|
REMARKS
BY
DR. BERNARD J. NOTTAGE
M.P.
AT
THE OPENING OF ELECTION
HEADQUARTERS
COALITION+LABOUR
The Bahamian two-sector
economic model has not evolved fast enough to keep pace with
changes enforced by globalisation. The Bahamas relies on
tourism and financial services for more than 75% of its GDP,
tourism itself accounting for two thirds of the GDP and
financial services some 15%. The tourism industry is still
largely just a hotel industry. The nation has failed to
diversify the tourism product, and exploit the foreign
exchange earning potential of fishing and agricultural
industries. The main challenge of tourism and financial
services is to keep abreast of developments within their
respective industries.
The service model utilized
in the Bahamas, which has not fully exploited opportunities
that the human infrastructure can provide, is the main
challenge.
Over the years successive
governments have paid lip service to the concept of
diversification of the economy, having regard to the
vulnerability of the main economic pillars, as has been
graphically demonstrated in the aftermath of the
blacklisting of the Financial Services sector with the mass
loss of business, jobs and confidence; and the events of
September 11th and the blacklisting of the
Aviation services which combined to shake our Tourism
industry to its roots with almost immediate closure of some
hotels, loss of jobs, and gross uncertainty.
It is futile to talk of
diversification, into agriculture and manufacturing, for
example, unless we understand that its success depends upon
a new scientific approach, which calls for new technology,
research and development, qualified personnel, higher
productivity, greater competitiveness, political will and
human capital…none of which were receiving adequate
strategic planning. No planning for the type of skills and
scientific manpower that would be needed if Bahamians were
to be the owners.
There is a difference
between economic growth and development. Our economy has
grown over the years as has the standard of living of many
citizens, and our per capita income has also. But most of
the money earned is used to import goods from the outside,
not to develop the Bahamas. For example, he points out that
the leakage from the domestic economy of tourist
expenditures is quite high in the Bahamas. Instead of $1 of
expenditure generating two or three dollars, in economic
activity, it generates less than a dollar in national
income!
The infrastructure of the
two main industries are owned and controlled primarily by
foreign investors who repatriate their profits and when the
going gets tough they often leave for greener pastures and
leave the infrastructure. Moreover, not only are they are
both heavily dependent on foreign private investment,
skills, and technological innovation. We have a high level
of imports of capital goods, intermediate goods, and even of
consumer goods including food on which we spend over $200
million annually.
In the Bahamian economy
there is foreign exploitation and under utilization of
existing resources. Additionally, there has never been any
strategy or policies for the use and exploitation of our
resources for the long-term benefit of Bahamians. This makes
us more dependent on external factors for sustenance with
tragic consequences for national socio-economic
development.
Governments can contribute
to economic growth and development by their expenditure,
which increases production and productivity, by reducing
policies, which create inefficiencies, and through prudent
fiscal and other policies. The prescription for economic
restructuring and diversification has a role for the
government. Few societies can resolve deep development
problems or succeed at alleviating poverty without active
intervention by the state, a view that I know will have many
conservative critics.
The lack of significant
endogenous (Bahamian) ownership in the industries Tourism
and Financial Services that have driven our economy for the
past fifty years is a serious threat that needs a sincere
and diligent effort.
The direction in which the
Bahamian economic growth is pointed is random and dependent
on the state of the international market and is not based on
any long-term national development plan. Indeed there seems
never to have been significant strategic planning by policy
makers over the years. The time for a plan is
now.
Tourism
Tourism remains the
bedrock of the economy of The Bahamas and although we will
seek to reduce the country’s over reliance on this
industry, we are aware that tourism will continue to be the
number one industry for some time to come. If this industry
is to meet the present and future needs and demands of
Bahamians, it must be so restructured to allow Bahamians the
opportunity to play a greater role in its overall
development and they must also own a greater share of the
industry.
