06192017 business

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MONDAY, JUNE 19, 2017

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DRINK MAKERS FEAR ‘IRREPARABLE HARM’ FROM BUDGET TARIFF CUTS By NEIL HARTNELL Tribune Business Editor and NATARIO McKENZIE Tribune Business Reporter LYNDEN PINDLING INTERNATIONAL AIRPORT

DOWNGRADE FORCES NAD DEBT RESERVE ‘DOUBLING’ TO $38M By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Nassau Airport Development Company (NAD) has been forced to double its debt reserve to $38 million after losing its ‘investment grade’ credit rating, the Minister of Tourism revealed yesterday. Dionisio D’Aguilar disclosed the “troubling” consequences of the Bahamas’ sovereign credit downgrade by Standard & Poor’s (S&P) just before Christmas 2016, which had a direct knockon effect for the Lynden Pindling International Airport (LPIA) operator’s own creditworthiness. “Their [NAD’s] debt got downgraded because Fitch said there’s additional sovereign risk,” the Minister confirmed to Tribune Business. “They went to downgrade NAD one rating below investment grade, and one effect of that was

Passenger fee rises to finance rise Over 80% of operating income to debt NAD loss down 10% to $13.59m they needed to increase the bond reserve fund from $19 million to $38 million.” The debt financing for LPIA’s $409.5 million redevelopment requires that NAD maintain “a restricted debt service reserve account” with Citibank in New York, which contains a balance equal to six months’ worth of principal and interest due on the senior notes (bonds). This facility is designed to give NAD’s lenders extra security, and comfort, See PG B6

BAHAMIAN juice drink manufacturers have warned they face “irreparable harm” if the Government eliminates the 60 per cent duty on rival imports, with one warning up to 20 jobs are at stake. Geoffrey Knowles, operations manager at Aquapure, which produces the Tampico fruit punch, told Tribune Business: “If that reduction goes through we will have to cut back our production, which means laying-off staff; about 20 persons. If we lose the duty advantage there is absolutely no way we can compete.”

Aquapure warns up to 20 jobs at stake 60% tariff end to boost rival imports Switcha chief blasts ‘slap in the face’ He added: “Tampico is quite popular. It has a pretty good market. Outside of that there are about another 50 juice drinks available to the public. There aren’t a lot of local juice manufacturers. There is us, Switcha, which has done tremendously over the past few years, and a few smaller guys. They have their market.

“We have done good things with Tampico. We are constantly fighting with the likes of Sam’s Club and CostCo because they receive so much discounted stuff due to excess production. We want to be competitive, but when you look at our economies of scale, the cost of electricity here and staffing costs, it makes it very difficult for local manufacturers. Our competitors can produce three times the volume that we can for far less.” Mr Knowles continued: “Tampico does very well in Abaco. We do sell to a wholesaler in Freeport, but it’s not as competitive because of the competition out of Florida and the fact that the shipping rate from Florida to Freeport is half

the price of the rate from Nassau to Freeport. “We are going head-tohead with producers in Florida. Right now, Sunny Delight is our biggest competition. If you take that 60 per cent duty off they would be significantly under our price.” Mervin Sweeting, Switcha Bahamas’ chief executive, told Tribune Business that the proposed Budget tariff cuts were “a slap in the face” for local manufacturers competing against foreign rivals who enjoyed significant cost and ‘economies of scale’ advantages. In a letter to Brent Symonette, the minister responsible for trade and commerce, Mr Sweeting said the comSee PG B5

Sir Franklyn: ‘All must be alarmed’ by fiscal position By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

SIR FRANKLYN WILSON

SUNSHINE Holdings chairman says “we should all be alarmed” by the Bahamas’ precarious fiscal position, with this nation’s room for manoeuvre “drastically reduced” by the past two decades’ policies. Sir Franklyn Wilson told Tribune Business that with a $7 billion-plus national

debt, and annual deficits of more than $300 million, the Bahamas had “eliminated a lot of headroom” previously enjoyed by the Government during tough economic times. He pointed to comments by Julian Francis, former governor of the Central Bank, who just after the millennium warned that Bahamians had squandered several years of sustained See PG B6

Arawak chair: ‘Headroom drastically reduced’ Points to bad governance over two decades Hurricane will make woe ‘very, very difficult’

Baha Mar agreement unsealing ‘very close’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Government is “very close” to having the agreement for Baha Mar’s construction completion unsealed by the Supreme Court, the Attorney General confirmed yesterday. Carl Bethel QC told Tribune Business that all parties had been “very co-operative” as the Minnis administration moves to fulfill a campaign prom-

Attorney General: Everyone ‘very co-operative’ ise to publicly disclose the ‘Heads of Terms’ struck between the Christie administration and the China Export-Import Bank. “Everyone’s been very, very reasonable and we are very close,” Mr Bethel said yesterday, while adding that See PG B7

‘DON’T CUT OFF NOSE TO SPITE FACE’ OVER VACATION RENTALS By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas has been warned not to “cut off our nose to spite our face” over plans to regulate and tax the vacation rental industry. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that this nation needed to adopt a long-term strategy that embraced the sector’s potential economic growth benefits, rather than just a narrow focus on supervising it.

Fears Bahamas thinking short-term on tax Calls for ‘full evaluation’ to understand sector Questioning whether the Bahamas properly understood the vacation rental home market, Mr Aubry said “a more holistic and comprehensive” assessment was essential See PG B4

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Infrastructure investment key to unlock Cat Island’s potential

THE TRIBUNE

In the second of his ‘Island Insights’ series, Roderick Simms explains how Cat Island’s growth is stuck in a ‘chicken and egg’ situation Island Overview The cradle of Bahamian rake ‘n’ scrape music, obeah and plantations, Cat Island is the undisputed cultural heart of the Bahamas. While finding sustainable ways to monetise Cat Island’s cultural exports has proven challenging, the island presents opportunities for Bahamians across cultural and more traditional tourism markets. Unlike many other islands in the southern Bahamas, much of the groundwork for small and medium-sized tour enterprises and supporting businesses has already been laid. However, Cat Island’s ability to flourish as a cultural hotspot for visitors seeking unfamiliar experiences will likely hinge on the Government’s willingness to honour a critically-needed infrastructure upgrade to the island’s air facilities. Cultural Tourism Cat Island has long hosted some of the country’s most recognisable festivals, including the Cat Island Regatta in New Bight and the Rake ‘N’ Scrape festival in Arthur’s Town, which features live music and a ‘battle of the bands’, while highlighting Cat Island’s unique arts, crafts and culinary products. Cat Island boasts some of the country’s most extensive and best-preserved plantations, including the Armbrister and Golden Grove sites, thus providing rich cultural heritage attractions for visitors seeking experiences beyond beaches. The scope and condition of these sites could provide young Bahamians with excellent opportunities to launch guided

tour companies, offering walking tours and other historical experiences to visitors. These start-ups could greatly benefit from technical and promotional support via some of the Ministry of Tourism’s recent cultural initiatives, such as the Bahamas Geotourism Mapguide. The Mapguide, a collaborative effort between the Ministry of Tourism, the National Geographic Society and Complete Caribbean, is an online database that allows residents and visitors to chart and promote points of interest - and local businesses - for visitors across Cat Island and other Family Islands. Ministry of Tourism officials believe that the service, a first for the region, can expose the Family Islands to 50 million potential customers. Cat Island is also home to the famous Mount Alvernia Hermitage, built by renowned architect and priest, Father John Hawes. The site, built near the highest point in the Bahamas, has long served as a tourist attraction, and stands to grow more popular as the Ministry of Tourism further invests in its ‘religious tourism’ initiatives. Conversely, those visitors searching for more unconventional spiritual attractions may turn their attention towards Cat Island’s rich obeah tradition. In addition to the new online resources available to local businesses, the Antiquities, Monuments and Museums Corporation (AMMC) recently identified two potential heritage centre sites as part of a study of Cat Island’s cultural history, paving the way for small-scale museum and tour ventures. Ecotourism and Marina Services Cat Island is already well-positioned for growth

ISLAND

InsightS By RODERICK A. SIMMS II

in traditional tourism ventures as it fosters its cultural industries, thanks to growing online exposure for its boutique hotels through the previously mentioned Geotourism Mapguide, as well as more established hotel rating services, such as TripAdvisor. Cat Island is home to some of the most beautiful beaches in the country and, unlike some islands in the region, stands out by having long, scenic beaches available to the public on both its eastern and western shores. The Cat Island Wetlands, located near the southeastern corner of the island, is also classified as an Important Bird Area, which opens up new opportunities for young Bahamian guides interested in the rapidly-growing birdwatching market. Cat Island has enjoyed healthy growth in visitor arrivals since 2014, thanks in large part to increased support from the Out Islands Promotion Board (OIPB) despite lacking an international airport. Arrivals in Cat Island increased by more than 10 per cent between 2015 and 2016 alone, as the Ministry of Tourism and OIPB continue providing travel incentives to visitors flying through New Providence. Cat Island also offers exquisite deep-sea fishing experiences for both yachters and visitors seeking charter services. The Hawk’s Nest Resort and Marina, located at Devil’s Point, currently serves as Cat Island’s only See PG B7

