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.

--------------
ECONOMIC OUTLOOK FOR GRAND BAHAMA GRIM
--------------

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.

--------------
THE PORT AUTHORITY'S ACTION PLAN
--------------

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.

--------------
TOURISM INCENTIVES FOR GRAND BAHAMA
--------------

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