Openness to Foreign Investment
The Government of Suriname (GOS) welcomes Foreign Direct Investment (FDI) into the country and has identified it as a key factor in achieving sustainable development. To improve Suriname’s investment attractiveness, the Ministry of Trade and Industry has shortened the time it takes to obtain a license. In 2008, 80 percent of licenses were granted within one month of applying. In 2009, the GoS received a grant from the InterAmerican Development Bank (IDB) to assist the Ministry of Trade and Industry in developing an action plan to improve the competitiveness of Suriname’s private sector as well as to assist in developing and implementing measures to simplify and reduce the costs of establishing and operating a business. The Minister of Trade and Industry has announced plans to set up an investment promotion agency whose primary function will be promoting Suriname to international investors.
In 2005, Suriname’s Central Bank and its Debt Management Office embarked on an aggressive program to repay the country’s outstanding bilateral debt. A series of repayments, including USD $118 million to Brazil in 2009, decreased the country’s outstanding foreign debt from USD $389 million in 2006 to an estimated USD $235 million in 2009. Still outstanding is USD $31 million of remaining arrears on debt to the United States, nearly half of which is penalties on past-due debt. Strong fiscal responsibility shown by the GoS and fiscal surpluses have led to general government debt declining to less than 10 percent of GDP in 2009.
In 2009, both Fitch and Standard & Poor’s once again reaffirmed their sovereign credit ratings for Suriname while revising their outlook from stable to positive. In its October 2009 rating report, Fitch based its rating rationale on the country’s progress on clearing its arrears, its accumulation of international reserves, its low debt service support, and consolidated and sustained growth in recent years which has positively affected debt dynamics and reduced financing requirements. It also noted the diversification of the export base from aluminum to gold and oil, thereby increasing the country’s resilience to external shocks. Clearance of outstanding arrears, medium-term continuity of macroeconomic policy, and reforms to strengthen the policy framework and improve competitiveness were seen as positive factors for a possible future upgrade of the country’s sovereign rating.
In its December 2009 rating report, Standard and Poor’s cites improving macroeconomic fundamentals, robust medium-term growth prospects, a solid debt position and, most importantly, legislative and institutional efforts to preserve the accomplishments beyond the current economic and political cycle as the reasons for the affirmation of Suriname’s sovereign credit rating. Its outlook was revised to positive to reflect the strengthening macroeconomic and financial profile that includes the falling debt burden due to progress in clearing up arrears. Standard and Poor’s did, however, caution that the economy’s continued heavy dependence on alumina, oil, and gold accounted for almost 80 percent of the country’s current account receipts at year-end 2009. The fall in commodity prices led to the surplus in the current account falling to 3 percent of GDP in 2009, down from 12 percent in 2008. The agency has further called on the GoS to contain the pressure for further wage increases as recent increases are already expected to contribute to small deficits in 2010. Suriname’s sovereign credit rating can increase to BB- if economic policies remain stable through the 2010 elections, and if the GoS clears its remaining debt to the United States.
In a December 2009 report, the Economic Council for Latin America and the Caribbean predicted a faster than expected recovery for countries in the region with average growth for 2010 at 4.1 percent. The Council has placed Suriname in the same category as Argentina with predicted growth of 4 percent for 2010. This prediction leaves Suriname with the highest predicted growth rate for the Caribbean since the average rating for the region is not expected to surpass 1.8 percent. The Council did, however, place doubts on whether this recovery would be sustainable given that growth expectations in the region are heavily dependent on what continues to be an uncertain external scenario.
As of January 2009, all investments, both foreign and local, were covered by trade laws that govern daily trade in the country. The Ministry of Finance repealed the 2001 Investment Law completely, terminating all available facilities under this law. Work on drafting a new investment law is reportedly stalled. Through negotiations with the ministries in their respective sectors, larger, multi-million dollar investments still get incentives.
The judicial system upholds the sanctity of contracts; however, the processing of cases may be constrained by tediously long processes within the judicial system. A long-standing shortage of judges was resolved in 2009, but the new appointments have not yet reduced the case backlog. As of January 2010, there were 20 sitting judges. A new training cycle for judges, which will take 4-5 years, is expected to begin in 2010. Suriname’s Ministry of Justice and Police is also developing a more specialized system where special courts for specific issues will be established. Implementation of this began with the installation of a traffic court. In 2010, the Ministry of Justice and Police intends to introduce a drug court to deal with offenses involving illegal narcotics.
There is no economic or industrial strategy that has a discriminatory effect on foreign-owned investments, with the exception of the oil sector. The law dictates that this sector must be state-owned. The State Oil Company has sole ownership of all the country’s oil-related activities. Access to this sector is possible, however, through exploration and production-sharing agreements with the State Oil Company Suriname. The government introduced a “state participation” vision to the bauxite and gold sectors in 2009. The Ministry of Natural Resources has declared that state participation is an important, if not the most important factor in its negotiations with continuing and new investments in these sectors. In the bauxite sector, it is reported that the Ministry of Natural Resources is negotiating for 45 percent participation while in the gold sector the participation is reportedly 20 percent.
