Identifier
Created
Classification
Origin
10NASSAU116
2010-02-03 21:35:00
UNCLASSIFIED
Embassy Nassau
Cable title:  

THE BAHAMAS: 2010 INVESTMENT CLIMATE STATEMENT

Tags:  EINV ETRD EFIN ELAB KTDB PGOV OPIC BF EIND ECON EINT 
pdf how-to read a cable
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RR RUEHWEB

DE RUEHBH #0116/01 0342137
ZNR UUUUU ZZH
R 032135Z FEB 10
FM AMEMBASSY NASSAU
TO RUEHC/SECSTATE WASHDC 0280
INFO EC CARICOM COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHDG/AMEMBASSY SANTO DOMINGO
RUEHRC/USDA FAS WASHDC
UNCLAS NASSAU 000116 

SIPDIS
STATE FOR EB/IFD/OIA, WHA/CAR, AND WHA/EPSC
STATE PASS USTR
STATE PASS TO OPIC AND EXIM BANK
USDOC FOR ITA/TD/OETCA/BUSBY, 3134/USFCS/IO/WH/MANN, AND 4322/ITA/IEP/WH/OMCB/MBROOKS
SANTO DOMINGO FOR USFCS

E.O. 12958: N/A
TAGS: EINV ETRD EFIN ELAB KTDB PGOV OPIC BF EIND ECON EINT
EAGR, EFIS
SUBJECT: THE BAHAMAS: 2010 INVESTMENT CLIMATE STATEMENT

UNCLAS NASSAU 000116

SIPDIS
STATE FOR EB/IFD/OIA, WHA/CAR, AND WHA/EPSC
STATE PASS USTR
STATE PASS TO OPIC AND EXIM BANK
USDOC FOR ITA/TD/OETCA/BUSBY, 3134/USFCS/IO/WH/MANN, AND 4322/ITA/IEP/WH/OMCB/MBROOKS
SANTO DOMINGO FOR USFCS

E.O. 12958: N/A
TAGS: EINV ETRD EFIN ELAB KTDB PGOV OPIC BF EIND ECON EINT
EAGR, EFIS
SUBJECT: THE BAHAMAS: 2010 INVESTMENT CLIMATE STATEMENT


1. (U) The following is Embassy Nassau's Investment Climate Report
for 2010.




-------------- -


Openness to Foreign Investment


-------------- -




2. (U) The Government of the Commonwealth of The Bahamas generally
encourages and offers incentives for foreign investment in all
sectors of the economy except those the government reserves
exclusively to Bahamian citizens. Reserved businesses include:
wholesale and retail operations; commission agencies engaged in the
import/export trade; real estate and domestic property management
agencies; domestic newspaper and magazine publication; domestic
advertising and public relations firms; nightclubs and restaurants
(except specialty, gourmet and ethnic restaurants and restaurants
operating in a hotel, resort complex or tourist attraction);
security services; domestic distribution and building supplies;
construction companies (except for special structures for which
international expertise is required); personal cosmetics/beauty
establishments; shallow water scale-fish; crustacean, mollusk and
sponge fishing operations; auto and appliance service operations;
and public transportation.




3. (U) Officially, the government has targeted the following
categories of businesses for foreign investors: tourist resorts;
upscale condominiums; time share and second home development;
international business centers; marinas; information and data
processing services; assembly industries; high-tech service; ship

registration, repair and other services; light manufacturing for
export; agro-industries; food processing; mariculture; banking and
other financial services; captive insurance companies; aircraft
services; pharmaceutical manufacture; and offshore medical centers.
Benefits of investing in The Bahamas include: a stable, democratic
government; relief from corporate and personal income taxes; timely
repatriation of profits of approved investments; proximity to the
United States; extensive air links through nearby Miami, Ft.
Lauderdale and Orlando; well-developed telecommunications links; a
good pool of skilled professionals; excellent tourism and
conference facilities; and current and potential future tariff
concessions under the Caribbean Basin Economic Recovery Act. The
Bahamian dollar is fixed on par with the United States dollar and
the Government is firmly committed to maintaining this exchange
rate.




