By Sir Ronald Sanders
Problems have emerged in the Bahamas over the number of Chinese workers on a project funded in part by the Export-Import (Ex-Im) Bank of the People’s Republic of China.
The original number of Chinese workers appears extraordinarily high – 8,150 even though there is an undertaking from the owners of the project that the peak number of foreign workers, at any given time, will not exceed 5,000 non Bahamians.
Rightly, Bahamas’ Prime Minister, Hubert Ingraham, has raised concerns about the large number of Chinese workers. His concerns are particularly relevant against the background that, according to the International Monetary Fund “tourist arrivals declined by 10 percent and foreign direct investment fell by over 30 percent, leading to a sharp contraction in domestic activity and a large rise in unemployment” in the Bahamas in 2009.
Construction is a critical engine of growth in any economy, but especially so in small economies where payments to local workers and suppliers keep money in circulation over a wide area including supermarkets, transport providers, clothing and footwear stores, real estate rentals and banks.
If 8,150 Bahamians – or close to it as possible – could be employed in this project, it would definitely be a fillip to the Bahamian economy and help to expand domestic activity and create jobs directly and indirectly.
The issue troubled Ingraham enough for him to travel to China to raise the matter with the Chinese government and return to the Bahamas with the news that he had succeeded in securing $200 million dollars more for construction workers and for Bahamian sub-contractors, raising the total that would be allocated to them to $400 million.
How this translates into jobs for Bahamians and a reduction in the number of Chinese workers is unclear, but note should be taken that, not surprisingly, the opposition Progressive Liberal Party (PLP) has characterised Ingraham’s journey to China as “a failure”. To be fair, it should also be pointed out that it was the PLP which introduced this project, known as Baha Mar, when it served as the government.
Baha Mar, projected to cost $2.5 billion, is a very large tourist project. On completion it is expected to rival the Bahamas’ biggest tourist plant, Atlantis, which was developed by Kerzner International. The operator behind Baha Mar is Caesars Entertainment Inc, a private gaming corporation that owns and operates over 50 casinos and seven golf courses under several brands. Prior to November 18, the Company was called Harrah’s Entertainment.
Ceasar’s, like every commercial business, puts its profitability first. In seeking financing from Ex-Im Bank of China, they apparently agreed that the work force, in effect, would be 71% Chinese and 29% Bahamian – a bitter pill to swallow in the best of economic times and certainly indigestible in the present economic climate.
No one in the Bahamas or elsewhere doubts the contribution that Baha Mar will make to the Bahamas economy in the short and long term, but the conditions of the Chinese loan rankles on the requirement for such a large number of Chinese workers.
After all, this is not aid. It is not even emergency or disaster aid when a high component of Chinese material and people would be acceptable. It is purely and simply a commercial contract, lending money that will have to be repaid.
The only reason one can surmise for the insistence on such a large number of Chinese workers, vastly outnumbering Bahamian ones, is that the Chinese will work for less and trade union conditions, and rights, would not apply in their case thus reducing the cost of the project.
This commentary is less concerned about the local politics of the Bahamas that are involved in this issue; more qualified people can comment on them. It is more concerned with the present and future relations between Caribbean Community (CARICOM) countries and China.
The experience of African countries, notably Angola recently, in relation to China’s use of an overwhelming number of Chinese workers, shows a strain in their relations with China. In 2006, the former President of South Africa Thabo Mbeki famously remarked: Africa must guard against falling into a "colonial relationship" with China.
I have long argued that CARICOM countries should negotiate with China at least a long-term framework treaty that covers aid, trade and investment. It should be a treaty along the lines of the Lomé and Cotonou Agreements that existed with the European Union.
As in all their bargaining with third countries, the CARICOM states would secure better terms if they negotiated with China as a collective than if each of them tried to bargain alone. And, if they succeeded in settling a treaty with China, issues such as the paramountcy of local labour in commercial projects and in loan-funded projects could be settled upfront, as would issues such as the supremacy of labour laws and respect for human rights in the countries where such projects are undertaken.
To negotiate such a Treaty with China, however, CARICOM countries have to do one of two things: those who now recognise Taiwan over China will have to drop that stance so that there is a united CARICOM recognition of China only; or those that recognise China should proceed to negotiate the Treaty with China leaving the others to join when they can.
There is a small window of opportunity left to negotiate a meaningful treaty with China. As China grows more powerful economically crowding out CARICOM’s traditional aid donors and investment partners, it will become very difficult for small Caribbean countries to bargain for the best terms even on commercial projects.
Beggar thy neighbour policies will get CARICOM countries nowhere in the long term and the time is right for all CARICOM countries to strengthen their relations with China on the basis of a structured and predictable treaty.
My friend and fellow writer, Anthony Hall, wrote recently that Hubert Ingraham’s “challenge to China” on the issue of the 8,150 Chinese workers “is precedent setting... and it behoves all leaders in our region to support, and be prepared to emulate, the stand he’s taking: for together we stand, divided we fall”.
China has itself faced the challenges of division; it might – just might - respect Caribbean unity.
November 19, 2010
caribbeannewsnow
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Showing posts with label unemployment Bahamas. Show all posts
Showing posts with label unemployment Bahamas. Show all posts
Friday, November 19, 2010
Friday, September 3, 2010
Bahamas: Loan Arrears Hit $1 Billion
LOAN ARREARS HIT $1 BIL
By CANDIA DAMES
Guardian News Editor
candia@nasguard.com:
Bahamians are now more than $1 billion in arrears on their loans as the public continues to struggle with keeping up mortgage payments.
