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The Bahamas government's re-negotiation and cancellation of the 50/50 Mayaguana Joint Venture Agreement with the I-Group made little business and economic sense. It was short-sighted and damaging to the developers, the residents of Mayaguana and the people of The Bahamas, in broad macro-economic terms.
I have been involved in a professional capacity in joint venture business structures encompassing various legal and economic jurisdictions - the Middle East, North Africa, Europe and the Americas. Multimillion-dollar projects ranged from hotel development, consortium banks, barite distribution (drilling mud), to name a few. The JV structure allows both parties to share the burden of the project as well as the resulting profits. No one party can make all of the decisions for the development of the business alone. The former chairman of the Hotel Corporation, George Smith, recently outlined in The Nassau Guardian the highlights of the Bahamas government's 50/50 JV structure with the I -Group. To describe that transaction as anything different from a pure joint venture agreement is nonsense.
I applauded the PLP government at the time they inked the original transaction with the I-Group. To my knowledge, it represented the first time that a government of The Bahamas altered the traditional structures and approach of cementing foreign direct investment (FDI) for touristic development in the country. Traditionally, we extended concessions and land at favorable terms and hoped for the best. The Mayaguana JV was an innovative approach to broaden Bahamian participation in touristic development, shift the focus of economic activity and thus jobs to remote areas of the country and at last, to have an opportunity to share in the future profitability of project development.
Bahamians of all political stripes share my view that "big ideas" have to be adopted by our political leaders in the granting of concessions and land for touristic development.
In his provocative and timely book, 'Is It Really Better In The Bahamas... For Bahamians', Dr. Johnny Rodgers stated, "The time is now long overdue for our leaders to undergo a paradigm shift in their archaic, colonial mindset. Our government must insist on joint ventures when foreigners want to invest here. Just imagine if Atlantis was part of a joint venture."
Andrew Allen, in a December 2005 Tribune article opined, "It seems reasonable since Sands (Sir Stafford), to have expected his trade-off of land and licenses for jobs and investment to have matured and evolved where local authorities can have a more proactive and leadership role in touristic development".
FNM Carmichael candidate, Senator Darron Cash's "My Ten Cents" contribution in the March 30, 2012 Nassau Guardian issue, was "stronger emphasis on Bahamian ownership in tourism needed". Any perusal of Senator Cash's loan portfolio at BDB will tell him that to accomplish this involves more than simply advancing a businessperson in Betsy Bay, Mayaguana funds for a bed and breakfast boutique hotel. It would be doomed to failure unless complemented by a major investment in infrastructure and additional amenities to generate market demand; as envisioned in the Mayaguana 50/50 JV Bahamas government/I-Group structure.
The government's seeming ambivalence has hurt this project's success. The Prime Minister himself is on record as saying he had no confidence in the transaction, irrespective of the I-Group having sunk over $40 million at the time in a remote area of our Bahamas.
The current chairman of the Hotel Corporation, Michael Scott, was even more negatively subjective in his commentary on the JV, in which his language was silly, emotive and unprofessional. The country expects that the appointment of important public corporation directors is made as much for their business acumen and etiquette as their political loyalties. Its indicative of a degree of commercial naivete when leaders in government have little concern how their actions and commentary affect markets.
There have been no sensible business or economic arguments from the government for canceling the 50/50 JV structure in Mayaguana. Minister Vanderpool-Wallace whom I have great respect for raised the philosophical argument that the government should not be both partner and regulator.
That makes no sense in the light of the government's equity interest in the Arawak Cay Port and Heineken Brewery - two entities that both require strong government oversight.
Many of our rural island communities face extraordinary challenges in their efforts to significantly improve their economies in terms of personal incomes, job creation, average wages and strong tax bases.
The Mayaguana JV structure was the ideal vehicle to facilitate the expansion of a major economic development project of significant scale in the remote southern Bahamas. Anyone now trying to attract investors to Mayaguana from usually fickle capital sources will always be faced with the hurdle, "Why should I put my money, when the Government of The Bahamas walked away from an economically impactful project in their own back yard?"
Local investment advisor Ken Kerr exuded optimism in stating how it was a major confidence booster for investors to have the Government of The Bahamas as an equity player in the Arawak Cay Port. He was describing a project in the center of the city of Nassau.
It's even more crucial to have visible, strong government involvement, for investment markets to buy into putting money into the remote islands of The Bahamas.
There is no question that the Government of The Bahamas has missed a splendid opportunity to enhance economic development in rural Bahamas with the cancelation of the JV agreement with the I-Group. In spending an entire term in office to achieve relatively little with an amended agreement, they have sent the very chilling message to capital markets that if PM Ingraham is not the "daddy of the deal", the baby could end up on life support.
- Gary Christie
The Bahamian economy is driven by the tourism and financial services sectors. Tourism and tourism-related construction and manufacturing combined provide an estimated 60 percent of gross domestic product.
Who is the Bahamian tourist? Is it the cruise ship passenger, the hotel vacationer, the yachtsman or the second-home owner? Not all tourists are created equal.
