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Private sector needs year Gov’t changing for WTO ‘acclimatisation’ law for

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

B

ahamian companies must have a year to “acclimatize” before this nation joins the WTO, a prominent businessman yesterday warning the economy will otherwise “slow” pre-accession.

Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that the private sector “needs to be placed in a competitive environment at least a year in advance” of joining the World Trade Organisation (WTO) if it is to successfully compete with foreign rivals.

Given the Minnis administration’s end-2019 deadline to accede to full

* Under 10 months ‘to get act together’ * Economy may ‘stall’ without transition * Clock running on ‘major structural woes’

membership in the world’s trade rules-setting body, Mr Myers said the Bahamas now had less than 10 months “to get its act together” and give businesses enough time to adjust.

Emphasising that much of the economy’s “significant structural problems” stem from Government “inefficiency and lack of accountability”, the ORG principal added that the public sector’s pace of reform to-date suggested it was “impossible” both deal with these issues and ready the private sector in time.

ROBERT MYERS And Mr Myers also warned that the economy could stall as companies held-off

on job-creating capital projects in anticipation of WTO-induced tariff cuts that could make equipment and material imports much cheaper.

He thus called for certainty over the Government’s tax reform plans, and questioned if there would be a WTO ‘transition period’ where companies received ‘rebates’ for preaccession duty payments to place them on a “level playing field” with rivals who had deliberately held off on such imports. “I can tell you

SEE PAGE 4

Oban

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Government has committed to changing the Bahamas’ tax incentive laws solely to “accommodate” Oban Energies’ $5.5 billion oil refinery and storage terminal.

A little-noticed section in the February 19, 2018, Heads of Agreement (HOA) for the now-controversial project discloses that the Minnis administration will “speedily” introduce legislation to amend the Industries Encouragement Act so that Oban Energies

* INCENTIVE ACT TO BE CHANGED, ‘EXTEND’ TAX BREAKS * 600 CONSTRUCTION JOBS SPREAD OVER 10 YEARS * BNT CHIEF’S CONCERN OVER EIA ‘LOCK IN’ can enjoy an “extended” period of tax concessions.

The HOA’s section 12.4 states: “The Government shall, on an expedited

SEE PAGE 8

Insurers: ‘We’ve not relaxed ‘Breadbasket’ reform to our guard’ on KYC changes Cabinet in 3-4 weeks

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHAMIAN general insurers yesterday revealed “we’ve not relaxed our guard” despite being relieved of increased customer due diligence obligations.

Timothy Ingraham, Summit Insurance Company’s president, told Tribune Business that the industry’s memories of the “last minute” Value-Added Tax (VAT) reversal were still too raw for it to completely trust the late change to

* ‘LAST MINUTE’ VAT U-TURN STILL RAW * MARGIN FEAR FOR SMALL AGENTS/BROKERS * WAS ‘DOUBLE WHAMMY’ WITH RATE RISES the Financial Transactions Reporting Bill.

The Minnis administration amended the Bill, prior to last week’s House of Assembly debate, to remove property and casualty insurers from the list of industries defined as ‘financial institutions’.

Had the sector remained in that list it would have been required to impose enhanced Know Your

Customer (KYC) due diligence on all current and former clients, thereby increasing bureaucracy and costs that would likely have to be passed on to Bahamian consumers through higher premiums.

The industry, through the Bahamas Insurance Association (BIA), successfully persuaded the Government

SEE PAGE 4

DOWNTOWN NASSAU HIT BY CRUISE LOSS

By NATARIO MCKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net FIVE cruise ships had to be re-routed yesterday after the Port Department was forced to “shut down” Nassau harbour as a precautionary measure amid heavy swells.

Captain Cyril Roker, the Port Controller, told Tribune Business that large waves had pushed channel markers into the direct deep water path of oncoming vessels.

He added that channel markers or buoys would normally serve as markers for the safest path for such vessels to follow.

“Nothing could have come in or gone out as a result of those buoys being in the channel,” Captain Roker explained.

“We decided to take precautionary measures. The heavy swells took the buoys out of position and put them in the channel, and if a ship came in that could have caused other problems, potentially damaging the ship’s propeller and rudder.

“These buoys consist of a cylindrical object with a heavy chain, and a slab that anchors them to the bottom of the sea. We looked at trying to remove them but we saw that it was too dangerous. There was no possibility of moving them and putting them back in place yesterday due to the rough seas. While five ships is a lot, a life lost is something you can’t pay for.”

* HEAVY SWELLS FORCE FIVE VESSELS TO DIVERT Captain Roker added: “I would say the weather was a factor indirectly. The ships could have come in otherwise. The only time we close the harbour down is when a hurricane is imminent. Once the wind exceeds 50 miles per hour we don’t bring anything in.

