Nassau, Bahamas - Hon. L. Ryan Pinder, Member Of Parliament For Elizabeth and Minister Of Financial Services, 2013 / 2014 Mid-Year Budget Communication delivered on February 20, 2014:

Mr. Speaker,

Today I rise on behalf of the good and loyal constituents of Elizabeth to debate the communication and associated legislation related to the Mid-Year Budget. This is an exercise where we each have an opportunity to analyze the financial implications for our country, and discuss opportunities that might exist for our great country. Today I want to discuss some observations from the Mid-Year Budget Statement by the Prime Minister and Minister of Finance, emphasize the state of fiscal responsibility by our Government, and speak to certain matters related to fiscal and tax reform. I will then speak to matters related to the portfolio of the Ministry of Financial Services of which I am responsible.

Fiscal Prudence

I want to personally congratulate the Minster of Finance and the Minster of State for Finance and their team for doing just as they said they would do, to promote fiscal prudence and responsibility. On a cash basis, for the first half of this 2013/2014 fiscal year the Government realized $56 million more in revenue than the first half of the 2012/2013 fiscal year, the first fiscal period of our administration, a time when we inherited to the catastrophic fiscal situation from the former FNM government.

Likewise, the total deficit for the first half of the fiscal year 2013/2014 was $92 million, or 25% less than the first half of the 2012/2013 fiscal year, the first fiscal period of our administration, a time when we inherited to the catastrophic fiscal situation from the former FNM government.

And, for the first time in a long time we bring a mid-year budget report without the need to seek additional borrowing. We have demonstrated the fiscal prudence promised by the Prime Minister during the 2013/2014 fiscal year budget debate last June. This PLP Government inherited a fiscal situation that anyone could objectively consider as negligence by the former Government, and set fiscal goals that those opposite said could not be achieved. Well, we achieved them, we are on course to fulfilling those goals and ensuring that the financial affairs of the country are responsibly managed.

The Prime Minister in his last budget debate set out the details of the various components of our Government’s fiscal reform strategy in the form of a Medium-Term Fiscal Consolidation Plan through 2016/17. The plan consists of four key parts: growing the economy; restraining expenditure; enhancing revenue administration; and securing new sources of revenue. When the Prime Minister detailed the fiscal goals, the members opposite said it could never be done, the fiscal results today demonstrate they were wrong, and we are a fiscally prudent government.

Tax Reform

The Bahamas is currently engaged in a program of tax reform measures to put the sustainable fiscal affairs of the government to be on sound footing we inherited a mess but are committed to righting the ship. The current model is unsustainable, there is not sufficient revenue to support the obligations of the government, the tax base is too narrow. This is substantiated by referring to the tax revenue as a proportion of GDP, a measure that is internationally recognized, just as debt to GDP is used to measure a country’s debt levels.

The Bahamas’ measure of tax revenue to GDP is between 16.2% - 18.2%. This includes revenue from property tax, selective services tax, business license, and customs duties. In the context of tax reform enforcement of efficient collection of all taxes are necessary.

The average tax revenue to GDP ratio in OECD countries was 34.6% in 2012. Mexico (19.6% in 2012) and Chile (20.8%) have the lowest tax-to-GDP ratios among OECD countries. They are followed by the United States, which has the third lowest ratio in the OECD region at 24.3%. The average tax revenue to GDP ratio in Caricom countries is approximately 25%, the Bahamas representing the lowest ratio, after Haiti.

The United Nations has said that a minimum level of 20% tax revenue as a percentage of GDP is necessary to achieve the Millennium Development Goals, which include:

To eradicate extreme poverty and hunger

To achieve universal primary education

To promote gender equality and empowering women

To reduce child mortality rates

To improve maternal health

To combat HIV/AIDS, malaria, and other diseases

To ensure environmental sustainability

To develop a global partnership for development

Clearly we are a low, or under taxed jurisdiction, tax reform is necessary to not merely meet the obligations of a government, but to ensure that the resources are available to achieve the goals for societal and cultural advancement. Tax reform is necessary.