Coalition+Labour
will:
Conduct a full review
of the tourism industry;
In the short term,
provide the Bahamian people with projections for the next
month, three months, six months to one year;
In the medium to long
term, provide projections for the next five years, and
map out a tourism development strategy in which your
children will play a part;
Outline a new and
innovative promotional strategy;
Expand the tourism
markets and foster and promote niche markets that would
take full advantage of our eco-tourism
opportunities;
Conduct a full
environmental study, as it relates to both existing and
potential touristic developments, outlining defined
standards to protect the country’s natural
resources;
Develop a diversified
island specific tourism to showcase the unique and
special features of each island and to provide a total
Bahamian experience;
Encourage further
large-scale touristic properties to suitable Family
Islands so as to serve as a stimulus for touristic
development on the Family Islands;
Facilitate the
establishment and/or further development of smaller
Bahamian owned and operated tourism-based
enterprises;
Expand the Ministry of
Tourism’s role in the areas of promotion and
marketing of The Bahamas as a multiple island destination
with particular concentration on the promotion of Family
Island destinations;
Fully integrate locally
produced items and cultural and historical activities
(e.g. craft and souvenirs, food, entertainment) into the
tourism industry so as to derive greater economic
benefits from our tourism earnings;
Ensure that the
appropriate infrastructure and services needed to enhance
the growth of Family Island tourism are provided
especially in the areas of air, sea and land
transportation and telecommunications;
Provide additional
concessions and incentives for locally owned tourist
related enterprises. Concessions and incentives will be
greater for those establishing touristic development in
the lesser-developed islands;
Establish a hotel and
tourism training facility, with a hotel of its own, in
one of the Family Islands that provides theoretical and
practical training for all levels of tourism
workers;
In conjunction with the
Hotel Unions, institute a certification and
re-certification programme for workers in the industry to
ensure that they are regularly trained and retrained and
that they are providing service at the highest
standards;
Encourage taxi drivers
and their unions to form themselves into island-based
co-operatives that will operate as a large tour company
while still providing tourists and residents with
personal taxi service.
FINANCIAL
SERVICES
Banking is the second
largest industry and contributor to our Gross Domestic
Product (GDP) accounting for some 20% of GDP. It is the one
industry where Bahamians have become qualified and are
competitive with their peers in the international
arena.
Stake holders have
predicted that the recent passage of new financial services
legislation will negatively impact Banking in the country.
There is now an urgent need to restore confidence in the
financial services sector and protect the jobs and careers
of thousands of young professional Bahamians. Since the
"blacklisting" of The Bahamas in 2000, and the actions of
the Government that followed, which had the apparent
appearance of having been enacted in the absence of a clear
and established policy, and ignored and in some instances
was in direct contravention of advice of a broad-based
representation of industry participants, the deficiencies in
the Bahamas’ financial services sector are clear: The
sector lacks clear and deliberate leadership; the sector
lacks a sound policy structure; the sector lacks a plan that
clearly outlines its path of future development; the sector
lacks the technical resources to sufficiently deliver the
required services, particularly as it relates to the
effective implementation of supervisory and regulatory
initiatives.
Leadership
Part of the reason that
The Bahamas found itself in the position that it did at the
time of the blacklisting, was due to an absence of industry
leadership. Senior public officials, including the Minister
of Finance cited their lack of surprise at the actions taken
by the OECD, FATF and FSF, suggesting that these actions
were somehow inevitable. These times call for leadership
that is proactive and that puts the collective interest of
moving this country forward before the interests simply of
accommodation of the policy objectives of other
jurisdictions. These times call for leadership that is
deliberate and able to articulate a clear vision for the
industry; leadership that is innovative enough and sound
enough not only to move the sector forward but in so doing
to inspire the confidence of industry players at all levels.
Such leadership and direction must come from our Central
Bank, The newly established Financial Intelligence Unit and
the Ministry of Finance.
