The Bahamas is driven by tourism and financial services. Tourism provides an estimated 40% of the gross domestic product (GDP), with an additional 10% of GDP resulting from tourist-driven construction. Tourism employs about half the Bahamian work force. Read more
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THE ECONOMY OF THE BAHAMAS. Feb. 16th 2012
The Bahamas is driven by tourism and financial services. Tourism provides an estimated 40% of the gross domestic product (GDP), with an additional 10% of GDP resulting from tourist-driven construction. Tourism employs about half the Bahamian work force. In 2005, more than 5 million tourists visited The Bahamas, 87% from the United States. There are about 110 U.S.-affiliated businesses operating in The Bahamas, and most are associated with tourism and banking. With few domestic resources and little industry, The Bahamas imports nearly all its food and manufactured goods from the United States. American goods and services tend to be favored by Bahamians due to cultural similarities and heavy exposure to American advertising. The Bahamian economy, due to its heavy dependence on U.S. tourism and trade, is deeply affected by U.S. economic performance.
Following economic struggles in 2001-2002 fueled by a drop in tourism after September 11, 2001, The Bahamas has enjoyed a period of economic recovery and an upturn in large-scale private sector investments in tourism, which will boost construction and provide long-term employment. Future goals include continued development of tourism properties, including increased Bahamian ownership, redevelopment of the Grand Bahama economy following major hurricane losses in 2004, and the expansion of the robust Bahamian financial sector.
Economic challenges facing The Bahamas include meeting continued employment demands, jumpstarting a lagging privatization process, and monitoring increasing levels of government debt. Another major challenge for Bahamians will be to prepare for hemispheric free trade. Currently, Bahamians do not pay income or sales taxes. Most government revenue is derived from high tariffs and import fees. Reduction of trade barriers will probably require some form of taxation to replace revenues when the country becomes a part of the Free Trade Area of the Americas (FTAA). As evident by domestic opposition to the Caribbean Single Market Economy (CSME), the advantages of free trade may be hard for the government to sell.
Two major hotel projects promise to increase economic growth and create short- and long-term employment. The Atlantis Resort and Casino on Paradise Island is in the third phase of a billion-dollar expansion expected to create 3,000 new jobs. A second hotel resort development project costing nearly $2 billion is planned for the Cable Beach area of Nassau. The Baha Mar Company has negotiated purchase of three major hotels and a development site, including the last assets of the state-owned Hotel Corporation. As a condition of these large-scale investments, the government promises to expand Nassau International Airport and has turned over management to private operators. The Bahamian Government also has adopted a proactive approach to courting foreign investors and has conducted major investment missions to the Far East, Europe, Latin America, India and Canada. The government continues to pay particular attention to China to encourage tourism and investment. For their part, the Chinese are funding the construction of a new $30 million sports stadium in New Providence. While the new FNM government has expressed a desire to increase Bahamian ownership interests in developments, The Bahamas' dependence on foreign investment is unlikely to change.
Financial services constitute the second-most important sector of the Bahamian economy, accounting for up to 15% of GDP, due to the country's status as a tax haven and offshore banking center. As of 2005, the government had licensed 262 banks and trust companies in The Bahamas. The Bahamas promulgated the International Business Companies (IBC) Act in January 1990 to enhance the country's status as a leading financial center. The act served to simplify and reduce the cost of incorporating offshore companies in The Bahamas. Within 9 years, more than 84,000 IBC-type companies had been established. In February 1991, the government also legalized the establishment of Asset Protection Trusts in The Bahamas. In 2000, in response to multilateral organizations' concerns, the government passed a legislative package of stronger measures to better regulate the financial sector and prevent money laundering in the country's banking sector, including creation of a Financial Intelligence Unit and enforcement of "know-your-customer" rules. Some of these measures have been challenged in Bahamian courts, and the number of offshore banks registered in The Bahamas has declined substantially since 2002. As many as half of the IBCs have also closed shop. As a result, the government is considering additional legislation to keep the industry competitive while complying with international standards, including possible reform of the regulatory structure.
Agriculture and fisheries together account for 3% of GDP. The Bahamas exports lobster and some fish but does not raise these items commercially. There is no large-scale agriculture, and most agricultural products are consumed domestically. Following an outbreak of citrus canker on Abaco in 2005, The Bahamas lost a main agricultural export, and the Ministry of Agriculture banned the export of plant materials from Abaco. The Bahamas imports more than $250 million in foodstuffs per year, representing about 80% of its food consumption.
The Bahamian Government maintains the value of the Bahamian dollar on a par with the U.S. dollar. The Bahamas is a beneficiary of the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), Canada's CARIBCAN program, and the European Union's Lome IV Agreement. Although The Bahamas participates in the political aspects of the Caribbean Community (CARICOM), it has not entered into joint economic initiatives, like the CSME, with other Caribbean states.
