Diversifying the Bahamian Economy: Fact, Fiction and the Real Alternative
BAHAMAS BUSINESS OUTLOOK
Vincent Vanderpool-Wallace
Minister of Tourism & aviation
13th January, 2011
Good morning.
Let me say from the outset that I am a strong supporter of the idea of economic diversification. Who could be against it? Who could possibly be against increasing the number of sectors that undergird an economy, especially the small economy of 350,000 hard working and hard striving citizens. Should Walmart with its 1.4 million selected employees in the United States alone diversify beyond retailing? Should IBM with its 400,000 selected employees diversify beyond computing? Should Toyota with is 320,000 selected employees diversify beyond automobile manufacturing? Should Bank of America with its 284,000 employees diversify beyond its narrow focus on banking?
Never mind the United Nations study that shows that wealthy small nations in this increasingly globalized world are those that focus on doing a few things very well. Never mind the New York Times article of a few years ago about Finland, a country with 5.5 million people being lauded for concentrating in music and telecommunications. According to the Times: ““ . . . the Finns, like the citizens of many small nations, have learned that the best way to make a splash on the global scene is to specialize”. Never mind that, we should diversify. We forget the large scale experiments of the 1960’s conglomerates of LTV, ITT, Litton Industries, Gulf+Western and TransAmerica. All are gone as it became clear that success comes from focusing on core competencies not from conglomeration or diversification. Never mind that, we should diversify.
The current perception is that our two most important economic sectors are facing stiff headwinds. In tourism, it is believed that our most important source markets are experiencing longer than expected economic recession that moderate our prospects for growth. In 2010 while our cruise numbers grew by more than 18 percent, when all of the numbers are in we expect our more important stopover number to have grown by approximately 5%. In stopovers, we still need to get back to 2008 numbers to begin to feel comfortable with our achievements. Given the level of unemployment in our largest markets in both the United States and Europe, 2011 will continue to be a challenge even though we expect continued growth in both cruise passengers and stopovers.
In financial services many members of the sector feel that irreversible international financial agreements have eliminated parts of our perceived comparative advantages which will lead to slower growth and more competition.
These are the kinds of conditions that frequently precede the call for economic diversification as if diversification is the panacea for all economic troubles. What is often forgotten is that the most diversified economies on earth, those of the European Union and the United States of America are not only going through the same economic troubles as The Bahamas, these highly diversified economies are in fact the source of our troubles. Even further, several of their states and countries in the US and the EU which were touted as tigers only a few years ago in this same forum are now in deeper economic troubles than The Bahamas has ever seen in recent times.
We are quite an intuitive people. We know that any initiatives to grow our economy in the short and long term must be grounded clearly in a new set of activities that offer obvious competitive and comparative advantages that arise from making existing and accepted strengths stronger. It is important that we focus in making existing strengths stronger because we know that any effort that requires massive training and retraining of our population, while noble, is for the medium and longer term and is less certain. We are optimistic when proposals have a high likelihood of short term successes; our optimism is sustained whenever we see visible markers of progress; that optimism converts to economic growth when members of a population act independently in a coordinated fashion because the proposals not only “makes sense”, they are easily grasped and easily acted on by all. It is the United Nations study entitled “Where is the Wealth of Nations?” that tells us that explosive success comes from the idea of many hands working with one mind; it comes from the shared insight of phenomenal opportunities that are clearly within our grasp and within the grasp of the ordinary Bahamian. It is those opportunities that provide the reasons for my high optimism.
So yes, like many, I believe in diversification but not necessarily diversification in the way that consumes much debate.
I begin where I left off at last year’s Business Outlook.
Many people in our region are surprised, shocked and astonished by some simple statistics: If New Providence & Paradise Island were a separate country in our region, it would rank 5th in the number of stopover visitors, 2nd in the number of total visitors and 1st in the number of cruise passengers in the entire Caribbean. That, they find surprising. What they find shocking is that New Providence & Paradise Island, where nearly 70% of our population resides, represents less than 2% of the total land mass of the Commonwealth of The Bahamas. Less than 2%? Yes, less than 2% of The Bahamas would be ranked 5th in stopover arrivals, 2nd in total visitor and 1st in cruise visitors in our region.
Is it not therefore abundantly clear that in a region where islands are major assets for tourism development, we have substantially underutilized tourism assets in The Bahamas? If we want to diversify, why not diversify that? Why not diversify like Toyota in extending their brands of cars which includes their Lexus. Why not diversify like LVMH which specializes in luxury products such as Louis Vuitton, Hennessy, Hublot watches and Dior perfumes. Like Toyota and LVMH, why not diversify within one’s areas of strength and comparative advantage?
Is that not clear? Let me go further, today this 2% “country” of New Providence & Paradise Island would be the 3rd wealthiest independent country in the western hemisphere in terms of per capita income behind only the United of America and Canada. If fully developing only 2% of our islands yields these kinds of results, imagine what could happen if we began to utilize more of our natural assets? Now you can understand why when some people speak about diversification, I hear in our peculiar vernacular “diworseification”.
Many of us appear to be unaware of where we are in the global economy. Let’s put it into a little perspective.