4. (U) In practice, the vast majority of successful foreign
investments in The Bahamas have been in the traditional areas of
tourism and banking. The decision-making process within the
Government of Commonwealth of The Bahamas is highly centralized and
major investments are subject to review and approval at the cabinet
level. The government is most interested in investments that will
generate local employment, particularly in white-collar or skilled
jobs. Large-scale projects in areas such as agriculture may be
difficult to staff since low-wage and low-skill jobs do not appeal
to most Bahamians, and because the government is reluctant to
permit importation of foreign laborers to staff these jobs, even on
a temporary-permit basis. When new foreign ventures are perceived
as competitors to existing Bahamian businesses or too dependent on
foreign labor, the government has responded to local concerns and
withdrawn or refused the license of the foreign business.




5. (U) In 1993, the government established The Bahamas Investment
Authority (BIA). It is located in the Office of the Prime
Minister, Ministry of Finance. BIA is intended to provide a

"one-stop-shop" to assist foreign investors with initial
governmental approval of their investment applications and to cut
through further red tape for approved investments. BIA is the
government's central point of contact for foreign investment
questions. Potential investors may contact the BIA at:



Bahamas Investment Authority

P.O. Box N-7770

Nassau, Bahamas

Tel: 1-242-356-5956, Fax: 1-242-327-5907

www.investbahamas.org



While The Bahamas has not yet enacted environmental legislation as
extensively as that in the United States, the BIA still requires a
full accounting of the environmental impact of any industrial or
agricultural schemes.



--------------

Conversion and Transfer Policies

--------------




6. (U) Persons and corporations resident in The Bahamas are
subject to exchange controls administered by the Central Bank.
Certain commercial banks are authorized to deal in foreign currency
and have authority delegated by the Central Bank to approve
exchanges for certain current account transactions. Non-resident
investors wishing to initiate operations in The Bahamas must
register their operations with the Central Bank. If their projects
are financed substantially by foreign currency transferred into The
Bahamas, they will be given "approved status," meaning that profits
and capital gains can be converted into foreign currency and
repatriated with minimal formalities. Capital investment into The
Bahamas remains subject to exchange controls, but as a practical
matter these controls have not been known to inhibit repatriation
of approved investment capital. Many Bahamians argue that exchange
controls should be eliminated and the Free National Movement had
included the elimination of exchange controls in its 2007 campaign
Manifesto, however to date neither the Central Bank nor the
government have announced any plan to move forward with it, citing
the need to retain sufficient foreign reserves to mount a strong
defense of the currency's one-to-one parity with the U.S. dollar.



--------------

Expropriation and Compensation

--------------




7. (U) Article 27 of the Bahamian Constitution prohibits
deprivation of property except upon the making of prompt and
adequate compensation in the circumstances. There is no evidence
that the government has ever expropriated a business, and both
major political parties have stated that nationalization will not
be an instrument of government policy.



--------------

Dispute Settlement

--------------




8. (U) There is no history of major investment disputes in The
Bahamas, although smaller contractual and other disputes between
Bahamians and foreign investors or exporters are not uncommon. The
Bahamian legal system is based on English common law. The
judiciary, appointed by the Governor General, is independent and
there is no evidence of governmental interference with the system.
The highest court of appeal is the Privy Council in London.




9. (U) Despite recent efforts to reduce backlogs of criminal and
civil cases, resolution of court cases can be slow, sometimes
taking years. The Embassy has received some reports of encounters
with biased judges and malfeasance by attorneys. The Embassy has
also received reports of local defendants evading payment of
Bahamian civil judgments or deliberately dragging out court
disputes, especially in cases involving non-resident plaintiffs.




10. (U) Judgments of British courts, and of selected commonwealth
countries, can be registered and enforced. Other countries'
judgments, including those of the United States, must be sued upon
in court as debt, subject to all jurisdictional requirements.
Judgments of Bahamian courts are payable in Bahamian dollars unless
otherwise specified by agreement of the parties.




11. (U) Personal bankruptcy laws are antiquated and rarely used.
Companies can be and are frequently liquidated according to law.
Creditors of bankrupt debtors and liquidated companies participate
in the distribution of the bankrupt debtor's or liquidated
company's estate according to statute. The law relating to sales
of goods and some other commercial subjects are codified in The
Bahamas' statutes.