Cruise ship passengers spend considerably less time and money in The Bahamas than other tourists. The Ministry of Tourism enthusiastically points to the increase in cruise ship arrivals that now outpaces arrivals through Lynden Pindling International Airport (LPIA). In May, the Ministry of Tourism estimated that total cruise ship arrivals for 2012 may exceed 4.5 million. This is not surprising given that a single ship can carry more than 4,000 passengers.
Without a doubt The Bahamas is a leading cruise ship destination. But cruise ships come to The Bahamas for only several hours or a brief one-night stay. A 2012 report from the Florida Caribbean Cruise Association notes that average visitor spending is down to $64.80 for 2011/2012 from $83.93 for 2008/2009. Though such statistics only include the ports of Nassau and Freeport and are limited to six-month time periods, cruise ship passenger spending relative to other destinations is low in The Bahamas.
Attempting to fully capture the spirit of The Bahamas in several hours, or even a night, is impossible. The Ministry of Tourism announced that it is planning an ambitious revamp of the Welcome Center at Nassau Harbour. But unless this is combined with an immediate revamp of downtown Nassau, tourists will still be welcomed to congested and smog-filled streets.
Downtown revitalization efforts should be spearheaded for Bahamians too and not just based on tourist expectations. Bahamians want to dine at downtown cafes. Why should the tourist be the sole consideration?
The Bahamas caters to the tourist, not to the Bahamian. LPIA was in dire need of an upgrade, its antiquated structure showed years of neglect. The U.S. departures terminal was completed first, then the international arrivals unit, and last but not least, we eagerly await a domestic terminal.
The New Providence Road Improvement Project was planned over a decade ago; its delayed implementation led to extreme frustration to motorists and business owners. But alas, the Airport Gateway Project will improve the capacity of the road system to and from the airport to facilitate the movement of tourists to and from two major hotels, Atlantis and Baha Mar.
The prime minister spoke enthusiastically recently about the construction of a medical center in Governor's Harbour, Eleuthera.
He said: "These three tourism projects together with the construction by government of a modern multi-million-dollar mini-hospital, which will begin shortly in Palmetto Point, will provide hundreds of new construction and permanent jobs for the people of Eleuthera. It will also prove to be a boost to the growth of tourism and second-home owners who will have the assurance of essential medical care being readily available right here in Eleuthera."
Yet again, a crucial infrastructure project was promoted for the tourists' appeal, not simply because Eleuthera is in desperate need for advanced medical facility. The Bahamas needs to focus on upgrading infrastructure and services for its own people, then the tourists will come.
The Bahamas seems to cater more to those who spend several hours wandering around our capital than to those who live here.
The government must "make its views known" in Kerzner International's restructuring, according to a former state minister of finance, with too many jobs and livelihoods at stake to just sit back and do nothing.
James Smith, the chairman of CFAL, said government officials should not directly intervene in the restructuring process. Instead, given the intimate market conditions, it needs to make some of its expectations and intentions known to protect Bahamian industry.
"Given the importance of the Kerzner property, in terms of employment, I think you would want to at least make your views known as to what should happen," he told Guardian Business. "In a small market like The Bahamas, everything is a monopoly. In a smaller country more intervention and oversight is needed from governments to ensure you are getting solutions that are appropriate. In this instance, you can't leave it to itself."
The statement from Smith comes shortly after a court filing by another lender in Kerzner International's $2.5 million mortgage debt that alleged a breach of contract and fiduciary duty by Brookfield Asset Management.
It was the second time Brookfield was sued by another Atlantis lender in recent months.
A spokesperson from Brookfield claims the court case "was dropped within a couple hours", although Guardian Business has so far been unable to confirm this statement.
With an election expected to be called within days, Smith added that the fate of the largest single private sector employer in the country must be properly addressed in the public forum.
"I think the government is caught in a dilemma," he continued, "in the sense that it has always put forward that it will leave the market to resolve its own issues."
The former state minister of finance said Brookfield "seems intent to keep the original deal", demonstrating the value of Paradise Island as an asset. The main concern, he explained, is how the property will be managed going forward. While it is in the country's interest to maintain it as a resort and tourism destination, this purpose may not match the long-term intentions of Kerzner's lenders.
"Sir Sol Kerzner was the embodiment of vision for Paradise Island," Smith told Guardian Business. "Everything revolved around him running the place. He connected with the local community. The new owners stepping in are essentially interested in real estate investment deals, not hotel operation. Can they bring to the table the skill set? The quick answer is no. I would be concerned about Atlantis as a future operation."
Last November, Sir Sol Kerzner, the chairman and CEO of Kerzner International, announced a transfer of ownership to Brookfield Asset Management. Under the debt-for-equity deal, Kerzner would have received a short-term management contract for Atlantis and a long-term agreement for The One&Only Ocean Club.
In January, the deal was derailed when Trilogy Portfolio Company, a group of lenders, filed legal action against Brookfield for orchestrating a "sweetheart deal". Later that month, the case was dropped when Brookfield withdrew the offer.
Since then, lenders returned to the bargaining table in an effort to reconcile the $2.5 billion in mortgage debt. Last Tuesday, ORIX Capital Market, another lender, filed its own legal action against Brookfield, alleging the Canadian firm was once again trying to push through essentially the same debt-for-equity swap after it "bought the cooperation" of other stakeholders.