There are no limits on foreign ownership or control of a company, except in the oil sector. Like local companies, foreign companies must register with the local Chamber of Commerce and Industry in Suriname (KKF). When registered as a local company with foreign ownership, the local operation is considered a branch operation.
Screening of investments occurs in all sectors and at all levels for both local and foreign investments. Screening does not serve to impede investments, limit competition, protect domestic interests, or discriminate against foreign investment. Smaller and medium-sized investments are screened through the Chamber of Commerce (KKF) upon registration. Large/major investments go through an additional screening by the Ministry presiding over the sector in which the investor is planning to invest. That Ministry will usually establish a commission to review the potential investment. In this process, investors must submit registration documents from the appropriate chamber of commerce in the country where its headquarters is located. Limited liability companies must also submit their articles of incorporation. Large/major investors must go through additional steps and provide financial documentation to the Ministry in charge of the sector of their investment. In cases of very large investments, such as in the mining sector, the respective Ministry will establish a negotiation team that will negotiate the terms under which the investor can operate in Suriname.
Screening of investments primarily takes place at the beginning of the investment process, and is aimed at making sure the investment is within the legal parameters of the business legislation. Once the business has been established, any additional screening that occurs is to confirm that the business operates within the purview of the license granted. In reality, additional screening often does not take place due to lack of capacity within the responsible agency.
Caribbean Single Market and Economy (CSME) countries theoretically have MFN status over other foreign investors; however, in light of the need for foreign investment in most Caribbean economies, it is highly unlikely that larger international firms would be denied investment opportunities in practice. The Economic Partnership Agreement (EPA) signed with the European Union has also given European companies better market access to the CARIFORUM countries. There is no entity in Suriname that regulates competition.
As of December 2009, there are no ongoing privatizations of parastatals taking place. During past privatization attempts, the government has strongly encouraged foreign investors to take part in the bidding process. Bidding criteria have so far been very clear and were developed with the help of an international consultant. Privatization of three ailing government-owned companies stopped in 2009. Additional information on those privatization attempts is below:
-- Surinaamse Machinale Landbouw (SML) (rice producer) was liquidated by selling off all its assets. The process started with the sale of the offices and other movable assets while a portion of the farmland was distributed to former farmers working for the company. The remaining 12,000 hectares of farmland was sold to the State Oil Company Suriname, which plans to use it to plant sugarcane for its new ethanol project.
-- Bruynzeel (wood processing company) is also being liquidated. The industrial complex of the company was split and sold to the electricity company EBS and the State Oil Company Suriname for energy generation and fuel bunkering. Yet to be liquidated are the thousands of hectares in a forest concession once belonging to this company. Once all SML and Bruynzeel creditors have been paid, the government intends to establish retirement funds for the former employees left uncompensated after the respective companies’ closings.
-- Although the privatization process for Stichting Behoud Bananen Sector (SBBS) (banana company) was not officially terminated, the government decided to halt the privatization process until it restructured and strengthened the company so that it could be sold off without any debt. In both 2008 and 2009, SBBS suffered financial losses even though the company had record productions. SBBS continues to be the largest job provider among the parastatals, with 2,500 employees, and is the fourth largest foreign currency earner. The company deposited USD $1.7 million in taxes and dividends for the government. The board in charge of managing the company has stated that it will need between USD $35 and $50 million to bring the company up to privatization standards.
There is no discrimination specifically targeted at foreign investors at the time of the initial investment or after the investment is made, such as through special tax treatment, access to licenses, approvals or procurement. In practice, different investors (both foreign and local) are offered different deals at the discretion of the GOS represented by the Ministry negotiating the deal. Furthermore, in major investments, investment benefits are usually obtained through negotiations with the government and can change depending on sector and the company’s negotiating strength.
There are no laws or regulations specifically authorizing private firms to adopt articles of incorporation or association which limit or prohibit foreign investment, participation or control.
There are no other practices by private firms to restrict foreign investment, participate in, or control domestic enterprises. To the contrary, objections have been raised stating the government gives preference to foreign companies over local companies in the same sectors. There have been particularly vocal objections in cases involving Chinese companies.
While the economy is expected to remain heavily dependent on the export of commodities from the mining sectors, the GOS has recognized the need to further diversify the economy.
-- In the tourism sector, eco-tourism continues its strong development, and small ship cruise tourism saw three ships come to Suriname in 2009. The economic crisis did have an effect as the hotel industry reported a drop in the number of occupancies in the summer season. An increasing trend for the tourism sector in Suriname is the development of conference tourism, where international organizations host their annual conferences in Suriname. Suriname has claimed spots on coveted “travel destination” lists and has stepped up its international marketing effort.
-- An important aid to the tourism sector and the development of Suriname, the airline sector, also logged significant investments in 2009. Regional carriers improved their services to Suriname by adding flights to their schedules. The national airline, Surinam Airways, invested heavily in upgrading its fleet. On the regional routes the airline replaced its aging MD-82 with two Boeing 737-300 aircrafts. It also sold its fuel-inefficient Boeing 747-400 and leased an Airbus A340-300 for the Mid-Atlantic Route instead. Surinam Airways expects to add a second Airbus A340-300 to its fleet in 2010. The airline increased its flights to the United States to three per week and added French Guiana to its schedule. For 2010, the company will be researching the opportunity to add other Caribbean destinations to its list of travel destinations.