“We didn’t have that kind of action. There was a system that came off the coast of the United States

that produced a lot of heavy swells.” Captain Roker said the harbour is now back open.

The Ministry of Tourism, in a statement yesterday, acknowledged that all cruise ships that were due to arrive in New Providence yesterday were rerouted. “The five cruise ships expected to call on the

SEE PAGE 8

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By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

* BUDGET ‘EXPLOSION’ WITHOUT PREVENTION * MINISTER: HEALTH DEMANDS ‘ASTOUNDING’

A CABINET paper on the proposed ‘breadbasket list’ reforms could be ready within three to four weeks, as part of long-term moves to prevent a healthcare budget “explosion”.

Dr Duane Sands, minister of health, told Tribune Business that his ministry had agreed with the Ministry of Labour, Price Control and “other stakeholders” how they would approach public education and the roll-out of an initiative designed to improve public wellness via economic incentives.

Suggesting that the benefits from encouraging a healthier diet may take “a generation” to materialise, Dr Sands said the demand for healthcare services was “astounding” and placing ever increasing pressure on the Government’s Budget

and system. He warned that “the Budget is going to explode”, as in Canada and other countries, unless the Bahamas adopted a ‘preventative medicine’ strategy to tackle the high level of chronic non-communicable diseases (NCDs) plaguing its society.

“Health will prepare the Cabinet paper with recommendations for final consideration, so that what we have discussed on this journey can be debated by that body that makes the final decisions,” Dr Sands told Tribune Business.

“It’s being drafted right now. Realistically, given that it should be completed for my review this week, and then has to be vetted by the permanent secretary here before

going to the Cabinet Secretary for review, then on to the Prime Minister for consideration and to be placed on the Cabinet agenda, we could be looking at three-four weeks” before it is discussed.

The bid to completely alter the Government’s ‘breadbasket’ food lineup aims to align tax and economic policies with the Bahamas’ dietary health needs for the first time since the 1970s. It plans to switch-out many existing foods in favour of products that will encourage healthy eating, replacing the likes of corn beef and sugar.

Dr Sands said a legal opinion from the Attorney General’s Office suggested

SEE PAGE 4

THE TRIBUNE

Tuesday, March 6, 2018, PAGE 3

BTC voluntary departure package ‘is nothing new’

By NATARIO MCKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net A TRADE union leader yesterday denied that the Bahamas Telecommunications Company’s (BTC) latest voluntary separation (VSEP) offer was driven by increased competition, adding: “This is nothing new”.

Bernard Evans, the Bahamas Communications and Public Officers Union’s president (BCPOU), told Tribune Business that the telecommunications provider wanted to reduce the age of its workforce, with the VSEP offer having been discussed - and on the table - since October last year.

Mr Evans told Tribune Business: “There isn’t a target number. There may be one but they haven’t expressed it to us. We have

said before that BTC has an aged workforce. The average tenure of service is almost 27 years. This is an opportunity for certain persons who have expressed an interest in wanting to leave.

“This has been probably the third or fourth such exercise since the sale of BTC. This is nothing new.

We are pretty much getting used to this, and they felt the need to put it back on the table again.

“There were some preliminary discussions on this back in October of last year. I don’t think there is a target number, but I would think persons who are 50 and over, with 50 being the qualifying age for retirement, are persons who may take this opportunity.

“Everyone over the next two or three days will get to look at what their package would be and get to discuss it with their families.

BERNARD EVANS We have been through this before.”

BTC, in a recent statement, announced that as part of a “company wide” strategic approach to transform its business to a more “customer-centric, high performing organisation”, it was making adjustments to how it runs its business. This included carrying out necessary network upgrades, placing more focus on training

and development, and improving back office support to better serve customers. “As part of this broader programme, BTC has implemented a voluntary separation programme (VSEP) to help ensure we have the right structure to succeed, and to address issues in a competitive environment,” the company said.

Data released by BTC’s parent, Liberty Latin America (LiLAC), revealed that the company lost over 60,000 mobile customers, almost 20 per cent of its market, in just over one year as a result of competition. At end-2017 BTC had 228,100 pre-paid subscribers and 26,800 postpaid customers, giving it a total base of 254,900 persons. This compared to the 282,000 pre-paid and 33,000 post-paid subscribers that Liberty’s 2016 accounts

showed it as possessing one year earlier, which was just after Aliv, BTC’s first-ever mobile rival launched in November 2016.

Still, Mr Evans said BTC’s continued restructuring was not solely due to competition. “I don’t want people to think, and some have attributed this to competition, but far be it from that,” he added.

“We anticipated that anywhere from 20-30 per cent would go to the new competitor. What was not anticipated was what we saw over the last four or five years with the advancement of data and bandwidth, the new apps coming out like WhatsApp and the ability to communicate via other mediums instead of incurring roaming charges.

