The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Central Bank’s exchange control department was yesterday urged to “wake up and smell the roses in 2018”, a top attorney suggesting it had yet to embrace liberalisation in practice.

Judith Whitehead, Graham, Thompson & Company’s managing partner, gave her wholehearted backing to further exchange control relaxation but suggested that the Central Bank department responsible for issuing such approvals has yet to implement this in decision-making speed.

“Liberalisation of exchange controls; yes, yes, yes and yes again,” she told the Bahamas Business Outlook conference. “They may have embraced the concept of exchange control liberalisation, but they’ve not embraced it in the exchange control department. “Anyone making an application for permanent residency for a foreigner, these applications will bring you to your knees. Exchange control has got to wake up and smell the roses in 2018.”

Mrs Whitehead is not the only private sector executive to complain to Tribune Business in recent weeks about the length of time taken by the Central Bank’s foreign exchange department to issue investment-related approvals.

The concerns have arisen just as the Central Bank and the Government are pushing for further liberalisation, especially on the capital account, with the department acting as a ‘hub’ around which all major currency conversion and investment-related applications revolve.

Mrs Whitehead, meanwhile, called for action rather than more talk on improving public sector efficiency and transitioning to e-government.

While welcoming Prime Minister Dr Hubert Minnis’s announcement that the Government will request assistance in this area from Singapore, the Graham, Thompson & Co attorney and partner said such action was needed immediately.

“We’ve been hearing it for years, time has passed and it’s overdue. And, yes, Singapore is the place to look,” Mrs Whitehead said. “The bottom line is there’s nothing easy about doing business here.

“As a person who works on the ground, meat and potatos, making these applications, I embrace everything said this morning but we need it now.”

Mrs Whitehead said she had examined the Bahamas’ 11 key investment incentive Acts in a bid to answer the frequent Bahamian complaint that foreign investors received more tax breaks, and if these were made available to them, too, business success was more likely.

She said her research had led her to question whether the City of Nassau Revitalisation Act, with its emphasis on real property tax and building material tax exemptions for owners seeking to upgrade their property, was having the desired effect.

“It certainly doesn’t appear to have had the desired effect of fostering growth in the Bahamian retail sector,” Mrs Whitehead said, referring to Bay Street and downtown Nassau’s current state.

“The bottom line is that the City of Nassau Revitalisation Act is a valuable Act. It provides valuable concessions to bricks and mortar, but is that enough? Is that the right vitamin for what is ailing the city of Nassau?”

Mrs Whitehead hinted that the Hotels Encouragement Act might be a ‘better fit’, given that the last Ingraham administration first extended its reach to restaurants and retail in ‘designated areas’, and then to nightclubs, entertainment businesses and restaurants generally.

She added that the Real Property Tax Act was the only investment incentive legislation where Bahamians received a “leg up” over foreigners, especially on the concessions for old-aged residential owners and persons owning duplexes/triplexes, but also warned homeowners that the Government is now cracking down on tax cheats.

“A lot of Bahamians take the position they don’t have to pay until they sell, and pay it from the proceeds,” Mrs Whitehead said. “The Government and Treasury have woken up to the fact this is a treasure trove of money they’re not collecting, and are hiring law firms to go after people who haven’t paid their real property tax. People tend to get the bill and pay or don’t pay. You need to pay attention to that.”

Mrs Whitehead said her review showed that Bahamians and non-Bahamians were treated equally by the Government’s incentive legislation, and added: “The answer is that legislation is not the answer.”

But she urged the Government to be more responsive and transparent in relation to its various investment incentive laws, arguing that these needed to be both updated and made available in language that was easily understood.

“People don’t know what’s out there, they don’t know what’s in the legislation,” she said. “You have to pitch and patch. There’s a wonderful exemption for east Grand Bahama in the Tariff Act, but it took me two-and-a-half hours to find the box. Who can find this stuff?

“The Government has an obligation to educate and be very clear, and put the [investment incentive] Acts in one place in every day layman’s language so people know what they have.”

Mrs Whitehead also urged the Government to respond much more quickly in making critical amendments to its investment incentive legislation, and address concerns and obstacles the private sector has been complaining about for years.

She pointed to the Hotels Encouragement Act’s stipulation that Family Island-based hotels can only qualify for tax breaks on their refurbishment if the “estimated cost” of the construction materials is 50 per cent or more of their property’s market value.

The upgrade must also take no longer than three years, and Mrs Whitehead said it was one example where the private sector had been pushing for reform for many years without any reaction by the Government.

“The Government has an obligation to respond faster than it does. There are things in these Acts that need to be updated,” she said. “The Government must be more responsive.”

The Graham, Thompson & Co managing partner also called for the Government to allow for proper consultation on new legislation, saying that complex Bills were sometimes issued on a Monday with feedback expected by that Friday.