The Commonwealth of The Bahamas is next door to the United States of America which is currently 25% of global GDP and that percentage is likely to remain quite high for the foreseeable future despite the growth of the BRIC nations of Brazil, Russia, India and China. Brazil represents 2% of global GDP, Russia represents 2%, India represents 1.6% and China 6%. Yet, despite our proximity, every day, as we have said several times, it is much less expensive and takes less time to travel from most places in the United States to most of the better known and variety of competing destinations in the Caribbean compared to the cost and time to travel to ANY of our Family Islands. Physical proximity without that proximity reflected in the cost and time of travel is useless. Reducing the cost and time for travel to our Family Islands will most assuredly lead to explosive growth and can turn our economy from the wind in our face to the wind at our backs. That solution will also make domestic travel for Bahamians a much more appealing proposition as compared to the current cost advantages of a trip to south Florida. The power of low cost high quality air and sea transportation is no longer a debate in our industry. Our Companion Fly Free program has been the most successful in history selling nearly 300,000 room nights and the annual growth of our cruise business by more than 18% last year are adequate testimony to the value of low cost access to a Bahamas vacation.
The simple and generally accepted reason for our current state of affairs has been the disproportionate focus on the development of the 2%, the capital island of New Providence and Paradise Island. For much too long now, our people, young and old, migrated like economic refugees to the economic centre of The Bahamas, to the island of New Providence. We have nearly overdeveloped this 2% over the past forty years without developing the necessary sea, air and ICT infrastructure for inter-island transportation and communication throughout the Commonwealth of The Bahamas. Infrastructure development in an archipelago depends as much on connections BETWEEN islands as it does on infrastructure ON islands. That is the necessary prerequisite to facilitate the easy and low cost movement of people, goods and services for the development of the entire country. In order to give a “mission to the moon” kind of focus, suppose we declared that in five years Bahamians will live on Eleuthera and Andros and commute to work in Nassau daily as we begin to reduce the overpopulation of New Providence and develop the remaining 98% of our nation of islands more completely. Those kinds of commutes are done every day in hundreds of places around the world. Why not The Bahamas? Our overall mission must be to go “Back to the Islands”. Of course, simultaneous with the development of that Andros and Eleuthera commute will be the introduction and expansion of inter-island transportation and communications services throughout the Islands of The Bahamas.
Some people have noted the reservation of space at Arawak Cay to establish a fast ferry terminal. But this is the first indication of a key government’s initiative to enable containers to roll off vessels at Arawak Cay and roll on to container trucks that can be transported to other islands to deliver the goods that are in demand for any resident population on those islands. In some cases, these containers can return with the fresh agricultural products from these islands to serve our long postponed “Fresh from The Bahamas” campaign with the Ministry of Agriculture to encourage greater use of our locally grown products by residents and visitors. In addition to passengers, these vessels will also carry large numbers of automobiles which is a normal occurrence in normal archipelagic nations such that those passengers can have their personal vehicles travel with them as they move across our Commonwealth. This will require a significant upgrade in the quality of our interisland vessels. We cannot continue with mail boat services in an email world. All of this will accelerate the purchase and utilization of first and second homes on our other islands and make that globally desired idea of living and loving the island life immensely more accessible and immensely more attractive.
Efforts are already underway to establish an electronic booking system for all of the air and sea transportation within The Bahamas such that residents and prospective visitors can make and pay for their transportation arrangements from anywhere on our planet to anywhere in The Bahamas instead of having to go to the airports and seaports to make those arrangements as is the case for most providers today. We expect that electronic backbone to be in place within several months. All of this makes the online rental of accommodations including hotels, homes and villas on these islands immensely more accessible and immensely more attractive. To give a sense of the scope of the existing opportunities, it is estimated that the number of bedrooms available for rent in second homes in The Bahamas today, exceeds the number of new rooms that are proposed for the new Bahamar. Imagine, all of the land sea and air transportation throughout the commonwealth of The Bahamas all owned and all operated by Bahamians and Bahamian companies. Imagine the size of aircraft and volume of seats coming into Lynden Pindling International Airport if substantial numbers of those passengers are on connections to other islands of The Bahamas.
Besides having all of the goods that would wish to have, “Back to the Islands” must also mean having other essential government services in place such as medical and school facilities that are either already underway or are in the planning stages. We know that mini hospitals and clinics must be available 24 hours per day and schools must be of a certain quality to persuade Bahamian families to move from New Providence to other islands. We know that effective tele-medicine must be available because it is impossible to have specialists of every kind available in every corner of The Bahamas. We understand that highly reliable, high bandwith electronic communications is critical to this process.
The same applies to the Minister of Education. In order to have the capacity to compete on the global stage island nations require the best distant learning programs on earth because of the obvious difficulty of replicating a college campus and the best teachers everywhere. I aint moving until I am sure that my children with have a decent education. Today, from CosmoLearning.com to academicearth.org to the MIT opencourseware project to khanacademy,org, there is a wealth of the best lectures in the world on various subjects. That must be available everywhere since the best tutors in The Bahamas cannot be available everywhere. We must provide the certainty to our people that our public school children will be as competitive as necessary in the future world. We know that some people will not move “back to the islands” if they fear that they will shortchange their children and deprive them of a private school level of quality education. An outstanding education program makes the prospect of families moving to these islands much more attractive.
