Ladies and Gentlemen,
I am delighted to have been invited to Grand Bahama to participate with Joan Albury
and her team at Counsellors, together with a cross-section of the business community
in another Grand Bahama Business Outlook.
Despite the economic challenges of Grand Bahama, including those caused by natural
disasters, protracted adverse international and local economic conditions , and lack of
adequate promotional and planning initiatives, Grand Bahama continues to demonstrate
its resilience, its staying power and its optimism about the future. And for good reason
too! More than any other island in our archipelagic nation, Grand Bahama has almost
limitless economic development potential because of its unique combination of e
infrastructure, human resources and strategic geographical proximity to the North
American mainland.
My Government is unswerving in its belief that the future of Grand Bahama is bright
and that its best days still lie before it, not behind it. Progress may not always be
attained or sustained at the pace or in the manner we want it to be but rest assured that
step by step the economic revitalization of Grand Bahama is steadily gaining
momentum..
The theme of this year’s Business Outlook, Securing The Bahamas Through Planning,
Partnership and Productivity, has been at the forefront of the work of my administration
as we promote the development of a more dynamic national economy, Bahamian
entrepreneurship and ownership, domestic and foreign investment, a better quality of
life for Bahamians and an environment that attracts the wealthy of the world and
unprecedented numbers of tourists.
While on a steady course to a brighter tomorrow, the prevailing headwinds and
aftermath of protracted worldwide economic recession still persist. It is still a fragile and
protracted recovery and most governments, particularly in this region, have had to re-
calibrate their efforts and initiate creative partnerships in light of still stagnant global
growth, unprecedented levels of employment, high public debt, fiscal deterioration and a
plethora of social ills, especially escalating crime..
Nonetheless, we have set clear strategic goals and continue to undergo structural
adjustments for the country’s economic growth. We have been diligent in our efforts to
ensure the success of the Government’s initiatives, including our initiatives here in
Grand Bahama.
National Development Plan
In addition to our various initiatives we have launched activities which will lead to the
development of the first National Development Plan for the country. The development
of this _Plan will not be Nassau-centric. Instead it t will involve conversations with
Bahamians throughout the length and breadth of The Bahamas.
A few weeks ago conversations with Grand Bahamians began and these will continue
over the next few months.
We are committed to structure planning that will inevitably result not only in economic
growth but in more meaningful and productive human capital development so that
Bahamians can become the primary benefactors of this growth both now and in the
years to come. This more structured planning process for government policy will yield a
more efficient and effective public sector machinery to meet the needs of both our
citizenry and investors.
It is anticipated that at the end of the process, later this year, we will have arrived at a
shared vision for The Bahamas – one that will ensure that we are a more productive,
innovative and entrepreneurial citizenry while revealing a viable, sustainable direction
for the country.
Grand Bahama has borne the brunt of successive adversities – both climatic and
financial but today its economy is rising from these calamities. This is in no small part
attributable to the resilience of Grand Bahamians, continued attractiveness to long term
international investors and the focused efforts of both the Government and private
sector to arrest the economic free-fall and to put Grand Bahama on solid footing
towards sustainable growth. We are succeeding in the face of formidable challenges.
This is not fiction. This is fact.
Tourism Growth
In the past year alone some 1000 construction jobs and 600 new permanent jobs were
created in the Tourism sector on Grand Bahama which has seen hotel occupancies
increase by 56% and hotel revenues by 33%. Another 300 – 400 tourism-related jobs
are projected to come on stream this year and inventory demand is expected to exceed
capacity on the Lucayan strip. In fact, this level of demand has not been seen since
2004.
Grand Bahama is a unique destination in The Bahamas where the cruise-and-stay
market yields significant benefits for hotel operators.
For those of you who are not aware, last year 42% of the business coming to the Grand
Lucayan resort came from cruise-and-stay business.
The newest ship to call on Grand Bahama, the Grand Celebration, which held its
maiden voyage on February 4 - last month - has already exceeded the Bahamas
Celebration’s 2014 passenger count, already delivering more than nineteen thousand
(19,000) visitors to Grand Bahama as compared to some sixteen thousand passengers
(16,000) delivered by the Bahamas Celebration in the whole last year.
As a result of this level of business, the Grand Lucayan Resort alone has already
exceeded last year’s performance and the cruise & stay market is projected to have an
overall economic impact on the local economy of Grand Bahama of thirty one million
dollars ($31million). That’s good news, ladies and gentlemen! It should give all of us
renewed faith and confidence in the tourism industry of Grand Bahama.
Speaking of cruise ship tourism to Grand Bahama, I would like to congratulate Ms.
