Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646482222.pdf (Bahamas)
CONTRIBUTION BY SENATOR, THE HONOURABLE CARL W. BETHEL QC ATTORNEY-GENERAL AND MINISTER OF LEGAL AFFAIRS ON THE COMMERCIAL ENTERPRISES BILL, 2017 IN THE SENATE MONDAY 4TH DECEMBER, 2017 1 Madam President I stand to move for the Second Reading and Committal of the Commercial Enterprises Bill, 2017.

As I do so I must observe that the debate in social circles has in my view been reduced to an exercise in race baiting and the stirring up of xenophobic irrational fears by Opposition elements.
Snide comments, such as the labelling of the Bill as “Brent’s Bill”, an obvious reference to the Minister of Immigration and former Deputy Prime Minister Brent Symonette are erroneous, inaccurate, harmful and redolent of vicious race-baiting.

The fact that Minister Symonette is the son of the Premier of the last Minority Government of this country is not a circumstance that was in his control.
Through his adult life Minister Symonette has shown a commitment to public service and the advancement of the Bahamian People which is to be commended.

In his business and professional life, his many investments and support for national objectives, Minister Symonette has always shown first and foremost a love for this country and its many and diverse peoples.
Similarly, the scaremongering by the Leader of the Opposition and his threat to potential investors and Bahamians who might take advantage of the provisions of this Bill, once enacted, is to be equally deplored.

Both of these responses are tired old PLP tactics, used in response to any meaningful FNM initiative.

There was the obvious race-baiting of airing the “Roots” mini-series the week before several general elections during the 1980s.

We well remember PLP elections slogans such as “no Turning Back”.
We need only remember the naked threat by Paul Adderley to Sol Kerzner in 1993, alleged by him to have been done with the full consent and participation of the then leadership of that Party.

We remember the PLP threat to repeal the Sunday shopping Laws; the PLP threats to repeal the international Persons Landholdings 2 Act; and the PLP threats to repeal the 2000 Laws which reformed the Bahamas’ Financial Sector.

In each of these instances they were empty threats.
In each case the PLP, when elected with its usual appeals to race and xenophobia, immediately abandoned any pretence of opposition to the FNM Laws, and warmly embraced every one of them.

I urge Bahamians to remember the sordid past of the PLP, and their abandonment of the principles they so often advanced while in opposition.
In a few weeks, and before the Christmas holidays, this government will take a bold step to carry out a campaign promise to repeal and replace the destructive and harmful so-called Grand Bahama (Port Area) Investment Incentives Act; an Act which is probably the worst and most ineffective Law ever passed by a Parliament in an independent Bahamas.
An Act which was still-born at birth; had to be immediately amended, and whose provisions requiring applications for tax exemptions by ordinary business licencees in Freeport had to be delayed every six months from the time the Act was brought into force to this present time.

OVERVIEW OF THE BILL The Commercial Enterprises Bill is intended to address the decline evidenced in the Financial Services Sector of our economy over the past 20 years.
As the world’s attention, through the OECD, has fastened on the prevention of the abuse of the financial sector by money launderers and terrorist financing, coupled with the open assault upon Bank secrecy itself by the European Union (with the tacit support of the USA), and the stand alone FATCA Law of the US, there has been a consequential loss of Banks offering the staple business which has for so many decades comprised our financial sector, namely Private 3 Banking.
It is an unfortunate reality that much of private banking appears to have been very sensitive to tax scrutiny.

With increased demands for tax transparency, there has been consequential loss of such business.

Hundreds of good paying jobs have been lost as private banks have either closed or been relocated to their home jurisdictions.
The losses have resulted in a harsh reality, namely that the contribution of financial services to our Gross Domestic Product, in the form or salaries, buildings, rentals, taxes and so forth, has fallen from roughly 20% of GDP to mere 3% of GDP.

The jobs lost have disproportionately affected single women, mothers, in formerly high paying jobs, who have been thrown onto the unemployment lines.
Let me take a few moments to speak to the vital importance of the financial services sector to our economy and the well-being of every Bahamian.

If we simply listen to the “noise in the market” we would simply dismiss it as a bunch of foreign bankers who don’t really add anything to the economy; who bring in a lot of other foreigners who do jobs that Bahamians can do.

Lets look at it.

This is a false and self-serving fallacy.

Firstly no Bahamians have set up any off-shore Banks.
Secondly, the jobs, in the absence of any Bahamian off-shore banks are dependent on the investments of foreigners.

What these jobs do is provide valuable foreign currency inflows to the Bahamian economy.

The business is conducted in foreign currencies.

