By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Discussions on improving The Bahamas’ ‘ease of doing business’ are “hopelessly simplistic”, Arawak Homes chairman is arguing, with the conduct of commerce set to become “more complex, not less”.

Sir Franklyn Wilson told Tribune Business “the world has fundamentally changed” since he started in business some five decades ago while citing the ever-growing intricacies involved with VAT and Business Licence fee calculation as just one factor set to further complicate operations for many businesses.

Speaking after the Prime Minister last week made a renewed pledge “to create an environment where entrepreneurs don’t feel like they’re fighting the system to succeed”, and asserted that agencies such as the Department of Inland Revenue “must move at the speed of the economy, not the other way around”, the Sunshine Holdings chief said there were certain realities that the private sector must accept.

While Philip Davis KC zeroed in on the time required to open bank accounts as one area requiring immediate change, Sir Franklyn told this newspaper that the Bahamian business community must distinguish between what is quickly achievable in ‘ease of doing’ business reform and other areas where it may prove much harder to effect change.

“This matter of ease of doing business, the world has changed,” he said. “I hear the talk. When I started my accounting firm in 1971, shortly after that I recruited an accountant from Trinidad. When I met that accountant he couldn’t believe how easy it was to do business in The Bahamas.

“He said it was different in Trinidad for two reasons. I said that in Trinidad, every business decision - separate and apart from the substance of what was being discussed - the businessman has to consider two things: Taxation and foreign exchange. In The Bahamas, you could make a decision and that was it.”

Sir Franklyn, though, said The Bahamas has since moved far beyond a relatively simple tax regime that was dominated largely by Customs duties imposed on goods at the border. “With VAT and Business Licence fees, you come into a real, serious debate about what is revenue and how do you recognise revenue,” he explained.

“These are issues that accountants are arguing about. These issues were not in The Bahamas before VAT, before the Business Licence. These were not issues. Second, the fact of the matter is, in terms of VAT, every decision you make you have to think about VAT.

“The point I’m making is that the Bahamian economy has fundamentally changed. It’s become a lot more complex. We can anticipate it becoming even more so, not less; I don’t care which political party is in power.” While certain ease of business reforms may appear simple, and easy to effect looking in from the outside, Sir Franklyn said established structures and processes are often more difficult and time-consuming to change.

The Arawak Homes chairman cited land transactions as an example, pointing out that despite the Government’s move to create a system of registered land in The Bahamas this reform will take years to bear fruit. And, in the meantime, parties to such a deal will still require the services of surveyors, attorneys and other professionals to ensure land parcel boundaries are agreed and clear ownership title established.

Referring to Sunshine Holdings, he told Tribune Business: “We’re in the middle of a transaction with a bank. The bank has been ready to close for months. There’s no issue. We are prepared to close, but the process of doing all the stuff, the tax certificates, all of those things, we can’t close. Thank God our corporate group is in a position to function without having to draw down on the bank’s funds.

“It ain’t like someone set out to complicate the system, but the fact is this has to do with some things that ain’t going to get simpler.... I think the discussion on the ‘ease of doing business’ in The Bahamas is hopelessly simplistic, and it’s likely to become more complex, not less, and that’s without reference to any government; no matter who is in power.

“The process of identifying land parcels takes time. It’s not simple. When you hear these discussions on the ease of doing business, in my opinion, lest the private sector not be unrealistically simplistic, there’s no point in harking for the good old days and what we had when the accountant joined from Trinidad. The world has changed, and it’s not getting simpler by wishing for it or the Government passing an Act.”

Sir Franklyn also cited the Government’s recent move to slash the VAT rate on most food items by 50 percent. While beneficial for consumers, especially those on lower incomes, he added that it will introduce further complexity into a tax the private sector is administering on the Government’s behalf, and represents a further move away from the broad-based, minimal to no exemptions, VAT model introduced in 2015.

BISX-listed FOCOL Holdings, which he also chairs, will now have to adjust its systems and pricing to reflect the VAT change in the convenience store portion of its gas stations. “It’s only getting more complicated,” Sir Franklyn added. “Talk about VAT, a regime where there were few exemptions. Just think about what the announcements made by the Prime Minister last week will do to the system.

“People have to adjust their accounting systems. FOCOL has to make adjustments to the food sold in its convenience stores. It’s a different set of book-keeping. We now have to adjust our accounting system to reflect that. The auditors have to say we did it right. The auditors have to get involved, the tax people. It may sound simple but it’s not simple. That’s the point.

“For years there was a reason why in The Bahamas most government revenues came in from Customs duties. The fact of the matter is that was simple to administer. Show me your invoice. People cheat on the invoice but that’s a separate matter. That was a simple system to administer,” Sir Franklyn added.

“The more new taxes you introduce, the more exemptions you have in those taxes, the more and very different interpretations you are prepared to accept on those taxes, you make life more complicated. Ain’t no point wishing for the good old days.”

Sir Franklyn, urging the Bahamian private sector to distinguish between ease of business concerns “that I don’t understand and some aspects that I think are more complex than the discussion is allowing us to entertain”, nevertheless said there were some areas on government permitting and approvals where this nation performs better than major first world developed countries.

“I had a meeting just last evening with executives from a large international company and the partners from a large Canadian law firm,” he revealed. “One of the partners said he could not believe what he was hearing. We are negotiating a contract, and the length of time to get a permit in The Bahamas is defined in months.

“That partner said the same discussion in Canada, the length of time to get that permit will be years, not months. We are drafting a contract with ‘Partner A’ that gives so many months to get the permit and the parties see that as reasonable....What would be reasonable to get a permit in The Bahamas is defined in weeks and months, whereas in Canada it’s defined in months and years. This is no simple matter.”

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC), meanwhile, said it was “elated to hear that the Prime Minister would like to meet with us to discuss matters relative to the business community, including the ease of doing business and unfair business practices, among many other things”.

Dr Leo Rolle, its chief executive, said in a statement: “Many of these issues relate to interactions with government agencies or are influenced by government agencies. We are hoping for a fruitful engagement as we represent the interest of the business community in an effort to improve the ease of doing business for businesses and members of the public.”

He was responding to the Prime Minister’s Bahamas Business Outlook conference pledge to meet with the Chamber “because creating a system that works for everyone requires genuine collaboration. It cannot be done in isolation; it must happen through meaningful partnership,” Mr Davis said.

“I want to hear directly from the business community about the frustrations you face, the roadblocks that slow you down, and the changes you believe are necessary to move us forward. Together, we can identify these issues and decisive steps to remove the barriers standing in the way of Bahamian entrepreneurs and businesses.

“If there are policies or systems we’ve put in place that are not working as intended, I want to know. My door is open to rethinking and improving our approach. This is the kind of partnership I believe in - a government that listens, learns and adapts to meet the needs of those driving our economy. Let’s iron out these challenges together and build a more efficient, business-friendly environment that benefits all Bahamians.”