Trinidad and Tobago

Bureau of Economic and Business Affairs
July 5, 2016

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Executive SummaryShare    

The two islands of Trinidad and Tobago (TT) are located in the Lesser Antilles, between the Atlantic Ocean and the Caribbean Sea. TT is a high-income developed country with a GDP per capita of over US$20,000 and an annual GDP of US$28 billion. It has the largest economy in the English-speaking Caribbean Community (CARICOM) and is the third most populous country with 1.3 million inhabitants. An ongoing decrease in energy production and continuing decline in energy prices caused TT to enter a recession in the latter half of 2015. Economic growth will likely be depressed through 2016.

Energy exploration and production drive TT’s economy, and this sector has historically attracted the most foreign direct investment. In 2015, the energy sector accounted for approximately 32 percent of GDP and 80 percent of export earnings. TT is the world’s largest exporter of ammonia and methanol and is the sixth largest exporter of liquefied natural gas (LNG). TT has an undiversified economy and lacks economies of scale, so it depends on imports.

TT’s investment climate is generally open and most investment barriers have been eliminated. Major issues impacting companies are inefficient government bureaucracy, crime, poor work ethic in the labor force, and corruption. Some foreign investors have seen the decision-making process for tenders and the subsequent awarding of contracts turn opaque without warning, especially when their company’s interests compete with those of well-connected local firms.

Positive aspects of TT’s investment climate:

  • Stable, democratic political system
  • Educated, English-speaking workforce
  • Well-capitalized and profitable commercial banking system and insurance industry
  • Established rule of law and respect for contracts
  • Independent judicial system that is substantively fair
  • In certain sectors, lack of domestic competition
  • High per-capita GDP

Negative aspects of TT’s investment climate:

  • Widespread perception of corruption among public officials
  • Lack of transparency in public procurement
  • Inefficient and complicated government bureaucracy
  • Time-consuming resolution of legal conflicts
  • Crime, particularly violent crime, continues despite ongoing attempts to curb it

Issues to watch

  • Foreign exchange shortages, which can significantly delay payment to U.S. firms

 

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2015

72 of 175

transparency.org/cpi2015/results

World Bank’s Doing Business Report “Ease of Doing Business”

2015

88 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

80 of 143

globalinnovationindex.org/
content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

2014

USD 222.2 Million

http://www.central-bank.org.tt/for-trade-bop-ex-rates

World Bank GNI per capita

2014

USD 20,070

data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

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:

Business Registration

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.

Industrial Promotion

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.

Privatization Program

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.

Competition Law

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.

Investment Trends

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.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

Despite TT having substantial foreign exchange reserves, businesses report a cumbersome bureaucratic process and a minimum six-week delay in accessing foreign exchange. Some companies claim exchanging TT for U.S. dollars can take up to 180 days. While there are no formal exchange controls, TT’s managed exchange rate and policy of maintaining a large stock of foreign reserves has resulted in shortages.

The Central Bank manages the nominal exchange rate, allowing it to fluctuate within a very narrow band relative to the U.S. dollar. The exchange rate has been between TTD 6.2 and TTD 6.5 for the past 10 years despite inflation in TT significantly outpacing that in the U.S. Many TT economists and business leaders now believe that the exchange rate may depreciate to TTD 7 by the end of 2016.

TT’s financial system is well-organized and regulated. The Central Bank determines monetary policy and regulates operations of the commercial banks and other financial institutions. The Automated Banking Machine (ABM) banking system offers access to advance cash withdrawals for VISA, MasterCard, and VISA Plus. Internet banking is available at all commercial banks. The regulated financial institutions consist of eight commercial banks, 17 non-bank financial institutions, and three financial holding companies. TT is a member of the International Monetary Fund, the World Bank, the Inter-American Development Bank, and subscribes to the General Agreement on Tariffs and Trade. The repatriation of capital, dividends, interest, and other distributions and gains on investment may be freely transacted without limits.

There is no requirement for withholding on interest paid to resident individuals with respect to loans secured by bonds or other similar investment instruments. When the individual is a non-resident, the withholding tax is 20 percent, except in cases where treaty relief is available.

Remittance Policies

Where the remittance is in the form of dividends paid to a U.S. individual, the tax rate is 15 percent of the gross dividend. In the case of a U.S. company owning more than 10 percent of the voting control of a TT company, the rate is 10 percent of the gross dividend. For dividends paid to a U.S. company with less than 10 percent ownership, the tax rate is 15 percent. In the case of a U.S. resident company having a branch or permanent establishment in TT, branch profit tax would be applicable on a deemed remittance made by the branch. The rate of branch profit tax is 10 percent, levied on the after-tax profits of the branch, minus any reinvestment of such profits (other than in the replacement of fixed assets). There are no options for remittance through legal parallel markets including those utilizing convertible, negotiable instruments.

TT is a member of the Caribbean Financial Action Task Force and is listed as a country “of concern” in the 2015 International Narcotics Control Strategy Report (INCSR).