“There was a fall-off on toll charges and roaming charges. Text messaging and all those things that

used to be revenue streams have all fallen off due to the advancement of technology. BTC was experiencing losses for a while. Even inter-island calls fell off because people aren’t using landlines. All these variables played a role in BTC losing revenue,” said Mr Evans.

“It’s not really about the competitor and what they were able to take. BTC made its initial downsizing exercise in 2012 in preparation for the new entrant, so they had almost four years pretty much of enjoying it as the lone operator at that time with a reduced staff of almost 600 persons, and so they would have recognised savings from the reduction four years ago.

While competition may be a contributing factor it is not really the overall means for which this exercise has come about.”

BFSB chair: We must shed ‘offshore’ label

By NATARIO MCKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net THE Bahamas’ financial services industry must shake the ‘offshore’ label, the Bahamas Financial Services Board’s (BFSB) chairman has urged.

Antoinette Russell, while addressing the

International Business and Finance Summit (IBFS), said: “As we hit the reset button, practitioners and regulators alike must move away from describing our financial sector as “offshore”.

“The reality is that our business model is far better described as international.

The Bahamas is an international financial and business centre, not only

due to the vast nature of globally integrated business conducted here, but also the presence of many multinational institutions that have established a strong presence in the Bahamas.

“Therefore, we must first remove ‘offshore’ from our lexicon, which is justified, in light of the preponderance of exchange of information agreements, before and after CRS, and the

Bahamas’ commitment to these initiatives including BEPS. Once we acknowledge how far we have come then we can focus on the way forward.”

Ms Russell added: “In a post-CRS world, the term ‘offshore’ no longer carries the same meaning as it once did, so continuing to use it does not convey what our jurisdiction should be projecting. International is

what we are. We provide a variety of financial services to a geographically diverse clientele.

“The Bahamas is an independent nation with an international profile.

The term ‘offshore’ is, unfortunately, often used interchangeably with tax haven, something we are certainly not. Offshore has an adverse connotation, which the Bahamas

has undoubtedly moved beyond.

“Therefore, we must tell our story.”

Ms Russell said BFSB was committed to being an advocate for industry while also “creating international awareness and appreciation for the attributes which make us the premier destination of choice for those who utilise international financial services”.

Broadcast truck deal an asset for Bahamas A BAHAMIAN production house has sealed an agreement giving them preferred access to a multimillion-dollar 4K Outside Broadcast (OB) Truck to record major events.

The MoVi Group, the sound, lighting and stage, and film production house, revealed the signing of a Memorandum of Understanding (MOU) with MultVideo of Brazil. The deal will enable the company to provide global coverage of major events taking place in the Bahamas, such as the IAAF World Relays and recent FIFA Beach Soccer World Cup. The 4K broadcast truck will provide quality on demand, and at vastly reduced cost to event managers, thereby making it an asset for the Bahamas as its local accessibility will help attract overseas event planners considering the Bahamas for conferences

and events. Its presence will also end the need to import/ export OB Trucks at huge cost, along with related logistics issues, to provide broadcast coverage for events of global interest. It will offer full production and 4K quality broadcast services for international and local onshore events.

Burton Wallace, MoVi’s senior principal, said negotiations began in 2016, and the MOU was eventually signed in December 2017 with the principal of MultiVideo, Sergio Mattoso.

“This is a first for the Bahamas,” he said. “MoVi now has unobstructed access to the OB Truck and its related assets, which are housed in Florida. The first assignment was last month, when a full Bahamian MoVi team manned the OB Truck to provide select global coverage of the Bahamas Basketball Federation national team in games against the Dominican

Republic and Canada, as a part of the FIBA Basketball World Cup Americas qualifiers games.”

Mr Wallace said there will be dozens of opportunities each year to use the MoVi OB. “MoVi already has the technical expertise, as we are regularly engaged by every incoming major event that uses broadcast equipment and needs professional, well-trained, technically-skilled people,” he added. It was a natural progression for us to eventually have our own broadcast unit here to save people time and money.

“Having assets easily accessible at this level also makes the Bahamas a more attractive proposition for event and destination management companies. I saw the need a long time ago.

I just never knew how to satisfy it. One of my mentors taught me business is simple – it’s just a solution

to a problem, with a price tag attached to it. “Being on the perimeter of all these events that we support, we see all this equipment and people being imported all the time, and I realised it would be such a great business opportunity if these things could already be here,” Mr Wallace added.

“When we talk to the people driving these events, they say the same thing: ‘If you guys had this here we’d be calling you all the time’ because they hate having to ship equipment for the job.

They’d like to be able to come here, do their thing, and leave without all the extra hassle to worry about, so that was the spark.

“After getting connected with Sergio, who is from

Brazil, we spoke about business opportunities. I did the research on his company and liked what I saw, and also we got on really well. We made the decision to do business together whilst both working on an IDB conference,” Mr Wallace continued.