-- Another sector that flourished significantly in Suriname is the offshore call center. Suriname has become a preferred country for call centers from Dutch companies because of the language, the high educational level of personnel, and the lower wages. Associated to these call centers are software testing centers for testing custom developed software for Dutch corporations.
Suriname’s bauxite sector underwent a major development in 2009 when BHPBilliton officially departed the country and sold its in-country assets to Alcoa. BHPBilliton and Suralco had run a joint venture under which BHPBilliton conducted the mining and Suralco ran the refinery. Although BHPBilliton had announced in 2008 plans to depart Suriname in 2010 after completing its obligations to mining the intermediary mines at Kaaimangrasie and Klaverblad in Suriname’s eastern region, the drop in world market prices and other factors caused BHPBilliton to expedite its departure timeline. In August 2009 when BHPBilliton departed Suriname ahead of schedule, Alcoa, through its newly established subsidiary Alcoa Minerals of Suriname, officially took over all BHPBilliton assets and liabilities in Suriname along with the 45 percent of the joint venture the companies had been operating under. With its two subsidiaries, Suralco and Alcoa Minerals of Suriname, Alcoa has officially become the 100 percent owner of all activities in the bauxite sector in Suriname, which includes one of the most productive refineries in the world. The drop in the world market price for aluminum forced Alcoa to decrease the production of alumina by 40 percent, which in turn reduced the company’s demand for bauxite from the intermediary mines and extended their economic lives. Following this takeover, the government-owned Alumsur entered into negotiations with Alcoa to become an active partner in the bauxite sector, negotiating for up to 45 percent in the sector.
According to the Ministry of Natural Resources, it is still the government’s intention to develop a fully integrated aluminum industry in the Bakhuys Region in the west of Suriname. With BHPBilliton’s exit from Suriname, the reduced world demand for aluminum, subsequent drop in aluminum prices, this western-focused plan is currently on hold. There is only a short time span between deposits in the intermediary mines running out in 2012 and the development timeline for a new mine in order to maintain production levels. It is reported that Suralco is considering mining bauxite out of its concession in the Nassau region in the southeastern part of Suriname to fill this gap.
Gross earnings in the oil sector decreased by 35 percent in 2009 to USD $375 million compared to the record USD $576 million of 2008. Dividend and income tax payments to the government decreased in 2009 to USD $130 million compared to USD $248 million in 2008. The State Oil Company Suriname is embarking on a USD $1 billion project that includes the expansion of the refinery to double its output to 15,000 bpd and introduce fuel products. This expansion is estimated to cost USD $550 million. The company also plans to intensify its exploration activities to increase its reserves by 64 million barrels. By acquiring 12,000 hectares of farmland to plant sugarcane, the State Oil Company Suriname has laid the groundwork for its biofuels initiative. The company intends to partner with a Brazilian firm to develop ethanol production in Suriname. Within the next three years, the State Oil Company Suriname will invest USD $25 million in doubling the output of its electricity plant to 28MW. Offshore, Murphy Oil Corporation has completed its acquisition of 3D seismic data. The company will now focus on studying the data in preparation for test drilling. Inpex Corp. also concluded its 3D seismic study and is currently studying the acquired data. The company has planned to drill a test well in either 2010 or 2011. Repsol YPF and partner Noble Energy have concluded their reevaluation of the test well drilled in 2008 and have announced plans to drill a second test well.
Gold became the largest contributor to the country’s GDP in 2009. Expansion investments by IAMGOLD of approximately USD $45 million paid off dividends for the company as its production in the Rosebel Gold Mine in 2009 increased by an estimated 16 percent to 365,000 troy ounces. Rosebel Gold Mine is one of the most profitable mines in the IAMGOLD portfolio worldwide as it has the highest output at the lowest cost. As part of its expansion project, the company placed a second mill and increased its winnable reserves by the same quantity as mined between 2004 and 2007. With record production and record high world prices, government income from Rosebel Gold Mine is expected to double to USD $100 million in income taxes and royalties. In November 2009, the Ministry of Natural Resources announced it had reached a tentative agreement with Surgold, the joint venture company of Alcoa and Newmont Mining Corporation. Negotiations for the mining of 3 million troy ounces in the Nassau Region in southeastern Suriname commenced in 2008. According to an announcement from the Ministry of Natural Resources, the tentative agreement included a 20 percent participation share for the Government of Suriname. Although the international gold market is such that it would be most lucrative to complete the deal now, the government publicly stated it is apprehensive about signing a deal so close to elections.
