By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ regulatory regime is “heavily weighted against business”, a prominent QC yesterday warning: “We can’t tax our way out of economic problems.”

Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, told Tribune Business that the Bahamas needed to “urgently address” an overly-bureaucratic approvals regime to maintain its economic competitiveness.

He warned that this nation’s ease and cost of doing business was impeding both the domestic and international economic segments, especially foreign direct investment (FDI) and the financial services industry, resulting in the anemic GDP growth levels experienced since 2012.

“We need to urgently address what has become a highly bureaucratic infrastructure for doing business in the Bahamas, both domestically and internationally,” Mr Moree told Tribune Business.

“I think one of the most important factors and problems we have to address is our low ranking in the [World Bank’s] ease of doing business report. We’re a small country, and ought to be able to minimise bureaucratic, regulatory and other administrative delays while, at the same time, maintaining the reputation of the country to ensure we are a fully compliant, responsible international financial centre (IFC).”

Mr Moree continued: “There’s a balance that has to be achieved here, but regrettably there has evolved a highly bureaucratic and regulated environment which is weighted very much against business at the moment.

“We have to rationalise our business environment, both locally and internationally, to see what developments have occurred over the last seven to nine years, and achieve a better balance between legislative, regulatory and compliance issues without creating significant obstacles for business, which drive the international community to more friendly jurisdictions than ourselves.”

The senior QC acknowledged that the Minnis administration was “acutely aware” of the problems, having already formed a committee - featuring private and public sector representatives - to improve the Bahamas’ ease of doing business and economic competitiveness.

He added that improvements here were essential to increasing FDI levels in the Bahamas, which he described as critical to pulling this nation out of its low/no growth and high unemployment spiral.

“This whole ease of doing business and barriers to entering markets in the Bahamas is very relevant to FDI, which is the engine of the Bahamas’ economy,” Mr Moree said.

Emphasising that higher FDI levels translated into higher GDP growth rates under the Bahamas’ current economic model, he added: “We have to be careful we don’t erode our competitive advantage.

“Not only do we affect our ability to grow and expand financial services, but we also affect the volume of FDI, which corresponds to anemic rates of GDP growth that we’ve had over the last several years.

“I maintain very strongly that any complete solution to the economic problems we’re confronting at the moment in the Bahamas must involve significantly higher rates of GDP growth,” Mr Moree continued.

“We will not be able to tax our way out of these economic problems, we won’t be able to borrow our way out of debt, and will have to have higher levels of financial discipline in management of the national finances and have more efficiency in collecting current revenues and taxes.

“Any successful solution has to involve higher levels of GDP growth. Under this current economic model we have, it is extremely difficult - if not impossible - to achieve acceptable levels of growth in GDP without substantially increasing volumes of FDI.

“That is directly related to our ability to service international business and produce results in a reasonable timeframe, which is what the ease of doing business is. Our ranking in that area is not acceptable, and we have to do better.”

With Hurricane Maria potentially threatening the Bahamas as another Category Five hurricane, Mr Moree said it was even more important for the Bahamas to reform areas such as this that were under its control.

Reiterating that solutions to the Bahamas’ numerous problems were all linked, he added: “These issues of protecting and growing our financial services industry; tackling the ease of doing business in the Bahamas; achieving higher levels of FDI; and increasing the GDP growth rate are all inter-related. They impact one another.”