The profits earned are used to pay salaries, rent office space and rent or buy dwelling homes.

These profits in foreign currency, when used to pay salaries, pay for rentals or purchases are converted to Bahamian Dollars.
This conversion means that that foreign currency is added to the foreign exchange reserves of the Central Bank, which means that the dollar for dollar peg between 4 the Bahamian Dollar and the US Dollar is strengthened and preserved.

This inflow of foreign currency maintains the quality of life of every Bahamian.
It means that whenever you go to the bank to convert Bahamian Dollars to US Dollars, or when the importer does so to buy the food and goods that we buy in Supervalue or Kelly’s, the Bahamian Dollar is on par with the US Dollar; so all you have to pay are the foreign currency conversion fees.

That is why the financial services sector is so vitally important.

All salaries, rentals and purchases are converted from Bahamian Dollars to US Dollars.
These US Dollars sold by off-shore banks to commercial Bahamian banks to pay salaries, etc., end up in the Central Bank of The Bahamas and are added to the foreign currency reserves of the country.

This means that whenever you want to buy foreign currency, for travel or for trading purposes, there is dollar for dollar, and the value of Bahamian currency is preserved and enhanced.
The importance of the financial services sector is that itbprovides not only high paying jobs, but also valuable foreign currency which adds to the Central Bank Reserves, and strengthens the Bahamian Dollar, while avoiding devaluation of our Dollar.

The financial services sector is adapting to the changes and, in many cases, has developed new and diversified service offerings.

However, it is clearly an infinitely smaller sector of the economy.
In an effort to address this loss of business the Commercial Enterprises Bill was conceived as a way to address the loss of traditional business by providing a way to attract new and diversified enterprises to locate, relocate or be established in The Bahamas, particularly in new and emerging businesses which are often at the cutting edge of the new technologies.
Further the Bill was conceived as a way to re-attract those larger, more labour-intensive, non-tax sensitive, financial services 5 which were once to be found in The Bahamas, but which were lost as a result of unfortunate mis-steps or bad policy decisions of former governments.
The most important of these being Captive Insurance, which was invented in The Bahamas, but which was lost to The Bahamas as a mass-employing industry in the early 1970s when the first PLP administration sought to impose taxes and impose regulations without consulting the industry.

The great advantage of Captive Insurance is that it hires a lot of people in other competing jurisdictions and it provides high paying jobs, especially when coupled with its necessary partner, Reinsurance.
Salariesin other jurisdictions in the Caribbean and Bermuda can start as high as $60,000.00 a year.

The other business which was lost to The Bahamas is the business of Maritime Brokerage, an incident of Maritime Trade.

Maritime Brokers match empty boats with ports full of Containers waiting to be shipped.

The margins earned by Maritime brokers can reach millions of dollars in some transactions.

Bahamians are involved in this business now, but abroad, NOT in The Bahamas.
We would dearly love to see those Bahamians return home to set up brokerage firms and to conduct such businesses here in The Bahamas, where hundreds more Bahamians could conceivably participate, gain jobs, learn the trade, and start new businesses.
Additionally, the Bill provides a List of targeted business enterprises, some of which relate directly to traditional businesses such as Captive insurance, assembly of manufactured goods and Brokerage; but the majority of which aim at new and emerging technology-based businesses which are largely conducted using Computers and the Internet.

These business, such as biometrics and analytics are NOT capital intensive.
They are technology intensive, requiring only powerful computing capacity equipment and a reliable Internet 6 connection.

For such Internet-based enterprises the reality is that The Bahamas has a distinct competitive advantage.

We have the best, strongest and most reliable communications and Internet infrastructure of any country anywhere in the Caribbean Region.
The investments made by successive governments in laying fibre-optic cables linking all major islands and linking the country to the US and Haiti, place The Bahamas in the best position to grab centre stage in new and emerging Internet based businesses.

We are, as they say when playing checkers, “on the Bull-run”.

We can, if we try, really take advantage of our tremendous strength in communications and Internet bandwidth capacity to attract more Internet-based businesses.
And Bahamians can have the opportunities to receive training and capacity-building in these new and emerging businesses and industries.
[Read the List of Businesses set forth in the Schedule] Members opposite may well oppose based on their notions of how the Bahamianization policy worked, but I respectfully assert that this Bill is in full accord with the Bahamianization Policy: which policy has ALWAYS been subject to and acknowledging of the economic necessity of allowing businesses which perform services for which Bahamians were un-trained to locate in The Bahamas, obtain work permits, and also train Bahamians so that, over time, Bahamians came to have greater roles even at the highest levels of senior management.
The clearest example of this is the insurance sector, which originally was foreign owned and run and which, now, is almost totally Bahamian owned and managed.