The telecommunications sector in 2009 saw continued fierce competition between the state-owned Telesur and 2007 market entrant Digicel. The third and much smaller participant in this sector, Uniqa, continued to trail far behind the two other companies. Text messaging between different providers continued to be impossible because, Telesur contends the law only required it to establish telephone interconnectivity and nothing more. In 2009, Telesur, in cooperation with Guyana Telephone and Telegraph, commenced a USD $60 million project to install a new offshore telecommunications cable that would serve as a back-up to the existing Americas II cable that originates in French Guiana and would also improve data transfer and internet capacity of both of both companies. This will make it possible for Telesur, which continued to be the largest internet provider in country, to offer broadband internet services. Digicel also entered the internet market in 2009 when it introduced USB Edge Modem capability. Currently Digicel is the only blackberry service provider in country; however, Telesur has announced plans to introduce its own blackberry service in 2010.
Measure Year Index/Ranking
-- TI Corruption Index 2009 75
-- Heritage Economic Freedom 2009 125
-- World Bank Doing Business 2009 155Conversion and Transfer Policies
There are no restrictions on converting or transferring funds associated with an investment (including remittances of investment capital, earnings, loan repayments, lease payments) into a freely usable currency at a legal market clearing rate. Permission is required from the Foreign Exchange Commission to transfer any funds associated with a business or investment out of Suriname. There have been no changes, nor are there plans to change, remittance policies pertaining to the access to foreign exchange.
In 2008 the Foreign Exchange Commission repealed the General Decrees 106 of 1960 and 153 of 1977. General Decrees are the laws that govern Foreign Exchange in Suriname. Under the new General Decree 217 of 2008, the Foreign Commission decided that banking institutions would be permitted to open accounts for non-residents, and conduct transactions, on behalf of these non-residents, in all foreign currencies for which the Central Bank of Suriname has an official exchange rate vis-a-vis the Surinamese Dollar. The documents of accounts, however, must clearly indicate the country of residency and the place in country and place in country of residency of the headquarters of the parent company. The general license does not apply to transactions of foreign currencies originating from the exports of minerals and/or transactions that are the result of such an export, unless a special license is granted or another law permits so. The banking institutions are required to provide the Central Bank of Suriname all necessary information regarding any transactions to assist in the Central Bank’s oversight responsibilities of foreign exchange transfers to and from Suriname as well as ease the balance of payments with other countries.
There is usually no difficulty in obtaining foreign exchange. There are some periods of the year when there is a shortage that the Central Bank labels as being primarily speculative. These are usually periods of higher than normal demand when local foreign exchange companies hold on to the foreign currency to drive up the price. As Suriname enters into its 2010 election season, speculative shortages in foreign exchange could occur, as was the case during Suriname’s 2000 and 2005 elections.
The delay period varies for remitting investment returns such as dividends, return of capital, interest and principal on private foreign debt, lease payments, royalties and management fees. Permission must first be obtained from the Foreign Exchange Commission, and the time needed to process the request depends on the sector and the amount to be transferred. Transfers through the banking system can range from same-day transfers to one week. Investors can remit through the legal parallel market. A source of origin must be declared, however, in cases where the incoming or outgoing amount exceeds USD $5,000 or 5,000 euros. No limitation exists on the inflow or outflow of funds.Expropriation and Compensation
The GOS is granted authority for expropriation under Article 34 of the Constitution. According to the article:
“property, of the community as well as of private persons, shall fulfill a social function. Expropriation shall take place only for reasons of public utility according to the rules to be laid down by law and against previously assured compensation. Compensation need not be previously assured if, in case of emergency, immediate expropriation is required. In cases determined by or in virtue of the law, the right to compensation shall exist if, in case of public interest, the competent authority destroys or renders property unserviceable or restricts the exercise of property rights.”
No one sector is at a greater risk for expropriation; however, Article 41 of the Constitution does specifically refer to all natural riches and resources being the property of the nation and states that the nation has inalienable rights to take complete possession of all natural resources for the purpose of the economic, social and cultural development of Suriname. However, there have been no expropriation actions in the recent past nor policy shifts that would lead one to believe that expropriation might take place. There are no examples of “creeping expropriation” or government action tantamount to expropriation.
The crude oil sector is entirely state-owned. The Petroleum Law of 1990 allows state enterprises to enter into contracts with third parties for the prospecting, exploration and exploitation of petroleum, subject to approval by the government. Under the Mining Decree of 1996, the mining rights for radioactive minerals and hydrocarbons can only be obtained by state-owned enterprises. Dispute Settlement
Suriname’s legal system is based on the Dutch Civil System. Laws are laid down in criminal, civil, and commercial codes and verdicts are based on the judge’s interpretation of these codes. There is no government or political interference in the judicial system, and judges are generally considered to be impartial.
Every effort is made to settle investment disputes outside the court system or appointed arbitrary. The Ministry of Justice and Police has made significant improvements in the appointment of judges, and there are currently 20 sitting judges. Some improvement has also been made in the time it takes to hear a case, but the appointment of the new judges in 2009 has not yet relieved a long-standing backlog of cases. Issues within the overall judicial system do hamper a timely conclusion of issues. There have been no publicly known investment disputes over the past few years involving U.S. or other foreign investors or contractors in Suriname.