I believe the primary constraint for the fiscal affairs of the country is that our tax base is far too narrow. With the level of concessions that are granted, coupled with sectors that go untaxed such as the services industry and the domestic gaming industry, the current tax base cannot sustain the recurring financial obligations of the Government.

Tax reform is not easy, and it is not simple, I can speak to that first hand as a tax professional. I think it important, however, to point out that in the process of tax reform, in the policy and methods chosen, there has been comprehensive analysis of options.

Value Added Tax – The Government of the Bahamas has decided that a value added tax will be a fundamental element of tax and fiscal reform of the Bahamas. The underlying philosophy of a VAT is that it by nature expands the tax base, the portion of the economy that is subject to tax. VAT, unlike the current tax system, taxes the services industry of the Bahamas, an industry that largely goes untaxed.

VAT is a consumption tax by its nature, ultimately every phase of consumption is taxed, and through a credit system ultimately, in the current proposal, the total tax remitted to the Government is equal to 15% of the value of the final product. As mentioned, VAT is charged on goods and services, an element that makes this tax system attractive. Since a business has to file a return in order to claim the credits, to ensure that they are not being over taxed, VAT is to a degree self enforcing. The duty and excise taxes on goods will be adjusted at the border to ensure as much as possible that the total tax on goods is kept the same. In a perfect world the broadening of the tax base should ultimately enable the lowering of tax rates. We are committed to make every effort to achieve this.

VAT has been implemented in over 140 countries throughout the world. We have heard arguments that a VAT is a regressive form of tax that is harmful to economic growth, however, the OECD has found that VAT is less harmful to growth than personal income taxes, corporate taxes and taxes on capital.

Alternative Options – We have heard the cries of the public that the Government should consider alternative options to tax reform, models other than VAT. The Government has done so, and based on such analysis we believe that VAT is the preferred option. Nevertheless as the Prime Minister said, we will continue to consider all reasonable proposals.

For example, we have heard some advocate for a payroll tax. The payroll tax would be more regressive and concentrated on the poor. For example, business owners could not be paid a salary and receive compensation in alternative form to avoid a payroll tax. This can take the form of a dividend or distribution, or have their company acquire assets and items on behalf of the individual owner.

One might say that to address this proposed abuse, dividends should be taxed. If dividends are taxed, the financial services industry, and all indirect services industries that serve the financial services industry could be in jeopardy. Our financial services industry, second home market, and private wealth planning industry are dependent on a zero tax, or tax neutral environment. It would be inequitable and contrary to our philosophy as a Government to take the position that only Bahamians should be subject to a dividend tax and not foreign persons and businesses. Likewise the introduction of a capital gains tax would have the same detrimental effect on significant aspects of our internationally based economy.

Revised VAT / Alternative Revenue

I recall a recent discussion with a major businessperson in the Bahamas regarding VAT. We had a heated debate for more than an hour, this particular business owner was adamant in his opposition to VAT. Over an hour into the discussion I proposed a hypothetical, I asked him if in a hypothetical situation the rate of VAT was 10% rather than 15%, and VAT was implemented January 1, 2015 rather than July 1, 2014, what would his opinion be. To my utter surprise, this successful and well respected business person admitted that he can work with that, at 10%, and with an implementation date of January 1, 2015 he could accept that appreciating the need for additional revenue and a broader tax base.

What I learned from this was that it is not necessarily the concept of VAT that he, and I assume others, are opposed to, but it’s the rate and the timeframe for implementation. In order to be in a position to accommodate my hypothetical, however, alternative revenue has to be identified to compensate for a lower rate and a delayed implementation.

Domestic Gaming – One alternative that I think would be reasonable and broadly accepted is the defining, regulation and taxation of domestic gaming. The domestic gaming industry maybe should take the form of domestic electronic casinos that are owned by Bahamians and a place where Bahamians can legally gamble on pre-approved and regulated electronic games.

