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Community : Service Organizations : Bahamas Chamber of Commerce Last Updated: Feb 6, 2017 - 2:32:04 PM


GB Chamber President Barry Malcolm's remarks at the 15th GB Business Outlook‏on
Mar 18, 2013 - 6:36:46 AM

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Barry J. Malcolm, President

The Grand Bahama Chamber of Commerce
Business Outlook – March 14th 2013,
Freeport, Bahamas

 
 
Thank you for the opportunity to speak to you.  
 
We live in a time of great challenge for this community …….. It is a time that demands vision and incisive action if we are to change, fundamentally, for the better, the economic fortunes of Freeport and greater Grand Bahama Island. 
 
It is to this issue that the Board of the Grand Bahama Chamber of Commerce, on behalf of its members among Freeport Licensees and the greater Grand Bahama Businesses Community, has
directed that we speak at this 15th Annual Gathering of the Grand Bahama Outlook.   Our new Board has invested considerable time and resources in assessing the views of Chamber Members, with the intent of articulating and moving to constructive public discussion, the ideas and issues that are of greatest importance to them.    
 
Among the issues that require attention there is perhaps none greater than that of: How do we turn around the economic well-being of Freeport? What do we do to change the economic life (or lack thereof) of Grand Bahama Island?
 
We concluded that an open discussion of this issue, not just among ourselves, but with vested stakeholders throughout Grand Bahama and beyond, might be instructive and might be helpful in  framing solutions for all that economically ails us.  
 
Our purpose in being here today is to advance the discussion to put on the table ideas that we think should be considered.  These ideas may help to shape our thoughts as to how to move forward. These are ideas for new and progressive growth in Grand Bahama. With that being said, our remarks should be entitled: 

“Freeport... It’s Possibilities and It’s Future.”
 
Before we get to possibilities and the future, however, let’s look back a few years, and rhetorically, put some sobering questions:
 
  •  How has Freeport changed since the early 70’s?  Has this change been for the better or for worse? 
 
  •  During this time have we seen any sustained growth in Freeport?  If so, in which sectors and of what quality?
  
  •  What significant enterprises have been developed in Freeport in the past 8 years, and what do you see as new tangible businesses opportunities for the next 8? 
 
  •  What are the truly attainable opportunities for Freeport?
How do we get to a new level of opportunity in this place?
How do we move this economy forward?
 
 
These are questions to which (for us as vested stakeholders) answers are required.    These are questions that have occupied our working sessions within the Chamber.  Many ideas were brought forth.  We’ll share some of them with you shortly. 
 
Before looking forward, however, let’s look even further back, at the Freeport Model that was ambitiously set up in August of 1955 when the Government of the Bahamas and the new Grand
 
 
Bahama Port Authority Ltd. executed the Hawksbill Creek Agreement. 

This was a simple (but brilliant) grant of concessions in return for certain commitments to be developed, on the island of Grand Bahama, an international center for business.  It was to be a center for Target Investment Enterprises -- the growth enterprises of that time in bunkering and commercial harbor operations, cement manufacture, pharmaceutical and chemical
production, and oil refining.  This center was positioned to provide the economic and tax incentives that were required to attract the growth enterprises of the 1960’s and 70’s. The model was simple, powerful and effective ………… and it was established almost 60 years ago.  We know it was effective because it successfully resourced and mobilized the capital and effort that built the infrastructure and established enterprises, the successors to which we rely on in Freeport to this day. 
 
 [As an aside, it seems to us at the Chamber that recent suggestions regarding the performance of these original Target Investments, that have evolved into the leaders of Freeport’s Industrial sector today, fail to recognize the significant and continuing contribution to the economy by these companies.  Frankly, with excellent and deep participation of a solid core of Bahamian workers, professionals and management,  these 
companies are contributing mightily to sustaining the wounded economy of Grand Bahama.]
 
What happened?  While the underlying drivers are obviously complex, one clear answer to the question is that, somewhere along the way, the model was modified and we started going
sideways.  There is a view that, from the early 70’s,   core elements of the model ceased to be driven as originally intended. There are a host of reasons why, this may have occurred.  The resultant impact on sustained quality growth in Freeport is evident. 

 
 
 A long time ago, we stopped pushing the model for growth and development of Grand Bahama and Freeport in its original form. The clear result (the powerful lesson learned) is that we lost traction and the momentum (made even worse by events of the last 8 years).  Some say the possibility of what Freeport could be has been irrevocably lost.
 
I do not accept the last proposition that all possibility is lost. But, I do believe that many specific opportunities have irretrievably slipped through our hands.
 
But despite all, I remain strongly optimistic, not just because that is my nature, but because we are of an even stronger view that the original Freeport Model, as conceived within the Hawksbill Creek Agreement, can be even more powerful and even more
effective in today’s international business environment than it was back in the 60’s.
 
