The Tribune

• Top realtor: Ask how we get to ‘first world mentality’

• Nation can’t ‘put head in sand like ostrich’ any more

• Govt focus on US report positives, not deficiencies

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent realtor yesterday urged Bahamian voters to challenge general election candidates on how they plan to drag The Bahamas’ ease of doing business “from a third world mentality to a first world mentality”.

Mario Carey, the Better Homes and Gardens Real Estate MCR Group Bahamas principal, told Tribune Business that the electorate needs to quiz prospective MPs from all the political parties on how they plan to address the transparency, accountability and red tape woes identified in the US government’s Investment Climate Statement report on The Bahamas.

While acknowledging that it was possible to point fingers back at the US, he argued that it was deeply frustrating for the same deficiencies and weaknesses in The Bahamas’ business and investment approvals processes to be flagged up year after year.

Suggesting that The Bahamas faces the choice of “putting its head in the sand like an ostrich” or finally addressing long-standing impediments to private sector growth and job creation, Mr Carey said the technology exists for a “really quick” turnaround on approvals speed and the ease of doing business if the political will and leadership is present.

“From an investment point of view those are common remarks in any conversation,” he told this newspaper of the concerns detailed in the US Investment Climate statement. “I don’t think those conversations have gone away.....

“Why are we stuck with these same problems? Why are we having these same issues year after year? Do we still have our heads in the sand like an ostrich? Who benefits by not correcting them?” Mr Carey said “frustration” was the most common sentiment voiced by the private sector when dealing with its public sector counterparts, yet the need for approvals, permits and such like meant there was little choice but to endure.

“Hopefully in the digital age, and by embracing blockchain technology, we can go from a third world mentality in business efficiency to a first world mentality,” he told Tribune Business. “It can happen really quickly. The questions are: ‘Can we do it?’ If the answer is yes, the question is: ‘Why are we not doing it?’ All of these things can be repaired and fixed. Why are they not doing it? We’re still taking the easy path of least resistance. 

“Their [the US] observations are correct. What do we do next? Do we live with it, and accept it, put our head in the sand? How do we change it, that entire mentality? These are all good things for voters to ask to get answers for. They should look at that list from the US, and ask the politicians what they are going to do to correct these policies. That would be interesting. It should also be in the party’s manifestos.”

Mr Carey spoke out after the US report detailed strengths, but also long-standing deficiencies, in The Bahamas’ investment climate and approvals framework. It said: “Positive aspects of The Bahamas’ investment climate include political stability, a parliamentary democracy, an English-speaking labour force, a profitable financial services infrastructure, established rule of law, general respect for contracts, an independent judicial system, and strong purchasing power with a high per-capita GDP.

“Negative aspects include a lack of transparency in government procurement, labour shortages in certain sectors, high labour costs, a bureaucratic and inefficient investment approvals process, time-consuming resolution of legal disputes, internet connectivity issues and high energy costs.

“The price of electricity averages four times higher than in the US and is driven by antiquated generation systems and a dependence on inefficient fossil-fuelled power plants. To remedy energy sector deficiencies, the current government has prioritised infrastructure projects focused on non-oil energy, including a liquefied natural gas (LNG) plant and various solar projects. However, the LNG plant is stuck in multi-year negotiations.”

The latter is a reference to the ongoing negotiations between state-owned Bahamas Power & Light (BPL) and Shell North America for the latter to take over New Providence’s baseload generation via a new Clifton Pier power plant that will be fuelled primarily by LNG supplied from a nearby terminal that has yet to be constructed.

However, the Ministry of Finance, in a statement yesterday responding to the US report, ignored the criticisms about the “stuck” Shell project and asserted that the Biden administration had acknowledged its work on lowering the cost of electricity - a reference to its fuel hedging that was not seemingly mentioned in the report.

While the Government-appointed Economic Recovery Committee (ERC) made numerous proposals to speed up investment approvals, and reduce associated bureaucracy and red tape, Mr Carey queried why the Prime Minister and Cabinet still needed to sign-off on something as simple as the purchase of a condominium at the Reef, instead of it being handed off to a lower level administrative team.

