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Saturday, February 28, 2015

CARICOM: We've got company!

Well, in case you didn't already know, the leaders of the CARICOM nation states held their 26th Inter-Sessional meeting here in Nassau, Bahamas for two days starting on Thursday, February 26th.

The Bahamas chairs the CARICOM grouping, with prime minister The Right Honourable Perry G. Christie as the chair. The outgoing chair, and current prime minister of Antigua and Barbuda, Gaston Browne, was on hand to hand over the reins (no pun intended) to the current.

Of course, these meetings are incredibly boring. As boring as watching paint dry, or watching a rock race. In fact, if you were to speak to any of the participants in this year's events, or participants from events prior, they would most likely tell you that aside from it being a chance to "get out of the house", so to speak, they would pass on these meetings just out of the sheer boredom of it all. But, these meetings are very necessary and vital to bridging the gaps of understanding between CARICOM nation states.

Fact of the matter is that through these meetings, Caribbean leaders have very little other opportunity to meet and greet one another through their busy schedule. While the events are boring, they must lead to impactful and fruitful dialogue about the problems that ails individual states and the region at large.

Also, the main discussions at these meetings are not the formal meetings for show-and-tell, but the back-room discussions and sub-committee’s between the leaders and their aides.

One of the first statements out of these meetings came from former CARICOM Chair Browne as he expressed solidarity with Venezuela amidst reports that a coup is looming. We hope too that the stability of Venezuela remains an important item on the Western Hemisphere's agenda, and not just with CARICOM.

Of course, the issue in Venezuela is more complex than the rumblings of a coup just for having a coup's sake. For starters, the president, Nicol├ís Maduro, former vice president under former president Hugo Chavez (deceased) was a former trade unionist of the ultra-left-wing kind. It's no secret that he is also a little "aggressive" with regard to internal politics, and is more of a Bolivarian idealist than his predecessor.

Furthermore, Venezuela is having challenges economically. Quite clearly with regard to low oil prices that has affected not just budgetary allocations currently, but also will affect the next fiscal year's budget and more than likely social spending programs will be either slashed in half, all out cut or just knowingly and wilfully underfunded.

As said on a previous article on oil prices falling, Venezuela is well below it's break-even point, and talks of social disruption, rumours of coups, or calls internally for the Venezuelan government to step down or at least shuffle their leadership, should be expected. Not just in Venezuela, but every single oil producing country that is feeling the sharp decreases on oil prices. May they all go with God!

A second item, as we gleaned from the end summary by the current CARICOM Chair Christie, was this issue of Marijuana decriminalization. Yes, the dutchie. Tu-Sheng Peng. Ganja. Weed. Herb. The "healings".

Without question the moves in the United States of America on the decriminalization and subsequent legalization of marijuana has prompted anyone with a brain cell left in their head from all of that inhaling to think about the issues as it relates to ending the prohibition on cannabis internally.

We hope that the move towards ending the prohibition in the Caribbean is met with all seriousness, and the criminal records of the young, and not so young, are not only expunged but these people are culturally integrated and if need be, compensated, for this clearly damaging policy inflicted upon them. A policy that has consumed most of their productive lives. Consumed all for a few ounces of weed. Not for international trafficking, not for mass local distribution, but just because a 17 or 18 year old decided that he was going to experiment like most 17 and 18 year olds do!

While I am not a fan or a staunch user of drugs of any kind, the studies and evidence on marijuana is more than telling. Especially when compared to legal, over the counter drugs and other mind and body altering substances that are legal like alcohol. We can only hope that a common sense approach is met and one of the Caribbean states would take the mantle to test out a sensible policy that strikes a keen and even social balance with regard to the decriminalization of marijuana that all other Caribbean states can follow.

The third and most important plank of this year's CARICOM meeting was with regard to regional banking. Yes! The big elephant in the room.

According to larger international bodies the region launders too much money, stashes too much money for the rich, steals from international investors and funnels terrorist money and monies for other illicit acts world-wide. Yes! It's only the Caribbean that does this through their banks. Not Switzerland, not in New York, not in Andorra, not Guernsey, not in Liechtenstein, not Qatar, Saudi Arabia or Algeria. Just Caribbean regional and offshore banks!

The hypocrisy is laughable. Laughable even more so in light of a bank leak from the HSBC in Switzerland that claims to have tens of billions of dollars in accounts. Just one bank in Switzerland.

Apparently, there are 55 passport holders from the Bahamas alone that have a reported $7 billion stashed away in HSBC. The Bahamas was the sixth largest amount of passport holders. But passport holders are what they really are, and not necessarily 55 Bahamians with a net-worth of over $7 billion dollars that have their personal money stashed with HSBC in Switzerland.

You see? In The Bahamas we have this financial instrument called "International Business Companies", or IBC's.

To cut a long story short, I can incorporate an IBC and stand as the "director" of the IBC or fund. I have a Bahamian passport and can act on behalf of the shareholders, or the people with the money, to shuffle their money around in any way, shape or form that I am directed to do so. So, when found, the transaction is done in my name, as a Bahamian citizen, but the money is certainly not mine. Even though I wish it were.

Of course, detailing exactly who are these passport holders would solve all of this instead of assuming any, none or all of them are Bahamian citizens with their own personal wealth.

Some of the people arguing for greater transparency and reforms in offshore jurisdictions may have money stashed away in an offshore jurisdiction, or a private fund that no one knows a thing about or has had personal business transacted through a private banking account. Just like the Bill Clinton Foundation received millions of dollars from donors as gathered from the information on the same HSBC leaked list most recently.

There is a case to be made on greater cohesion on banking and an understanding on how some need to do business from all sides. Let's just be fair about it.  