The Bahamian government has yet to release a statement on these events.
Progressive Liberal Party (PLP) leader Perry Christie yesterday downplayed an election threat from the Democratic National Alliance (DNA) and suggested that the new party is falling apart.
Christie's comments came as he hit out at the DNA's claims that he was in collusion with Prime Minister Hubert Ingraham to suppress details about the recent Atlantis takeover.
"Bahamians already know the DNA is not ready for the big time. It has been a rough few weeks for [DNA Leader] Branville McCartney, whose party has been plagued by infighting, stumbles, accusations and counter-accusations," said Christie at a press conference at PLP headquarters on Farrington Road.
He said the DNA is "self-destructing even before it's out of the gate".
Christie also refuted McCartney's claims that he (Christie) was present at a Cabinet meeting called on the eve of the Atlantis ownership change announcement.
"The DNA states that I was in the Cabinet room with the prime minister and his Cabinet to discuss the Brookfield [takeover] of Atlantis. I was not. Let me say it again, though, in case the slower minds in the DNA need it to be repeated: I was not in that room," he said.
Christie said it was his party that first called on the government to reveal details of the Brookfield/Atlantis deal. He added that he only knew of the ownership change "five minutes" before the prime minister made his public announcement last November.
"I learned that the government had approved the [transfer of ownership] of Atlantis to a Canadian hedge fund on the same day as the Bahamian public. My response was concern about the security of Bahamian jobs, and it continues to be a matter of serious concern for me.
"Immediately after the government made its announcement, I called on the FNM to make the deal public, and we've been repeating this call ever since."
He reiterated his party's plea for the management agreement between Kerzner International and Brookfield Asset Management, a Canadian conglomerate, to be made public. But there is no evidence that a final agreement is actually in place.
"The truth is, Bahamians do not trust the FNM to fight for them at the bargaining table. The government assured Bahamians their jobs were secure, but Bahamians are smart; they're asking if those assurances are only good until the elections.
"Hubert and Branville, FNM and FNM light, listen to me, for the many thousands whose jobs are at stake, and for their families, this is not a game," he said.
Kerzner Chairman Sir Sol Kerzner announced in November that Brookfield was taking over Atlantis, the One&Only Ocean Club and Kerzner's property in Mexico in a $175 million debt-for-equity swap.
Kerzner International will continue to manage the Paradise Island properties under a four-year contract, which The Nassau Guardian understands can be terminated at any time, subject to a penalty.
The management contract also requires Kerzner to meet gross earnings of $215 million at the end of the agreement's first year, a target the company last met in 2008.
The Guardian has also been informed that there are worries Kerzner could reduce staff or cut operating costs to meet those revenue targets. However, Prime Minister Hubert Ingraham and Sir Sol have both publicly said the nearly 8,000 jobs at the Paradise Island properties are safe.
A mixture of optimism and an expectation of challenging and uncertain circumstances to come characterize the views of a number of leading figures in Guardian Business' round up of opinions on what 2014 has to hold for The Bahamas in terms of growth, unemployment levels, government policy initiatives and the outlook for a variety of key sectors.
Here James Smith, former central bank governor and chairman of Colina Financial Advisors Limited (CFAL); George Markantonis, president and managing director of Atlantis Resort; Anthony Ferguson, president of CFAL; Aliya Allen, chief executive officer and executive director of the Bahamas Financial Services Board; Franon Wilson, president of the Bahamas Real Estate Association; and a top banker, who spoke on condition of anonymity, offer their views on what The Bahamas can expect in 2014.
James Smith said he expects The Bahamas to experience "some modest economic growth in 2014, but at an insufficiently high level to produce any dramatic change in the unemployment rate".
"The Bahamas is still emerging slowly from the deep recession which began in 2008 and was marked by negative GDP growth rates for most of the period, accompanied by high unemployment rates; more than doubling from 7.5 percent at the end of 2007 to a little over 16 percent currently," he said.
"Given the unflattering macroeconomic statistics of 2013, any positive trends for 2014 are likely to be at best 'modest' since we would be projecting from an already low base."
"Our major economic sector, tourism, is likely to continue to face headwinds in 2014 because our major market, the USA, projected GDP growth and lower unemployment levels are unlikely to be sufficient to dramatically alter the fall-off in tourist expenditure, total room revenue and average occupancy rates experienced in The Bahamas over the last three quarters of 2013," Smith said. "There is likely to be an improvement in employment levels in the tourist sector as a result of accelerated job additions to meet the December 2014 deadline of the Baha Mar project."
On the financial sector
"The second largest economic sector, financial services, continues to operate under the stressful conditions induced by international regulators' demands for increased capitalization, which in turn has led to some downsizing in the local market in order to preserve profit levels or to avoid stringent regulatory oversight," he said.
"The continued losses of high-end jobs in the financial services sector would compress overall demand for goods and services locally and present a challenge to economic growth throughout 2014."
"Our third largest sector, construction, which accounts for about 10 percent of GDP but also has the highest proportion of value-added contribution to GDP, is expected to continue to perform poorly as a result of the fall-off in demand for new construction and the restraint on new mortgage loans in the banking sector, which continues to be plagued with abnormally high loan arrears portfolios of over $1.2 billion at the end of the third quarter in 2013," he said.
