|The Bahamas Investor Magazine
June 26, 2018
June 26, 2018
Although the industrial sector in Grand Bahama has weathered recent storms well, initiatives are afoot to reboot the flagging tourism product and attract new investment.
The economy of Grand Bahama is currently largely dependent on two major components: The industrial sector, with Freeport being dubbed the “industrial capital” of The Bahamas; and the tourism sector.
Despite several major hurricanes over the past 13 years, starting with hurricanes Frances and Jeanne in 2004 through to Matthew in 2016 and Irma in 2017, and the global recession of 2008, the industrial sector has continued to flourish and provide much needed direct and indirect employment on the island.
The Grand Bahama Shipyard has grown from a one-dock operation in 2000 to a three-dock operation today and has become one of the world’s leading shipyards and the premier cruise ship repair facility in the world.
The operator of Buckeye Bahamas Hub, which is the largest petroleum products terminal in the Western Hemisphere, has also continued to upgrade and expand since acquiring the Freeport facility in 2011.
In 2016, PharmaChem Technologies Grand Bahama, which produces bulk pharmaceutical ingredients and registered intermediates, commenced work on a new facility due for completion in 2019, with the creation of 200 new jobs.
Polystrene producer and distributor Polymer International, Bradford Marine boatyard and Statoil, which owns the South Riding Point storage and transshipment terminal, also continue to do well.b
The only large industrial company to sustain major, long-term damage during Hurricane Matthew was the Freeport Container Port, which has been operating at reduced capacity ever since. The replacement of heavy equipment is ongoing and it plans to be fully operational again by 2019.
However, the tourism sector has not fared so well during the same period. The Princess Towers, the Country Club and the adjacent casino were all severely damaged during hurricanes Frances and Jeanne and have not reopened for business.
This has had a devastating effect upon the International Bazaar retail and entertainment complex and some of the other surrounding businesses. The hotel site is in a prime location and, if not reopened as a hotel, has the potential for other uses.
In Port Lucaya, the three hotels comprising “The Strip” were all badly damaged during Hurricane Matthew. Since then only Lighthouse Pointe has reopened. The prolonged closure of the Grand Lucayan and Memories has not only resulted in loss of employment at the hotels, but has also had a detrimental impact on other tourism related businesses.
At the beginning of this year, the current owners of the Our Lucayan hotel strip Hutchison Whampoa signed of a Letter of Intent with the CEO of resort development company Wynn Group (Canada), Paul Wynn, to redevelop the site. During a recent tour of the facilities Prime Minister Dr Hubert Minnis said that the hotel, which has 400 rooms, is in what he described as “very good condition.”
The new developers will be looking to recoup investment as Bahamas Paradise Cruises resumed Grand Celebration sailings between Grand Bahama and West Palm Beach in December last year, and in April 2018, the company added an additional vessel.
At press time, Memories was yet to reopen and ownership is still being negotiated, but the government has stated its intention to revamp the resort.
According to the Minister of State for Grand Bahama Kwasi Thompson, “the Grand Lucayan deal is very much underway” and negotiations are nearing an end. He said the deal was beyond simply transferring ownership of a hotel from one company to another. “What we are doing is providing a unique destination for Grand Bahama, one that is different and set apart from the rest of The Bahamas,” said Minister Thompson. “We believe that at the end of the day, we will see up to two well-known brand names that have never been in The Bahamas before.”
There is also talk of rebranding the whole Port Lucaya area. If this were to happen, it would not only bring back the lost jobs, but would also create more employment and help rejuvenate the economy of Grand Bahama.
Government commits to rejuvenation
In its Election Manifesto and again in the Speech from the Throne, the Free National Movement (FNM), which came to power in May last year, made a number of commitments regarding Grand Bahama, including:
i. Launch the rebound of Grand Bahama in accordance with the template of a major strategic plan designed for Grand Bahama and establish a tourism signature identity in the marketplace for the island.
ii. Collaborate with strategic international partners to bring world-class tournaments and competitions to Grand Bahama.
iii. Repeal and replace the Grand Bahama (Port Area) Investment Incentives Act, 2016, to ensure that all licensees receive equal treatment under the law.
iv. Establish an Investment Promotion Board to promote Grand Bahama as a place of doing business and recreation.
v. Focus on the development of Freeport as an offshore technology hub.
vi. Promote Grand Bahama as a primary location for the local and international film and television industries.
vii. Create incentives to establish a financial services centre in Grand Bahama.
