The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s “redirection” of Freeport’s economic model has resulted in the city becoming indistinguishable from the rest of the Bahamas, eliminating its natural advantages and global focus.

The Grand Bahama Chamber of Commerce, in its ‘Vision 2015’ paper, said the Government’s ‘redirection’ of the Grand Bahama Port Authority’s (GBPA) regulatory and administrative powers since the late 1960s had “negated” Freeport’s ‘free trade zone’ capability.

While conceding that Freeport, and Grand Bahama’s, social development had failed to keep pace with economic development, the Chamber said Sir Lynden’s 1969 ‘Bend or be Broken’ speech marked the decline in GBPA-Government relations that many believe still exists today.

“The decline of Grand Bahama’s economy in the post-independence era can be attributed to a combination of natural and macroeconomic events, as well as the perception of conflict of interest by the GBPA and its affiliates, the Port Group of Companies, and a lack of political support by the central government,” the Chamber’s ‘The Future of Freeport - 2015 and Beyond’ paper said.

“Beginning in the late 1960s and early 1970s, the central government has methodically redirected the administrative and regulatory powers reposed in the GBPA under the terms of the Hawksbill Creek Agreement, thus negating its attractiveness as a free trade zone.”

The Government took back Immigration and Business Licence control from the GBPA, with Sir Lynden then electing to use the Bahamas Oil Refining Company’s (BORCO) opening to issue his 1969 ultimatum to the Port and its then-licensees.

“Notwithstanding its ‘moral correctness’, the Premier’s ultimatum was viewed by many as an abrogation of the Hawksbill Creek Agreement and marked the beginning of the less-than-cordial relationship between the central government and the GBPA that is believed to still exist today,” the Chamber paper said.

“These, along with erosions of the tax benefits over time, have significantly changed the nature of the development from an outward looking international trade zone to a domestically-driven economy with some foreign direct investment, similar in nature to the rest of the country.”

Turning to the future, the Grand Bahama Chamber said Freeport - and the entire island’s - economic decline over the past 10 years had to be reversed. The uncertainty over whether Freeport’s real property tax and Business Licence exemptions, which are due to expire in August 2015, will be renewed has done nothing to assist recovery.

“Fighting to survive in an already depressed economy, members of the Grand Bahama Chamber of Commerce and other business owners throughout the length and breadth of Grand Bahama are rightfully concerned about the prospect of having to pay Business License fees and property taxes to both the GBPA as well as the central government,” the Chamber paper said.

“Our membership and others are equally concerned about Grand Bahama’s prolonged state of ‘economic inertia’, which claimed as its victims the Crowne Plaza Hotel & Casino Resort, Xanadu Beach Hotel, the International Bazaar, Freeport’s Towne Centre, Eight- Mile Rock Shopping Centre, and the businesses and hard-earned nest eggs of countless valiant small merchants with the temerity to believe that things will one day get better. This state of affairs must change.”

To create this change, the Chamber paper urges the Bahamas Development Bank to “fanatically support” local investors seeking to create tourist attractions and activities based on Bahamian culture and the environment.

“Tourists visit attractions/activities and stay in hotels. Without attractions there are no visitors,” the Chamber warned.

“Venture capital is required for the cultural and ecological assets of Grand Bahama to be packaged and offered as attractions/activities to our visitors.

“The Bahamas Development Bank must take a strategic rather than commercial approach to funding domestic investors in this area. Failure to do so perpetuates the unsuccessful marketing programme and the lack of Bahamian ownership in this essential economic driver.”

Other factors cited as impacting Grand Bahama’s development were the absence of medical facilities and staff, which “undercuts the value added by the other concessions in the Hawksbill Creek Agreement”.

Banking was stifled by “bureaucratic requirements and high costs” which, together with the inefficient and congested legal system,. acted as a deterrent to both foreign and Bahamian investment.

The Chamber paper also called for a strategic development plan for small business, and a renewed focus on education and increasing standards, as it warned: “Unemployment is resulting from poorly educated youth and adults, and economic development is tied to funding of education.”

The paper urged that Grand Bahama’s tourism product be redefined to focus on “upscale, high density resorts” in niches such as medical and sports tourism, plus conventions and the second home market.

“The opportunity to establish a domestic and international arbitration centre in Freeport would ease the court burden of domestic legal disputes, while providing an opportunity to expand our international trade in services,” the Chamber added.