Tonight, I have the unparalleled honour, as your servant, to account for the performance of Financial Services and Investments in our beloved Commonwealth for the past 11 months.

You will recall that the Prime Minister wisely created the Ministry of Financial Services and Investments, for the first time, one Cabinet Minister was to guide these essential sectors through the turbulent times into which the second pillar of our economy had been driven.  I am happy to report to you that today; stakeholders in both sectors see the Financial Services and Investments sectors as secure.

It may be helpful for me to remind you of the areas of responsibility within the Ministry of Financial Services and Investments:

(i) the promotion of the financial services industry;
(ii) the promotion and administration of direct investments through The Bahamas Investment Authority;
(iii) Hotel Encouragement and Time Share and Vacation Plan Acts.
(iv) the promotion of electronic commerce;
(v) the Office of the Registrar of Insurance Companies;
(vi) the Registrar General’s Department;
(vii) the promotion of mutual funds; and
(viii) the Hotel Corporation of The Bahamas.

Time constraints do not allow me to give an in depth outline of extensive work done by my team and me in all areas, but I will highlight to you a few of the many successes.

Having accepting the Prime Minister’s mandate, over the past 11 months, my team and I have diligently and successfully pursued putting in place the framework to restore The Bahamas to its position of preeminence as a Financial Services Centre; aggressively pursued investment, both foreign and domestic; put Bahamians First by ensuring that Bahamians are treated respectfully and are provided with all of the incentives available to foreign investors; and we are replacing long standing bureaucratic obstacles with an eager and open ‘Yes we Can’ attitude toward Bahamian and Non-Bahamian investors alike.

The Bahamas’ economic base has been broadened. The framework has been laid to encourage and develop more Bahamian entrepreneurship.  Bahamians can now benefit from the creation of new economic opportunities.  With the increased Bahamian ownership of national assets, Bahamians have been economically empowered and are right now generating jobs for their fellowmen.
 
 
 
 

INVESTMENTS

Investment should never again be seen simply as a tool for pure economic growth with out the potential for real and lasting benefit to the Bahamian People.  Bahamians cannot be left simply to the mercy of “market forces”.  A caring government must have a vision.  Within that vision investors in our economy must not simply prove themselves capable of making healthy profits.  Investors will be encouraged to become meaningful partners in national development.  This Government will not agree to any investment that is not in the best interest of the Bahamian people.

I am happy to report that by consulting with all stakeholders in the sector, private and public, my team and I have created the first Five Year National Strategic Plan.  Investors have a new confidence as has been expressed in the multiple investments which I will outline, but the key to investor confidence has been the credible message that The Bahamas is “open for business”, and the Government is “business friendly”.

Bahamians have flourished in this new fertile environment.

During the period of May 2002 to the present, the Government has considered and approved foreign direct investment projects with a projected capital investment of $727.4 million.  You will undoubtedly hear the usual naysayers say that some of these projects were already in the pipeline prior to May 2002.  This is further testimony to the disgraceful level of incompetence which existed.  We have sought to and have been successful in approving, speedily, all investment projects fulfilling the requirement that they be in the best interest of Bahamians.  Projects submitted and approved since May 2002 amount to a project capital of approximately $398 Million.

The approved investments range from sizeable investment projects, such as:
· the $140 million proposal for Winding Bay, Abaco, involving a high-end 50-unit residential development, a Links golf course and a Club House (which Heads of Agreement we expect to sign next month); to
· smaller, boutique hotel facilities, such as the Rock House Hotel and Restaurant, which has already opened for business on Harbour Island,
· a new $2.5 million mini resort and conference centre coming on Tilloo Cay, Abaco, and
· a small, but upscale, residential development at Simms, Long Island.

New projects have been approved for Abaco, Crooked Island, Exuma, Grand Bahama, Eleuthera, Bimini and New Providence.

In addition to our tourism sector, major emphasis has been placed upon transportation.  In order to fill these new Bahamian and foreign owned ventures, your Government has approved investments which supplement movement to and between the Bahama Islands. Key among them is the Bahama-Florida Express, which is to provide fast ferry services between Nassau and Miami and Miami and Freeport and the Fiesta Mail, an inter-island mailboat with the capacity to carry 200 passengers and 12-40 foot cargo containers.
This significant level of investment approved by the Government is projected to create new jobs for approximately 1,828 Bahamians, including a minimum of 968 jobs during construction periods a minimum of 712 permanent jobs.