12. (U) The Bahamas has been a member of the International Center
for the Settlement of Investment Disputes (ICSID) since 1995. It
is also a member of the Multilateral Investment Guarantee Agency,
which insures investors against currency transfer restrictions,
expropriation, war and civil disturbances, and breach of contract
by member countries.



-------------- --------------

Performance Requirements/Incentives

-------------- --------------




13. (U) There are no taxes on income, sales, estates or
inheritances. The only direct tax is a real property tax. Casinos
are specially taxed, and there is a USD 20 departure tax levied at
the airports and harbors, which will be increased to USD 25 once
the first phase of the U.S. pre-clearance facility is complete at
the end 2010, tentatively. The principal incentives for foreign
investments are concessions on import duties and property tax
abatement. Tariffs in general are high but do not generally
discriminate by country of origin, although The Bahamas recently
signed an Economic Partnership Agreement with the European Union
that aims at the eventual elimination of duty on EU imports over
the next 25 years. Incentives are offered under the following
legislation:



-- Industries Encouragement Act: Under this law, the government
may exempt from duties the machinery, tools, equipment, and raw
materials imported to construct new factories. A list of

duty-exempt items is negotiated separately with each new venture.



-- Hotels Encouragement Act: Under this law, new hotels and
resorts can be exempted from real property taxes for ten years from
the date the new facility opens, and for significant tax reduction
for up to ten additional years. An amendment to the Act currently
before Parliament would allow the government to grant tax relief
for an additional ten years, raising the maximum length of tax
abatement to thirty years. In addition, the Act allows the
duty-free importation of materials used for the construction of new
facilities or the substantial renovation of existing facilities
acquired by new owners for a set period of time. The list of
duty-free items for each project and the duration of some duty-free
windows are negotiated separately for each venture.



-- Agricultural Manufacturers Act: This law allows any materials
necessary for the construction, alteration, or repair of an
agricultural factory, as well as any machinery or supplies used in
establishing such a factory, to be imported duty free. An
agricultural factory refers to any factory established for the
purpose of manufacturing or preparing agricultural or horticultural
produce of The Bahamas for sale or export.



-- Spirits and Beer Manufacturers Act: This law provides for the
duty-free importation of materials used in the construction,
alteration or repair of approved liquor distilleries or beer
breweries and the duty-free importation of raw materials and
equipment for liquor or beer production.



-- Recent amendments to the Tariff Act provide duty exemptions for
construction and development on certain outer "Family Islands."




14. (U) Prospective investors should discuss the terms and
conditions under which these benefits will be made available in any
specific case with The Bahamas Investment Authority. Although work
permits for key foreign employees are readily granted in connection
with the investment approval process, government policy favors
employment of Bahamians. Fees for work permits can run up to
several thousand dollars each, and permits for less senior
employees can be difficult to obtain.



-------------- --------------

Right to Private Ownership and Establishment

-------------- --------------




15. (U) Subject to the reservation of certain areas of economic
activity to Bahamian citizens only, and the necessary approvals and
licenses, private entities may engage in nearly all forms of
remunerative activity. They may freely establish, acquire, and
dispose of interests in business enterprises. One significant
exception is the government's monopoly on all forms of
telecommunications (except Internet services, wireless services,
paging, and radio) exercised by The Bahamas Telecommunications
Company (BTC). However, with the plan to privatize this
corporation the government is opening the market to competition
within 2 years of the sale. To regulate this industry and ensure
fair competition on the open market the government has commissioned
a new body, the Utilities Regulation Competition Authority (URCA),
to regulate the activities of the Communications Industry. URCA
has pledged to continue public consultation the policy process.
The government is actively seeking a buyer and is now offering
51percent of its stake in BTC and a sale is imminent. Government
corporations such as the Hotel Corporation of The Bahamas and ZNS

Radio compete on a basis of rough equality with private
corporations in similar businesses.

--------------

Protection of Property Rights

--------------




16. (U) Subject to long legal delays, secured interest in
property, both chattel and real, is recognized and enforced.
Mortgages in real property and security interests in personal
property can be recorded with the Registrar General.




