|The Bahamas Investor Magazine
July 1, 2013
July 1, 2013
When the Grand Bahama Port Authority (GBPA) Ltd was created in 1955, Grand Bahama had a population of just 3,340 and contributed little to the Bahamian economy. Since then it has developed into what current GBPA chairman Ian Fair calls “an international, vibrant hub” that has attracted global firms such as Buckeye Partners LP (NYSE: BPL) and Polymers International Ltd (see sidebar pg 74), serviced ships from all over the globe in its deep water harbour and grown to a population of some 65,000. Overseeing this growth is GBPA—a privately owned company tasked with regulating Freeport and encouraging economic development. Today, in the aftermath of the global financial crisis, the GBPA executive team is attempting to breathe new life into the island by focusing on overseas markets, refining its tourism model and growing its shipping and industrial sectors.
Ian Fair joined the GBPA in August 2011 as a director and was appointed chairman in April 2012. He is no stranger to public life, having previously served as chairman of the Bahamas Maritime Authority (BMA), and has more than 40 years experience in The Bahamas’ financial services sector. In addition to his chairmanship of the GBPA, Fair is deputy chairman of Butterfield Trust (Bahamas) and chairman of the Bahamas International Securities Exchange (BISX).
“I never know what I’m doing from minute to minute,” he says of his GBPA role. “Most of it is exciting; most of it is interesting. The job is very varied.”
Assisting Fair in his position is vice chair Sarah St George (pictured). Sarah was appointed a director of the GBPA in 2010 and became vice chair in 2012. “It has been great,” she says of her first year on the job. “Being in an executive and a management position has given me an even greater insight and a chance to really start the work that will be needed coming out of the recession.
“We are going into a growth spurt, which makes it an exciting time to be part of the company. We are spreading our wings and I want to be a part of that.”
Sarah’s brother Henry joined the executive team in March 2012 when he was appointed vice president. His role includes management of the business development team, giving him responsibility for international marketing and promotion. “We give people the short and the sweet of investment in Grand Bahama and educate them about some of the benefits that are available,” he says.
Both Sarah and Henry are following in the footsteps of their father, Edward St George, a former chairman of the GBPA who is credited with bringing a flood of new investment to Freeport in the 1990s and kick-starting a new prosperous era for the island.
“My family takes an incredibly long-term view as investors in Freeport,” says Henry. “We have been here as a family since the 1960s and I hope we can say the same thing in the 2060s. We really believe in Freeport.”
Another executive with family ties to the island is GBPA president Ian Rolle, who was born on Grand Bahama, but raised on New Providence. He returned to Freeport after training as an accountant in the US to work with Hutchison Lucaya Ltd, and moved to the GBPA in 2000 as group financial analyst and group financial controller. He then became chief financial officer and, in 2009, was appointed president—a job which he believes he is uniquely suited to given his familiarity with all aspects of the company.
“I look after the day-to-day operations because of my intimate knowledge of the various tentacles of the group,” he says. “I know the ins and outs of the company.”
A free port
“Most countries would salivate at the thought of having a [city such as] Freeport in their boundaries,” says Fair, who points out that the city is entirely privately funded and “did not cost the country a single cent.”
Freeport was the brainchild of American financier Wallace Groves, who sought to transform the sparsely populated swamp land into a bustling free trade zone. As the GBPA’s first president, Groves negotiated the landmark Hawksbill Creek Agreement with The Bahamas government in 1955, giving Freeport a wide range of tax concessions. Thanks to the agreement, residents and licensees in the port area are exempt from personal income taxes, corporate profit tax, capital gains tax, death taxes or property taxes until 2015.
With the expiry date on the exemptions fast approaching, the Port Authority is currently working with the government to renegotiate the terms of the agreement.
“One thing investors like is stability,” says Henry St George.
“The sooner we are able to reassure our investors about the concessions, the sooner we would hope to see streams of capital coming into Grand Bahama.”
Selling the city
Promotion, particularly in emerging markets, is key to the GBPA’s plan for Freeport. To accomplish this, the GBPA has invested in a new marketing campaign, which involves rebranding the organization, preparing new multimedia promotional materials and embarking on a series of trade missions.