In all of this, it should be abundantly clear that the e-government initiative being led by the Ministry of Finance’s and a robust telecommunications sector is a most important part of this “Back to The Islands” initiative.
Incentives could be offered to Bahamians now living overseas who might wish to move back home to one of the Family Islands as well as residents of New Providence. The largest incentive thus far is the Government’s declaration in the Speech from The Throne that it will tackle the generations old problem of generation and commonage land. This will be the greatest distribution of wealth in our history and accords with that same United Nation’s study about “Where is the Wealth of Nations?”, which shows that clear title to land is one of the most important of five major factors adding wealth to nations.
An often forgotten sector of our economy, because of its intermittent nature, is construction. Not only does construction absorb large pools of labour, physical buildings also have the psychological value of establishing visible markers of progress and confidence in the future. It is for these and other important reasons that the Bahamar project was approved. It will be our task to ensure and be seen to be ensuring all commitments for the training and development of Bahamian labour during the course of that project and that all appropriate and available Bahamian labour and contractors are absorbed. The training element is of utmost importance as we provide the thousands of young men in our society with a tradable sets of skills.
The entire concept of “anchor projects” as conceived by some and as perceived by many is externally focused. It relies largely on foreign investment for much of its success. All that is required for Bahamians to be successful in tourism are “Bed & Breakfast” facilities that can be viewed and booked electronically from anywhere in the world along with the air and sea transportation that might be required to deliver the visitor to their accommodations. My Ministry is in the final stages of negotiations to acquire the software to put such a system in place. There is clear evidence that warm weather vacationers dream of their own villa or private and intimate home near the water in The Bahamas but those dreams are deferred once the difficulty of accessing those facilities and purchasing them with confidence are encountered. When those difficulties are overcome, we can enable hundreds of Bahamians to enter the tourism business immediately all over The Bahamas. As mentioned earlier, today, right now, we have more vacant rooms available in private homes and villas throughout The Bahamas than the rooms to be brought on stream by Bahamar. No need to wait, we can start the day that the transportation and booking systems are in place. At that time, we will also bring the answering and development of 800-BAHAMAS back to The Bahamas for Bahamians to provide those services to prospective travelers.
These developments also expands the tourism offerings in the Bahamas in a way that has been long contemplated. Cruise lines have discovered the multiple destinations of The Bahamas and those different experiences are easily accessible by ship. Once we put the sea, air and electronic infrastructure in place, The Bahamas will also be accessible for multi island vacations by land based visitors and more importantly become attractive to those long stay vacationers of two weeks to a month who loathe the idea of remaining on one relatively small island for that period of time. We know that it is difficult to persuade a vacationer to extend the length of their vacation stay but it is entirely possible to attract persons who naturally take long staying vacations but for whom the single island offers of The Bahamas were insufficiently compelling.
Last year at this event, we introduced the concept to recast The Bahamas as sixteen differentiated destinations instead of the current designations of “Out Islands” “Family Islands” or “700 Islands”. Our research shows that the term “Out islands” conveys the idea of “seen one seen them all”. We found that the term “Family Islands” conveys the misapprehension that these islands are for family oriented vacations when in fact they are just the opposite in many cases. The third description of “700 islands” is overwhelming to contemplate and is therefore treated as an intriguing fact but not something worthy of exploration.
The sixteen islands and island groups is just right. Each has its own logo and sense of place within the Bahamian archipelago. In many cases, the social and historical differences between these island groups in The Bahamas are greater than two English speaking countries in the Caribbean but we have never taken advantage of these differences. We have also discovered that in order to strongly convey the idea of differences, we have to show different “looks and feelings” for each island/island groups. Our research of the views of prospective consumers confirms the positive images and impressions that the new logos deliver. We also know that we can take advantage of the fierce loyalties that Bahamians have to their island of birth or the island from which they were descended. So the internal rivalry that comes with these designations will foment the kind of positive energy that is most useful in advancing this initiative. We believe that this is the best example we know of Stephen Covey’s famous quote that “Strengths lies in differences, not in similarities”.
The renaissance of New Providence is well underway with the downtown turnaround, a newly dredged harbor, the new Straw Market, the new green space on the location of the current straw market site, with the new airport, the new Gateway Highway, the new connecting road system with the replacement of tens of thousands of feet of new water, power and communications infrastructure underneath, the new container port and the fast ferry dock, and with the new national stadium and associated sporting facilities. These all merely recognize New Providence as the capital and hub island of The Bahamas. These massive capital improvements on New Providence are necessary pre-requisites for Bahamians to move “Back to The Islands” to take advantage of untapped assets unmatched by any other country in our part of the world.
