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TUESDAY, OCTOBER 27, 2020
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BRANVILLE MCCARTNEY
Bran: ‘Talk cheap, money buy land’ on ganja sector By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Democratic National Alliance’s (DNA) ex-leader has urged The Bahamas to move “post haste” on developing a medical marijuana and hemp industry, saying: “Talk is cheap and money buy land.” Branville McCartney, who headed the party when it placed the creation of such a sector on its 2017 general election campaign platform, told Tribune Business that The Bahamas needed to move “in the direction of decriminalisation and legalisation” as suggested by the government-appointed Economic Recovery Committee’s (ERC) report. Calling for medical marijuana, in particular, to be a focus, Mr McCartney said its production and export could evolve into a $500m industry for The Bahamas at a time when reviving its economy post-COVID-19 is becoming ever-more critical. “It is an industry that can help our economy tremendously,” he argued. “It has already strengthened into a multi-billion dollar industry in Canada. It’s a natural resource that grows everywhere. It’s a good move but, of course, we want to make sure it’s done in a way that is beneficial to the selling, export and use of it for medicinal purposes. “It’s good for these things to be said, but we need to have it acted on and acted on as soon as possible. I think that if we can act on it quickly we can still catch the boat, or catch the ferry as they say.” Mr McCartney said the DNA’s medical marijuana plans were “looked down upon by other members of the political regime”, including the present government, when they were articulated during the 2017 general election campaign. “I’m certainly glad they’re looking at it now in a positive light,” he added, “but at the end of the day talk is cheap and money buy land. It will be difficult, but I am
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Grand Lucaya sale needs ‘double deal’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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HE Grand Lucayan’s sale will not close until Royal Caribbean and its joint venture partner have sealed the deal for Freeport Harbour, a Cabinet minister disclosed to Tribune Business. Dionisio D’Aguilar, minister of tourism and aviation, confirmed that ITM Group and the cruise line want to seal “the entire transaction at once” to protect their commercial interests and not hand an advantage to either Freeport Harbour Company or the government. “We would obviously like to conclude the entire transaction at the same time,” Mr D’Aguilar told this newspaper. “So, yes, ITM wants to conclude the entire transaction at once. They don’t want to close on one part of the deal and the other part of the deal is still pending.” The minister’s confirmation adds another twist to long-running negotiations
• ITM/Royal Caribbean won’t buy hotel without harbour • Govt lost Hutchison leverage via 20-year tax break • December 10 targeted to close critical $300m deal
THE GRAND LUCAYAN HOTEL
DIONISIO D’AGUILAR that are attempting to get an agreement perceived as vital to Freeport’s economic and tourism revival over the line amid the devastation
inflicted by the COVID-19 pandemic. The ITM Group/Royal Caribbean joint venture, known as Holistica, is understandably reluctant to close the Grand Lucayan’s purchase without first sealing an agreement with Freeport Harbour Company, and its 50 percent shareholder and manager, Hutchison Whampoa. Securing the hotel without the harbour, and the proposed additional cruise berths and water-based adventure theme park,
SOME 75 percent of small Bahamian businesses face a persistent competitive disadvantage because they are up against rivals in an “informal economy” that generates up to 30 percent of Bahamian GDP. An Inter-American Development Bank (IDB) report, accompanying its recent $200m loan to the government, drew on International Monetary Fund (IMF) research to reveal that more than of this nation’s legitimate mediumsized firms face similar challenges from unregulated competitors able to undercut them on price due to tax evasion and other factors. Describing the so-called “underground” or informal economy as one of the key “structural factors affecting the competitiveness of
would hand the advantage to Hutchison. Knowing that ITM/Royal Caribbean will now be desperate to tie down terms for the harbour to complement the Grand Lucayan, Hutchison could seek to alter the deal to its commercial advantage and extract extra concessions from the joint venture. Thus ITM/Royal Caribbean’s interest in sealing both aspects of its $300m project simultaneously. However, sources familiar with developments, speaking on condition of anonymity, argued that the government has done too little to push Freeport Harbour Company and Hutchison to close their end of a complex deal. And Tribune Business can reveal that the government has little negotiating leverage with Hutchison Whampoa
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Rebranded bank targets 40% managed asset rise By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A BAHAMIAN investment bank is targeting up to 40 percent growth for its assets under management by the mid-2020s as it eyes expansion into territories such as Jamaica “over the next year”. Michael Anderson, the former RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business it is poised to act on its ambitions to become a panCaribbean player after it was approved for a banking and securities licence in the Cayman Islands last week. The institution, which has now been renamed RF Bank & Trust more than a year after it completed its management-led buyout from Fidelity Bank (Bahamas) and Royal Bank of Canada, believes the Cayman regulatory approvals represent the final piece in the platform that will provide the
• Former RoyalFidelity eyes Jamaica, T&C • Cayman licence completes uniform product platform • Territory’s US$ offering boost for regional ambitions
MICHAEL ANDERSON springboard for further regional growth. Mr Anderson, in a recent interview, said it now has the ability to “fully market” the RF Bank & Trust name in The Bahamas, Barbados and Cayman Islands - the three markets it currently serves - backed by a consistent product portfolio that offers the exact same menu in all three territories. Sensing opportunities to offer staff pension
management and administration services to Caribbean companies with a presence in multiple territories, he added that Cayman’s open currency system - in contrast to the closed structures in The Bahamas and Barbados - will give RF Bank & Trust the platform to offer US dollar services across multiple jurisdictions. Disclosing that the Bahamian-headquartered institution’s plan was to grow its asset base “by more than ten percent per annum across the three countries”, Mr Anderson acknowledged that achieving such expansion will depend heavily on the pace at which this nation’s economy and those of the region recovery from COVID-19.