What should be addressed with regard to greater protection for the financial services sector in The Caribbean are the overall benefits for the risks taken by and for those in the sector. To say quite frankly: It is immoral, unconscionable, disgraceful and just flat out cowardly that we transact, or facilitate, on a yearly basis, billions upon billions of dollars but the net benefit for those in the sector and their relevant economies is minimal, relatively speaking.

It has to be more than just doing it for pride, or saying that we have to protect it because it makes us feel good inside to say we have to protect it. It can't be that we are going through such lengths for this financial services sector because of emotional strings and nothing beneficial for the rest of us, or the majority of us. Has to be more than just that!

So, as we wrap up this most recent CARICOM meeting. We wrap up! See you next year, God's willing!

Saturday, February 21, 2015

Exchange controls and the Bahamian dollar!

Since the introduction of Value Added Tax (VAT) in January, 2015, there has been some turbulence. As expected, it's a new initiative, one in which it places an additional cost on goods and services, so it was expected. One can only hope that with this additional cost to Bahamians that there would be additional revenue and spending reforms placed on the government with this windfall.

The information or proof of movement towards greater fiscal responsibility has been a little dodgy, to say the very least about it. But, let's trust but verify that these reforms will be delivered as promised.

What came as a result of VAT's implementation was something very extraordinary. Something that I did not expect to be brought into the debate post-implementation. Persons began making statements pertaining to the valuation of the Bahamian dollar, claiming that the Bahamian dollar is worth 7.5% (or cents) less after VAT implementation.

Of course that's not how it works. That's not how any of that works. It didn't stop people from saying it, and most likely won't stop people from thinking or feeling that it may be the case. But, let's try to discuss the importance of the valuation of the Bahamian dollar and by extension, the fixed exchange rate's usefulness at this time.

Just coincidentally over the last week or so, discussions about the exchange rate and it's usefulness was brought up in a very heated debate in the House of Assembly during the mid-term budget debate by two back-bench parliamentarians from the governing party. On one side pro-fixed exchange rate was Ryan Pinder, MP for Elizabeth and former minister for financial services; and on the other side, Dr. Andre Rollins, MP for the Fort Charlotte constituency.

Through this I began to think, and harkened back to the notion that the Bahamian dollar would be devalued by the VAT, and at what risk will we be devalued on purpose or not, and then that almost means that a discussion on the fixed exchange rate system needs to be addressed and addressed in the proper way.

I'm more than receptive to the idea of removing the fixed exchange control. It's something that should be in serious consideration at this time in our country's development. How do we go about doing that and to the extent it happens is up for debate.

For the most part, persons in favour of keeping the fixed exchange control hinge their rationale on two main tenets:

  1. Removing the fixed exchange rate would lead to a direct devaluation of the dollar; and
  2. There really is no need to remove the fixed exchange rate.

Let's examine the first point. Removing the peg will in fact devalue the local currency against the currency it is pegged against, for example the Bahamian dollar (BSD) versus the US dollar (USD).

How does this happen? It's quite simple. The US dollar is the universal currency that is used to settle payments world wide. Aside from the Euro and to some extent the British pound, the USD is the new "gold standard".

Countries try to make payments and use the USD in international trade and exchange because the USD is strong, universally accepted and in frequent supply and demand.

However, this automatically means that all other smaller nation currencies are of lesser importance and to a significant extent of lesser value than the USD to begin with. So, before we speak about the merits of valuation and devaluation, we need to begin from that premise and understanding.

How is a nation's currency valued? Well, there are two main factors. The first of which a currency is valued is based on the macroeconomic perspective of trade and exports minus imports, or in other words the balance of trade and the differences in the current account.

When exports are higher than imports, this affects the value of a currency through the exchange rate by signalling that a country's goods and services are worth more than what they import. In The Bahamas, this is the exact opposite, or so it seems.

From the information that Trading Economics has compiled from reports from the Central Bank of The Bahamas, The Bahamas recorded a current account deficit of $533 million (USD) in the third quarter of 2014. The current account in The Bahamas averaged -$309.34 million (USD) from 2005 until 2014, reaching an all time high of -$49.20 million (USD) in the first quarter of 2010 and a record low of -$533 million (USD) in the third quarter of 2014.

The methodology of balance of payments; i.e., current account balance, is slightly outdated. Glaringly, the balance of payments neglects the impact of tourism receipts on exports. Tourism is now and should be defined as an export, as the World Centre of Excellence for Destinations (CED) in conjunction with the United Nations World Tourism Organization.

With tourism accounting for 60% of GDP in The Bahamas, which at any given year hovers around $5 billion dollars worth of value annually, with an average of $2.5 billion in actual tourism receipts since 2012, considering all of new information, The Bahamas is accounting for balance of payment surpluses year-on-year.

Be that as it may, the fundamental point for one side of a country valuating their currency is based on the balance of trade. The second fundamental determining factor for valuating a currency is with regard to capital inflows.

Capital inflows, quite directly for the Bahamian experience, almost solely, means foreign direct investment (FDI) for major projects that require land and human resources for construction and development, in addition to other receipts from sovereign bond issuances. Countries that have balance of payment deficits, but not exclusively, follow a capital inflow or a "FDI" based growth model for development, for obvious reasons.

Because of the current prevailing notion on the balance of payment deficits and as that relates to capital inflows/FDI, policy makers, most likely, feel there is no need to tinker with it if removing the exchange control carries with it the psychological damage of currency devaluation and thus the self enforcing notion of the second point with regard to persons seeing no need to tinker with exchange rate in the first place.

