Bahamas: Investing

FDI in Figures

FDI flows over the past three years are at a lower level than at the beginning of the decade. Nonetheless, the Bahamas is the largest host economy among SIDS (small island developing States) in terms of FDI.  According to UNCTAD’s World Investment Report 2021, FDI inflows increased by 47% to USD 897 million in 2020, despite the contraction of the domestic economy and tourism following the COVID-19 pandemic. Reconstruction work after the devastation of Hurricane Dorian in 2019 and investment in ICT services continued in 2020. The stock of FDI increased slightly in 2020 to USD 26 billion. Major investments in recent years include a collaboration between US giant MasterCard and the Central Bank of The Bahamas to launch the Bahamas Sand Dollar, the first digital currency of its kind. In addition, a USD 300 million expansion of the archipelago's largest resort complex, Baha Mar, was completed in 2021.

The quality of the business environment could benefit from further improvement, as the country ranked 119^th out of 190 economies in the last Doing Business report, published by the World Bank in 2020, which indicated a one-spot drop compared to the previous year. Still, the Bahamas was among the economies that improved the most across three or more Doing Business topics. The Government aims to keep a stable and attractive investment climate to facilitate the ease and effectiveness of doing business in the Bahamas, so registering a new business has been easier and taxes are cheaper. The country can offer investors a stable and democratic political environment, attractive tax laws, well-developed infrastructure, a qualified workforce and a geographical proximity to the United States. On the other hand, the main weaknesses of the islands are the lack of economic diversification and the small scale of its domestic market. Despite the strenuous will of the government to ensure the country's economic sovereignty, the dependence of the archipelago on foreign investment remains significant. The Bahamas has an investment promotion strategy that includes multiple government agencies working to attract foreign direct investment. Foreign investments are subject to governmental approval, with the Bahamas Investment Authority (BIA) being responsible for approving all FDI in every sector of the Bahamian economy. The BIA functions as the investment facilitation agency and acts as a ‘one stop shop’ to assist investors in navigating a potentially cumbersome approvals process. The tourism sector attracts the majority of FDI inflows, which primarily comes from the United States, Canada, and China. The latter, in particular, has become a major player and is planning to finance new infrastructure projects in the country. Investments range from services to billion-dollar resort developments to million-dollar homes on the major islands of the archipelago. Although the Bahamas saw a significant decrease in FDI in 2020 and 2021, due to the COVID-19 pandemic, there have been some significant investments made in the country during that period. Most notably, the launch of the Bahamas Sand Dollar through a partnership between MasterCard and the Central Bank of The Bahamas.

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Latest Update: February 2023