17. (U) Protection of Intellectual Property Rights (IPR): Prior
to October 2009, The Bahamas maintained a compulsory licensing
system for television broadcasting that allowed Bahamian cable
operators to retransmit any copyrighted television programming,
including for-pay programming, whether or not transmitted from The
Bahamas or outside of The Bahamas and whether or not encrypted.
That system provided the legal basis for Cable Bahamas to extract
and distribute encrypted copyrighted content from the U.S.
satellite providers without having entered into agreements with the
content providers. In September 2009, following consultations with
U.S. officials and industry representatives, The Bahamas
implemented a 2004 amendment to the Copyright Act. The Bahamas had
not previously allowed the 2004 amendment to enter into force.
This amendment narrowed the scope of the compulsory licensing
regime for the reception and transmission of copyright works
broadcast free over the air. The amendment took effect on October
1, 2009.




18. (U) The Bahamas' legal framework does provide for the
protection of IPR. However, enforcement is lax and anecdotal
evidence suggests that the police are complicit in the buying and
selling of pirated movies, songs and fabricated high-end purses to
residents and tourists. The Bahamian government has taken some
steps to strengthen IPR protection as part of its World Trade
Organization (WTO) accession process and in response to requests
from the United States. The Bahamas has also participated in
several IPR protection and enforcement training programs and
exercises with U.S. Department of Justice and UK officials.




19. (U) The Bahamas is a member of the World Intellectual Property
Organization (WIPO),but not of the WTO. There is little
industrial production that might generate possible infringements of
patent rights. Parliament passed a new copyright law on July 4,
2000, which is intended to provide better protection to
international holders of copyrights but has yet to be strictly
enforced. The government has recognized the gaps in compliance and
the Attorney General has submitted a confidential report to begin a
Plan of Action process to combat this. Post has received reports
that new legislation granting greater protections to IPR and more
stringent penalties for IPR violations will be submitted to
Parliament for review this year. This new legislation was designed
to bring The Bahamas in line with WTO and Economic Partnership
Agreement (EPA -with the European Union) requirements.



-------------- --------------

Transparency of the Regulatory System

-------------- --------------




20. (U) Official government policy commits The Bahamas to building
an economic environment where the government assumes its proper
role as regulator and facilitator of economic development, and

where ideals of transparency, fair play and equality of treatment
are protected. Still, the discretionary issuance of business
licenses can result in a lack of transparency in decisions to
authorize or to renew the authority of a business. Large foreign
investors may be held to higher labor, health and safety standards
than are local entrepreneurs. Obtaining required permits,
especially immigration permits, can take an inordinate length of
time. To encourage and maintain foreign and local investment the
government has pledged to implement new investment policies which
will simplify the process and reduce ambiguity. The Bahamas
Investment Authority exists to assist foreign investors in dealing
with the permitting process.



-------------- --------------
--

Efficient Capital Markets and Portfolio Investment

-------------- --------------
---




21. (U) In 2000 the Bahamas International Securities Exchange
(BISX) began operations, and presently involves the listing and
trading of domestic equities and also provides a mutual fund
listing facility. BISX has experienced several problems during its
short corporate life, with a shortage of funds and low trading
volumes since its inception. The Exchange presently consists of 19
listed public companies and poor economic conditions have continued
to negatively impact investor sentiment. The volume of securities
traded on BISX in the third quarter of 2009 declined by 5.4
million. The corresponding value contracted sharply by USD 44
million to USD 4.7 million. In the same period the BISX All Share
Price Index declined a further 4.9 percent to 1,501.78 points
extending the 0.7 percent decrease reported in the same period of

2008. Total market capitalization on BISX fell by 5.8 percent to
USD 2.4 billion, a reversal from a 1.9 percent advance to USD 2.9
billion recorded in the previous year.




22. (U) Despite a number of important initiatives are being
carried out to accelerate the development of the local capital
markets, the Exchange has declined due to a suppressed economy.
The absence of any significant transactions over the review
quarter, in contrast to a foreign-based firm's purchase of 50
percent of the outstanding shares of a utility a year earlier has
significantly impacted the current outlook.