"The moderation in consumer prices as a result of declining oil prices is likely to be tempered somewhat with the planned introduction of a new consumer-based tax during the second quarter of 2014.
On foreign direct investment
"Plans in the pipeline for some major and minor FDI (Foreign Direct Investment) projects in the tourism sector could have a positive impact on economic growth and employment levels if they materialize over the next several months," Smith said.
"However, there is likely to be a continued drag on the economy; one that cannot be adequately addressed by increased government spending at a time when a growing public sector debt issue is being closely monitored by both local and international lenders."
George Markantonis, president and managing director of the Atlantis Paradise Island Resort, the country's largest private sector employer, said he is very optimistic about 2014 based on the pace of bookings the resort is seeing for the new year.
"Only February seems somewhat weak in the first four months and we are taking steps to try and correct that," he said. "We believe that the improving American economy, the stable U.S. housing market and the climbing Dow Jones Industrial Average (DJIA) are all creating more consumer confidence in the U.S. which realistically provides us with 85 percent of our annual business.
"A bright spot on the horizon is our group booking pace continuing to grow, while a dark spot is the declining airlift coming into the country. December numbers released (last week) show year-on-year decline in seats of eight percent, mostly due to reduced December service of American from Dallas and Jet blue from Ft. Lauderdale."
New trends in tourism that The Bahamian tourism sector will need to consider in 2014:
"New gaming licenses are being approved across the United States which will continue to add competition for our casinos," he said. "In addition cruise lines are continuing to add non-traditional attractions to their new mega-ships thereby directly competing with land-based mega-resorts, that is water slides, celebrity chef restaurants etc, etc."
Major policy steps the government could take to impact the tourism sector in 2014:
"We are very pleased that government is reviewing the gaming regulations of course but hope that there will be some significant steps taken to reduce utility costs across the sector, and to minimize the addition of more fees to business which will have to be passed on to the consumer and may impact the value perception of the destination," he said.
Anthony Ferguson said he expects a "challenging" 2014.
"I think 2014 will be a challenging one for The Bahamas as the U.S. slows in the first half coupled with the implementation of value-added tax (VAT) which would cause businesses to delay any hiring and expansion decisions," he said. "This will be countered by Baha Mar as they look to hire and train for the December opening. However 5,000 kids graduating from school in 2014 will negate Baha Mar hiring."
On unemployment levels
"I don't think we can really reduce unemployment in 2014 as the Baha Mar hiring will be offset by the 5,000 school graduates," Ferguson said. "To rescue employment the government needs to balance new taxes against incentives for businesses to consider expanding their business."
On policy initiatives which could stimulate the private sector:
"The government should reduce the red tape, allow economic passports, revisit immigration policy," he said.
"It's mind blowing that the Department of Labour are directing businesses who to interview and hire. It's also socialist. And if they sent qualified people you be grateful!
"The government needs to reshuffle the Cabinet and implement an economic planning ministry to develop a 20 year strategy for Bahamas Inc. Unless we do this we are headed in the direction of the rest of the Caribbean."
Aliya Allen, CEO and executive director of the BFSB, said she is upbeat about the potential for 2014 to generate more opportunity and greater returns for the financial services sector.
"Generally, we see a number of bright spots for financial services, as a result of the initiatives we have undertaken in recent and past years," she said.
"These include ongoing developments in the captive insurance and funds sectors, as well as continuing to solidify our position as a leader in wealth management."
Major trends or changes that The Bahamas will have to adapt to in 2014:
"The cost of compliance will continue to be a challenge, with initiatives like FATCA, for example. Indeed, I would add to that the cost of compliance with VAT, even for firms that benefit from zero rating but wish to reclaim inputs," she said.
Significant policy steps the government could take to positively impact the financial sector:
"The government has demonstrated a historic commitment to the financial community," Allen said.
"If this commitment could be expanded to include additional resources we could truly be first in class in business, both local and international. That extends to setting and monitoring turn around times in all effective business processes and departments such as the Department of Immigration, the Registrar Generals Department, and the Bahamas Investment Authority."
Franon Wilson, president of Arawak Homes and the Bahamas Real Estate Association, said he too is optimistic about what the new year holds for the economy.
"I am optimistic in large part because of Baha Mar, and in that regard even though the hotel will not open during the course of this year they'll probably be hiring a lot of people and that will be a big jolt in our economy," he said.
"I do think the levels will come down. I don't think it's going to happen overnight and go back to 2005 or 2006 levels, but I do think now it is moving slowly in that direction and that will give a boost. We won't be in the clear but we'll be moving in the right direction."
On policy initiatives that could stimulate the private sector:
"At the end of the day certainty is key and I accept the country's financial position is in a state where we need some type of reform to help the government to move forward and maintain the standard we have right now, whether it's VAT or a blend of VAT and something else; whatever it is, I'm looking forward to getting that process done so we can move forward. We need to deal with it and move forward."
A leading banker, who offered his views on condition of anonymity, told Guardian Business he fears The Bahamas will "let a good crisis go to waste" in 2014.
"Rahm Emanuel, the former Chief of Staff for [U.S. President Barack] Obama said something along the lines of 'You never let a serious crisis go to waste,'" he said.
