Attitude toward Foreign Direct Investment
Foreign ownership of companies is permitted under the Foreign Investment Act. The Government of Trinidad and Tobago (GOTT) desires foreign direct investment and has traditionally welcomed U.S. investors. Within the past year, several U.S. firms alerted the Embassy to projects in which the GOTT did not follow through as expected. Despite the challenges, U.S. companies operating in Trinidad and Tobago (TT) span many economic sectors including finance, aviation, energy, manufacturing, and retail food franchises.
Other Investment Policy Reviews
The Ministry of Trade and Industry and the Arthur Lok Jack Graduate School of Business collaborate with the World Bank's Ease of Doing Business annual report: http://www.doingbusiness.org/~/media/giawb/doing%20business/documents/profiles/country/TTO.pdf
Laws/Regulations on Foreign Direct Investment
The Global Enterprise Registration Network gives the TT business websites a below average score of 4.5 out of 10 for providing on information on how to register a business. (http://ger.co/). The inability to make online payments, submit certificates online, and engage in simultaneous requests are the three main reasons for the low score. A feedback mechanism allowing users to communicate with authorities is a strength of the TT business websites.
GOTT has reduced the number of procedures required to establish a business to seven, leading to an average time to complete the necessary procedures of twelve days. TT performs better than the regional average on these two indicators in the World Bank Doing Business Indicator for starting a business (http://www.doingbusiness.org/data/exploretopics/starting-a-business#close).
InvesTT is the investment promotion agency of the TT Government: http://www.investt.co.tt/. Investor facilitation services are available to all investors; however, certain criteria exist for specific industries. GOTT has prioritized industries like hospitality and has identified a specific minimum capital expenditure for projects in accommodation development, theme parks, and golf courses.
TT’s judicial system respects the sanctity of contracts and generally provides a level playing field for foreign investors involved in court matters. Due to the backlog of cases, however, there can be major delays in the process. It is imperative that foreign investors seek competent local legal counsel. Some U.S. companies are hesitant to pursue legal remedies, preferring to attempt good faith negotiations in order to avoid an acrimonious relationship that could harm their interests in the country’s small, tight-knit business community.
The major laws/ regulations, and judicial decisions affecting incoming foreign investment are:
Foreign Investment Act
Occupational Safety and Health Act
Minimum Wage Act
Retrenchment and Severance Benefits Act
Useful websites to help navigate foreign investment laws, rules, and procedures are:
Businesses are registered at the Companies Registry of the Ministry of Legal Affairs. Subsequently, firms need to complete various procedures at:
The Board of Inland Revenue – taxpayer identification number
The National Insurance Board – registration of employer and employees
Value Added Tax Office, Inland Revenue Division of the Ministry of Finance – application for sales tax registration number if gross income in TT exceeds US$77,000 per annum
Financial Intelligence Unit – registration of businesses involved in real estate, motor vehicle sales, money or value transfer services, jewelers, art dealers, gaming houses, etc. to prevent money laundering.
Additional information from the GOTT about business registration, trade, work permits, and more can be found at the following websites:
GOTT defines micro enterprises as having less than five employees, small enterprises as having less than twenty-five employees, and medium enterprises as having less than fifty employees. Facilities for micro, small, and medium enterprises exist in the form of training.
As GOTT seeks to diversify its economy beyond the energy sector, it has expressed interest in: Information and Communication, Agribusiness, Environmental Technologies, Energy and Mining, Tourism, Media and Entertainment, and Marine Technology. The nation’s investment promotion agency, www.investt.co.tt, is responsible for disseminating investment related information.
Limits on Foreign Control and Right to Private Ownership and Establishment
Both foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity. Under the Foreign Investment Act of 1990, a foreign investor is permitted to own 100 percent of the share capital in a private company but a license is required to own more than a 30 percent of a public company. The Foreign Investment Act also limits foreign ownership of land to one acre for residential purposes and five acres for trade purposes without a license. In the past, the government generally granted waivers on corporate equity and land ownership restrictions. License applications are subject to review and approval/denial by the Ministry of Finance (in Trinidad) or Tobago House of Assembly (in Tobago).
Under the Companies Ordinance and the Foreign Investment Act, a foreign investor may purchase shares in a local corporation, incorporate, set up a branch office in TT, or form a joint venture or partnership with a local entity. Businesses may be freely purchased or disposed of. Private enterprises and public enterprises are treated equally with respect to access to markets, credit, and other business operations. The Companies Act, based on the Canadian Corporations Act, came into force in 1997 and was updated in the Companies (Amendment) Act, 1999.
Post is not aware of any sector-specific restrictions to U.S. investors; however, U.S. companies occasionally complain that corruption and nepotism results in obstacles to completion of contracts or steers contracts to local competitors.
TT is looking to Public-Private Partnerships as a model for privatizing key sectors and has encouraged foreign investment in several state enterprises. In nearly every case, foreign investors purchased large minority holdings in privatized firms. Within the last 5 years, as a way to generate revenue for the government, the GOTT privatized at least 2 companies in the energy sector using Initial Public Offerings. The current government has not yet defined its privatization policy for the next 5 years.
Screening of FDI
In general, the GOTT will only involve itself in foreign investments when the investor is seeking government incentives or concessions, the investor wishes to lease land in one of the government-owned industrial parks, or a planned activity requires a license, such as mining or drilling. Nationals and non-nationals are generally treated equally with respect to obtaining licenses; however, come U.S. companies have complained of delays when competing against a politically connected rival. Bureaucratic delays in approval of investment packages for investors are common. These generally are the result of negotiations for a memorandum of understanding or framework agreement and incentives, or in the case of petrochemical investors, negotiations for favorable natural gas prices. Environmental approval for large industrial projects is governed by the Environmental Management Authority through the issuance of a Certificate of Environmental Clearance.
The Intellectual Property Act of 2000 covers unfair competition, misleading the public, discrediting another's enterprise and activities, and disclosure of secret information. The Act identifies which agencies review transactions for competition-related concerns. Enforcement of the law is a concern as the procedure for reviewing competition related concerns is lengthy. The Fair Trading Commission, established in 2014, has the responsibility for promoting and maintaining fair competition in the domestic market. It investigates the various forms of anti-competitive business conduct set out in the Fair Trading Act.
FDI in Trinidad and Tobago has historically been highly concentrated in the extractive industries. TT has historically had a favorable investment environment and offered incentives in the government’s priority sectors. The top three countries investing in TT are Canada, the United States, and China. The GOTT continues to streamline the investment registration system and permits investors to submit a single application for all the licenses, approvals, and tax concessions necessary to implement an investment project. GOTT would welcome investment in tourism projects, creative industries, and the maritime sector.