23. (U) Local bank credit, including loans from The Bahamas
Development Bank, are available to resident enterprises for capital
investment in The Bahamas in proportion to their local ownership.
The current global economic downturn's effect on the banking system
has been mild, reflecting a relatively sound system. The prime
rate and the Central Bank Discount rate have been maintained at
5.50 and 5.25 percent, respectively. The majority of outstanding
commercial bank credit is personal loans (mortgages) for consumer
purchases. At the end of September 2009, the Central Bank reported
the total net external assets contracted by USD 15.5 million to USD
754.9 million, following a 3.6 per cent decrease a year earlier.
Domestic banks also showed weakness with credit expansion slowing
to 1.9 percent (USD 149 million) from 2.3 percent (USD 169 million)
a year earlier. With the decrease in credit quality, profitability
was also negatively impacted, with capital and surplus reserves
growing marginally by USD 11 million which amounts to 0.6 percent
compared to the 2.3 percent increase of 2008 at USD 40.7 million.
The gross economic contribution of the banking sector at the second
quarter 2009 to the Bahamian economy was USD 86 million.
Currently, the Bahamas has 160,454.registered IBC's however only
44,605 of that number are active. Further, the enactment of the
new legislation on Private Trust Companies has ushered in the
approval of two Financial and Corporate Service providers (FCSP's)
to act as Registered Representatives of Private Trust Companies and
the exemption of seven Private Trust Companies from having to

obtain a trust license.




24. (U) Projects in The Bahamas are also eligible, in some
instances, for financing from the U.S. Export-Import Bank, the
Overseas Private Investment Corporation (OPIC),or from
multilateral institutions such as the Inter-American Development
Bank (IDB). Major Bahamian banking institutions, which can provide
financing for certain projects in The Bahamas include:



Bahamas Development Bank

P.O. Box N-3034

Nassau, Bahamas

Tel: (242) 352-5780



Bank of The Bahamas, Ltd.

P.O. Box N-7118

Nassau Bahamas

Tel: (242) 326-2560



First Caribbean International Bank (merger between Barclays Bank
and the Canadian Imperial Bank of Commerce (CIBC)

Charlotte House

P.O. Box N-3221

Nassau, Bahamas

Tel: (242) 325-7384



British-American Bank

P.O. Box N-7502

Nassau, Bahamas

Tel: (242) 327-5170



Commonwealth Bank

P.O. Box SS-6263

Nassau, Bahamas

Tel.: (242) 328-1854



Royal Bank of Canada

P.O. Box N-7537

Nassau, Bahamas

Tel: (242) 322-8700



Bank of Nova Scotia

P.O. Box N-7518

Nassau, Bahamas

Tel: (242) 356-1400



Finance Corp. Of The Bahamas

P.O. Box N-3038

Nassau, Bahamas

Tel: (242) 322-4822



--------------

Political Violence

--------------




25. (U) The Bahamas has no history of political violence, although
labor unrest has become violent on occasion and labor strikes are
becoming more common. The government publicly and strongly
supports a modern open approach to foreign investment, although
many Bahamians, including some prominent politicians, remain
suspicious of expatriate investors and employees. Foreign
investors are sometimes the targets of criticism in the news media
and Parliament.



--------------

Corruption

--------------




26. (U) Giving a bribe to -- or accepting bribes from -- a
government official is a criminal act in The Bahamas under the
Prevention of Bribery Act. Penalty under this act is a fine up to
USD 10 thousand or a maximum prison term of 4 years or both. The
reigning government party, the Free National Movement (FNM),has
emphasized anti-corruption measures, although reports of heavy
corruption have plagued the political process for decades.



-------------- --

Bilateral Investment Agreements

-------------- --




27. (U) There is no bilateral investment treaty between The
Bahamas and the United States. The Bahamas was designated a
beneficiary of the Caribbean Basin Initiative (CBI) in 1985. As a
result, with certain restrictions, products manufactured in The
Bahamas qualify for duty-free entry into the United States. High
wage rates, combined with the small size of the country's
manufacturing and agricultural sectors, have hindered The Bahamas'
ability to exploit these benefits. On January 25, 2002, a previous
FNM government signed a Tax Information Exchange Agreement (TIEA).
A key side benefit of this agreement for The Bahamas is that,
effective 2006, it permits U.S. tax deductions for expenses of
business conventions held in The Bahamas. The Bahamas has also
signed twelve other TIEA's this past year to comply with EPA and
WTO requirements.