THE TRIBUNE

Monday, June 19, 2017, PAGE 3

FLOWERS DISAGREES WITH CHRISTIE GOVT’S WEB SHOP REGULATION By NATARIO MCKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net

THE proliferation of web shop locations remains the industry’s most pressing challenge, a senior operator telling Tribune Business he did not agree with how the former administration handled the issue. Craig Flowers, founder of the FML Group of Com-

panies, said: “I personally don’t agree with how the former administration has dealt with the entire package - from the referendum going forward. The whole thing was concerning to me but it is what it is. If the new administration calls me in and would like to hear my opinion on what I think needs to be addressed, and the way forward, I would have no problem with that.” Mr Flower, who says he

has stepped back from dayto-day operations, has long argued that the permitted number of web shop locations - and locations per operator - plus zoning enforcement need to be addressed. Nine companies applied for gaming house licenses when the Government began the process to legalise, regulate and tax the sector. Eight applicants were subsequently provided

with provisional licenses, with Bet Vegas the only operator to have been denied. Bet Vegas has since mounted a legal challenge to that decision via Judicial Review. Island Luck, Nassau Games, Percy’s Island Games, A Sure Win, Chances, Paradise Games, Bahama Dreams and Asue Draw were all awarded licenses. However, Asue Draw + Spin later an-

nounced it would not renew its gaming house operator license for 2016-2017, and exited from the industry. “I think that the most pressing issue is the proliferation of stores,” Mr Flowers said. “It has nothing to do with licenses. If one licensee has a million stores, the impact on the country remains the same. “The Government has a mandate to make decisions in the best interest of the

people, and what impacts people is the amount of stores, the amount of outlets, not the amount of licenses. I don’t understand why there is a concern over the well-being of the industry if there is no governing of its expansion,” said Mr Flowers. The Christie administration decided to limit the number of gaming house operator licenses to eight until 2027.

START-UP TARGETING DIGITAL MEDIA PUSH A BAHAMIAN start-up aims to transform the digital media sector by providing platforms that offer the greatest marketing potential for business clients. “We’re on the cusp of something big,” said Marc Hohnstein, co-owner of TAHM Management and Marketing Consultants, a company that recently signed a three-year deal with Aliv for advertising on their digital media platforms. The transit digital platform allows for electronic advertising on select buses and along heavily trafficked routes. For its part, Aliv will power the buses with free wi-fi. “The point of digital marketing is target grouporiented,” Mr Hohnstein explained. “If I’m a Mercedes Benz dealer, I know a client from a middle class area like Carmichael Road is a rarity. They are not my target group. So where do I advertise? In areas like Lyford Cay and Paradise Island. In blasting the masses you are wasting 70 per cent of your advertising budget since those people aren’t your target market. “In digital marketing we have digital platforms, or monitors, that we purposely place in selected areas for the selected client. Digital advertising allows the ‘Mom and Pop’ store to have the same level of exposure as, say, a Honda dealer, even if they’re on a lean budget.” TAHM currently provides two digital media platforms to its clients - transit

MARC HOHNSTEIN

RAY THOMPSON

digital media platforms located on 30 buses, and freestanding digital platforms at various locations throughout New Providence. An electronic billboard allows businesses to display animated commercials and announcements on a flat screen placed strategically on their premises. It is popular in the US and elsewhere for being an effective and cost-efficient means of engaging with consumers. TAHM’s clients are able to update their digital promotions or change an ad display in real time at no additional cost. Once the digital ad monitor is up and running, TAHM’s clients could offer other vendors the opportunity to digitally blast their media message to the public, enabling the client to make a return off their investment. Arthur ‘Ray’ Thompson, who oversees TAHM’s management, is currently working with two

Bahamian shipping agents to develop an online web control database that would allow customers to track their vehicle shipment in real time, in addition to being able to assess and prepay fees. The second phase is linking that online database directly to Bahamas Customs, saving the companies thousands of man hours. “On the marketing side we aim to improve the visibility and popularity of our clients’ businesses. If you don’t keep up you’ll get left behind,” Mr Thompson warned. “On the management end, we help clients improve efficiency and profitability.” Following a 25year career in the shipping industry, Mr Thompson, an accountant by training with a strong background in business, spent the last decade engaged in private consultancy work for various international See PG B4

CLARIFICATION THE Bahamas Petroleum Company (BPC) has asked Tribune Business to clarify a quote attributed to its chief executive, Simon Potter, in a June 16 article entitled, ‘Oil explorer’s extra $3.25 million encouraging for Bahamians’. Mr Potter was quoted as saying: “The characteristics of the project, being the exclusivity in the Bahamas and the small scale, means it’s still attractive notwithstanding the global drop in oil prices.”

BPC says Mr Potter meant that while the company is currently the only exploration firm preparing to drill a well in Bahamian territory, it does not have exclusivity in terms of other companies being able to apply for a license. As for the reference to “small scale”, while BPC’s license field and prospects are large in nature, they do not need to produce as many barrels per day as rivals to be economically viable.

L TO R: Edison L Sumner, chief executive; Derek Osborne, treasurer; Khrystle Rutherford-Ferguson, vice-chairman; Mike Maura, chairman; Lana Lee-Brogdon, secretary; Gowon Bowe, immediate past chairman.

Chamber unveils Board and executive members THE BAHAMAS Chamber of Commerce and Employers Confederation (BCCEC) has elected a new Board of Directors at its annual general meeting (AGM) for the year 20172018. Elected to serve as Board officers were: * Michael Maura - chairman, Arawak Port Development Company (APD) * Krystle RutherfordFerguson – vice-chairman, Fidelity Bank

* Lana Lee-Brogdon secretary, New Oriental Cleaners * Derek Osborne - treasurer, Family Fun Treats Edison L. Sumner serves as a non-voting Board Member as BCCEC chief executive. Gowon N. G. Bowe will continue to serve on the executive committee as immediate past chairman. The following persons were elected to serve as Directors on the Board for 2017- 2018:

* Davinia Blair – University of the Bahamas * Viana Gardiner - More Development Company * Peter Goudie - PGHR Consulting * Emmanuel KomolafeColina Holdings Bahamas * Tara Morley-Nolan Cole’s of Nassau * Samantha Rolle – Deloitte * Leon Williams - Bahamas Telecommunications Company (BTC) * Julian Rolle - BAF Group * Deborah H. Deal - Contemporary Builders * Christel Sands-Feaste Higgs and Johnson * Darron Pickstock Glinton Sweeting O’brien

PAGE 4, Monday, June 19, 2017

Start-up targeting digital media push From pg B3 companies, including the preparation of business plans and reviewing the viability of proposed acquisitions. Mr Hohnstein, who has a Master’s degree in finance, worked in the financial services sector in the US, holding key positions at Bank One (now Chase Bank) and Wells Fargo. He got a taste for digital marketing when it came under his portfolio while serving as a member

of the Economic Council to the Christian Democratic Union (CDU) Party of German Chancellor, Angela Merkel. The Economic Council represents the interests of thousands of small and medium-sized firms from all sectors of the German economy. In 2013, Mr Hohnstein co-founded an international consulting company, LCA Global Consulting, specialising in public relations campaigns for international brands, digital marketing

‘Don’t cut off nose to spite face’ over vacation rentals From pg B1 to developing plans for its development. “It’s a sector that needs to be evaluated fully, not just from a taxation and regulatory standpoint, but its potential in the marketplace, so that we don’t cut of our nose to spite our face,” he told this newspaper. “If we want to look at this thing in a more holistic and comprehensive way, we can understand things more from a development standpoint. There are so many opportunities that we’re looking at with limited data or with limited objectives.” Mr Aubry was responding after Dionisio D’Aguilar, minister of tourism, told Tribune Business last week that the Government had

entered into a Memorandum of Understanding (MoU) with Airbnb, the largest and fastest-growing vacation rental website. Airbnb will collect all due taxes and fees associated with Bahamas-based vacation rentals listed on its website, and ensure those landlords are in full compliance with local rules and regulations. The website, though, will not collect Value-Added Tax (VAT) on the Government’s behalf due to difficulties in determining whether a vacation rental has met the $100,000 turnover per annum registration threshold. As a result, Mr D’Aguilar suggested the Bahamas will have to introduce some kind

