THE former Christie administration's decision to replicate Freeport and the Grand Bahama Port Authority (GBPA) through the $1.7 billion Mayaguana development was yesterday branded "foolhardy", with the project's investment incentives potentially breaching the Hawksbill Creek Agreement.

Christopher Lowe, the Grand Bahama Chamber of Commerce's president, told The Tribune that the Government appeared not to have learnt the lessons stemming from Freeport's current problems, and the fact that the Hawksbill Creek Agreement had not developed the city into what had been envisaged in 1955.

Mr Lowe said of the Heads of Agreement signed with Mayaguana Island Developers, the 50/50 joint venture betweenthe Hotel Corporation of the Bahamas and the Boston-based I-Group: "It's foolhardy and it's going to be fraught with the identical problems that Freeport has had over the last 50 years, which are now being exemplified by the implosion within the Port itself.

"It is amazing that they would go and repeat this experiment and not make any attempt over the last 50 years to rectify the problems of Freeport, but plunge head and repeat it elsewhere. I'm assuming we're going to have another Freeport, problems and all.

Infrastructure

"We have yet to figure out that the incentives granted 50 years ago have not helped. It has allowed the Port to put some infrastructure in, but it has not turned Freeport into the mega destination it was supposed to become."

Setting aside what Hutchison Whampoa had put in at the Freeport Container Port, Freeport Harbour Company, Grand Bahama International Airport and elsewhere, Mr Lowe said little infrastructure had been added to Freeport over the past 30 years.

Those tax concessions have not played out very well in the real world." he said. "They're (the Government] creating a mirror image of the problems of Freeport, problems that have yet to he fixed." The Heads of Agreement for the Mayaguana project, tabled in the House of Assembly by the FNM government, revealed that Mayaguana Island Developers Ltd had been given powers that rival the GBPA's,including the ability to licence businesses on the island, and a host of 20-year investment incentives for itself and its licensees.

However, Mr Lowe pointed out that the Hawksbill Creek Agreement stipulated via statute law "that no other concessions are to be granted that exceed those" contained in the law that created Freeport. "If it exceeds, in concessions granted to Freeport, it goes against the original Hawksbill Creek Agreement," Mr. Lowe said of the Mayaguana Heads of Agreement. "At least ours is enshrined in statute...

"They have not looked at the ramifications of the Hawksbill Creek Agreement prior to recreating it elsewhere.
"I think, at this juncture, we're obviously going to have as many, if not more problems, down there than we have had here."

One area where the Mayaguana Heads of Agreement may breach the Hawksbill Creek Agreement and its successors is on real property tax exemptions. Mayaguana Island Developers has a 20-year real property tax exemption for itself and all its licensees, which could possibly be extended for another five to 15 years.

Relief

Yet the Freeport, Grand Bahama Act 1993 has only granted Freeport relief from real property tax until 2015, potentially some 26 years less than what Mayaguana Island Developers and its licensees will receive. When it comes to investment incentives, the Heads of Agreement also gives Mayaguana Island Developers and its licensees a 20-year-exemption from stamp taxes (including on money remitted by banks to foreign countries0, all licence fees (including Business Licences), taxes upon earnings, interest or dividends, and "direct fiscal impositions upon or against earnings."

Mr Lowe said the Mayaguana Heads of Agreement appeared to have borrowed language and terms directly from the Hawksbill Creek Agreement, especially when it came to items such as 'consumable stores', 'administrative stores' and`licensees'.

Other incentives, which the Heads of Agreement say are granted under the Bahamas Investment and Incentives Act and the Family Island Economic Enterprise Zones Act,duty free importation for 20 years of all manufacturing supplies required by industrial firms that establish themselves in the 9,999 acre development area on Mayaguana.

The Grand Bahama Chamber president added that the 'consumable stores' definition was "fraught with problems", as it was based on what the end-use was, whether for business or other purposes. Twenty-year customs duty exemptions are also granted for a whole host of equipment and material necessary to fit out factory plants and for construction.

"The Government recognises that the exemptions and incentives set forth... are of paramount-importance to Mayaguana Island Developers to enable the company to achieve its goal of developing Mayaguana as a resort/second home destination, with viable commercial and industrial sectors competitive with other premier destinations/mixed-use communities," the Heads of Agreement says.

On the licensing of Bahamian and foreign-owned businesses in Mayaguana, the Heads of Agreement states: "The Government agrees that Mayaguana Island Developers shall have the exclusive and unconditional right at all times to grant licences to any licensees.

"Nothing in this Agreement shall be deemed to prevent or restrict in any way Mayaguana, Island Developers from licensing any person, firm or company to carry on any lawful business, undertaking or enterprise within the development on such terms as Mayaguana Island Developers shall in its absolute discretion deem fit and proper."

Source: The Tribune