"I find that quote a very appropriate place to start as I reflect on where The Bahamas finds itself financially today.
"The Bahamas economy has suffered a body blow since the financial crisis erupted in the developed world in 2007. While the U.S. seems to be emerging from this crisis, albeit painfully slowly, we have yet to see the Bahamian economy back to pre-crisis levels. Unemployment in The Bahamas remains stubbornly high and loan delinquencies have soared. With the economy in the doldrums, government revenue has plummeted but the expense base has not changed materially. The net effect of this development has been that the budget deficit has widened and the debt to GDP ratio is in the danger zone. The government is taking steps to address the problem of the lack of revenue, through the proposed introduction of VAT. Based on public pronouncements of the business community, the government's proposal has gone down like a lead balloon with loud voices suggesting dire events if VAT is introduced."
The economic outlook in the short and medium term:
"The short-term (one to two years) does not look particularly good," he said.
"The introduction of VAT in 2014 will likely tip the struggling Bahamian consumer over the edge and exacerbate their already difficult existence. Delinquencies are likely to worsen as living standards erode. Discretionary spending funds will reduce and related consumption will decline hurting the already struggling Bahamian private sector. The Bahamian consumer accounts for a considerable percentage of the Bahamian GDP and lower consumption will hurt Bahamian economic recovery and tax revenues. The devil is in the details and the public cannot see the execution of VAT meeting the GOB revenue expectations simply because Bahamians do not have a culture for paying taxes as is evident with the $500MM in delinquent property taxes. The informal sector and cash basis society will blossom and leach the tax revenue GOB is relying on.
"The medium term (three to five years) perspective is more positive as global economies in general, and the U.S. in particular, are showing greater robustness in their economic recovery, which should hopefully translate to more tourism traffic for The Bahamas. The U.S. is particularly important to The Bahamas as more than 90 percent of our tourist traffic and related revenues come from there and signs that U.S. consumers are more willing to spend and charge up their credit cards auger well for the Bahamian economy. Coupled with the opening of Baha Mar in late 2014, I see a resurgence in the domestic economy and employment levels in 2016."
Fiscal reform in 2014 - stuck between 'a rock and a hard place'
"It appears that the government knows all the VAT related pitfalls but it finds itself between a rock and a hard place," he said.
"It needs to plug the fiscal deficit and control the growing debt to GDP ratio. The introduction of measures to reduce the deficit cannot fail as the alternatives are much worse. Barbados has already announced a reduction in civil servant levels by 3,000 to avoid going to the IMF for a bail out and Jamaica has defaulted twice. Both face many years of painful adjustments that cannot be good for their people.
"The mandarins from the IMF have persuaded it that the same medicine of VAT that has been applied with modest success elsewhere would work here, notwithstanding the tax avoidance and downright tax evasion culture that is pervasive in The Bahamas. VAT is simply a revenue generating tool that government is presently promoting - there may be other options that may be more targeted and have a greater chance of success with lower leakages and collection costs. The government is hopefully exploring all options including a phased introduction of VAT with lower starting rates. But any form of taxation will have the same impact on lowering consumer spending.
"But reducing the deficit requires not only an increase in revenue but also a reduction in expenses - from the bloated civil service to the inefficient government corporations. No administration historically has wanted to touch these sacred cows and regrettably, the time has now come where the country cannot simply ignore the vast government bureaucracy and the amounts that are used to subsidize the corporations.
"Instead of taking the opportunity to reset the public's expectations, the government is maintaining that everything will be fine soon and unemployment is dropping and economic recovery is in sight. No serious effort is being made to sit costs or wastage. We are, yet again, letting a serious crisis go to waste."
The arrangements associated with the takeover of Kerzner International's Paradise Island properties call for the new owners to refinance Kerzner's $2.1 billion loan within the next two years, The Nassau Guardian has confirmed. Kerzner's failure to make payments relative to the loan prompted one of its lenders, Brookfield Asset Management, to take over Atlantis, the One&Only Ocean Club on Paradise Island, as well as its Mexican property.
There are growing concerns in the business community over the ownership change and the implications it could have for economic activity.
The Nassau Guardian understands that the government does not see Brookfield as a suitable fit for Atlantis. The Canadian conglomerate has no experience in owning hotels; however, it has entered into a four-year agreement with Kerzner to manage Atlantis.
Amid lingering concerns about the implications of the ownership change, The Nassau Guardian has continued seeking details in the matter as many people wait to see whether the management agreement between Kerzner and Brookfield will be made public.
Kerzner had various lenders but Brookfield was the smallest.
According to a Guardian source, Chairman of Kerzner International Sir Sol Kerzner was blindsided in his months-long bid to keep the properties under the ownership of Kerzner International.
Sir Sol had reportedly been confident that he could prevent the takeover because he thought he had support of shareholders in his attempt to secure new funding. However, board members out voted him.
It has also been suggested that he felt disappointed after he was unable to get the support of important investors.
Although Prime Minister Hubert Ingraham and Sir Sol have both said that the nearly 8,000 jobs on Paradise Island are not at risk, many employees are jittery over the development -- particularly as a formalized deal between Kerzner, as manager, and Brookfield, as owner, has not been made public.