Because of the investment climate that we created, investors are upbeat about The Bahamas, notwithstanding the soft world economy. The Ministry is excited about the foreign direct investment applications that are continuing to be submitted for Government’s consideration.  Presently, pending projects represent a projected capital investment of approximately $2.18 billion and new employment of 5,947 (a minimum of 2,569 positions during construction and 2,951 permanent positions).

I am particularly encouraged by the diversity of the investments.  They include a number of small eco-tourism resorts and residential developments with capital investment under $15 million.  These are expected on the islands of San Salvador, Inagua, Andros and Eleuthera.  This model of investments creates the strong fibre that upholds our Tourism Industry and fortifies our economy, one small business at a time.  Other investments in the pipeline, signifying a level of diversification in our economy, include a poultry and pig rearing and processing plant, as well as a goat processing plant on Grand Bahama; a broiler or chicken meat production and processing facility on Andros; and a light manufacturing plant for bio-fuels, soaps and lotions on Andros and New Providence and Grand Bahama.

However, your Government is mindful that investment is not simply a tool for growth.  All investors must be partners in national development.  We have strengthened our working relationship with the BEST Commission by inviting them into discussions on proposed developments at the earliest stages.   Worthy of note also is our decision that all new Marinas must have pump out and treatment facilities.  Every effort will be made to protect our precious national resource, our waters and their ecosystem.  No investment, no matter how large, is more important than the health and welfare of the Bahamian people.

Important to the success of large projects is that their acceptance by the communities in which they will be located and that they create entrepreneurial opportunities in those communities. To this end, along with officials of my Ministry, as well as other Ministers and other Government officials, I have made a number of site visits and held town meetings to inform residents and communities of the matchless opportunities of business that these investments offer.  Such visits have been made to Exuma, Grand Bahama, Crooked Island, Eleuthera and Andros.  Repeat visits are scheduled to these Islands and others are scheduled for the Berry Islands, Cat Island, San Salvador, Abaco and Bimini

Our second home market has flourished.  Bahamian realtors and contractors have all benefited.  The confidence which your Government enjoys in the investor community is also evident from the almost $880,209,687.73 million worth applications made to the Investments Board for the period May 2, 2002 to April 15, 2003.  This represents an 83% or 440 million dollar increase for the land sales over the corresponding period for the previous year, which stood at almost $480,762,573.77 million.  For that same period, government revenue through Stamp Duty amounted to more than $44,032,439.38 million compared with just over $10,520,781.13 million over the corresponding period for the previous year.  This represents a significant increase of 318% or almost $35 million dollars.
 

International landholding investments in second homes/vacation cottages and commercial ventures continue to foster economic growth and sustainable development in our country and we remain committed to the development of the second home market.  I am especially pleased to acknowledge the private sector’s acknowledgement and enthusiasm about my team’s achievement of our stated objective of processing Investments Board applications within 30 days.  However, your Government is mindful that investment is a tool for growth that benefits Bahamians. We are concerned about the burgeoning home rental industry in various Family Island communities which has been established by non-Bahamian second home owners.  As partners in national development, investors should be mindful of considerations being made by your Government.  These include:
· minimal standards ought to be instituted so that the promotional efforts of the Ministry of Tourism not be undermined;
· some form of licensing  fee ought to be implemented;
· a policy should be developed that takes in to account the views of each community in which this market had growth potential; and,
· no such rentals unless it enhances our small hotels in the Family Islands.

Land is an essential national resource.  I am concerned with the many applications made to the Investments Board for land transactions less than $10,000.  Consultations with my Ministry from within Family Island communities have led to the request for my Ministry to review the National Investments Policy in this area.  Shortly, we shall be announcing a Committee to conduct this review and make recommendations.

Finally in the investment arena, I wish to mention sports fishing, an industry that is estimated to be worth $500 Million annually.  My team and I have commenced meetings with bonefish lodge owners, operators and guides.  Rightly so, they are concerned about the fact that non-regulation of this industry enables unbridled exploitation of a national resource.  As I speak, mother ships are entering The Bahamas on a $100 cruising permit and conducting the business of sports fishing.  My team and I join Bahamians in the Bonefish Industry in our determination that this industry be developed in an orderly fashion and to the best advantage of The Bahamas, which includes protection, rather than exploitation, of our precious resources. Together with these stakeholders we are developing a policy for sports fishing

FINANCIAL SERVICES

In May 2002, we met a sector that had been assailed due to the hasty passage of legislation in 2000 and the lack of consultation about those laws.  Key players in the sector felt that the industry been pillaged; that they had been shunted to the sidelines; and, their views disregarded. We also found that The Bahamas’ message was not effectively being delivered in key markets, especially when compared with our immediate competitors, Cayman and Bermuda.