A Coalition+Labour
Government will establish such leadership, with equal
emphasis on the interests of both public policy and private
sector developments.
Policy
Structure
In the absence of industry
leadership, industry stakeholders are still not clear on the
overriding policy objectives of the country’s financial
services sector. Overnight, The Bahamas has gone from
boasting an image of strict bank secrecy to one of select
agreements of information exchange. Moreover, exchange
agreements that outline only the terms under which The
Bahamas will disseminate information, with no corresponding
indication as to measures that would be taken in order to
supply The Bahamas with information, nor specifics of the
content of such information, as might be deemed necessary.
No truer than in our present day situation, is there a need
for a meaningful public and private sector partnership in
order to establish a sound policy framework for the
industry.
A Coalition+Labour
Government will appoint a Financial Sector Action Task
Force, comprised of both public and private sector persons,
representing professions across the sector, which will serve
as an advisory body on issues of policy
Development
Path
Recent times have
certainly exposed the industry, for its lack of a clear path
for the industry’s future growth and development. The
rushed introduction of a nine-piece package of legislation,
which the sector now struggles to interpret and effectively
implement, is perhaps the most glaring example of the lack
of an articulation of both medium and long-term objectives
for financial services in The Bahamas.
A Coalition+Labour
Government, as part of its overall National Development Plan
for The Bahamas, with the co-operative efforts of the
Central Bank, The Financial Intelligence Unit, The Ministry
of Finance and the Financial Sector Action Task Force, will
devise a plan for financial services in the country, which
will place particular emphasis on product development,
industry promotion, industry standards and regulation and
resource development.
Local Resource
Development
Since 2000 the focal point
of industry developments has been on the supervision and
regulatory environment, which to date, has been directed
mainly by non-Bahamian appointees. Moreover, required
expertise and positions evolving out of these initiatives,
e.g. compliance officers, have created areas in which only
significantly small numbers of Bahamians have specific
expertise and practical experience. In addition, as the
global industry develops, the need for persons with fluency
in multiple languages and proficiency in various
technological areas alongside financial, legal and other
expertise has grown.
A Coalition+Labour
Government, in collaboration with the Association of Banks
and Trust Companies, The Bahamas Institute of Bankers, The
Society of Trust and Estate Practitioners, the Association
of Chartered Financial Analysts, The Bahamas Bar
Association, The College of The Bahamas and other relevant
agencies, will embark on an aggressive programme to qualify
Bahamians in these and other areas; and will establish an
exchange programme with various international organisations,
in which Bahamians would gain from the practical experience
in a cross-section of areas.
The Food
Industry
Success in agriculture
would depend on the value added to the product and thus, as
with fisheries we have to look at a Food Industry, including
food processing for the local and export market. But you
cannot promote food processing if your educational policy
and scholarships are going to train lawyers and doctors
primarily.
The Fishing industry
accounts for 54.8% of non-oil merchandise exports. It is
under-exploited and has the potential for greater foreign
exchange earnings.
There must be a
reduction of expenditure on food, which accounted for 16.1%
of imports between 1995 and 1999. Agriculture has far more
to offer than it currently does. Relatively few farmers have
developed viable agri-businesses.
The absence of a clear
policy for developing Bahamian farming has led to minimal
investment in developing a modern agri-workforce.
Accordingly, agriculture lacks the broad based capital and
technological advances that transform the industry
worldwide. In the Bahamas, farmers are a dying breed as
their average age increases, their subsidised ventures fail
and their antiquated methodologies result in a
non-competitive industry.
The successful development
of a food industry is possible, despite the naysayers who
have dominated government policy thinking in recent memory.
The present Minister of Finance and the present Governor of
the Central Bank are both of the view that domestic
producers cannot compete with cheaper imports, that there is
a lack of local raw materials and resources and finally,
that it is in our best interest to concentrate on what we do
best, services. In support of this position, others point
out that high wages, low productivity, lack of
competitiveness, and inefficiencies are further
deterrents.
