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Freeport: open for business
WELCOME BAHAMAS - NASSAU, CABLE BEACH & PARADISE ISLAND - 2006
Freeport: open for business
New plan, new team, spark optimism
"We will be the Dubai of this hemisphere in my lifetime," says Willie Moss, Deputy Chairman of the Grand Bahama Port Authority. That's a bold forecast for Freeport, a city that has endured more than its share of hardship in recent years.
But if the prediction bears out, it will at last fulfil the dream of its visionary founders, American Wallace Groves and Englishman Sir Charles Hayward.
A half century-plus after it was created by the Hawksbill Creek Agreement in 1955 (see box, pg 189), those in charge at the Grand Bahama Port Authority (GBPA) - the entity charged with planning and developing the city's economy - believe that Freeport is only now hitting its stride. A new business plan, new investment, and a new face in the person of CEO and Co-Chairman Julian Francis, promise to make the next few years a pivotal time for the nation's second largest city.
"We believe that, going forward, the economy of Freeport is going to be grounded in three areas: heavy industrial, business/commercial and residential/touristic, with each of these being rather equal in the degree that they are important to the city's future growth and development," says Francis, until 2005 Governor of The Central Bank of The Bahamas. "That's a unique blend of economic diversification within the entire Caribbean region, and certainly within The Bahamas, where the tourism and financial services sectors, in the case of New Providence, are really the model."
Industrial strength
Heavy industry, traditionally the most robust sector of Freeport's economy, continues to outperform. The Grand Bahama shipyard, which is currently responsible for approximately 20 per cent of North American and Caribbean cruise ship repair and servicing, is expected to expand even further over the next several years. The petroleum refinery is also being redeveloped, while liquefied natural gas and cement manufacturing are being explored as possible growth areas.
The city's container port is also home to several leading-edge initiatives in collaboration with the United States. The US Department of Homeland Security has been negotiating to have Freeport's harbour designated an approved port to security-screen US-bound cargo for illicit or dangerous materials. Called the Container Security Initiative, this programme is in place in more than 35 seaports worldwide. Francis expected a decision on Freeport's status early in 2006, adding, "Once you have that designation, it certainly does support the continued expansion of the port's activities."
As well, Freeport's harbour is a location for the experimental US screening of containers for nuclear materials. New technology scans the containers, immediately detecting the presence of targeted substances, eliminating the need for visual inspection.
A tax-neutral location
One of the most significant initiatives set to debut in 2006 was the use of the harbour as a buying and distribution base. The first company to experiment with this concept is a US-based corporation that sources merchandise from several international locations and sells to customers in the Caribbean and Latin America. Instead of purchasing and importing its goods into the US, then processing, packaging and re-exporting from there, the company will use Freeport as a holding centre and ship its products out on an as-needed basis.
"The financing of the inventory which is held... (here) can be done more efficiently because you have a completely tax-neutral environment and the real estate costs here are far less than in Florida or elsewhere in the US," says Francis. "This will be replicated, we hope, in many instances for similar kinds of businesses involving imports into and exports from the United States. Businesses in the international transportation sector - parcel post, courier companies and so forth - would be ideal candidates here. Usually they have to avail themselves of, in relative terms, reasonably expensive housing facilities in the United States. The great thing about Freeport is its proximity to Florida... so it's very easy to access the facilities here... Today, a larger and larger portion of the movement of trade from Asia is actually coming through Freeport."
The GBPA is also promoting Freeport's nascent financial services sector, rolling out the red carpet for international bankers and working to establish a new financial services hub downtown.
...and lifestyle too
Although industry remains the lifeblood of Freeport's economy, knowledgeable investors are confident that Freeport may be on the cusp of a residential boom. Port Authority Deputy Chairman Moss points out that, as early as the next decade, baby boomers will begin retiring en masse, with a sizeable portion of them expected to migrate to Florida. This massive influx will place a tremendous strain on the infrastructure and services in that state and push real estate prices through the roof. With the Sunshine State reaching capacity, the doors are flung open for Freeport to become a premier retirement destination, offering a similar climate, less traffic, lower crime and cheaper real estate prices than in Florida.
The city already possesses the capacity to handle such an influx. "Freeport is planned at the moment for a quarter of a million people. Currently, it accommodates only 50,000, so we can absorb five times the existing population," says Francis. "Some people believe, and I share this view, that you wouldn't see any change in the logistics around Freeport in terms of traffic jams and so forth because of the way the city is planned. In fact, I think that 250,000 is a conservative estimate. I believe this city could potentially accommodate a million people."
To support future growth, The Grand Bahama Development Company (DEVCO), real estate arm of the Port Authority, is working on a mix of projects, including timeshare condominiums and upscale villas.
The jewel in this area, though, is a much talked about project, finally announced in 2005 by The Bahamas Government and the Ginn Corporation of Florida. When complete, this project will be the largest mixed-use resort ever created in The Bahamas. Promoting developer Bobby Ginn as "a visionary doer of the first order," Prime Minister Perry Christie hailed the development as one that "will spearhead the transformation of Western Grand Bahama into a resort Mecca of world-class calibre," making it "a gateway to The Bahamas."
A number of smaller scale commercial developments are also in the works. A vacation project called Club Fortuna was doubling the size of its development. Hutchison Whampoa Limited is planning another development at Silver Point. New Hope Holdings is proceeding with a new phase in its project, amounting to more than $100 million. And the Harcourt Group, which has existing property holdings in Freeport, is also expanding its investment significantly.
"These are all very real projects and they're a little bit under the radar so nobody is giving them the fanfare of the Ginn project. But really, I believe that, in a way, they are more important, because it's that kind of broad-based growth and development that really lends your economy stability as it develops. We saw very painfully with the Royal Oasis (Resort) that if you have a huge property, something goes wrong and it gets knocked out, all of a sudden you lose 1,500 jobs, but if you've got a nicely diversified portfolio of smaller properties and you lose one or two, you're not going to be crippled by it. We think the idea of seeking to diversify our development base significantly is very valid, and that's what's quietly happening here," says Francis.
View from the Port
When asked about their long-term vision for Freeport, GBPA leaders are effusive. "My vision for Freeport is to see the container port... moving in excess of five million TEUs (containers) per annum. It is a new cruise port that is enjoying a visitor population in excess of two million people per annum. It is to realize its full potential touristically so that when people hear the name Freeport, they will know immediately where it is and what it has to offer," says Moss.
"We think Grand Bahama offers the best opportunity for development of all of the islands within The Bahamas, including New Providence," adds Francis, "because the elements that are really going to underpin its growth and development are now more or less in place, and because, generally speaking, New Providence is fast approaching saturation point. In my view, Freeport has the potential to be the hub of the Bahamian economy."
"The founders of Freeport had themselves to be visionaries to contemplate such a development in 1955," says Moss. "Today, it is not difficult to see what they saw and to buy into their vision."
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