Michaela Lewis of Tabernacle Baptist Academy in Freeport who won the naming
contest for the Balaeria’s new 1,000 passenger Fast Ferry, the ‘Bahama Mama,’ which
had its maiden voyage to Grand Bahama on the 26th of February, just last week..
Operated by Balearia Bahamas Express, the ship is expected to bring some 300,000
passengers annually to Grand Bahama and now provides almost daily service from Ft.
Lauderdale.
Both the Grand Celebration and the Bahama Mama together are expected to generate
more than $42 million dollars in the Grand Bahamian economy and $2.3 million in
Government revenues in 2015.
But we will not stop there! My Government continues to advance discussions with major
cruise lines for the development of new cruise destinations with themed Bahamian
attractions right here on Grand Bahama. We anticipate being able to make further
announcements about this in early course..
I wish to point out at this juncture that the Government’s actions in securing the right
operating partner in Sunwing on the Lucayan strip has provided much needed impetus
and paved the way for further growth through increased airlift to Grand Bahama..
The Government has also recently negotiated daily air service with Delta Airlines to
Freeport, representing a 400% increase in seat capacity from the increased frequency
of flights provided by that carrier. American Airlines meanwhile has deployed its larger
76-seater on the Miami-Freeport routes while both Bahamasair and Silver Airways now
also have higher frequency weekly flights to Grand Bahama from Ft. Lauderdale.
The Government continues to expand the partnership with Sunwing on shared risk
initiatives from eight cities across Canada which resulted in a 30% increase in arrivals to
this destination last year and its operation of flights from eight new U.S. cities in 2015 is
projected to position the destination for substantial growth in air carrier capacity to meet
growing demand for the destination.
With public private partnerships to stimulate the markets in major cities across the USA
and Canada, most carriers serving Grand Bahama are currently sustaining healthy load
factors, and with cruise business on the increase as well, overall tourism business
growth is projected to increase by 40% above last year’s arrivals of just over one million
(1,076,416) air and sea passengers.
Tourism Diversification
I am reliably informed that on the Tourism front this February will be the best February
in tourism since 2007, and this trend is projected through the end of April 2015. With
completion of the $10 million Okyanos Heart Institute, the Island’s first stem cell
research facility, I am also pleased to see the beginnings of diversification of the tourism
industry in Grand Bahama and am reliably informed that other such medical facilities
have entered discussions for similar investments on the Island. Medical tourism is a
high-end niche market with enormous potential for Grand Bahama.
Bahamas Junkanoo Carnival
As you know, my administration has made a significant investment in the Bahamas
Junkanoo Carnival. This initiative aims to elevate the profile of The Bahamas in the
global marketplace, create sustainable linkages with the tourism industry, to improve
income distribution within the country and to enhance the visitor experience. Indeed as
I speak, Grand Bahamians are gearing up for the Music Masters Song Competition with
25 semi-finalists performing on stage in the Festival Village on April 17, and the all-day
Beach Party with music, food and cultural entertainment and Midnight Junkanoo Rush
on the 18th.
The Festival Committee has reported that to date just over $46,000 has been spent in
Grand Bahama on four “incubator” businesses. This has already generated an
economic impact of over $200,000 in the purchase and processing of raw materials,
instruments, costumes and the like before any events have even occurred.
The Carnival is being aggressively advertised and promoted abroad through the
Ministry of Tourism’s sales and marketing channels and just over 16,000 locals and
visitors are expected to attend or participate in the Grand Bahama events. Our efforts,
therefore, to generate new revenues and income distribution in Grand Bahama are
broad and far-reaching, and we expect the residents of Grand Bahama to support these
efforts being made on your behalf.
Investments
Ladies and gentlemen:
The naysayers and prophets of doom aside, the economic-turnaround in Grand
Bahama is real and gaining traction. I know this because investor confidence - both
local and foreign – is gaining momentum in various sectors of industry here and
business owners are putting serious money in the ground. By way of example, just this
week the owner of the Deep Water Cay Resort and his project team met with us to put
forward a proposal for a unique world class resort project which would be managed by
one of the world’s leading six-star resort brands. This would bring a magnificent new
product to Grand Bahama with unique features embracing the pristine and bountiful
marine environment.
On Monday last an announcement was made of the $5.5 million acquisition of
Freeport’s premier commercial and retail center, Port Lucaya Marketplace, by U.K.
businessman, Peter Hunt, whose company has plans for upgrades to the Marketplace.
Additionally, the owner of the Xanadu Hotel is in the initial stages of closing on the sale
and re-development of this historic 188-room resort and marina. This will add valuable
luxury inventory to the product offering.
Investors are also showing interest in the purchase and re-development of the Royal
Oasis which, if concluded, would certainly breathe new life into the city of Freeport.
Initiatives have been mounted to attract investor interest in the acquisition and re-
development of the former Ginn Holdings in West End as well.