Before discussing the anticipated revenue implications, I want to show why this could be in the best interest of the Bahamas. I agree with the observations of the Governor of the Central Bank, the current activities require regulation to ensure compliance with anti money laundering requirements and to ensure there is not unregulated banking activities that are operating, both in the form of accepting deposits and advancing credit. This is a significant regulatory concern. Because of these concerns, the current operations are unable to bank their assets in The Bahamas, thus essentially removing millions and millions of dollars from the economic activity of the Bahamas. This has a dramatic effect on the economic growth of the country.

Separate and apart from these concerns are the obvious implications to government revenues. With a legitimate and regulated domestic gaming industry, it is projected that depending on the tax structure the Government can realize anywhere between $20 million and $100 million per year. This is a very significant amount of Government revenues and significantly impact the fiscal well being of the Bahamas and alleviate any pressure from multilateral institutions such as the IMF and international rating agencies.

Given what I have detailed, I think the creation of a domestic electronic gaming industry, owned by Bahamians where Bahamians would be permitted to gamble on games approved by the regulator, the Gaming Board is worthy of consideration. The imposition of anti money laundering regulations and requirements on these establishments consistent with international best practices would be required. The taxation of these institutions and the winnings could well result in reduced taxes and reduced cost of living for all Bahamians. Generally speaking, I support more choices for Bahamians rather than fewer choices.

International Revenue – I would also propose a review of external fees for the purpose of revenue generation. An example of this is immigration fees on work permits and permanent residency. A review and balance must be achieved that generates additional government revenues while not making the Bahamas non-competitive to foreign investment and business. A comparative study of other similar jurisdictions shows there is some headroom here.

Another option for additional government revenues is consideration of an International Operational Company Income Tax. This will require careful review and intense consultation, and will require detailed analysis on revenue versus affect on business. The concept is those businesses that are designated as "non-resident" by the Central Bank will be subject to a Corporate Income Tax. By definition these institutions are operational entities from within the Bahamas that are foreign owned and provide services exclusively to foreign clients. This model can only work if the Bahamas can successfully negotiate double tax agreements with countries where the owners or parent company of these companies are from / taxed.

None of the above suggestions, nor other revenue efficiencies can substitute for a VAT, however, consideration of different revenue measures and taxation of new industries can cause for the goals of the prominent business person that I discussed to be achieved, a lower rate of VAT implemented at a later date. Tax reform is not easy, but the Bahamas requires tax reform to be fiscally sustainable. Tax reform is not easy, the Bahamas Government has and continues to review options and approaches. Tax reform is not easy, but tax reform is necessary.

Economic Growth

Many frequently state that the Government should spend less, and I for one am in favor of fiscal responsibility and efficiency, however, as I have detailed above, we as a country are not a high taxed jurisdiction, and efficiencies will result in measured savings as compared to our fiscal deficit.

I am personally not in favour of austerity, I do not believe it contributes to economic growth and development, in fact, I think if you look at countries that have either voluntarily or been forced to undertake austerity measures, you would have seen that they failed when it comes to economic development. I am personally an advocate for growth rather than austerity, we can solve our fiscal challenges, have lower tax rates, and more opportunities for Bahamians through a dedicated philosophy of economic growth. I do not think I am alone in this, responsible spending and a growth agenda was the theme of the communication by the Prime Minister on the Mid-Year Budget.

The Prime Minister spoke in his contribution about how the Government has worked tirelessly over the past eighteen months to promote the further development and expansion of economic activity and the attendant employment opportunities. As a result of this growth strategy, the economy is growing and unemployment is declining. The Prime Minister detailed a number of the major new developments and foreign direct investment projects initiated during our administration that contributes to the growth agenda of this government. The Prime Minister assured the Bahamian people that we will persist in planning and further develop initiatives that assuredly will get our economy growing more strongly in the years ahead.