THE TRIBUNE and creating digital advertising platforms throughout seven cities in Germany. He also served as the vicepresident of German development for EVO Payments International, a company which processes ATM, mail order, telephone and point of sale transactions, according to its website. Mr Hohnstein built up five teams in Dresden, Köln, Hamburg, Munich and Berlin, providing training on how to use multiple formulas and tactics to achieve success in the sales industry. Upon discovering his friend’s interest in returning to the Bahamas to take up residency, Mr Thompson broached the idea of a

business partnership to Mr Hohnstein. “With my managing experience and his marketing experience we felt the integration into a consulting firm would be perfect,” said Mr Thompson. Earlier this year TAHM rolled out its transit advertising platform on 30 buses that collectively cover New Providence. Expansion plans to bring more buses on stream are in the works. The buses are equipped with 18-inch TV monitors. Daily looping on the bus monitors allows for continuous advertisement streaming for TAHM’s clients. According to the company, the average bus oper-

ates from 6am to 7pm. Each bus accommodates up to 28 riders at a time, making anywhere from seven to 10 trips per day. Each ad is slotted to run every four minutes in the present six-minute loop. Most ads are 35 seconds. Each advertisement runs 15 times an hour or 195 times per bus. That is 5,850 times per day for the 30 buses. The transit advertisement platforms are currently on buses servicing South Beach, Cable Beach, Carmichael, Palmdale, Fox Hill, Blair and Montagu. The company is also in talks with a few MPs who view the technology as a means of keeping their con-

stituents abreast of their work, relevant community news and national emergency alerts in real time. “It’s all about being competitive in your niche market, whatever that market may be,” said Mr Thompson. “We want to ultimately digitise the entire archipelago from Grand Bahama in the north to Inagua in the south.” For Mr Hohnstein, it all boils down to where an enterprise wants to be in a year’s time with their business. “You want to be known everywhere,” he said. “Standing still and complacency is the enemy of prosperity.”

of room/occupancy tax for the vacation rental market, and give landlords a choice between paying this or VAT. Once it does this, the MoU with Airbnb will become a full agreement. The Minister acknowledged that the Bahamas needed to achieve a delicate balance when it came to vacation rental regulation/taxation, and suggested he favoured a ‘light touch’ approach to ensure there was no market ‘shock’ that drove business elsewhere. For an ORG-commissioned study by Oxford Economics, the research consultancy, recently identified the vacation rental market as a potential growth opportunity that could boost Bahamian ownership and entrepreneurship in the tourism industry, plus aid economic diversification. However, it found that the Bahamas’ ability to make

further inroads into this market was already being impeded by old, impractical laws and regulations that treated vacation rentals like mega resorts. Apart from the International Persons Landholding Act imposing “especially strict rules” on foreign home owners, the study said all vacation-based properties have to be approved by the Bahamas Investment Authority (BIA). “While vacation home owners and foreign owners can overcome these hurdles, this comes at a cost in terms of time and money,” the report’s author, the Oxford Economics consultancy, said. “In the view of interviewees, most of the complexity reflects laws that are designed with mega-resorts in mind. For example, if the owner is not the primary occupant, then the applicant must present detailed business plans that addresses issues such as how many people will be employed, traffic issues, etc. For the vacation home rental market, this is not a practical approach.” Mr Aubry told Tribune Business he backed ‘light touch’ approach indicated by Mr D’Aguilar, saying: “Particularly with this kind of business model, it’s critical. “There needs to be an understanding of two things: What is going to be regulated, and the economic impact to this industry, and how does that relate to taxation and collection? What is the long-term impact? “When you look at making policy for the second home vacation rental market, I don’t think we have quite understood this model and its applicability.” Mr Aubry said that between Airbnb and Home

Away, another popular vacation rental website, there were 1,200 Bahamas-based listings. He questioned, though, whether there had been “any follow-up” by the Bahamian authorities to “understand the scope and business” of these rentals. Suggesting that this would inhibit the crafting of long-term strategy to aid the Government’s dual regulation and economic growth objectives, Mr Aubry said there was no ‘one-size fits all’ business model for the sector. He used as an example his two neighbours, one of whom rented out their property one-two times’ per month, and another who did the same - but on a yearly basis. “We have to define what it means and, more importantly, ensure we don’t put obstacles in the way of this,” Mr Aubry said, referring to ORG’s study. “We’re putting in something that changes their level of obligation and not thinking about the long-term processes. “We’re putting in regulation for the short-term, but we need to be looking longterm. That’s where we have to look. What is the longterm strategic vision with this product, as we want to facilitate Bahamian ownership and entrepreneurship.” Mr Aubry added that Airbnb already employed a form of self-regulation, where it vetted landlords and ensured they were removed from the site if their properties received consistent bad reviews. Besides fostering Bahamian tourism industry ownership, the vacation rental market allows this nation to attract a different visitor niche that does not want to stay in mega resorts. These are the tourists seeking the authentic experiences described by Dr Hubert Minnis when the Prime Minister addressed the Bahamas Hotel and Tourism Association (BHTA) last week, calling for an infusion of cultural and heritagebased activities into this nation’s product. Vacation rental tourists also inject visitor spending directly into Bahamian-owned businesses that otherwise would not receive it. Tribune Business has this year seen a notable upsurge in tourists shopping at, or walking to, Super Value’s Winton store - indicating a likely rise in business for nearby vacation rentals. This market is also a potential tool for developing, and spreading the tourism wealth, to Family Island economies as vacation rentals require less infrastructure than major resorts. Mr Aubry suggested vacation rentals held potential

for revitalising run-down areas and communities, with the benefits extending beyond just landlords. “These kinds of industries that facilitate the ownership and participation in the tourism industry also create supply chains for local manufacturers and agriculture,” he told Tribune Business. Such businesses would be better able to supply product to vacation rental homes than larger resorts, and Mr Aubry added: “The scale fosters a lot more local development if done right.” Oxford Economics’ study, which analysed the impact of a 50 per cent increase upon current vacation rental activity, found this would grow stopover tourists by 8,350 annually, and generate $13 million in additional visitor spending. Excluding 50 per cent of that $13 million from its analysis, as that represented lease costs, the ORG study said: “The full economic impact - direct, indirect, and induced - of additional spending by these new tourists is estimated at $9.8 million of additional GDP and 225 new jobs. “The sectors most affected are community, social and personal services, which receives 35 per cent of the GDP impact and 50 per cent of the jobs impact, and hotels and restaurants, which receive 23 per cent of the GDP and 18 per cent of the jobs impact.” Data obtained by Oxford Economics showed that the Bahamas had 1,878 properties registered with Airbnb, of which 908 - just under half - were deemed to be active. Highlighting the vacation rental market’s growth and economic potential for the Bahamas, the ORG report showed these numbers were between eight to three times’ higher than comparable Airbnb data for Bermuda, the Cayman Islands and Turks & Caicos. The Bahamas’ mean occupancy rate was lower than Bermuda’s and Cayman’s, at 38 per cent and 22 per cent, respectively, but higher than Turks & Caicos’s 16 per cent. When it came to yield, the Bahamas’ mean Airbnb nightly rate of $306 was higher than Bermuda and Cayman’s, but lower than Turks & Caicos’s. This nation’s guest ratings were also in line with its regional rivals. Mr Aubry said the research had been shared with the BHTA and Ministry of Tourism, and suggested that it could be “furthered” as part of future conversations on the vacation rental market.

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BAHAMAS AIR SEA RESCUE ASSOCIATION ANNUAL GENERAL MEETING BASRA Headquarters, June 22nd, 2017 7:30pm All members are urged to attend. Refreshments will be served.

