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The Bahamas is beginning "a slow and sustainable recovery," from the 2008 financial downturn, though there continues to be challenges with debt. The spotlight is on the country's two major industries, tourism and financial services....

The Bahamas is beginning "a slow and sustainable recovery," from the 2008 financial downturn, though there continues to be challenges with debt. The spotlight is on the country's two major industries, tourism and financial services. Development projects that stopped in their tracks with the credit crisis are coming to life again as investors regain confidence in the jurisdiction. "Direct foreign investment is the singular most important factor in our economy," says one attorney.

There is renewed interest in high-end property transactions and high-end tourism projects, such as multi-use developments with hotels, clubs and residential properties. Construction is well underway on the $2 billion Baha Mar development on Paradise Island, which, at 1000 acres, is expected to be the largest resort in the Caribbean. On the west side of the island, the luxury condominium complex and golf course, Albany, opened in October 2010.

There is also work being done to enhance the image of the country's capital, Nassau, as a tourist destination. The first phase of the $409.5 million redevelopment of the city's Lynden Pindling International Airport is complete and a new US departure terminal opened in March 2011. Progress continues on the $65 billion Arawak Cay Port Development, which will effectively move the container port out of the downtown area, and the government has also invested heavily in infrastructure such as roads and sewage systems. The $11.2 million construction of the famous Straw Market in Nassau, which was destroyed by a fire in 2001, has also commenced.

Over the last 12 months the government has focused on legislation designed to stimulate the economy by appealing to local businesses and foreign investors. In April 2011, In recognition of the importance of tourism and financial services to the Bahamian economy, the government amended the National Investment Policy, raising the minimum requirement from $250,000 to $500,000 for direct foreign investment in a commercial enterprise and removing restrictions on restaurants and entertainment facilities unless they are part of a hotel. The amendment also raised the required threshold for real estate investors seeking accelerated permanent resident status, from $500,000 to $1.5 million. Despite concerns by the industry that the increase will put off buyers a stamp duty interest rate increase from 10% to 12% became effective in July 2010 for all real estate transactions, except those by first-time home buyers.

Other new legislation includes the New Business License Act which streamlines business establishment through on-line applications, and the Securities Industry Act 2011, which passed in the House of the Assembly in April 2011 and is designed to provide clarity to the definition of securities, stabilise the market, and protect investors' interests.

One attorney described the Bahamas as a "well kept secret," when it comes to investment funds, which are a small but steadily growing industry on the islands. Corporations report increased interest, primarily from Canada and Europe, in off-shore vehicles, incorporations and structuring.

As a demonstration of its commitment to the goals of the Organisation of Economic Cooperation and Development (OECD) with regard to tax transparency and anti-money laundering, the Bahamian government has signed a number of Tax Information Exchange Agreements (TIEAs) over the past year. In April 2009, it had only one TIEA, with the United States. By March 31 2010, it had signed TIEAs with 20 countries, comfortably surpassing the 12 TIEAs required by the OECD for "White List" status.