Addressing the annual Bahamas Business Outlook on Tuesday, Mr. Francis called for careful reflections on the operations of labour unions, stating that it is time to develop better dialogue between labour, industry and government.
“I would argue that the influence of labour leaders – as distinct from the union membership – is currently far in excess of what it should be given what they represent in the entire process,” Mr. Francis said. “One can wonder whether they have not been allowed to direct the administration of labour far too much in the individual interest.”
Focusing his speech on critical issues facing the Bahamian economy, Mr. Francis said:
“The institutionalisation of a meaningful forum for dialogue between labour, industry and government needs to be pursued to develop a better appreciation by labour of its appropriate place in the economy and provide a long term stable framework within which orderly negotiation and determination of labour contracts and other issues of importance between groupings could be pursued.
According to Mr. Francis, The Bahamas has been able to hold its own in the two-pillar industries of tourism and financial services because of geographic consideration and a longstanding openness in policies governing the operation of activities in these environments.
“There is virtually no restriction on investments by credible and acceptable parties in either sector with the exception of the domestic retail banking sector,” he said.
Mr. Francis also noted that the labour policy of these two sectors has facilitated the management and technical needs of these sectors and could be considered as being reasonably flexible. He provided examples such as the Hotel Encouragement Act and the establishment of a government ministry to specifically focus on issues relating to the financial services sector evidence of the governments fiscal and administrative support for these sectors.
The Central Bank governor described the policy of openness and determination to be competitive in these two industries as the result of a realisation that despite the comparative advantage that is presently enjoyed by these industries, they are global industries and cannot be controlled by individual countries acting alone.
“This is especially true of the smaller countries such as The Bahamas. One has to play by the rules of the broader global environment or not play at all,” Mr. Francis said.
He added that this reality is not fully understood by many who still pine for the old days of financial services. “They do not fully understand or agree that The Bahamas alone cannot cause this industry to behave as we might wish.”
Mr. Francis also commented on certain areas of administrative and economic control that need to be examined such as the exchange control policy, investment policy, the virtual monopoly of public sector utilities, the immigration policy and the monopoly held by the Bahamas Bar Association.
According to the Central Bank governor, the decision made almost 40 years ago to fix the Bahamian currency to the U.S. dollar facilitated the need for exchange control, which currently places restrictions on the movement of capital within the economy.
He continued that while a more liberalised path needed to be pursued towards the ultimate objective of complete removal of exchange controls in the future, The Bahamas is “too far down the path” of a fixed exchange arrangement to make a sudden reversal.
“It is therefore in my view necessary to pursue the measured liberalisation path which has been followed for more than 10 years now.”
Mr. Francis also suggested that the country move quickly to commercialise the benefits of “diminishing” monopolies, noting that the country will lose the value built up in the national telephone company as the telecommunications industry as with tourism and financial services is driven by global forces.
“The Bahamas needs to embrace the international telecommunications industry fully and allow business and the community generally to realize the tremendous benefits it provides…As in other domain, we do have to appreciate that developments will not wait for us,” he said.
Mr. Francis also commented on the electrical monopoly which he said should not be driven by protectionism but rather seek to offer the Bahamian economy with the latest in technological and commercial arrangements allowing consumers to enjoy terms similar to those available elsewhere.
“Those who would have us believe that this has anything to do with our birthright or national pride are wrong,” Mr. Francis said. “The best long-term interest of Bahamians in a globalised environment is served by polices which embrace all opportunities available to us.”
Mr. Francis described the strict legal monopoly in favour of members of The Bahamas Bar Association as counter productive especially in the delivery of international financial services.
“The best that one can say for this anachronism is that it fails to appreciate to what extent legal services have become synonymous with this industry…Legal practitioners who refuse to contemplate any compromise in this regard are simply pursuing naked self interest,” Mr. Francis said adding that if policy makers refuse to address this issue then it should be put to the Bahamian people to decide.
“It is simply too important to the future of a potentially more vibrant and dynamic financial services industry to leave it as it currently stands.”
Mr. Francis noted that while reforms where needed, The Bahamas was not ready for them as there is still a pervasive desire by Bahamians to resist change and assume that the country will continue to enjoy the fruits of its traditional good fortune with not effort on the part of Bahamians.
“Unless we are willing to embrace these types of reforms in the way we pursue development, the improvements which we have known for three and a half decades of development will become increasingly difficult to realize.”
Martella Matthews, The Nassau Guardian