We challenge this view. If
our government pursues an aggressive industrial strategy and
policies aimed at adaptation and technological development
of specific sectors (such as food industry), structural
transformation and diversity, economic growth and higher
productivity can be achieved.
Agriculture and
Fisheries
Only 4% of persons are
employed in agriculture and fisheries.
5.2% of the workforce is
employed in industrial and manufacturing.
The other 90.8% works in
the service industries.
Every sovereign nation
should strive to produce as much of the food it consumes as
possible. The more you depend on other nations for something
as fundamental as food the less you determine your
nation’s destiny. Over the last fifty years, the
approach used by governments of this country has been to
earn money from other sources to buy the food needed.
Particularly over the last decade, the amount of money
earned as a result of agriculture has steadily declined due
to the government’s stated disregard for the importance
of this most vital sector. It is in the national interest,
especially in this increasingly unpredictable world, that
the agricultural sector is revived, developed and sustained.
A vibrant agriculture and fisheries sector will be
multifunctional. In addition to the economic and food
security benefits, agriculture and fisheries can provide
environmental, cultural, bio-diversity and community
benefits.
This is recognised by most
countries of the developed world including the USA, Canada,
Australia and the UK and this is why these countries
maintain important agricultural and fisheries
sectors.
Our ultimate goal will be
to make agriculture, fisheries and agribusiness sustainable
and competitive sectors of the Bahamian economy.
A Coalition+Labour
government will:
Establish agricultural and
fisheries training facilities on suitable Family Islands to
train agriculturists, local farmers and workers in the
fisheries industry in theoretical and practical skills
required for successful farming and fishing in The Bahamas.
These facilities will also serve as research centres that
will develop appropriate agricultural and fishing techniques
and identify and experiment with varieties of crops, animals
and fish for their suitability for the Bahamian
market;
Ensure that the Ministry
of Agriculture and Fisheries strategically place sub offices
that are manned by suitably trained technical officers to
provide farmers and fishermen with the necessary technical
and administrative support as needed;
Establish an agricultural
rejuvenation fund, initially with $1million, to facilitate
the strategic development of agriculture;
Provide assistance
(financial, technical and administrative) to individual
farmers and fishermen and to community-based organisations
involved in this sector;
Reduce taxes for large
enterprises (such as hotels, food stores and restaurants)
that purchase locally produced food.
Improve the networking
capability of the Ministry of Agriculture and Fisheries to
develop meaningful relationships with regional and
international agencies devoted to the development and
promotion of food production such as the Food and
Agricultural Organisation (FAO);
Safeguard the interest of
Bahamian farmers and fishermen by negotiating in their best
interest on matters relating to free trade at the regional
and global levels (e.g. Caribbean Community CARICOM, the
Free Trade Areas of the Americas (FTAA) and the World Trade
Organisation (WTO);
Create new industries
through the industrialisation of various agricultural and
fisheries products such as canneries and food processing
plants;
Provide some level of
compensation for food producers who lose crops, animals
and/or machinery and equipment due to natural
disasters.
MANUFACTURING
In order to reduce the
heavy reliance on tourism and also in order to retain a
greater share of the income generated from that industry, it
is important to diversify the economy. This will give
Bahamians additional avenues to showcase their skills and
talents while providing them with opportunities for economic
and social advancement.
To ensure growth and
development of the manufacturing sector Coalition+Labour
will:
Identify key areas within
manufacturing that can easily and quickly be developed and
provide interested Bahamians with the necessary business and
technical skills training to enter these areas.
Encourage greater numbers
of Bahamians to engage in manufacturing enterprises by
providing attractive tax concessions and
incentives.
Encourage the development
of links between local capital and craftsmen (both locally
and within the CARICOM region) to establish manufacturing
firms in The Bahamas.
Provide special
concessions to manufacturers located on the Family
Islands.