The expectation is that Brookfield's immediate concern will be to sell the assets.
Earlier this week, The Nassau Guardian reported that job security on Paradise Island is tied to certain high revenue targets that Kerzner will be required to meet in an environment of ongoing global economic uncertainty.
It is understood that Brookfield expects that higher rates will help Kerzner achieve the new revenue targets. The Ingraham administration believes that the former government erred when it allowed the Paradise Island properties to be used as collateral for mortgages held overseas.
Over the last several days, the Democratic National Alliance (DNA) has called on the government to come clean about the details of the Atlantis takeover and has asserted that jobs are at risk.
"The management agreement between Kerzner and the new owner can be terminated at any time with penalty and even requires Atlantis to increase profits by about 20 percent each year in an (environment) described by the prime minister as a time of global economic and financial uncertainty," DNA leader Branville McCartney said earlier.
Kerzner will not be able to meet these high targets unless staff cuts are made and operating costs are cut, McCartney believes.
Brookfield is taking over the Kerzner properties in a $175 million debt for equity swap. Developments relating to the ownership change are being closely watched in many circles as Kerzner International is the country's largest private employer with an annual payroll of approximately $189 million.
2***Nassau, The Bahamas - Minister of State for
Investments the Hon. Khaalis Rolle, joined a panel of hospitality
leaders November 9, to address prospective investors about current
trends in The Bahamas to create jobs and expand the industry.
Caribbean Hotel Investment Conference and Operations Summit was held
November 8- 9 at the Atlantis Resort, where hotel executives gathered to
learn about the 1,000 careers growing in the hospitality and
Some have opined that the gold rush administration (PLP), led by Perry Christie, has failed the people of The Bahamas. I beg to differ. I confess that I have many problems with the lackadaisical leadership style of the PM but, on balance, the PLP has performed as best as it was able to in the particular circumstances which it met in place in May 2012.
The FNM, then led by Hubert Ingraham, increased the national debt to unmanageable proportions. He and his ill-fated administration spent money like a drunken sailor. In essence, they jacked us right up, big time. The most callous item was the massive overrun on the so-called road improvement scheme to the extent of $100 million.
Millions more were wasted on pie in the sky projects and so-called job creation schemes which really only benefited FNM cronies. Contracts were awarded to the party faithful while Nero (Ingraham) was fiddling.
Schools and public buildings were badly neglected and were allowed to fall into a state of disrepair. Indeed, many of our courts were literally falling apart while Ingraham was seeing ghosts and dead people all over the place. Unions were striking or withdrawing their labor. The uniformed branches were unhappy and crime was soaring. Major foreign and Bahamian investors were put in play while being turned around like literal fools.
The PLP made too many electoral promises. Yes, one is able to understand the necessity of the big hype during electoral campaigns, but the 2012 event was the biggest one yet. Never again should any political party attempt to bamboozle the good people of this country in such a fashion. This, obviously, is the last lap around the arena for many in the gold rush administration. New leadership is just around the corner.
The gold rush administration must and will, I submit, get its footing within the next few months. May I be bold enough to suggest ways and means by which it will do so? Number one, crime is not out of control, despite the alarming incidences and purported statistics. We have the best commissioner of police in place. Ellison Greenslade sometimes comes across as a showboat but that is precisely what we need to lead a modern and savvy police force.
A majority of the alleged homicides are been perpetuated by and upon so-called gang members. Yes, a handful may involve domestic disputes, but by and large, alleged criminals are retaliating on fellow alleged criminals. Eventually, they will kill themselves off and statistics will automatically go down. This might appear to be a cruel assessment but it is a true one. Eventually men and women will understand the necessity of conflict resolution and counseling.
The PLP is not good at public relations, and the party is in urgent need of a press spokesperson. The PM is not doing the party any good by constantly admitting that he knows nothing about numerous issues or that no one told him about them in a timely manner. He is coming to look and sound like a man who lives in another galaxy. Other ministers are just as bad, if not worse.
The minister of housing and the environment is not suited for his portfolio. Garbage collection is horrible on New Providence and the island is looking like the dump that it has become. Not one home has been built since his appointment and the much touted survey on alleged shantytowns is nowhere in sight. The minister of foreign affairs and immigration is now a man unto himself.
Despite these seemingly inept office holders, the PLP will succeed because of a few visionary and hardworking ministers in the administration. Deputy Prime Minister and Minister of Works Philip Brave Davis was instrumental in securing the electoral success of the PLP. Some say that I am a spear carrier for Brave. Others say that I want something from him. No. I want nothing from him except what is good for Bahamians.
Brave has a master plan for the nation and, God willing, it will be implemented with the cooperation and assistance of his colleagues within the gold rush administration in short order. The bogus promise to create 10,000 jobs was just that, a bogus promise. The PLP is able to assist the private sector in generating a minimum of 2,000 jobs per year by immediately reducing the costs of utilities, even if we have to subsidize them. The same economic incentives which are being handed out like candies to foreign investors must be granted to Bahamians.
Let us allow the privatization of Bahamasair. Sell off 60 percent to a consortium of Bahamian and foreign investors and let the government retain 30 percent, the other 10 percent could be sold to the Bahamian public. What is the point of toting this albatross any further?