-------------- --------------

OPIC and Other Investment Insurance Programs

-------------- --------------




28. (U) Since 1992, the OPIC has approved two investment projects
in The Bahamas. It guaranteed up to USD 10.8 million in loans to
Uniroyal Chemical Company, Ltd. to assist in the purchase and
refurbishment of a plant in Freeport. The Uniroyal plant has since
closed. In addition, OPIC committed itself to a loan of up to USD
1.6 million to Landquest, Ltd., for the development of a cruise
ship facility on the island of Eleuthera. The facility is
currently operational.




29. (U) The Bahamas is also associated with the Multilateral
Investment Guarantee Agency of the World Bank, which, like OPIC,
insures investors against currency transfer restrictions,
expropriation, war, civil disturbances and breach of contract by
member countries.





--------------


Labor


--------------




30. (U) The labor force contracted 4 percent in 2009 to 184,020
from 191,595 workers in 2008. Notwithstanding this decrease the
unemployment rate increased from 8.7 percent in 2008 to 14.2
percent. Hence the decrease in the labor force can only be
attributed to discouraged workers, however this is not represented
in the current statistics.




31. (U) Well-qualified accountants and secretaries, and others
with skills appropriate to the financial services industry, command
a premium wage. While low skilled labor, mostly found in the hotel

and restaurants, basic wage hovers around the minimum rate.
Unemployment is slightly higher for adults between the age of 25
and 34. As expected, Nassau - the capital city - has the highest
employment. However, Freeport, the second-largest city, has
experienced escalating unemployment due to two devastating storms
and the closure of a major resort and casino. The recent
re-opening of the Emerald Bay property in Exuma - now owned by
Sandals - will employ 300 workers on that island. This all-butler
style resort will present more direct and indirect employment
opportunities on that island. Also, the Bahamas Maritime Affairs
Chairman, Ian Fair, has suggested that jobs are available in
maritime. He based his comments on the fact that The Bahamas has
earned one of the prestigious and highly sought after sears on the
40-strong council of the International Maritime Organization (IMO).
Wage rates, while lower than in the United States, tend to be
higher than elsewhere in the Caribbean.




32. (U) There are media and anecdotal reports regarding the level
of employee and white-collar crime in The Bahamas. For example,
newspaper reports have detailed numerous accounts of employees
stealing from employers. The Royal Bahamas Police Force (RBDF) has
issued a number of public service appeals and has advised corporate
citizens to remain vigilant and hold employees accountable.
Additionally, tax evasion has plagued revenue collection in the
Bahamas' Customs Department and the National Insurance Board (NIB).
In response, the GCOB conducted an investigation into corruption

claims and discovered some senior officers aided business persons
in dodging payment of correct duties on imported items. Several of
the officers were transferred to other government departments while
nine others are slated to be dismissed. The GCOB also pursued
businesses that appeared to have evaded taxes and the National
Insurance Board charged several employers with evading NIB
payments.




33. (U) In the 2000/2001 Government Budget, the government
increased its minimum wage from USD 4.12 per hour to USD 4.45 per
hour for public sector employees. Minimum wage for private sector
workers is USD 4 per hour. The Fair Labor Standards Act requires
at least one 24-hour rest period per week, paid annual vacations,
and employer contributions to National Insurance (social security).
The Act also requires overtime pay (time and a half) for hours in
excess of 48 or on public holidays. A 1988 law provides for
maternity leave and the right to re-employment after childbirth. A
new Minimum Labor Standards Act including the Employment Act,
Health and Safety at Work Act, Industrial Tribunal and Trade
Disputes Act, and the Trade Union and Labor Relations Act were
passed in 2001 and early 2002.




34. (U) The Bahamian Constitution specifically grants labor unions
the rights of free assembly and association. These rights are
exercised extensively, particularly in the hotel industry - where
80 percent of the employees are unionized - and in the state-owned
industries. Unions operate without restrictions or government
controls. The right to strike is governed under the Industrial
Relations Act, which requires a simple majority of union members to
vote in favor of a strike before it can commence. The Ministry of
Labor oversees strike votes. Although prolonged strikes are still
rare, work slow-downs and rowdy protests occur and workers often
use labor actions to force management to act on issues of concern
to them. Labor unions and others involved in disputes with
foreign-owned enterprises have used foreign ownership as leverage
to gain popular support for their demands.