3. Expropriation and CompensationShare    

The Embassy is not aware of any expropriation actions since the 1980s. There is no indication of policy shifts that might lead to the implementation of expropriations in the near future.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

TT is a unitary twin island state, with a parliamentary democracy modeled on the English Westminster System. TT has an independent judicial system that is competent and procedurally and substantively fair. It is, however, backlogged and generally lacks specialized courts, making the resolution of legal claims time consuming.

Ownership of property is enforced through the court system. Civil cases of less than US$2,500 are heard in the High Court of Justice, which can grant equitable relief. Decisions may be appealed to the TT Court of Appeal. The United Kingdom Privy Council Judicial Committee is the final court of appeal. Criminal acts are first heard by the Magistrates’ Court and may also be appealed as high as the Privy Council. Domestic courts are able to refer parties to mediation. A Mediation Board was created in 2004 with responsibility for certifying mediators and accrediting training programs.

The World Bank ranks TT 167 out of 189 countries for enforcing contracts due to the length of time required to resolve a dispute. There is no court or division of a court dedicated solely to hearing commercial cases. The Industrial Court exclusively handles cases relating to labor practices but also suffers from severe backlogs.

The 1958 New York convention allows the enforcement of arbitral awards in international arbitration proceedings. TT’s Judgments Extension Act Chap 5:02 grants the reciprocal enforcement in TT of Judgments of the United Kingdom and other Commonwealth countries. It provides a system of registration to facilitate the direct enforcement of money judgments. A foreign judgment that emanates from a jurisdiction which does not fall within the schedule of countries listed in the Judgments Extension Act will be enforceable in Trinidad and Tobago once the following criteria are satisfied:

  • The courts of Trinidad & Tobago recognize the jurisdictional competence of the foreign Court;
  • The foreign judgment is for a definite sum of money;
  • The foreign judgment is final and conclusive; and
  • There is no defense to the recognition of the foreign judgment.

Bankruptcy

The Bankruptcy and Insolvency Act of 2006 was proclaimed by the President in 2014. A dramatic improvement, it introduces a formal mechanism for rehabilitation, establishes a public office responsible for the general administration of insolvency proceedings, and clarifies the rules on appointment of trustees. The World Bank ranks TT at 66 of 189 countries for resolving insolvency in their Ease of Doing Business Index. Bankruptcy is not criminalized in TT. Creditors, equity shareholders, and holders of other financial contracts (including foreign contract holders) can present a bankruptcy petition to the High Court. Secured creditors are given first preference to liquidated assets.

Investment Disputes

Investment disputes are not common in TT. Post is only aware of one investment dispute involving a U.S. company in the past ten years.

International Arbitration

The Bilateral Investment Treaty between the United States and TT allows for alternative dispute resolution measures, including binding arbitration.

ICSID Convention and New York Convention

TT is a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention).

TT has ratified the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention). Local courts recognize and can enforce foreign arbitral awards according to chapter 20 of the Arbitration (Foreign Arbitral Awards) Act 1996.

Duration of Dispute Resolution – Local Courts

Lack of court automation, delays in case management and a lack of capacity have caused tremendous backlogs. Dispute resolution for investment/commercial issues takes approximately 1,340 days (3.6 years), according to the World Bank. This includes filing, trial, judgment, and enforcement. Alternative Dispute Resolution is often a preferred route because of shorter timeframes.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

TT has been a member of World Trade Organization (WTO) since 1995 and abides by the WTO’s Trade-Related Investment Measures (TRIMS).

Investment Incentives

The GOTT desires foreign direct investment in almost all sectors, with specific focus on non-energy targeted sectors. Foreign and local investors are generally treated equally with respect to incentives like exemption from duties, tax breaks, and tax credits. In the Creative Industries, TT offers cash rebates to encourage local service and supply sourcing. Additional information is available on the www.investt.com website.

Research and Development

Grant funding is available to non-energy manufacturing and service businesses for research and development. Tax credits are also offered for investments in registered venture capital companies. U.S. and other foreign firms are eligible to participate in government financed research and development programs.

Performance Requirements

The GOTT strongly encourages, through negotiable incentives, projects that generate employment and foreign exchange; provide training and/or technology transfer; boost exports or reduce imports; have local content; and generally contribute to the welfare of the country. Foreign investment is, however, screened for potential environmental impact. The government encourages joint ventures between foreign and local corporations. Corporate partners in a joint venture are governed by a joint-venture partnership agreement.

Foreigners entering TT to engage in legitimate trade or occupation may do so without a work permit for a single period not to exceed thirty days within a twelve consecutive month period. To engage in legitimate work for any period in excess of thirty days, a work permit must be obtained from the Ministry of National Security through the proposed employer. This system has created logistical challenges for companies involved in large industrial and energy projects that frequently need technicians for periods longer than thirty days. TT’s Bilateral Investment Treaty with the United States specifies that a company making an investment may engage top managerial personnel of its choice, regardless of nationality.

Several foreign firms have alleged that there are inconsistencies in the issuance of long-term work permits beyond top management. These generally fall into three categories:

(1) a permit is not granted to an official of a company that is competing with a local firm,

(2) a permit is not granted because TT officials believe the firm should instead hire a TT national,

(3) TT authorities threaten not to renew a permit because a foreign firm has not done enough to train and promote a TT national into the position.