No additional new infrastructure work should be carried out in New Providence for the next year. The private sector should be encouraged to invest in job generating enterprises by public/private sector projects. For instance, we are badly in need of adequate and affordable medical facilities in the south, west and eastern areas of New Providence.
Invite Doctors Hospital and/or a group of investors to build state-of-the-art medical facilities in those locations and allow them to bring in all equipment and building supplies (where they are not available locally) duty free. While they are at this, a pre-paid medical national plan should be conceptualized and implemented. Allow a private company to offer such a plan say at $25 per month per individual so that when there is need to access medical treatment it would be available at a low cost.
The gold rush administration must also take the bull by the horn and immediately before the summer recess of Parliament bring legislation to regulate and tax the so-called web shops and numbers houses. I have already opined on this issue, but allow me to lay it out again.
This industry generates in excess of $400 million per year. If it were regulated, the gold rush administration could easily tax at a minimum of 40 percent per year. That translates into $160 million per year. Each operator or those who would wish to become operators should be charged $5 million per year for a license. It is commonly agreed that there are at least five major web shops. If so, that translates into an additional $25 million per year for a grand total of $185 million per year.
This money could be used to pay down the national debt and to upgrade The College of The Bahamas to university level and to drastically reduce or even eliminate student fees and charges. The Grand Bahama campus could also then be modernized and expanded. The agriculture and fisheries component of the college could then be introduced over in Andros and Eleuthera right now, eliminating long-winded talk.
The floating power plant proposed by clients of Senator John Bostwick must be carefully looked at and, I submit, approved. Electrical costs are simply too high for the average individual and business firm. If his clients want to put up the money, at little cost to us, let them do so. If it works out, fine. If it fails, what have we lost? Nothing.
Crown land should also be freed up on the major islands and sold to Bahamians at cost, once the infrastructure is in. Where possible the gold rush administration could grant 100-acre tracts to Bahamian developers who would then put in the infrastructure and sell developed lots to Bahamian clients for $30,000 or less with financing by the Bahamas Development Bank.
The gold rush administration must also reverse the traffic flow on Market Street and Baillou Hill Road. Those two streets are the lifeblood arteries of the inner city. Yes, it will take a few million dollars to re-visit this but sell road bonds to institutional and ordinary investors. By the way, are there any audited financial statements for the Road Traffic Department? How much money is collected by that vital government department and where does it go?
The much talked about national training institute is nowhere in sight. Baha Mar and Atlantis are both bemoaning the fact that they are unable to find qualified Bahamians to fill the most mundane positions. Atlantis says that on any given day it has vacancies in the hundreds. Baha Mar says that it will need 3,000 employees to 4,000 employees once it opens next year, God willing. What organization, governmental or otherwise, is now providing training for potential employees? Not a single one. This must come on stream immediately.
The gold rush administration has a golden opportunity to succeed but it must become more proactive and demonstrate visionary traits. It must also revamp and enhance its public relations efforts. The elected and appointed representatives must become more available, if only twice per month. Bahamians like to feel their representatives as opposed to having to run them down.
Lastly, come clean on the issue of the availability of government jobs. There are precious few available and they should only go to the most qualified. Bahamians may act the part of the fool on occasion, but they are able to understand. Stop promising pie in the sky and let us deal with the real issues on the ground.
Yes, as the gold rush administration approaches its first anniversary, it is my contention that it will succeed despite the bad first year, by its own making, in office. Brave and his inner sanctum, with consultative advice from Christie, will make the difference.
To God then, in all things, be the glory.
- Ortland H. Bodie Jr.
Forty-eight days after the
Progressive Liberal Party expressed serious concerns about the FNM
government's approval of the Atlantis deal, that deal has fallen apart,
leaving more than 7,000 Bahamians even more anxious about the security
of their jobs.
The Prime Minister and the FNM government have shown extraordinary
incompetence when it comes to dealing with our nation's largest private
employer. Working in secret behind closed doors, they approved a
takeover by a junior creditor without first securing support from more
senior creditors, who went on to pull the deal under, leaving the future
Tourism is a wonderful industry; it pays our BEC, BTC, Water and Sewerage and Cable Bahamas bills, gives us money to shop in Miami and Ft. Lauderdale and creates mega-resorts that we wonder around as if in a dream. It creates the hottest, coolest clubs, restaurants and discos. It removes most resources from the local grasp, enclosing them within the resort's limits. Locals can only venture there at the owners' pleasure; it is private land on what may have been once upon a time public access property. Sadly, as I walked along the lovely newly fenced in Paradise 'public' beach access, it became clear that Bahamians are up against a monster. While the beach on this part of Paradise Island has been open to the public for years, it has not been public in the true sense of the word in many years. Atlantis actually acquired the beach years ago. Unfortunately, Bahamians were probably unaware of that fact.
As the beach access is controlled and restricted, Bahamians seem to be unaware that they are losing rights that they thought they had as a part of their birth. Yet, people seem nonplussed by it. As the gate stands locked across the 'public access', tourists approach from the inside and are confused as to how to leave. Locals simply duck under, jump over or somehow negotiate in and out. Ease of access is gone. The owners are asserting their right to the land. As the new owners/managers of Atlantis flex their muscles, asserting their ownership of the land that allows people to access the beach, the public wonders by apparently unaware.
