Bahamas - Right to Private Ownership and Establishment Bahamas - Ownership
The National Investment Policy explicitly reserves certain sectors of the economy exclusively for Bahamian investors. These sectors are listed on the BIA website at www.bahamas.gov.bs/bia. The government has made exceptions to this policy on a case-by-case basis but generally these sectors should be avoided as there is no guarantee of market access or right of establishment. The embassy is aware of several cases in which investors have been concerned about lengthy delays in the approvals process. International investors are permitted to engage in the ‘wholesale’ distribution of any product they produce locally.
Beyond the areas reserved for Bahamian participation in the National Investment Policy, rights to private ownership and establishment are maintained and respected. With the assistance of a local attorney, investors can create the following types of businesses: sole proprietorship, limited or general partnership, joint stock company, or a subsidiary of a foreign company. The most popular all-purpose vehicles for foreign investors are the International Business Company (IBC) and the Limited Duration Company (LDC). Both benefit from income, capital gains, gift, estate, inheritance, and succession tax exemptions.
There is no automatic right of establishment and all business engagements are subject to licensing and approval by the relevant authorities but, once approved, foreign and domestic private entities may engage in business activity without impediment. They may also freely establish, acquire, and dispose of interests in their business enterprises. All foreign investment is subject to review and approval by the BIA and may be subject to further review by the National Economic Council or Cabinet.
Privatization Program
In recent years, the Government has shown a preference for private management of state owned enterprises over equity interest and full scale divestment or liberalization. It continues to entertain proposals for upgrading services and is in discussions on several public-private partnership agreements. Foreign companies and investors have been permitted to participate in privatization programs and to bid on management contracts. In 2016, the Bahamian government completed an RFP process and signed a management services agreement with an American company to manage the country’s electric utility company.
Screening of FDI
Decision-making in The Bahamas is highly centralized, and all investments by foreign nationals are subject to approval by the National Economic Council (NEC). Investment proposals must include economic and environmental impact assessments. NEC decisions are final although it is sometimes possible for an investor to request reconsideration of a denial, particularly in cases where a proposal has been revised and strengthened. The government asserts that the majority of investment applications are processed quickly and without delay. Some U.S. companies, however, have reported that the review and approval process is cumbersome and time-consuming, and that often pending decisions linger for long periods making it difficult to make investment decisions. There is no timeline for approval and in a few instances proposals have been pending for more than a year. The review by a political body also provides an opportunity for political influence to weigh in the analysis of a business proposal.
Competition Law
With the exception of the Utilities Regulation and Competition Authority (URCA), which regulates the telecommunications sector, there are no regulations governing competition or antitrust policy. Recent decisions by the Government will expand the mandate and powers of URCA to include the regulation of electricity. This is a positive development and suggests the medium term potential for competition in the sector and the eventual approval of independent power producers. Exclusive rights for fixed periods to provide services have been granted by contract in some sectors. These legally approved private monopolies are being discontinued.