Judgments of foreign courts are accepted and enforced by the local courts only if Suriname has a legal treaty of jurisprudence with the foreign country involved. If not, the foreign judgment can be brought before the Surinamese court for consideration as long as the court determines it has jurisdiction and doing so does not otherwise violate any Surinamese laws. Suriname has no legal treaty of jurisprudence with the United States. With Suriname’s participation and membership in the Caribbean Court of Justice, judgments from this court are also binding for local courts. Cases have been successfully filed against Suriname before the InterAmerican Court of Justice and the Organization of American States. Judgments from these courts have been upheld by the Surinamese legal system.
Suriname has consistently applied its commercial and bankruptcy laws. Companies have a right to file for bankruptcy with the courts. All debts are subsequently filed with a trustee as appointed by the court. The judge may declare bankruptcy in cases where there are a minimum of two creditors. In cases where there is a loan from a commercial bank, payment on this loan takes precedence. Monetary judgments are made in local currency, unless the contract or agreement stipulates otherwise.
The government accepts binding international arbitration only if it is stipulated in the contract or agreement and if it does not contradict any local laws. International arbitration is accepted as a means for settling disputes between private parties, but only if local alternatives have been exhausted. Most agreements involving foreign companies have clauses that clearly stipulate the laws applicable to the agreement.
Suriname has been a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1964 when the country was still a Dutch territory. At independence in 1975, Suriname automatically continued its membership in international conventions and treaties. Performance Requirements and Incentives
Suriname is a member of the World Trade Organization. Suriname does not impose any performance requirements, nor does it provide any performance incentives, that would be inconsistent with Trade Related Investment Measures (TRIMS) requirements.
No performance requirements are imposed as a condition for establishing, maintaining or expanding the investment, or for access to tax and investment incentives. There are no requirements that investors purchase from local sources or export a certain percentage of output. Both local and foreign investors, however, have found it useful to purchase from local sources and import only those goods unavailable on the local market. Larger companies (e.g., the mining companies) have signed contracts for the delivery of products that are not readily available on the market. In the case of foreign investments, no requirements exist that nationals own shares or that the share of foreign equity be reduced over time, or that technology be transferred. Suriname does not impose any “offset” requirements, which would force foreign suppliers to invest in manufacturing, R&D, or service facilities to receive procurement approvals. With regard to the telecommunications sector, the government did require newcomers Digicel and Uniqa to deposit USD $1 million each in a performance bond as a guarantee that the companies would provide the services for which they had requested licenses.
To operate a company, investors must obtain a special industry license. There are no special requirements on percentage of local content or equity. No requirements exist for substitution for imports, nor for export targets. Investors are not required to use specific employment agencies, nor to transfer technology or use local sources of finance. For an investor to receive permission to hire a foreign national, the investor needs to prove to the Ministry of Labor that every effort was made to hire a host country national first. The rule does not, however, apply to specialists; in that case the company is free to use whomever it deems necessary for the operation of the company. The specialists must have work permits.
Exceptions have been made to the requirement that Surinamers be hired first. The GOS has signed contracts with Chinese companies for construction and infrastructural projects which, through negotiations, included in the contracts the stipulation that Chinese nationals be allowed to enter Suriname to work in jobs host country nationals could have performed.
U.S. and other foreign firms are welcome to participate in research and development. Larger foreign investors, such as the Alcoa subsidiary, Suralco, have played a major role in the establishment and maintenance of research facilities at the Anton de Kom University (Suriname’s only university).
In 2009 Suriname’s National Assembly passed new legislation regarding the issuance of work permits to foreigners. Although the procedures remain the same, a foreign worker must apply first for a residency permit at the Ministry of Justice and Police, after which s/he can apply for a work permit at the Ministry of Labor. The new legislation limits the term of a work permit to three years to make it possible to better track the movement of foreign workers in Suriname, and to prevent the foreign workers from obtaining employment that can regularly be done by Surinamese citizens. The new legislation also introduced a permit requirement for interns. This is also meant to prevent interns from getting jobs that can regularly be done by a Surinamese citizen. Companies or organizations that want to employ interns are now required to request the permit on behalf of the intern. The free movement of artists, university graduates, media workers, musicians, and sports persons of CARICOM origin is arranged through the CSME regulations. CSME regulations also provide for the free movement of those wanting to establish or conduct business within the community.
Non-tariff barriers on both imports and exports include: proof of residency, registration with the Chamber of Commerce, Customs’ import registration numbers, and tax identification numbers from the Tax Office of the Ministry of Finance. Under the 2003 Law on the Movement of Goods, “the Ministry of Trade and Industry created “negative lists” for both imports and exports. In theory, anything can be imported or exported without a license unless it is included on the “negative lists.” Items included on the “negative lists” may only be imported or exported with special permission from the government. Examples of goods on the negative list for imports are chemicals, pesticides, and animals on the Convention of Endangered Species and Faunas List. Examples of goods on the negative list for exports are bark wood, letter wood, explosives, gold, and other precious metals.
