ECONOMIC OUTLOOK FOR GRAND BAHAMA ISLAND

UNCLAS NASSAU 000124





STATE FOR WHA/CAR AND EB

USDOC FOR MICHELLE BROOKS

SANTO DOMINGO FOR USFCS



E.O. 12958: N/A

TAGS: ECON, BEXP, ETRD, BF

SUBJ: ECONOMIC OUTLOOK FOR GRAND BAHAMA ISLAND



1. SUMMARY: On February 23, during the Annual Business Outlook

conference in Freeport, Grand Bahama, Bahamian economic officials

confirmed that the economic outlook for that island will continue to

be grim for at least another 12 to 18 months. Newly appointed

Chairman of the Port Group Limited Hannes Babak, however, announced

plans to attract foreign investments to Grand Bahama, including a

retail license fee discount plan, assistance to small business

owners, and a plan to attract home builders to the island. In

addition, the Ministry of Tourism and Aviation noted their plan to

work with airport authorities to reduce the price of airfare to

Grand Bahama in an effort to stimulate tourism. End Summary.



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ECONOMIC OUTLOOK FOR GRAND BAHAMA GRIM

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2. During the Annual Business Outlook conference in Freeport, Grand

Bahama on February 23, Minister of Finance Zhivargo Laing told

conference delegates that Grand Bahama has suffered from an economic

recession for the past seven years and an economic crisis for the

past five years. Laing noted that he does not anticipate a

turnaround in this situation for another 12 - 18 months. He

indicated that Grand Bahamas has never recovered from Hurricanes

Francis and Jeanie in 2004 which resulted in the closure of the

Royal Oasis Hotel as well as a number of other businesses in Grand

Bahama.



3. Conversely, Hans Babak, the newly appointed Chairman of the Port

Group Limited of the Grand Bahama Port Authority said that he is

optimistic about the future of Grand Bahama and plans to attract a

number of foreign businesses to the island. Babak is already

credited for the recent opening of Ross University Campus and the

Fernestration Glass and Services Company. Babak believes that the

best fit for Grand Bahamas is companies in the area of education,

training, health care and medical facilities.



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THE PORT AUTHORITY'S ACTION PLAN

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4. Newly appointed President of the Grand Bahama Port Authority

(GBPA) Ian Rolle outlined the Port's plans to revitalize the local

economy by revitalizing downtown Freeport, implementing a retail

license fee discount plan where fees will be reduced by 50 percent

for bills paid within three months after billing. The GBPA also

plans to partner with the College of The Bahamas, Grand Bahama

Chamber of Commerce and the Bahamas Development Bank to form "The

Enterprising Center." The mission of the center is to provide

persons seeking to operate or currently operating a small enterprise

with valuable resources to make their business a success. Rolle

said the Port also plans to introduce the "Build Now Program" to

allow qualified persons to build their dream home immediately after

purchasing a piece of property. Additionally, GBPA will provide

scholarships to top graduates of all high schools on Grand Bahama

and identify vacant properties in communities that can be used for

after school learning programs. Rolle said he also plans to

relaunch the Port's website in April to enable members to gain a

better understanding of what the organization does. The GBPA's

website will also include a site entitled investgrandbahama.com,

which specifically caters to investing on Grand Bahama island that

will be linked to the GBPA.com website.



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TOURISM INCENTIVES FOR GRAND BAHAMA

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5. Director General of the Ministry of Tourism Vernice Walkine told

Outlook attendees that the Ministry of Tourism plans to partner with

the airport operator and the Tourism Board to reduce the price of

airfare to Grand Bahama in an effort to stimulate more tourism for

the island. Currently, Grand Bahama airport's fees, taxes, and

surcharges result in the highest operating cost in the region.

Walkine said that this incentive will enable the Ministry to attract

new life to Grand Bahama and reduce the turnaround cost to existing

carriers enabling them to offer more affordable travel packages to

the island. In addition, the Ministry of Tourism announced plans to

build a new cruise passenger port terminal in Freeport in an effort

to increase the cruise passengers to the island. Cruise liners are

already attempting to increase bookings to Freeport by lowering

prices. Discovery Cruises lowered prices in 2009 and increased its

passenger arrivals to Freeport by 60% during the first two months of

2009, bringing a total of 32,000 passengers to the island between

January and February, compared to 20,000 during the same time in

2008.



6. COMMENT: Grand Bahama has suffered from an economic depression

for many years and local officials welcome any assistance from GCOB

or private industry to stimulate the island economy. The incentives

described by the Port Authority at the conference could certainly

help the struggling economy, but only if U.S. tourists and home

buyers return to the market. It seems unlikely that Grand Bahama

will see a real tourism boost until U.S. consumer confidence has

returned.





ZUNIGA-BROWN