Speech: Investments Incentives Bill, 2016

It is both an honour and a humbling privilege to be able to rise and second this bill as the first Minister for Grand Bahama, on behalf of the great people of Pineridge and the residents of Grand Bahama, who I am privileged to serve. I am most grateful to the Member for Centerville, for the confidence he has placed in me as one of the new generation leaders to pioneer this important piece of legislation on behalf of the people of Grand Bahama, who have suffered much over the years because of the down turn in the economy.

Mr.Speaker, over the last four years my team at the Ministry for Grand Bahama has worked tirelessly to lay a solid foundation, and as we have the administrative responsibility to implement many of the evidence based government policies, this Bill, which we are debating today, and one that I fully support, will cause an economic paradigm shift on the island of Grand Bahama.

Mr. Speaker, over the last four and a half years, through the collaborative efforts of my ministry and our private sector partners, we have chartered a new course for the island of Grand Bahama that will be beneficial for all residents. I believe this transformative partnership, which is focused on training, employment and entrepreneurial opportunities, will create a brighter future for the residents of Grand Bahama Island.

Mr. Speaker, I would like begin my contribution with a brief history of the signing of the1955 Hawksbill Creek Agreement, between the then Government of The Commonwealth of The Bahamas and a prominent financier called Wallace Groves, which would ultimately change the island of Grand Bahama and impact both the local economy and by extension, the country’s economy, forever.

Mr. Speaker, this historical agreement caused the creation of an economic, free trade zone, which would ultimately open the door for a thriving industrial sector, allow for global interconnectivity and eventually put Grand Bahama on the map as a major maritime player.

Mr. Speaker, as a part of this agreement, the government consented to grant conditional purchase leases for fifty thousand acres of crown land surrounding the Hawksbill Creek and to grant a conditional purchase lease of the seabed under the Hawksbill Creek.

In exchange for these parcels of land, the Grand Bahama Port Authority committed to the dredging of a deep water harbour and accepted the administrative responsibility to operate and maintain the port in accordance with international best practices.

Additionally, they committed to promote and encourage the establishment of factories and other industries on the island, create jobs for local residents, construct schools, provide adequate medical services and facilities, with properly trained and qualified medical personnel in accordance with good, standard medical and hospital practices.

They were also supposed to provide living and office accommodations for government employees stationed in the Port Area for the maintenance of law and order, the administration of justice and the general administration of government services such as the collection of customs duties and a host of other mutually agreed clauses and conditions as set out in the original Hawksbill Creek Deep Water and Industrial area act, which has since been extended by previous governments throughout the years.

From the date of the signing of this agreement, Mr. Speaker, it was clear that this important public private partnership has made a significant impact on the island of Grand Bahama and over the last few decades has been used as the template for other nations, who have created their very own free-trade zones in their various jurisdictions. However, it is important to note that not only did these countries use our template, but they modernized it and are now operating far more competitive Free Trade Zones, in accordance with international best practices.

Understanding this reality, in our Charter for Governance, the Progressive Liberal Party made a commitment to the people of Grand Bahama that upon being elected to office, we would establish a ministry that would focus on the specific needs of the entire island and not just the city of Freeport. With this in mind, the mandates of my ministry were carefully and strategically crafted to create a paradigm shift on the island of Grand Bahama. These two essential mandates, which are essential to the enactment of the Grand Bahama (Port Area) Investment Bill, 2016, include the Revitalization and Promotion of Grand Bahama and improving the Relations between the government, the Grand Bahama Port Authority and other major stakeholders on the island.

Mr. Speaker, thanks to the visionary leadership of the Member for Centerville, my ministry is now fully operational and working for the common good of all the residents of Grand Bahama from Sweetings Cay to West End.

Mr. Speaker, upon realizing that certain tax concessions in the Hawksbill Creek Agreement were due to expire and, to ensure that we improve the quality of life for all residents, expand the industrial sector and further develop Grand Bahama’s economy, we began the long and complicated negotiations with the Grand Bahama Port Authority, Hutchinson Whampoa Group of Companies, other major stakeholders, the licensees of the Port and the people who would` be affected most of all, the residents of Grand Bahama.

Mr. Speaker, the Hawksbill Creek Review committee, led by Chairman Dr. Marcus Bethel, was established by the Member for Centerville to carefully review the Hawksbill Creek Agreement in its entirety, assess the current economic situation of Grand Bahama and to make important and necessary recommendations for the way forward, with respect to the negotiations pertaining to the expiring clauses of the Hawksbill Creek Agreement.

After many months of long negotiations, the principles of the Grand Bahama Port Authority and the Government of The Bahamas came to a mutual understanding and agreed to provide conditional extensions of the concessions by way of a complex working Memorandum of Understanding.

As with other nations and jurisdictions, this administration realized the importance of incentivizing businesses in order to grow and further develop the economy of Grand Bahama. Additionally, we realized the importance of modernizing business practices in the city of Freeport which would ultimately benefit all domestic and international investors alike.

Mr. Speaker, the harsh but honest reality is that we could not go on with business as usual on Grand Bahama because the existing business model was outdated and simply no longer working effectively for the people of Grand Bahama.

