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January 19, 2006



This is an excellent article and one that all Bahamians should dispassionately read, particularly those invplved with the offshore financial services sector.

What this article demonstrates is that the Financial Services sector as we knew it is dead and those involved with trying to resurrect it are wasting valuable time and resources which can better be put to developing true productive industry in the Bahamas. Industy that will legitimately attract foreign exchange.

A major problem with the article however is the amazing lack of mention of the U.S. PATRIOT act which most experts consider the greatest problem for continuation of offshore financial schemes.

While it it was apparently passed to fight the money problems supporting terrorism, its wide reaching, heavy U.S. enforcement provisions effectively kills such offshore services.

Keep up the good work, the future of the Bahamas is in jepoardy and it will need all the help it can muster. See the recent IMF study on Bhamas Brain Drain and its ever increasing effect on the country's competitiveness.

larry smith

Thanks. What true productive industry would you suggest?


First the Bahamas will have to solve its Brain Drain problem to be truly competitive and successful in the long run. There are ways to do it, but the govt has to have a highly structured and organized program to accomplish it. This is much more of a problem than most people realize, simply, you can't play in the major leagues with minor league players, our talent pool is just to thin.

In any event the productive industry needed is generally that which will attract foreign exchange on a consistent basis. Tourism is actually a good industry but the Bahamas has not really been able to move it forward. We are really struggling in tourism, we have a poor product comparatively and the competition is simply doing a better job. Incidently the main competition is actually from within the U.S. and not the Caribbean like the govt seems to always imply.

But other true productive industry will need proper functioning capital markets to develop within the Bahamas which will allow Bahamians to obtain ownership of its most important industries. Local ownership and control is critical to sustainable development. We will never be able to functionally develop with complete foreign ownership of our major industries.

Govt will need to revamp its entire investment and foreign exchange rules to allow Bahamians to effectively participate in the major industrial capital markets as investors, venture capital seekers and brokers. This type of activity and the resultant access to real capital is what will allow industry to become and operate at productive foreign exchange procurring levels of business.

More than any particular type of business the scale, sophistication, and competitive capabilty of the enterprise combined with a significant amount of local ownership is what will make the enterprises productive.

BIZX or other local capital markets will have to operate to link locally domiciled businesses to major markets, unlike the reverse depository receipt (BDR) schemes that are now developing and being promoted by govt.

Unfortunately all these things will require sophisticated & experienced thinkers and producers in govt, but apparently we do not have much of that type of talent available and so we seem destined to depend on the short sighted policies of potential real estate developments for foreign second home owners as our ticket to success.

Obviously there are some specific industries which lend themselves more to the particular circumstances in the Bhamas, but considering that we seem to have great difficulty even competing in tourism, branching out into these other areas without the depth of talent available will be difficult.

We certainly have major problems for the future of the Country and the lack of true investigative media does not help because there is little challenge to govt's sugar coated pronouncements and figures.

Your article is extremely important because to a knowledgable reader it highlights the complicated nature of the current and future global market in which we have to compete. No longer can we depend on skirting the laws of other countries, helping their crooks to evade their domestic laws, and appear to be encouraging the use of our country as an enabler of shady practices. In the international legal arena the real law is "Might is Right" and when other countries perceive your actions as antagonistic to theirs, no cries of sovereignty will protect you if they are mightier than you.

I realize I may not have specifically answered your question but the answer is all about being able to mount a functionally competitive enterprise on a global scale.

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