The Government of Suriname (GOS) has identified Foreign Direct Investment (FDI) as the primary vehicle for future economic development. In particular, the Development Plan 2012-2016 designates revenues from foreign investment in non-renewable resources as the means for developing the other sectors of the economy. The government has identified agriculture, tourism, and industry as a means to diversify the economy and reduce vulnerability to price shocks in international commodities markets. Additionally, the government has attempted to improve the investment climate by eliminating the licensing requirement for many types of businesses and by simplifying licensing procedures. The GOS hopes to attract a minimum of US$6.9 billion over the next five years, resulting in estimated growth of 33.8 percent by 2016.
In January 2011, the Central Bank of Suriname officially devalued the Surinamese Dollar by approximately 20 percent, adjusting the official exchange rate from SRD2.80 : US$1.00 to SRD3.35 : US$1.00. The government also announced a series of tax increases aimed at increasing government income. Increased taxes on fuel, tobacco, alcohol, and casinos have already been implemented. Other increases have been delayed due to concern over their economic impact, including: a vehicle tax, a two percent increase on sales tax on goods and services, and a 12 percent sales tax on utilities. Since January 2011, 12-month inflation has hovered between 15 and 20 percent.
Fitch Ratings upgraded Suriname’s Foreign Currency Issuer Default Rating (IDR) from B to B+, the local currency IDR was affirmed at B+, while the country ceiling was also upgraded to B+. The rating outlook improved from stable to positive. The upgrade is a result of comparatively strong external credit metrics, structural improvements in balance of payments, and positive growth momentum. The government’s effort to repay its outstanding debt obligations to the United States was also a key factor. While there were notable improvements in political stability, rule of law, and government effectiveness, weaknesses in macro policy framework that resulted in high inflation volatility, limited fiscal financing flexibility, and high commodity dependence continue to constrain the country’s credit. For 2012, Fitch expects Latin America’s creditworthiness, including Suriname, to remain stable. Sound economic policies, moderate external and fiscal imbalances, modest government burdens, and improved external liquidity support this outlook. For Suriname, the rating agency projects a growth rate of 4.5 percent for 2011 and 4.9 percent for 2012, higher than the projected regional rate of 3.4 percent for 2012.
Standard & Poor’s (S&P) raised Suriname’s long term foreign currency rating from B+ to BB- and its transfer and convertability assessment from BB- to BB. The local currency rating was affirmed at BB-. The outlook is stable. The basis for the upgrade of the foreign currency rating was the agreement between Suriname and the United States for Suriname to repay arrears under the GSM-102 Export Credit Guarantee Program. Although S&P considers the prospects for the oil and mining sectors to be positive, the rating agency once again warned against the economy’s high dependence on commodities. Suriname’s ratings could increase further if mining projects currently under negotiation come to fruition, if the country strengthens its relatively weak governmental institutions and implements a strategy to limit dependence on the mining sectors, or if the country bolsters ties with multilateral institutions and bilateral partners. However, the ratings could come under pressure if significant fiscal slippage brought renewed pressure on the exchange rate, inflation, and the balance of payments.
Moody’s Investment Services affirmed its long term rating for Suriname at Ba3 for local currency and B1 for foreign currency. The ratings reflect Suriname’s comparatively low economic strength related to the small size of the economy; low per capita GDP; and low institutional strength. Low budget flexibility and weak access to financing represent structural constraints of the government’s credit profile, although external accounts have benefitted from strong commodity prices. The rating outlook remained stable.
Per September 30, 2011, Suriname’s foreign debt was US$654.3 million or 22.11 percent of GDP. Total domestic debt was US$502.39 million or 16.98 percent of GDP. In July 2011, the GOS and the United States signed an agreement for repayment of Suriname’s outstanding bilateral debt, which was at the time approximately US$35 million. Under the agreement, the GOS is entitled to pay back the loan in quarterly installments over a period of three years. Suriname has now paid the first three quarterly payments on schedule.
