The Commonwealth of The Bahamas is a 100,000 square miles archipelago in the Atlantic Ocean just 50 miles from Florida’s east coast. The country maintains a stable environment for investment with a long tradition of parliamentary democracy, respect for the rule of law, and a well-developed legal system. U.S. companies find that The Bahamas’ proximity to the United States, common English language, and exposure to U.S. media and culture contribute to Bahamian consumers having general familiarity with and positive attitudes towards U.S. goods and services. The Bahamas is a high-income developed country with a GDP per capita of over USD 20,568 (2016) and conducts more than 85 percent of its international trade with the United States. The Free National Movement (FNM) government elected in May 2017 has benefitted from a strengthening economy with 1.3 percent growth in 2017, leading the IMF to conclude that the economy had ‘turned a corner.’ Projections are that the economy will grow by 2.5 percent by the end of 2018. The Bahamian economy is heavily dependent on tourism and financial services and these sectors have traditionally attracted the majority of foreign direct investment. Tourism contributes over 50 percent of the country’s GDP, and employs just over half of the workforce. The Bahamas relies primarily on imports from the United States to satisfy its fuel and food needs for local and tourist consumption. More than six million, mostly American, tourists visit the country annually. U.S. exports in 2017 to The Bahamas exceeded USD 2 billion, resulting in a trade surplus of USD 1.7 billion in the United States’ favor.
The Bahamas’ maintains an open investment climate and actively promotes a liberal tax environment and freedom from many types of taxes, including capital gains, inheritance, and corporate or personal income taxes. The Bahamas does not offer export subsidies, engage in trade-distorting practices, or maintain a local content requirement. The country continues to attract foreign direct investment (FDI) from various parts of the world and has recently benefitted from significant investments in the tourism sector from international companies based in China. Investments from the United States are also primarily in the tourism sector and range from services to billion-dollar resort developments to million-dollar homes on the major islands of the archipelago. One drawback to the sector is the high cost of energy, which averages four times higher than in the United States – primarily driven by antiquated generation systems and almost complete dependence on inefficient fossil-fueled power plants. Positive aspects of The Bahamas’ investment climate include political stability and parliamentary democracy since 1729, educated English-speaking labor force, well capitalized and profitable financial services infrastructure, established rule of law and respect for contracts, independent judicial system, and high per-capita GDP. Negative aspects of The Bahamas’ investment climate include: a lack of transparency in government procurement, shortages of skilled and unskilled labor, bureaucratic and inefficient investment approvals process, time consuming resolution of legal disputes, high energy costs (4 times U.S. kwh), and the high cost of labor.
A major challenge to investment in the country is the prohibition of foreign investment in 12 areas of the economy and the absence of transparent investment procedures and legislation. U.S. and Bahamian companies alike report that the resolution of business disputes often takes years and collection of amounts due can be difficult even after court judgments. Companies also describe the approval process for FDI and work permits as cumbersome and time-consuming. The Bahamian government does not have modern procurement legislation and companies have complained that the tender process for public contracts is not consistent, and it is difficult to obtain information on the status of bids. In response, the FNM administration launched an e-procurement and suppliers registry system in an effort to increase levels of accountability and transparency in governance. Corruption is relatively low according to the Corruption Perception Index (28 of 180) and Bahamian government officials have told the Embassy that the government tabled omnibus legislation to address concerns related to its investment policy. These draft laws pertain to the creation of the office of ombudsman, freedom of information, and the establishment of a credit bureau and an independent department of public prosecutions. The government has also used technology to improve new company formation and engaged an IDB consultant to review investment approvals procedure. Women have raised concerns regarding the ease of their doing business in The Bahamas, particularly bureaucratic hurdles to register businesses and difficulty in securing financing. The Prime Minister’s wife has committed to supporting women’s empowerment, particularly economic, as a priority of the Office of the Spouse of the Prime Minister.
|TI Corruption Perceptions Index||2017||28 of 180||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2017||121 of 190||http://www.doingbusiness.org/rankings|
|Global Innovation Index||2017||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country (M USD, stock positions)||2016||USD 24.7B||http://www.bea.gov/
|World Bank GNI per capita||2016||USD 22,090||http://data.worldbank.org/