The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister is hoping the Government’s trade and industry promotion policy will result in a “flood” of manufacturers coming to the Bahamas, adding that it was “imperative” to retain domestic production industries.

Ryan Pinder, minister of financial services, said the removal of the five-year ‘term limit’ on Industries Encouragement Act tax incentives appeared to have sparked an increase in applications for ‘approved manufacturer’ status as producers reacted to the Government’s policy signals.

Mr Pinder, though, acknowledged that the return to previous long-standing policy was only a first step in the Government’s bid to revitalise Bahamian manufacturing, given the negative impact of high energy costs on the sector.

Disclosing that the Bahamas was seeking European Union (EU) and CARICOM support for a technical analysis that would propose solutions for the manufacturing sector’s higher energy costs, Mr Pinder said the productive industries were essential to Bahamian economic ownership and diversification.

And he also described as “misguided” comments by executives of the Nassau Institute economic think-tank that the decision to remove the five-year incentives limit had created never-ending ‘welfare support’ for Bahamian manufacturers, with the Government picking ‘winners and losers’.

And, on the international front, Mr Pinder said the Government was taking a “comprehensive approach” to attracting international manufacturers, building human capital as well as implementing the necessary legislation, policies and bodies to give effect to the likes of the Economic Partnership Agreement (EPA).

While Brazilian and Latin American firms were still interested in using the Bahamas as a base to access EPA incentives, this nation still needed to put in place supporting foundations such as a ‘Rules of Origin’ regime.

Speaking to the reintroduction of duty exemptions under the Industries Encouragement Act, Mr Pinder said: “The new policy of promotion of manufacturing and industry by this government has created excitement among companies looking to gain concessions for manufacturing.

“It has also made the general public aware of these type of incentives for their business. We have a number of [approved manufacturer] applications at different levels, at different stages, that are in development. We look at each and every one on their merits, process them accordingly, and are very excited about the renewed enthusiasm for industry, an increase in applications and increase in contacts.”

The Financial Services minister said this held out the promise of an economic stimulus and more diversification, but agreed that “the next important step” was to deal with the energy cost challenges plaguing the manufacturing sector.

Mr Pinder said the industry’s message was that while they were grateful for the tax/duty incentives, energy costs remained a major impediment to growth and earnings. As generally heavy electricty consumers, Bahamian manufacturers are among BEC’s biggest customers.

“One of the areas we have identified to the CARICOM Secretariat and EU for development assistance is a strategic analysis with respect to domestic industy and the cost of energy,” Mr Pinder told Tribune Business.

“As soon as it is possible to get the technical and expert assistance, they will be coming to the Bahamas to gain an understanding of the type of industry here and what to do, and provide options to the Government for creative solutions. I think that’s the important next step.”

Asked why the Bahamas needed to maintain a domestic manufacturing capacity, Mr Pinder said: “It’s absolutely imperative. It’s a form of entrepreneurship that’s economically empowering, and if you look at companies like Graycliff Chocolatier, that is a manufacturing operation that is taking a creative approach to it.

“You look at the creative industries, artisans manufacturing items for tourists. We have to approach it from a competitive mindset. It’s not just something put together. It’s pretty broad. Manufacturing encourages Bahamian empowerment and ownership. Manufacturing and industry is a key industry that can be a labour intensive industry, which is very relevant to our current situation with unemployment.”

Mr Pinder added that successive governments had deemed sectors such as manufacturing worthy of various legislative and policy incentives, determining it was “in the best interests of economic diversification”.

Responding to the arguments of Nassau Institute executives such as Rick Lowe, who argued that it was unfair to pick manufacturing over other industries for never-ending duty exemptions, Mr Pinder noted that Mr Lowe’s company and others in the auto industry also received tax concessions to assist them with the sell of hybrid vehicles.

“I don’t understand the argument. It’s a little misguided,” he told Tribune Business.

Assessing the Government’s international manufacturing policy, Mr Pinder said this was inextricably linked to its trade agenda. “We look to revisit Latin America, and particularly Panama and Brazil, in the New Year to further expand the seeds we planted there before,” Mr Pinder said.

“There continues to be interest in using the Bahamas for EPA, but we need to have full implementation of that through legislation. We have to understand the Rules of Origin regime requirements to advise manufacturers of the level of ‘value added’ required in the Bahamas to make it a Bahamian product. Customs has to understand that.”

Pointing to last week’s intellectual property rights seminar with the World Intellectual Property Organisation (WIPO), the Minister told Tribune Business: “We have to modernise the human capital, as well as the legislative and trade framework, to realise the vision we have on trade and industry.

“It’s a comprehensive approach we’re taking, and hopefully we’ll see applications from manufacturers flooding to our country.”

Mr Pinder described Freeport as the “natural destination for large scale trade and industry” in the Bahamas, given its free trade zone and presence of the Freeport Container Port.

He added that the Panama Canal expansion, and evolution of Panamex shipping, could entice manufacturers to establish assembly and ‘value added’ hubs in Freeport, before redistributing products made in Asia throughout the Western Hemisphere.