The International Monetary Fund (IMF) projects a growth rate of 5 percent of GDP for Suriname. The country is expected to maintain the same level of growth in 2012. This is higher than the average growth rate of 4.5 percent projected for both Latin America and the Caribbean. Growth has been attributed to favorable commodity prices, primarily gold.
Currently, all investments, both foreign and local, are subject to the same standards and laws that govern daily trade. Larger, multi-million dollar investors have been able to negotiate separate terms with the GOS.
The judicial system upholds the sanctity of contracts, but processing of cases can be slow, bureaucratic, and inefficient, hampered by a high caseload and not enough judges to address it effectively. Since 2009 the Court has implemented a more specialized case handling system which has helped in the processing of smaller cases.
There is no economic or industrial strategy that has a discriminatory effect on foreign investors or foreign-owned investments, except the oil sector. This is also the sector where, by law, ownership is limited to the State Oil Company Suriname (Staatsolie). Staatsolie has sole ownership of all the country’s oil-related activities. Access to this sector is only possible through Exploration and Production Sharing Agreements with Staatsolie. All other sectors are open to foreign ownership. In those cases foreign companies, like local companies, are required to register with and join the Chamber of Commerce and Industry, and obtain appropriate licenses as necessary.
Unless requesting special investment incentives, smaller foreign investments are not subject to more screening processes than local companies. Standard screening is usually done by the Chamber of Commerce and Industry. Larger/major investments are subject to screening by the Ministry presiding over the specific sector the investment is in. A special commission screens the potential investment and all necessary financial and legal documentation must be presented for review. Major investments, particularly in the mining sector, go through extensive negotiation processes to determine the terms of investment. In all cases, small or large, filing is mandatory. The purposes and criteria for screening of investments vary depending on the nature of the investment, but are primarily meant to assure that the investment is within the legal parameters of trade legislation. This screening process usually takes place at the beginning of the investment process. Once the business is running, secondary screening is unlikely.
Caribbean Single Market and Economy (CSME) countries have favored status over other foreign investors; however, in light of the need for foreign investment in most Caribbean economies, it is unlikely that, in practice, larger international firms would be denied investment opportunities. The Economic Partnership Agreement (EPA) signed with the European Union has also given European companies better market access to the CARIFORUM countries. The GOS does not regulate competition within Suriname; however, legislation has been drafted and is awaiting review by the State Council. The CARICOM Competition Commission has been based in Paramaribo since January 2008. The CARICOM Competition Commission monitors anti-competitive practices of enterprises operating within the CSME and provides support to member states in promoting and protecting consumer welfare. The Commission also investigates and arbitrates cross-border disputes.
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, as 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 is no law requiring that Surinamese nationals own a share of foreign investments, nor is there a requirement that the share of foreign equity be reduced over time. In an effort to maximize the country’s income, the GOS has sought to participate in investments related to the mining sector. In negotiations with IAMGold over the expansion of the Rosebel Gold Mine, the GOS is reportedly seeking to participate with up to 30 percent investment, which would require a government investment of US$240 million.
In 2011, the government selected 12 parastatal companies for privatization. These include the national banana company SBBS, the National Dairy Company, and the national shrimp company SAIL. No details concerning the privatization process have been released. The government has placed the companies under the management of the Investment and Development Corporation Suriname (IDCS), a parastatal entity in charge of preparing and executing the privatization process.
Suriname’s economy is expected to continue to be dependent on extractive industries. The extraction sector accounts for 95 percent of total exports of goods, while total tax and non-tax revenues account for more than 35 percent of fiscal revenues. In the oil sector, Staatsolie reported record earnings of US$796 million, an increase of 41 percent over 2010. Gross profits increased by 55 percent to US$450 million. Oil production increased by 3 percent to 5.98 million barrels. Increased earnings can primarily be attributed to higher world market prices for oil, with net prices increasing from US$71.82 per barrel in 2010 to US$99.69 per barrel in 2011. Oil exports to Trinidad, Barbados, Curacao, Guyana, and Jamaica increased by 10 percent, while bitumen exports to Guyana, Trinidad, and French Guiana increased by 87 percent.
