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Advertisers Dupuch & Turnquest & Co.
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The renaissance of Grand Bahama Island: A sleeping beauty awakens
New investments are diversifying the economy and sprouting new opportunities on the island in manufacturing, maintenance, construction, tourism, financial services and agriculture, among others.
Grand Bahama Island has a unique history among the archipelago of 700 islands that make up The Bahamas. Once the point for gunrunners in the American Civil War, the center for bootleggers smuggling liquor in the 1920s and the home to limited hotel development in the late 1940s, Grand Bahamas remained a sparsely populated pine barren until the 1950s.
In 1955, the Hawksbill Creek Agreement was signed between the government of the Bahamas and the Grand Bahama Port Authority, a quasi-government private sector company. The agreement created Freeport, which later became the capital of Grand Bahama, designed to be an industrial city free from taxation (see sidebar).
"In effect we became the town planners, road builders, building inspectors, and so on," said Albert Miller, chairman of the GBPA. He reported that Freeport was planned to accommodate 250,000 people and that capital was heavily invested in creating infrastructure.
Within 12 years, the island was transformed into the center of industrial development. It became a popular tourist destination and the playground of the rich and famous who invested in luxurious homes. Land sales topped $60 million dollars annually and business transactions in Freeport dwarfed the rest of the Bahamian economy.
The growth, expansion and success of Freeport were not without critics. During the late 1960s, the Progressive Liberal Party came to power in the Bahamas. The party represented the black majority of Bahamians for the first time and after years of British rule, a movement evolved to have Bahamians in positions of power.
Nowhere was the contrast between the dependence upon expatriate personnel and foreign capital investment and the lack of Bahamians in positions of power more clear than in Freeport. Many complained that in Freeport expatriates were benefiting while Bahamians remained poor.
A new investor-friendly government, the Free National Movement came to power in 1992. Since then Freeport has seen a change in the GBPA and resurgence in capital investment and is on its way to becoming a leader in the Caribbean.
While The Grand Bahama Port Authority has been responsible for the planning and development of Freeport from its inception, it has sold 50 percent of the holdings of some of its companies to increase international investment. Hutchinson Port Holdings is joint owner of The Grand Bahama Airport Co., The Freeport Container Port and the Freeport Harbour. In 1998, HPH also acquired 50 percent of DEVCO. GBPA has also sold a 50 percent interest in its power company to Southern Co.
According to Mike Power, general manager of the Bahamas airport and seaport operations of Hutchinson Whampoa Limited, Hutchinson Whampoa was attracted to Freeport because of the potential it saw in the Freeport Container Port. Phase I of the Freeport Container Port was opened in April 1, 1997 and Phase II is scheduled to be finished this December.
"The way things seem to develop here is that one idea leads to another good idea." Power explained that two years after HPH invested in the container port, Edward St. George, an owner of the GBPA, approached HPH Group to take over the management of the airport.
"The airport has lost money for a number of years. Mr. Edward St. George made an offer to include the land between the airport and the container port, giving us a total of 6,500 acres. What that gives us is a cruise ship port that can handle the largest cruise ships in the world and a container port that can handle the largest container port in the world, sewn in with an airport at one end of the complex that can handle the largest aircraft in the world," stated Power.
"By the time that we finish here will have invested more than $550 million, which makes us the largest investor in Grand Bahama and second largest in the Bahamas," said John Markoulis, president and chief executive officer of DEVCO, with 20 years of experience with Hutchinson Whampoa Limited.
Why a company would invest that quantity of money in an island that is 96 miles long is a question that many have asked.
"The reason why the company decided to make further investments here was because they saw the same thing that people are starting to see now, which is that the economy of Grand Bahama was held back for several reasons and that has all changed now."
Markoulis noted that for the last eight years now, the islands have had a good, stable, progressive government that has attracted other international companies, such as Southern Co., to invest money in Grand Bahama. "There has been a realization that having the benefit of the laws of The Bahamas and a location that is 50 miles from the United States is good for business.”
Julian Snowden, partner at PriceWaterhouseCoopers, has lived in Freeport since 1966 and has seen the boom and bust of Freeport. "I am looking forward to seeing the boom again. We have the space to grow that Nassau lacks, we have good roads and an ample supply of clean water.
"What we are seeing in Freeport is a change in direction of the nation. Freeport is going to give a different emphasis on the income of the nation. The activities here are going to add value-added services, allowing us to retain more than the eight cents on the dollar we now retain. We are going to have financial services, industry and tourism. This will give us a more solid quality of earnings," said Erik Christiansen, president of New Hope Holding Co.
"More than $700 million is being invested in Grand Bahama right now on a population of 40,000. Nowhere in the Western Hemisphere does that exist," he stated.
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Table of Contents The Bahamas: An established tourism and tax-free financial services center experiences a renaissance |
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Only 35 minutes from Miami, a transformation is taking place that will chart the economic future of The Bahamas. With the planned expansion of the international airport, the creation of the Grand Bahama Sea-Air Business Center, the continued growth of the container transshipment port and the new $350-million-dollar hotel project under way, the island is experiencing nothing short of a renaissance.
Under the agreement, the GBPA had the responsibility for dredging a deepwater harbor, building an airport and developing Freeport. The GBPA was granted the ability to give business licenses. Under the umbrella of the GBPA, The Grand Bahama Development Company (DEVCO) was formed and made responsible for building roads, bridges and canals and for selling real estate.
In 1969, a business transaction enabled the government of the Bahamas to assume more control of Freeport and grant business licenses. The government appeared hostile toward foreign investors in Freeport, causing capital to flee and pushing Freeport into an economic void in the early '70s. Freeport remained a sleeping beauty until the early 1990s.