Like the Prime Minister, and I would say this Government as a whole, the Ministry of Financial Services is focused on developing growth and opportunity in our country for Bahamians. I would like to take a moment to discuss activities of the Ministry of Financial Services over the first half of this fiscal year and how we are setting the stage and facilitating growth in our portfolios.

Ministry of Financial Services

Financial Services

I now turn to the matter of Financial Services, a portfolio which I am privileged to lead. I am proud to recite the accomplishments of my ministry over the mid year period. The Ministry has utilized a small budget extremely well to do the work of the people in promoting and developing this country’s second industry.

Blue Chip Bahamas: Smart Branding

Last year I told the story of a financial services jurisdiction which was rich in talent and product offerings, but seriously lacking in definition. Unlike The Bahamas’ tourism product, which had been carefully cultivated over decades, the financial services industry lacked dedicated Cabinet level oversight and guidance through some very crucial periods. My Ministry had as its responsibility the job to change this. We set about to ensure that The Bahamas as a financial services centre had a clear definition.

I can report that change is occurring. The Bahamas’ name is once again synonymous with a blue chip jurisdiction. I have taken the message from Uruguay to Brazil to Guatemala to build our profile in key Latin American markets. I have taken the message from Miami to New York to re-launch the Bahamas in the North American market. My Ministry has taken the message to from the UK to the Middle East. We will be taking the message next to the Far East, to the world’s fastest growing economy – China in the next few months.

I have made it my personal mission and a core mission of my Ministry to ensure that our message gets out to the people who matter. Indeed, the Ministry’s record speaks for itself. My Ministry has ensured that The Bahamas headlines many of the major conferences in the financial services world. Gone are the days when we sit on the sidelines as observers to other jurisdictions at these conferences and meetings! This is the day where the Bahamas leads the way.

Over the last few months, first hand information on The Bahamas has been delivered to thousands, if not tens of thousands of international financial services professionals. I am speaking of persons who bring clients to our shores; persons who intend to bring new clients and set up businesses in our country; and those who make the decisions as to whether operations which are already here in The Bahamas stay or go, in the face of global uncertainty. Over the last 6 months, my Ministry has been a featured speaker at:

• Financial Crime Conference in New York

• ACAMs coming up in Florida

• STEP Caribbean in St. Kitts

• STEP Latin America in Uruguay

• BFSB London Landfall

• BFSB Brazil Landfall and other meetings

• BFSB Latin America Landfall

I and my Ministry will continue to tell the story of The Bahamas as a financial services centre that offers a full range of services: trusts, banks, funds, insurance, wealth preservation services, second homes, yacht and aircraft services and arbitration services. We will continue to tell the story of a business center with the top-notch human capital and infrastructure and most importantly – a business and financial centre with full government support. The Bahamas is open to business and is friendly to all business – both foreign and domestic. Unlike many of our competitors that are commodity financial services jurisdictions, our brand is a full service business and financial center, offering the full range of products and the service providers to support the industry.

Everywhere we go, we have made the case for why it is best to choose The Bahamas for your business activities and to highlight the commitment of The Bahamas Government to business services.” We are seeing a healthy response and the business community is experiencing positive changes which increase opportunities in The Bahamas for Bahamians. I say it again, “the world is being told that the Bahamas is open for business.”

My Ministry is telling The Bahamas’ story in the print media as well. In November 2013, The Bahamas, through the Ministry of Financial Services, was a featured story in International Financial Centre (IFC) Review under the heading, “The Bahamas: the Right Choice for Latin America”. We will continue such efforts.

New Products

During the last budget debate, I made the promise that My Ministry would actively seek out new product ideas and fill gaps. I am proud to say that we have followed through on the promise – particularly for Latin America and the Middle East.

We are well on our way to launching a tangible product, which evolved from a series of simple conversations. My team and the BFSB listened carefully to industry, applied our technical expertise and developed from concept to legislation to marketing exciting new products that will be discussed more in the next few months.

