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THE BAHAMAS

The Bahamas Tourist Office / Greg Johnston / Julian Bajzert

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The Bahamas — Still booming Sustainable projects are continuing to come on stream for the island paradise.

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country built on a thriving tourism industry, the Bahamas has made significant strides into diversification in the last decade. With government estimates putting foreign direct investment in the last 15 years at around the U.S.$8-10 billion mark, the paradise archipelago continues to be one of the most successful economies in the Caribbean. As he approaches the end of his first year in office, Prime Minister Hubert Alexander Ingraham remains committed to keeping the Bahamas attractive for investment, and creating jobs for the Bahamian people. Deputy Prime Minister Brent Symonette says, “The Free National Movement’s policy is that government should not

optic cable installed to link the nation in 2005-6, means that today, BTC can provide the whole gamut of telecoms services on each of its major islands. Leon Williams, BTC’s president and CEO says, “When you look at the major conference centers in the Caribbean right now, one would certainly be the Atlantis, one of the mega developments currently under construction in the Bahamas. From an occupancy and size level, it has all that is required. As a telecommunications provider for the Atlantis, we are hoping to provide ubiquitous GSM coverage there very shortly and have spent more than U.S.$5 million on this already. When

Brent Symonette, Deputy Prime Minister

be in business. Investors here feel confident and safe. They know they can take their investment back in U.S. dollars and it is for this reason we have a high GDP. Tourism, and our second economic pillar, financial services, have provided some high-end jobs. We have been fortunate in being able to make sure the Bahamians hold those jobs.” It is hoped that double-digit unemployment figures are in the past. Zhivargo Laing, Minister of State for Finance notes, “Essentially, the Bahamas’ economic model hasn’t changed in 60 years and it is unlikely to change in the future. Much of our focus is therefore on finetuning the advantages we have, enhancing the tourism and financial services sectors. Given our investment track record, we want to ensure international investments have the kind of integration and synergies with local investments that allow greater retention of foreign reserves, thus spreading the generated wealth throughout the islands.” Fiscal prudence is a significant focus of this administration, Laing says. “We recognize there is a need for us to manage the fiscal affairs of the country so that we can continue to give ourselves a kind of security cushion in the face of a dynamic world—one that will allow us to respond better to any external shocks.” The government’s desire to distance itself from entities that might better function as private businesses is best exemplified in telecommunications and power. The Bahamas Zhivargo Laing, Minister of State for Finance

Telecommunications Company Ltd. (BTC) celebrated its most successful year in 2007, with revenues reaching a record U.S.$327.4 million, showing that its customer-focused approach is paying off. Five years’ worth of solid investment, that includes a U.S.$60 million submarine fiber

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THE BAHAMAS

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we replicate the Atlantis service to other hotels, the Bahamas will be in a position to compete. But from a business perspective, we have all the connectivity.” As Williams notes, the Bahamas is one of the Leon Williams, President and CEO, BTC

best-connected island nations in the region. “There are four cables connecting us to the U.S.” he says, “and besides that, we have satellite back-up to the cables. Now that we have the Bahamas Domestic Submarine Network, we no longer have an issue getting bandwidth to any one island. An investor coming here can be assured of connection to the rest of the world, via DSL, high-speed Internet, GSM and so on. We are deploying a mesh WiFi network which is bringing to fruition the concept of lying on the beach while connected to your laptop.” BTC has been in business for over a century, and while it may no longer have the monopoly, its role as telecoms provider is more important than ever. Corporate social responsibility and equality are integral parts of the company philosophy. “BTC is bigger than the company. BTC IS the Bahamas,” says Williams. ”My job is not about trying to install fixed lines and bring in new technology. It is about ensuring that every resident has a right to ICT. There are parts of the country where residents have a BlackBerry, GSM phone, TDMA phone and a CDMA phone. Then there are citizens who don’t even have dial-up access. It is easy to marginalize citizens in the same country, and then you end up growing the digital divide. “My role is also to ensure the connectivity is affordable. In the Bahamas, implementation is asymmetrical but if you don’t have universal rates, those people who can least afford it are the ones who end up being charged more. “As a manager, you need to listen to the voice of the customer. I need to have town meetings, I need to be doing polls to find out what the

