Friday, July 5, 2019
By NEIL HARTNELL
Tribune Business Editor
Private sector executives yesterday expressed fears that The Bahamas will lose "a desperately-needed reform catalyst" if the government decides the 2020 WTO target is unattainable.
Darron Pickstock, who heads the Chamber of Commerce's trade and investment division, and Carey Leonard, the ex-Grand Bahama Port Authority (GPBA) in-house counsel, both agreed that the "momentum" to implement changes - required regardless of whether The Bahamas joins the World Trade Organisation (WTO) or not - could now slow or be lost completely.
The duo, speaking to Tribune Business in separate interviews, were responding after Zhivargo Laing, The Bahamas' chief WTO negotiator, suggested on his Guardian Radio program that The Bahamas was unlikely to meet the June 2020 accession deadline set by the Minnis administration.
He suggested that the process might take several more years to complete, and hinted that the government was sensitive to the political (election vote) implications given the level of opposition to joining the WTO from some elements in Bahamian society.
Mr Leonard, expressing disappointment at Mr Laing's comments, said: "I was hoping the government would stand firm and move the country forward. I think the forward momentum will dry up completely, and the rest of the world will speed far ahead of The Bahamas and we will continue to fall further behind.
"We look at poor countries like Haiti, but are doing nothing to keep up with the rest of the world and will fall back into that position. The reforms desperately needed the WTO as a catalyst, and the fact we're talking about missing the deadlines means we will fall further behind the rest of the world. Unemployment in this country is still high and may get even higher."
The recent Chamber of Commerce-commissioned study by Oxford Economics argued that The Bahamas needed to undertake internal reforms for its own good, regardless of whether it becomes a full WTO member or not, and that such changes were critical to maximising the benefits from joining.
Besides improving the "ease of doing business", and eliminating bureaucracy and red tape, such reforms include lowering the cost of electricity and improving its reliability; cheaper and easier access to credit; equipping Bahamian workers with the necessary 21st century skills to compete; and digitising government services for smoother interaction with the public.
Mr Leonard, now a Callenders & Co attorney, added: "These are reforms the country has to do to get ahead in the world and stay up with the rest of the world. The rest of the world is steadily increasing its lead on The Bahamas because they are moving on ahead and we are not, and are continuing to do so.
"This was one area where we could have caught up. We led in some of these areas in the past, but are now behind in the ease of doing business, attracting foreign direct investment (FDI) and international financial services."
Mr Pickstock backed Mr Leonard's sentiments, telling Tribune Business: "One thing we don't want to do is we don't want to lose that reform momentum. These things should have been implemented long ago.
"We don't want them [the Government] to lose that momentum, and WTO was certainly a driver pushing the Government to review and implement new and existing legislation. It will be interesting to see - if we don't meet the deadline and the pressure is off all of a sudden - whether the momentum of the Government slows down with the reforms. The reforms are certainly more important than anything else."
The International Monetary Fund's (IMF) full report Article IV report on The Bahamas, released this week, reiterated that "decisive structural reforms are needed to enhance competitiveness" in the Bahamian economy.
"Long-standing structural impediments continue to weaken competitiveness and constrain private investment and growth," the Fund said. "The World Bank's ease of doing business index (DBI) points to onerous administrative processes, high costs of trading across borders, poor access to credit, and lack of reliable and affordable electricity.
"These factors are aggravated by the strength of the currency in real effective terms. Tackling these structural bottlenecks is urgent to prepare the economy for the planned accession to the WTO in 2020."
The IMF's recommendations will come as no surprise to the private sector or most persons in government. It urged rapid progress on energy reform, calling for "strengthening regulatory oversight of both BPL and private sector operators, and encouraging energy efficiency and conservation measures, including in the hotel industry."
A regulatory framework to incentivise renewable energy investment, and its uptake by consumers and businesses, was another priority identified by the IMF. Besides the $30m digitisation initiative designed to lower the cost of conducting business with the Government, the Fund also urged passage of the Integrity Commission Bill to combat public sector corruption.
The Government, according to the IMF's report, agreed with "the need to advance structural reforms to strengthen competitiveness. The authorities concurred that the external position in 2018 was weaker than suggested by fundamentals, and shared staff's view that structural reforms hold the key to shift the economy to a higher and more inclusive growth path," it added.
"They recognised the need to continue building external and fiscal buffers, and to take reforms to lower costs and raise productivity. They stressed that the WTO accession process will allow analysing the implications for the Bahamian economy and putting in place necessary safeguards to mitigate disruptions, enabling a transition towards a more open and competitive economy."