Remove all excise taxes on
locally manufactured items to reduce their cost to external
markets.
Grant a reduction in the
Business Licence fees of businesses purchasing locally
produced goods.
Establish policies, which
ensure that government agencies give first and real
consideration to purchasing locally produced
goods.
Development of the food
industry, along with Tourism and Financial Services can then
provide a foundation upon which an endogenous development
strategy can be built.
Success, however, requires
appropriate agricultural and industrial policies, the
political will to stay the development course and investment
by the government in human resources, skills, technological
capacity and innovation.
The Bahamian economy will
then have a link through the export of food products to the
world economy, and Bahamian manufacturers would have scope
for exploiting economies of scale, while being forced into
competitive discipline, and greater efficiency, quality and
profitability.
We have to seek close
integration with the hemispheric and world
economy,
The FTAA will have a
serious impact on a number of economic activities at the
expense of local productive initiatives and the development
of our technological capabilities and industrial
competency.
We will therefore need to
demonstrate fiscal prudence, a higher level of savings, and
aggressive export policies. Industry will become an engine
of further growth
New Globalisation of
the Economy
We have designed a Global
Commerce Initiative, which includes eight (8) major economic
development programs designed to work in tandem to bring new
economic prosperity to the Bahamas, and to refocus the
Bahamian economy for the future.
The GCI is an overall
legislative supplement for pragmatic Governmental reshaping
of the Bahamian economy to get in stride with new global
economies, which are fast replacing the old economies around
the world.
The Bahamas cannot afford
to sit idle in this new information superhighway global
economy, but must move forward and be proactive in the new
global economy. The recent Black listing can eventually be
devastating to the economy and is a sign of what is to come
if the Bahamas does not keep up with modern futuristic
trends in the world economic trends.
Not only will the GCI
produce exciting new opportunities for Bahamian businesses
and workers but it will ensure that every Bahamian with an
economic dream will have an excellent opportunity to
maximize the use of his or her talents, and money making and
business ideas. This initiative will place the Bahamas as
the leader at the forefront of a new trend in the region, if
not the world.
The successful
implementation and even the announcement of the GCI will
garner a significant amount of positive public relations for
the Bahamas, consolidating its role as a leading economy in
the region while simultaneously bolstering its reputation
among potential foreign investors.
1. The
Information Technology Business Services Act
2. The International Trade Business Services & Support
Act
3. The Foreign Public Company Support Act
4. The Citizens Foreign Investment Act
5. The Small Business Development Act
6. The College of the Bahamas GCI Division
7. The Information Technology Infrastructure Act.
8. The Bring It Home Initiative
Each of these programs is
designed to provide innovative futuristic approaches to the
provision of lucrative jobs in the economy and the massive
inflow of monies from foreign sources into the Bahamian
economy. These types of economic intervention will produce
the kind of top quality employment and business operations
that will place the Bahamas right at the top of the world's
new economies. In addition, the GCI and its programs are
specifically suited to directly benefit from the proximity
of the Bahamas to the United States and the one to one
functioning of its currency float with the U.S.
dollar.
Legislation to provide
incentives for foreign companies, e-commerce and other
Internet based operations to set up and operate out of the
Bahamas. This is an important future industry because of the
capabilities of the information superhighway technologies,
and the resultant increase in the globalization of
economies, which the Internet and its technologies will have
on the future of business.
Currently many major
industrial countries are falling short in providing the work
force needed to keep pace with the burgeoning information
and Internet based industrial needs. This initiative affords
the Bahamas the opportunity to fill such needs. In addition
there will be increasing legislative restraints and other
regulations in major European countries and the U.S., which
will force Internet heavy business operations to seek
alternative regulation free domiciles.