Chamber of Commerce involvement
Since the General Election, the Grand Bahama Chamber of Commerce has been working closely with the new administration, mainly through the Office of the Prime Minister on Grand Bahama, acting as the voice of and representing the interests of its members and the business community as a whole.
The chamber facilitated meetings between the Minister of State for Grand Bahama and its members to discuss the repeal and replacement of the Grand Bahama (Port Area) Investment Incentives Act.
Subsequently, the Grand Bahama (Port Area) Extension of Tax Exemptions Bill, 2017, was presented to Parliament in October last year. The bill provides for the exemption of certain taxes (real property taxes, capital gains or capital appreciation taxes and taxes on earnings), which shall apply to the Grand Bahama Port Authority (GBPA), its licensees and homeowners in the Port Area for 20 years. This addressed the principal concern of chamber members and Port Authority licensees.
The bill also provides for the establishment of a Port Area Investments Board to approve and regulate foreign direct investment into the Port Area consistent with national economic policies and laws. The board shall be comprised of five persons appointed in writing by the Prime Minister, three persons appointed in writing by the chairman of the GBPA and two persons appointed in writing by the Grand Bahama Chamber of Commerce.
This means that decisions will be taken locally and based on local considerations and should speed up the time taken to issue business licenses providing a step towards improving the ease of doing business in The Bahamas.
On the subject of the ease of doing business, the prime minister has formed a special committee to comment and advise government. The committee is comprised of members from the private sector and the Grand Bahama Chamber of Commerce has been asked to contribute, concentrating on those issues that are of particular importance or uniqueness to Grand Bahama.
As part of the process, the chamber will be commenting on a number of things including: the business license application process, customs issues, immigration issues, power (both the cost of it and alternative energy generation), the cost of access to Grand Bahama (such as airport taxes), issues affecting the tourism sector, banking and the issues arising from having two levels of “government” in Freeport.
The chamber has also been working with the Office of the Prime Minister on a Business to Business Expo, held in April. This initiative brings together the larger industrial companies and smaller existing or potential Bahamian businesses with a view to sourcing goods and services locally rather than from overseas. To qualify, Bahamian companies need to be competitive on price, quality and performance. This has enormous potential for the local economy.
At the Business to Business Expo, Minister Thompson announced plans for several investment projects that are presently underway on the island, such as the Seaward Fishing Village in Deadman’s Reef; the expansion of The Blue Marlin Cove; and the $2.8 billion Grand Palm Beach Acquisitions Ltd Resort, formerly the Ginn project.
One of the country’s major food store owners has also embarked on a major multimillion-dollar expansion project, and three technology companies have received approval in principle to operate in Grand Bahama.
In keeping with its election pledge, the government held a Grand Bahama Tech Summit in November last year.
“The technology industry can become a third pillar of our economy,” said Minister Thompson at the time. “And that can begin right here in Grand Bahama. For years, we in Grand Bahama have been searching for industries which can diversify our economy and the summit is a very important step in that process.”
Since the inaugural summit, a Technology Hub Steering Committee comprised of tech and industry experts has been established to help guide the initiative. Drawing on a report by the committee submitted to the government at the beginning of the year, Minister Thompson acknowledged during the mid-year budget debate that The Bahamas needs to make advancements in a number of areas to achieve its goal. Among the reported recommendations are a review of work permit processes for technology and computer professionals, further investment in industry-specific promotion and the creation of a venture capital conference to encourage “early- stage” investment in companies engaged in blockchain, cryptocurrency and FinTech.
Furthermore, in October last year, Carnival Corporation formally opened its new facility on Grand Bahama for the configuration of its Ocean Medallion Project. The project has already started to create new employment opportunities in the new technology field.
Whilst there is still much to be done, there are positive signs that things are moving in the right direction. The Grand Bahama Chamber of Commerce will continue to work with the government and the Grand Bahama Port Authority to represent the interests of its members and the broader business community to stimulate and rejuvenate the economy of Grand Bahama.