35. (U) The Immigration Act requires foreigners to obtain work
permits before they can be employed in The Bahamas. The government
will permit foreign employees to work in a technical, supervisory
or managerial capacity to initiate and operate industries, provided
no similarly qualified Bahamians are available for the job.
Foreign business owners are expected to train as many of their
Bahamian employees as possible to eventually fill technical and
managerial positions. Work permit fees range from USD 350 to USD
10 thousand per year.



--------------

Foreign Trade Zones/Free Ports

--------------




36. (U) The 1955 Hawksbill Creek Agreement established Freeport,
Grand Bahama, the country's second-largest town, as a free trade
zone. Firms in Freeport are granted the right to import equipment
and materials duty-free, and enjoy other tax advantages. In 1993,
the government extended the Hawksbill Creek property tax exemptions
to 2015 and duty exemptions to 2054, but withdrew real property tax
exemptions for foreign individuals and corporations. The current
administration plans to extend these exemptions to the entire
island of Grand Bahama. The Hong Kong-based conglomerate Hutchison
Whampoa has invested millions of dollars in a new deep-water
container port, airport, cruise ship dock, industrial park, and
hotel properties in Freeport, promising a revitalization of
Freeport as The Bahamas' leading industrial city. The benefits of
this investment have been realized with the Bahamas' ship registry
surpassing the 50 million tonnage mark, which is the largest in the
world and the Freeport Container Port is the 72nd busiest container


terminal in the world and the 4th busiest hub for its partner
Mediterranean Shipping Company (MSC). The Grand Bahama Port
Authority (GBPA) continues to be entangled in an ownership
dispute as the estate for the late Edward St. George seeks a buyer
for his 50 percent stake. Rival and co-owner Sir Jack Hayward
recently announced plans to sell his 51 percent stake in the
company to Mid-Atlantic Projects, an American firm. However, the
sale has not been finalized, and media reports indicate that St.
George estate would initiate a liquidation action against the
Port's parent company to deny controlling interest to the
prospective buyer. The instability of the port has done little to
improve the grim economic outlook for Freeport.



-------------- --------------
--------------

Foreign Direct Investment Statistics and Major Foreign Investments

-------------- --------------
--------------




37. (U) There is also a direct link between the level of imports
flowing into The Bahamas and foreign direct investments. At the
end of the third quarter 2009, net private direct investment was
USD 214.4 million and net private direct equity investments was USD
171.7 million. Net Foreign Loans Financing on foreign investments
was USD 92.7 million. Net foreign real estate purchases for this
period totaled USD 42.7 million. While government statistics do
not list overall foreign investment by nationality, the Embassy
believes that the largest investors are American, Canadian,
Chinese, and South African in origin.




38. (U) Major foreign investments in The Bahamas include:



ACCOUNTING

Grant Thornton Chartered Accountants



Horwath International



KPMG



Ernst & Young



PriceWaterHouseCoopers





TOURISM DEVELOPMENTS

Abaco Beach Cottages, resort development, owned by an American
company.



Atlantis Resort, a hotel, resort, and casino complex on Paradise
Island near Nassau owned by Sol Kerzner of the South African firm
Sun Hotels International

Baha Mar owned by Armenian, Sarkis Izmirlian consisting of the
Radisson Resort (formerly government owned),Wyndham Nassau Resort
& Crystal Palace Casino formerly the Nassau Marriott Crystal Palace
Resort, casino, and convention center, and the Nassau Beach Hotel.
Izmirlian plans to expand the complex significantly, adding three
additional hotels, a commercial village and other amenities on the
scale of nearby mega-resort Atlantis. The media report that
Izmirlian will retain ownership of the Baha Mar, however,
negotiations continue with the project's potential financer,
Chinese Export Import Bank and the Chinese State Construction
Corporation. The Chinese ExIm bank will reportedly hold an
ownership stake in the project.