The Bahamas (with the obvious exception of Cuba) holds the distinction in the Caribbean as that independent country from which the fewest number of its citizens leave to live elsewhere in search of better economic opportunities. It was an axiom in recent times that Bahamians leave home reluctantly only for training and development but they returned on completion. That is no longer as true as it once was and is the greatest risk to our future. The acknowledged but unaddressed problem in many places in our region is that the people with “get up and go” get up and leave. There is no substitute for talent and if our talent begins to leave our shores, we create a variety of problems beyond those that we currently experience. Our young people who are experiencing levels of unemployment that is much higher than average. Never mind the horror stories that they see with people in the United States finding work, ambitious people believe that the pool of opportunity is so much larger in the United States and that their chances of successful and sustained employment are better there. I am here to tell them that the long term prospects are much better here. This is for the young man on the American Airlines flight who sat next to me to say that land prices in The Bahamas especially on the waterfront are too high for young people. He was speaking about New Providence and had never been to many of the other 98%. This is for the young woman who wants to open her own hotel in The Bahamas and has a wonderful concept. She was looking only at New Providence and left my office with a new gleam in her eye. In large measure, the purpose of this presentation is for those young people.
While we always compare things as they are against the way they used to be, we have always thought it important to compare ourselves against the rest of the Caribbean. Barbados, the country, is the same length as and only seven miles wider than New Providence and has roughly the same population. But Barbados, for example has one airport, one major dock, three power generating plants and approximately fifty cell phone towers. The Bahamas has more the 50 airports including 17 international airports, 22 docks, 30 power generating plants and more than 220 cell phone towers. We have no option but to grow the economies of our other islands.
We are coming around to see that while broader diversification of our economy is a wonderful mantra and is an idea supported by our government, until that day, diversifying the utilization of our tourism assets are more likely to bring immediate benefits in the short term. Move from utilizing 2% to utilizing 10, 20 then 30%. Besides, tourism cannot grow without all of the other traditional sectors contributing to that growth and growing themselves: it needs agriculture, it needs legal services, it needs accounting services, it needs medical services, it needs engineering services, it needs software development etc. The more useful mantra is that one must always compete in their area of comparative and competitive advantage. Tourism is an economic development tool and it is our area of comparative and competitive advantage. We have not come close to making maximum use of that tool. Our position has never been tourism OR diversification but always tourism AND diversification.
It was most instructive to read in a recent article in Foreign Policy magazine entitled “The Japan Syndrome” which examined the reasons why a manufacturing society such as Japan has grown less than 1% per year since 1991 and whose GDP today is lower than it was in 1997. In that article, it was noted that : “Mei Xinyu, a researcher at the Chinese Academy of International Trade under the Ministry of Commerce, recently wrote that "the manufacturing industry can provide enough jobs to Chinese people and also widely distribute the benefits of economic growth." In fact, the service sector is better at both. The International Monetary Fund (IMF) recently found that the benefits of growth are not distributed equitably to workers in manufacturing-oriented economies; wages tend not to keep pace with productivity gains in countries like China and Japan where productivity in services lags manufacturing badly”. Let us not be so quick to “diss” our dependence on services. In fact, it is a godsend for the broader distribution of benefits across a society.
For me, this all started in 1992 with the newly elected administration deciding to get the government out of the hotel business and using the proceeds and savings from those adventures to begin the modernization of the infrastructure on our Family Islands. Roads, telephones, electricity and water systems were all upgraded to levels never seen before. The very definition of a quantum shift was seen in the quality of visitor coming to The Bahamas in the wake of the new and improved quality of tourism investments. While we continued to count and grow the number of visitors, we were counting and growing a higher quality of stopover visitor than any of the larger destinations in our region. Now, we are merely continuing the development of this new and improved Bahamas by providing the inter-island connections and inter-island economies to stitch our nation into a whole and extend the benefits to all of our people and to all corners of our Commonwealth. As I mentioned at the beginning, this is merely an overarching synthesis of the expressions of this government’s compact with the people of The Bahamas. I am delighted to a part of the unfolding of these extraordinary achievements especially at a time when the entire world is recovering from the effects of what has now become known as the Great Recession second only to the Great Depression of the 1930’s.
A few Sundays ago, I was sitting in St Anselm’s church and listening to one of Monsignor Moss’ sermons which I always consider a privilege. In support of one of the points made in the Gospel reading Monsignor Moss quoted Steven Covey who once said: “The main thing is to keep the main thing the main thing.”
Ladies and gentlemen, the main thing is that we have been bequeathed 100,000 square miles of the clearest and most salubrious waters in the world. If we continue to guard and protect those waters with increasing fervor as we have been doing, it does not diminish in size or value over the course of time unlike the natural resources of many other nations. We have been bequeathed more islands than the rest of the Caribbean combined. We have been bequeathed more beaches than the rest of the Caribbean combined.
In a world where warm weather islands surrounded by such clear and salubrious waters are major assets, we must provide infrastructure for the full utilization of a country’s assets. As you will have seen, we are now at the beginning of the biggest educational, transportation and electronic infrastructure development in our history. This is the beginning of the wave to move us all forward, upward and onward together.
But for the sake of our children and your grandchildren, for the sake of all Bahamians who are looking for low cost high quality land, who are looking for unending economic opportunities, who are looking for living and loving the best island life on earth, this is the time, now is the time to give focused attention to the development of our islands.