Staatsolie is in the midst of implementing a US$1 billion expansion program. Seventy-five percent of the investment capital will come from company earnings, while a total of US$275 million will be borrowed from banking giants ING Bank and Credit Suisse as well as other regional banks. A separate local bond issuance was oversubscribed by approximately 300 percent, yielding US$55 million. The expansion program includes the doubling of the capacity of the refinery to 15,000 bpd by 2013, expansion of the Staatsolie Power Company Suriname’s power generation capacity from 14 MW to 28 MW, and a pilot project to produce ethanol from sugarcane.
Staatsolie has continued the feasibility study of the TapaJai Hydropower Project and hopes to commence the infrastructural component of this project in 2013. International partners Murphy Oil and Teikoku Oil completed test drilling of their respective blocks off Suriname’s shores. Murphy reported unsuccessful results; Teikoku will announce its results in 2012. Staatsolie has signed additional Exploration and Production Sharing Agreements with Murphy Oil and Kosmos Energy with a total value of US$150 million. Exploration drilling at sea is scheduled for 2013. In January 2012, Suriname officially started receiving fuel through the PetroCaribe Agreement with Venezuela. Staatsolie has been placed in charge of the total management and execution of this agreement. Staatsolie also acquired Chevron’s distribution network, company plant, company reservoirs, a jet fuel bunkering facility, and all direct hire Texaco staff in Suriname during 2011, allowing it to enter the downstream market.
In the gold sector, the government entered into a Heads of Agreement with Canadian mining giant IAMGold on the US$800 million expansion of the Rosebel Gold Mine. In 2011, the mine produced an estimated 395,000 troy ounces, while IAMGold increased its reserves by a similar amount. The company has calculated that current reserves should last until 2022.
Negotiations with Surgold, a joint venture between Newmont Mining Corporation and Alcoa subsidiary Suralco, over a new mine in the Merian Area in Southeastern Suriname continued. Although progress has been made, no agreement has been reached. Both the government and the company have expressed an interest in having the new mine operational by 2015. Proven reserves in the Merian area are three million troy ounces.
In January 2011, the GOS embarked on an ambitious plan to bring order to the informal gold sector. Once considered small-scale, this untaxed and unregulated sector is currently estimated at US$1 billion annually. Thousands of Brazilians, mostly illegal, and local Maroons (indigenous descendents of those who escaped slavery by fleeing into the rain forest) find employment in this sector. Chinese shop owners have set up businesses, also unregulated, near the mining sites.
By December 2011, the commission in charge of regulating the sector has reported that nearly 9,000 of the estimated 30,000 workers in the sector have registered with the government. Three mining service centers have been established in the interior to enable the government to interact with local communities and provide government services to miners. This project is expected to continue in 2012. The GOS also plans to start a School of Mining in the interior, aimed at educating small-scale miners in mercury-free gold mining techniques. The government aims to have a mercury-free gold sector by the end of 2012.
In 2011, Alcoa subsidiary Suralco continued as the 100 percent owner of all activities in the bauxite sector. The company continued negotiations with the Government of Suriname over construction of a new bauxite mine in the Nassau region in Eastern Suriname. With the expected exhaustion of bauxite reserves of the Kaaimangrasie and Klaverblad mines in 2012, Suralco is preparing to return to the Lelydorp mines it abandoned in the eighties due to weak economic conditions. Reserves in these mines are expected to be sufficient to keep the refinery running at current capacity until the Nassau mine comes on line. The Dutch firm Boskalis was awarded the US$175 million contract for the mining and delivery of bauxite from the Lelydorp mines to the refinery. In the long term, Alcoa hopes to begin mining the Bakhuys Region in Western Suriname, where estimated reserves are believed to be able to support the sector for an additional 40 years.