“Trying to open a bank account here is one of the worst nightmares that ever existed,” he added. “There are solutions if we are open-minded to them, but why are they not thinking of or listening to them? It we want to stick in a third world mentality for generations to come, and the process we want to exist in, that’s unfortunate; very unfortunate.”

While similar charges could be thrown back at the US, and the deficiencies identified are already well known, Mr Carey said The Bahamas’ northern neighbour was at least “open for business”. He added: “I think that list is perfect. It’s spot on. It is frustrating for Bahamians to have to be stuck in the same old, same old. Nothing changes.”

Kwasi Thompson, minister of state for finance, sought to focus on the positives in the US Investment Climate Statement and made little to no mention of the corruption-related concerns or the Government’s continued failure to move legislation such as the Integrity Commission Bill and Ombudsman’s Bill forward.

Instead, his statement kicked-off by billing the Public Procurement Act - which is due to be enacted on September 1 - as “the most progressive procurement legislation in the entire Caribbean region”. He added: “The investor community can be reassured that this Government has not only taken concrete steps to improve the process, but the new Public Procurement Act is now a standard bearer of modern, progressive procurement standards.”

Mr Thompson’s glowing assessment contrasts with that of Daniel Ferguson, the former government official who helped to draft the legislation and design its implementation. In repeated Tribune Business columns, he has warned that the Bill’s intent and impact are in danger of being lost due to poor execution and resistance at both the political and official levels as it will prevent contracts from being awarded to family, friends, constituents and political cronies.

Mr Ferguson was subsequently acted in the House of Assembly by the Prime Minister, who branded him “an angry man” and threatened to reveal details from his personnel files. Dr Minnis’ conduct was this week rebuked by Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, who said it would inhibit efforts to “change the culture so that there is no tolerance” of corruption.

Besides fostering greater accountability and transparency, Mr Aubry said passing the Integrity Commission Bill and Ombudsman’s Bill into law would ensure The Bahamas is no longer “perceived as having corruption ingrained in our system” and “gives us a leg up on reform”.

“This concept of corruption is detrimental,” he added. “It wastes money, breeds inefficiency and ineffectiveness in government, and tarnishes our reputation overall.” Besides changing the culture and mindsets, Mr Aubry said the use of technology was key, and praised the Government for making public services available electronically via the MyGateway platform as well as digitising agencies such as Customs and the Road Traffic Department.

Mr Thompson, in his statement, said: “This Government has taken firm steps to address the deficiencies that impede the ease of doing business in the country. The fiscal reforms taking place to increase transparency, accountability and the ease of doing business are not the only areas of advancement. 

“The report acknowledges the Government’s INVESTBahamas Project that will cut through the burdensome bureaucracy that places an unnecessary drag on investment decisions. The report also acknowledges the Government’s successful digital transformation efforts and its work to reduce the cost of electricity, to streamline business license applications and expand provisional business licenses.

“In fact, the Ministry of Finance will shortly announce new changes that simplify the business license process even further,” he added, noting the US report’s references to other legislative reforms. “Even with the shortfalls, the investor community has continued to recognise The Bahamas is a best in class destination for business,” Mr Thompson continued. 

“Despite the global pandemic, The Bahamas proved to be the global leader among small island developing states for inward investment, doubling the quantum of the second place counterpart nation. In 2020, The Bahamas experienced a 47 percent increase to $897m in inward investment, outpacing other small island developing states (SIDS) by some $500m.

“This reflects ongoing confidence of international and domestic investors in the country and the Government. Moving forward, the ongoing reform efforts most recently outlined in the Accelerate Bahamas Budget Plan will only improve the country’s standing as an exemplary place to invest.”

What the Government did not say, though, is that the report detailing the $897m inward investment in 2020 said much of this related to one-off Hurricane Dorian reinsurance payments rather than sustainable, long-lasting flows.