One-stop shop welcome for investors
CONSIDERABLE EFFORTS HAVE BEEN MADE TO ENSURE THAT THE BAHAMAS OFFERS A BUSINESS FRIENDLY ENVIRONMENT TO INVESTORS. AT THE FOREFRONT OF THE DRIVE TO ATTRACT FOREIGN COMPANIES IS THE BAHAMAS INVESTMENT BOARD

PHILIP MILLER Deputy General Manager of The Bahamas Investment Authority

STABILITY, PROXIMITY AND CONFIDENCE are the three major attractions of The Bahamas as a destination for foreign investment. The islands’ economy is bolstered by prudent fiscal policy, a stable exchange rate, flexible exchange control rules and free trade. There is a long tradition of parliamentary democracy and a legal system based on the rule of constitutional and statute laws.

"We have a reputation of stability, both economically and socially," says Philip Miller, Deputy General Manager of The Bahamas Investment Authority (BIA). "Investors feel very safe here. They have confidence in the legal system–perhaps Canadians even more than Americans because of the similarity between our system and that of Canada.
"From a geographical point of view," he adds, "no-one can compete with us because we are so close to the major investment market, North America."

And then, of course, there are the obvious tax advantages. Freedom from capital gains, inheritance, withholding, profit remittance, corporate, royalties, sales, personal income, dividends, payroll and interest taxes is ensured.
Mr. Miller believes that all these factors taken together are key to The Bahamas’ success in attracting inward investment. "Many neighboring countries offer the same fiscal incentives, and in some cases more than we do. Yet studies have shown that the decision to invest is not based on fiscal incentives as much as on characteristics such as stability, proximity and confidence."

The BIA’s main function is to coordinate the approvals necessary for a foreign investment proposal. It acts as a ‘one-stop shop’ liaising with all the relevant government agencies on the investor’s behalf.
Noteworthy successes since its creation include the attraction of Sun International to Paradise Island, Hutchison Whampoa to Freeport, Grand Bahama, and the Emerald Bay development in Exuma. "Once Sun International came in and had no problems, the word spread that The Bahamas was ready to do business," says Mr. Miller.
But it’s not just the big developments that matter. "We have a lot of small investments that tend to be overlooked but that are very important, such as those in restaurants, condominiums and residential property," he adds.

AREAS TO EXPLORE Tourism is still tops for investment but a number of other sectors also have potential

Of course, the tourism sector remains the main attraction for investors. "Most investors come to The Bahamas because it is known to be a major tourist destination in the area and they want to participate in a lucrative industry," says Mr. Miller.
Aside from tourism, however, growth industries that offer opportunities for investors include agriculture, fisheries, data/information technology, telecommunications, maritime services, manufacturing and ancillary services.
Proximity to the U.S. makes The Bahamas an ideal location for establishing an off-shore manufacturing facility or assembly plant. Mr. Miller considers manufacturing one of the most attractive areas for investment after tourism (see panel below, right), particularly in Grand Bahama.

"In Grand Bahama the infrastructure is already in place. The container port is there and functioning very well. There is also an even greater proximity between Grand Bahama and the US, which makes transshipping very attractive."
Another sector he pinpoints is the second, or vacation, home market. "This is second only to tourism in size and importance. It is also an enormous source of revenue for the government in terms of stamp and property taxes."
Prior to 1992, it was very difficult for a foreign person to own real estate in The Bahamas, but in 1993 the government introduced new legislation relaxing the rules for foreign nationals wishing to purchase a property for a single family dwelling.

"That created a boom," says Mr. Miller. "People started not only buying, but building also. We allow them to build these homes and rent them out for that part of the year that they do not live there themselves. This has really taken off in the northern Bahamas, in Abaco and Grand Bahama."
Mr. Miller has no doubt that the establishment of the BIA in 1993 was one of the greatest achievements of the Ingraham government. "It has been directly responsible for the boom that we have experienced in foreign investment over the last 10 years," he says.
The initiative originated with the World Bank at a time when investors were having difficulties doing business in the Caribbean and Central and South America. "The World Bank decided to address this problem. They had meetings with us in the late 1980’s and suggested this one-stop shop. The suggestion was made by the
Foreign Investment Advisory Service (FIAS) and we set it up."

Foreign investment has had a very positive impact on the development of The Bahamas, Mr. Miller believes, particularly in terms of government revenue.
"The government revenue generated from foreign investment has funded clinics and schools, as well as the electrification of the Family Islands, for example. This increased infrastructure then itself aids further foreign direct investment by making the islands more appealing to investors."
Proposals passed on to the National Economic Council by the BIA usually take around eight weeks to be approved. This is a considerable improvement over the months, or even years, it took before the existence of the authority, but Mr. Miller wants to see the process speeded up. "There is always room for improvement," he says.

Meeting the challenge may even require a restructuring of the BIA. "We have not yet implemented everything the FIAS indicated to us. They suggested that BIA be made up of representatives of the different government agencies so that decisions could be made on the spot. That has not been implemented, so each proposal has to be sent to each ministry for approval. Eventually, I think that we will get to that point."
Mr. Miller believes it is important for high-level investors to know that their proposals are of interest to the very top level of government. "They like to know that they are getting maximum support from the administration and the best way to indicate this to them is by facilitating their meeting directly with the Prime Minister. That is what BIA can do for them.
"The Bahamas is still an area to look toward in terms of investments," says Mr. Miller. "We have legislation in place and we are constantly looking at improving legislation, incentives and the administration of projects. We are in the market to do business!"