Hong Kong-based Greenheart Group Ltd. became the largest concession holder in Suriname’s forestry sector. The company holds a total of 403,750 hectares in lumber concessions across Suriname, as well as several saw mills. The company wants to increase production in 2012 in order to expand its export market to the Caribbean, the Americas, and Europe. Current exports focus primarily on China.
The GOS has emphasized its intent to increase agricultural exports to the Caribbean. Shortly after taking office in 2010, the new government installed a Rice Commission. The primary task of this commission is to increase rice production and exports, returning rice to the place it once held on Suriname’s list of export products. The Commission has developed a seven-point emergency plan that should contribute towards increasing Suriname’s rice production from 26,000 hectares (currently) to 40,000 hectares in 2013. The plan includes overhauling the irrigation of the rice fields, upgrading equipment, and improving production processes over the course of 2012. In 2011 the sector suffered from a lingering shortage in fertilizer, as government-supported imports through the PetroCaribe Agreement were consistently late and were more expensive than fertilizer from other sources.
Suriname’s banana sector is expected to undergo significant changes in 2012 as the national banana company, SBBS, has been identified for privatization. The company reached record production in 2011; however, income is expected to fall as the world market price for bananas slips due to the economic crisis in Europe. SBBS is seeking approximately €19 million of the €200 million that the EU has set aside to help former banana-exporting European colonies in Africa and the Caribbean (ACP) adjust to stiffening competition from Latin America. The funds will go toward necessary infrastructural improvements at the company’s plantations of the company. The company currently employs 2,500 persons.
Other sectors with strong investment potential are: transport, heavy equipment, tourism, environmental protection, ICT, the service sector, and education.
TI Corruption Index
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Global Competitiveness Index
Suriname is not a Millennium Challenge Corporation (MCC) country.
Conversion 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, banking institutions are 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 Suriname Dollar. The documents of accounts, however, must clearly indicate the country of residency and the 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 so permits. Banking institutions are required to provide the Central Bank of Suriname all necessary information regarding any transactions in order 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.
The National Assembly approved new legislation in 2011 to give the Central Bank greater oversight authority over the commercial banks, cambios (currency exchanges), insurance companies, and other credit institutions under its supervision. The Central Bank will also have greater oversight over the issuance of licenses to new financial institutions. The new legislation builds upon other passed measures combating money laundering and terrorism financing. The legislation brings Suriname up to the standards of the Caribbean Financial Action Task Force.
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, but is relatively short. Permission must first be obtained from the Foreign Exchange Commission. 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 US$5,000 or €5,000. No limitation exists on the inflow or outflow of funds.
Expropriation and Compensation
The GOS is granted limited 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 single sector is at a greater risk of expropriation than others; although Article 41 of the Constitution specifically refers to all natural resources as being the property of the nation, and states that the nation has inalienable rights to take complete possession of all natural resources in order to utilize them for the needs of the economic, social, and cultural development of Suriname. Although there has been no direct threat of expropriation, or official policy shift that would lead one to believe that expropriation might take place, the new government has repeatedly expressed an interest in acquiring the Afobaka Hydro Dam from Suralco (Alcoa) for the symbolic amount of SRD1.00.
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, mining rights for radioactive minerals and hydrocarbons can only be obtained by state-owned enterprises.
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 overt 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 via appointed arbitrators. 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 Inter-American 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 records of 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.
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 investments, 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 in order to receive procurement approvals. With regards to the telecommunications sector, the government did require the companies Digicel and Uniqa to deposit US$1 million each in a performance bond as a guarantee that the companies would provide the services for which they had requested licenses.
Under current regulations, investors can benefit from both tax- and non-tax-based incentives. Under the tax-based incentives an investor can benefit from a nine-year tax holiday that can be extended by one year if the investment is at least US$13 million, accelerated depreciation of assets, and tax consolidation. Under the Raw Minerals Act an exemption of import duties is granted for the import of raw materials from CARICOM member countries. Exemptions are also granted for the food industry, the soft drinks industry, and the fruit juice industry. In 2011 the government eliminated import duties on computers and related items.
