US report laments significant downsides to investment in Bahamas

The US Department of State’s 2021 Investment Climate Statements on The Bahamas outlines significant downsides to investment in The Bahamas, listing things such as a lack of transparency in government procurement, high labor costs and inefficient approvals processes as continuing pain points to doing business in The Bahamas.

According to the US Department of State’s website, the Investment Climate Statements “provide country-specific information on the business climates of more than 170 countries and economies” and are prepared by embassy officers in those countries as analyses for potential investment by US businesses.

The statement explains to potential investors that while The Bahamas’ positives include its political stability, English-speaking workforce, stable financial services industry, rule of law, respect for contracts, independent judicial system and strong purchasing power, the outlined negatives continue to be barriers to business that Bahamians and foreign business people have asked to have changed for decades.

The statement reveals that impediments to investment also include labor shortages, time-consuming resolution of legal disputes, internet connectivity issues and high energy costs.

The statement explains that the cost of electricity in The Bahamas is on average four times higher than in the US, though Bahamas Power and Light (BPL) has had recent reductions in the average cost of electricity over the past year through fuel hedging.

The statement adds that BPL’s power is “driven by antiquated generation systems and a dependence on inefficient fossil-fueled power plants”.

“To remedy energy sector deficiencies, the current government has prioritized infrastructure projects focused on non-oil energy, including a liquefied natural gas (LNG) plant and various solar projects, however the LNG plant is stuck in multi-year negotiations,” the statement notes.

It also points to an “absence of transparent investment procedures and legislation” as problematic to investment in the country, adding that US and Bahamian companies have reported that after long business dispute resolution processes, it could take years to collect the debt following court judgments.

Approval processes such as the acquisition of work permits have been described as “cumbersome and time-consuming”.

“The Bahamian government does not have modern procurement legislation and companies have complained that the tender process for public contracts is not consistent and it is difficult to obtain information on the status of bids,” the statement points out.

“In response, the current government passed a Public Procurement Bill and launched an e-procurement and suppliers registry system to increase levels of accountability and transparency. The Public Procurement Bill was passed in March 2021, but has not yet been fully enacted.”

The statement also mentions the protection of 15 sectors reserved for Bahamians as a barrier to doing business, though it did explain that those sectors could be entered with consent from the National Economic Council.

“These sectors include commercial fishing, public transport, advertising, retail operations, security services and real estate agencies, among others,” the statement notes.

“In 2018, the government set a goal of accession to the WTO by the end of 2019, which would require opening at least some of these protected sectors to foreign investment. However, the government later confirmed it was unlikely accession would take place before 2025.”

The US also pointed out that The Bahamas continues to be a mid-range country on Transparency International’s Corruption Perception Index, with a score that has worsened by eight by points since 2012.

“The Bahamas still lacks an Office of the Ombudsman to strengthen access to information, nor has it fully enacted its Freedom of Information Act or appointed an independent information commissioner,” the statement points out.

“Although the current government is pursuing legislative reforms to strengthen investment policies, progress on these efforts has been mixed.”

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source https://thenassauguardian.com/us-report-laments-significant-downsides-to-investment-in-bahamas/