To further bolster the position on at least thinking along the lines of considering models and methods in which to relax the exchange control, we must take into consideration several things now:

  1. The balance of payment methodology used by the economic establishment is outdated;
  2. Rejecting, off top, for psychological reasons of currency devaluation, is meaningless considering the fact that when compared to the USA, almost all other countries currencies are meaningless because settlements are almost always denominated in USD;
  3. Not having a concerted effort with regard to bolstering foreign reserves has not worked well in the past and targeting a foreign reserve quota per quarter would be more helpful;  
  4. International payments and trade is denominated in USD, and even the Euro-Zone and the ASEAN and APEC zones, even with the prevalence of the Euro, British pound and the Chinese Yuan, still use USD predominantly and especially when they are doing business with North-American, Latin American and some European countries;
  5. The current thinking and rationale on keeping the exchange control, based on the outdated balance of payment methodology, and also based on the fact that now devaluing the currency would make production for export cheaper if we take into consideration that tourism is an export, only if in services; and
  6. While imports would be more expensive, it also means exports- including tourism- would be cheaper to produce relatively speaking and per value and that would mean more US dollars to spend with local shops and venues.

The value as determined for what we pay for imports is inconsequential because our major exports are service related and not manufacturing based and also for the fact that The Bahamas imports "inflation" and are "price takers" from the USA, primarily.

Even with regard to inflation, as The Bahamas is a price taker, increasing Bahamian dollar supply would not necessarily indicate a decrease in value once US dollars is still being brought into the country via tourism, primarily, and also by capital inflows once brought in as USD or another controvertible currency that can be held in foreign reserves as it already is the norm. An additional best case scenario would be to allow simultaneous US dollar accounts with Bahamian dollar accounts.

The operative term is "value", and not in a dollar for dollar or monetary sense, but value in terms of the quality and value of life and living in The Bahamas.

For example, while the US dollar is trading at $1 for every .88 cents in Euros, can we with certainty say that every country in Europe has a better quality of life than America? The UN's Human Development Index (HDI) states that the United States has the fifth highest HDI with Norway #1, Australia #2, Switzerland #3 and the Netherlands at #4. Conversely, for the Australian dollar, you would need $1.28 for every US dollar. Are we to say that Australia is doing more poorly qualitatively speaking in terms of their lack of equal parity with the US dollar.

As it stands now with the latter issue of imports requiring US dollars in any event, if we move away from the exchange control and it results in currency devaluation based on the old methodology for balance of payments, a devaluation that really would be normal under any circumstance when faced with the obvious fact that the USA is the dominant economy in the world would not make much difference when the quality of life is the ultimate goal and not necessarily keeping exchange controls for superficial reasons.

The considerable reliance on customs duties that have now since started along the process of being replaced by VAT would still make thinking on the possible benefits of moving away from exchange controls fruitful even at this stage.

Saturday, February 14, 2015

The mid-term budget: Let's give it justice!

On February 11th, the prime minister of The Bahamas, Perry G. Christie, who also serves as the substantive minister of finance as well, gave what we call a "mid-term budget" to advise the public and the parliament of the performance of the government on their fiscal management and their economic planning.

The provision of a mid-term budget isn't a new practice, and neither is it a very old practice. It is not constitutionally mandated, but the appreciation by the political directorate, for the last 10 years or so, towards giving the parliament and the public at large the respect and decency it deserves with regard to telling them how their money was being spent was and will always be welcomed. Outside of a freedom of information act, or a transparency in government finances act, this is the best we can do and expect at this time.

For starters, the mid-term budget, while it's not a legal or constitutional mandate, should and could be done a little earlier than the first or second week in February. Not because I feel it is just made up out of thin air and easy to do, but because the information should be right at hand since we are dealing with such serious times and producing it earlier in January would give more confidence that persons are on the ball.

However, and before we all break out into paroxysmal euphoria, let's run a little bit of the issues back just so we can appreciate what's really important here.

For starters, the mid-term budget, while it's not a legal or constitutional mandate, should and could be done a little earlier than the first or second week in February. Not because I feel it is just made up out of the air and easy to do, but because the information should be right at hand since we are dealing with such serious times and it would give more confidence that persons are on the ball.

In light of this, the performance as reported could have been a little better, but it is what we expected based on two factors: The preparation for the Value Added Tax (VAT) in terms of revenue collection enhancement in the Customs Department and subsequently all other revenue generating departments prior to the VAT being introduced, could have given the government a better boost. Secondly, The Bahamas's economy shrunk by nearly $230 million dollars as stated by the prime minister between 2007 to 2012. These two issues are very important.

With the first point, let's take for example what theoretically should have happened before January 1st of his year. Not only was there supposed to be the preparation for the VAT, but also all other revenue generating agencies were supposed to be upgraded to buttress and support the introduction of VAT as part of a package to make the transition and additional taxation easier for businesses and consumers. This has not been the case for the most part.

The Customs Department's reformation has been not as stellar as it was promised. With a loan financed by the Inter-American Development Bank, the project has not shown to have delivered the goods pre-VAT introduction and one can only hope that it would be corrected. As it stands now, the Customs Department collects less than 50% of all duties. No VAT could truly fix that if the main leakage in your main revenue generating department is not even collecting 50% of it's expected revenue.

This, of course, was acknowledged by the prime minister who stoutly stated, as well he should, that they are working on enhancing these revenue generating areas and it is something his administration is aware of. Which is a great first step in actually moving forward with the overall reformation process which is expected to take years to fully complete, if ever. What should be expected now, and requested equally, is an overall progress report of the money spent with these reformation programs, the methods used to arrest the problem and measurements provided on the efficacy of these programs, how the problems can be corrected and prove to be successful in the current term and long term.