‘Informal economy’: 75% of SMES at disadvantage By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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• Undercut by rivals avoiding tax and regulation • More than half of medium firms hit by same trends • Just 0.5% of Bahamas firms using ‘advanced tech’ small-scale private businesses”, the IDB document said this unregulated, untaxed sector was likely to account for “about 20-30 percent of GDP” or economic output in The Bahamas. “The costs and consequences of informality are well known: Unfair competition due to avoidance of social and fiscal obligations, lack of access to credit markets or to public financing, low productivity firms with limited capacities to grow and innovate,” the IDB said. “High business registration costs can generate perverse incentives towards maintaining informality, especially among micro-enterprises. “Currently, the percentage
of firms competing against unregistered or informal firms is 74.6 percent in the small firms’ segment, and 52.6 percent among medium firms. To reduce the level of informality, changes in start-up regulation should also include specific mechanisms to incentivise formalisation through simplified registration.” As for business capacity, the IDB report added: “Bahamian firms face challenges derived from their low use of technology and low capacity for innovation. Bahamian firms experience low complexity - existing industries are not closely connected and face challenges in upgrading products or moving into
more complex parts of the supply chain.” It said there was “insufficient innovative activity”, as only 22 percent of Bahamian companies are involved in innovation that “is more prevalent in the manufacturing sector”, while there is “practically non-existent use of high technology”. The report said just 0.5 percent of Bahamian companies “have adopted advanced technology” such as licensed technologies. “In addition, Bahamian micro, small and mediumsized businesses (MSMEs) lag in the adoption of digital technology, and therefore miss out on the potential
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While the pandemic has deterred many would-be investors, the RF Bank & Trust chief said it has also created “opportunities that come with change, and it’s how you take advantage of it”. He added that the merchant bank’s new name had been “rolled out fairly quietly” from late August/ early September 2020 as it waited to obtain all the necessary regulatory approvals in The Bahamas, Barbados and Cayman so that it could finally achieve a uniform brand and product portfolio. “We finally got this approved late last week,” Mr Anderson told Tribune Business of the Cayman banking and securities investment
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$3.95 Tourism losing $8.5m yearly to plastic pollution By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamian tourism industry is losing up to $8.5m annually to plastic beach pollution, an InterAmerican Development Bank (IDB) report has revealed, undermining the sector’s key attraction. The report, accompanying the multilateral lender’s recent $200m loan to the government, said plastics had been shown to account for more than 90 percent of marine debris on Eleuthera by recent research. “Plastic waste can have negative impacts on tourism, recreational activities, and damage vessels. In The Bahamas, it is estimated that plastic beach pollution could cause up to $8.5m in tourism losses annually,” the IDB said. “In 2010, plastic marine debris accumulation for The Bahamas was estimated between 200 and 533m metric tons. A recent study carried out in Eleuthera Island shows that 93 percent of all marine debris corresponds to plastic. Until 2019, there was no legislation nor regulations in place to manage or ban the use of plastics in The Bahamas.” That refers to the legislation banning plastic bags, with the IDB adding: “Governments can influence manufacturing of products and provisions of services that are less harmful to the environment by including legal and regulatory frameworks that incentivise green solutions. “Until 2019, The Bahamas had no clear legal guidance regarding sustainable procurement practices for micro, small and medium-sized enterprises (MSMEs) for the reduction of the adverse environmental and social impacts of purchased products, nor incentives for suppliers to adopt practices that minimise the negative impacts. “Prior to 2019, the BEST Commission oversaw the approval of Environmental Impact Assessments (EIA) and Environmental Management Plans (EMP), but had no strong mechanisms for their enforcement by, for example, issuing fines or requiring restoration. In addition, the procedures for EIAs needed to be strengthened in terms of providing greater transparency and enhancing consultation measures.”
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