However, despite these bright prospects in the Tourism sector, we are certainly not out
of the woods yet. The largest resort owner in Grand Bahama, Hutchison is still not
realizing a profit and together with the Government continues to subsidize the operation
of both their resort and the casino. Hutchison and the Government are in critical
discussions to find an early sustainable and viable solution so as to keep these
properties operational.
In Grand Bahama, we must resolutely tackle issues of cost, productivity, flexible and
competitive yet fair industrial agreements, addition of new inventory, product
enhancement, better airfares, lower aviation fuel and handling charges, better airport
facilities for non-US flights, lower electricity costs, penetration of new markets, etc.
These are all matters which the Government and private sector partners must resolutely
address.
New Businesses
But the turn-around in Grand Bahama is not just within the Tourism sector.
The Grand Bahama Port Authority reports that over 270 new business licenses were
issued last year creating an estimated 1200 jobs. Many new businesses resulted from
the grant by my administration of equitable concessions in the East End and West End
of Grand Bahama. I am told that sixteen (16) additional licence applications are now in
various stages of approvals.
The late Sir Jack Hayward, as his father and Wallace Groves had done before him, and
Sir Jack’s partner, Edward St. George carried the baton for Freeport’s development,
each in his own time the baton has now passed to another generation. The Grand
Bahama Port Authority needs a new dynamic business plan, and it must engage in a
vigorous programme of promotion, while embracing new partners with the necessary
know-how and capital , working hand in hand with Government and other stakeholders.
They must leverage the infrastructural assets and strategic location of Grand Bahama’s
Free Zone, and build on a solid foundation to re-position Grand Bahama to attract new
investment and to ensure the productivity and engagement of its residents in the
growing economy.
The Freeport Container Port is leading the way with a two-year, $256 million phased
capital expansion to begin in the third quarter 2015, generating an additional 100
construction jobs next year and an additional 150 operations and engineering jobs on its
completion in 2017. Additionally, with a $6 million capital investment this year in a
container freight station to manage movement of cargo to domestic and international
markets an additional 30 jobs will be created in the operation in first quarter 2016.
A $15 million upgrade to runways and taxiways by the Grand Bahama Airport company
is slated to begin in the second quarter 2015 with an additional 20-30 construction
workers being employed and significantly more construction jobs will come on stream
from public expenditures on infrastructural improvements to roads, schools, and public
buildings this year.
Last year, PharmaChem injected some $15 million into Grand Bahama’s economy in
direct and indirect employment, procurement of goods and services, scholarships,
charitable contributions and has increased its staffing by 20% in advance of plans to
execute Phase Two of their acquisition and expansion project. The company has
announced that it will construct a new, state-of-the-art, multi-product plant facility to
facilitate its sole customer, Gilead Sciences Limited, with more diversified product
offerings and has extended its Manufacturing Supply Agreement with Gilead.
Negotiations are underway on the new products to be manufactured, amendments to be
made to the Supply Agreement and financing of Phase Two of the project. The
Company will finalize its plans once further studies and cost analyses are completed.
The Grand Bahama Shipyard, which has invested over $200 million in facilities and
docks since 2000, made a further $10 million investment in ground improvements and
dredging activities last year. Continuous upgrades are planned at a cost of $6 million a
year through 2018. The Company employs 323 full-time Bahamian staff, another 202
contracted Bahamian workers and 503 temporary expatriate labour and is making
focused efforts through its Apprenticeship Program to train and improve skills in Pipe,
Steel and Welding for its staff.
The Shipyard has undertaken a major dredging project, opening the Shipyard to entirely
different market sectors with the use of its Drill Ships and Rigs during the slower
summer months.
Other business licensees of Grand Bahama have demonstrated growing investor
confidence by entering into business expansion mode and committing significant
dollars to capital development of their businesses.
The planned half a billion dollar infrastructural investments by the Grand Bahama
Airport Company, Pharmachem, Bahama Rock, Caribbean Bottling, Wendy’s, Eco Oil,
the Okyanos Heart Institute, the Freeport Container Port, Freeport Harbour Company
and the Grand Bahama Shipyard, etc. constitutes the leading edge of an impressive
wave of new investment in Grand Bahama over the short and medium term.
Government Projects
The Bahamas Government also has significant infrastructural projects slated for Grand
Bahama on the drawing board, including the building of new schools, roads, and
<
refurbishment of government buildings and has already spent $6 million on roadways,
water storage and hurricane shelters in the East, the Fishing Hole Causeway in the
West, upgrade of the Hawksbill Medical Clinic, refurbishment of government buildings
including the Harold DeGregory Building as well as social and cultural programmes.