THE TRIBUNE

Monday, June 19, 2017, PAGE 5

Drink makers fear ‘irreparable harm’ from Budget tariff cuts From pg B1 plete elimination of the 60 per cent tariff on imported fruit drinks would further hurt “an already fragile and disregarded industry”. “If it is reduced, it will affect the local juice beverage manufacturing industry and give unfair competitive advantages for wholesalers to sell at cheaper prices, thus causing irreparable harm to this industry,” Mr Sweeting wrote. “As local manufacturers we have to take on high electricity costs, high fuel costs, NIB, Business License, a very large pool of low-skilled, untrained, rude and lazy workers, and minimal access to capital along with high duty on company vehicles. These added costs make it very difficult to compete with foreign products, which is why the duty should not be reduced as it would hurt an already fragile and disregarded industry.” Mr Sweeting told Tribune Business yesterday that he had received no response to his letter, which called for the Government to reinstate the tariff on imported fruit drinks to 60 per cent. The 2017-2018 Budget is also proposing to lower the duty on ‘drinks’ from 55 per cent to 30 per cent, and eliminate the 5 per cent tariff on juices. The Switcha said these tariff cuts ran counter to the Free National Movement’s (FNM) election campaign promises to support Bahamian manufacturers and entrepreneurs, and suggested that the Minnis administration was little different from its PLP predecessor. “It seems like Peter is no better than Paul, so we’re back to square one,” Mr Sweeting told this newspaper. “No one has consulted anyone in the beverage industry, and we all speak to one another. “Everyone in the beverage industry as a whole is upset and trying to figure out why they’ve made such a decision because it’s such an uninformed, unjustified decision.” Mr Sweeting said the 60 per cent duty elimination was “touted” during the Budget debate as something that was conceived by the incoming administration, and he also hit out at the Deputy Prime Minister’s comments to the National Conclave of Chambers of Commerce last Thursday. K P Turnquest, who is also the minister of finance, said that while he was sensitive to local manufacturers’ needs, they - and the wider Bahamian economy - needed to work out how to increase their competitiveness in the absence of protective measures such as tariffs. “It was like a slap in the face,” Mr Sweeting told Tribune Business. “It was like: ‘We know what we’re doing, and you guys must be

more competitive’. If that is the case, that is completely wrong and sends the wrong message. “Through their campaign they were talking about helping manufacturers, building up local Bahamians and helping our economy. This is what you want to do to Bahamians?” Mr Sweeting added that while Bahamians would always support home-grown products, the economic realities of high unemployment and stagnant/reduced incomes meant consumers were increasingly shopping on price. The duty reductions, he emphasised, would make import rivals more competitive and attractive in that exact same area - price. Amid fears of reduced demand and sales for Bahamian-made products, Mr Sweeting said the Government’s Budget policies would further disincentivise local entrepreneurs from starting such businesses. “That’s going to discourage young people from getting into business, as they will not have an opportunity or a head-start,” he told Tribune Business. “It will be too competitive for them to get into, as they will be at a disadvantage from day one. “It’s going to discourage potential local manufacturers and entrepreneurs from getting into the beverage industry or any manufacturing industry, as there is no hope for them to grow, especially when they are competing against imports that are duty-free.” Mr Sweeting reiterated that Bahamian manufacturers were “always always fighting hard with a pool of low-skilled workers, where it takes two persons to do the job of one”, and urged the Government: “Don’t make it more difficult for us.” “They have to make wise decisions, and consult the industries they are going to affect,” he said of the Government, “and see the impact. Be mindful, talk to us, and be consultative, because if we fail the Bahamas’ fails, more businesses close down, and the worse the economy is going to get. “It [the tariff structure] wasn’t broken, so why look to fix something that’s not broken? That’s a whole lot of money foregone in import duties at a time when the Treasury needs revenue. There’s no real reason you just did that.” Mr Sweeting argued that the real beneficiaries from the proposed duty elimination would be Bahamian wholesalers, as opposed to consumers, and said:

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“Crime is too high to hurt a sector that employs so many Bahamian men. The factory guys, delivery guys, warehousing guys. I would like Mr Turnquest to justify and explain the reasoning behind such an ill-thought out move. “Nothing in the new Budget offers any incentive or relief for the manufacturing industry, or for small businesses on the whole for that matter. The new Government should be very careful before it makes a decision about a particular industry. Speak to the stakeholders first to see how it affects them. “Bahamian business owners have grown frustrated at the lack of respect from politicians, who make these unjustified decisions with no input from the people. If this is going to be a trend with the FNM, they can expect a fight because now you’re putting livelihoods at risk. Further, there was so much talk about supporting local industries and now this.” Mr Sweeting, in his letter to Mr Symonette, suggested several measures to support Bahamian manufacturers apart from leaving the existing duty rates well alone. He called for the Government to sell Bahamas Agricultural and Industrial Corporation (BAIC) land to local manufacturers, thereby giving them an asset that can be used as collateral to raise investment/ growth capital. The Switcha chief also called for lower electricity rates for approved manufacturers; the elimination of duty on spare parts for manufacturing equipment; and the reduction or elimination of Business Licenses and duty on company vehicles. Mr Sweeting said the latter should be bonded. Aquapure’s Mr Knowles also stressed the importance of protecting local manufacturing, saying: “I know that protectionism is a word people don’t like to

use, but we have to protect the industry here because it makes us sort of self-sufficient in certain things. We can’t be completely dependent on outside sources. The little bit of manufacturing we are able to do we should do.” Bahamian juice manufacturers thus find themselves in a similar predicament to local paint and battery supplies, who last week made similar demands of the Government - to repeal the 2017-2018 Budget duty cuts that will impact their in-

dustries by making imports more competitive. Budget tariff cuts frequently trigger protests and push-back from manufacturers and producers, and trigger the long-standing debate of ‘protecting’ local businesses and ‘Buy Bahamian’ versus allowing consumers to obtain the best prices. Bahamian manufacturers, due to this nation’s high operating cost structure, are frequently unable to compete on price with foreign rivals who have greater

economies of scale. This frequently raises the issues of whether they should compete on factors other than price, and if Government policy should ensure the Bahamas maintains a manufacturing base - and the jobs associated with it - especially since tariffs may soon no longer be an effective tool as this nation enters into rulesbased trading regimes. Mr Turnquest could not be contacted for comment before press-time last night.

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PAGE 6, Monday, June 19, 2017

Sir Franklyn: ‘All must be alarmed’ by fiscal position From pg B1 prosperity, as evidence that both the Government and individuals had failed to ‘save for a rainy day’. Calling for debate to focus on generating greater economic growth once the 2017-2018 Budget is passed, Sir Franklyn urged all Bahamians to “pray unceasingly” that the country is spared another major hurricane as such an event will make its economic challenges “very, very difficult”. “I think we should all be concerned,” Sir Franklyn told Tribune Business of the Government’s financial predicament. “I think the Minister of Finance has expressed that. I don’t think anyone is questioning that. I think we should all be alarmed.” Moody’s, the international credit rating agency, recently expressed alarm that the Bahamas’ fiscal strength is “much weaker” than initially thought after the Minnis administration,

in unveiling the 2017-2018 Budget, disclosed it may borrow up to $722 million this fiscal year. This sum is intended to cover the $500 million projected deficit for 2016-2017, and deal with a $160 million Government payments “backlog”, as well as cover the $323 million deficit forecast for the 2017-2018 fiscal year. The Minnis administration could thus borrow more than $1 billion in its first three years in offices, following in the footsteps of a predecessor that added $2.2 billion to the national debt during its five-year term. Sir Franklyn praised K P Turnquest, minister of finance, for his handling of the situation to-date, and particularly his promise that the Government will honour all its debts and obligations. “That’s particularly important to international financial institutions but also to local stakeholders that

THE TRIBUNE the Government intends to meet their obligations,” he said. “Two, he recognised this is an important and serious matter. He stressed that he didn’t make the decision [to borrow $722 million] lightly. “Three, he recognises the importance of the rating agencies in our national life, and he will do all he can to convince the rating agencies that the Government is serious about arresting the trajectory. That provides evidence of the seriousness of how the Government is going to deal with the matter. “He’s [Mr Turnquest] addressed the stakeholders, stressing continuity, stressing seriousness and stressed the need to give us a little more time, and I think that’s reasonable.” Sir Franklyn acknowledged that it was “a necessary step” for the new government to give a public accounting of the present fiscal situation, and what had happened in the past. “As we get past the stuff about what the former government did wrong, I am hoping that the discussion will move at some point in

the not too distant future to where it’s more about the economic plan for recovery and change,” he told Tribune Business, “and we will be able to address what I see as serious problems.” Sir Franklyn said it was “amazing how history is repeating itself” with regard to the Bahamas’ economic circumstances, recalling how 1991 was “probably the most brutal year in the history of the country in terms of economic performance” due to the first Gulf War and worldwide recession. He added that this was a major factor in the Pindling administration’s 1992 election loss, with the thenOpposition also blaming its policies for the Bahamas’ woes. Sir Franklyn said the country enjoyed “a pretty good run” during the 1990s, due to a combination of Kerzner’s Atlantis expansions, a booming US economy and the then-Ingraham administration’s investorfriendly policies that included privatising the hotel sector. “One of the most candid and professional observations by an official at the