Tariff barriers include consent and statistical fees charged in addition to regulatory import duties. An amendment was made on the issue of consent fees in 2008 as the Foreign Exchange Commission, through General Decree 216, waived all consent fees in all cases where the Ministry of Finance has already exempted or suspended import duties. Imports from countries outside CARICOM, except the European Union, are subject to increased import duties due to the Common External Tariff (CET) adopted by CARICOM members. Imports are subject to a 7 percent turnover tax as stipulated under the 1997 Law on Turnover Tax. Exports are subject to consent and statistical fees. Companies in the bauxite sector pay a 2 percent statistical fee on both imports and exports. In the gold sector the royalties are 2.25 percent with an additional 6.25 percent if the price of gold exceeds USD $ 425 per troy ounce. A statistical fee of 0.5 percent is also applied on the export of timber (except to CARICOM countries).
CSME regulations also prevent its members from importing products from outside the Community if the same quality goods can be produced or delivered by fellow member states by a pre-set deadline, not taking price into account. Violation could lead to a case being filed at the CARICOM Secretariat. The first of such cases was filed by the Trinidadian cement producer TCL against various countries in the region, including Suriname and Guyana. TCL won the case and countries who had been allowing the import of cement from outside CARICOM at lower import duties were given a deadline to make the necessary changes. Guyana has appealed the ruling. A second such case involves the import of flour from Europe at a zero tariff rate in Suriname. The Trinidadian miller successfully argued his case, and Suriname was given a deadline of April 2010 to amend its import duties on flour from Europe, primarily the Netherlands.
In October 2008, Suriname, as a member of the CARIFORUM, signed an Economic Partnership Agreement (EPA) with the European Union. Under this agreement the CARIFORUM countries have agreed to have all goods from CARIFORUM states, except rice and sugar, enter the European market duty and quota free. Parties have also agreed on a three-year moratorium before reducing import duties on goods imported from the European Union in 2011. In 2011, they will introduce a gradual scheme of reduction where duties will be reduced over a period of 25 years. Parties also have agreed that to protect the fragile economies of the CARIFORUM states, 13.1 percent of goods imported from the EU will be placed on an exclusions list, meaning that duties will never be reduced/ eliminated on these products. Parties have further agreed to extend to each other any treatment or benefit that is provided to a third party through a Free Trade Agreement (FTA) signed after this EPA.
Although already in effect, the EPA is currently before the National Assembly for ratification. Significant concerns have been expressed against this agreement because National Assembly members reportedly have expressed concern that local companies will not be able to access European markets as easily as European companies will enter the local market. Right to Private Ownership and Establishment
Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity. Once private entities have registered their business with the Chamber of Commerce and Industry (KKF), they have the right to freely acquire and dispose of interests as they see fit. Competitive equality is the standard applied in competition between private enterprises and public enterprises with respect to access to markets, credit, and other business operations, such as licenses and supplies. In practice, private enterprises even have better access to markets and credit since they are more flexible and have a less bureaucratic decision-making hierarchy. Protection of Property Rights
Secured interest in property, both movable and real, are recognized and enforced. The concept of mortgages exists and mortgages are registered by the Mortgage Office. Acquisition and disposition of all property rights are protected and facilitated by law.
Even though Suriname is a member of the World Trade Organization (WTO) and, since 1975, a member of the World Intellectual Property Organization (WIPO), it has not ratified the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. While Suriname is officially party to the following international agreements on intellectual property rights, which came into force when it was still a colony of the Netherlands, there is little or no adherence to these agreements since they are not incorporated into the country’s domestic legislation:
-- the Paris Convention for the Protection of Industrial Property (1883)
-- the Berne Convention for the Protection of Literary and Artistic Work (1886)
-- the Hague Convention concerning the International Deposit of Industrial Designs (1925)
-- the Nice Agreement concerning the International Classification of Goods and Services for the Purpose of Registration of Marks (1957)
-- the Strasbourg Agreement concerning the International Patent Classification (1971)
The Ministry of Justice and Police presides over the Bureau for Intellectual Property Rights and has on several occasions mentioned its intent to improve the country’s legislation on this issue. So far, however, intellectual property rights have not received a high-level of attention from legislators. A basic Intellectual Property Rights law was prepared in 2004 and was presented to the National Assembly. This law, however, never made it on the legislative agenda for discussion and approval. Subsequently, the law was retracted for revisions and has not yet been resubmitted. More advanced and specialized legislation (e.g., brand and music piracy, industrial property and associated rights) was supposed to be added to the basic legislation once it was approved.
The current legal framework for discussing copyrights, patents, and trademarks dates back to 1912 and 1913, and is an amendment to a previously written law. Neighboring rights (related rights) in copyrights, geographical indications, industrial designs, utility models, layout designs of integrated circuits, undisclosed information, or new plant varieties remain unprotected.