Not just the business of being insurance brokers and agents (where Bahamians traditionally predominated), now there are even Bahamian Insurance Companies, owned, managed and run by Bahamians.

7 The National Economic Policy which is currently in force clearly states those areas of the economy that are reserved exclusively for Bahamian participation.
They are:  Wholesale and Retail Operations.

 Commission agencies engaged in the import/export trade.

 Real estate and domestic property management agencies.

 Domestic newspapers and magazine publications.

 Domestic advertising and public relations firms.

 Security services.

 Domestic distribution of building supplies.

 Construction companies, except for special structures for which international expertise is required.

 Personal cosmetic/beauty establishments.


 Shallow water scale-fish, crustacean, mollusks and sponge-fishing operations.

 Auto and appliance service operations.

 Public transportation inclusive of locally solicited charter boat tours.

 Landscaping.

No one, none, of these businesses are touched by the Commercial Enterprises Bill!!
The National Economic Policy published by BIA also lists “areas targeted for foreign investors”, as follows: “What are the investment areas targeted for Foreign Investors?
a) Touristic resorts b) Upscale condominium, timeshare and second home development; 8 c) Marinas; d) Information / data processing; e) Assembly industries; f) High-tech services; g) Ship registration, repair and other ship services h) Light manufacturing for export; i) Agro-industries; j) Food processing; k) Mari culture l) Banking and other financial services; m) Captive Insurance; n) Aircraft services; o) Pharmaceutical manufacture; p) Offshore medical centres; q) Wholesale distribution of any product produced locally” The Bill, once carefully analyzed will be clearly seen, devoid of political posturing, to be entirely consistent with the existing National Investment Policy and the Bahamianizatian policy!
In fact most of the commercial enterprises listed in this Bill are already specifically listed as being areas targeted for foreign investment.

The fact that The Bahamas, despite having created and published this list decades ago, has been less than successful in attracting more of these businesses, such as Captive Insurance and “high tech services” indicates that something is missing.
This Bill seeks, in that aspect referring to non-Bahamian proposed investors, to address some of the rigidities which might have negatively impacted our ability to attract new, diversified and meaningful investments such as those we have long ago proclaimed to be open to foreign investments.

9 WHO MAY ESTABLISH A COMMERCIAL ENTERPRISE?


Section 3 of the Act as originally drafted plainly states that “any person” might apply to establish a specified commercial enterprise in The Bahamas (and, accordingly to set that enterprise up in a special economic zone and to receive tax exemptions and incentives to assist in starting the enterprise).

ANY PERSON.

Any person means and was always intended to include Bahamians; if only because Bahamians too are persons.
Section 3 NEVER said “any foreign person” it said and says today “ANY PERSON”.

The Bill always envisaged that Bahamians fit into the designation of “any person” just as much as non-Bahamians.
The point was that the application to The Bahamas Investment Board was, and remains necessary, whenever it is proposed whether by a Bahamian or a non- Bahamian to import foreign skilled or technical workers, and to obtain work permits for themso that they can work in a business which receives business incentives or tax exemptions.
The point was to provide an accelerated means by which these businesses could get off the ground quickly and efficiently, whether they are Bahamian owned or foreign inward investments.
In order to clarify the intention of the government, an amendment was moved and passed in the House of Assembly which in Section 4 (a) makes it more than abundantly clear that a Bahamian may apply to establish a specified commercial enterprise, and to receive all the benefits tax or other incentives that a non-Bahamian might also obtain under the same Act of Parliament.

Now, a Bahamian is expressly allowed to apply, with no need to commit to spending any amount of money up-front.
Further, if a non-Bahamian forms a joint venture or partnership with a Bahamian their Firm might apply and receive the same benefits without any up-front Capital commitment.

10 It is only where a non-Bahamian makes a solo investment, without any Bahamian equity participation, that the up-front Capital requirement of $250,000.00 kicks in.

Some critics has called such a “low” initial capital requirement “bottom feeding” or worse, “prostitution”.
The question of why the Capital requirement was set at $250,000.00 is a valid question.

There are several good reasons.

If, as has been suggested the amount should have been at least $500,000 or even $700,000, or perhaps Millions up-front, then in such a case the proposed foreign investor, based on existing National Economic Policies, would be fully entitled, after a commitment of only $500,000.00 to apply for and be granted Permanent Residence.
The existing National Economic Policy of The Bahamas under both the Ingraham and Christie administrations for years has been to grant Permanent Residence based upon a business investment of a mere $500,000.00 in a business.