Downgrade forces NAD debt reserve ‘doubling’ to $38m From pg B1 that the airport manager will continue to make debt payments as they come due - especially since the funds cannot be used for anything else. However, NAD’s credit rating downgrade - and that of the Bahamas’ - will likely have triggered lending conditions requiring an increase in NAD’s debt servicing (interest) costs. The company’s latest financials,

to end-June 2016, show that the debt reserve account contained $18.735 million at that point. Mr D’Aguilar yesterday said the increased burden was why NAD had elected to increase total per passenger costs by $8, or 4.7 per cent, from $175 to $183 by December 1, 2017. Suggesting it would take time to increase the debt service reserve from its current $19 million to $38 million, the Minister added: “The only way they could increase it is by increasing the facility charge. “The thing that’s most troubling about this debt downgrade is there are severe restrictions about what NAD can spend money on. It can only spend on certain expenses before it goes to debt interest.” Mr D’Aguilar suggested this could hinder NAD’s ability to undertake capital works projects vital to maintaining LPIA’s upkeep as the primary gateway to the Bahamas for stopover tourists. The Minister, meanwhile, declined to comment further on the political controversy he ignited last week by arguing that the Christie administration’s direct intervention allowed one LPIA tenant to amass rental arrears worth $3.3 million. He suggested that the former government, and the then-NAD Board, wrote-off $1.2 million of this debt because the tenant concerned, businesswoman Patricia Mortimer and her PatMor Holdings vehicle, enjoyed strong links to the

end of that boom came from Julian Francis, thengovernor of the Central Bank, who raised the question as to whether the country was putting something away for a rainy day,” the Arawak Homes chairman recalled. Arguing that Mr Francis’s comments were especially relevant today, Sir Franklyn said the Bahamas enjoyed “another really good run” from 2002-20007, but the question of “did we do enough in terms of saving” remained. Then came the 2008-2009 ‘credit crunch’ and global recession, which the Bahamas has struggled to recover from ever since. Sir Franklyn said the two elections since then had confronted the then-governments with the same problem as the 1992 Pindling administration - namely being blamed for domestic policies that made the situation worse. “When we stop with the politics of this, there will be some serious questions that professors at the University of the Bahamas will have about the quality of governance the country has had for the past two decades

now,” he told Tribune Business. Sir Franklyn pointed to recent comments by James Smith, minister of state for finance between 2002-2007, that he had seen spiralling debts and deficits coming 14 years ago as evidence to support governance concerns. “I really believe that what has happened over the past 20 years has eliminated what Prime Minister Ingraham called headroom,” he added. “What has happened is that the headroom has been drastically reduced. “But let’s not be oblivious to the fact that these last two hurricanes had very serious consequences. I call upon every Bahamian citizen and everyone who loves this country to please pray unceasingly that the Good Lord spares us from hurricanes this year and next, as it could make a difficult situation really, really difficult. “I had a contractor in my office today, and he expressed the same point. He said: ‘Mr Wilson, I’m still doing work from the hurricane in 2015’.”

Progressive Liberal Party (PLP). Mr D’Aguilar’s claims were strongly denied by both Glenys Hanna-Martin, the former minister of transport and aviation, and then-NAD chairman Anthony McKinney, who branded the Minister’s comments “irresponsible”. Mr McKinney said the Kikivarakis & Company accounting firm was hired to investigate Ms Mortimer’s claims that the rental rates for her five LPIA stores were excessive compared to other tenants, and a settlement was agreed where PatMor would pay $800,0000 of the arrears upfront - and the balance over an agreed period - in return for the $1.2 million write-off. Several observers have suggested the key question is whether any other NAD tenant, in similar rent arrears circumstances, would have received a similar deal, given that the terms appear weighted heavily in favour of Ms Mortimer. Tribune Business understands that the Minnis administration’s attention was drawn to the situation by NAD’s desire to increase passenger user fees, and its fears that the airport could be making itself price uncompetitive at a time when Baha Mar makes it imperative to attract additional airlift. The Government is understood to have asked add about other sources of funding, including persons who owed it money, as a means to avoid the fee increase - and Ms Mortimer’s situation came up. NAD’s 2016 financials, which were signed-off just three months ago, reveal that more than 80 per cent

of its operating income is going towards servicing the interest on its $523.62 million debt mountain. Although the airport manager’s operating income rose by 3.8 per cent year-over-year to $50.93 million, some $42.156 million of this sum went towards paying its interest bill. Together with various accounting treatment ‘amortisations’, the interest bill drove NAD to a net $13.59 million loss for the year to end-June 2016 - a figure that was down 10 per cent on the previous year’s $15.101 million net loss. NAD executives have stressed to Tribune Business in the past that profitability is not the best measure of its success. Rather, they have suggested that cash flow and the ability to service its redevelopment financing are the key metrics, especially as interest costs will reduce over time once the debt principal starts to lower. However, NAD’s continued losses, and a near-$25 million accumulated deficit, are another factor likely driving the passenger fee increases as well as the 3 per cent rise in aeronautical revenues. With Baha Mar not fully opening until March/April 2018, NAD will have lost three years of projected passenger increases since the missed March 2015 opening. This, too, will have forced it to increase yields given that rising volumes have yet to materialise. NAD’s financials show it was owed $18.64 million in receivables by the private sector at end-June 2016, with a $3.285 million allowance made for doubtful accounts. The airport operator was also owed $2.979 million by Bahamasair, the national flag carrier, which accounted for the majority of the Government’s net $3.124 million payables to NAD.

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THE TRIBUNE

Monday, June 19, 2017, PAGE 7

Infrastructure investment key to unlock Cat Island’s potential From pg B2 major marina, and hosts several annual big game fishing tournaments that draw many crews from the Bahamas and the US. While Hawk’s Nest provides ample services for those travelling or fishing between Cat Island and New Providence, those yachters travelling throughout the southern Bahamas are left with no alternative on the eastern shore. Subsequently, potential investors may consider developing a marina on the southeastern end of the island to potentially attract a portion of the long-distance yachting market that is likely to skip Cat Island altogether, given its current lack of facilities. Challenges Issues relating to dwindling populations and poor infrastructure are endemic throughout the southern Bahamas, and Cat Island is no exception. Although it offers strong primary and secondary education to its residents, the island has long struggled with the social and economic impact of population drain, as the bulk of its young adults migrate to New Providence or abroad after completing their high school education each year. Aside from the expected ‘brain drain’ of skilled labour that coincides with such migration, Cat Island is also experiencing

a decrease in its unskilled labour force. As a result, retirees and the elderly comprise a growing percentage of the island’s current population of roughly 1,200 full-time residents, and it is unlikely that Cat Island’s youth will opt to stay without renewed investment in the island – particularly its infrastructure. Poor infrastructure arguably remains the greatest obstacle to economic growth and steady investor interest in Cat Island. Despite the recent uptick in visitor arrivals, the lack of an international airport constrains growth within the tourism sector, though the island currently enjoys regular flights to and from New Providence. To date, the status of a long-awaited upgrade for New Bight Airport, which would cost an estimated $14 million and finally allow Cat Island to receive international flights, remains up in the air. Despite backing the improvements in 2015, the previous administration later voiced concerns about the infrastructure project without greater assurances from property developers. This uncertainty has proved to be a point of contention with prospective developers, including Cat Island Partners and their PGA Village project, which was envisioned as the ‘anchor project’ for the island.

Baha Mar agreement unsealing ‘very close’ From pg B1 he did not want to “get into the nuts and bolts” of how the agreement and supporting documents will be unsealed. “Everyone’s been very co-operative, and we’re very close,” the Attorney General reiterated. His language indicates that the China Export-Import Bank, via its attorneys, Lennox Paton, has likely consented to the release of the ‘Heads of Terms’ now that Baha Mar’s sale is almost complete. The August 2016 construction completion agreement between the thenChristie government, the bank as Baha Mar’s secured creditor, and China Construction America (CCA) as main contractor was sealed at the lender’s request to “preserve the integrity” of the $4.2 billion development’s sales

process. With Chow Tai Fook Enterprises (CTFE) having long been selected as Baha Mar’s ultimate new owner, and just awaiting completion of the resort’s construction, any commercial rationale for the ‘Heads of Terms’’ remaining sealed and non-public has likely long since passed. Mr Bethel’s language will also raise expectations among Bahamians that the unsealing is imminent, the issue having aroused significant public interest given suspicions over the amount of land and tax concessions granted to the Chinese entities for Baha Mar’s completion and opening. The fact that significant movement appears to have taken place suggests that the China Export-Import Bank will itself apply to the Supreme Court for the agreement’s disclosure, as