Mr. Speaker, there is no question that The Grand Bahama Port Authority facilitated much economic growth and development for the City of Freeport in the past; however, moving forward, as we seek to chart a new direction and further expand our local economy, it is paramount that the government of The Bahamas has equity and a seat at the table so that we can work in tandem with our partners to achieve this goal.

Mr. Speaker, the detractors will argue that this move is intrusive, that the Government is “getting in the way of business” and will somehow increase the bureaucracy and stifle the economic growth of Grand Bahama. This could not be further from the truth. Mr. Speaker, the government, having a seat at the decision making table guided by international best practices and crucial policy changes, will not hurt, but rather help in facilitating even more investments and stimulate economic growth for Grand Bahama Island.

Mr. Speaker, this strategic move by the government will certainly improve the ease of doing business on the island, encourage existing businesses to expand, attract new investments to Grand Bahama, and create sustainable jobs and entrepreneurial opportunities for Bahamians.

Mr. Speaker, with the assistance of our consultants and partners, we will develop a workable strategy to reduce the red tape that holds up investment projects and ultimately improve the ease of doing business through the creation of a “One-Stop-Shop”. Much of the preliminary work to effectively establish this “one stop shop” on Grand Bahama Island has already been completed by my Ministry. With the support from the Office of the Prime Minister and the AG’s office, we will create workable policies and synergies with other public sector counterparts to ensure that investment applications are processed in a more timely and seamless fashion, and in accordance with international best practices. This, Mr. Speaker, will ease the burden of doing business on Grand Bahama Island, for international and local investors alike.

This new model, which is currently being designed, will allow for a true partnership. Together with our stakeholders, we will ensure accountability and execution of responsibilities based on existing strengths.

Mr. Speaker, under this new model the Grand Bahama Port Authority and the government will have mutually agreed upon, specific responsibilities. Under the existing Hawksbill Creek Agreement, the GBPA will still be responsible for the granting of business licenses but the Government will now have the responsibility for granting concessions to potential investors. This will cause the government to play a more integral role in the facilitation of new investments and existing businesses on Grand Bahama Island, making the entire process faster, and more accountable and transparent.

Mr. Speaker, others have argued that if the Government allowed the expiring concessions to fall away, we would reap hundreds of millions in tax revenue dollars. In theory this sounds great, but based on research and on advice from the business community, we believe that this approach would prove to be counterproductive in the long run and instead of stimulating economic growth, this strategy could potentially result in the downsizing of existing businesses and ultimately stagnate economic growth.

In fact, Mr. Speaker, our research clearly indicates that there is evidence to support the notion that additional taxes in Freeport would prove to be counterproductive and could potentially result in the collapse of the economy of Grand Bahama Island.

Mr. Speaker, as noted, The Government not only engaged the principals of the Grand Bahama Port Authority with regards to the extension of these provisions of the Hawksbill Creek Agreement but we also sought after and engaged other stakeholders, those in particular who would be impacted both immediately and in the long term, regarding any decision we made.

Mr. Speaker, I would dare say that these negotiations have been some of the roughest, harshest and most intense negotiations any Government of this country has ever entered into. However, despite the many challenges we faced during the entire negotiating process by the Cabinet sub-committee, chaired by the Member for Centerville, the Bahamian people will finally have a voice at the table.

Mr. Speaker, I am pleased to report to the people of Grand Bahama that with the passage of this Bill, one of the leading investors on Grand Bahama Island, Hutchison Whampoa, in conjunction with the Mediterranean Shipping Company will proceed with its two hundred and eighty ($280) million dollar expansion of phases 5 and 6 of its container port, which will pave the way for the two hundred and fifty million dollar cruise port, targeted for East Grand Bahama.

Mr. Speaker, with the passing of this bill, the people of Grand Bahama will witness in excess of a half a billion dollars injected into the local economy. This is the kind of economic investment capital that is necessary to prime our local economy, stimulate economic growth, and increase employment and business opportunities for Bahamians.

Mr. Speaker, this Grand Bahama Investment Incentives Bill, 2016 is a monumental Bill and in years to come,will be one of the many positive legacies of this Perry Christie led administration. It will serve as the fulfillment of an important criteria that is necessary for the paradigm shift for the future development of Grand Bahama Island.

Mr. Speaker, I now turn my attention to the Grand Bahama Investments Incentives Bill, 2016 but before I get into certain sections of this Bill, I would like to point your attention to the interpretation of four key words, as outlined in the Bill and to clearly note that this bill does not apply to Bahamians who are not licensees of the Grand Bahama Port Authority full stop.

1) “Board” means the Investment Board established by section 12 of the International Persons Landholding Act. This Board is chaired by the Prime Minister as that office holds responsibility for investments and will comprise of relevant Cabinet Ministers.

2) “Concessions” means exemption from the payment of certain taxes in accordance with this Act. For clarity, this Act speaks to concessions relative to real property tax, real property levies and personal property tax, capital levies on taxes, on capital gains or capital appreciation, and a zero tax regime in respect of the earnings of the Grand Bahama Port Authority and the earnings of Port Licensees.

