The Commonwealth of The Bahamas is a 100,000 square mile 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 30,762 (2017) that 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 a projected growth rate of 2.1 percent in 2019, according to the IMF. The Bahamian economy is heavily dependent on tourism and financial services and these sectors have traditionally attracted the majority of foreign direct investment (FDI). 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 tourists, mostly American, visit the country annually. U. S. exports in 2018 to The Bahamas valued USD 3.09 billion, resulting in a trade surplus of USD 2.72 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 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 general services to billion-dollar resort developments to million-dollar homes on the major islands of the archipelago. Companies find the high cost of energy as one drawback to the sector, as it 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. In light of companies’ complains of this deficiency, the current government has prioritized infrastructure projects focused on non-oil energy, including an LNG plant on New Providence and various solar projects on the Family Islands.
Positive aspects of The Bahamas’ investment climate include: political stability since independence in 1973, a parliamentary democracy since 1729, an English-speaking labor force, a well-capitalized and profitable financial services infrastructure, established rule of law and general respect for contracts, an independent judicial system, and high per-capita GDP. Companies have identified 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, and the high cost of labor as negative aspects of The Bahamas’ investment climate.
Investors find the prohibition of foreign investment in 12 areas of the economy to be a major challenge to investment in the country. The current government set a goal of accession to the WTO by the end of 2019, which would require opening these protected sectors to foreign investment. The accession timeline may be delayed.
Some businesses have also reported that the absence of transparent investment procedures and legislation to be problematic. 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. According to reports, 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.
The Bahamas scored 65 out of 100 in Transparency International’s Corruption Perception Index in 2018 (whereas zero is highly corrupt and 100 is very clean). This represents a stabilization of the year on year score following a marked increase in perceptions of corruption between 2014 and 2016. Many companies claim that The Bahamas still lacks necessary legislation to establish an office of the ombudsman to strengthen access to information. Although the current government is pursuing legislative reforms to strengthen further its investment policies, progress on these efforts has been reported to be mixed.
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||2018||65 of 100||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report “Ease of Doing Business”||2018||118 of 190||http://www.doingbusiness.org/rankings|
|Global Innovation Index||2018||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country (M USD, stock positions)||2017||$ 23,400||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2017||$ 29,170||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|