In its latest economic report, the Central Bank said the banks'credit quality indicators deteriorated further in July.
According to the report--"Monthly Economic and Financial Developments July 2010"--this was buoyed by sustained high unemployment levels and a challenging business environment.
While there are no recent numbers on unemployment, it is widely agreed by those in government and in business that the rate of joblessness remains in the double digits.
With regard to the main components, the expansion in total arrears was due primarily to a rise in the dominant mortgage segment, which accounts for 52.0 percent of delinquencies.
The report said total private sector loan arrears rose by$22.4 million(two percent)to$1.2 billion, with a corresponding increase to 18.6 percent of total loans.
"The current numbers evidence the fact that the economy is still under some pressure and will probably continue to be for the near future,"said Barry Malcolm, chairman of the Clearing Banks Association and Managing Director of Scotiabank Bahamas Ltd., in an interview with The Nassau Guardian last night.
"Notwithstanding the current levels of delinquencies we're confident that the situation is stabilizing and will improve into 2011."
The Central Bank said that in terms of the average age of delinquencies, arrears in the short-term 31-90 day segment grew by$13.3 million(2.6 percent)to $534.2 million, resulting in an expansion in the corresponding loan ratio to 8.6 percent.
In addition, non-performing loans--those more than 90 days in arrears and on which banks have ceased accruing interest--rose by $9.1 million(1.5 percent)to $629.5 million, firming in the ratio to total loans to 10.1 percent.
Smaller gains were noted for the commercial and consumer categories, which comprise 23.3 percent and 24.6 percent of arrears, respectively.
Mortgage delinquencies expanded by $20.0 million(3.4 percent)to $606.8 million, owing to growth in both the 31-90 day, and non-performing segments of$11.3 million(3.5 percent)and $8.7 million(3.2 percent)respectively, the report added.
Malcolm told The Guardian that the absence of significant growth in the economy right now and the likelihood that growth will be slow in coming over the next year speaks to the need for prudence in how consumers save and spend.
In the United States, the economic outlook remains much more subdued than originally forecast.
Last week, Chairman of the Federal Reserve Ben Bernanke confirmed this.
Malcolm said,"To the extent that is the case in the U.S., it will as it always does have some direct effect on us."
Patricia Birch, who heads the Bahamas Real Estate Association, noted that it is impossible to tell from looking at the new numbers whether the majority of loans in arrears are for first-time property owners.
"Some of these may be properties that are not primary residences of Bahamians but may have been investment properties that they bought at a time when they were working steady and these may be lots or properties in the out islands or even here in Nassau,"Birch said.
"Certainly people are going through difficult circumstances, but in my opinion the banks do try to work with people as much as they can because banks are not interested in owning houses or property."
9/2/2010
thenassauguardian
By CANDIA DAMES
Guardian News Editor
candia@nasguard.com:
Bahamians are now more than $1 billion in arrears on their loans as the public continues to struggle with keeping up mortgage payments.
In its latest economic report, the Central Bank said the banks'credit quality indicators deteriorated further in July.
According to the report--"Monthly Economic and Financial Developments July 2010"--this was buoyed by sustained high unemployment levels and a challenging business environment.
While there are no recent numbers on unemployment, it is widely agreed by those in government and in business that the rate of joblessness remains in the double digits.
With regard to the main components, the expansion in total arrears was due primarily to a rise in the dominant mortgage segment, which accounts for 52.0 percent of delinquencies.
The report said total private sector loan arrears rose by$22.4 million(two percent)to$1.2 billion, with a corresponding increase to 18.6 percent of total loans.
"The current numbers evidence the fact that the economy is still under some pressure and will probably continue to be for the near future,"said Barry Malcolm, chairman of the Clearing Banks Association and Managing Director of Scotiabank Bahamas Ltd., in an interview with The Nassau Guardian last night.
"Notwithstanding the current levels of delinquencies we're confident that the situation is stabilizing and will improve into 2011."
The Central Bank said that in terms of the average age of delinquencies, arrears in the short-term 31-90 day segment grew by$13.3 million(2.6 percent)to $534.2 million, resulting in an expansion in the corresponding loan ratio to 8.6 percent.
In addition, non-performing loans--those more than 90 days in arrears and on which banks have ceased accruing interest--rose by $9.1 million(1.5 percent)to $629.5 million, firming in the ratio to total loans to 10.1 percent.
Smaller gains were noted for the commercial and consumer categories, which comprise 23.3 percent and 24.6 percent of arrears, respectively.
Mortgage delinquencies expanded by $20.0 million(3.4 percent)to $606.8 million, owing to growth in both the 31-90 day, and non-performing segments of$11.3 million(3.5 percent)and $8.7 million(3.2 percent)respectively, the report added.
Malcolm told The Guardian that the absence of significant growth in the economy right now and the likelihood that growth will be slow in coming over the next year speaks to the need for prudence in how consumers save and spend.
In the United States, the economic outlook remains much more subdued than originally forecast.
Last week, Chairman of the Federal Reserve Ben Bernanke confirmed this.
Malcolm said,"To the extent that is the case in the U.S., it will as it always does have some direct effect on us."
Patricia Birch, who heads the Bahamas Real Estate Association, noted that it is impossible to tell from looking at the new numbers whether the majority of loans in arrears are for first-time property owners.
"Some of these may be properties that are not primary residences of Bahamians but may have been investment properties that they bought at a time when they were working steady and these may be lots or properties in the out islands or even here in Nassau,"Birch said.
"Certainly people are going through difficult circumstances, but in my opinion the banks do try to work with people as much as they can because banks are not interested in owning houses or property."
9/2/2010
thenassauguardian
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