The Bahamas is re-emerging in the world of Captives. We have aggressively sought to attract world-class captives here and the strategy is working. We amended legislation to streamline the captive insurance process and have actively engaged world leaders. We are happy to report that we have partnered with one of the largest captive insurance managers in the world to advance the Bahamas as world-class captive insurance jurisdiction.

International Initiatives

The international landscape for financial services continues to change extremely rapidly. My Ministry continues to actively follow and engage on issues emanating from the Global Forum, OECD, G-8, G20, the EU and now even the United Nations on matters related to financial services. As I pointed out previously, “Leaders of these organizations have made statements to the effect that they wish to crush “tax havens” and countries which prioritize financial services as a mechanism for development.” As I also promised, “We can no longer ignore these threats. We must respond in a systematic and principled approach to address the misperceptions of The Bahamas and its financial services industry.”

I also take this opportunity to highlight the single strongest defense of financial services delivered by any country in the last 30 years. On 28th September, 2013, our Prime Minister delivered a message to the General Assembly of the United Nations which championed the financial services sector of The Bahamas and other responsible international financial services centres. He championed the right of our existence and our future unashamedly.

I take this moment to applaud the Prime Minister and I hope that the nation, the entire nation – irrespective of political persuasion, will join me in applauding the Prime Minister for this remarkable achievement. I think that The Bahamas UN speech was a key defining moment in Bahamian history and one which should make any Bahamian extremely proud.

Turning now to FATCA, Mr. Speaker,

My Ministry has advanced our progress with the United States Treasury and the IRS on FATCA. Our achievements, through negotiation specific exemptions under FATCA for trusts won us esteem throughout the world. I credit this achievement to a number of things. First and foremost, I attribute our success to the sovereignty, which has allowed this Government to seek the best arrangements for our citizens. Second, I believe that the people in the Ministry of Financial Services who work on these issues continue to be top notch. Therefore, funding has been allocated for continued development and training of my staff.

The work on FATCA will continue and funding has been allocated in this budget for continued industry education and training on FATCA matters. Over the next few months, my Ministry together with other Government stakeholders will continue to review the proposals of companies who have sought to build The Bahamas a FATCA reporting system. Sufficient funding will be allocated for this project in the next budget cycle.

My Ministry’s goal in its dealings with all of the international initiatives is to have The Bahamas’ products and services offered internationally without unnecessary impediments.

Human Development Issues

The issue of training and human development within the financial services industry is an essential pillar of my Ministry. We have followed through on our budget promises to ensure that new learning opportunities are created for Bahamians in the financial services centre. Through our affiliation with the AIBT, 10 students were afforded internships over the summer and 2 participated in language study in Mexico. Through our affiliation with the Bahamas Institute of Financial Services, two new certificate courses were launched in taxation and corporate finance.

The Ministry is preparing in the next few months to release its call to industry to demonstrate the best in class in terms of training programmes that benefit Bahamians. We will be launching a print media series to highlight Bahamian professionals who have been successful at home and abroad in financial services. We are doing this not only to highlight these people, but also to serve as an important beacon to guide young professionals and new entrants to the Bahamian financial services system. We hope that this programme can expand to include a mentorship element.

My Ministry’s strategy continues to focus on education at all levels. The Ministry’s Strategy includes foreign language training and cultural sensitization so that Bahamians are well placed for the new careers in the financial services industry. I am seeing some positive advancement in this regard and I wish to see this trend continue and accelerate. We are delighted that the BFSB is continuing to expand its language training programmes through an international recognized language training company at affordable rates. At all meetings with foreign governments and the international organizations, my Ministry continues to make the case of foreign language training scholarships and international exchanges. My Ministry seeks to ensure that sufficient Bahamians are trained in the languages of business.