What impressed me about him was his support for us, The MoVi Group.

This guy has over 600 people on staff – he’s exceptionally successful – and he’s like: ‘Burton, I want to support you and your company. All of my staff coming to the Bahamas for the IDB conference will be branded in MoVi shirts. We’re there to represent yours.’

“Meeting and working with Sergio, who owns

several successful media companies, has given me a source for services that is just phenomenal. It has greatly increased the footprint of what we can put on the table now for clients, and literally all it takes is a phone call. This business alliance has also opened the door for extensive training opportunities for Bahamians in the tech communications field. For instance, I’m working with BTVI because I want to ensure their studies are in keeping with the tech needs of the day. Also, I’m thinking of MoVi Internships for UB students. We now have the capability to produce world-class communication technicians at all levels. The opportunities are many.”

PAGE 4, Tuesday, March 6, 2018

THE TRIBUNE

Private sector needs year for WTO ‘acclimatisation’ FROM PAGE 1

that if we are not liberalised ahead of accession we are creating a tremendous threat for Bahamian businesspeople and entrepreneurs,” Mr Myers told Tribune Business. “They need to be placed in a competitive environment at least a year before we accede to the WTO. “Assuming it’s the end of 2019, that leaves us 10 months to get our act together. That’s very aggressive, but we want to get a level playing field at least a year in advance of accession to get the inefficiencies out of the system.

“We’ve got significant structural problems caused by inefficiency and lack of accountability, and those have to be overcome before they thrust us into a globally competitive environment,” he continued.

“Those structural issues in the Bahamas that make the private sector uncompetitive are largely caused by government inefficiency and lack of accountability, and those have to be overcome to be globally

competitive. We’ve got to get our house in order at least a year ahead of any final WTO accession. The tax-paying private sector is already tapped out.”

Mr Myers ran through his previously-identified ‘to do’ list, including the ‘ease of doing business’, the cost of electricity and labour, exchange control liberalisation, interest rates and banking regulations.

Emphasising that the Bahamas needed to be at least “competitive with our regional competitors” in all these areas prior to completing the WTO accession process, Mr Myers said providing the private sector with a year-long adjustment ‘window’ was “not possible” based on a combination of the 2019 target and the Government’s progress to-date.

“It took us 18 months to debate VAT, and get the right programme and framework in place,” he told Tribune Business.

“This is equally as complex. In my opinion, we’re not there. We cannot fix these structural issues in 10 months.

“You’re talking two-anda-half years [to complete the accession]. We don’t want to drop the barriers and give no adjustment period to local businesses.

You’ve got to give at least a year for local businesses to adjust once you’ve got those barriers out the way.

There’s some big, big gorillas in the room when you get into that discussion.”

Mr Myers suggested such a ‘transition period’ would enable the Bahamas to avoid uncertainty that could stall the economy, and prevent ‘arbitrage’ between pre-accession and post-accession duty rates.

“If I buy a $300,000 piece of equipment, a crane, today for my construction company I’m paying 55-60 per cent in duty on that crane,” he explained. “If you say you’re liberalising trade in goods and services in a year-and-a-half, is the Government going to pay me back duty on the crane so I’m competitive with the guy that brings in a crane after WTO? “What am I going to do with that? The $125,000 duty that I’ve paid, I can’t

write it off in a year. All of these equipment and construction costs, all these things you’re [the Government] doing now, you’ve got to be careful not to deter people from hiring and expanding now and slowing the economy.

“Anything you do now, and do not get rebates back, makes you less competitive in a global economy. This is why you have to give people a year, year-and-a-half, two years to get acclimatized and deal with these issues.”

The Bahamas will have to either eliminate or slash multiple Customs duty rates and tariff lines, as these are seen as ‘barriers to trade’ under the WTO. However, the Government appears to be some way off in determining which tariffs will be affected and, in any case, this will have to be negotiated with those nations wanting to trade with the Bahamas.

“Any capital expenditure, people are going to be saying: ‘Let’s not do anything’,” Mr Myers explained of his duty uncertainty concerns. “We can’t stall the economy, but if

you’re not going to give credits against what you get in the future, it’s going to send the wrong message to industry.”

He added that ‘economies of scale’ meant Bahamian businesses were already at a disadvantage in having to compete against larger foreign rivals in a rules-based, liberalised trading environment.

“We are already going to be at a disadvantage, everybody, on one issue alone and that is sheer economies of scale,” Mr Myers told Tribune Business.

“It’s going to be very difficult for these small island nations to compete with these larger and more sophisticated companies as they have such massive advantages with economies of scale.

“That is very worrying, and needs to be discussed within the Ministry of Financial Services and Trade Commission. It’s a significant concern.”