“You have to get out and inform people,” says Fair. “Sitting waiting for business is not going to work. You have to be in Panama, in Latin America, and market in areas we have not marketed before. We intend to commit a good amount of money to this initiative.”
In January 2013, the GBPA led a delegation to Panama in a bid to attract new business and, two months later, representatives from the GBPA also went to São Paulo to exhibit at Intermodal South America—one of the largest logistics trade shows in the world. Over 48,000 visitors attended the event, making Freeport more visible than ever before. But it is not just Latin America that the GBPA has set its sights on. “You cannot ignore Europe,” says Fair. “We see parts of Europe as being very ripe for informing people of what we have to offer. That is the next area.”
As well as promoting the city in the international arena, GBPA is also trying to overhaul its image at home.
“People in Nassau have a certain view of Freeport,” says Fair. “We all need to get on the bandwagon and stop this negativity. I truly believe Freeport and Grand Bahama present the solution to the problems we face in this country. We have the land mass and the infrastructure already in place. We just need to take advantage of it.”
Fair argues that Grand Bahama could be the answer to a wide variety of social ills found on New Providence, including overcrowding, unemployment, overdevelopment and poor infrastructure. As well as drawing in foreign investors, he wants to see more Bahamians relocating to the island and helping it grow.
Developments spur growth
Vice chair Sarah St George believes that growth is already gaining momentum. “In the last couple of months there is genuine renewed interest from foreign companies in coming to Grand Bahama.”
She says that the word is spreading about the island’s business-friendly environment. “Word of mouth is very powerful; you start to get a buzz.”
That “buzz” has been generated not only by the GBPA’s marketing efforts, but by recent tourism developments on island.
At the end of 2012, the government announced that Asian firm Hutchison Whampoa would team up with Canadian travel company Sunwing Travel Group to renovate and reopen the 500-room Reef Village. The GBPA says this project will begin by November this year. There are also proposals on the table for a new water park catering to the local and cruise ship market, with construction expected to start this year.
Developments on New Providence could also spell growth for Nassau’s sister city. The $3.5-billion, Chinese-funded Baha Mar mega-resort on Cable Beach is an opportunity not to be missed, according to Fair, who says that when it opens in December 2014, the resort will require a massive amount of goods and suggests that these be housed in Grand Bahama, where warehouse space is plentiful and available.
“Baha Mar is a huge facility. Almost all the things they need will come out of China [and] the obvious place to have warehousing is Grand Bahama. It makes the delivery [time] line so much shorter. It is a win-win situation.”
Although still the primary engine for growth, tourism is not the only industry that can benefit Grand Bahama and Fair says that all avenues must be explored to realize the island’s potential. “Tourism is not the only solution to the problem here,” says Fair. “It will take a multi-faceted approach to achieve huge success for Freeport.”
This approach needs to play to the island’s strengths in areas such as shipping, manufacturing and the maritime industry, argues Fair.
The much anticipated expansion of the Panama Canal, for example, could bring a significant boost to both the Grand Bahama Shipyard and the Freeport Container Port. The major waterway is expected to double its capacity by 2015, allowing for larger tankers and more traffic through the Caribbean region’s shipping channels, something Freeport is poised to capitalize on.
“We are one of the only deep-water harbours [in the region],” says Fair. “The location of Freeport is so critical.”
Grand Bahama is also well positioned to expand in the wealth management sector, according to Fair, who was the founding chairman of the Bahamas Financial Services Board (BFSB) and would like to see more banking institutions in Grand Bahama and a greater emphasis on the financial services sector.
“There is a crying need for wealth management business in Freeport. We need banks and trust companies here and we would offer huge incentives to get them. It helps to round out the jurisdiction.”
Sarah St George agrees: “We are seeking offshore offices from top tier companies. It would be lovely to see a high-net-worth client base migrating towards Grand Bahama.”
The GBPA is also working with government to develop an arbitration centre in Freeport—something Fair is particularly passionate about given his background in the maritime industry, which has led the way in alternative dispute resolution.
However, as these new areas are explored, president Rolle would also like to see the more well-established industrial core of Freeport living up to its potential. “It makes sense to focus on industry, because we have the infrastructure in place already,” he says. “It is the lower hanging fruit.”
As president, Rolle is directly responsible for business development and both he and vice president Henry St George have been active in the community, getting feedback to identify where improvements can be made. “We are going out to meet with persons in various industries and they give us ideas about how to grow that industry,” explains Rolle.