The Bahamas with its
proximity to the U.S. is a prime domiciliary for such
companies who will be increasingly seeking domiciles other
than the regulatory intense U.S. and European markets. With
proper legislation providing less regulation, fewer taxes,
special incentives and a highly literate work force
Companies will be able to set up their Internet intensive
operations in the Bahamas. This Incentive allows the Bahamas
to benefit from the trend for many communities worldwide to
establish their own version of "Silicon Valley".
In addition the vagaries
of the new laws being spawned by the Internet is an
interesting and powerful new element which is just beginning
to affect the business world. Changes in Intellectual
property laws and protection, privacy and security issues,
banking and transactional actions, online signatures and
numerous other global legal problems will be at issue and
need to be resolved. This trend will have a major effect on
all business transactions with time, and will offer
additional opportunities for countries like the Bahamas with
a history of fashioning successful legislation to benefit
from such events, if positioned properly and timely.
Implementation of the GCI will allow the Bahamas to be
timely and appropriately positioned to maximize the benefits
from this phenomenon.
With the initiation of the
Free Trade Area of the Americas in 2005, countries are
gearing their economies to meet an anticipated expansion in
hemispheric and global trade. The Bahamas must also prepare
itself to exploit this new frontier.
Tourism and Services have
not filtered to the south-eastern islands. On the other hand
the bight of Acklins is ideally suited for the
development of a major port facility for the
southeast Bahamas. A Free
Trade Zone can be established in the twin islands of
Acklins and Crooked Island as a transshipment
point between the US and Latin American countries. This will
also call for possibly negotiating bilateral trade
agreements with Cuba, Haiti and the Dominican Republic, our
neighbours to the south. Haiti is a potential source of
controlled inexpensive labour. The Dominican Republic is a
manufacturer of textiles and computer parts. Cuba is a
source of technological components for the medical industry
and the movement of Cuban products into the US
market.
With the development of a
Free Trade Zone, the trade dynamics of the Bahamas will
change enabling it to become a leading manufacturing
centre.
Bahamian businessmen will
have the opportunity to become manufacturers in the
zone.
An economic bonanza,
fuelled by the construction of a new port; the building of a
new city; the resettlement of thousands of Bahamians to work
and live in the zone along with other Caribbean peoples will
create a multi-lingual sub-region in The Bahamas with the
potential ultimately to rival the development in the
Northern Bahamas.
Conclusion
Economic
diversification requires concentration on enhancement of
knowledge and skills for human capital development to offset
high labour costs. There is a need for a plan for greater
consolidation of human resources. There is currently an
estimated 24% enrollment in tertiary education. The
objective should be to increase that per
centage.
There is a need for a
plan to exploit the larger base of such intellectual
industries.
TOURISM
1. Tourism can be
strengthened by the development of niche markets such
as eco-tourism and expanding the customer base
outside of the eastern seaboard of the U.S. Further, the
government should create a destination of international
appeal by reducing reliance on the U.S. market which
produces some 81.9% of our visitors, while only 8% come from
Europe, 5,7% from Canada, and 4.4% from other
countries!
2. Visitors from outside
the U.S. stay longer. Canadians and Europeans average 9.2
and 10.3 days compared to the U.S. stay of 5.7, and are from
higher income groups and thus are likely to spend more.
Customer diversification would give greater
protection against external events.
3. Creating a
multinational destination would also bring added
benefits, but this calls for a multi-lingual population. Of
stop over arrivals in the Caribbean, Puerto Rico got 19%,
the Dominican Republic got 15.6% and the Bahamas got 9.3%.
Visitors flocked to Spanish speaking countries indicating
the value of a second language to an economy.
4. Cruise ship
passengers to the Bahamas grew by 26% compared to
stopovers, which increased by a mere 1.2% but they spent
only $55.70 per day compared to $162.70. They should be
encouraged to spend more onshore.
5. This can be addressed
by diversification of the tourism product through
value added to more creative services in the areas of
Bahamian entertainment, food and culture. Other
attractive and marketable services include sport fishing,
bird watching, and other eco-touristic
features.
|