Mr Myers said there was “not a single Bahamian company” that would not be considered a small and medium-sized enterprise

(SME) in a global context, pointing out that this applied to the likes of AML Foods and Super Value even though they were ‘large’ for the Bahamian market.

The ORG principal said large foreign companies would be able to use their scale, buying power and lower unit production costs to potentially squeeze out Bahamian companies in their home market, even to the extent of absorbing losses because they were subsidised by profits from elsewhere.

“We have an added concern, which is larger companies in a WTO environment that want to obtain market share, when they’re doing hundreds of millions in revenue and want to penetrate your market, they can do so at a loss for a very long time to drive you out the market or eat your lunch,” Mr Myers told Tribune Business.

“They can make money in the US, Canada or a much broader business environment, and Bahamians are not going to be able to do that.”

Insurers: ‘We’ve not relaxed our guard’ on KYC changes FROM PAGE 1 to change course on the basis that the Financial Action Task Force (FATF), the global standard-setter in combating financial crime, does not currently include property and casualty underwriters in its list of ‘financial institutions’.

Mr Ingraham, though, pledged that the sector will remain “vigilant” despite the legislative change, recalling how the former Christie administration performed a last-minute u-turn in imposing 7.5 per cent VAT on premiums.

“We’re staying vigilant,” he told Tribune Business.

“We remember in 2015 how the previous government took VAT off the table and did an ‘about turn’ at the last minute. We’ve definitely not relaxed our guard and the issue remains at the forefront.”

Carl Bethel QC, the Attorney General, last

week told this newspaper he was going to seek further advice on the Bill’s treatment of the insurance industry from the Caribbean Financial Action Task Force (CFATF), the regional FATF affiliate that last year identified serious weaknesses in the Bahamas’ anti-money laundering and counter-terror financing regime.

Those findings have placed the Bahamas in an ‘enhanced review process’, where it must now satisfy the FATF and world community that it has satisfactorily addressed these deficiencies to avoid the possible imposition of sanctions.

The BIA argued that the Financial Transactions Reporting Bill’s initial version subjected general insurers to ‘over-regulation’ by going beyond world standards, and Mr Ingraham yesterday revealed that “small agents and brokers” had been especially vexed by its contents.

With such businesses operating on alreadythin margins, the Summit chief said some would have needed to alter their business models had the enhanced KYC customer verification regime been imposed.

He added that the nature of property and casualty insurance limited its vulnerability to abuse by money launderers, given that annual third-party motor insurance policies worth $300-$400 would be of little use to such criminals.

As for property insurance, Mr Ingraham said owners would have already undergone significant background checks by banks and attorneys before they reached insurers.

“From the industry’s perspective I think we’re all relieved at the moment that we weren’t included,” he disclosed, “and that the Government decided to stick with the international definition that excludes

the property and casualty companies.

“Anything that contributes to the ‘ease of business’, and making business easier to do for local residents, is a good thing in our minds.”

Had the Bill not been changed, Mr Ingraham said general insurance clients would have endured “a fairly stringent” application of KYC rules and regulations similar to that found in the banking industry and life/investment insurance sector.

“The concern was you could have someone taking out a $300-$400 motor insurance policy and they’d be subject to the same KYC as someone opening a bank account,” Mr Ingraham told Tribune Business of the original Bill.

“We understand and fully appreciate we need to be very careful on money laundering, and crack down on financial crime, but it was difficult for us to see how a $200-$300 motor insurance policy could be used for money laundering.”

Mr Ingraham said this also applied to other property and casualty insurance products, such as home insurance. “By the time the home owner gets to the insurance company they’ve been through a number of certifications at the bank, government agencies, attorneys and everybody else,” he added.

“If somebody’s purchasing a home they have to go

through the legal process with their attorney. By the time they get to property and casualty insurers they will have been through a number of legal entities who have done checks, or are expected to have done checks, before they get to us.”

Mr Ingraham said there was “a possibility” insurance premiums would have had to rise to offset any increased compliance costs, given that the sector would have had to hire extra staff to conduct customer KYC. “At the industry meeting last week, some of the small agents and brokers were especially concerns about this,” he recalled to Tribune Business. “They’d be required to do this in a situation where margins are already thin. They were appealing for a different way for this to be handled.

“It was definitely a case where some companies would have had to look at their business model, margins, and see how they could accommodate the additional cost of this.”

Carl Bethel QC, the Attorney General, previously told Tribune Business that the Government had suggested to the insurance industry that it contract KYC due diligence services from outside companies rather than hire their own staff - as a means to control such costs.

Mr Ingraham added, though, that cost ‘passthrough’ to consumers

could have meant more Bahamians “going without insurance” at a time when the Government was seeking to make coverage more affordable to reduce the burden on taxpayers in the aftermath of major hurricanes.

