Just as investor confidence is key to attracting and maintaining foreign direct investment (FDI), boosting that confidence within the Bahamian private business sector is critical because local business owners are this country’s most important investors and our primary creators and drivers of economic activity.
In the country’s two largest economic centers outside of New Providence – Grand Bahama and Abaco, respectively – the rules of engagement for business in these special economic zones must be clearly and expeditiously defined so that business owners can plan accordingly and have the confidence to rebuild and re-invest.
The government’s 2019 Fiscal Strategy Report puts the impact of Dorian on both islands at one percent of GDP, with the productive sector, which includes tourism, commerce, fisheries and agriculture sustaining approximately $620.7 million in damage and the social sector including housing sustaining approximately $1.6 billion in damage.
In order for the nation’s economy and fiscal position to stabilize as projected in the medium term, Grand Bahama and Abaco must get on as fast a track to commercial recovery as is possible, but productive commercial activity must be undergirded and supported by leadership and efficiency at the central and quasi-government levels.
It is, therefore, difficult to understand why it took the government over two months to table in Parliament enabling legislation to give effect to its core tax incentives under its economic zone designations announced by Prime Minister Dr. Hubert Minnis back in September.
The prime minister’s initial announcement came with much fanfare and was re-ignited in early November when he announced that Abaco would be made value-added tax-(VAT)free “immediately” due to the level of devastation suffered on that island.
But his announcement was not accompanied by the framework that would instruct and guide businesses on the rules and procedures of the concession.
Minnis also announced that the same concessions would come into effect for Grand Bahama on December 1, but without requisite tariff details and regulations tabled in Parliament yesterday, three days after the announced start date, businesses on both islands had no guidelines on how to proceed.
The government’s failure to cause its own announcements to be realized resulted in it issuing a fifth exigency order for both islands so that concessions under a previous order could continue until such time as the government played catch up to its stated intentions.
Governance by press conference might make for impressive headlines and momentary political gains, but businesses cannot function by press releases and the country’s economy cannot rebound via momentous town meeting declarations.
Back in October, this newspaper revealed the findings of a Grand Bahama Chamber of Commerce impact survey wherein approximately 13 percent of storm-damaged businesses surveyed did not plan to reopen or were uncertain of the same.
Hundreds on both islands were left unemployed and scores of residents evacuated, creating a critical mass deficit that for Freeport businesses compounds protracted sluggishness in the retail sector pre-Dorian.
Grand Bahama Chamber of Commerce president Gregory Laroda stressed in Freeport last week that the island’s businesses “need leadership and a clear plan for business recovery”.
He lamented that the government, the Grand Bahama Port Authority (GBPA) and the Chamber had yet to sit together to craft a strategic plan that all stakeholders could buy into.
Calling on the GBPA to provide “critical and regular” updates to Freeport’s business owners, Laroda highlighted the temporary and future status of Grand Bahama International Airport and the timeline for the re-establishment of potable city water to the island as two of the major concerns.
The government’s fiscal report estimated that transportation infrastructure damage to the tune of $51.0 million, inclusive of international airports on both Abaco and Grand Bahama, “signal a slow recovery in the productive sector on these islands”.
The recovery may be even slower still if the pressing needs of our most important investors on both islands are not speedily and adequately addressed.
It’s a potential The Bahamas can ill afford.