While VAT for a large part will run simultaneously and with the Customs Department at the border, if the same "challenges" are put in with the same system, or wrought with the same systematic challenges, then revenue collection will be weak and will not be optimal where Bahamians would see the benefits of the money they spend.

The second point with regard to the shrinkage of the economic pie in The Bahamas is critical. While the IMF forecasts growth over the next two to three years for The Bahamas at a modest 2%, the fact of the matter is we are no where near out of the woods in terms of a new path for economic progress.

What has happened, and rightfully so, the government has tried to spend it's way back into growth and prosperity. The GFS deficit during the first half of this fiscal year, 2013/2014 amounted to $238 million, down from the $295 million during the 2012/2013 year.

The decrease in the deficit from the 2012/2013 year into the 2013/2014 fiscal year could be accounted for with regard to a new government, projects from the previous administration being slashed or just scrapped, as per the norm. However, for this mid-term budget report, the deficit increased to $273 million from the last year's $238 million.

However, while we see the spending increase, and we see modest gains with regard to overall GDP growth rate indicators, and projected to grow more slightly over the next 2 to 3 years by the IMF, we still have staggering unemployment that is stubbornly slated at over 15% in addition to overall business failure.

While this lends to the notion that while the government has committed itself to stimulating the economy through spending, the evidence indicates that they are not spending the money in pro-growth areas and spending the money on things that would substantially bolster the economy, boost growth, create jobs and increase the overall trajectory of The Bahamas in a more positive direction.

This too was also highlighted in the mid-term budget communication, and the prime minister flatly acknowledged that our models and methods of economic growth stimulation, economic management and interventions are outdated and in many cases, antiquated and ill suited for us to get our country back on the path to prosperity.

This is heartening to hear. One can only take the prime minister at his word that changes in the way we do business is forthcoming and that new tools and measures would be added to the basket, and in some instances, stripped away, if we want to talk about real economic empowerment for the rest of us.

As we acknowledge this along with the prime minister, one item glaringly missed in the mid-term budget communication was the overall support for small businesses and entrepreneurs. What has not happened is an embrace for entrepreneurs in this new world and new world economic order through the pronouncements of this mid-term budget.

While the introduction of a new method for obtaining government contracts has been set into effect, the Public Private Partnership model, the fact of the matter is that there is more that can be done with regard to increasing the overall business environment, the granting of licenses, government support and hand-to-hand negotiations and support for entrepreneurs particularly those geared for trade and export or new technological advancements, better support for professional services and professional services providers, in addition to the government relieving itself of most of the services it produces to the private sector and small and medium sized entrepreneurs, without special favour or harm.

These are indeed high and lofty goals. Considering the size of our government in terms of it's legal and regulatory intrusion, and not at all with regard to its human resources, the task for doing such is daunting considering also the fact that the government operates heavy handed and in some instances, in clandestine manners at times in relation to how it works with and deals with persons in the private sector.

But a start must be made. Because, we can't see growth and be better in all overall performance, regardless of the tax regime and regardless of the deficit spending for growth, if Bahamians aren't given a fair shake off of the rip and the inconsistency of our regulators and their administration of these antiquated regulations are a part of the big government problem. Big government equals small private sector.

All in all, we see signs of slight improvement. Even if only through blatant acknowledgement by the minister of finance and prime minister of the understanding of the new world order we live in, one can only look forward with optimism as we work together for a better and more progressive budget year and economy.

Saturday, February 7, 2015

The never ending drama in Grand Bahama!

If you talk to any resident of Grand Bahama, they would tell you that they hate the government and their constant interference in Freeport and particularly with the Grand Bahama Port Authority (GBPA). But, walk away, and come back within 10 minutes, those same people will also tell you that they hate the GBPA and wish that the government would come in and stop them from being so mean and arbitrary to the residents and businesses of Freeport.

I was unclear of all of the issues as it relates to all of the cause for all of this vituperation coming from both sides of the argument, so I did the best thing one can do these days: I took the question to social media, and the returns were very interesting to say the very least. Refreshing and enlightening, while at the same time leaving me a little curious as to why some people decide to talk in codes and riddles about what ails them and the troubles they face with the government, Freeport, Grand Bahama and the GBPA nexus?

Well, the primary takeaway I had from those exchanges was that you just can't have your cake and eat it too. The other sad thing is that by the way the relationship between the residents, GBPA and the central government have evolved over the years, there is no easy solution to the madness as a lot of emotions are wrapped up in this, as well as a lot of distrust along with an overall lack of agreement on the direction Grand Bahama should take with the government and GBPA in addition to a lack of vision on the matter entirely.
One thing everyone can agree on is that calling it "quits" on the entire  GBPA project would do more harm than good. Because, it would not only show minor failure with regard to displaying that The Bahamas can't deliver on another development success story outside of New Providence. But, more importantly, a gigantic failure on the matter of the execution of a concept that has worked so well in other jurisdictions: i.e., the concept of a "Free-Trade-Zone".

Secondly, the government has little or no rights to involve themselves in the administration of the Freeport area until it is contractually obliged to do so, and every time that they do outside of the agreed upon term limit for the general Hawksbill Creek Agreement along with the subordinate and supporting agreements, as local Grand Bahamian lawyer and Queens Counsel Fred Smith always points out, the government loses the court battle. Yes, the government has never won not one single court battle against the GBPA. Not one! Not even close to winning one. Sad, but true.

Thirdly, it's clear that the GBPA Free-Trade-Zone has not worked out for the benefit of all and sundry. With massive unemployment in Grand Bahama with the rate over 18% as outlined in the last labour survey, in addition to businesses, from 2008, having steadily and surely shut their doors for good amidst cries of high-energy and electricity costs in addition to a weakening in consumer demand brought on by high unemployment, you don't need to be The Amazing Kreskin to understand how unfortunate the situation has become. 

