VII.  INVESTMENT CLIMATE:

The Bahamian government actively encourages foreign investment in
certain sectors of the economy, particularly in tourism, banking,
agriculture, and manufacturing.  At the time of its election in 1992, the
Ingraham Administration announced its intention to privatize several
public corporations, including the hotel corporation, the corporation
providing ground services at Bahamian airports, and parts of the
state-owned Bahamas Telecommunications Corporation (BATELCO), as
well as to invite private investment in the national air carrier,
Bahamasair.  Foreign investment is welcome in these areas, particularly
in the purchase of government-owned hotel and resort properties.
Certain businesses, however, are reserved exclusively for Bahamians.
These reserved businesses include restaurants (except gourmet and
ethnic); all but very large-scale construction; wholesale and retail
distribution; commission agents engaged in the import and export
trade; real estate agencies; domestic public transportation by land, sea,
and air; newspaper and magazine publications; advertising and public
relations; interior decorating; cinemas, theatres, and nightclubs;
security services; handicrafts; service establishments such as
hairdressing, barbering, automotive and appliance repairs; guest
houses and hotels of 25 rooms or less; and farming up to 100 acres.  In
addition, the Bahamian government has reserved certain categories of
businesses for joint venture operations which include majority
Bahamian ownership.  Included in this category are international air
and sea transportation; debit insurance; franchises, hotels of 26 to 100
rooms; manufacturing aimed primarily at the local market; some types of
farming in excess of 100 acres; and large-scale construction to the
extent possible.

Benefits of investing in The Bahamas include a stable democratic
environment, relief from corporate and personal income taxes,
sophisticated financial services, timely repatriation of corporate
profits, proximity to the United States, extensive air links through
nearby Miami and Orlando, excellent communications links, a good pool
of skilled professionals, excellent tourism and conference facilities, and
designation under the Caribbean Basin Initiative (CBI) as well as
Canada's CARIBCAN program and the European Union's Lome IV
Agreement.  Annual or permanent residence will be given to major
international investors; and fit and proper owners of residence valued
at $250,000 or more.

In 1993, the Government announced the establishment of The Bahamas
Investment Authority (BIA) within the Office of the Prime Minister.  BIA
was designed to provide a "one-stop shop" to assist foreign investors
with approval of their investment applications and to cut through
further "red tape" for approved investments.  Despite a slow start, BIA
remains the Bahamian government's central point of contact for foreign
investment questions.

In practice, the vast majority of successful foreign investments in The
Bahamas have remained in the traditional areas of tourism and banking.
The Bahamian government and business community have been
suspicious of outside investment in non-traditional areas
such as agriculture and industry, and projects in these areas have
generally faced a drawn-out approval process and some local
opposition.  The Bahamian government is most interested in
investments which will generate local employment, particularly in
white-collar or skilled jobs; large-scale projects in areas such as
agriculture requiring low-wage and low-skill labor in which many
Bahamians are not interested have failed due to government reluctance
to allow foreign workers to be used even on a temporary permit basis.
In instances where new foreign ventures have been perceived by a
part of the Bahamian business or labor communities as competing with
existing Bahamian businesses, the Government has been generally
responsive to local concerns and has closed the foreign venture, even
in instances in which business licenses were already granted.
Furthermore, while The Bahamas has not yet enacted environmental
legislation as extensive as that in the United States, the BIA will
require a full accounting of the environmental impact of new industrial
or agricultural schemes and will not approve projects which would be
unable to pass American environmental standards.  Finally, while
corruption is admirably rare, some foreign businesses, attracted by the
tax advantages of investing in The Bahamas, have complained that
frequent requests for "voluntary" donations to various civic causes
have constituted an unexpectedly high expense.

Real Estate:  The Bahamian government in 1993 repealed the Immovable
Property (Acquisition by Foreign Persons) Act, which required
foreigners to obtain approval from the Foreign Investment Board
before purchasing real property in the country, replacing it with the
Foreign Persons (Landholding) Act.  Under the new law, approval is
automatically granted for non-Bahamians to purchase residential
property of less than five acres on any single island in The Bahamas,
except where the property constitutes over fifty percent of the land
area of a cay (small island) or involves ownership of an airport or
marina.  The Bahamian government hopes this new legislation will
stimulate the second home/vacation home market and revive the once-
vibrant real estate sector.  The new law also provides for a two-year
real property tax exemption for foreign persons acquiring undeveloped
land in The Bahamas for development purposes, provided that
substantial development occurs during those two years.  At the same
time, however, the Bahamian government doubled the tax on
undeveloped real property held by foreigners from 1.50 percent of
assessed value to 3 percent, effective january 1, 1994, and planned to
more than double the tax again in 1995 to 7 percent of assessed value.
Following protests by foreign property owners, however, Bahamian
officials indicated that they may reconsider the tax increase, which was
originally passed to raise revenue, spur the lagging construction
industry, and encourage foreigners holding undeveloped plots of land
over long periods of time to develop their land.