My Ministry has been charged with the task of ensuring that The Bahamas is recognized as the Regional Centre of Excellence in Financial Services and for the development of a Centre for Excellence in Financial Services. We continue to discuss with Caribbean and International governments and with our tertiary institutions. A definitive plan of action for achieving this will be released in the new budget year.

Financial Services for the Development of All Bahamians

Finally my Ministry is on a mission to correct the misperception that financial services is an insular issue – affecting only a handful of persons in the country.

Financial Services, like tourism, is everyone’s business. The industry, through its professionals supports the Bahamian economy. The industry has played a paramount role in the creation of a middle and upper middle class – and even wealthy Bahamians. The industry has provided, not only careers, but also entrepreneurial opportunities for Bahamians. Financial services supports the need for a strong cadre of lawyers, accountants and other professionals such as teachers. It supports the need for persons employed in domestic industries such as housekeepers and landscapers. It supports thousands of shopkeepers who benefit from Bahamians and non-Bahamians with high disposable incomes. Indeed, I cannot think of one occupation, which is not supported by a stronger, more active financial services industry.

We must work together to ensure that all Bahamians understand the contribution of financial services to the development of the Bahamas – past, present and future. I have asked my team to ensure that there is better and fuller dialogue with the public so that all understand the importance of this sector.

Trade and Industry

During the debate of the 2013 / 2014 Budget I noted that this Government had taken a targeted, forward looking and proactive approach in respect to matters related to international trade policy and trade promotion. I also noted that trade is the avenue for further economic diversification and new opportunities for Bahamians.

My Ministry and its technical officers at every opportunity continue to advance the value added chain strategy highlighting the efficiencies of The Bahamas as a significant value component in global value chains throughout North America, Latin America and the Caribbean. Given our geographical position in the Northern Caribbean, proximity to North, Central and South America, and given Freeport’s industrial base, the container port and international shipping lanes, my Ministry continues to promote Freeport as a natural fit to position The Bahamas as a preeminent trade hub in this hemisphere. To this end my Ministry continues to engage in discussion with CARIFORUM Member States and countries in Latin America on how our respective countries might benefit from value chain production.

In fact Mr. Speaker, my Ministry is presently exploring opportunities with the Organization of American States to cause a study to be undertaken by an expert on Global Value Chains using The Bahamas as a case study in order to better understand how Bahamian firms might capitalize on this approach to identify trading opportunities. Just yesterday I had the opportunity to speak with the propose consultant to advance our value added trade strategy.

Economic Partnership Agreement

Mr. Speaker, when I last updated you on the approach of this Government as it relates to the Economic Partnership Agreement I advised that The Bahamas had secured a consultancy sponsored by CARTFUND and that the Government would consider establishing an EPA Implementation Unit called for under the EPA Agreement and recommended by the Consultants. In August 2013, Cabinet approved the EPA Implementation Plan tailored to the Bahamian environment and established the National Economic Partnership Agreement (EPA) Implementation Unit within my Ministry. That Unit is geared to liaising with stakeholders including the Chamber of Commerce in order to facilitate trading opportunities for Bahamian businesses arising under the EPA Agreement.

The Bahamas has recently accessed funding under the EPA and CSME Standby Facilities for Capacity Building and under the 10thEuropean Development Fund (EDF). Within these two envelopes, The Bahamas has submitted proposals to access funding for over $580,000 to further develop and strengthen the newly established National EPA Implementation Unit and to further build trade capacity in the area of Standards, Financial Services, Trade Information Services. The selected areas are ones in which The Bahamas seeks to collaborate with other CARIFORUM Member States, specifically those in the northern Caribbean (Haiti, Dominican Republic and Jamaica). These countries have expressed interest in partnering with The Bahamas in these areas of interest.

My Ministry continues to collaborate and hold ongoing consultations with relevant stakeholders including those agencies of Government like the Ministry of Finance, the Attorney General’s Office, the Ministry of Agriculture and Marine Resources, the Ministry of Youth and Culture, the Bahamas Investment Authority, the Customs Department and the Registrar General. These consultations enable us to determine needs and ascertain opportunities and funding available under the EPA Agreement from which The Bahamas might benefit in order to increase trading opportunities and build capacity to meet the demands of full integration in the global economy.