As you can clearly see, this is what folks would call a huge boondoggle, to put it mildly. It all looks so useless, and on top of that such a tremendous waste of resources and human capital, to be brutally honest about it.

This kerfuffle, quite sadly, seems to have no end in sight. As we have been led to understand the extensions for the GBPA go into the year 2054, but only with the real property tax exemptions set for renegotiation in this year, 2015.

So, apparently, we are set for a "Showdown" at 2015 High with the central government folks on one side, and the pro-Freeport people on the other. High drama, indeed.

But, just to add my two cents based off of the exchanges I had, and not exclusively most recently about the problem in Freeport, having heard- and in some respects, not heard- a lot of other issues and concerns, I have come to understand and have taken into consideration four sticking points with regard to this affair:

  1. The now resolved dispute over the ownership of the GBPA still frightens persons, particularly that it may flare up again.
  2. The 2015 exemptions renegotiation process and possible sunset of said exemptions.
  3. The application of clear and transparent fee schedule and licensing for businesses
  4. Central government inaction with regard to even assisting in resolving all major and minor matters.
Perhaps someone from the outside with no emotional ties or sentiments towards the matter other than wanting to see it successfully working for the benefit of the entire Bahamas is what is needed.

The first thing is that the good news about this entire affair is that the GBPA shareholder dispute is over, for now. Apparently the "owners" were at odds for a brief period that ended up in logjam for quite some time, particularly families of the late Edward St. George and the recently deceased Sir Jack Hayward, but it has been settled and both sides have agreed to maintain the 50/50 equal split of the GBPA's ownership, with the government having a 7.5% share out of it all.

The second thing is that in, 2015 the real property tax exemptions are set for renegotiation. As the agreement stipulates, Freeport GBPA licensees are exempt from paying real property taxes to the central government. The national real property tax law mandates that real property taxes be exempt for properties valued under 250k; properties between 250k to 500k, 3/4 of one percent of the total value must be paid; between 500k and 5 million is 1% of the value; and any property over 5 million, one quarter of one percent the total value of the property must be paid as it is valued by the government.

I see no reason, considering that the price of property in Freeport is considerably less than that of New Providence, where in Freeport an acre of prime real estate on a Marina or Waterfront costs under $1 million dollars, compared to property of the same type locale in New Providence can fetch well into the multi-millions of dollars. So this should not be a critical issue seeing that real property taxes are as low as they are generally, and also considering if that you have the money to buy a property valued at over 250k, then you most likely should have the money to maintain it and pay taxes when most all else is waived. This is only fair.

Of course, renegotiating this exemption is not my call to make, but it wouldn't be unfair or damaging if it is allowed to sunset, all things considered with the current state of immobility in Freeport. The impact just seems negligible.

The third thing, and this is what I had to pry out of and talk to people on directly about the management of the GBPA, is that the rates and fees for licenses seem to be more than a little murky. They seem arbitrary, to put it very mildly. This was detailed to a great extent in the Grand Bahama Chamber of Commerce's Vision 2015 Paper that it presented to the government on their matters about Freeport and Grand Bahama development.

Some license fees are somewhat high, considering the lack of economic growth in Freeport in recent times, and particularly if we are talking about stimulating Freeport and Grand Bahama again.

But also, some license fees are set at a rate "to be determined". This lends itself to the idea that the rates are being set by the whim and fancy of someone, or some group of persons, feeling that one particular investor should be charged this amount for a particular enterprise, and another can be charged a totally separate rate for the same type of enterprise, with none of those rates set in stone with regard to the regularity of a particular set schedule they must adhere to or contractually agreed to.

So as it appears, if the GBPA doesn't like you today, for whatever reason, they can simply price you out of the market or revoke your license without nothing much an investor or licensee can do about it. That in itself is the largest investment risk to Freeport, and far outweighs, in my estimation, anything the government can do, has done but failed, or threatened to do with regard to any imposition of greater control and tax collections from the GBPA and Freeport.

With all of this into consideration, even when we factor in a minor issue with regard to the GBPA wanting greater control of their immigration and the skilled migrant worker program, with immigration being a national hot button issue right as this article is being penned, and a demand which seems more of a pipe dream by those pro-GBPA than it is closer to any sort of reality, government inaction on the proper sticking points throughout this entire debacle has been much of a problem as is everything else.

However, there is very little that the government can do based on all of the prevailing factors if the government wants to be seen as a democratic, free market friendly government- even though fair, clear and standard free market principles are not being adhered to in the GBPA as it relates to the arbitrary license fee schedule.

More importantly,  it's not as if the government has had success with regard to imposing their will on the GBPA at all, in any event. Also, it's probably not within the best interest, nationally, for the government to make Freeport into just another Family Island centre that has all of the issues that come along with either the capital in New Providence or, at worst, the problems of being a Family Island.

In my humble estimation, most of the major problems and the exacerbation of such within Freeport and the GBPA are self inflicted. Skilled migrant control issues notwithstanding, there has been nothing the government has done or can do for the GBPA in its current form and present state. Sad, but true.

This very unfortunate situation is like watching your little brother that was supposed to be bigger and better than you were in any and all respects, just destroy himself  and his potential off of sex, drugs, alcohol along with crude and unusual forms of self mutilation. You can't "stop" him from doing what he wants with his life. You can only offer occasional help from time to time and ensure that his problems do not become more of your problems.

Most persons that wish to complain would like to think that the central government is the problem in Freeport, but the truth is a lot more serious and real than is the perceived boogeymen sitting up in their Bay Street offices just looking for every which way to stick it to Freeport.