customer wants. You need to put the customer at the center, to hear what the issues are. You need to address the common issues, instead of getting side-tracked. It has to be for the betterment of the entire population, not only for the individual.” Giving more power to the people is also the mantra of the Bahamas Electricity Corporation (BEC), an entity that is being kept increasingly busy with demand from the numerous boutique and mega resorts coming on stream. Minister of Public Works and Transport, Earl Deveaux says, “We meet with all developers to get an indication of their needs and then plan for the investment and infrastructure to accommodate the demand. That might mean constructing new plants or licensing additional facilities. We are currently installing new powering capacity.” Kevin Basden, general manager of BEC, speaks of the challenge of supplying power to new projects while taking care of existing customers. “From a planning perspective, we have a 5-10 year forecast which will take care of the ordinary growth, but we have to factor in the major projects as well,” he says. “If developers give us the information ahead of time, it allows us to complete the design and make the necessary procurement because all of our products are imported. To date, we are doing okay and have been able to have it ahead of time. “There are definitely opportunities for foreign investors in terms of building power stations, and for the provision of spares or supplies and materials. There is also potential for financing, especially the major capital projects. Do we do it by means of a bond, a loan or supplier financing, for example?” There are also some major road construction projects under way. Minister Deveaux says, “One of our key strategies is to complete a new corridor system in New Providence, to ensure the bridges and airports bringing in tourists are well-connected so that both tourists and the local population travel the shortest distances possible.”

Business Focus

www.businessfocus.org.uk

The Central Bank of The Bahamas: achieving democracy, stability and integrity The Central Bank of The Bahamas (CBB) has played a pivotal role in the Bahamian economy for more than 33 years. Having been established less than a year after the Islands gained independence from Britain, the CBB has worked to promote a stable economy for the population and investors alike. Moreover, as The Bahamas’ financial services sector has grown, the Central Bank’s goal to promote high standards of conduct and management has become a crucial and important one. Wendy Craigg has been Governor since June 2005, and has been closely involved in initiatives that enhance the delivery of domestic banking services, such as the modernization of the ongoing payments system, including the Real Time Gross Settlement System and the Automated Clearing House. Seven years ago, much of the CBB’s legislation was overhauled to strengthen The Bahamas’ examination and supervisory regime. As Governor Craigg explains, “The Bahamas undertook a number of legislative and regulatory initiatives to ensure that our financial services regime was aligned with best practices in the international financial arena, and we are presently engaged in other measures aimed at maintaining a robust, reputable, and business-friendly environment.” Evidently, it has been successful. With an unprecedented amount of foreign investment being channeled into the islands in recent years, investors are already putting their trust in The Bahamas, and have found a country with a long history of political and economic stability, an excellent workforce, a first-rate legal system, and a government that encourages business growth and development.

Although tourism is the largest sector, making up approximately 50% of the economy, Governor Craigg notes the sizeable direct and indirect contributions being made by the financial services Wendy Craigg, Governor, Central Bank

sector. “It is not unusual for persons who come here on financial business, for example, to eventually have a second home in The Bahamas, and then visit more frequently,” she says. “Therefore, when one considers the secondary effects, there is significant value added, derived from financial services. “We want to continue to offer ourselves as an attractive jurisdiction for private banking and wealth management. We currently have nearly 250 banks in operation, many of which are branches of some of the world’s largest leading financial institutions. As a regulator, the CBB places great value on promoting and maintaining a close, consultative relationship with the banking community so that we are responsive to developments impacting the sector. It is such public-private dialogue that has been key to our success in growing the sector.” New legislation has been introduced for private trust companies, in response to the industry’s view that this could become a lucrative niche market. “The CBB will continue to maintain high standards in its regulatory and supervisory framework, to sustain confidence in The Bahamas as a credible jurisdiction for financial services,” says Gov. Craigg.

The Central Bank of The Bahamas P.O. Box N-4868, Nassau, N.P The Bahamas Tel: 1 (242) 322-2193 Fax: 1 (242) 322-4321 Email: cbob@centralbankbahamas.com www.centralbankbahamas.com

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Bahamas Report March 2008  

Bahamas Report March 2008

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