Based on the criticisms levelled at this Bill, it would seem to me to be the height of “bottom feeding” to go so far as to grant a non-Bahamian who starts a business the right to permanently reside and live in The Bahamas for the rest of his life for as little as $500,000.00.
Here is what the Investment Policy on the Government website proclaims: 11 “Major international investors and owners of residences valued at BS$500,000.00 or more are given accelerated consideration for their annual or permanent residence applications.” [Note that it was the last Ingraham administration that raised the homeownership hurdle (for Economic Residence) to $1.5 million; but the $500,000.00 limit on an investment to start a business which entitles the investor to receive, not just consideration for permanent residence, but “ACCELERATED consideration”, remains at a mere $500,000.00.]
That could sound a lot like long-established ‘bottom feeding’; to give an investor lifetime legal status in the Commonwealth of The Bahamas for a mere $500,000.00 investment.

ThisFNM government did not want the issue of how much the initial Capital investment by a foreigner should be under this Act to get mixed up and tangled up with issues such as Permanent Residency, or Economic Permanent Residency.
All this Bill speaks to is the Capital requirements for a non-Bahamian to start a business, and get Work Permits; not permanent residency!

The second consideration was that most of the businesses listed are Computer and Internet based.

The days of “bricks & mortar” businesses are coming to a sharp and definitive end.

The Amazons and Alibabas of this world have slain major retail outlets such as Toys ‘R Us and Sears.
Even the behemoth Wallmart is feeling the pressure caused by computers, Internet connections and overnight shipping and home delivery.

Apart from the transport aspects, all of these Internet businesses are low density, low labour, and low Capital investments.

They are Technology and Knowledge based businesses.

Hence the Capital requirements, say for brokerage services or an analytics 12 business, are very low.
All that is basically required is some office space, with a few desks or computer stations and skilled staff.

The $250,000 Capital requirement is based upon a realization that we are seeking to attract business enterprises that are not Capital intensive.

In view of the current investment policies of the past several political administrations, all of these criticisms noted above are both unfounded and shortsighted.
THE APPLICATION PROCESS AND SAFEGUARDS FOR BAHAMIANS Under Section 5 of the Bill, application is to be made by both Bahamians and non-Bahamians to the Bahamas Investment Authority if the commercial enterprise is to employ any non-Bahamians to perform any job or function.
Every Application must be “accompanied by a business plan which indicates with specificity the nature of the proposed commercial enterprise, its staffing needs, inclusive of the number of work permits which may be required, and such training and capacity- building opportunities as may be agreed to be afforded to Bahamians in respect of positions staffed by work permit holders.” Thus, the true price of work permits is “training and capacity building opportunities “agreed (between the BIA and the investor) to be afforded to Bahamians “in respect of positions staffed by work permit holders”.
In short for every job held by a work permit holder, a Bahamian must be employed and trained to develop the capacity to replace that work permit holder.
13 By Section 6 of the Bill the BIA, which itself has been said to be prone to long delays in performing its due diligence functions, has been mandated to create a special Commercial Enterprises Facilitation Unit in order to give prompt and responsive consideration to every application to establish a designated enterprise anywhere in The Bahamas, or in any specified economic zone.
Under the provisions of Section 7, in order to obtain a work permit, the individual(s) who are sought to be employed must be either “an executive or manager or individual with specialized knowledge relating to the enterprise”.

Thus, it is not any non-Bahamian who can be employed.

It is only managers or specialists who will qualify.

And Section 7 further provides that the work permits can only be “a specified number of work permits for specified posts”.
So there will not be the granting of any agreed number of ‘blank’ work permit entitlements, to be filled in by some unknown applicants at some later time, as seems to occur very frequently in the hotel industry.
Once there is a specific Agreement between the BIA and the proposed investor, Bahamian or non-Bahamian, as to the number of work permit holders, the nature of the functions of such work permit holders and the number of Bahamians who will be trained for those positions, then a Commercial Enterprise Certificate can be issued.

The certificate will only be valid for a period of one year.
If the investor does not live up to the spirit and intention of the Agreement, the certificate will not be renewed, and any work permit issued pursuant to that Certificate will fall away.

Such work permit holders will have to leave The Bahamas forthwith upon the expiration of the Certificate.
The BIA, which will be a party to a signed contract or Agreement will have the duty to “police” the Agreement, and to see 14 that the same is honoured according to the letter and the spirit of that specific Agreement.