Alas, and as it may frighten some, but one day, and one day before 2054, the government will have to step in with the GBPA to ensure fairness and equity for all involved and those wishing to be involved in the success of Freeport.

As the government assisted back in, 1955 with the signing of the Hawksbill Creek Agreement which allowed for the establishment of the GBPA, so too will they have to be involved with the restructuring of the GBPA and the Hawksbill Creek Agreement in plotting a better and more clearer direction for Freeport.

It is simply just that with all of the options out there, but with the present mechanisms, management and wilful acceptance of the current arrangement by pro-GBPA affiliates as it stands, there is little else that can be done by government or anyone else for that matter. Which means a continuation of the woeful status quo, but that's just the way it will have to be.

Saturday, January 31, 2015

American changes on Cuba: Bad news or good news?

President Barack Obama has just now opened up channels for future dialogue with the Communist Republic of Cuba. Most people should have a cursory understanding of the Cuban/American diplomatic, political and economic standoff by now. But as tensions cool now to a new generation of understanding and tolerance of Cuba/America relations, certain issues have come to light with the possibility and seeming eventuality of opening the doors for Americans into Cuba.

Former President of Cuba, Comrade Fidel Castro, has been ill for the past few years. His brother, President Raul Castro, has assumed responsibility for the country's administration. This initially had signalled a small shift in thinking on Cuba's communist and anti-Western ideology espoused and kept current by Fidel Castro.

Fidel's brother, Raul Castro, is certainly not Fidel and apparently is not as hard and fast on having further prolonging this unequal, wasteful and nonsensical standoff with the Western-Hemisphere's largest economic block and the world's largest military super-power, the United States of America.

How does all of this go over with Cuban migrants that were affected by Fidel Castro's policies is something very important. In fact, oddly enough, the reaction of South Floridians has been tame. Too tame. The man responsible for them leaving their homeland in search of freedom, and in most certainty the man responsible for taking their wealth and power within Cuba post revolution, is being given leeway by America through his younger brother as the current president of Cuba.

This means one thing: The old guard of Cuban migrants in South Florida have either died out, or are simply coming to the understanding that the American blockade on Cuba has worked to the disadvantage of all persons involved intimately in this.

While living in South Florida, I had a chance to take a Latin-American politics class. As per the norm, the class was primarily filled with Cuban-Americans. The good thing about this was that younger Cuban-Americans, while they were aware of Castro and the Revolution and the pain and displacement it caused their friends and family members, were not as hard pressed on Fidel Castro or the Castro regime to any large extent. This was refreshing.

So, as we see things changing, the time is apparently "ripe" for an opening of US and Cuban relations. We wish the parties all the best as the embargo, quite frankly, has done more to harm Cubans living in Cuba than it did the Castro regime.

However, Cuba opening up, particularly for tourism based economies like The Bahamas, has caused some fears and anxiety. Anxiety particularly as it relates to Cuba, being a beautiful and culturally historic country that would be "new" and virgin tourism product for Americans, and especially North Eastern seaboard American tourists.

Just to give a little bit of information on the top visited destinations in the region, The Bahamas, as reported by Travellers Digest, is the fifth most visited destination in the Caribbean with about 1.3 million visitors a year, behind Jamaica with nearly 2 million and Cuba with 2.6 million in the fourth and fifth slots respectively. The Dominican Republic is in the top spot with just over 4.25 million visitors and Puerto Rico in the number two spot with roughly 3 million visitors.

The Bahamas is not even in the top spot, with Cuba having doubled the amount of tourists a year than does The Bahamas. The question to be asked now is how much more of a gain will Cuba make with regard to more tourist arrivals and how will it impact the persons looking to travel and them changing their travel plans to go to Cuba instead? We honestly won't know until it happens, but the option is on the table for that to occur.

What's shocking to note is that the top three destinations on the list are non-English speaking countries. What's also shocking is that the largest English speaking economy, Trinidad, is not even in the top ten. Also, the further you go Southward, tourist arrival figures start to trend downwards for English speaking countries.

What all of this suggests is that we have problems with tourism, right here and now even before Cuba fully opens up to Americans.

What it also suggests is that Cuba has made it quite fine with a mixture of tourists that are not American, as most of their visitors are Canadian and Mexican. While Mexicans obviously speak Spanish, the Mexican economy must be very strong and support a strong middle and upper-middle class, at the very least. It is those middle and upper middle class people that like to take vacations to get away from the hum-drum of life and in the numbers needed for a country depending on tourism as their main economic engine.

While The Bahamas, at least, should be concerned about, roughly, 250 to 350 thousand (or thereabouts) prospective tourists changing their itinerary from The Bahamas to Cuba, the point of the matter is what should we do to get more tourists to our shores right now as we type?

I'm no tourism specialist. However, anything over 250 thousand visitors deciding not to come to The Bahamas on any given year would most likely spell serious consequences.

With all of that being said, as we wrote earlier about the inconsequence of the Sir Stafford Sands economic model at length, and particularly as it relates to the need for other economic engines for The Bahamas, what should happen now is more of a focus on other industries in addition to capturing some of the Canadian, Latin American and European tourists along with Asian tourists.

Of course, money is always an issue. Money as it relates to tourism marketing expenditure, facilities upgrades and maintenance with regard to increased air-lift support and activity/venues for tourists when they come on shore, but we should not shy away from the challenge and shrink at the mere thought of doing something different and doing what we do better.

