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Bahamas slowly recovers from Baha Mar fiasco

Cruise ship docks at Freeport terminal, Grand Bahama Island, where Carnival plans a huge yet controversial cruise-ship port. (Credit: Larry Luxner)

Cruise ship docks at Freeport terminal, Grand Bahama Island, where Carnival plans a huge yet controversial cruise-ship port. (Credit: Larry Luxner)

The Bahamas is still trying to get back on its feet ever since last year’s Baha Mar scandal, in which a $3.5 billion mega-resort on Nassau’s Cable Beach largely financed by China’s Export-Import Bank shut its doors and declare bankruptcy even before opening.

The collapse of Baha Mar, which cost 2,000 Bahamians their jobs, has been a major embarrassment for Prime Minister Perry Christie, who had been pushing his country’s growing ties with Beijing. According to a recent New York Times article, Standard & Poor’s cited the Baha Mar impasse in its August decision to lower the Bahamas’ credit rating to one level above junk status, warning that further downgrades were possible depending on “the handling of the Baha Mar project.”

And in December, the International Monetary Fund lowered the country’s growth forecast for 2016. Even if work at Baha Mar resumes, said the Times, it could be another year before it opens.

But other hotel projects throughout the 700-island archipelago are still on track. One of the biggest is a $200 million eco-friendly, high-end resort planned for Children’s Bay Cay and Williams Cay on Exuma. The owner is Swiss heiress Dona Bertarelli, who is worth $4.4 billion, according to Forbes magazine.

“Among its benefits is the high-end branding affiliated with a prominent European family, and diversification of the tourism industry in the form of a five-star experience for high net worth individuals,” Christie said at an event in early February.

Meanwhile, the Bahamas could get a big boost from two major conferences to take place in Nassau this April: an annual meeting of the Inter-American Development Bank (IDB) and a separate gathering for the Inter-American Investment Corp., an IDB subsidiary. The IDB-IIC meetings, set for Apr. 7-10, could draw 5,000 delegates from 48 countries to Nassau, said Lynden Maycock, chief of the local organizing committee.

As in past years, the Bahamas still leads the Caribbean in absolute numbers of cruise visitors, though 2015 arrivals were down by 6.2 percent compared to the year before. Last year, Nassau and Freeport together received 3.93 million cruise passengers. They spent a combined $243.5 million, according to the FCCA, or $82.83 per passenger — far less than per-capita cruise spending in Aruba, Jamaica, Cozumel or Cartagena.

On the other hand, the Bahamas far outpaces the other 34 destinations in the FCCA survey when it comes to cruise line expenditures. Last season, cruise operators spent $70 million — nearly double the $39 million spent in Puerto Rico, which was second on the list — with 95 percent of that going towards port fees and services.

More cruise ships could soon be coming to the Bahamas with the announcement of two major projects.

In December 2015, MSC Cruises said would create a $200 million private island for exclusive use of its guests. The proposed Ocean Cay MSC Marine Reserve will open by December 2017 and will have its own dock, eliminating the need for tendering.

The 95-acre island, once used as a sand extraction station, is located 20 miles south of Bimini. When construction is finished, it’ll feature Bahamian-style architecture, restaurants, bars, shops, an arrival center with gazebo and a 2,000-seat amphitheater.

“This is a natural progression for our company, which is growing rapidly,” said MSC’s executive chairman, Pierfrancesco Vago, who recently visited Nassau to sign a 100-year lease with Prime Minister Perry Christie to allow the Geneva-based company to occupy and develop Ocean Cay.

When complete, Ocean Cay is expected to serve as a port call for all MSC ships sailing in the Caribbean including MSC Divina and the new MSC Seaside launching in December 2017, both sailing from Miami, the Sun-Sentinel reported. The MSC Opera and MSC Armonia sailing from Havana also will stop there.

The second project is far more controversial. It involves a plan by Carnival to build a private port in at the eastern end of Grand Bahama Island, but some locals warn it’ll hurt commerce in Freeport and the Port Lucaya Marketplace — especially for shops, taxi drivers and tour-bus operators.

“The cruise ship facility out east is going to be the kiss of death to businesses in Freeport, where we have so little business anyway,” attorney Fred Smith recently told the online Tribune 242 website. “It will cause Freeport’s cruise ship economy to take a nosedive, as ships will no longer be coming to Freeport harbor. I don’t see how it makes any sense to cater to the cruise industry clamoring for a private beach experience.”

Last year, the Bahamas introduced a tax-free shopping scheme for visitors, with more than 60 percent of eligible Bahamian merchants signing up since its launch in August 2015, despite initial concerns. Swiss-based Global Blue operates the system in partnership with the country’s Value Added Tax (VAT) and Customs Departments.

Global Blue’s system introduces a standardized electronic platform to the tax refund process, which means that retailers can sell a wide range of products to tourists, minus VAT. The purchases are recorded in standard format by retailers and then monitored electronically by the Customs department.

“Following the introduction of VAT, we needed to ensure that the Bahamas continued to be seen as a competitive shopping destination,” said Michael Halkitis, minister of state for finance. “I’m pleased to say that the new system has made tax-free shopping easy and simple for retailers and the Customs Department, and therefore, more available and accessible for tourists.”

Yet under the new system, visiting shoppers receive an 85 percent refund of their VAT payments, down from the previous 90 percent refund. The 15 percent balance now goes to Global Blue, in effect as a commission, said John Rolle, the acting VAT comptroller.

Jorge Casal, senior vice-president for new markets at Global Blue, said the company would double its current investment in marketing and promotion in 2016 to further support development of the program. Besides the tax-free shopping system, Global Blue supports Bahamian merchants with training and other services.

Author Details
Tel Aviv-based journalist and photographer Larry Luxner has reported from more than 100 countries on behalf of the Miami Herald, the Washington Diplomat, the Journal of Commerce and other news outlets. From 1986 to 1995, he lived in San Juan, Puerto Rico, covering the manufacturing sector for Caribbean Business. Among other ventures, he launched a monthly newsletter, South America Report, and later published CubaNews for 12 years before relocating to Israel in January 2017. Larry is fluent in Spanish, Portuguese and Hebrew.

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