Just this month two consultants funded by the Caribbean Development Bank visited The Bahamas and held consultations with relevant stakeholders including the Chamber of Commerce in order to ascertain how The Bahamas might maximize the benefits that could be derived with full implementation of the EPA. They also used the occasion to help us identify potential training opportunities which would assist in capacity building.

Caricom Canada Trade Agreement

Mr. Speaker, my Ministry continues to be present at the negotiation table to ensure the best market access terms for Bahamian goods into Canada as the Caribbean and Canada negotiate a reciprocal CARICOM Canada Trade and Development Agreement to replace the non-reciprocal CARIBCAN trade arrangement with Canada which expired last December.

With the expiration of the World Trade Organization (WTO) waiver granted to The Bahamas and other CARICOM countries and the decision of the Government of Canada not to apply for an extension of the waiver to the WTO, I was able to reach out to relevant Canadian officials to ensure that Bahamian firms who export to Canada not be negatively impacted given that The Bahamas was not a member of the WTO and entitled to MFN trading provisions like other CARICOM Members.

World Trade Organization

In that regard Mr. Speaker, my Ministry continues to advance the membership application process of The Bahamas to the rules based WTO. My Ministry is in the final stages of vetting the Factual Summary document prepared by the WTO which will enable The Bahamas to hold a Third Working Party meeting with other WTO Members to advance the application of The Bahamas. Accession to the WTO will provide the necessary trade guarantees to advance trade as a 3rd pillar of our economy creating opportunities for economic diversification and jobs for Bahamians.

During the 9th Ministerial Conference of the WTO held in Bali Indonesia last December, I used the opportunity to underscore the country’s vulnerability and the need for both multilateral and bilateral aid donors to consider the provision of both technical assistance and development funding to assist The Bahamas meet the challenges of WTO accession and further integration into the international trading system.

Bahamas Bureau of Standards

The assumption by the Ministry of Financial Services of Standards has seen the formalization of the operations of The Bahamas Standards Bureau temporarily working out of the Ministry of Financial Services. This week witnessed the successful convening of the 1st National Standardisation Forum hosted by The Bahamas Bureau of Standards. The three day event was made possible with the assistance of the CARICOM’s Regional Organization for Standards and Quality (CROSQ) and the10th European Development Fund (EDF) Programme. The Forum brought together Stakeholders to begin the dialogue to form technical committees to develop and adopt national standards which are critical for consumer safety but also ensuring that Bahamian manufacturers and producers who wish to trade meet and comply with standards required to access international markets. These would include standards related to:

• Labelling of pre-packaged foods

• Specification for packaged water

• Code of hygiene practice for packaged water

• Grading requirements for table eggs

• Specification for poultry and poultry products

• Code of practice for food hygiene and

• Specification for cement

At the very least the implementation of national standards will:

• Set the level of quality, thereby allowing products to be evaluated and compared;

• Streamline production and improve manufacturing processes;

• Increase productivity and enhance efficiency;

• Reduce costs for consumers;

• Provide the basis for trade transactions;

• Minimize waste;

• Ensure safety and performance;

• Ensure that products and services perform their necessary functions;

• Facilitate interchangeability of products and services designed for the same purpose

The benefits of the standards bureau are critical to our national development. A standards system can enhance the reputation of locally made products by assuring buyers that such products meet specified levels of quality and safety, thereby permitting domestic producers to compete more effectively not only locally, but also regionally and internationally. Moreover, such a system encourages fair competition in the marketplace, and provides necessary consumer protection by preventing unsafe products or products of inferior quality which can be priced more cheaply flooding our markets

Industry

Mr. Speaker, my Ministry continues to provide support to local manufacturers designated as “approved Manufacturers” under the Industries Encouragement Act and who continue to seek Government’s support to import equipment, supplies and materials to manufacture “approved products” under the Act.