All in all, I for one welcome the shift in American foreign policy towards the end of the embargo on Cuba. It was long over due. In fact, it was something that should have been done 20 years ago, and particularly after it was seen that the Communist ideology was clearly and resoundingly defeated, the Soviet Union will never be again and that Cuba was no more of a military threat to America as is any other Caribbean nation a non threat.

In advance, we want to wish our friends in Cuba, Buena suerte, con mucho amor!

Saturday, January 24, 2015

Sex, lies and videotape: Going viral and the consequences!

I typically don't make a habit of posting social commentary unless it has something of value that I can spin off of from a social study or into one. Particularly when Rome is burning, commenting on the lack of water for the plants seems to be inconsequential and putting other more substantive matters on the backburner seems unprofitable. But, this is one of those rare occasions where it seems as if, in this case, our young flowers are being put on display via the internet in any manner of sexually explicit, violent and morally corrupt situations.

A few days ago I was made aware through social media that the sexual prowess of a police officer of the Royal Bahamas Police Force, Constable Edmund Lewis Jr., was on display as he filmed a threesome, apparently unbeknownst to the other participants. This police officer also has several other videos of his sex-romps, and one reportedly with an under-aged girl. Officer Lewis has since been arrested and is now currently on remand until March, 2015 when his case is expected to be heard. He was also fired from the police force. Quite an unfortunate situation for all of those involved.

At first thought, one would think that it was an isolated incident of one particular sex-romp and that the contents were stolen from the owner, and somehow it got into the hands of someone that was more than willing to share this private moment with as many persons as possible. But, as we are now led to understand by the charges levied against officer Lewis, he apparently has several videotapes of his sexual exploits with various women, one of them alleged to have been under-aged at the time.

As it turned out, the female participants were extremely angry. To such an extent that there surfaced yet again another video, this time recorded from a cell phone, of one of the female participants and a few of her friends and family members beating the living daylights out of Lewis for filming her with out her knowledge and then sharing it with friends. Of course, this too is a crime. Crimes ranging from assault, kidnapping and perhaps attempted murder if we want to really be harsh.

You see? This is how far it has gotten with the introduction the world wide web. Of course, this phenomenon isn't something brand-new and most certainly something that was going on around the developed countries in large numbers from the early 2000's, particularly with the introduction of social media websites like MySpace and Hi-5. However, it has gotten even more wild and voluminous with the advent of Facebook, Twitter and now Instagram and Whatsapp. Yes, what you do and say can go around the globe 100 times in 10 minutes with just a click of a button.

But, to what extent do we understand that this new form of media and ways to connect with people should be used with responsibility? To what extent to we tell people that we need to understand the value of using social media, and the double edged sword that it is in many respects?

So, as we have seen current, and I am most certain have seen countless other incidences, people going well and beyond the call of duty to share their most private moments with people. People that may or may not have their best interest at heart, but in these incidences, people that surely have no issue with sharing your private moments for their benefit if they have the chance.

But, the issue of social media sharing in such negative ways does not end there. In fact, one can also be a victim without being a participant at all, but by just being there for someone to harass and be privy to things you wish not to be privy to.

I too was a victim of a exhibitionist. A male, who represented himself to me as a Bahamian living abroad, added me as a friend to my Facebook account a few months back. He claimed to have read my articles via the various on-line media sources like the Caribbean News Now, The Bahamas Weekly and the Nassau Guardian.

What then started as innocent chatter between countrymen from the Bahamas but living in separate countries, and for him someone that was living abroad and that claimed to want first hand information of what was going on on the ground, shockingly and without warning ended with him sharing with me a picture of his genitals.

Of course, I went ballistic! Not for the fact that he may be homosexual, or an unashamed voyeur, at the very least, looking to get his rocks off on the shock and awe of his invasion into my inbox with his penis pictures. But it was for the mere fact that he would do something like that, with no warning, and with no solicitation and just would up and send a picture of his private parts to a total stranger. A strange man that he was not sure of who I really was, if I was someone that would appreciate that, or just someone that would take that and make a public spectacle out of it and him, and at the very least share it with the authorities and report it as a case of assault.

In my moment of anger, I did something rash: I shared the picture with his name attached for the world to see. I exposed him, reported the picture and his profile to Facebook and then proceeded to exact my revenge for this invasion of my privacy and conscience.

As you can imagine, the issue of me sharing and exposing the pervert caused some stir. I got it from all sides, from ridicule, to shock, to persons asking me what did I do or say that caused him to want to share his penis picture with me? I assured them that I did nothing aside from talk about the issues in The Bahamas and Caribbean, and from that it may have given him the courage in his deepest and most erogenous spots to do what it is that he did. (Now I know how rape victims feel when no one believes them, or when folks say that it was "their" fault for the rape in some way, shape or form.)

But, as with my moment of anger, who is to say what went through the minds of the persons that share private and sexual videos, and that these expositions don't have a twinge of anger at the root of it all? Or, even worst: A moment of jealousy where you sought to tear down the image of another?

Of course, all three cases are totally separate, but they share the same common thread: In the days of social media, be careful what you share and who you share it with and make it a matter of a priority that you discern this. 

General rules of thumb must be observed:
  1. Do not take off your clothes for anyone other than your committed lover or spouse for anything else other than it being for commercial use, especially for it to be transmitted live via the internet. In some places pornography and the proliferation of pornography is illegal, but there is some leeway for tasteful nudity and shared private art between friends and colleagues.
  2. Do not share "all" of even any of your personal data and/or information on social media unless it is something innocuous or standardized like pictures of your family, your spouse or the schools you have attended and professional affiliations.
  3. Sending lewd or suggestive pictures via your cellular phone, especially one that bears your face or something that can be traced back to you personally, or racy texts to people without their asking, or without them knowing you personally can also lead you into serious trouble.
  4. Filming a crime in progress, especially when you are the perpetrator, is a crime within itself on top of the crime you are committing. Also, withholding evidence from the authorities is also a criminal act and one can face time in prison.
The overarching theme and message here is that you don't know who's out there, what type of security they have on their side of the transmission or how they truly feel about you now, and what they may feel about you in the future.