Baker's Bay located on Guana Cay, Abaco is owned by the U.S.
Discovery Land Company of San Francisco



Bimini Bay Resort, owned by Florida-based developer Geraldo Capo




Comfort Suites on Paradise Island owned by a U.S. company



Crooked Island Lodge, a 12 room lodge owned by an American
developer.



Four Seasons Resort Development on Exuma, owned by a Canadian
Company



Freeport/Lucaya marina village developed recently by European
investors



Gorda Cay, renamed Castaway Cay, purchased and developed by Disney
Corp. for its cruise ship operations



Half Moon Cay, owned by U.S. company Holland America Cruise Lines



Island Outpost Resort at Compass Point, Nassau, Pink Sands Resort,
Harbour Island, and Kamalamae Resort, Andros owned by a Jamaican
company



Our Lucaya Resort, a subsidiary of Hutchison Whampoa Group and
Centex Rooney



Princess Cay, a cruise ship landing facility near Eleuthera Island,
owned by Landquest, a U.S. company



Professional Golfers Village, the proposed hotel broke ground on
April 24, 2009, owned by Southworth Developers, a U.S. company.



Ritz Carlton Rose Island Resort, owned by Florida-based Gencom
Group

RIU Resort, Paradise Island, owned by a Spanish Company



Sandals Royal Bahamian Resort, owned by a Jamaican company.
Sandals now owns the Emerald Bay property in Great Exuma, formerly
the Four Seasons Emerald Bay, having purchased it from the
liquidator last year.



Superclub Breezes Resort, owned by a Jamaican company



The Bahamas Film Studio/Gold Rock Creek Enterprises Ltd., located
at East Grand Bahama, owned by Canadian Paul Quigley



The British Colonial Hilton Hotel a subsidiary of Blackstone and
managed by Hilton Corp., both U.S. companies



The Ginn development project located on the west end of Grand
Bahama, owned by the Florida-based Ginn Development Company



The I Group Mayaguana development owned by developers from Boston



Winding Bay Resort, Abaco, owned by a British company





CONSTRUCTION

Baker Construction, a subsidiary of a U.S. firm.





BANKING & FINANCE

BankBoston Trust Company Ltd., a U.S. bank subsidiary



BNP Paribas, a French bank subsidiary



Citibank, N.A., a U.S. bank subsidiary



JP Morgan Trust Co. (Bahamas) Ltd., a U.S. bank subsidiary



Templeton Global Advisors Ltd., a U.S. owned company.





OTHER

AES American Oil Company, which owns Ocean Cay, a facility to
produce liquefied natural gas (upon Bahamian government approval)

Cable Bahamas, Ltd., established by a Canadian group



Commonwealth Brewery Ltd (Heineken),a Dutch-Bahamian company



Freeport Ship Care Facility, owned by the Lloyd Werft Ship Repair
Company of Germany



Morton Salt (Bahamas) Ltd.



Mirant (Grand Bahama Power Company)



Polymers International, Ltd., a subsidiary of Dart Container, which
produces styrofoam pellets at a plant in Freeport



The Container Port facility, airport and three beachfront hotels in
Freeport were acquired in 1997 by Hong Kong-based Hutchison Whampoa



The Caribbean Marine Research Center, operated by The Perry
Institute for Marine Science, an American firm





HOUSING DEVELOPMENTS

Albany Golf and Beach Resort owned by an investment group
comprising Bahamian Joe Lewis, and AmericanTiger Woods and South
African Ernie Els



Chub Development Ltd., Treasure Cay, Abaco, the proposed
construction of nine townhouses with docking facilities and other
amenities.



Cotton Bay, Rock Sound, Eleuthera owned by Eleuthera Properties
Ltd.



Old Fort Bay, a housing subdivision, owned by a U.S. company.



Powell Point at Cape Eleuthera, includes The Island School and
marina, owned by the parent company for Amway Corporation.



Roberts Isle, a housing subdivision owned by a U.S. company



Sandyport Development Co. Ltd., a housing subdivision owned by a
British company



Schooner Bay, an environmentally friendly development, owned by a
U.S. company

Treasure Cove, a housing subdivision, owned by a U.S. company.
AVANT