones. Extend the current duty-free concession regime in place for manufacturing and hospitality to cover all small Bahamian business start-ups for the acquisition of commercial equipment and supplies during the start-up and expansion phases of their business. Make provisions for these start-ups to buy from in-country vendors at duty-free prices.”
Another recommendation the prime minister committed to yesterday was the implementation of a national digital marketplace.
“This e-commerce platform can provide opportunities for small businesses and Bahamian entrepreneurs to buy and sell goods online across The Bahamas and provide opportunities for global sales,” he said.
The ERC also acknowledged challenges within the business community, noting the perception that the business climate does not adequately encourage innovation, investment or efficiency; thereby causing The Bahamas to have lost some of its jurisdictional competitiveness over the years.
Toward this end, the ERC recommended that there be more simplified tax procedures, particularly for value-added tax (VAT) filing forms; more streamlined audit requirements for SMEs; and the granting of allowable duty exemptions on an annual basis instead of every six months.
Additionally, it addressed deficiencies highlighted in the World Bank’s Ease of Doing Business Index by recommending the streamlining of the company incorporation procedures; the reduction in the number of requirements needed to start a business; making all National Insurance Board payments online; the development of a legal framework in support of a moveable asset collateral asset registry; the procurement of an electronic system to more efficiently process construction permits; and the digitization of land title certificates and cadastral plans.