The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government has approved $627 million worth of foreign direct investment (FDI) so far this year, a Cabinet minister said yesterday, adding that this nation receives $3 in return for every dollar offered in investment incentives and subsidies.

During his contribution to the 2014-15 Budget debate, Khaalis Rolle, minister of state for investments, said: “Approvals for investments in economic areas designated for foreign investor participation sharply increased in 2013 by almost six times the amount recorded for the year 2012, from $130.5 million to $756.4 million.

“The current trend indicates that at a minimum, total investments in 2014 will double the 2013 amount. The year-to-date preliminary figure recorded for 2014 stands at $627.4 million. This figure is $129 million short of the 2013 total investments.”

Defending the need for investor incentives and subsidies Mr Rolle pointed out that major industrialised countries “go out of their way” to offer investor incentives. recognising these were necessary to stay competitive.

M Rolle also hit at suggestions that Bahamians were not allowed to benefit from the same level of concessions offered to foreign investors, and that the level of concessions offered did not match the investments.

“The Bahamas is one of many destinations for investments,” he added. “FDI is needed for us to survive as a nation. Foreigners are not the only ones who benefit from these concessions. Bahamians have the same right, the same access and go through the same process to gain these incentives.

“There is a perception that major developers do not make a significant contribution to the economy based on the level of concessions received,” he added

Mr Rolle said that based on the estimated total value of approved concessions as at May 2013, for every dollars in provided by the Government, hotels are expected to generate $0.52 cents in taxes and fees, direct payments to the government and its corporations; and $0.83 cents in salaries, wages and employee benefits for more than 10,000 employees, some 98 per cent of whom are Bahamian.

“It is also estimated that direct spending in the economy with Bahamian service providers and business will be $0.69 cents. Overall these annual payments represent 7 per cent of GDP, before the full opening of Baha Mar,” said Mr Rolle.

“This is what investing is all about. The country front loads a promissory note to an investor for a $1. In return we get back $2.04 cents at a later date. Essentially, when you factor in that that promissory note isn’t real money that we are putting up front, we get back more than $3 for every dollar we give away. For every dollar we give away in incentives we get $3 in return.”

Mr Rolle said approvals for duty free concessions under the Hotels Encouragement Act for the period May 2012 to May 2013 totalled more than $138 million, and between June 2013 to May 2014 these increased to $683 million.

Mr Rolle said that under the City of Nassau Revitilisation Act, which has been extended for one year, concessions granted between July 2013 and May 2014 totalled over $2 million, down from the nearly $10 million the preceding year.

“I believe the decline in applications is due to an increase in the number of applicants under the Hotels Encouragement (Amendment) Act,” said Mr Rolle.

He added that the Act was amended in 2008 and 2009 to include entertainment facilities, nightclubs, restaurants and shops in designated areas to assist in the development of businesses to support the tourism product and grow the economy.

Concessions granted to businesses under this amendment total $926,370.48 for May 2012 to June 2013, and for the following year, July 2013 to May 2014, the total grew to just over $6 million in duty-free concessions.