The Tribune

By DENISE MAYCOCK

Tribune Freeport Reporter

dmaycock@tribunemedia.net

WITH Freeport’s key investment incentives set to expire in August, top cruise executive Giora Israel believes that such benefits in the Hawksbill Creek Agreement (HCA) will generate more business and investment activity and keep Grand Bahama competitive.

Mr Israel is senior vice-president of port and destination development for Carnival Corporation, which is a joint venture partner in the Grand Bahama Shipyard. He is also a serving board member for the shipyard.

“We are for keeping it (the HCA) and keeping GB very competitive,” he said when asked to comment on the expiring HCA exemptions.

Significant multi-million dollar investments such as the Freeport Container Port and the Grand Bahama Shipyard, he said, are in Grand Bahama because of the benefits in the HCA.    

Exemptions on business licence fees and real property tax in the HCA will expire on August 4. The Christie administration has retained US consultants McKinsey & Co to advise them and provide recommendations on the way forward, and has appointed a committee to assist them in their negotiations.  

“Every government has a system of taxation and fees, and obviously Grand Bahama, through the HCA, has a very unique set of circumstances,” Mr Israel said. “Many countries have special economical zones where certain tax breaks are designed in order to allow economical development.”

He noted that while Freeport’s proximity to the US was important to build a shipyard, the incentives in the HCA were the deciding factor.     

“The benefits of the HCA were a key reason to build Grand Bahama Shipyard, with all its economic engines to Grand Bahama there.  So business needs to be encouraged because businesses create employment, economic activity and that is the top priority for any government,” Mr Israel said.

Grand Bahama Shipyard employs 800, has contributed $240m to the local economy from 2000-2013 and spends $1m annually to run a four-year apprenticeship programme to train Bahamians.

The cruise executive said a lot of governments are building duty free zones and special taxation areas. “Most countries have things like that. So, the HCA, although it goes back pre-independence, it is not unusual to have a structure like this in the Bahamas. Why don’t we have one in Andros island? And there should be more of it,” he stated.

“Over the years, the country giving those economic benefits will spawn more and more activity. We are for keeping it and keeping GB very competitive. The HCA … maybe did not deliver everything that was expected of it, but at the end of the day we have one of the biggest port operators in the world with the container terminal,” Mr Israel said.

He noted that their competitor, Mediterranean Shipping Company, one of the largest cargo companies in the world (which also operates a cruise line), owns 50 per cent of the transhipment facility.

The port is the deepest container terminal in the region, serving as a major transshipment hub for the eastern seaboard of the US, and the principal east/west line-haul routes through the region. It is capable of handling the largest container vessels in the world. It is undergoing the $250m Phase V expansion.

“GB Shipyard is the number one cruise ship repair facility, with all its infrastructure and dozens of subcontractors,” Mr Israel said. “So the promise is there. There was a setback on tourism; unfortunately, we know the story of the Princess, and Our Lucaya, and all these issues. But, I think the best years of Freeport are ahead, but the people of Grand Bahama and the Bahamas need to grab it and run with it. I am sure the government and private enterprise will do so.”

Kevin Seymour, president of the Grand Bahama Chamber of Commerce, said Freeport and its private sector could ill-afford to wait on the government’s consultants to provide recommendations on the way forward.

He added that the 3,500 Grand Bahama Port Authority (GBPA) licensees, did “not have the luxury of time” in waiting for the Government to make a decision on Freeport’s expiring investment incentives.

Mr Seymour said it would be “disastrous” if the Government chose to levy real property tax on Port licensees post-August 2015, warning it would be “another nail in Freeport’s coffin”.