“Certainly, at a time when, because of the storms last year, insurance rates are going up in any event, it would definitely have been a double whammy,” the Summit chief told Tribune Business.

Anton Saunders, RoyalStar Assurance’s managing director, said the original Financial Transactions Reporting Bill would have made it “extra impossible to get insurance in a timely manner” had the KYC obligation been imposed on the property and casualty sector.

“We are all in favour of making sure our industry has anti-money laundering rules and regulations, but we’re glad the Minister looked at it and realised the industry will take care of what we take care of ourselves, and doesn’t need obligations that over-burden it and are passed on to clients,” he said. “It was going to create unnecessary hardship for the industry, and make it extra impossible to get insurance in a timely manner. The general insurance industry has always shown it will do what is necessary, but we will voice our concerns if things are onerous.”

‘Breadbasket’ reform to Cabinet in 3-4 weeks FROM PAGE 1 the ‘breadbasket’ reforms did not require legislative change, only an amendment to the schedule accompanying the existing Price Control Act. Given the “fairly dramatic implications” for health, and a cultural shift in the eating habits of many Bahamians, the Minister said the revised schedule was likely to be laid in Parliament and accompanied by a ministerial communication.

“We have targeted the Budget as the mark, the benchmark,” Dr Sands said of when the change will likely be introduced. “This has such significant implications that whenever it’s done will be worthwhile.

We are shooting for that

target, and not necessarily suggesting we will miss it, but it should proceed anyway and we will make whatever adjustments we need to make.”

Dr Sands acknowledged that “continuous public education” would be required on the reforms, as altered prices would not necessarily lead to an immediate change in dietary habits that many Bahamians have learned over decades.

He added, though, that a preventative approach that focused on wellness would more than pay for itself in the long run as a result of Budget savings as well as improved quality of life, productivity and healthy living.

Describing the cost of, and demand for, healthcare

as “astounding”, Dr Sands told Tribune Business: “We recognise we have to pay more than lip service to a preventative approach to health and investing in wellness. If we don’t, the Budget is going to explode.

“If you look at Canada’s budget for healthcare, it’s 51 per cent, I’m informed, of their spending per year; 51 per cent of their budget.

If we look at that we realise this an insatiable appetite for healthcare expenditure will not stop.

“We’ve got to apply a drastic force in the other direction.

“I’m hoping this initiative finally starts to change behaviour, and we go in that other direction. This is going to be part of a generation before we see the impact.”

PAGE 8, Tuesday, March 6, 2018

THE TRIBUNE

Gov’t changing law for Oban FROM PAGE 1 basis, present a Bill in Parliament in order to amend the Industries Encouragement Act so that the statutory period (as defined therein) may be extended to allow the developer to be granted concessions for such period to accommodate the development.”

The Minnis administration is thus changing a law, first passed in 1970, to meet the needs of one specific investor/developer. A copy of the Industries Encouragement Act, obtained by Tribune Business, defines the ‘statutory period’ as a 15 years from the date when a manufacturer first begins production.

This means that companies will enjoy the Act’s real property tax, export tax and income tax exemptions for their first 15 years in operation. The Oban Energies’ Heads of Agreement does not specify the extent to which the Government will now ‘extend’ these tax breaks for the developer’s benefit, but it could be as long as its deal with the Government - some 45 years.

Changing the law for the benefit of a single developer, and one with an unproven track record in major energy infrastructure projects, is likely to raise eyebrows among many Bahamians and seasoned observers. It is also unclear whether the ‘extension’ will apply to other manufacturers, and it goes in the

opposite direction to that initiated by the last Ingraham administration.

In a bid to prevent Bahamian manufacturers existing on what could be perceived as a ‘never-ending welfare system’, funded by the taxpayer, the thengovernment amended the Industries Encouragement Act during the 2010-2011 Budget process to prevent them from receiving tax/ duty free concessions for more than five years.

This was intended to ‘graduate’ manufacturers from a government assistance programme to ‘standing on their own feet’, with a 10 per cent tariff rate then applied to these companies’ previously duty-free raw material and equipment imports.

The Christie administration reversed this upon coming to office in 2012, eliminating both the fiveyear limit and 10 per cent tariff, thereby returning the Act and businesses enjoying its benefits to the ‘status quo’.

The impending Industries Encouragement Act change will likely further stoke the already-fevered debate over whether the Government’s deal with Oban Energies is in the Bahamas’ best interests and represents a ‘net benefit’ for the country.

The Heads of Agreement shows the Minnis administration has given away extensive ‘tax breaks’ upfront for an extended period of time, although there is a ‘claw back’ provision that allows the Government to reduce these concessions on a “proportionate basis” if Oban Energies fails to meet job and performance milestones.

With just 250 full-time jobs pledged during the refinery/storage terminal’s operations, the main long-term benefits for the Bahamas appear to be economic diversification and spin-off opportunities for local businesses through the project’s presence in east Grand Bahama.