Secondly, and almost as important as the former, be mindful of what it is you are doing out here in the first place: Be mindful of the laws in place, in particular when you feel something isn't right, or at the very least makes you uncomfortable knowing what you are doing is taboo, socially awkward or just plain wrong!

Be safe. Be smart. Use this wonderful tool of social media wisely. It can be used for our benefit if used properly. But some discretion and common sense must be practiced.

Saturday, January 17, 2015

The oil is falling, the oil is falling!

Oil prices are dropping dramatically. Something that consumers have been waiting on: Lower prices at the pump in addition to lower energy costs.

But, the recent drop in oil prices has been met with fears and concerns by financial and economic pundits, crying that the end is near and the world is on the brink of another economic collapse as a result.

Some have argued that drops in oil prices causes economic collapse. There may be some merit in that to a certain extent, but only because of the matter that economic turbulence had already started, which prompted analysts to move into a position of sifting through historical clues and evidence to see where these problems first occurred.

To the average person on the street that just wants cheaper gas at the pumps, these concerns seems somewhat strange that persons would be scared to death over falling oil prices in addition to the average consumer not giving much of a care on how it started. But, under closer examinations, some fears may be warranted, and more importantly, who will lower oil prices negatively effect?

Let's take a look at historic oil prices, provided by the good people at As of today, oil is down to under $50 per barrel. This is a stark difference from it's peak of over $135 back in May, 2008.

What happened, you ask? Well, several things happened. Some may say unfortunately, some may say fortunately. But happened things did.

For starters, the Organization of the Petroleum Exporting Countries (OPEC) was knowingly over producing for quite some time. In fact, they have no intention of cutting production anytime soon either as the cartel said in a statement at the end of November, 2014 that members had agreed to roll over the ceiling of 30 million barrels per day, at least 1 million above OPEC's own estimates of demand for its oil next year, 2015.

Part of the reason for the over-production was because China's economy was red hot and needed more oil to fuel that economy. While it could be said that China needed a significant amount of oil to maintain growth, the effect was that other larger economies started to change their oil-security policies and practices; i.e., hoarding oil supplies, increasing domestic supplies and reserves and as an extension, financial markets capitalized by increasing the futures' margin month-on-month end.

videoSecondly, the futures market for oil, and the "irrational exuberance" around oil-spot-prices, made it problematic in predicting what the true price of oil would be. The market was trading oil at about 30% higher than what some analysts comfortably estimated it should have been at any given point and time in recent history prior to the sudden drops.

The reason why no one said anything with regard to the astronomical cost of fuel was because they had a plausible excuse in China, and also because it was profitable to keep oil prices artificially high and rising.

As a consequence, the financial markets, via investment banks, just kept adding additional trading fees and raising the futures' prices based on their own reasoning of what oil prices should be, while selling the public a distorted view of what oil prices were, which was not based on what the actual demand for global production truly called for.

This has caused a significant problem, because oil producing countries, particularly vulnerable oil producing countries like Trinidad, Venezuela, the Ukraine and to some extent Russia, had budget forecasts based on a $100 (USD) and higher oil price. That has obviously changed, as Venezuela has been selling oil way below their breakeven point and are now faced with serious decisions on what their fiscal year may look like.

Thirdly, and most importantly, US President Barack Obama has made tremendous strides in picking the US economy back up off of the ground from the 2008 recession, and has not only increased domestic jobs, but has also increased manufacturing by significant margins over the course of the last 2 years.

US manufacturing grew by over 4% in 2014, and is showing immediate no signs of slowing up in 2015. Thanks to president Obama and his policies on increasing manufacturing jobs in America by reducing tax-cuts to companies that offshore jobs, in addition to enhancing the enabling environments for manufacturing plants and entrepreneurs by first creating a steering committee in 2011 called the "Advanced Manufacturing Partnership 2.0", his administration has worked diligently with regard to boosting production in America and the fruits are telling.

Of course, these manufacturing increases may be blips on the radar screen if not seen in the global perspective. But as we have seen China cut back tremendously on manufacturing growth, and is projected to cut by another 1% in 2015, cut domestic spending in addition to reigning in some of their expansion projects inland, US manufacturing may possibly continue to rise in 2015 if things remain constant.

With respect to oil prices, what it additionally means is that as manufacturing shifts back to the USA from China, greater efficiencies in technological practices should be taken into consideration in the USA that the Chinese simply do not have.

Contextually, while US manufacturing had a modest rebound in 2014, it is no where near back to pre-2000 levels when since that time, up to now, over 1 million manufacturing jobs were lost. This lends to the notion that US manufacturing may be on a continual rise based on increased technological advances that China must now try to keep pace with, which may take 3 to 5 years to truly be on par, job for job.

All of this coinciding with an increase in domestic oil production in the USA, coupled with even a modest decline in US oil consumption, we are probably going to experience relatively low oil prices in the near to medium term at the very least in 2015 if all things remain constant.

So, here we have it: Oil prices at a considerable low, the average consumer is seeing cheaper gasoline at the pump, but with small and vulnerable oil producing countries in fear, coupled with market jitters as a result of the shift and modest decrease in oil demand which has significantly affected market valuations on the price of oil globally, we have what we have today and may be sustained well into the middle of 2015 barring some catastrophic event or human action.

Who's problem is it and should we all be worried? You tell me and you make the call!