3) “Licensee” unless otherwise expressly stated, means a licensee of the Port Authority.

4) “Non-Bahamian” – one who is not an ordinary citizen of the Commonwealth of The Bahamas. Or A company in cooperated in the Bahamas where any shares or other capital is owned by a person who is not a citizen. Or a company in cooperated outside of the Bahamas or an international organization.

Mr. Speaker upon close examination of this Bill, I am certain that many questions will be asked during this debate but before I take my seat, I would like to answer three basic questions in an attempt to simplify some of the complexities of this Bill.

1. What is the purpose of this Bill?

2. To whom does this Bill apply?

3. What is being offered?

What is the purpose of the bill?

Mr. Speaker, having finally arrived at a mutual agreement with the principals and stakeholders of the Grand Bahama Port Authority in the form of the Memorandum of Understanding, this Bill was the legislative requirement necessary to implement many of our agreements in the MOU, using the MOU as a template. This was a difficult task for the legal draft person. But I would like to take this opportunity to thank the legal team from the AG’s office for their professionalism and hard work.

Mr. Speaker, the successful passage of this Bill will be accompanied by regulations by the Minister responsible for Investments.

Who does this Bill apply to?

Mr. Speaker, this piece of legislation applies to Bahamians and Non-Bahamians licensees, with existing developments and undeveloped land in the Port area.

1. A licensee who owns less than 5 acres of undeveloped land in the port area.

2. Non Bahamian licensee who owns five or more acres of undeveloped land in the port area, and carries on or intends to carry on business within the Port area whether or not the licensee is the beneficial owner by an affiliate of such person.

What’s being offered?

Mr. Speaker, earlier in my presentation I attempted to explain in the most basic terms, exactly what the people of Grand Bahama will get out of this deal and how the residents and by extension , the entire island will benefit.

1) The concessions as earlier defined will no longer be automatic for existing or new businesses on Grand Bahama. Each business, will be assessed on a case by case basis, and will have to apply in writing for an extension of the concessions and such concessions, will only be granted by the Board once certain conditions and criteria are met.

2) In this Bill Mr. Speaker, existing investments on developed land; once they satisfy the Board of a sure plan they will receive swift approval, whereas new businesses on undeveloped land will be classified as small, medium and large and depending on the nature of the business some of the steps outlined in section 5 under the application of concessions may be waived by the board. In other words, let’s say there’s an existing business on 6 acres of land, but the developer owns 13 acres of land that is not contigious. Under this new business model, it will be possible for the developer to only be granted concessions for the 6 acres, however, concessions for the remaining 7 acres of land, will not be granted until the criteria is met for that portion of the undeveloped land, even if the six (6) acres are located in region of the harbour and the remaining seven (7) acres of land is in downtown area.

3) Businesses will be granted confidentiality;

4) Licensees will be required to report on their developments on an annual basis or as stipulated upon approval. And,

5) Developments which violate this Act shall be subject to penalties.

In other words Mr. Speaker, businesses will no longer be incentivized for poor management.

No longer will investors be able to buy commercial land on speculation. No longer will big companies receiving concessions and lay off workers without just cause yet still enjoy the benefits of operating tax free.

Mr. Speaker, no longer will developments on Grand Bahama be incentivized while creating known damage to the environment. No longer will developers be able to invest without proper monitoring schedules. As a jurisdiction we must ensure work is being carried out as promised, and in keeping with best business practices.

Mr. Speaker, the new Grand Bahama will be one where commerce is incentivized, but the Bahamian people are also protected. Businesses will be given an environment to grow, but will also be held accountable. Greater accountability, transparency and fairness will be the order of the day.

Workers and the small man will be protected by the government as developers will have to ensure such protections are in place before being incentivized.

Finally, the people of Grand Bahama will reap the benefits in the form of investment opportunities and the creation of jobs.

The Government of the Commonwealth of The Bahamas and the Grand Bahama Port Authority and other stakeholders will work hand in hand, side by side for the best interest of all, for the further development of the City of Freeport, the Port Area and by extension the Island of Grand Bahama.

Mr. Speaker, we fought very hard, tooth and nail, for the best possible deal for Grand Bahamians and I am satisfied as Minister for Grand Bahama that we did our best and finally the people have equity and a seat at the table. I wish to thank my hardworking staff at the Ministry for Grand Bahama, the Hawksbill creek review committee, the Grand Bahama Port Authority, the Hutchinson Group of companies, the business community and Grand Bahamians from Sweetings Cay to West End for your ideas, comments, commitment and determination in assisting this administration with bringing this vision to life, which will ultimately create a better Grand Bahama for all of us!

And finally, Mr. Speaker, I wish to once again, thank my constituents, who have sent me to this Honorable place to speak on their behalf and I can truly say, unreservedly, that I am most confident that despite all of the challenges we faced during the negotiations history will reflect that we did our best for the people of Grand Bahama and by extension the entire country.

Mr. Speaker, as Minister for Grand Bahama I am proud to second this Bill and I stand resolute in my conviction that it will be the catalyst that will help us to build a better, safer, prosperous and stronger Grand Bahama!

With these few words, Mr. Speaker, Pineridge supports the Bill.

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