The Freeport for Global Commerce initiative was launched earlier this year and brings together representatives from the Port Authority, the Ministry for Grand Bahama, the Ministry of Financial Services, the Grand Bahama Chamber of Commerce and members of the private sector to identify any impediments to business and suggest solutions.
“It is an ongoing dialogue,” says Henry St George. “We come together to talk through and make suggestions for amendments to various government processes, which will improve the process of doing business in Grand Bahama.”
As it approaches its 60th birthday, the team at the helm of the Port Authority are united in their goal of pursuing foreign investment in tune with the best interests of the community.
“My father’s focus was always on Grand Bahama and the people who live and work there, their quality of life and their level of happiness. That heart and soul of Freeport is something that continues to be very important to me, to all of us,” says Sarah St George.
When Rolle became president, one of his first jobs was drawing up a new mission statement for the Port Authority. He wanted to emphasize that the GBPA can contribute not only to the local community, but also to the country as a whole.
“We have something unique in Grand Bahama,” he says. “I want Grand Bahama to be more of a significant asset to The Bahamas. I want people to see it, to believe it and to use it.”
Grand Bahama Inc
Major companies located on Grand Bahama include:
- Bahamas Oil Refining Company International Ltd (BORCO)–oil refining and storage facility to the west of Freeport owned by US company Buckeye Partners Ltd. With more than 21 million barrels of storage capacity and eight berths, BORCO is Buckeye’s flagship marine terminal and is one of the largest crude oil and petroleum products storage facilities in the world.
- PharmaChem Technologies (Grand Bahama) Ltd–one of the key suppliers of active pharmaceutical ingredients (APIs) and registered intermediates in the global fight against AIDS. PharmaChem has invested about $56 million in creating a state-of-the-art plant on its 62-acre Freeport site.
- The Grand Bahama Shipyard–one of the biggest ship repair companies in the region, with three floating docks with a maximum lifting capacity of close to 90,000 tonnes and support services for repairs, upgrades and conversions.
- The largest of these docks can handle vessels up to 300m in length, and has an internal width of 56m. Estimated contribution to local economy-$240 million since opening in 2000.
- Freeport Container Port–opened in 1997 by Hutchison Port Holdings. Serving as a major hub for worldwide transshipment of containerized cargo, Freeport Container Port contains more than 1,000m of berths, with 15.5m of depth alongside. It contains 49 hectares of stacking area and capacity to handle 1.5 million TEUs per year.
- Polymer’s International Ltd–one of the largest companies in Freeport and a major contributor to Grand Bahama’s economy, providing employment opportunities and vocational training for the local community. The company produces expandable polystyrene used in foam products, which are exported to Europe, the US, Argentina and beyond.
GB investor forum
In February this year, The Bahamas International Investment and Business Forum (BIIBF) was held at the Grand Lucayan resort in Freeport, Grand Bahama. Jointly hosted by the Bahamas Investment Authority (BIA), the Grand Bahama Port Authority (GBPA) and the Commonwealth Business Council (CBC), the three-day event attracted a significant number of international businesses, government leaders and top decision makers from North, Central and South America, as well as the CARIFORUM countries, Africa, Europe, Asia and Australia.
“This forum is the ‘Big Bang’ for Bahamas business,” says CBC general director and chief executive officer Peter Longworth. “We wanted to present The Bahamas to international investors, not only as a dynamic shipping and distribution hub for the Caribbean and Eastern Seaboard, but as a business centre with a wide reach and huge potential for expansion.”
The CBC was founded by the 54 Commonwealth Heads of Government to promote investment in member countries. Since its beginnings in 1997 the council has organized more than 100 international investment events.
“We have seen billions of dollars’ worth of investment deals and partnerships concluded at our events. We have years of experience in creating these opportunities and we are glad to have partnered with the Grand Bahama Port Authority and the Investment Promotion Authority as fellow stakeholders,” explains Longworth.
Speakers at the event included Prime Minister Perry Christie, who delivered the keynote address, GBPA chairman Ian Fair, chief executive officer of the Bahamas Financial Services Board Aliya Allen and director of investments for The Bahamas Investment Authority Joy Jibrilu.