And, while Oban Energies’ Heads of Agreement says the developer “anticipates that the development will create approximately 600 direct jobs plus 1,000 indirect and induced jobs during the construction period’, the reality is these hires will be spread out over the project’s 10-year build-out.

Under the heading ‘total jobs’, which come to 600, construction employment is projected to peak at around 325 in year four, when the most extensive storage, refinery and infrastructure build-out occurs.

Construction hires for Oban Energies’ first two years total 140, as the infrastructure, ship’s dock and first four million barrels of storage capacity are built, with the latter two facilities projected to come online by year five.

The development kicks into high gear between years three to seven, a Heads of Agreement annex shows, while the biggest storage terminal and refinery expansion is reserved for last. A 10 million barrel and 125,000 barrel per day increase respectively, representing a doubling of capacity for both facilities will start from year six.

The 10-year build-out indicates that it will be some time before the development’s economic benefits are maximised, given that the final completion date is pegged at December 31, 2030. Yet Oban Energies, in an advertorial in today’s paper, touted the potential economic impact.

“It is calculated that the Oban Energies project will improve GDP by 10.13 per cent per annum, from $9.047 billion to $9.964 billion,” the developer said. “GDP per capita will increase from $23,124.39 to $25,467.42; a reduction of the unemployment rate from 15.7 per cent to 15.26 per cent through direct and indirect employment.

“Overall, the projected increase in FDI net inflow could make the Bahamas

t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com

BISX ALL SHARE INDEX: CLOSE 2,040.16 | CHG 0.00 | %CHG 0.00 | YTD -23.41 | YTD% -1.13 BISX LISTED & TRADED SECURITIES 52WK HI 4.38 19.17 9.09 3.76 1.64 0.18 4.60 8.70 6.30 5.30 11.87 2.59 1.56 9.70 6.10 10.55 10.90 4.50 12.51 11.00

52WK LOW 3.50 17.43 8.19 3.32 0.90 0.12 3.50 8.40 6.00 3.15 9.00 2.18 1.40 7.75 5.83 8.78 5.67 3.35 12.01 10.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson Premier Real Estate

1050.00 1000.00 1000.00 1000.00

1000.00 1000.00 1000.00 1000.00

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class Commonwealth Bank Class Commonwealth Bank Class Commonwealth Bank Class Commonwealth Bank Class Commonwealth Bank Class Fidelity Bank Class A Focol Class B

PREFERENCE SHARES

1.00 103.00 100.00 106.00 105.00 103.00 100.00 10.00 1.01

1.00 100.00 100.00 100.00 105.00 100.00 100.00 10.00 1.00

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS EMAB FAM FBB FIN FCL JSJ PRE

E J K L M N

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00 100.00

52WK LOW 100.00 100.00

CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +

SYMBOL FBB18 FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MUTUAL FUNDS 52WK HI 2.13 4.14 1.99 178.69 153.40 1.54 1.70 1.62 1.10 6.99 8.54 6.15 10.52 11.46 10.46

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.48 1.62 1.57 1.04 6.41 7.62 5.66 8.65 10.54 9.57

LAST CLOSE 3.90 17.43 9.09 3.34 1.00 0.18 3.60 8.70 6.10 4.65 9.87 2.54 1.50 7.88 6.10 10.10 6.40 4.47 12.51 10.00

CLOSE 3.90 17.43 9.09 3.34 1.00 0.18 3.60 8.70 6.10 4.65 9.87 2.58 1.50 7.83 6.10 10.10 6.40 4.47 12.51 10.00

CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.00 -0.05 0.00 0.00 0.00 0.00 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

LAST SALE 100.00 100.00

CLOSE 100.00 100.00

CHANGE 0.00 0.00

109.39 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

109.26 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Royal Fidelity Int'l Fund - High Yield Fund Strategies Fund

VOLUME

375

VOLUME

EPS$ 0.475 0.932 -0.306 0.281 -1.133 0.000 -1.462 0.638 0.583 0.171 0.631 0.102 0.330 0.000 1.129 0.743 0.484 0.298 0.543 0.000

DIV$ 0.080 1.130 0.000 0.230 0.000 0.000 0.000 0.320 0.220 0.120 0.690 0.060 0.050 0.083 0.300 0.500 0.150 0.120 0.570 0.000

P/E 8.2 18.7 N/M 11.9 N/M N/M -2.5 13.6 10.5 27.2 15.6 25.3 4.5 N/M 5.4 13.6 13.2 15.0 23.0 0.0

YIELD 2.05% 6.48% 0.00% 6.89% 0.00% 0.00% 0.00% 3.68% 3.61% 2.58% 6.99% 2.33% 3.33% 1.06% 4.92% 4.95% 2.34% 2.68% 4.56% 0.00%

