The die has been cast when The Bahamas signed on in observer status of the World Trade Organization, and quite a number of legislations are expected to be passed very quickly in this country to make us compliant.
These thoughts were expressed by attorney Carey Leonard as he addressed the Grand Bahama Chamber of Commerce this past week.
He stressed that once the WTO is signed “there are no changes (and) you have no say. So it is vital that we act now.”
He said that one of the main criteria is that of non-discrimination on the grounds of nationality which he shared:
Part III: Specific Commitments Article XVI: Market Access 2. In sectors where market-access commitments are undertaken, the measures, which a Member shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in its Schedule, are defined as:
(a) limitations on the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test; (b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limitations on the total number of service operations or on the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
(d) limitations on the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test;
(e) measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and (f) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment.
Leonard said that all of the above restrictive measures exist in The Bahamas today and will have to be phased out and require new legislation.
“How might this affect us, will it open us to competition? How are we to meet this competition? Will we need to merge with others to survive? Will we need to expand to survive? Will we need venture capital?
“Are our businesses ready for this? What is the condition of the corporate governance of our businesses?
“Many of us operate our businesses with a single bank account which is used for both our personal lives and our business. Some of us receive cash for business services rendered, don’t even deposit it in the bank, which means that we will be unable to prove our turnover if we go to the bank for a loan or if we want to merge with someone else we can’t show how well the business is doing so we won’t be able to negotiate much of a deal, or if we want to sell we won’t get the real value.”
Carey stated that there are also VAT implications in this because the business is going to need receipts and good accounts if it is get the VAT rebate or credit.
He said that in The Bahamas we have many family held and closely held businesses, noting that some of our most successful companies are either family held or are closely held companies.
“The corporate governance of these companies does not, as a rule, get the attention it deserves.
“Lenders, creditors, and, to a lesser extent, customers, increasingly require such companies to abide by corporate governance rules and principles. By doing so, these lenders, creditors and customers endeavour to ascertain that the internal governance procedures meet high reliability standards and deliver current and appropriate information about a company’s financial performance.”
Leonard said that compliance with these higher standards, by a closely held business, will also make it better able to withstand competition or take it public noting as The Bahamas transverses into the World Trade Organization (WTO), and protection of businesses on the grounds of nationality disappears, many locally closely held companies will find that they need to raise extra capital to survive or may wish to sell out and corporate governance he said is going to be critical.
Carey then went on to talk about the different types of businesses and how they would be affected.
However he noted the forums are being planned for the general public to get a better idea of what is coming but he stressed that it is going to be a battle of the fittest and everyone needs to act now!
By Yasmin Popsecu
The Freeport News