The WTO TRIPS agreement has been neither implemented nor enforced even though the Ministry of Justice and Police has indicated its intention to do so. Suriname has signed the WIPO Internet Treaties, but has not ratified them.Transparency of the Regulatory System
In 2008 Suriname became the headquarters of the CARICOM Competition Commission. In 2009, the Ministry of Trade and Industry received funding from the InterAmerican Development Bank to conduct a competitiveness enhancement program. This program aims to assist in the preparation of, and the building of consensus for, the implementation of an action plan to improve the competitiveness of the private sector. It also will assist in the implementation of measures to simplify and reduce the time and cost to complete the legal and regulatory measures required to establish and operate a business. Once implemented, this program should lay the groundwork for the preparation of necessary legislation to set up a Competition Authority, which will be set up by the Ministry of Trade and Industry.
No tax, labor, environment, health and safety, or other laws or policies, are purposely used to impede investments. This does not, however, mean that they do not form obstacles for investment. Labor laws, for instance, prohibit employers from firing an employee without the permission of the Ministry of Labor, once the employee has fulfilled his or her probationary period. Tax laws have also been criticized for overburdening the formal business sector while there is an entire informal sector, estimated to be roughly twice the size of the formal economy, which goes untaxed.
Bureaucratic procedures, including those for licenses and permits, are neither sufficiently streamlined nor transparent. The large number of civil servants involved in the process of granting licenses not only makes it a lengthy process, but also invites corruption. Both the World Bank, through its “Doing Business Report,” and Standard & Poor’s have identified the government’s involvement in the real economy as an undue burden that not only undermines policymaking transparency but gives rise to corruption. The Ministry of Trade and Industry has made progress in cutting through the red tape and working to have licenses approved and signed within one month after the application is filed. In the second half of 2008 and in 2009, almost 80 percent of new or extension applications were signed within 30 days.
Laws and regulations are drafted in consultation with the relevant stakeholders in both the public and private sectors. After this, they are presented to the Council of Ministers for discussion and approval. Once approved, they are sent to the President’s advisory body, the State Council, for approval before being presented to the National Assembly for discussion, amendment, and approval.
All regulatory processes go through the government. Nongovernmental organizations have an advisory role in some instances. Legal, regulatory and accounting systems are transparent and consistent with international norms.
In 2007 a Standards Bureau was officially established. In its first year of operation the Standards Bureau primarily focused on hiring qualified personnel and organizing seminars on the topic. In 2009 it started working with local businesses on identifying needs for standards. Because of the time it has taken to develop this system, companies have hired international consultants or private firms to assist in certifying processes based on the ISO system.Efficient Capital Markets and Portfolio Investment
Sufficient policies exist to support the free flow of financial resources in the product and factor markets. Credit is allocated on market terms and at market rates. Once established as a business in Suriname, foreign investors are able to get credit on the local market, usually with a payment guarantee from the parent company. The private sector has access to a variety of credit instruments. Larger companies can obtain customized credit products.
Lending rates have remained relatively stable over the past years. The corporate lending rate for the local currency has floated between 11 percent and 14 percent depending on the project and client. The lending rate for US dollars and Euro loans is between 9 and 10 percent.
Even though Suriname’s banking sector is considered sound, the IMF has in the past given some stern warnings on the level of non-performing loans in the system. In 2009 private credit growth decreased steadily from 42 percent in 2008 to 18 percent. The Central Bank of Suriname has kept the effective reserve requirement for local currency at 15 percent while the reserve requirement rate for foreign deposits is 33.3 percent.
The estimated total assets for the three major commercial banks were:
-- DSB Bank (per June 30, 2009): USD $619.3 million
-- Hakrinbank (per June 30, 2009): USD $354.2 million
-- RBC Financial (Caribbean) Ltd. (per March 31, 2009): USD $10.094 billion.
(In 2008 the Royal Bank of Canada took over the Royal Bank of Trinidad and Tobago, parent company of RBTT Bank Suriname. Since then, the different branches across the region have been gradually integrated into the RBC System. RBTT Bank Suriname is expected to officially become RBC in 2010. Figures are therefore consolidated in the RBC Financial (Caribbean) Ltd. figures.) Competition from State-Owned Enterprises
Private firms compete under the same terms and conditions as public firms for access to markets, credit, and other business operations.
State Owned Enterprises are active in the oil sector, airline sector, electricity and gas supply, water, banana, telecommunication, banking, and transport sectors. The government also owns several “authorities” that operate like regular businesses.
These companies are in most cases managed like regular companies with a Supervisory Board. Members of these Supervisory Boards are appointed by the Minister’s presiding over the sectors in which the companies operate.
Suriname has no Sovereign Wealth Fund.Corporate Social Responsibility
There is a growing awareness of corporate social responsibility among both producers and consumers. The trend was started by Alcoa subsidiary Suralco and has since been taken over by other larger companies in Suriname. Consumers have taken note of this trend and, particularly nongovernmental organizations have been depending on this for survival. Firms who do follow this model have been viewed more favorably. Locally owned companies that also stand out for their corporate social responsibility include the State Oil Company Suriname, Fernandes Group of Companies (local Coca Cola bottler), and McDonalds Suriname. Political Violence
There have been no incidents over the past few years involving politically motivated damage to projects and/or installations. In November 2007, 25 defendants went on trial for the "December 1982” murders of 15 prominent citizens. This case is still ongoing and has recently been remanded back to the Solicitor General for interviewing of new witnesses introduced by the prosecution. Corruption
No U.S. firms have reported corruption as a major obstacle to foreign direct investments. Suriname has signed and ratified the Inter-American Convention Against Corruption. Suriname has not yet signed or ratified the UN Anti-Corruption Convention. The country is not a signatory to the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery.
