The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has yet to confirm “in writing” that it will remove the 1 per cent Customs administrative processing fee in Freeport, it was disclosed yesterday.

Sir Jack Hayward, the Grand Bahama Port Authority’s co-chair, told a Grand Bahama of Chamber of Commerce luncheon that while Prime Minister Perry Christie and his government had given multiple “positive signs” such a roll back will happen, not confirmation has been received.

This is likely to dash the Freeport business community’s hope, at least for the moment, that the fee introduced in the 2013-2014 Budget, and which has negatively impacted both the ease and cost of doing business, will be removed.

Sir Jack’s address effectively amounted to a call for the Government to get a move on in tackling Freeport’s needs, particularly the 2015 expiration (and hoped for renewal) of the city’s Business Licence and real property tax exemptions.

He added that London-based lawyers had, around the time the Prime Minister visited London to meet with GBPA and Hutchison Whampoa executives, rendered a legal opinion arguing that the Government’s 2013-2014 Budget impositions were illegal under the Hawksbill Creek Agreement and could not be enforced.

Tribune Business revealed earlier this month that the Government had agreed orally to “roll back” the 1 per cent Customs administrative processing fee in Freeport to help facilitate the long-proposed $250 million expansion at the Freeport Container Port.

Multiple business and political sources said the Government had agreed to lift the fee, part of the tax increase package unveiled in the 2013-2014 Budget, following the meeting in London between Prime Minister Perry Christie and senior Hutchison Whampoa executives.

The Hong Kong-based conglomerate is the Container Port’s 51 per cent majority owner, but both it and the facility’s main customer, Mediterranean Shipping Company (MSC), had been left reeling by the 1 per cent processing fee’s imposition.

But, while optimistic, those contacts spoken to by Tribune Business remained sceptical that the fee would be removed for Freeport, saying no written confirmation of such a move had been received.

“We were told last Friday they’d agreed to roll it back,” one source told Tribune Business, speaking on condition of anonymity.

The Freeport Container Port had been the subject of recent discussions between the Government and Hutchison Whampoa, the expansion having been on the ‘drawing board’ for many years.

“Because of the tariff issues, Hutchison had said: ‘To hell with it’, as did MSC,” the source added.

The $250 million Phase V expansion is intended to give the Freeport Container Port a total quay length of 1,536 metres, plus a yard area of 63 hectares.

It will have dock depth of 15.5 metres, nine post-Panamax cranes and one super-post-Panamax quay crane, and be one of the few ports off the US eastern seaboard capable of accommodating the huge post-Panamax ships set to start emerging from the Panama Canal in 2013.

K P Turnquest, the FNM MP for east Grand Bahama, also confirmed to Tribune Business recently that he had heard a compromise over the 1 percent Customs processing fee had been reached for Freeport.

“I understand they agreed, but are waiting for it in writing,” he said of the two sides. “They’re waiting for the pieces to fall into place. No doubt we’ll hear about it.”

The 1 per cent Customs processing fee was among the 2013-2014 Budget tax increases that the Grand Bahama Chamber of Commerce, and Grand Bahama Port Authority (GBPA) licensees, had aimed to challenge via a Judicial Review action in the Supreme Court.

It is understood that the Chamber has held off, at present, to give time for the GBPA and others to negotiate with the Government and see if this will bear fruit.

Mr Turnquest, meanwhile, said he understood the Government was in talks with several parties over the 1 per cent Customs administrative processing fees, and supposed to make an announcement pre-Christmas.

“We have to be careful how we impose these fees and levies. There’s no doubt we stand to lose business as a result, and stand to lose more, and it would be very short-sighted for us to look at short-term gain and the expense of long-term vision.”

Mr Turnquest said he understood that the 1 per cent Customs fee had increased MSC’s costs “significantly”, and that it had explored alternatives to reduce them, including determining whether “the environment is conducive to their business model”.