In order 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. In order for an investor to receive permission to hire a foreign national, the investor needs to show 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 obtain 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 infrastructure projects which, through negotiations, included in the contracts the stipulation that Chinese nationals be allowed to enter Suriname to work in jobs that 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, in order to make it possible to better track the movement of foreign workers in Suriname, and to prevent 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, 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 seven 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 two 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 US$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 prevent members from importing products from outside of CARICOM 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. In 2008 the CARICOM Secretary General, based on a decision by the 19th Inter-Sessional Meeting of the Conference of Heads of Government of the Caribbean Community, gave member countries permission to partially or completely suspend import duties on products from outside the Community for one year. In 2009 the GOS extended this suspension for another year. Cases were filed against Suriname by both the Trinidadian cement producer TCL and a Trinidadian grain miller against the import of cement and flour from non-CARICOM countries. In both cases the plaintiffs successfully argued their cases, and Suriname was ordered to reinstate the CET. By July 2010 all tariff suspensions were lifted.
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 agreed to have all goods from CARIFORUM states, except rice and sugar, enter the European market duty and quota free. Parties also agreed on a three-year moratorium before reducing import duties on goods imported from the European Union in 2011. In order to protect the fragile economies of the CARIFORUM states, 13.1 percent of goods imported from the EU were placed on an exclusions list, meaning that duties will never be reduced or eliminated on these products. Most of the countries missed the January 1, 2011 deadline for reduced tariffs on EU goods as set out in the EPA. (Only St. Kitts-Nevis and Guyana notified the secretariat of tariff reductions.) The remainder are in the process of making efforts to effect their reduction, although there are indications that some countries may maintain restrictive measures invoking balance of payments and external financial difficulties. Parties have 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. Suriname signed the EPA with the EU but the agreement has never been enforced.
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 may 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 while 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 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, and utility models, layout designs of integrated circuits, undisclosed information, or new plant varieties remain unprotected. The WTO TRIPS agreement has to date not been implemented nor enforced. Suriname has signed the WIPO Internet Treaties, but has not ratified them.
The Ministry of Justice and Police presides over the Bureau for Intellectual Property Rights (IPR) and has publicly stated its intention to improve the country’s IPR legislation. However, intellectual property rights have not received a high level of attention from legislators. Three pieces of IPR legislation, including an updated copyrights law, have been drafted by the Bureau for Intellectual Property Rights, and are being evaluated by the legal department of the Ministry of Justice and Police. More advanced and specialized legislation (e.g. brand and music piracy, industrial property and associated rights) is slated to be added to the basic legislation once it is approved. Investors can register brands at the Bureau for Intellectual Property Rights and the Surinamese court system has a successful record of handling cases of brand infringement.
Transparency of the Regulatory System
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, which by law is limited to two months. 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. In 2011 the government took its first step towards overhauling the tax system. The Dutch firm BMC was hired to design and implement the new system and draft the necessary legislation. The new system will be consumption-based rather than income-based, with consumers paying a value added tax beginning in 2013. The Tax Department has estimated that a full overhaul of the system could take up to five years to implement and has proposed a phased introduction of modifications. Other proposed changes include the introduction of a real estate tax in place of the current rental value tax, an environmental tax, and a gold tax for gold buyers.
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 makes it a lengthy process and 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 to be a continued burden that undermines transparency and gives rise to corruption. In 2011 the government liberalized the licensing system so that applications for licenses only need to be submitted to the Business License Department of the Ministry of Trade and Industry. The government has also reduced the number of business categories requiring a license to 26. These changes have reduced the time and required steps it takes to establish a business, however the system continues to be overburdened and lacks sufficient transparency.
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. The Standards Bureau is working with stakeholders from different sectors on starting the process for developing standards for these sectors.