Further improvements to Cat Island’s other public services, including electricity and running water, are also required. Potential investors or entrepreneurs should be aware that many business owners are currently dependent on generators and private wells to meet the utility demands of their clients year-round. Moving Forward As is often the case in the Bahamas, the pace of growth will heavily depend on the Government’s willingness to invest in infrastructure. Cat Island is currently stuck in a ‘chicken-and-egg’ situation between an international airport and large-scale tourism projects, with government officials unwilling to commit to costly upgrades without firmer investment promises, and property developers uneasy to invest in the island without the needed boost in airlift. Islands such as the Exumas have already enjoyed the benefits brought about by regular international airlift, and Cat Island will likely experience a surge in interest from developers and potential visitors should the Government make good on its long overdue promise to upgrade the facilities at New Bight Airport. • Roderick A. Simms II Bahamas Chamber of Commerce director and Family Island division chairperson, RASII@ ME.com it would take much longer than indicated by Mr Bethel if the Government had to seek this as an ‘interested party’. Tribune Business sources, meanwhile, have questioned whether the Minnis administration will provide disclosure beyond the already-released ‘Heads of Agreement’ with CTFE and the ‘Heads of Terms’ once they are unsealed. Among other key documents they identified are the Hotels Encouragement Act agreement with China Export-Import Bank, which CTFE will inherit, as this lays out the monetary value of the investment incentives granted, and the value and volume of items they are attached to. ‘Side letters’ and other agreements between the Government, CTFE and the Chinese state-owned entities; the sale and lease of Crown and Treasury Land; and details of the $101 million creditor payout and agreements reached over debts owed to government agencies remain other piec-

es of the Baha Mar puzzle. Mr Bethel told Tribune Business that he had been “very focused on the narrow task” of having the ‘Heads of Terms’ between the Government and China Export-Import Bank released, and issues such as the creditor payout had “not been a matter of concern to me”. “My concern has been to live up to the manifesto commitment to have the August 2016 agreement released and unsealed,” he

confirmed to this newspaper. Mr Bethel said the land sales, leases and transfers were likely to have changed little from what was arranged in the 2005 and 2007 Heads of Agreements struck by the then-administrations and Baha Mar’s original developer, Sarkis Izmirlian. The Attorney General added that the Hotels Encouragement Act agreement “was not a matter covered” by the ‘Heads of Terms’ and its sealing “as

I understand it”, given that it was signed-off afterwards in September 2016. He described such agreements between the Government and resort developers as “par for the course” for any hotel property over 25 rooms seeking to expand and upgrade. Mr Bethel said there was nothing in law that blocked the disclosure of Hotels Encouragement Act agreements, and release would be discussed if a reasonable request was made.

PAGE 8, Monday, June 19, 2017

THE TRIBUNE

AMAZON-WHOLE FOODS DEAL HAMMERS GROCERY STORES; DOW TICKS UP By MARLEY JAY Associated Press

NEW YORK (AP) — Amazon’s $13.7 billion deal for Whole Foods sent grocery stores, big retailers, and food makers and distributors plunging Friday. Energy companies rose while other stocks were little changed. It’s rare for a single deal to have a big effect on the broader stock market, but Amazon’s agreement to buy Whole Foods Market did. Investors wondered if Amazon will do to grocery stores and supermarkets what it’s done to sellers of goods like clothing and office supplies: force them to make big changes or be supplanted. Neil Saunders, managing director of the research firm Global Data Retail, said Amazon is likely to push supermarkets and grocery stores to slash prices, which will affect the companies that make and distribute those products. “As Amazon enters the grocery market proper, it will put a lot more pressure on existing grocers,” he said. “Those grocers will respond by cutting prices and that will cut profits for the distributors.” Elsewhere, energy companies rose as oil futures bounced back from their lowest price this year and

utilities and industrial and basic materials ground out modest gains. Thanks to a late gain, the Standard & Poor’s 500 index inched up 0.69 points to 2,433.15. The Dow Jones industrial average added 24.38 points, or 0.1 percent, to a record high of 21,384.28. The Nasdaq composite fell 13.74 points, or 0.2 percent, to 6,151.76. The Russell 2000 index of smaller company stocks shed 3.36 points, or 0.2 percent, to 1,406.73. Online juggernaut Amazon said it pay $42 a share for Whole Foods. Whole Foods had been the target of sale rumors for about two months, and investors appeared to wonder Friday if another bidder may step in. Its stock jumped $9.62, or 29.1 percent, to a twoyear high of $42.68. Amazon climbed $23.54, or 2.4 percent, to $987.71. Many investors had expected Amazon to get into the grocery business. It already runs AmazonFresh, a grocery delivery service that costs $14.99 a month for members of its Prime service, and it recently opened a few grocery stores. Investors dumped retailers, drugstores, and even discount chains. Many of them have started trying to sell more groceries in the last few years to try to capitalize on shoppers’ yen for fresher, more natural food.

That was a trend Whole Foods helped start. Wal-Mart had its worst day in more than a year as it fell $3.67, or 4.7 percent, to $75.24. Costco took its biggest loss in almost six years as it sank $12.95, or 7.2 percent, to $167.11. Target tumbled $2.85, or 5.1 percent, to $52.61. Amazon is a unique threat to many retailers because it doesn’t mind losing money for long stretches. The company might be able to sell inexpensive groceries as it makes its money from its cloud computing business and its gigantic online marketplace. “Is the future of grocery store shopping going to be a point and click experience, or is it going to be going to a grocery store?” said Dan Morgan, senior portfolio manager at Synovus Trust. Supermarkets and grocery stores had also plunged Thursday after Kroger cut its annual forecast. Kroger, which plunged 19 percent a day ago, lost another $2.27, or 9.2 percent, and hit a three-year low of $22.29. Sprouts Farmers Market skidded $1.41, or 6.3 percent, to $21.01. Campbell Soup fell $1.91, or 3.4 percent, to $55.05 and General Mills dipped $1.73, or 2.9 percent, to $57.10. United Natural Foods dropped $4.36, or 11 percent, to $35.39.

TRADERS WILLIAM MCINERNEY, left, and Mark Muller, right, confer on the floor of the New York Stock Exchange, Friday, June 16, 2017. Major U.S. indexes are slightly lower in early trading on Wall Street, but grocery stores and other retailers are plunging after Amazon said it would buy Whole Foods Market. (AP Photo/Richard Drew)

Greece dodges new crisis but austerity remains part of life By ELENA BECATOROS AND PAN PYLAS Associated Press ATHENS, Greece (AP) — Greek stocks rallied to two-year highs on Friday, after the government struck a deal with European creditors that means the country won’t face another brush with bankruptcy anytime soon. However, for austerity-weary Greeks the deal does little to lift the pall from years of belttightening. After months of haggling that raised fears of another escalation in Greece’s nearly eight-year debt crisis, the 19-country eurozone agreed late Thursday to release a further 8.5 billion

euros ($9.5 billion) from its current, third bailout after the Greek government delivered on an array of reforms. Getting the money was becoming increasingly urgent as Greece has a big debt repayment hump next month. With an eye to the longer term, the eurozone creditors also made clear they are ready to ease the burden of Greece’s debt repayments when its bailout program ends next year, possibly by extending repayments by up to 15 years. The International Monetary Fund may also get involved financially, with up to $2 billion, but only if and when it sees the specifics of the debt relief and agrees

it can make Greece’s debt bearable. “I think that’s really the best agreement we’ve had for quite a while,” said Pierre Moscovici, the top economy official for the European Union, the 28-country bloc that includes the 19 states using the euro. Though some details remain sketchy, investors breathed were relieved if only because a deal wasn’t postponed, as has occurred so many times previously. The main Athens stock index hit a two-year high, later closing up 0.8 percent on the day. Yields on both the two-year and 10-year Greek bonds fell, reflecting diminished investor fears of bankruptcy.