The financial services ship had been captained into treacherous shoals.  Banks were leaving The Bahamas, red tape was so thick that it felt like concrete, and there was uncertainty about Government’s commitment to financial services and the valuable jobs and opportunities that it creates for Bahamians.  The challenge now is to reclaim our competitive advantage without compromising the integrity of our financial services sector.  Bahamians everywhere may be assured that our financial services sector will rise from the ashes like a phoenix.  We will not be satisfied with “second best”.  We will be leaders in the region and will compete at the table with the larger financial sectors of London, New York, and Zurich.

I meet regularly with the stakeholders in the sector.  The good news is that:
· there is no uncertainty about our commitment to financial services; and,
· there is optimism about the revival of the sector and its restoration to pre-eminence, especially when they note the challenges that we faced last May in the world economy and in the domestic arena.

They have given several reasons for this vote of confidence, including:

· access to decision makers and participation in decision making process.
· institutionalization of consultation with the private sector through the establishment of the Financial Services Consultative Forum; and,
·  participation in development and promotion of “The Bahamas brand”

I noted and agree with the view recently expressed by a leading Bahamian private banker that private banking will continue to flourish in The Bahamas as we restructure the sector.

CONSULTATIVE FORUM

Let me now speak about the Consultative Forum and the consultative process.

To date, the Forum, BFSB and other industry organizations such as BICA, BAMFA and the Bar Association have successfully addressed amendments to the IBC Act, Investment (Mutual) Funds Act and the E-Commerce Legislation.  The various sub-committees of the Forum are feverishly working to complete the remainder of their stated goals.  Let me now take this opportunity to thank the Chairpersons of these organizations and their hard working committees for the tremendous work they are doing and urge them to press on with their important task. Let me also acknowledge their view that it takes time to get it right and undo the damage that was done.

Let me also say in the strongest of terms that we hear clearly the industry’s concerns about the regulatory red tape, which prevents expeditious decisions, and which in their view, has induced some institutions to leave The Bahamas. I know that the Forum is in consultation with stakeholders and working on recommendations in this matter, critical to our strength and competitiveness as a financial centre.

The sector has made clear its views that the following Acts of Parliament are vital to the success and competitiveness of the sector and the Forum is diligent working on:

Recommendations:

· On amendments to the IBC Act
· for the revision of the Mutual Funds Act and Regulations
· on the E-Commerce legislation
· for review of Know Your Customer Regime and amendments to the Financial Transactions Reporting Act
· for review of the Securities Industry Act
· for amendments to the Financial and Corporate Providers Act
· for review of the Insurance Act
· for the adoption of Protective Cell Legislation and
· for the amendments to the Perpetuities Act
· for adoption of a Foundations Act and,
· for adoption of Purpose Trust legislation.
 
 

I must however warn that we as Bahamians must endure the painful transition of once again being “world class”.  We must re-tool, re-train, and re-invent ourselves and our products.  We must be competitive both in price and services.  We must re-capture the charm and diligent work ethic for which we were once known.
 

CONCLUSION

Ladies and gentlemen, it is plain for all to see.

· Almost $400 Million worth of new projects since May 2002
· More than $2 Billion worth of pending investment
· Significant development on Family Islands
· Exuma and San Salvador are booming.
· Economic empowerment of Bahamians
· Entrepreneurial opportunities in the Family Islands
· Significant Projects to come to Eleuthera and Andros
· Bright future in financial services
· Stakeholders involved as partners in national development
· Bahamians First

As you can see significant strides have been made by my Ministry since May 2002.  None of these would have been possible without the cooperation of the entire hardworking, enthusiastic and dedicated team that I have the privilege to lead. They rose to the challenge of creating a Ministry that so dramatically impacts the lives of Bahamians.  I take this opportunity to thank them all for their dedication, support and patriotism.  I also thank the many private sector individuals and groups who so willingly have given of their time, talent and treasure. Finally, my brothers and sisters, none of these would have been possible without the visionary leadership of our Prime Minister and his commitment to the sector.  I thank him for giving me the privilege to serve as a part of his team.

My brothers and sisters, we are a blessed people living in a blessed nation and I have been blessed to serve you.  Revival is here for The Bahamas.  Each of us must believe it, rise to the challenge of developing our nation to its greatest potential, spread the good news and stay focused on national development for our children and grandchildren.

May God continue to richly bless The Commonwealth of The Bahamas.

God bless you.

Good night.