There are no private sector and/or government/authority efforts to restrict foreign participation in industry standard-setting consortia. In most instances foreign participation is not only welcomed, but requested in order to bring standards in Suriname up to international norms.
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. There is, however, a Central Bank regulation that limits commercial banks’ credit exposure to a single client.
Due to a shortage of Surinamese Dollars at commercial banks, corporate lending rates for local currency increased by 2 percent in 2011, to between 13 and 16 percent. Banks were forced to increase their rates on savings and term deposits in local currency in order to acquire Surinamese Dollars. The lending rates for U.S. dollars and Euro loans remained stable, between 9 and 15 percent. The IMF has found the banking system to be strong, well capitalized, and profitable, but finds that compliance with prudential norms remains uneven.
According to the IMF Article IV Consultation Report, the rate of nonperforming loans remained stable at 7.9 percent. In 2010, credit to the private sector increased by 10.6 percent. The Central Bank of Suriname has kept the effective reserve requirement for local currency at 25 percent, while the reserve requirement rate for foreign deposits is 40 percent.
The increase in the government’s capacity to borrow within Suriname, by increasing the domestic debt ceiling to 25 percent of GDP, will place some pressure on the available lending liquidity in the market. Although the government has several lending options at its disposal, the commercial banks continue to be the sole source for immediate short term borrowing. As shareholder of two of the three largest commercial banks, the government has increased access to these banks’ resources.
In September 2011 Suriname signed on to become the 183rd member of the International Financing Corporation (IFC) of the World Bank. Through this membership the government hopes to gain access to cheaper, long term funding for the private sector and assistance in the identification and development of new investment possibilities.
The estimated total assets for the three major commercial banks were:
-- DSB Bank (as of June 30, 2011): US$ 706.8 million
-- Hakrinbank (June 30, 2011): US$ 423.8 million
-- RBC - RBTT (October 31, 2011): US$ 767.4 billion.
(In 2008 the Royal Bank of Canada took over the Royal Bank of Trinidad and Tobago, parent company of RBTT Bank Suriname. Financial figures for this entire group are consolidated into the financial figures of RBC. Above asset figures reported are the assets in international holdings, other than U.S.)
Competition from State-Owned Enterprises (SOEs)
Private firms compete under the same terms and conditions as public firms for access to markets and credit. State Owned Enterprises (SOE) do have an advantage in access to other resources such as land.
SOE are active in the oil sector, airline sector, electricity and gas supply, water, bananas, rice, fishing, telecommunication, banking, shipping, and transport sectors. The government also owns several “authorities” that operate like regular businesses. The only SOE with private capital invested is Staatsolie that, through bond issuance in 2010, borrowed US$55 million from private investors.
These companies are in most cases managed like regular companies with a Supervisory Board. Members of these Supervisory Boards are appointed by the government. These companies do consult with the respective ministry presiding over the sector on business decisions and major decisions require government approval or consent.
The GOS has announced that it will start an interim Sovereign Wealth Fund in January 2012. The fund will have US$20 million drawn from income from the extractive industries and will be managed by monetary authorities.
Corporate Social Responsibility (CSR)
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 adopted by other larger companies in Suriname. Consumers have taken note of this trend and, particularly some nongovernmental organizations have been depending on this for survival. Firms who follow this model are viewed more favorably. Locally owned companies that stand out for their corporate social responsibility include: Staatsolie, Surinam Airways, Telesur, Fernandes Group of Companies (largest local soft drinks bottler), and McDonalds Suriname.
There have been no incidents over the past few years involving politically motivated damage to projects and/or installations. In November 2007, 25 defendants, including current President Desiré Bouterse, went on trial for the December 8, 1982 murders of 15 prominent democracy activists. This case is still ongoing.
No U.S. firms have reported corruption as a major obstacle to foreign direct investment. 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 ranked 100 out of 182 countries on the 2011 Transparency International Corruption Index. It was ranked 75 out of 180 countries in 2009.