Construction of a new Police and Fire Station for Grand Bahama, will begin in April of
this year at a cost of approximately $6.2 million. With additional sums earmarked for
the building of a new West Grand Bahama High School, upgrade of the Eight Mile Rock
High School, reinforcement of the Smith’s Point Sea Wall, more than 1,000 new jobs will
be created this year alone.
Unemployment
While there is still far too much unemployment and financial hardships existing, even
discouraged workers here are clearly seeing uptick in the economy of Grand Bahama,
because they are re-joining the ranks of unemployed workers in compelling numbers
and are seeking opportunities from an expanding economy and I predict that barring
any unforeseen downturn, this trend will continue through 2015 as the job market
continues to expand across all sectors.
Clearly it is our youth, our school-leavers, who are most severely impacted. Many are
challenged in finding jobs because of the lack of adequate skills to become productive
workers in the labour force. This is a situation which we must overcome if Grand
Bahama’s potential is to be realized, for all our efforts will be in vain without a trained
citizenry to take advantage of the employment offerings being presented.
These challenges have also resulted in entrepreneurial opportunities in the area of
technical and vocational training, recruitment, job fairs and internships some of which is
the Ministry of Grand Bahama is spearheading, such as the Fresh Start, which has
yielded short-term and permanent job placements for many of our young people.
The National Training Agency, in conjunction with the Ministries of Labour and Tourism,
and the local maritime services provider Ship Mate Limited, have already undertaken
hospitality and training of the first 50 of 300 of our young people in Grand Bahama to be
selected to join the team of the Grand Celebration.
Tax Reform
As our nation’s second city, Grand Bahama has a substantial role to play in the national
development of our country. I must applaud the efforts of the business community in
facilitating the smooth application of VAT in Grand Bahama. This island is specifically
targeted for new foreign and local investments in renewable energy, light and heavy
industry, hotel, cruise and medical tourism and ancillary businesses not only to generate
business growth and economic expansion for Grand Bahama’s residents, but also to
increase government revenues - a strategic objective of Government especially for the
more thriving economies of Bimini, Grand Bahama and Abaco in the northern Bahamas.
In so doing, we must reform our tax structure to ensure that the Government will have a
reliable and sustainable means of funding infrastructural development and economic
and social programmes particularly for the most vulnerable in our society and for the
continued well-being of all Bahamians across this archipelago.
Other reforms are planned which will focus on modernization of systems in public
management for greater accountability, consolidation and effectiveness in planning,
administration and revenue collections.
Hawksbill Creek Agreement
It should be obvious to all, at least to objective minds, that the turnaround which is
underway in the economy of Grand Bahama, has come at great expense to the public
purse, on top of the generous tax exemptions and incentives under the Hawksbill Creek
Agreement which Freeport enjoys, unlike the rest of The Bahamas.
It ought to be that with the exemptions and concessions of the Hawksbill Creek
Agreement, Freeport, in particular, should be able to maintain a vibrant economy driven
by the Grand Bahama Port Authority and its licensees, yielding a surplus in Government
revenues over public expenditure, and not be reliant on the present high levels of
Government marketing support and subsidies which are not only unsustainable in the
long term but adversely affecting the public expenditure which the Government should
be making in other parts of The Bahamas.
The Way Forward –
Review of Hawksbill Creek Agreement
Freeport and its environs have largely been built as a result of the partnership which
was entered into many years ago between the Government and the Grand Bahama
Port Authority under the statutorily enshrined provisions of the Hawksbill Creek
Agreement.
Certain provisions of the Hawksbill Creek Agreement with respect to exemption on
business licence and real property tax are due to expire in August this year. It also
transpires that in recent years the Freeport economy has remained stagnant with some
exceptions, thus negatively impacting economic growth and Government revenue, to
the extent that the Government is having to fund a substantial deficit for the provision of
Government services in the area.
The international consulting firm of McKinsey and Company was retained by the
Government to undertake a study of the economic situation in the Port area, the
implications of the expiring incentives and measures which might be taken to spur
economic development. Arising out of the McKinsey Report, I will shortly announce the
Government’s appointment of a Committee to hold discussions and negotiations with
representatives of the Grand Bahama Port Authority, investors, licensees and relevant
public and private sector and community interests, with a view to making appropriate
recommendations to the Government on arrangements and measures which should be
taken with regard to the expiring concessions and other appropriate measures to
promote and sustain economic growth in Grand Bahama, within a suitable regulatory
framework in keeping with present and changing international best business practices.
I wish to conclude my remarks by stating that, although for so many in Grand Bahama
the struggle to eke out a decent living remains a reality, I hope that you will have heard
and acknowledged the evidence which I have presented today of my Government’s and
private sector focused initiatives and progress in improving the economy of Grand
Bahama.