Vincent Vanderpool-Wallace
Minister of Tourism & aviation
13th January, 2011
Good morning.
Let me say from the outset that I am a strong supporter of the idea of economic diversification. Who could be against it? Who could possibly be against increasing the number of sectors that undergird an economy, especially the small economy of 350,000 hard working and hard striving citizens. Should Walmart with its 1.4 million selected employees in the United States alone diversify beyond retailing? Should IBM with its 400,000 selected employees diversify beyond computing? Should Toyota with is 320,000 selected employees diversify beyond automobile manufacturing? Should Bank of America with its 284,000 employees diversify beyond its narrow focus on banking?
Never mind the United Nations study that shows that wealthy small nations in this increasingly globalized world are those that focus on doing a few things very well. Never mind the New York Times article of a few years ago about Finland, a country with 5.5 million people being lauded for concentrating in music and telecommunications. According to the Times: ““ . . . the Finns, like the citizens of many small nations, have learned that the best way to make a splash on the global scene is to specialize”. Never mind that, we should diversify. We forget the large scale experiments of the 1960’s conglomerates of LTV, ITT, Litton Industries, Gulf+Western and TransAmerica. All are gone as it became clear that success comes from focusing on core competencies not from conglomeration or diversification. Never mind that, we should diversify.
The current perception is that our two most important economic sectors are facing stiff headwinds. In tourism, it is believed that our most important source markets are experiencing longer than expected economic recession that moderate our prospects for growth. In 2010 while our cruise numbers grew by more than 18 percent, when all of the numbers are in we expect our more important stopover number to have grown by approximately 5%. In stopovers, we still need to get back to 2008 numbers to begin to feel comfortable with our achievements. Given the level of unemployment in our largest markets in both the United States and Europe, 2011 will continue to be a challenge even though we expect continued growth in both cruise passengers and stopovers.
In financial services many members of the sector feel that irreversible international financial agreements have eliminated parts of our perceived comparative advantages which will lead to slower growth and more competition.
These are the kinds of conditions that frequently precede the call for economic diversification as if diversification is the panacea for all economic troubles. What is often forgotten is that the most diversified economies on earth, those of the European Union and the United States of America are not only going through the same economic troubles as The Bahamas, these highly diversified economies are in fact the source of our troubles. Even further, several of their states and countries in the US and the EU which were touted as tigers only a few years ago in this same forum are now in deeper economic troubles than The Bahamas has ever seen in recent times.
We are quite an intuitive people. We know that any initiatives to grow our economy in the short and long term must be grounded clearly in a new set of activities that offer obvious competitive and comparative advantages that arise from making existing and accepted strengths stronger. It is important that we focus in making existing strengths stronger because we know that any effort that requires massive training and retraining of our population, while noble, is for the medium and longer term and is less certain. We are optimistic when proposals have a high likelihood of short term successes; our optimism is sustained whenever we see visible markers of progress; that optimism converts to economic growth when members of a population act independently in a coordinated fashion because the proposals not only “makes sense”, they are easily grasped and easily acted on by all. It is the United Nations study entitled “Where is the Wealth of Nations?” that tells us that explosive success comes from the idea of many hands working with one mind; it comes from the shared insight of phenomenal opportunities that are clearly within our grasp and within the grasp of the ordinary Bahamian. It is those opportunities that provide the reasons for my high optimism.
So yes, like many, I believe in diversification but not necessarily diversification in the way that consumes much debate.
I begin where I left off at last year’s Business Outlook.
Many people in our region are surprised, shocked and astonished by some simple statistics: If New Providence & Paradise Island were a separate country in our region, it would rank 5th in the number of stopover visitors, 2nd in the number of total visitors and 1st in the number of cruise passengers in the entire Caribbean. That, they find surprising. What they find shocking is that New Providence & Paradise Island, where nearly 70% of our population resides, represents less than 2% of the total land mass of the Commonwealth of The Bahamas. Less than 2%? Yes, less than 2% of The Bahamas would be ranked 5th in stopover arrivals, 2nd in total visitor and 1st in cruise visitors in our region.
Is it not therefore abundantly clear that in a region where islands are major assets for tourism development, we have substantially underutilized tourism assets in The Bahamas? If we want to diversify, why not diversify that? Why not diversify like Toyota in extending their brands of cars which includes their Lexus. Why not diversify like LVMH which specializes in luxury products such as Louis Vuitton, Hennessy, Hublot watches and Dior perfumes. Like Toyota and LVMH, why not diversify within one’s areas of strength and comparative advantage?
Is that not clear? Let me go further, today this 2% “country” of New Providence & Paradise Island would be the 3rd wealthiest independent country in the western hemisphere in terms of per capita income behind only the United of America and Canada. If fully developing only 2% of our islands yields these kinds of results, imagine what could happen if we began to utilize more of our natural assets? Now you can understand why when some people speak about diversification, I hear in our peculiar vernacular “diworseification”.
Many of us appear to be unaware of where we are in the global economy. Let’s put it into a little perspective.
