PUBLIC AFFAIRS - Harmony, discord or economic dysfunction?

Claude Clarke, Guest Columnist

It was with a wry, knowing smile that former Bahamas Prime Minister Hubert Ingraham joined in the chorus of praise by his fellow prime ministers for the proposed Caribbean-wide open common economy at the opening ceremony of the CARICOM Heads of Government Conference in Montego Bay in 1977.

But while Ingraham encouraged them to carry on with its implementation, he deftly and firmly maintained that the Bahamas was not ready for it.

Ingraham's belief that the Bahamas was better off pursuing its own economic path was perhaps grounded in the significant economic developments that were taking place in his country at the time. Atlantis Paradise Island Resort and Water Park, a mega resort development that would eventually offer 3,900 luxury rooms, suites and villas, among the largest hotel complexes in the world, would be opening its doors the following year.

The Bahamian economy would thrive over the next decade, growing by more than 32 per cent during the period, driven not only by tourism but by other export services such as offshore banking.

Not surprisingly, the period saw the income of the average Bahamian reaching almost five and a half times that of the average Jamaican. Certainly, the Bahamian Government's decision to focus on its own development and not to be sidetracked by delusions of regional economic cooperation led to a much better economic outcome than Jamaica has experienced.

Elegant four-lane roadway

I couldn't help remembering Ingraham's amused look as I recently travelled along Nassau's elegant four-lane roadway to its smart, modern, new airport. It struck me that the Bahamas, not being afflicted with the infatuation with Caribbean 'unity' from which Jamaica suffers, has recognised that foreign adventures must never be pursued at the expense of domestic interests.

Absent from the trip to the Nassau airport is the squalid disorder that characterises a journey from the Norman Manley Airport to Half-Way Tree. But what is most striking about the ride is the sight of multiple cranes dotting the Nassau skyline, a sight seldom seen in Jamaica in recent years. They are the signs of economic progress, specifically of the latest Bahamian tourism venture: a multifaceted mega resort called Baha Mar.

In December next year, Baha Mar, the largest single-phase, luxury-resort project currently in development in the Western Hemisphere, will open in Nassau. It is the second of its type in the region: both being in the Bahamas, a country with a population less than that of St Catherine.

A US$3.5-billion integrated gaming resort development, Baha Mar covers a thousand acres and features 2,200 brand new luxury rooms, suites and villas accompanied by an expansive water park, a world-class championship golf course and a 200,000-square foot convention centre. An additional 1,250 revitalised rooms will be contributed by the Sheraton and the Wyndham to create a 3,450-unit, high-class mega resort that, like Atlantis, will be among the 20 largest in the world.

It is estimated that after pumping more than US$400 million into the Bahamian economy during the construction phase, Baha Mar will have brought 12,000 permanent jobs directly and indirectly and generate US$12 billion in new employment income over 20 years.

It is more than instructive that the idea of Baha Mar coincided with the beginning of a dream for a similar mega tourism project in Jamaica over 10 years ago: Harmony Cove. Like Baha Mar, Harmony Cove was to be 'an ultra exclusive resort, catering to the very rich'.

More than 2,000 acres of land were acquired by Government to accommodate what was to be a 2,000-room development, with a state-of-the-art golf course and marina. It was to have given the north coast and Jamaica a major economic boost. And so it would, if only it could have been realised.

The Harmony Cove concept resembled the soon-to-be-completed Bahamian project, Baha Mar, in every way except one. Unlike Baha Mar, which was promoted and driven by private entrepreneurship, Harmony Cove is a government project attempting to attract the support and eventual development by a private partner.

Baha Mar needed the Bahamian government principally to provide legislative and administrative support and to share the cost of the supporting public infrastructure. The need for government to divert or risk the resources of the Bahamian people to develop an investment project, when the world is awash with private investment capital, was minimised.

Brilliance of individuals

The manner of the development of Harmony Cove exposes some of the worst and most costly characteristics of Jamaica's governance practices. Projects are often not assigned to agencies based on the areas and subjects for which they are responsible, but on the assumed brilliance of individuals and, most dangerously, by the control these individuals may have over the financial resources of government.

In the case of Harmony Cove, a project that should properly have been driven by the agency set up to promote investments and shepherd the development of economic projects in Jamaica landed in the laps of two agencies holding enormous amounts of public funds straddled by one presumed brilliant individual.

The National Housing Trust, responsible for developing houses for ordinary Jamaicans, and the National Development Bank, whose purpose was to mobilise capital to support ventures that are unable to attract sufficient commercial financing, were the two agencies.

Government has so far invested US$8 million; and not a shovel of mortar has been turned. It now needs another US$44 million to move forward, and as yet there is no certainty that anything will materialise. The best we have is a projection that construction could begin next year and completion three years later of 1,000 rooms; half the original projected size and less than one-third the size of the Baha Mar project.

This is despite the fact that in 2004, the chairman of the government company set up to manage Harmony Cove proudly proclaimed that the Government was not prepared to sell the project for up to US$80 million, which he said he was being offered by private interests as it was necessary for the Government to retain ownership.

Why?

At that price, Government would have earned a 900 per cent return on the US$8 million that it had originally invested.

Perhaps Government's penchant for control is the reason Harmony Cove remains lifeless; when its early divestment to the interested private parties might have provided just the entrepreneurial stimulus, it needed to yield results similar to those achieved by Baha Mar in the Bahamas.

Even at this late stage, the Government would be well advised to review its approach and adopt the strategies employed by the Bahamas in successfully bringing its two mega tourism projects to fruition.

One thing we could certainly learn is that economic development requires a singular focus. Focus on what really matters. The Bahamas has clearly identified the things that are needed to grow its economy and has committed and organised itself to pursue them. Among these things is not to be distracted from its central mission by foreign adventures.

If the Jamaican Government is serious about its responsibility to uplift the lives of the Jamaican people, it must concentrate its efforts on the single goal of economic development and be guided by an economic philosophy around which all government activities would coalesce.

In this way, the housing needs of the country would be organised so that workers' feeling of security and their productivity would be enhanced. Entrepreneurs with sound development projects would be able to rely on a development bank whose prime purpose is to satisfy their financing needs. Our educational institutions would be organised to best deliver the skills and aptitude needed by a productive society. And our foreign and trade policies would be designed to protect and promote our interests at home and abroad.

The misguided idea that we should "fight for Jamaica in CARICOM and fight for CARICOM in Jamaica', as the PNP's Progressive Agenda incredibly proclaimed, has succeeded in only one way: the fight for CARICOM in Jamaica has been spectacularly successful. The fight for Jamaica in CARICOM has been an unmitigated failure.

Claude Clarke is a businessman and former minister of industry. Email feedback to columns@gleanerjm.com.