The Tribune

By NEIL HARTNELL Tribune Business Editor THE BAHAMAS' development is being "seriously impacted" because its citizens are unable to invest in key productive areas, such as energy and transportation, due to almost 74 per cent of credit going on 'personal' consumption items. Fred Perpall, a principal in the Atlanta-based Beck Group, a commercial architecture, construction and development firm, told yesterday's Bahamas Business Outlook conference that Bahamians needed to make serious adjustments to their savings and spending habits to pave the way for this country's sustainable economic future. And he also urged that rather than look to bring in specialist foreign consultants and skilled workers, the Bahamas should first go to its citizens living and working abroad when the need for such labour came up. Explaining that it was more important for the Bahamian diaspora to be "engaged" with what was happening in their homeland, rather than being present physically, Mr Perpall said: "We need to turn brain drain into brain gain." Suggesting that the Bahamas should recall some practices of the past, Mr Perpall said it needed to "get back to more dense, smaller homes". It had to get away from following the US in the rush to build larger and larger homes, with the average home size in the Bahamas' northern neighbour rising steadily, having gone from 2,200 to 2,500 square feet. Noting that this nation had followed a similar trend, Mr Perpall said: "This has serious implications for our ability to afford homes. If we're spending money on larger homes, what aren't we spending money on? We need to be building smarter homes in the Bahamas." The message from Mr Perpall, an Atlanta-based Bahamian, is that this nation's citizens are spending too high a proportion of their incomes on housing and consumer goods, particularly luxury cars. As a result, this nation's ability - both individually and collectively - to invest in productive industries that would aid sustainable development has been squeezed, if not compromised. Noting that communities, not houses, "made homes", Mr Perpall noted the discrepancy between the western world, including the US, Bahamas and Caribbean, and the east (eastern Europe and Asia), when it came to spending priorities. In western economies such as the Bahamas, on average citizens devoted 51 per cent of their incomes to housing and transportation. In the eastern economies, this percentage dropped to just 16 per cent. "If we're going to be a country that takes development seriously, if we're only about square footage and home space, how can you be active and effectively investing in other areas of the country," Mr Perpall asked. "And if you're leveraged to the hilt individually, and leveraged to the hilt collectively. We need to revisit how we're spending money and what we're spending it on. We've dedicated so much of our resources to our homes that it has a tremendous impact on us financially, but also our development as a country." Urging Bahamians to get away from the notion that real estate valuations would always go up, and that it was a "speculative investment", Mr Perpall then took aim at Bahamian saving habits, noting that 80 per cent of bank accounts in this nation held less than $10,000. "It's evident that we're spending far too much on consumer items, such as cars and homes," he added. This is backed by evidence from the Central Bank of the Bahamas' quarterly economic review for the three months to end-September 2011, which shows that 73.6 per cent of all commercial bank credit - some $5.102 billion - has gone on personal items, such as homes and homes. Just 1 per cent of the $7.175 billion in outstanding bank credit, some $166.9 million, had gone to the tourism sector, Mr Perpall noted. "If we're spending all that money on personal consumable items, how much room is there for investment elsewhere?" he asked. "If we don't change...... it will be very difficult to make the investments we want." Mr Perpall said the transportation business was driven by passenger volumes, not distance covered, referring to a Bimini-based company he held discussions with earlier this week. That company, believed to be the Bimini Bay Resort, was said to have invested $250 million and is looking at another $300 million project, but transportation concerns remain an issue. Reducing energy consumption, and the associated imported fuel bill, by 25 per cent would create "real business opportunities", Mr Perpall said, offering huge potential profits. He urged that Bahamians own the energy and transportation sectors of the economy. Suggesting that the Bahamas move to reduce population pressures in New Providence, Mr Perpall said business opportunities lay in providing a ferry service between Andros and the Bahamian capital. To incentivise development of the island that is this nation's largest land mass, he added that the first 5,000 persons willing to move be given free land. "All across the Caribbean, people are thinking about sustainable growth and the sensible distribution of our population," Mr Perpall said. Noting that he was one of the Bahamian diaspora, he added: "We have to get away from the position that presence and engagement are the same thing. They are not necessarily the same thing....... "We need to encourage our people abroad to be engaged in our country, as the first means of engaging specialist labour. We need to turn brain drain into brain gain. You can be non-present, but very engaged." Turning to Bahamians as outside specialists would enable more money to stay in this nation, and would maximise the use of local labour. Mr Perpall said that in the 1990s, the model on consultancy contracts showed that 71 per cent of the fees went to foreign professionals. Yet the contract obtained by the Beck Group for the Princess Margaret Critical Care Block would see 70 per cent of the fees "stay with the local consultant".