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%

INTEREST 6.00% Prime + 1.75% 6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

NAV 2.13 4.12 1.99 178.69 153.40 1.54 1.69 1.62 1.09 7.16 8.40 6.29 11.28 11.60 10.21

YTD% 12 MTH% 0.31% 4.30% 0.16% 5.93% 0.17% 2.36% 4.66% 3.89% 5.58% 6.65% 0.36% 4.29% -0.15% 3.50% 0.23% 3.89% -0.34% 4.66% -1.08% 1.77% -5.96% -3.05% 1.90% 4.59% 7.24% 11.96% 2.77% 3.88% 3.94% 4.69%

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

4 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

MATURITY 31-May-2018 19-Oct-2022 20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022 NAV Date 31-Jan-2018 31-Jan-2018 26-Jan-2018 31-Dec-2017 31-Dec-2017 31-Jan-2018 31-Jan-2018 31-Jan-2018 31-Jan-2018 30-Nov-2017 30-Nov-2017 30-Nov-2017 30-Nov-2017 30-Nov-2017 30-Nov-2017

Agreement based upon any EIA report”.

Instead, the Government has committed to working with Oban Energies to “mitigate any concerns”.

While the deal allows the Minister of the Environment to “cause the discontinuation” of any aspect of the project’s operations that poses a threat to human health and the environment, the penalty for environmental infractions is capped at $3.5 million.

Mr Carey said the BNT had requested a copy of the Heads of Agreement last week, adding that the Trust did not even know where the project will be located in east Grand Bahama.

Only then will it be able to provide advice on concerns “within the context of the National Parks and other sensitive marine and environmental areas”.

Pointing out that EIAs were normally conducted and reviewed prior to EIA signings, he added: “This one, according to what was spoken to in the House, appears to be a bit different.

“From what I understand, it references that even if there is a detrimental environmental impact there’s no escape clause for the country. That needs to be corrected or addressed.”

Mr Carey said EIAs typically “influence whether a project proceeds but what was laid in the House suggests that’s not the case”.

He added that most Bahamians would not want a development to proceed if there was a harmful environmental impact that cannot be mitigated or avoided.

“They should not want to be in a position where they’re locked into something regardless of what comes out of the EIA,” the BNT executive director told Tribune Business.

DOWNTOWN NASSAU HIT BY CRUISE LOSS FROM PAGE 1

MARKET REPORT MONDAY, 5 MARCH 2018

No.1 in real GDP growth across Latin America and Caribbean.” It is unclear where the data came from, although the Government typically requests economic impact assessments from potential developers, which are usually provided by a consultancy.

The advertorial adds that Oban Energies is being “assisted by the most environmentally-friendly tank building operation from the Netherlands, and a group of oil industry titans”.

Tribune Business understands that there is indeed a Dutch connection, with Oban using engineers connected to Vopak, the company that once operated Grand Bahama’s BORCO facility when owned by First Reserve.

The “oil industry titans” were not identified.

This newspaper’s contacts, speaking on condition of anonymity, said Peter Krieger, the Oban Energies’ non-executive chairman who was accused in two US lawsuits of misappropriating investor monies, is representing his family’s interest in the project. Specifically, they said much of the development’s financing was coming through his wife’s family.

Meanwhile Eric Carey, the Bahamas National Trust’s (BNT) executive director, told Tribune Business that the Heads of Agreement needs to be “corrected or addressed” if the Bahamas has “no escape clause” from an adverse Environmental Impact Assessment (EIA).

Reluctant to say too much given that he and the BNT have yet to see the Oban Energies deal with the Government, Mr Carey expressed concern over revelations that the latter “shall not have the right to terminate these Heads of

Port of Nassau have been diverted to various locations. Visitor safety remains a top priority for the Ministry of Tourism and Aviation, and we will continue to monitor the weather along with our colleagues at the Port

Department. The Ministry will be assessing the impact over the next few days,” the Ministry of Tourism said.

The cancelled calls potentially deprived Bahamian-owned businesses in downtown Nassau and Paradise Island, not to mention the major resorts, of thousands of dollars in lost revenues.

NOTICE

NOTICE is hereby given that LEVANIA SAINT-VIL DORCELY of Caspian Rd. East off Soldier Rd., New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 27th day of February, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, Bahamas.

NOTICE

NOTICE is hereby given that JEFFREY PIERRE of Mackey Street, New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 6th day of March, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, Bahamas.

NOTICE

NOTICE is hereby given that HARRY JOSEPH of #16 Kiki St. and Farrington Rd., New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/ naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 27th day of February, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, Bahamas.

NOTICE

NOTICE is hereby given that ISEMENE PETIT-HOME RAYMONVIL of Golden Isle, New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/ naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 27th day of February, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, Bahamas.