The Bahamas has a few notable industrial firms: the Freeport pharmaceutical firm, PFC Bahamas (formerly Syntex); the BORCO oil facility, also in Freeport, which transships oil in the region; the Commonwealth Brewery in Nassau, which produces Heineken, Guinness, and Kalik beers; and Bacardi Corp., which distills rum in Nassau for shipment to U.S. and European markets. Other industries include sun-dried sea salt in Great Inagua, a wet dock facility in Freeport for repair of cruise ships, and mining of aragonite--a type of limestone with several industrial uses--from the sea floor at Ocean Cay.
The Hawksbill Creek Agreement established a duty-free zone in Freeport, The Bahamas' second-largest city, with a nearby industrial park to encourage foreign industrial investment. The Hong Kong-based firm Hutchison Whampoa operates the container port in Freeport. The Bahamian Parliament approved legislation in 1993 that extended most Freeport tax and duty exemptions through 2054.
GOVERNMENT AND POLITICAL CONDITIONS. Feb. 14th 2012
Governor General--Arthur Dion Hanna, Sr.
Prime Minister--Hubert Ingraham
Deputy Prime Minister and Minister of Foreign Affairs--Brent Symonette
Ambassador to the United States and to the OAS--vacant (Charge d'Affaires, a.i.--Rhoda Mae Jackson)
Ambassador to the United Nations--Dr. Paulette Bethel
Consul General, Miami--Alma Adams
Consul General, New York--Eldred Bethel
The Bahamas maintains an embassy in the United States at 2220 Massachusetts Ave., NW, Washington, DC 20008 (tel: 202-319-2660) and Consulates General in New York at 231 East 46th Street, New York, NY 10017 (tel: 212-421-6420), and in Miami at Suite 818, Ingraham Building, 25 SE Second Ave., Miami, FL 33131 (tel: 305-373-6295).
THE HISTORY. Feb. 9th 2012
In 1492, Christopher Columbus made his first landfall in the Western Hemisphere in The Bahamas. Spanish slave traders later captured native Lucayan Indians to work in gold mines in Hispaniola, and within 25 years, all Lucayans perished. In 1647, a group of English and Bermudan religious refugees, the Eleutheran Adventurers, founded the first permanent European settlement in The Bahamas and gave Eleuthera Island its name. Similar groups of settlers formed governments in The Bahamas until the islands became a British Crown Colony in 1717.
The late 1600s to the early 1700s were the golden age for pirates and privateers. Many famous pirates--including Sir Francis Drake and Blackbeard--used the islands of The Bahamas as a base. The numerous islands and islets with their complex shoals and channels provided excellent hiding places for the plundering ships near well-traveled shipping lanes. The first Royal Governor, a former pirate named Woodes Rogers, brought law and order to The Bahamas in 1718 when he expelled the buccaneers.
During the American Revolution, American colonists loyal to the British flag settled in The Bahamas. These Loyalists and new settlers from Britain brought Colonial building skills and agricultural expertise. Until 1834, when Britain abolished slavery, they also brought slaves, importing the ancestors of many modern Bahamians from Western Africa.
Proximity to the U.S. continued to provide opportunity for illegal shipping activity. In the course of the American Civil War, The Bahamas prospered as a center of Confederate blockade-running. During Prohibition, the islands served as a base for American rumrunners. Today, The Bahamas is a major transshipment point for narcotics on the way to the U.S.
Bahamians achieved self-government through a series of constitutional and political steps, attaining internal self-government in 1964 and full independence within the Commonwealth on July 10, 1973. Since independence, The Bahamas has continued to develop into a major tourist and financial services center.
THE PEOPLE OF THE BAHAMAS. Feb. 7th 2012
Eighty-five percent of the Bahamian population is of African heritage. About two-thirds of the population resides on New Providence Island (the location of Nassau). Many ancestors arrived in The Bahamas when the islands served as a staging area for the slave trade in the early 1800s. Others accompanied thousands of British loyalists who fled the American colonies during the Revolutionary War.
Haitians form the largest immigrant community in The Bahamas. 30,000-50,000 are estimated to be resident legally or illegally, concentrated on New Providence, Abaco and Eleuthera islands.
School attendance is compulsory between the ages of 5 and 16. The government fully operates 158 of the 210 primary and secondary schools in The Bahamas. The other 52 schools are privately operated. Enrollment for state primary and secondary schools is 50,332, with more than 16,000 students attending private schools. The College of The Bahamas, established in Nassau in 1974, provides programs leading to bachelors and associates degrees. Several non-Bahamian colleges also offer higher education programs in The Bahamas.