THE TRIBUNE

Monday, June 19, 2017, PAGE 9

AP FACT CHECK: NOT MUCH NEW IN TRUMP’S CUBA POLICY By MICHAEL WEISSENSTEIN Associated Press

HAVANA (AP) — President Donald Trump’s announcement that he’s “cancelling” his predecessor’s policy toward Cuba is a good deal less than meets the ear. Trump’s move, announced Friday in Miami, actually leaves in place most of the important elements of President Barack Obama’s moves to open relations with the island. And while his policy has the stated aim of helping the country’s nascent private sector, it contains a measure that could damage thousands of small-business people who host, feed and transport independent American travelers to Cuba. Trump’s policy keeps a U.S. Embassy open in Havana and allows U.S. airlines and cruise ships to continue service to Cuba. Cuban-Americans can still send money to relatives and travel to the island without restriction. U.S. farmers can continue selling their crops to the Cuban government. The new policy aims to starve military-linked businesses of cash by banning any U.S. payments to them. It pledges to help the entrepreneurial class that has grown since President Raul Castro enacted changes af-

ter taking office a decade ago. “Effective immediately, I am cancelling the previous administration’s completely one-sided deal with Cuba,” Trump said. “We will very strongly restrict American dollars flowing to the military, security and intelligence services that are the core of the Castro regime.” He promised “concrete steps to ensure that investments flow directly to the people so they can open private businesses and begin to build their country’s great, great future.” The policy will undoubtedly reduce the flow of cash to GAESA, the militarylinked conglomerate that operates dozens of hotels and other tourism-related businesses. But those businesses host hundreds of thousands of Canadian, European and Latin American tourists a year, and do unfettered business with corporations from around the world, reducing the impact of any U.S. cutoff. Weakening the impact further, Trump’s policy carves out exceptions in the military ban for airlines, cruise ships, agricultural sales and remittances. The policy also allows Americans to continue patronizing state-run hotels and other businesses that are not directly linked with Cuba’s military and statesecurity services. And, of course, nothing prevents

PRESIDENT Donald Trump speaks about Cuba policy, Friday, June 16, 2017, in Miami. (AP Photo/Evan Vucci) the Cuban government from simply moving revenue over to the military or state security, a vulnerability in the policy that the White House has not addressed. The policy risks harming independent business people by restoring a requirement for most American travelers to visit Cuba as part of tightly regulated tour groups. The Cuban government has traditionally steered those tour groups to state-run business, meaning the majority of American travelers to Cuba will probably no longer be able to patronize private restaurants, bed-and-breakfasts and taxi drivers. Private entrepreneurs say Americans represent a disproportionate share of their revenue because they spend more than other travelers

for high-end services that badly run state-operated business typically cannot provide. Trump also demanded the return of U.S. fugitives including Joanne Chesimard, a black militant convicted in 1977 of the murder of a New Jersey state trooper. “The harboring of criminals and fugitives will end,” Trump said. “You have no choice. It will end.” Many of the high-profile fugitives in Cuba are black or Puerto Rican militants who were offered political asylum by Fidel Castro during the 1970s and 1980s. Cuba has repeatedly said it will not renege on the promise of the former president, who died in November.

ANTI-President Donald Trump protester chants anti-Trump slogans during the president’s visit to the Manuel Artime Theater, Friday, June 16, 2017, in Miami. The president announced a revised Cuba policy aimed at stopping the flow of U.S. cash to the country’s military and security services while maintaining diplomatic relations. (AP Photo/Alan Diaz)

Republicans divided as Trump reverses some Obama Cuba policy By RICHARD LARDNER Associated Press WASHINGTON (AP) — President Donald Trump’s new Cuba policy has landed with a thud among many Republican lawmakers who say his plan surrenders a potentially lucrative market for American goods to U.S. competitors. Anti-Castro conservatives are hailing Trump’s partial reversal of the Obama-era detente with Havana, but a number of other GOP lawmakers hammered the change. They’re calling

Trump’s policy misguided and isolationist, and they want him to reverse course and ease barriers that will boost trade and create jobs in both countries. Congressman Tom Emmer of Minnesota says Trump’s new policy will cut “the knees out from under” U.S. travel and manufacturing industries. Congressman Rick Crawford of Arkansas says the president’s approach may put U.S. national security at risk as strategic competitors move to fill the vacuum the change could create.

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SHAD CAY LTD. NOTICE is hereby given as follows: (a) Shad Cay Ltd. is in Voluntary Dissolution under the provisions of Section 138(4) of the International Business Companies Act 2000. (b) The Dissolution of the said Company commenced when the Articles of Dissolution were submitted to and registered by the Registrar General of the Commonwealth of The Bahamas. (c) The Liquidator of the said Company is Beatus Limited, P.O. Box N7776-348, N.P., Bahamas. Dated this 16th day of June, A.D., 2017

PRESIDENT Donald Trump shows a signed executive order on Cuba policy, Friday, June 16, 2017, in Miami. From left are, Rep, Mario Diaz-Balart, R-Fla., Florida Gov. Rock Scott, Cary Roque, and Vice President Mike Pence. (AP Photo/Evan Vucci)

Beatus Limited Liquidator

MARKET REPORT FRIDAY, 16 JUNE 2017

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

BISX ALL SHARE INDEX: CLOSE 1,867.12 | CHG -0.03 | %CHG 0.00 | YTD -71.09 | YTD% -3.67 BISX LISTED & TRADED SECURITIES 52WK HI 4.38 17.43 9.09 3.60 4.70 0.13 6.56 8.60 6.10 10.60 14.49 2.72 1.60 6.00 10.00 11.00 10.00 6.90 12.51 11.00

52WK LOW 3.40 17.43 8.19 3.50 1.64 0.12 3.80 8.35 5.70 10.05 10.02 2.18 1.31 5.80 7.55 8.56 7.30 6.35 11.92 10.00

1000.00 1000.00 1000.00 1000.00

900.00 1000.00 1000.00 1000.00

PREFERENCE SHARES

1.00 106.00 100.00 106.00 105.00 105.00 100.00 10.00 1.01

1.00 105.50 100.00 100.00 105.00 100.00 100.00 10.00 1.01

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 Famguard Fidelity Bank Finco Focol ICD Utilities J. S. Johnson Premier Real Estate Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B

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

52WK LOW 100.00 100.00 100.00

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS FAM FBB FIN FCL ICD JSJ PRE CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 17 (Series A) + Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +

SYMBOL FBB17 FBB18 FBB22

Bahamas Note 6.95 (2029) BGS: 2014-12-3Y 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 BG0103 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

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

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

MUTUAL FUNDS 52WK HI 2.06 3.93 1.95 169.70 141.76 1.49 1.67 1.58 1.10 6.96 8.50 6.30 9.94 11.21 10.46

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.43 1.64 1.54 1.04 6.41 7.62 5.66 8.65 10.54 9.57

LAST CLOSE 4.22 15.85 9.09 3.60 1.64 0.12 4.05 8.60 6.00 10.50 10.02 2.52 1.56 6.00 9.75 9.00 9.75 6.90 12.50 10.00 1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.01 LAST SALE 100.00 100.00 100.00 109.13 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

CLOSE 4.22 15.85 9.09 3.60 1.64 0.12 4.05 8.60 6.00 10.50 10.02 2.48 1.56 6.00 9.75 9.00 9.75 6.90 12.50 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 0.00 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 1.01

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

CLOSE 100.00 100.00 100.00

CHANGE 0.00 0.00 0.00

109.08 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

-0.05 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 0.00

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 Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund

VOLUME

300

VOLUME

NAV 2.06 3.93 1.95 168.44 141.76 1.49 1.64 1.58 1.07 6.96 8.50 6.30 9.80 11.13 9.63

EPS$ 0.444 0.932 -0.510 0.383 -1.117 0.000 -0.406 0.587 0.550 0.540 0.570 0.102 0.197 0.753 0.762 0.330 0.820 0.600 0.697 0.000

DIV$ 0.080 1.000 0.000 0.210 0.000 0.000 0.090 0.300 0.220 0.360 0.570 0.060 0.060 0.290 0.400 0.000 0.330 0.140 0.620 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 0.000

P/E 9.5 17.0 N/M 9.4 N/M N/M -10.0 14.7 10.9 19.4 17.6 24.3 7.9 8.0 12.8 27.3 11.9 11.5 17.9 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 0.0

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 7.00% 6.00% Prime + 1.75%

MATURITY 19-Oct-2017 31-May-2018 19-Oct-2022

6.95% 4.00% 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%

20-Nov-2029 15-Dec-2017 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

YTD% 12 MTH% 1.57% 4.52% 0.39% 2.75% 0.77% 2.51% 3.95% 3.95% 6.77% 6.77% 1.45% 4.17% -1.59% 0.17% 0.49% 2.72% 1.29% 2.00% 4.35% 4.69% 4.13% 4.28% 4.22% 4.64% 6.19% 3.43% 2.77% 2.98% -3.66% -3.90%

NAV Date 30-Apr-2017 30-Apr-2017 30-Apr-2017 31-Dec-2016 31-Dec-2016 30-Apr-2017 30-Apr-2017 30-Apr-2017 30-Apr-2017 30-Nov-2016 30-Nov-2016 30-Nov-2016 30-Nov-2016 30-Nov-2016 30-Nov-2016

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

YIELD 1.90% 6.31% 0.00% 5.83% 0.00% 0.00% 2.22% 3.49% 3.67% 3.43% 5.69% 2.42% 3.85% 4.83% 4.10% 0.00% 3.38% 2.03% 4.96% 0.00%