The Ministry of Justice and Police is responsible for combating corruption. The Fraud Department of the National Police is in charge of investigating corruption cases. The government has also established an Anti-Corruption Working Group at the ministerial and technical levels to assist the police in combating corruption. No international, regional, or local nongovernmental anti-corruption “watchdog” organization operates in Suriname.
Suriname does not have special anti-corruption legislation in place, but the penal code does refer to anti-corruption. The Ministry of Justice and Police has drafted anti-corruption legislation which has been placed on the National Assembly’s agenda for discussion. The anti-corruption measures in the penal code are being enforced, with the bulk of those prosecuted for corruption to date being civil servants. Corruption is most pervasive in the areas of government procurement, land policy, and taxation.
Accepting or giving a bribe is a criminal act, which is punishable by a fine or a prison sentence of three months to five years, depending on the severity and/or amount of the bribe. A bribe to a foreign official is considered a criminal act and cannot be deducted from taxes.
Although senior government officials take anti-corruption efforts seriously, there is a widespread perception of corruption in the executive branch of the government. In 2009, members of both the governing coalition and the opposition continued their allegations that the Minister of Physical Planning, Land and Forest Management and the Speaker of the National Assembly were involved in the illegal issuance of government land titles. Bilateral Investment Agreements
Suriname has bilateral investment treaties with Indonesia and the Czech Republic. In 1993, Suriname signed an Agreement on Bilateral Trade Relations with the United States. This agreement has not been ratified by the National Assembly.
Other international agreements into which Suriname has entered are as follows:
-- a double taxation treaty with the Netherlands and the Netherlands Antilles.
-- a trade agreement with the People’s Republic of China (1998).
-- the Treaty of Chaguaramas, which established the CARICOM and subsequently led to the creation of the CARICOM Single Market and Economy.
-- trade agreements by virtue of CARICOM membership with Venezuela, Costa Rica, Brazil, Cuba, the Dominican Republic, and Colombia.
-- trade promotion treaties with Indonesia, India, and China.
-- CARIFORUM – E.U. Economic Partnership Agreement (This EPA also has some provisions for investment between the 2 regions.).OPIC and Other Investment Insurance Programs
Suriname is one of the signatories establishing the Multilateral Investment Guarantee Agency (MIGA). Currently there are no Overseas Private Investment Corporation (OPIC) programs in operation in Suriname. In the event OPIC should pay an inconvertibility claim, the official currency exchange rate for the U.S. Dollar is SRD 2.80 for US$ 1. This is the same rate used by the Embassy. Labor
Labor unions in Suriname are independent of the government, but play an active role in politics. In 2009, the Government of Suriname introduced a new wage scheme for civil servants. FISO I (as it is called) required a total reevaluation of all positions within the public sector taking into account the level of responsibility of the function and educational level of the person filling the position, and based on these factors a new salary was then calculated. The new scheme is expected to increase the government wage bill by almost 30 percent in 2009. The planning office, the International Monetary Fund, and rating agencies have all asked the government to either postpone the implementation of FISO II or phase it out over a period of 4 years to prevent this from having an adverse effect on the government budget and on inflation. With 2010 being an election year, the government is hard pressed not to implement FISO II as originally planned.
A recent study done by the Statistical Bureau of Suriname indicates that the jobless in Suriname are facing serious competition, particularly from Chinese workers. According to the report, Suriname gave work permits to 696 Chinese in 2008. Overall 1,407 workers from abroad received work permits in 2008, up from 1,329 in 2007. The number of registered Surinamese residents without a job was 881 in 2008. Their education varied from lower/basic education to university graduates.Foreign Trade Zones/Free Ports
There are no duty free trade zones, duty free import zones, or duty free ports in Suriname.Foreign Direct Investment Statistics
Recent data on the value of foreign direct investment -- Source for the data is the 2009 World Investment Report
FDI Inflow in millions of US$
2006 2007 2008
323 316 -234
According to the same report, Suriname had no Direct Investment Abroad between 2004 and 2008.
FDI Flows as a percentage of Gross Fixed Capital Formation
2006 2007 2008
Inward 21.0 17.8 -10.6
Outward -- -- --
FDI Stock as percentage of GDP
1990 2000 2008
Inward -- -- --
Outward -- -- --
Number of Greenfield FDI projects (by destination)
2006 2007 2008
-- -- 2
A list of major foreign direct investments in Suriname follows:
Once an agreement has been reached, Surgold, the joint venture between Alcoa and Newmont Mining Co., will commence preparations for developing the area for set up of the industrial complex.
In offshore oil, Murphy Oil Co., Repsol YPF, and Inpex will all commence preparatory work for the drilling of test wells.
Alcoa subsidiary Suralco plans to start preparatory work for setting up a bauxite mine in the Nassau Area.