By NEIL HARTNELL
Tribune Business Editor
Freeport’s private sector is seeking an urgent meeting with the Grand Bahama Port Authority (GBPA) over its Freeport Light Industrial Park (FLIP) venture, amid fears it will create “an uneven playing field” for Bahamian-owned businesses.
Tribune Business sources, speaking on condition of anonymity, confirmed that the concerns centre on the GBPA’s FLIP joint venture partner, Gold Rock Corporation, and whether their deal will give it an unfair competitive advantage over rival Freeport retailers.
The GBPA’s Bahamian-owned licensees are especially worried that the incentives and benefits flowing from the FLIP deal will aid Gold Rock and its owners, the Florida-based Del Zotto family, in their ambitions to dominate Freeport’s hardware retailing market.
This newspaper revealed last month how Gold Rock is constructing a 130,000 square foot store under construction at the 300-acre FLIP park, which it will develop as part of its joint venture with the GBPA.
Apart from the potential “inequity” created by the FLIP deal, Tribune Business was told that Freeport-based rivals are questioning whether the new Gold Rock mega store is “feasible”, given that its primary market is just 50,000-60,000 strong.
With numerous Bahamian-owned retailers already in this space, the fear is that the market is not big enough for all, and the Del Zottos – with businesses in four US states – will exploit their financial muscle and the natural competitive advantages enjoyed by foreigners to squeeze existing Bahamian businesses out of the hardware/retail sector.
A list of private sector concerns relating to FLIP and the Gold Rock connection, which has been compiled by the Grand Bahama Chamber of Commerce, calls for a “level playing field” between all GBPA licensees.
The list, part of which has been seen by Tribune Business, says: “This is about what is fair and what is right.
“This initiative, as presented by the GBPA, is creating an unfair market advantage, and it threatens to negatively impact so many businesses and individuals instead of its desired goal of growing the GB economy. The players/incentives/structure [are] far too narrow for that to happen.”
Emphasising that rival GBPA licensees were not asking for ‘protectionist’ policies to be imposed, the list added: “We ask that careful consideration be made for how all Grand Bahama businesses can be furthered.
“How can the Port Authority set up such favourable conditions for one developer, soon to become an even larger retailer? Agreements, initiatives aside, we cannot understand how all of Grand Bahama will benefit.”
Kevin Seymour, the Grand Bahama Chamber of Commerce’s president, did not return Tribune Business calls seeking comment yesterday. However, this newspaper understands that the Chamber is hoping to meet with the GBPA by Thursday or Friday this week.
“I know some of the businesses are trying to get together to have a meeting with the St Georges, the Port Authority and the Chamber to find out what the hell the deal is,” one Freeport-based businessman said, speaking on condition of anonymity.
“They’re saying: ‘We’ve been here all this time. Why are you giving away all these concessions, preferences and benefits to a group from the US intent on wiping us out?’”.
Another concern is that the Bahamas’ National Investment Policy is being breached, given that retailing is supposed to be reserved for local ownership only, and Gold Rock Corp is foreign-owned.
The businessman, though, said this was the weakest protest argument, given that the National Investment Policy has been waived numerous times by successive governments already.
They pointed out that this would be undermined further by the Bahamas’ international trade commitments, such as the Economic Partnership Agreement (EPA) with the European Union (EU) and impending World Trade Organisation (WTO) membership.
“You cannot bring up the National Investment Policy,” the businessman said. “It’s going to be history. It’s really the uneven playing field.”
The private sector’s FLIP and Gold Rock-related concerns also revolve around the fact that Freeport’s retail market for hardware, home furnishings and fixtures, and construction materials is already “extremely saturated” given the city’s population.
And these businesses, including two large home centres and three large furniture locations, their smaller counterparts, and seven paint stores, are also facing fierce competition from south Florida.
The Chamber’s concerns list points out that several stores have already closed, and adds: What feasibility study was done to determine the viability of an outlet at the reported scale?
“What review was done to determine how such an outlet would impact a market of our size? The sales needed for break-even for such a location, even in the US, are significant. Granted, with the purported FLIP market, the retail outlet being planned will have additional competitive advantages over other GBPA licensees.”
The document added that the FLIP tie-in had “created an extraordinary (and inequitable) competitive situation”, given the bonuses and incentives offered to Gold Rock for on-time completion of the industrial park.
Henry St George, the GBPA’s vice-president, unveiled FLIP at the Grand Bahama Business Outlook. Under their partnership, the GBPA is both landowner and regulator, while Gold Rock is the developer.
FLIP’s 300-acre site, which runs directly west along the highway from Grand Bahama International Airport’s domestic terminal, was selected because Gold Rock’s existing businesses can serve as ‘anchor’ tenants.
Mr St George explained that the FLIP project was designed to smooth the entry of international businesses to Freeport, adding that there had already been interest from potential tenants.
FLIP tenants will be provided with sites ranging from three to 11 acres, with a “customisable turnkey business headquarters” then built for them by Gold Rock.
Mr St George said there would be a $7.5 million investment in FLIP’s infrastructure, with phase one vertical investments totalling $18 million.
“The site has been divided into four phases, and the transaction has been structured so that the development of 75 per cent of Phase 1 has huge economic benefits to the developer if it is completed within the targeted three-year window,” he added, in reference to Gold Rock.
Another private sector source added of Gold Rock’s retail venture: “The broader point is: Does this make sense for this market that needs diversification, that needs a shot in the arm, not a shot in the foot.”
They added that the Chamber’s planned meeting with the GBPA was intended to be non-confrontational, and to obtain a better understanding of the FLIP agreement and the Port/Gold Rock plans.