While acknowledging positive aspects of The Bahamas’ investment climate, the United States Department of State’s Bureau of Economic and Business Affairs has again highlighted the severe challenges that hold the country back.
The US state department releases its Investment Climate Statement every year on numerous jurisdictions, including The Bahamas.
The department said the absence of transparent investment procedures and legislation remains a problem and highlighted the incomplete rollout of public procurement rules.
“US and Bahamian companies report business dispute resolution often takes years and debt collection can be difficult, even with a court judgment. Companies describe the approval process for FDI [foreign direct investment] and work permits as cumbersome and time-consuming,” the statement said.
“The government passed a Public Procurement Act and launched an e-procurement and suppliers registry system in 2021. While the registry system is in place, the Public Procurement Act has yet to be fully implemented. Companies complain that the tender process for public contracts is inconsistent, and allege it is difficult to obtain information on the status of bids.”
This is not the first time the US has highlighted a lack of transparency surrounding public procurement. In fact, it has successively called out the Bahamas government’s failures in this area for many years.
Recently passed legislation was supposed to bring about reforms in the awarding of contracts. But, a year and a half after the Public Procurement Bill was passed and a full year since it was enacted, the government has yet to provide transparency and accountability in the awarding of public contracts, which is called for under the law.
The opposition has continued to call for transparency, with Free National Movement (FNM) Leader Michael Pintard recently disclosing that the Public Accounts Committee (PAC) – the opposition-led subcommittee of Parliament which examines value for government expenditure – has requested of all government ministries and agencies information on the contracts that have been issued since September 2021.
Elsewhere in the report, the US pointed to the new Davis administration’s willingness to engage investors from non-traditional markets such as the Middle East. The US highlighted the government’s “friendly environment”, but cautioned against longstanding issues.
“Positive aspects of The Bahamas’ investment climate include political stability, a parliamentary democracy, an English-speaking labor force, a profitable financial services infrastructure, established rule of law, general respect for contracts, an independent judiciary, and strong consumer purchasing power,” the statement, released last week, said.
“Negative aspects include a lack of transparency in government procurement, labor shortages in certain sectors, high labor costs, a bureaucratic and inefficient investment approvals process, a lengthy legal disputes resolution process, internet connectivity issues on smaller islands, and energy costs four times higher than in the United States. The high cost of electricity is driven by antiquated generation systems and inefficient diesel power plants.
“The current government has prioritized infrastructure projects focused on non-oil energy, including a liquefied natural gas (LNG) plant and an onshore LNG regasification terminal. The government is also promoting solar energy, particularly on the smaller islands.”