The Commonwealth of The Bahamas is next door to the United States of America which is currently 25% of global GDP and that percentage is likely to remain quite high for the foreseeable future despite the growth of the BRIC nations of Brazil, Russia, India and China. Brazil represents 2% of global GDP, Russia represents 2%, India represents 1.6% and China 6%. Yet, despite our proximity, every day, as we have said several times, it is much less expensive and takes less time to travel from most places in the United States to most of the better known and variety of competing destinations in the Caribbean compared to the cost and time to travel to ANY of our Family Islands. Physical proximity without that proximity reflected in the cost and time of travel is useless. Reducing the cost and time for travel to our Family Islands will most assuredly lead to explosive growth and can turn our economy from the wind in our face to the wind at our backs. That solution will also make domestic travel for Bahamians a much more appealing proposition as compared to the current cost advantages of a trip to south Florida. The power of low cost high quality air and sea transportation is no longer a debate in our industry. Our Companion Fly Free program has been the most successful in history selling nearly 300,000 room nights and the annual growth of our cruise business by more than 18% last year are adequate testimony to the value of low cost access to a Bahamas vacation.
The simple and generally accepted reason for our current state of affairs has been the disproportionate focus on the development of the 2%, the capital island of New Providence and Paradise Island. For much too long now, our people, young and old, migrated like economic refugees to the economic centre of The Bahamas, to the island of New Providence. We have nearly overdeveloped this 2% over the past forty years without developing the necessary sea, air and ICT infrastructure for inter-island transportation and communication throughout the Commonwealth of The Bahamas. Infrastructure development in an archipelago depends as much on connections BETWEEN islands as it does on infrastructure ON islands. That is the necessary prerequisite to facilitate the easy and low cost movement of people, goods and services for the development of the entire country. In order to give a “mission to the moon” kind of focus, suppose we declared that in five years Bahamians will live on Eleuthera and Andros and commute to work in Nassau daily as we begin to reduce the overpopulation of New Providence and develop the remaining 98% of our nation of islands more completely. Those kinds of commutes are done every day in hundreds of places around the world. Why not The Bahamas? Our overall mission must be to go “Back to the Islands”. Of course, simultaneous with the development of that Andros and Eleuthera commute will be the introduction and expansion of inter-island transportation and communications services throughout the Islands of The Bahamas.
Some people have noted the reservation of space at Arawak Cay to establish a fast ferry terminal. But this is the first indication of a key government’s initiative to enable containers to roll off vessels at Arawak Cay and roll on to container trucks that can be transported to other islands to deliver the goods that are in demand for any resident population on those islands. In some cases, these containers can return with the fresh agricultural products from these islands to serve our long postponed “Fresh from The Bahamas” campaign with the Ministry of Agriculture to encourage greater use of our locally grown products by residents and visitors. In addition to passengers, these vessels will also carry large numbers of automobiles which is a normal occurrence in normal archipelagic nations such that those passengers can have their personal vehicles travel with them as they move across our Commonwealth. This will require a significant upgrade in the quality of our interisland vessels. We cannot continue with mail boat services in an email world. All of this will accelerate the purchase and utilization of first and second homes on our other islands and make that globally desired idea of living and loving the island life immensely more accessible and immensely more attractive.
Efforts are already underway to establish an electronic booking system for all of the air and sea transportation within The Bahamas such that residents and prospective visitors can make and pay for their transportation arrangements from anywhere on our planet to anywhere in The Bahamas instead of having to go to the airports and seaports to make those arrangements as is the case for most providers today. We expect that electronic backbone to be in place within several months. All of this makes the online rental of accommodations including hotels, homes and villas on these islands immensely more accessible and immensely more attractive. To give a sense of the scope of the existing opportunities, it is estimated that the number of bedrooms available for rent in second homes in The Bahamas today, exceeds the number of new rooms that are proposed for the new Bahamar. Imagine, all of the land sea and air transportation throughout the commonwealth of The Bahamas all owned and all operated by Bahamians and Bahamian companies. Imagine the size of aircraft and volume of seats coming into Lynden Pindling International Airport if substantial numbers of those passengers are on connections to other islands of The Bahamas.
Besides having all of the goods that would wish to have, “Back to the Islands” must also mean having other essential government services in place such as medical and school facilities that are either already underway or are in the planning stages. We know that mini hospitals and clinics must be available 24 hours per day and schools must be of a certain quality to persuade Bahamian families to move from New Providence to other islands. We know that effective tele-medicine must be available because it is impossible to have specialists of every kind available in every corner of The Bahamas. We understand that highly reliable, high bandwith electronic communications is critical to this process.
The same applies to the Minister of Education. In order to have the capacity to compete on the global stage island nations require the best distant learning programs on earth because of the obvious difficulty of replicating a college campus and the best teachers everywhere. I aint moving until I am sure that my children with have a decent education. Today, from CosmoLearning.com to academicearth.org to the MIT opencourseware project to khanacademy,org, there is a wealth of the best lectures in the world on various subjects. That must be available everywhere since the best tutors in The Bahamas cannot be available everywhere. We must provide the certainty to our people that our public school children will be as competitive as necessary in the future world. We know that some people will not move “back to the islands” if they fear that they will shortchange their children and deprive them of a private school level of quality education. An outstanding education program makes the prospect of families moving to these islands much more attractive.