If it is not, then the Certificate will not be renewed after one year.
WORK PERMIT APPLICATION The Certificate allows the investor and the designated employees to enter The Bahamas “freely” meaning essentially that they will receive tourist visas at the airport permitting entrance for a few weeks.

This will allow them to do all things necessary to set up their business, such as finding and renting office space, setting up their offices and finding and renting living accommodations.

They must apply for a Work Permit not later than 30 days after entry.
The usual safeguards including the obtaining of the Labour Certificate that there are no Bahamians registered or capable of performing the functions must still be obtained.

Bahamians who have registered themselves with the Department of Labour as having skills in the area of the proposed investment will obviously be at the front of the line to receive jobs and the specialized training necessary to eventually replace the work permit holder.
Accordingly, I urge all Bahamians who have lost good jobs in the financial services sector to go to the Department of Labour and get registered.

All Immigration due diligence must be performed within 14 working days, meaning in or about three weeks, Mondays to Fridays.
Obviously, the Department of Immigration will itself set up some kind of facilitation unit, in order to move things along within the time period specified for the application to be “determined”, meaning that Immigration should give its answer “yes, no or maybe so” within 14 working days.

15 If there is no such determination, then the work permit will be deemed to have been granted to the Applicant.
This Statutory provision serves to send a clear signal to officials that as a matter of governmental policy there should not be any unnecessary delay in giving full and adequate consideration to a work permit application based on a Commercial Enterprise Certificate.

The first work permit is for a period of three years, and can be renewed for a further period of three years ONLY.

After a total of six years the worker must leave The Bahamas.
Notwithstanding the above, the Director of Immigration retains the power at any time, and despite the Certificate to cancel any work permit at any time on the grounds of public safety, morality or national security.
PROTECTION OF BAHAMIAN PROFESSIONALS Many businesses located in competing jurisdictions say that the greatest disincentive to investing in The Bahamas is the inability for their “in- house” professionals, such as Lawyers or Accountants to practice in The Bahamas, without the approval of professional associations or bodies who jealously protect and guard against foreign professionals.
The intent of the Bill is to permit the employment of such in-house professionals within the ‘four walls of the specific business’.

The definitions clause of the Bill, Clause 2, clearly limits such in-house professionals to working “within the strict confines of the undertakings of that enterprise and not in competition with professionals and advisors in the open marketplace of The Bahamas”.
The Bill, in Section 9 further provides that “Notwithstanding the issuance of the said certificate any specified commercial enterprise 16 and where required its employees shall comply with the terms and conditions set by the relevant regulatory agency or professional regulatory body in The Bahamas.” Thus, it is clear that no non-Bahamian Accountants, Architects, Engineers or Lawyers, among the many regulated professional undertakings in our country, will be allowed to compete outside the confines of the business against Bahamian professionals.
CONCLUSION Madam President, it was said by Albert Einstein that the definition of insanity is doing the same thing in the same manner, while expecting different results.

the National Investment Policies published by For decades The Bahamas has tried to encourage the development of new and diversified businesses within the financial services sector.
The extracts of the government on its website Bahamas.gov.bs clearly shows that virtually every Specified Commercial Enterprises set forth in the Schedule to this Bill is already specifically and expressly targeted for foreign investment.

Yet, our outcomes have been woefully short of expectations when these incentives and policies were devised, crafted and announced.
This Bill is a bold effort to address two critical areas which have hampered business development and investment in The Bahamas, namely to speed up the time for business proposals to receive approvals, and to speed up the times for Immigration approvals or at the very least answers to applications.

The intent is that all of these things should be accomplished in a matter of weeks, rather than months.
17 There remain a host of other inefficiencies particularly affecting the obtaining of a business licence and VAT/TIN registration, and the obtaining of National Insurance registrations.

The government is aggressively looking at all areas where all businesspersons, particularly Bahamian businesses are negatively repetitive applications, providing the same information to a host of different government agencies, and suffering, in respect of each agency, a host of administrative delays.
Amendments to several Laws, some of which might have implications to government revenue collection are being worked through, both with private sector representatives as well as with technical officials in the Ministry of Finance and the Central Bank.
impacted by The government intends in due course to make very important announcements of major initiatives which will be launched to greatly improve the ease of doing business, reduce bureaucratic inefficiencies, and to lighten the burdens for all business persons, from the handyman or road and verges cleaning small contractor to big businesses and major employers in the domestic economy.
This government was elected on a mandate to bring about meaningful and positive changes and improvements in governance and in business development, safety and security.

We take our mandate very seriously, and Bahamians can look forward to improvements leading we hope to the creation of new job, employment and business ownership opportunities.

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