Work Permits:  The Immigration Act requires foreigners to obtain work
permits before they can be employed in The Bahamas.  The Government
will permit foreign employees to work in a technical, supervisory, or
managerial capacity to initiate and operate industries, provided no
similarly qualified Bahamians are available for the job.  Foreign
business owners are expected to train as many of their Bahamian
employees as possible to eventually fill technical and managerial
positions.  While work permits are normally granted impartially under
established criteria, there have been isolated instances in the past in
which Bahamian government officials have prolonged the process of
renewing work permits for foreign managers whose actions drew local
labor protests.

Repatriation of Profits:  Profits and investment capital may be freely
repatriated.  Non-resident or foreign investors wishing to initiate
operations in The Bahamas must register their operations with the
Central Bank.  If the projects are substantially financed by foreign
currency transferred into The Bahamas, they will be given "approved
status."  This means that all profits and dividends, as well as the
proceeds from sales of such businesss, can be freely converted from
local currency into foreign currency at any time.

Tax Incentives:  The Bahamas levies no taxes on personal or corporate
income, capital gains, dividends, interest, royalties, sales, estates,
inheritances, or payrolls.  Foreign-owned businesses receiving tax
benefits are expected, however, to contribute generously to various
civic projects.  The only direct tax is the real property tax.  The tax
rates on real property are as follows:

-- Owner occupied:

-- (a) exempt from real property tax on the first $50,000 of assessed
   value;
-- (b) 0.75 percent per annum on the next $50,000 of assessed value;
-- (c) one percent per annum on assessed value in excess of $100,000.

-- Commercial property:

-- (a) 0.50 percent per annum on the first $50,000 of assessed value;
-- (b) one percent per annum on assessed value in excess of $50,000.

A gambling tax is also levied.  The airport departure tax was raised
from $7 to $13 per person in 1991 and again from $13 to $15 per person
in 1993.  The Government originally raised the harbor departure tax
from $7 to $20 per person in 1991; following protests from cruise ship
operators, however, the haror departure tax was lowered to $15 in 1992.

Industries Encouragement Act:  Under this law, the Government may
exempt from duties the machinery, tools, equipment, and raw materials
imported to construct new factories.  A list of duty-exempt items is
negotiated separately with each new venture.

Hotels Encouragement Act:  Under this law, new hotels and resorts can
be exempted from real property taxes for ten years from the date the
new facility opens.  In addition, the act allows the duty-free
importation of materials used for the construction of new faciilties or
the substantial renovation of existing facilities acquired by new owners
for a set period of time.  The list of duty-free items for each project
and the duration of some duty-free windows are negotiated separately
for each venture.

Agricultural Manufactories Act:  This law allows any materials
necessary for the construction, alteration, or repair of an "agricultural
factory," as well as any machinery or supplies used in establishing
such a factory, to be imported duty free.  An "agricultural factory"
refers to any factory established for the purpose of manufacturing or
preparing agricultural or horticultural produce of The Bahamas for
sale or export.

Spirits and Beer Manufacture Act:  This law provides for the duty-free
importation of materials used in the construction, alteration, or repair
of approved liquor distilleries or beer breweries and the duty-free
importation of raw materials and equipment for liquor or beer
production.

In addition to these acts, the tariff act grants to the Government
authority to waive import duties on various goods, supplies, and
materials justified by the public good where the specific waiver is not
covered by other Parliamentary Acts.

Investment Disputes:  The Bahamian government has never
expropriated a business and both major political parties have stated
that "nationalization will not be an instrument of government policy."
The Bahamas is not yet a member of the International Center for the
Settlement of Investment Disputes.  The Bahamas joined the Multilateral
Investment Guarantee Agency (MIGA), which insures investors against
currency transfer restrictions, expropriation, war and civil
disturbances, and breach of contract by member countries in 1992.  The
Bahamas has no history of political violence.

Bilateral Investment Agreements:  The Bahamas is in the process of
negotiating an Investment Protection Agreement with the United
Kingdom.  There is no Bilateral Investment Treaty (BIT) between The
Bahamas and the United States.

Intellectual Property Rights:  The Bahamas is a member of the World
Intellectual Property Organization (WIPO).  Local copyright laws, which
date to the 1970's, have not yet been revised to take into account
recent developments in communications and computer technology.