In all of this, it should be abundantly clear that the e-government initiative being led by the Ministry of Finance’s and a robust telecommunications sector is a most important part of this “Back to The Islands” initiative.
Incentives could be offered to Bahamians now living overseas who might wish to move back home to one of the Family Islands as well as residents of New Providence. The largest incentive thus far is the Government’s declaration in the Speech from The Throne that it will tackle the generations old problem of generation and commonage land. This will be the greatest distribution of wealth in our history and accords with that same United Nation’s study about “Where is the Wealth of Nations?”, which shows that clear title to land is one of the most important of five major factors adding wealth to nations.
An often forgotten sector of our economy, because of its intermittent nature, is construction. Not only does construction absorb large pools of labour, physical buildings also have the psychological value of establishing visible markers of progress and confidence in the future. It is for these and other important reasons that the Bahamar project was approved. It will be our task to ensure and be seen to be ensuring all commitments for the training and development of Bahamian labour during the course of that project and that all appropriate and available Bahamian labour and contractors are absorbed. The training element is of utmost importance as we provide the thousands of young men in our society with a tradable sets of skills.
The entire concept of “anchor projects” as conceived by some and as perceived by many is externally focused. It relies largely on foreign investment for much of its success. All that is required for Bahamians to be successful in tourism are “Bed & Breakfast” facilities that can be viewed and booked electronically from anywhere in the world along with the air and sea transportation that might be required to deliver the visitor to their accommodations. My Ministry is in the final stages of negotiations to acquire the software to put such a system in place. There is clear evidence that warm weather vacationers dream of their own villa or private and intimate home near the water in The Bahamas but those dreams are deferred once the difficulty of accessing those facilities and purchasing them with confidence are encountered. When those difficulties are overcome, we can enable hundreds of Bahamians to enter the tourism business immediately all over The Bahamas. As mentioned earlier, today, right now, we have more vacant rooms available in private homes and villas throughout The Bahamas than the rooms to be brought on stream by Bahamar. No need to wait, we can start the day that the transportation and booking systems are in place. At that time, we will also bring the answering and development of 800-BAHAMAS back to The Bahamas for Bahamians to provide those services to prospective travelers.
These developments also expands the tourism offerings in the Bahamas in a way that has been long contemplated. Cruise lines have discovered the multiple destinations of The Bahamas and those different experiences are easily accessible by ship. Once we put the sea, air and electronic infrastructure in place, The Bahamas will also be accessible for multi island vacations by land based visitors and more importantly become attractive to those long stay vacationers of two weeks to a month who loathe the idea of remaining on one relatively small island for that period of time. We know that it is difficult to persuade a vacationer to extend the length of their vacation stay but it is entirely possible to attract persons who naturally take long staying vacations but for whom the single island offers of The Bahamas were insufficiently compelling.
Last year at this event, we introduced the concept to recast The Bahamas as sixteen differentiated destinations instead of the current designations of “Out Islands” “Family Islands” or “700 Islands”. Our research shows that the term “Out islands” conveys the idea of “seen one seen them all”. We found that the term “Family Islands” conveys the misapprehension that these islands are for family oriented vacations when in fact they are just the opposite in many cases. The third description of “700 islands” is overwhelming to contemplate and is therefore treated as an intriguing fact but not something worthy of exploration.
The sixteen islands and island groups is just right. Each has its own logo and sense of place within the Bahamian archipelago. In many cases, the social and historical differences between these island groups in The Bahamas are greater than two English speaking countries in the Caribbean but we have never taken advantage of these differences. We have also discovered that in order to strongly convey the idea of differences, we have to show different “looks and feelings” for each island/island groups. Our research of the views of prospective consumers confirms the positive images and impressions that the new logos deliver. We also know that we can take advantage of the fierce loyalties that Bahamians have to their island of birth or the island from which they were descended. So the internal rivalry that comes with these designations will foment the kind of positive energy that is most useful in advancing this initiative. We believe that this is the best example we know of Stephen Covey’s famous quote that “Strengths lies in differences, not in similarities”.
The renaissance of New Providence is well underway with the downtown turnaround, a newly dredged harbor, the new Straw Market, the new green space on the location of the current straw market site, with the new airport, the new Gateway Highway, the new connecting road system with the replacement of tens of thousands of feet of new water, power and communications infrastructure underneath, the new container port and the fast ferry dock, and with the new national stadium and associated sporting facilities. These all merely recognize New Providence as the capital and hub island of The Bahamas. These massive capital improvements on New Providence are necessary pre-requisites for Bahamians to move “Back to The Islands” to take advantage of untapped assets unmatched by any other country in our part of the world.
