By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday warned to take the US government’s ‘investment climate’ concerns “very seriously”, as they potentially jeopardise this nation’s ability to attract “the best of the best investor class”.

Gowon Bowe, the Bahamas Chamber of Commerce and Employer’s Confederation’s (BCCEC) chairman, said the issues raised by the US State Department’s report - which were repeated for the second consecutive year - should be more than just a ‘concern’ for this nation.

Pointing out that “perception” was vital to attracting foreign direct investment (FDI), Mr Bowe added that the ‘weaknesses’ identified by the US largely matched the areas where the Bahamas had slipped in the World Bank’s ‘ease of doing business’ rankings.

He explained that the Bahamas’ relative insignificance in terms of size, when compared to developed countries’ economies, meant this nation had provide “superior performance” in every respect just to “maintain the status quo” on FDI competitiveness.

Mr Bowe told Tribune Business that the Bahamas thus required a “best of class mindset” if it was to compete with the likes of the US for scarce investment dollars, warning that failing to do so would only attract “bottom feeders” to this nation.

Asked how concerned the Bahamas should be over the criticisms contained in the US State Department report, Mr Bowe said: “It’s wider than that.”

He noted that the weaknesses it identified, such as the lengthy time (average of five years) to resolve civil/commercial court cases; problems in concluding real estate transactions; and “lack of transparency” in the bidding/awarding of government contracts, correlated strongly with the Bahamas’ rankings in the World Bank’s ‘Ease of Doing Business’ report.

The Bahamas’ was ranked “near bottom” by the latter when it came to the cost/ease of closing property transactions, placing it in agreement with the US State Department’s report.

As an island nation with just a 350,000-strong population, Mr Bowe told Tribune Business that the Bahamas constantly had to ‘punch above its weight’ just to remain competitive in the global investment market.

With competition in this area getting ever-fiercer, the BCCEC chairman emphasised that this, together with its relatively small scale, required the Bahamas to perform better than larger nations just to keep pace.

And with perceptions mattering more than reality, Mr Bowe said the credibility of the US State Department as a ‘source’ meant investors were likely to take the contents of its Bahamas report seriously in determining whether to consider this nation as an investment destination.

“There’s certainly an air of trepidation when you talk to the business community about these sorts of findings,” Mr Bowe told Tribune Business.

“We are a small island nation, and therefore often have to have superior performance just to be considered on par.

“When you have perceptions of weakness in these areas, there is no doubt the US has the same weaknesses, but everyone wants to participate in the US economy. Not everyone wants to come here,” he added.

“We certainly have to force ourselves to be the best of the best to maintain the status quo... We have to take these perceptions seriously. These [US] people matter, and have a tremendous impact on attracting the calibre of investors we are seeking.”

Mr Bowe said areas such as the judicial system land registry provided the “very basics necessary” to entice investors to the Bahamas.

He warned that if such weaknesses as those identified by the US report persisted, and worsened, the Bahamas increasingly risked attracting ‘bottom feeders’ eager to exploit regulatory loopholes.

“When you lose the advantage of high rankings [in the World Bank report ] that investors hold dear, you attract the bottom of the barrel,” Mr Bowe said, “bottom feeder investors that feed off weaknesses to make a profit.

“We have to put ourselves in a situation where we can attract the best of the best investor class globally.”

Again urging the Bahamas to prepare for the competitive global economy it now operates in, the BCCEC chairman added: “What I would readily say is that if we are not in a ‘best of class mindset’, we will find ourselves short and vulnerable when it comes to global competitiveness.”

Otherwise, the Bahamas will not be in a position to compete with the world’s largest economies.

As reported by Tribune Business on Monday, the US State Department’s Bahamas investment climate report criticised “cumbersome” government approvals processes as barriers to investment in the Bahamas.

It added that the US Embassy in Nassau continues to receive complaints from American companies about the “time consuming” wait for Government permits, which complicates investment decisions and adds to costs.

While acknowledging that the Government had refuted such assertions, the US State Department report said: “Other areas of concern noted by companies include the discretionary issuance of approvals and licenses from various government authorities.

“Companies complain that in many instances these approval processes are confusing and opaque, with little to no possibility for review or appeal of a decision.”

The report also said the US Embassy in Nassau continued to receive complaints from American companies about “a lack of transparency and undue political influence with government bidding and procurement processes”.

It cited “significant challenges to investing” in the Bahamas, and added: ““Judicial courts in the Bahamas face a persistent backlog of cases. Civil cases, on average, take five years to resolve.

“Foreign investors have frequently complained that local defendants are able to delay payment on Bahamian civil judgments in dispute cases due to the lengthy judicial process, which often involves multiple levels of appeal.”

Complaints made to the US Embassy about Bahamian attorneys have largely involved real estate deals, the report said.

“Property disputes can be challenging, sometimes lasting several years in the Bahamian court system,” the US State Department warned. “Some purchasers have reported problems obtaining clear title to property, either because the seller had no legal right to convey, or due to claims to ownership that arose after a purchase was made.”