What are the current 21-Century Investment Enterprises that we would Target for the Bahamas today?  Who are these companies (and individuals), these new fonts of direct foreign investment. Which enterprises are the most profitable, most successful, game-changing businesses today?  They are:
 
  •  Knowledge-based Enterprises
  •  Could operate from anywhere in the world
  •  Do not need the Bahamas for existence or success
  • Create value and compete beyond the Bahamas Economy
  •  Demand optimal conditions for business operations and
quality of Life
  •  A Finite Resource courted by progressive countries world-
wide
  • Once captured, hard-wired into the economic growth
structure of Country

 
These companies and individuals are changing the world in sectors such as: 
 
  • Information and Communications Technology
  •  Medical Science and Bio-Technology
  •  International Financial Services
  •  Sustainable Energy and Environmental Sciences
  •  Manpower and Technology Skills Development
 
As a country, we may as a strategy for our own national development target specific enterprises or individuals within these or other sectors, because we determine that can help to fulfill national development needs that are important to us.  We might, for example, seek out and welcome as investors in the country companies or individuals that are capable of:
 
  •  Producing significant net intellectual and capital inflows to
the Country
  • Driving GDP and rapidly strengthening local competitive
capabilities
  •  Seeding new business opportunities and investments within
Country
  •  Developing the creative / productive capacity and skills of
Bahamian Workers
  •  Expanding the capacity and reputation of the Country in
international business
  •  Attracting other Target Enterprises to Country
  • Meeting other specific hurdles established by current
Development Policy
 
 
The Strategy we pursue in targeting specific investors and sectors, and the incentives we offer to get the attention of our Targets will ultimately be determined by national will and preferred social choices. Whatever we do and whomever we target the competition with other countries is intense.
 
Knowledge based and information based enterprises, the companies that are driving and changing the world, can operate from anywhere in the world.  They demand and usually get what they want to optimize growth and development and health of the business wherever they operate.   Countries are seeking them out and satisfying their needs. Countries are falling over each other to attract them to their shores.  So, why come to Freeport?   How we answer this question determines how Freeport will  survive?.  
 
At best we may have a two-year window to put a clear strategy in place, unless we want to be left further behind  countries that are struggling as we are in the current the economic downturn, but are ahead of the curve for recovery when it comes.  
 
[2015 Expiration of HCA Property Tax Provisions]
[Global Trade Agreements  --  WTO   / EPA]
[End of the Recession]
 
What is the value-add for Freeport?  What would cause you as a businessman sitting anywhere in the world choose to come to Freeport?  That is the question.  I would like to answer in part by looking at what the competition is doing. To be in the game and have a chance of turning Freeport around we must match or beat that competition. If we are not prepared to do what the competition is doing then we are making a different kind of choice for the future of Freeport.
 
Countries that are most competitive offer some combination of the following concessions for the companies that meet their set criteria to be designated Target Investment Enterprises that operate within their Special Economic Zones:  
 
 
  •  100% exemption from income and capital gain; 
  • 100% exemption from customs duty; 
  •  100% ownership of your business and property;
  •  5 year work and residence permit and if you meet our
expectation,
  • 30-day approval of business license; 
  •  30-day approval of full business and personal banking; 
  •  Transparent of regulatory process and license fee; 
  •  100% repatriation of capital and net profit if you chose to
wind up your business. 
 
We know we are not there yet.  That’s why the Chamber has asked that we speak to these issues.   The challenge is to get there if we wish to compete.
 
The person who will develop the next Google is somewhere out there. We want to get them here.  They are not yet part of our economic critical mass.  We are talking about net positive inflows to the country.    To increase that mass we must be creative, open, and fiercely competitive. To be competitive we must to offer comparable or better concessions (for appropriate commitments) for investors to come.  That is Freeport’s challenge. That is our country’s challenge. 
 
My contention, the Chamber of Commerce’s contention, is that unless or until we wrap our heads around this challenge and collectively and uniformly decide where we want to go, having had the discussion, we are simply wasting more time.  
 
We can decide that we want to make the original model that should be Freeport work or not.  If we choose the latter, we then simply agree to allow Freeport to continue to die its slow
exhausting death. 
 

 
As mentioned, the original structure of the HCA was ideally suited for the leading international enterprises of almost sixty years ago.  That same model is even more ideally suited for the kinds of new international businesses we have been talking about for the last half hour.  It speaks to the beauty, power and simplicity of the model that was originally Freeport.  As we said before, we got off the track and stopped working towards that specific model. The question is “Can Freeport become the international center it was
intended to be 60 years ago? Can we strip away the obstacles that block  and destroy ease of doing business? Can we become a true international centre or do we just sit here all of us moving into our 60’s and 70’s and simply watch the dream fade.  What is it going to be?” 
 
We’ll end with the same questions asked at the beginning of our presentation:
 
  •  What are the truly attainable opportunities for Freeport? 
  •  How do we get to a new level of opportunity in this place? 
  •  How do we move this economy forward?
 
Our clock it ticking……..time has run out!
 
Thank you.
 

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