Suriname does not have special anti-corruption legislation in place, but the penal code does refer to anti-corruption. Under the previous government the Ministry of Justice and Police had drafted anti-corruption legislation, but it has not been addressed by the National Assembly. Anti-corruption measures in the penal code are enforced, and the majority of those prosecuted to date have been civil servants. Corruption is most pervasive in the areas of government procurement, license issuance, 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.
Although senior government officials state that they take anti-corruption efforts seriously, there is a widespread public perception of corruption in parts of the government structure, and there have been incidents of corruption uncovered in the current and previous governments.
Bilateral Investment Agreements
Suriname has bilateral investment treaties with Indonesia and the Czech Republic.
Other international agreements into which Suriname has entered are as follows:
-- a double taxation treaty with the Netherlands.
-- 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). While Suriname has signed an Investment Incentive Agreement with the United States in 1993, there currently 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 SRD3.35 for US$1. This is the same rate used by the U.S. Embassy. The estimated annual U.S. dollar value of local currency that will be used by the Embassy is US$710 thousand.
Labor unions in Suriname are independent of the government, but play an active role in politics.
Some sectors in Suriname are more prone to labor shortages, such as the agricultural sector and service sector, while the more technical sectors, such as mining and communications technology, have a surplus in labor supply. The government continues to be the largest employer in country. Suriname is a member of the ILO and adheres to ILO conventions. The Ministry of Labor has for some years been trying to implement a minimum wage system. Actual implementation continues to be hampered by lack of agreement between all stakeholders.
In 2009, Suriname implemented the Civil Service Wage Reform Program (FISO) system for government workers, which reclassified each position in government to streamline categories of workers and their pay rates. The GOS implemented Phase 2 of FISO in 2010 and 2011. Under this program a regrading of civil servants took place at all ministries and government agencies along a uniform pay scale and included a wage increase for approximately 45 percent of all civil servants.
Foreign Trade Zones/Free Ports
There are no duty free trade zones, duty free import zones, or duty free ports in Suriname.
Foreign Direct Investment Statistics
Recent data on the value of foreign direct investment -- Source for the data is the IMF Balance of Payments Statistics Yearbook
FDI Inflow in millions of US$
According to the same report, Suriname had no Direct Investment Abroad between 2004 and 2009.
A list of major foreign direct investments in Suriname follows:
- IAMGold will be expanding its Rosebel Gold Mine. Total investment is approximately US$800 million.
- Murphy Oil and Kosmos Energy will be conducting exploration activities off Suriname’s shore in the oil sector. Total investment is approximately US$150 million.
- Once an agreement has been reached, Surgold, the joint venture between Alcoa and Newmont Mining Co., will commence preparations for developing the Nassau Area for set-up of a gold refining industrial complex. The company has invested approximately US$100 million in exploration activities to date.
- The government is negotiating with Alcoa over the establishment of a new bauxite mine in the Nassau Area.
- Staatsolie has signed an agreement worth US$550 million with Italian Company Saipem for construction of the oil refinery.
- The GOS is currently negotiating with Indian firm Food Fats Fertilizer Hyderabad for the establishment of a palm oil company in Suriname. The project is worth an estimated US$200 million.
- Chinese firm China Zhong Heng Tai has expressed interest in establishing a palm oil company in Suriname’s eastern Marowijne District.
- Dubai-based Kaloti Jewelry Group has signed an agreement with the GOS to establish a government-owned mint in 2012. The Mint will process the gold to a purity of 99.9 percent.
- United Arab Emirates-based DP World is finalizing the acquisition of a 51 percent stake in two port operating companies in Suriname.
- Dubai-based metals and mining company Gulf Pacific has expressed interest in investing up to US$2 billion in Suriname’s extractive industries.
- Hong Kong-based Greenheart Group Ltd. plans to invest in two giant saw mills in Suriname’s interior.