The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A governance reformer yesterday argued "nothing has changed" to improve The Bahamas' stagnant ease of doing business ranking, as he revealed: "I don't know how much more I can take."

Robert Myers, a principal with the Organisation for Responsible Governance (ORG), cited recent personal experiences with driver's licence renewals, bank account opening and customs registration as to why he was reluctant to invest in more business ventures in The Bahamas.

A proprietor with multiple businesses, Mr Myers said he was now thinking of leaving "capital sitting in the bank" rather than "continuing to invest in this country decade after decade" as he has done due to the "headaches" created by the Bahamian economy's structural bottlenecks.

Speaking after The Bahamas fell by one notch to 119th spot in the World Bank's "ease of doing business rankings", the ORG chief said he was "sure I'm not alone" among entrepreneurs mulling whether it was "worth" the frustration to continue taking risks in a bureaucratic, inefficient economy.

He added that there had been no reforms of significant enough impact to justify an improvement in the World Bank rankings, and added that the ongoing stresses and hassles of operating a company in this nation were likely to be a key factor for some business owners in deciding whether to rebuild after Hurricane Dorian.

"I incorporated a business earlier this year and it must have taken me at least, I'm not kidding, four months to have gotten a bank account open," Mr Myers told Tribune Business. "That's through the business licence process, the lawyers and everything else.

"It took four months to get the accounts open, and I'm still waiting for digital banking. I have an account but can't access it digitally. It takes too damn long. It's obscene how long it takes. It's just arduous.

"If I was not Bahamian and involved, I'd be pulling my hair out, leave and go elsewhere. You just give up. It definitely hurts us. No doubt. It's not just the cost; it's the ease and cost of business. The harder they make it to do business, the more costs go up," he continued.

"You have to hire a lawyer to sit on top of it, and the cost and ease of doing business is inflated, which is not good when you're trying to attract foreign direct investment and local investment."

The Bahamas has effectively stagnated in the World Bank's 'ease of doing business' rankings, staying put in much the same spot for the past four years. This nation improved from 121st spot in 2016 to 119th the following year and 118th in 2018, before falling back again to 119th this year and leaving itself further adrift from its professed ambition to catch Jamaica in 75th position.

Mr Myers said such concerns are likely to "weigh heavily" on whether some Abaco and Grand Bahama-based businesses elect to rebuild in Hurricane Dorian's aftermath. "That frustration will cause a negative effect for businesses that have the decision to start or fold post-Dorian," he warned.

"It does have an effect locally, not just on foreign direct investment. I said to my wife the other day: 'I don't know how much more of this I can handle'. It gets to the point where I could start more businesses but it's such a headache. I don't know if it's worth it.

"You capital is sitting in the bank, it isn't working and people aren't working.... That's a bad situation because money is sitting in the bank and not creating employment. I've been one of those people who has continued to invest in the country decade after decade. It's not good when I start thinking like that and I'm sure I'm not alone."

Mr Myers argued that "not very much has changed at all" when it comes to the ease of conducting commerce in The Bahamas, and said: "The banks are still a disaster, exchange control makes it difficult to move money in and out.

"Customs is doing its best to get into Click 2 Clear, but it's not working well and is a bit of a disaster. Stuff is not showing up in the system, then it works, and then it doesn't work. Everyone has to be registered in the system. I went to be registered and nothing happened. It wouldn't take my information.

"I went to the driver's licence place [at Road Traffic] last week and they're out of licence cards. I don't have a driver's licence, so cannot go to the US and drive a car as they don't have anything to put the damn licence on. They've been out for three weeks. It's ridiculous."

Mr Myers, though, praised the Passport Office for the efficient processing of his expedited application. Yet he pointed out that US and UK citizens are able to apply for, and renew, their passport applications online.

"You can go to Cayman and get your driver's licence, and check your immigration status, online; click, click," he added. "Why incorporate in The Bahamas when you can incorporate in Cayman with significantly less hassle, and why hire people in The Bahamas when you can hire them in Cayman, Bermuda, Panama for significantly less hassle?

"We should be making massive strides in the other direction to see faster GDP growth, and the harder you make it the less likely you are to see GDP growth. We're just less competitive and people just don't take us seriously."

The Bahamas' stagnation in the World Bank rankings, with this nation seemingly making little to no improvement, creates a reputational risk for this nation as potential investors will perceive the jurisdiction as encumbered by red tape and a destination to potentially avoid.

This could be especially damaging given The Bahamas' positioning as an international business and financial centre where efficiency, minimal bureaucracy and speedy processes are key to the economy's competitiveness.

The Government had continually voiced optimism over the past year that The Bahamas would enjoy an improvement in its World Bank ranking due to the series of reforms it was implementing, but last week's assessment has proven something of a setback.

Lynn Holowesko, chair of the Government's ease of doing business committee, earlier this year said its members had kept in close contact with the World Bank to ensure it was being informed of everything The Bahamas was doing.

"A concerted effort was made to meet with the World Bank prior to this year's questionnaires being circulated, and many members of the committee have been in direct contact with the bank's managers of the process," she said.

"The committee has facilitated the World Bank survey process this year by providing a recommended list of potential survey candidates, following up with individuals on their survey responses, and providing clarification on the information sent to the World Bank by the survey candidates.

"We sincerely hope that these efforts, along with those made by the Ministry of Finance, will result in significant improvement in The Bahamas' rating for 2019-2020."

The Bahamas did improve this year in five categories assessed by the World Bank - starting a business; dealing with construction permits; getting electricity; enforcing contracts and protecting minority investor/shareholder rights.

The latter registered the greatest improvement of 44 spots, with The Bahamas moving from 132nd in the world to 88th, due to reforms to the Companies Act and Securities Industries Act that increased "disclosure requirements for conflicts of interest, clarifying ownership and control structures, and requiring greater corporate transparency".

The Bahamas also received credit for improved transparency surrounding electricity prices via their online publication; improving the online VAT filing system and making it more accessible to taxpayers; and reducing the Business Licence renewal timeframe to just two to three days together with related upgrades.

Yet The Bahamas fell down in three key areas - registering property, getting credit and resolving insolvency - falling by 12, eight and two places, respectively, in these categories.

The World Bank dropped this nation to 169th in the world on the "ease of registering property", finding: "The Bahamas made property registration more costly by increasing the stamp duty on property transfers."

But K Peter Turnquest, deputy prime minister, argued that this was a "misunderstanding" by the World Bank as it seemed to have misinterpreted the 10 percent Stamp Duty's replacement of the previous 7.5 percent stamp duty/2.5 percent VAT split on property transfers as a tax increase.