Additionally, Mr. Speaker, my Ministry continues to engage in research and analysis regionally on the economic opportunities for developing and promoting a creative industry sector within The Bahamas. The establishment of a Creative Industries Council in 2013 is the first step taken by the Ministry to develop the strategic framework for the sector.

In January my Ministry collaborated with the Bahamas Chamber of Commerce and the Caribbean Export and Development Agency to hold a workshop to help participants develop the skills to complete applications to improve their chances of obtaining grant funding for their businesses. There is a current grant program underway through the Caribbean Export Development Agency and I encourage all Bahamians small businesses in need of capital to review the grant opportunity on the website and coordinate with the Ministry of Financial Services for any assistance.

I continue in a collaborative fashion the advancement of industry participants in our economy. An example of this is our accomplishments with respect to the egg industry of the Bahamas. We debate today an increase in the duty for imported eggs to 30%, which will provide needed protection at the border for domestic producers. But through collaboration with producers, distributers and retailers, we agreed a revision to the price control mechanism was also required.

Price control is being assessed not on a cost basis, which provides difficulty to producers because of the volatility in the cost of feed, but to a permissible profit margin, 20% at each stage. This reform is with the agreement and consultation of all interested parties, and one which should provide opportunities for the domestic egg industry, with limited inflationary effect on consumers. We look to further additional consultations on local industry participants, both agro-industry and manufacturing to ensure the necessary framework is in place for industry growth and diversification in the Bahamas.

Arbitration

The Ministry of Financial Services continues to develop International and Domestic Arbitration in The Bahamas. The effort continues to ensure the success of the Bahamas’ first International Commercial Arbitration Centre. The advantages of arbitration include respect for parties’ autonomy, as well as savings in time and cost for parties opting to resolve their disputes through arbitration exist both for international business and domestic businesses. My ministry has undertaken consultations with various industries to benefit from the establishment of an international and domestic arbitration centre in The Bahamas.

Domestic Arbitration

My ministry remains committed to developing avenues for making it easier to do business in the Bahamas. Discussions with the Bahamas Chamber of Commerce and Employers Confederation continue in an effort to develop the strategic framework for the establishment of a domestic centre to provide opportunity for the use of arbitration by Bahamian businesses.

The relationship with the Chamber of Commerce and Employers Confederation has resulted in a draft Memorandum of Understanding that will allow for partnerships on educational initiatives, development of a domestic strategic plan and continued relations with the International Chamber of Commerce for the development of domestic arbitration for Bahamian commercial ventures. Arbitration for domestic business can assist with the commercial case backlog experienced in the court system today.

International Arbitration

We continue to advance towards a strategic framework and plan for the development of a International Commercial Arbitration Center in the Bahamas. We have been in contact with representatives from the London Court of International Arbitration, the International Chamber of Commerce and experts from the University of Miami with the hope of receiving technical assistance and the development of a strategy document and a legislative review. Through consultations, we are advised to structure our international arbitration center around the maritime industry given we are a jurisdiction of choice for ship registry, our financial services sector, and for trade disputes between Latin American and North American businesses.

Conclusion

From this presentation the Ministry of Financial Services responsible for trade and industry is extremely proactive and is consistently and constantly seeking to place the Bahamas in a leading position in financial services, trade and industry development. We are committed to expanding the economy of the Bahamas and while doing so promote, train and incorporate Bahamians in this economic expansion.

Being realistic one would readily understand that apart from better efficiencies there is not much one can do about the cost of operating government and if there is to be substantial improvement in the economy of the Bahamas it will have to come from economic expansion.

The Ministry of Financial Services are committed to seeing that Bahamians take their rightful place in any economic expansion while understanding that such economic expansion has certain global implications. We as a Government strive to grow, strive to create opportunities for Bahamians in our economic development.