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

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

PAGE 10, Monday, June 19, 2017

THE TRIBUNE

TAX OVERHAUL IN TROUBLE AS OPPOSITION TO IMPORT TAX GROWS By STEPHEN OHLEMACHER Associated Press

HOUSE Freedom Caucus Chairman Rep. Mark Meadows, R-N.C walks on Capitol Hill in Washington. A key part of House Republicans’ plan to overhaul the way corporations pay taxes is on life support, leaving lawmakers scrambling to save one of President Donald Trump’s biggest priorities and increasing the chances the GOP will simply pass a tax cut instead of overhauling the tax code. (AP Photos/J. Scott Applewhite, File)

WASHINGTON (AP) — A key part of House Republicans’ plan to overhaul the way corporations pay taxes is on life support, leaving lawmakers scrambling to save one of President Donald Trump’s biggest priorities and increasing the chances the GOP will simply pass a tax cut instead of overhauling the tax code. A proposed tax on imports is central to the GOP plan to lower the overall corporate tax rate. It would generate about $1 trillion over the next decade to finance the lower rates without adding to the deficit. It would also provide strong incentives for U.S.-based companies to keep their operations in the United States and perhaps persuade companies to move overseas operations to the U.S. But the tax faces strong

HOUSE Ways and Means Committee Chairman Rep. Kevin Brady, R-Texas speaks on Capitol Hill in Washington. opposition from retailers, automakers and the oil industry, and a growing number of congressional Republicans have come out against it. They worry that it will increase the cost of imports, raising consumer prices. Majority Leader Mitch McConnell, R-Ky., says there probably aren’t enough votes to pass the import tax in the Senate — not a single Republican senator has publicly endorsed it. And a powerful group of House conservatives says it’s time to dump the idea. “The sooner we acknowledge that and get on with a plan that actually works and actually can build consensus, the better off we will be,” said Rep. Mark Meadows, R-N.C., chairman of the conservative Freedom Caucus. Even one of the biggest backers of the new tax says he is open to other ideas.

Rep. Kevin Brady, RTexas, has pushed the tax as chairman of the powerful House Ways and Means Committee. He still says it’s the best way to promote economic growth and domestic jobs, but he has softened his stance on alternatives. “I’m still confident that we’re going to stay at the table until we solve that problem, which is how do we stop U.S. jobs from continuing to leave the United States,” Brady said. “We’re going to remain open to the best ideas on how we do that.” On Tuesday, Brady proposed gradually phasing in the tax over five years to give corporations time to adjust. It wasn’t received well by opponents. “Forcing consumers to pay more so that some profitable companies can operate tax-free is no better of an idea in five years than it is today,” said Brian Dodge of

the Retail Industry Leaders Association. But if the import tax is dead, then what? “I would never declare anything dead until there was a fully formed alternative,” said Rohit Kumar, a former tax counsel to McConnell who now heads PwC’s Washington tax office. “I think that’s one of the big challenges that Republicans are struggling with right now.” Thirty-one years after the last tax overhaul, there is widespread agreement that the current system is too complicated and picks winners and losers, compelling companies to make decisions based on tax implications instead of sound business reasons. The goal — for now — is to simplify the tax code and make it more efficient in a way that does not add to the federal government’s mounting debt. That means some would pay more and some would pay less, a heavy political lift among politicians who have deep political and practical disagreements. Lawmakers also are trying to overhaul taxes on individuals, which raises another set of big challenges. “It’s easier to get a coalition to cut taxes,” said Mark Mazur, a former Treasury official under President Barack Obama. “And if the conversation is, ‘how long do they last and how deep are the tax cuts,’ each party knows how to do that conversation. It’s not like you’re asking for a huge lift.”

THE TRIBUNE

Monday, June 19, 2017, PAGE 11

CAN AMAZON PERSUADE ENOUGH PEOPLE TO BUY FRESH FOOD ONLINE? By ANNE D’INNOCENZIO Associated Press NEW YORK (AP) — Can Amazon, the company that persuaded people to buy ever more items online, win enough of them over to having their fresh groceries arrive in an Amazon box? Going full throttle into groceries by announcing a $13.7 billion deal for Whole Foods on Friday, Amazon gets the advantage of using the stores as mini-distribution hubs to deliver items to customers. But online delivery of groceries has been tough to pull off. Some shoppers worry about the quality of their produce and say they’re rather pick their pears themselves. Amazon, though its Prime benefits program has created strong loyalty, has a long way to go before it’s a default choice in groceries as it often is for books and electronics. And shoppers may be skittish about having Amazon take over one more element of their shopping experience. “It’s funny. I was just ordering something on Amazon,” said Nick Yezierski, a hotel manager who was eating breakfast outside the Whole Foods flagship store in Austin, Texas. “But I don’t really buy any home items on Amazon, not anything I put in my body.” Peter Belanger of Newington, Connecticut, who was shopping at a Whole Foods in West Hartford, said he didn’t think he’d be interested in groceries online. “Most of us like to see what we’re buying, and it’s a good store, but we just wouldn’t buy online,” he said. “That’s something that doesn’t seem to right to me, actually.”

In Jackson, Mississippi, 59-year-old Deborah Sullivan says she does order some items online, but when it comes to clothes and food, she prefers to touch and feel the items. Her daughter Bethany Capels agrees and says she likes Whole Foods for the organic fruits she can serve her kids. “Consumers want to know what they’re getting and putting in their bodies,” said Madeline Hurley, a senior analyst at market research firm IBISWorld. “Books are lot more homogenous,” she said, noting that a hardcover Harry Potter book is the same at Amazon — though Amazon can sell it at a lower price. But shoppers could start to grow more comfortable buying, and Amazon sees the grocery business as a hot market because shoppers buy weekly or even more often for items they run out of. Walmart, which has the largest share of the U.S. grocery market, is ramping up its grocery services as a way to fuel online sales. Online grocery sales are expected to increase from $71 billion this year to $177 billion in 2022, according to John Blackledge, an analyst at Cowen & Co. So there’s lots of room to grow. Amazon has been dipping its toes in groceries since it launched its Amazon Fresh delivery service a decade ago in Seattle, and expanded it to California, New York, and the Philadelphia area. It took a different path from online competitors like Shipt, Instacart and Peapod, which use existing retailers to deliver grocer-

SHOPPERS enter a Whole Foods Market, Friday, June 16, 2017, in San Antonio. Amazon is buying Whole Foods in a deal valued at about $13.7 billion. (AP Photo/Eric Gay)

ies and avoid holding inventory. Amazon invested in refrigerated distribution centers to hold items. But it has been struggling to find a profitable model. Amazon also just launched two grocery pickups kiosks in Seattle that allow its Amazon Prime customers to buy online and pick things up in as little as 15 minutes instead of having them delivered. And grocery may take a middle path, says Kimberly Scott, a portfolio manager at the Ivy Mid Cap Growth Fund, which counts Whole Foods stock as one of its biggest investments. She’s skeptical that groceries will go purely online and thinks it’ll be more of a hybrid model, where people use a mix of online ordering, restaurants and traditional grocery stores. “Think about human nature and how most people deal with dinner,” she said. “People don’t know what they’re having for dinner when they leave the office at the end of the day and don’t have it in the refrigerator.” How quickly items get delivered “is going to have to be improved considera-

bly” for customers to order something online instead of going to the prepared-foods counter at the supermarket, she said. That was feeling of Taylor Malooly, 19, a University of Texas student at Whole Foods in Austin, who said a Whole Foods delivery service would have to be fast if he were to try it. “If there ever was a time crunch, I’d consider it,” he said. Shoppers have plenty of options. The top 10 grocery retailers plus Amazon control less than half of the market, Blackledge says, and a patchwork of several hundred grocery chains, convenience stores, dollars stores as well as mom and pop stores make up the remainder. Based on his forecasts, Amazon will likely rank as the ninth largest U.S. grocery retailer this year — though he expects it to assume third place by 2021, behind only Walmart and Kroger. And shoppers are a picky bunch, saying they would be looking for the best prices, good quality and convenience when it comes to online food delivery.

WHOLE Foods customer Bethany Capels, 34, of Mendenhall, Miss., loads her Whole Foods Market purchases in her car in Jackson, Miss., Friday, June 16, 2017. Amazon is buying Whole Foods Market in a deal valued at $13.7 billion, uniting the on-line giant with the grocery store chain that touts fresh organic foods. (AP Photo/Rogelio V. Solis)

PAGE 12, Monday, June 19, 2017

THE TRIBUNE