Looking back...and to the future
MAJOR CHANGES TOOK PLACE DURING THE DECADE THE Free National movement was in power in THE BAHAMAS. HERE THREE FNM LEADING FIGURES TALK OF THE FORMER GOVERNMENT’S ACHIEVEMENTS AND OF THE CHALLENGES THAT FACE PERRY CHRISTIE’S progressive liberal party ADMINISTRATION

HUBERT INGRAHAM, former Prime Minister

“THE CHALLENGES facing The Bahamas are many. They are those confronting most small, developing states at this time. First of all, The Bahamas must come to terms with a changed global environment. This is a sea-change in as much as The Bahamas has been–notwithstanding its successful tourism and financial services sectors–a very insular place of essentially a merchant class of people. Buying and selling imported finished goods–foodstuffs, building and construction materials and supplies, furniture, machinery and equipment, vehicles of every type–has provided our merchants with good incomes and accumulated wealth.
Providing services has proved lucrative to our people and to the government, which derives some 65-70 percent of its revenue from customs duties and tariffs on imports. However, our tax base is becoming increasingly less adequate to sustain the level of public services demanded and required. This will be increasingly the case as trade liberalization progresses.

The FTAA [Free Trade Agreement of the Americas] process will cause The Bahamas and other nations to become less reliant on customs duties as a major source of revenue. There will be a need to turn to alternative sources of revenue to replace that income. Our situation is very contradictory. One the one hand, we have a very open economy with few restrictions on imports and with large-scale foreign ownership in the tourism and financial services sector. But on the other hand, we have a very closed economy in terms of what other businesses international persons can become engaged in here.
The retail trade, for example, is reserved exclusively for Bahamians. A number of other service areas and some professional services are also essentially closed shops reserved for Bahamian citizens. Walmart cannot set up a shop in The Bahamas, McDonald’s franchise in The Bahamas must be owned by a Bahamian national in order for the chain to operate here, and no large U.S., Canadian or British law firm could establish offices here. All of this will be challenged as the FTAA process progresses.

The Bahamas for many years maintained a financial services sector that relied upon strict bank secrecy as its underpinning. That has to change. The new OECD initiative and the Tax Information Exchange Agreement which we have concluded with the U.S. has been an opening for The Bahamas to begin to adjust to changing times. The Bahamas now needs to market itself as a changed financial services provider.
And we still have great challenges to meet in terms of national development. We have a great unevenness in the level of development on our many islands. Some have become seriously depopulated, while the island of New Providence has become congested.
I would like to see The Bahamas continue to advance and improve its social statistics, public health and the quality of education available in government-operated schools. We ought to be able to continue to improve because of the income that we derive from tourism. With good management, we are in a great position to continue our prosperity.”

ZHIVARGO LAING, former Minister of Economic Development

"IT IS SAFE to say that when we assumed office in August 1992 there were many things about our country that were not positive, there were many negative trends. We had an unemployment rate of about 14.8 percent; we had negative growth in the economy of about minus one percent (or almost 0); we had foreign reserve levels that were of the order of some $145 million. Household income was far below its potential at about $25,000. The inflation rate was around seven percent and generally there was an impression in the international community that things were not going right in The Bahamas.

Compare those realities with the current realities of an economy that had experienced–up to September 11–an average growth rate of three-and-a-half percent, peaking in 1999 at six percent and in 2000 at five percent: an unemployment rate of 6.9 percent; household income of around $35,000; an inflation rate of under two percent; foreign reserve levels that had peaked at close to $500 million, now around $300 million; and an impression in the minds of the international community that The Bahamas is on the right track.
We had a tourism industry in 1992 which had deteriorated, which has been entirely renewed and which attracts significant stopover visitors with good purchasing power. In the last nine-and-a-half years, there has been a gross inflow of direct foreign investment of around $4 billion, with a net of $2.5 billion. Government revenue has nearly doubled without significant increases in taxes, having increased from about $500 million to about $900 million.

We have been able to use that to refurbish our education system, to upgrade the terms of employment of our teachers. We’ve been able to increase the number of computers in the education system from 100 nine-and-a-half years ago to 3,000, with the prospect of 3,000 more being added in the next three years.
We have been able to build infrastructure in some of the Family Islands, where light, water and roads were things that were not available but now are and the infrastructure is now in place to encourage economic development. Many of those islands have experienced significant economic growth and in some cases full employment. So from an economic and social point of view we have literally had a transformation in this country.
This is augmented by the political achievements in terms of deepening our democracy by adding local government to the machinery of government in the country, by adding local radio to the communication infrastructure and by providing internet and cable access throughout the country.

For the future, what we are looking at is maximizing potential in this country. There is tremendous human resource in The Bahamas–in the extent to which Bahamians can participate more fully in the development of new businesses or the expansion of existing businesses, and to which we can maximize some of the gains of current developments in the world, whether it’s in the area of globalization or information technology etc.
We have to look at ourselves, see our potential and go after that potential with tremendous aggressiveness and vigor. We have to improve our productivity as a workforce so that we are internationally competitive in every area that we have a comparative advantage in. We have to look at the other islands of The Bahamas and see the peculiar advantages they have and cause those advantages to be realized for the people of those islands.
We have to give The Bahamas a brand that’s relevant to the 21st century, a brand that is attractive and appealing and that the world recognizes.”

SIR WILLIAM ALLEN, former Minister of Finance

“THE CHALLENGE will be to carry on in a changing world. Considerable changes are taking place now and are likely to take place in the next 5-10 years. It will be a challenge to maintain the same fiscal and macro economic stability and to achieve reasonable levels of growth, but I think there will be increased opportunities as well to broaden the Bahamian economy.
There is no doubt that international finance, particularly offshore finance, will be challenged in the future. We expect that centers engaged in cross-border financial services will have to re-define themselves because the proportion of the business which is predominantly fiscally sensitive will likely diminish. The OECD countries seem determined to do that. Their success will depend on whether they are able to pursue their initiatives on a level playing field basis or not. There is no doubt that greater transparency will be needed. The Bahamas has already
taken steps to ensure transparency in our financial sector.

The other factor which is likely to be important in international finance is exchange of information. There will need to be some basic arrangement for the exchange of information under certain circumstances across
borders, but it has to be even, it has to be level. It cannot be that some rules apply to some and not to all of us.
We were very pleased that the OECD understood and accepted the importance of a level playing field in the implementation of any commitment that The Bahamas gives. We have always had the view that as an international financial center The Bahamas is prepared to abide by any set of internationally accepted standards evenly applied. We have no fear of being able to compete and that has always been our position. We have committed to doing what everyone else does–meaning any other offshore financial services providers, such as Singapore, Switzerland, Hong Kong or anyone else.

We were also pleased to eliminate any concerns that people had about the inclusion of The Bahamas on some negative OECD listing. That uncertainty has been removed and now we can get on with business.
The Bahamas is predominantly an international services provider. We will not be producing corn or rice–we will
never be an agricultural power, although we may effectively link some agricultural production to tourism.
We have therefore to provide a reasonably high level of international services. We have tourism, financial services and now ship repair and transshipping services–both added since the FNM government came to power. We also expect that The Bahamas should be able to develop a viable e-commerce business. We have all the necessary facilities and infrastructure.

Tourism is very important and the diversification of tourism must go forward. We need to put great emphasis on eco-tourism and marine tourism, for example.
Policy makers need to find ways to enhance, expand and diversify the tourism package.
Whatever international services the world is looking for, it will be The Bahamas’ objective to find a way to produce such services to the extent that we are in a position to do so.”