OPIC Programs:  Most recently, OPIC approved two investment projects
in The Bahamas in 1992.  It guaranteed up to $10.8 million in loans to the
Uniroyal Chemical Company, Ltd. to assist in the purchase and
refurbishment of a plant in Freeport formerly owned by Gist-Brocades,
Ltd.  Uniroyal currently uses the plant to produce high performance
antioxidents used in the manufacture of plastics for export to to North
America, Europe, and Asia.  In addition, OPIC committed itself to loan up
to $1.6 million to Landquest, Ltd. for the development of the Princess
Cays cruise ship facility on Eleuthera Island near Bannerman Town.

Labor:  In 1993, The Bahamian labor force consisted of 136,900 workers.
The unemployment rate, officially estimated at 13 percent, is more likely
in the 20-25 percent range.  Unemployment is highest among youth and
slightly higher for women; unemployment outside Nassau and Freeport
tends to be higher than in the two major population centers.
Considerable underemployment also exists in The Bahamas.  Despite
these facts, wage rates, while considerably lower than in the United
States, tend to be higher than elsewhere in the Caribbean.

The Ministry of Labor, Human Resources, and Training is responsible
for enforcing labor laws and has a team of several inspectors who make
on-site visits to enforce occupational health and safety standards and
investigate employee concerns and complaints.  The Ministry normally
announces these inspections ahead of time.  The Fair Labor Standards
Act limits the regular workweek to 48 hours and requires at least one
24-hour rest period per week, paid annual vacations, and employer
contributions to National Insurance (the local equivalent of Social
Security).  The Act also requires overtime payment (time and a half) for
hours in excess of the standard or time worked during public holidays.
The Act permits the formation of a wages council to determine a
minimum wage, but not such council has been established.  A 1988 law
provides for maternity leave and the right to reemployment after
childbirth.

The Bahamian Constitution specifically grants labor unions the rights
of free assembly and association.  These rights are exercised
extensively, particularly in the hotel industry where 80 percent of the
employees are unionized.  Unions operate without restrictions or
government control.  The right to strike is limited under the Industrial
Relations Act, which requires that union members must vote to strike
and that the motion must be passed by a simple majority before a strike
can commence.  The Ministry of Labor oversees strike votes.  In
general, labor-management relations in The Bahamas are very good,
and major or prolonged strikes are very rare.  Labor unions involved
in disputes with foreign-owned enterprises have not been above using
the fact of foreign ownership as a lever to gain popular support for
their demands.

Free Trade Zones:  A free trade zone exists at Freeport on Grand
Bahama Island, and a much smaller one on New Providence Island.  The
Hawksbill Creek Agreement established Freeport, the country's
second-largest town, as a free trade zone in 1954.  Firms in Freeport
are granted the right to import materials duty-free, and enjoy other
tax advantages.  In 1993, the Bahamian government extended most
hawksbill creek tax and duty exemptions through 2054, while
withdrawing exemptions on real property tax for foreign individuals
and corporations.  Prime Minister Ingraham declared, however, that
property tax exemptions might still be granted to particular individuals
on a case-by-case basis.

Capital Outflow Policy:  While foreign investors in The Bahamas enjoy
complete freedom to repatriate their investments and profits, The
Bahamas does not offer any incentives for investment in other
developing countries.

Major Current Foreign Investments In The Bahamas Include:

-- Alarge pharmaceutical plant in Freeport owned by Syntex
   Pharmaceuticals, which in turn is owned by the Swiss pharmaceutical
   firm Roche;

-- Uniroyal chemical's plant manufacturing high performance
   antioxidants in Freeport;

-- A container port facility being developed at Freeport by Hong Kong
   investors;

-- A hotel, resort, and casino complex on Paradise Island near Nassau
   recently purchased by the South African firm Sun Hotels International;

-- A large citrus farm being developed on Abaco Island by the B.G.
   Harmon Fruit Company of florida;

-- A large shrimp farm on Long Island operated by the American firm
   Maritek;

-- A tropical fish farm operated on Walker's Cay by Aqua Life, Ltd.;

-- Carnival's Crystal Palace Resort, Casino, and Convention Center,
   recently purchased by the Ruffin Hotel Group of Wichita, Kansas.

-- Coral Island underwater observatory, marine park, and hotel
   operated by an Israeli firm;

-- Princess Cays, a cruise ship landing facility on Eleuthera Island
   owned by Landquest;

-- Club Med resorts on Paradise Island, Eleuthera, and San Salvador;

   and

-- Comfort Suites on Paradise Island