The Bahamas (with the obvious exception of Cuba) holds the distinction in the Caribbean as that independent country from which the fewest number of its citizens leave to live elsewhere in search of better economic opportunities. It was an axiom in recent times that Bahamians leave home reluctantly only for training and development but they returned on completion. That is no longer as true as it once was and is the greatest risk to our future. The acknowledged but unaddressed problem in many places in our region is that the people with “get up and go” get up and leave. There is no substitute for talent and if our talent begins to leave our shores, we create a variety of problems beyond those that we currently experience. Our young people who are experiencing levels of unemployment that is much higher than average. Never mind the horror stories that they see with people in the United States finding work, ambitious people believe that the pool of opportunity is so much larger in the United States and that their chances of successful and sustained employment are better there. I am here to tell them that the long term prospects are much better here. This is for the young man on the American Airlines flight who sat next to me to say that land prices in The Bahamas especially on the waterfront are too high for young people. He was speaking about New Providence and had never been to many of the other 98%. This is for the young woman who wants to open her own hotel in The Bahamas and has a wonderful concept. She was looking only at New Providence and left my office with a new gleam in her eye. In large measure, the purpose of this presentation is for those young people.
While we always compare things as they are against the way they used to be, we have always thought it important to compare ourselves against the rest of the Caribbean. Barbados, the country, is the same length as and only seven miles wider than New Providence and has roughly the same population. But Barbados, for example has one airport, one major dock, three power generating plants and approximately fifty cell phone towers. The Bahamas has more the 50 airports including 17 international airports, 22 docks, 30 power generating plants and more than 220 cell phone towers. We have no option but to grow the economies of our other islands.
We are coming around to see that while broader diversification of our economy is a wonderful mantra and is an idea supported by our government, until that day, diversifying the utilization of our tourism assets are more likely to bring immediate benefits in the short term. Move from utilizing 2% to utilizing 10, 20 then 30%. Besides, tourism cannot grow without all of the other traditional sectors contributing to that growth and growing themselves: it needs agriculture, it needs legal services, it needs accounting services, it needs medical services, it needs engineering services, it needs software development etc. The more useful mantra is that one must always compete in their area of comparative and competitive advantage. Tourism is an economic development tool and it is our area of comparative and competitive advantage. We have not come close to making maximum use of that tool. Our position has never been tourism OR diversification but always tourism AND diversification.
It was most instructive to read in a recent article in Foreign Policy magazine entitled “The Japan Syndrome” which examined the reasons why a manufacturing society such as Japan has grown less than 1% per year since 1991 and whose GDP today is lower than it was in 1997. In that article, it was noted that : “Mei Xinyu, a researcher at the Chinese Academy of International Trade under the Ministry of Commerce, recently wrote that "the manufacturing industry can provide enough jobs to Chinese people and also widely distribute the benefits of economic growth." In fact, the service sector is better at both. The International Monetary Fund (IMF) recently found that the benefits of growth are not distributed equitably to workers in manufacturing-oriented economies; wages tend not to keep pace with productivity gains in countries like China and Japan where productivity in services lags manufacturing badly”. Let us not be so quick to “diss” our dependence on services. In fact, it is a godsend for the broader distribution of benefits across a society.
For me, this all started in 1992 with the newly elected administration deciding to get the government out of the hotel business and using the proceeds and savings from those adventures to begin the modernization of the infrastructure on our Family Islands. Roads, telephones, electricity and water systems were all upgraded to levels never seen before. The very definition of a quantum shift was seen in the quality of visitor coming to The Bahamas in the wake of the new and improved quality of tourism investments. While we continued to count and grow the number of visitors, we were counting and growing a higher quality of stopover visitor than any of the larger destinations in our region. Now, we are merely continuing the development of this new and improved Bahamas by providing the inter-island connections and inter-island economies to stitch our nation into a whole and extend the benefits to all of our people and to all corners of our Commonwealth. As I mentioned at the beginning, this is merely an overarching synthesis of the expressions of this government’s compact with the people of The Bahamas. I am delighted to a part of the unfolding of these extraordinary achievements especially at a time when the entire world is recovering from the effects of what has now become known as the Great Recession second only to the Great Depression of the 1930’s.
A few Sundays ago, I was sitting in St Anselm’s church and listening to one of Monsignor Moss’ sermons which I always consider a privilege. In support of one of the points made in the Gospel reading Monsignor Moss quoted Steven Covey who once said: “The main thing is to keep the main thing the main thing.”
Ladies and gentlemen, the main thing is that we have been bequeathed 100,000 square miles of the clearest and most salubrious waters in the world. If we continue to guard and protect those waters with increasing fervor as we have been doing, it does not diminish in size or value over the course of time unlike the natural resources of many other nations. We have been bequeathed more islands than the rest of the Caribbean combined. We have been bequeathed more beaches than the rest of the Caribbean combined.
In a world where warm weather islands surrounded by such clear and salubrious waters are major assets, we must provide infrastructure for the full utilization of a country’s assets. As you will have seen, we are now at the beginning of the biggest educational, transportation and electronic infrastructure development in our history. This is the beginning of the wave to move us all forward, upward and onward together.
But for the sake of our children and your grandchildren, for the sake of all Bahamians who are looking for low cost high quality land, who are looking for unending economic opportunities, who are looking for living and loving the best island life on earth, this is the time, now is the time to give focused attention to the development of our islands.