Aggressive plan for growth
WHAT-TO-DO - FREEPORT/LUCAYA & GRAND BAHAMA ISLAND - JAN 2003
Aggressive plan for growth
Diversified economy, free trade zone, attractive tax exemptions, ideal location
Grand Bahama has always been different from the rest of The Bahamas, and now it wants to capitalize on that fact to boost its tourism trade and the economy.
Under a smart new marketing programme, officials are creating a niche market for Grand Bahama that will set it apart from the rest of the islands in the minds of tourists.
"We propose to establish a niche for Grand Bahama in the areas of both sports and entertainment," says Minister of Tourism Obie Wilchcombe, whose constituency is Grand Bahama's West End and the neighbouring island of Bimini.
"We plan to bring major sporting events that will draw visitors who can spend money, and reposition this destination as an exciting new destination where there is much going on for the sporting enthusiast in a wide array of land and water sports pursuits."
Included are media and entertainment events, such as jazz and gospel music festivals, and golf and fishing tournaments.
The effort is part of a larger plan by the new Progressive Liberal Party (PLP) government, elected in May 2002, to aggressively promote the Out Islands as individual destinations.
The government is also introducing pari-mutuel betting in Bahamian casinos to entice sports fans to visit in groups to bet on their favourite horse and dog races.
"Many of the potential visitors are less than two hours via connecting flight from Grand Bahama," says Wilchcombe.
The expansion and redevelopment of Grand Bahama International Airport, including a $5.5-million resurfacing of the 11,000-ft runway and construction of a new terminal, means it is now capable of handling the world's largest passenger and cargo aircraft.
Unique position
While tourism remains the No 1 industry in Grand Bahama, the island has a diversified economy that includes light and heavy industries and a burgeoning financial services sector.
Lines Overseas Management (LOM), a Bermuda-based investment management company, established an office in Freeport in July 2001 after passing over jurisdictions such as Barbados and the British Virgin Islands.
"We used three criteria in determining where to establish an additional office: stability of jurisdiction, potential for growth in the financial services industry, and quality of life for LOM personnel. Grand Bahama, and specifically Freeport, meets all of these criteria," says Craig Lines, general manager of LOM's Bahamian sales office.
Like the rest of The Bahamas, Grand Bahama businesses pay no taxes on profits, capital gains, earnings, distributions or gifts.
What sets Grand Bahama apart is the Hawksbill Creek Agreement, a pact between government and the Grand Bahama Port Authority that created a Free Port Area when Freeport was founded in 1955.
Covering 233 square miles, the Port Area is a free trade zone where licensees enjoy tax exemptions - including no taxes on real estate and no import duties - that can save them up to 65 per cent over costs in Nassau.
It could put Grand Bahama in a "unique position" when it comes to negotiating the terms of the impending Free Trade Area of the Americas (FTAA) agreement, said Minister of State for Finance, James Smith.
"In some free trade agreements, the free trade zones are recognized as legitimate instruments of economic development and, as such, any goods and services manufactured, processed or assembled in the zone receive the full benefits of the trade agreement in a manner similar to establishments outside of the free zone," Smith said in his address to the Grand Bahama Business Outlook conference in 2002.
Location, location, location
Geographically, Freeport is perfectly situated to take full advantage of the FTAA.
Its container port is located at the hub of the major shipping routes that will be employed to transport goods and services throughout the FTAA and beyond.
Even better, the Grand Bahama Port Authority, which administers the Port Area, has linked with Hong Kong conglomerate Hutchison Whampoa, the world's largest port operator.
Hutchison has invested $700 million in Freeport, including the port, which can now handle 950,000 container movements per year.
It is the centrepiece of Freeport's maritime services industry and has attracted other shipping services to the island, including the Grand Bahama shipyard, which boasts the largest floating dry dock in the Caribbean and Eastern Seaboard region.
Mark Roberts, chairman of GateWay Management Services, a Grand Bahama-based management consulting company, writes in his book, FTAA: A Bold Step Towards the New Caribbean: "Grand Bahama, because of its strategic location, sits on the avenue of success with the best capability for movement and delivery of goods throughout the world. The shipping and delivery businesses give Grand Bahama a clear advantage for large economic gains through the FTAA."
In another promising development, Texas-based energy company El Paso is planning to invest "substantial millions" in building a liquefied natural gas (LNG) plant and trans-shipment facility at the old Burmah Oil site in east Grand Bahama. The 163-mile Seafarer pipeline from Grand Bahama to the Port of Palm Beach, FL, is expected to be operational by the second quarter of 2005 - just in time for the scheduled implementation of the FTAA.
Financial plan
While Grand Bahama's financial services sector is a relatively small part of the economy compared to Nassau, it will benefit from a new 10-point Financial Services Strategy introduced by Allyson Maynard Gibson, Minister of Financial Services and Investments.
Maynard Gibson's portfolio is a new one, created by the PLP government to recognize the importance of the financial sector to the Bahamian economy.
The plan includes a new investment vehicle that's a combination of an International Business Company (IBC) and a mutual fund.
Called SMART (for Specific Mandate Alternative Regulatory Test fund), it will be licensed and supervised by the Securities Commission of the Bahamas. Some of its benefits include fast-track licensing and limited direct regulation.
Maynard Gibson's plan also includes law revisions aimed at encouraging foreign investment that is fully compliant with onshore tax laws, including changes to existing trust and foundations legislation, new legislation to encourage capital markets transactions, and a complete overhaul of e-commerce legislation.
In fact, Grand Bahama stands to reap huge benefits in the area of e-commerce, since goods could be cleared through The Bahamas, taking advantage of the tax-free environment.
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