A few years ago, Adrian Gibson (Tribune 13/11/09) wrote a piece on public beach access and the right to it. Yes, Bahamians may use the beach up to the high water mark, but he left out that we are not guaranteed access to the high-water mark. Private property extinguishes the right to that access, unless there is a common law right-of-way provided to the beach, which is usual for many coastal communities, but seems to be tentative on Paradise Island. However, the signs do say, as is customary, that the beach is accessible to Paradise Island residents. This does not include New Providence residents. Tourists are less important - or perhaps more important than locals; they do not live here, they simply play here, they do pay though. However, they may gain access by the virtue of their identity; they are not local.
All governments talk about tourism's benefits for the local economy, but what are they? It seems, to date, that they include jobs, at the expense of land. Low-paying service jobs at the expense of high-earning professions, all of which allow for diversity. Yes, we must recognize that the government has provided Goodman's Bay for public use, and so kindly too, along with Montagu. However, as the population grows two public beaches with a smattering of a few other local access points seem rather inadequate. Perhaps, though, we matter less in this country. Unfortunately, the more people feel penned in and ghettoized, the more they begin to act as people do when in confined spaces and not allowed to enjoy the pleasure they see on the other side. As the tourism areas grow, the local area shrinks. Areas such as Bain Town and Millennium Gardens become more crowded and other troubles brew.
What tourism actually develops, as the title indicates is a two-tier community where the tourists that can afford, or apparently afford, the pleasure of luxury have the pickings of the coast and all the accoutrements of the resorts, while the locals serve them to be able to afford to eat. As tourists go, they are unaware of the disparity that they create. They save for months, or in some cases years to come here for a few days of luxury, or to take a cruise. Often, they live out their dreams while here. So the country becomes a place of play, according to Mimi Sheller and John Urry in Tourism Mobilities. It also becomes a place in play; a place that is created according to the whims of the tourist or those catering to them. The place is produced to attract tourists. What is the actual cost of that production? Local development is sidelined in favor of the mega-resort.
As Frantz Fanon argues, locals become second-class citizens. Tragically, the resentment and anger build and it often turns in on itself until it becomes too explosive. Rather similar to colonialism, tourism creates a separation between those who serve and those who are served. This separation is not only mental but physical. Or, it is not only physical but also mental.
It becomes real and as Fanon and Camus illustrate, manifests in physical and psychological ways. We not only begin to kill each other, we also begin to hate ourselves and what we see ourselves as. But we downplay the violence and crime, we protect the tourist areas with increased police presence, all the while encouraging the others out of those areas. Regulations are made to limit local access to said areas, after all, it is private property and if you do not look the part, management reserves the right of admission.
As the coastline becomes out of bounds for many of the blacks who inhabit paradise, it becomes a place where those who fly in for five days and four nights enjoy all manner of pleasure. They play. Meanwhile, the locals who can no longer freely access the coast or most of the desirable spaces unless paying top dollar, are consumed as mere pawns to a hungry industry.
As the local community gains jobs and loses land, it also feels like it has more disposable income. At least that is one of the objectives. We want to buy things. We are willing to sell our souls to buy some thing, any thing that we are told will make us better looking, more desirable or happier. We assume that the tourists who inhabit the destination that paradise promises are happy and rich. That is the image we see.
When I walked past the beach this morning and realized that I no longer had access to it, a button was pressed and a sad realization took hold. As many of the taxi-driven, cruise-shipped-in tourists also realized, but they had to find an entrance. That entrance is at the pleasure of the owner. Tragically, the government did not have the foresight to write in a clause that would protect coastal land for continued enjoyment by locals and others who may wish to live near it. They simply sold it. The owners who bought then also sold and made massive profits. The ones who lost out and continue to lose out are those very people who are meant to be benefiting from all this development.
In the long run, the tourists may be willing to pay $10 or $20 to visit the beach for a few hours as their ship passes by, but what of those rich, and noble locals who braid hair day in and day out, work in hotels, restaurants, banks, shops, laundries, those who work to pay to stay alive? If we go to the beach daily do we have to pay $10 or $20 to swim? It may sound like a little, but $10 times 5 equals $50. A mere drop in the bucket to swim in the beautiful aquamarine waters that hem in these islands. Many can afford to pay this and others will pay it and smile, because they look rich paying it. But the fact is that we have sold our navel string and birthright for a song, much like the yellow bird caught in that sickly sweet rendering of paradise.
To be sure tourism is a great provider of jobs that pay bills. It creates wealth for some and pleasure for others. It also creates envy and discontent. More fully, it creates a two-tiered country where those who can pay to play and fly in for the pleasures of paradise, luxuriate in spaces that protect themselves with chain-link fences against the vagrancies and dalliances of those beyond.
The segregation of the 1950s does not compare to the mindful segregation of a people no longer able to enjoy the natural pleasures of their land because said nature has been mega-resorted. More tragically, we do not even realize it is happening. The Bahamas is certainly becoming a destination, but not one that we can all pay to play in. Paradise truly exists behind fences.
- I. Bethell-Bennett