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Hawksbill Creek Agreement
The Agreement
On the 4th August, 1955, the Government of the Bahamas entered into an agreement with the Grand Bahama Port Authority, a company owned by Mr. Wallace Grove, and American Entrepreneur, for the dredging of a deep water harbour, and the establishment of an industrial area at, and in the vicinity of Hawksbill Creek, Grand Bahama. This agreement was later amended in 1960, and 1966 became known as the Hawksbill Creek Agreement.
The Government Agreed To:
(1) Lease 50,000 acres of Crown Land to the Grand Bahama Port Authority
for development.
(2) Grant exemption from Customs Duties on imports (except consumable stores)
and exports to and from the area for 99 years (until 2054).
The Grand Bahama Port Authority Limited Agreed To:
(1) Dredge and develop a harbour at Hawksbill Creek.
(2) Encourage factories and other industries to the area that would make use
of the natural resources (limestone, rock and pine lumber).
(3) Purchase other acres of land in the surrounding areas from private owners
also for development. This project is known as the Port Project, and the area
is referred to as the Port area - better known as Freeport.
Conditions
To enjoy duty-free concessions, the Grand Bahama Port Authority and its licensees must apply to Bahamas Customs for Open Warehouse Status and a bond number.
The application must include:
(1) A copy of the License Agreement.
(2) A duly executed C.B.9 Bond Surety guaranteed by a local bank. The amount of security is determined by Customs, and varies depending on the nature of business. However, the minimum requirement is Five Thousand ($5,000.00) Dollars.
Open Warehouse Status
Once the application is approved, the licensee is given an Open Warehouse Status/Certificate and a bond number. The open warehouse status allows the licensee to import, enter and have full control of conditionally duty free goods for the operation of business. The bond number, peculiar to the licensee must be noted on all import entries.
The Import Entry
The import entry use to enter imported goods conditionally duty free under the Hawksbill Creek Agreement is the Conditionally Duty Free Entry (C-14).
Purchasing Goods Out of Bond
Under the Agreement, licensees may import or purchase goods out of bond from other licensees, conditionally duty free, for the operation of their business. Where goods are purchased out of bond, the C-14, or some other form (i.e, Purchase Orders) approved by Customs may be used, depending on what is being purchased.
Record Keeping
Whether goods are imported or purchased out of bond or exported, the Grand Bahama Port Authority and its licensees are responsible for keeping proper records on the use and the disposal of the goods.
Cancellation Of License Agreement
The Grand Bahama Port Authority may cancel a license agreement for any reason. When this happens, all goods entered conditionally duty free under bond, automatically become dutiable. The licensee is then called upon to pay the duty applicable thereon.
Violations
Any violation of the agreement is subject to penalties imposed under the agreement and under the Customs Management Act.
Amended Agreement 1960 & 1966
In 1960, the Grand Bahama Port Authority went back to the Government and convinced them that to further develop Freeport, they (the Port Authority) needed to build a hotel/casino to encourage tourism. Thus, the 200 room King Inn Hotel was built. The 1966 amendment called for the construction of low cost homes, schools and a hospital.
Licensees
Licensees are companies or persons licenced by the Grand Bahama Port Authority to conduct business in the Port Area. Presently, there are a total of 3155 licensees doing business in Freeport.
Goods Entitled to Customs Exemption
Goods entitle to exemption are supplies and materials of all kind, including vehicles used in the operation of a licensee’s business.
Goods not Entitled to Customs Exemption (Consumable Stores)
Goods not entitled to Customs exemption are articles for retail sale, personal clothing and foodstuff.
Vehicles
Vehicles imported under bond may not be used outside the Port Area (Freeport) except permission is granted by Customs.
Housing
Licensees can construct homes with Conditionally Duty Free materials, but employees of licensees cannot. However, employees of licensees may be granted duty exemption on such homes, on application to and approval by Customs.
Rate of Duty on Homes and Other Buildings
The rate of duty on homes and other building in Freeport is 25% ad valorem of 40% of the cost of construction (this works out to 10% of construction cost).
Retail Sales
Licensees engaged in retail sales must submit Monthly Returns to Customs, which must include duty payments on goods sold to non-licensees. About 50 of the 3155 licensees are engaged in this business.
Purchasing Of Goods Out of Bond
Means buying bonded goods from other licensees (licensees engaged in retail sale).
Goods Manufactured and Assembled
Goods manufactured and assembled in Freeport, and sold to non-licensees elsewhere in The Bahamas are subject to Customs Duty. However, because of outcry from business persons, the Law in this regard is currently being held in abeyance.
Factories
Factories in Freeport include:
- Bahamas Oil Refinery (BORCO) - Refining of low-sulphur fuel oil (inactive)
- Bahamas Cement - Manufacturing of Portland Cement (inactive)
- Syntex (Rueben Services/Honeywell) - Manufacturing of pharmaceuticals
- Franklin Chemical (Uniroyal) - Manufacturing of pharmaceuticals
- Polymers International - Production of polynumeric beads used in the
- manufacturing of plastic cups and other plastic goods
- Grand Bahama Window - Manufacturing of PVC Windows and Doors.
- Grand Bahama Brewery - Manufacturing of beer (Hammer Head).
Assembly Plant (Shops)
Assembly plants (shop) in Freeport include:
- Marine & Land Industries - Assembling of Jet Skis, Motorcycles and Golf carts.
- Island projects - Assembling of Golf carts.
- Lucayan Furniture - Assembling of furniture (Armoire, chairs and tables)
Open Warehouse
An open warehouse gives licensees maximum access to duty free goods deposited in a warehouse.
Locked Warehouse
A locked warehouse restricts licensees access to duty free goods deposited therein, as the warehouse is dual locked.
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