Some companies report employee shortages due to the inability to find qualified job applicants who are TT citizens. Some executives of smaller companies have found that their work permits are only approved if they form joint ventures with local firms or set up formal training programs.

Data Storage

There are no forced localization requirements. Data storage legislation is in the drafting stage.

6. Protection of Property RightsShare    

Real Property

Property rights are protected under the constitution and common-law practice. Secured interests in property are recognized and enforced; however, TT has a dual system of land titles, the old Common Law title system and the registered land title system governed by the Real Property Act of 1946. 75 to 80 percent of land in TT remains under the more complicated Common Law System, which is not reliable for recording secured interests. The Government does not make a defined effort to identify property owners and register land titles. Individuals use law firms to conduct identification of property owners. Trinidad and Tobago ranks 151 out of 189 countries in the 2016 World Bank’s rankings for Ease of Registering Property.

Intellectual Property Rights

The Government of Trinidad and Tobago is supportive of intellectual property rights (IPR) internationally, is a signatory to several international agreements on IPR, and has specific legislation that protects many forms of IPR. TT’s legal framework, however, is of limited consequence due to the absence of enforcement. The police service has not detected an IPR crime in over two years, instead focusing on the drugs and gangs that give TT the 14th highest homicide rate in the world. Customs has employees in only fifty percent of its job positions and has not made an IPR seizure in at least two years. The Director of Public Prosecutions and the Judiciary are hampered by a cumbersome legal system and the requirement that rights holders, who are often not interested in pursuing claims in such a small jurisdiction, be physically present for trial. TT was on the United States Trade Representative’s (USTR) Watch List for having intellectual property rights deficiencies from 2013 to 2015.

Since rights holders seldom pursue claims in TT and the country doesn't track seizures, it is very difficult to accurately assess the prevalence of counterfeit goods in the local market. Customs Officers have ex officio authority to detain counterfeit goods but need input from the rights holder to pursue a case. If discovered, the importer would be responsible for paying for the storage and destruction of the counterfeit goods.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

The contact at U.S. Embassy Port of Spain for IP issues is:

Jake Stevens
Economic Officer
868-822-5986
StevensJD1@state.gov

The TT legal authority for IP issues is:

Intellectual Property Office
Ministry of Legal Affairs
http://www.ipo.gov.tt/
868-625-1907; 868-627-0706
info@ipo.gov.tt

Public list of local lawyers:

http://photos.state.gov/libraries/port-of-spain/231771/PDFs/ListofAttorneysNov2014.pdf

7. Transparency of the Regulatory SystemShare    

The Companies Ordinance and the Foreign Investment Act, in general, govern foreign investments. An investment proposal can only be denied if it is illegal, contrary to public morals, or environmentally unsound. Government inaction on a proposal, however, may have the same effect as outright denial. Foreign investors have complained about a lack of transparency and delays in the investment approval process. Complaints focus on a perceived lack of delineation of authority for final investment approvals among the various ministries and agencies that may be involved in a project. Some prospective investors have abandoned their efforts in TT as a result of long delays.

Legal, regulatory, and accounting systems are consistent with international norms. Proposed laws and regulations are published in draft form for public comment, and the government solicits private sector and business community comments on proposed legislation. The government and private sector do not seek to restrict foreign participation in industry standards-setting organizations.

Trinidad and Tobago is not a member of UNCTAD’s international network of transparent investment procedures.

8. Efficient Capital Markets and Portfolio InvestmentShare    

In general, the government welcomes foreign portfolio investment and has an established regulatory framework to encourage and facilitate portfolio investment. TT has well-developed capital markets.

A full range of credit instruments is available to the private sector, including a small but well-developed stock market. There are no restrictions on borrowing by foreign investors, nor are there intentional restrictions on payments and transfers for international transactions. (However, shortages of foreign exchange can cause delays in obtaining funds for transfer).

Local credit is expensive by U.S. standards due to high commercial bank reserve requirements, but loans in foreign currencies are much cheaper, and businesses can negotiate for low rates.

Money and Banking System, Hostile Takeovers

The banking sector is considered healthy, as it is well capitalized and liquid. Leading financial economists believe that cutbacks in both the public and private sector arising from TT’s recession will cause lending growth to decelerate.

The estimated total assets of TT’s banks in 2014 are approximately US$20 billion, the five largest banks’ assets are estimated at US$8.4 Billion.

In 2015, the Central Bank estimated non-performing loans at 3.5 percent, down from a high of 7.5 percent in 2011. The legal, regulatory, and accounting systems governing credit markets are, on the whole, effective and transparent, although TT needs stricter regulation of the insurance industry. In 2012, the GOTT amended its Securities Act in hopes of supporting fair and efficient capital markets.

TT's Financial Institutions Act of 2008 provides penalties up to US$800,000 and five years in jail for operating without a license from the Central Bank. Directors and Officers of a company violating the Act can be held liable.

There are no restrictions on a foreigner’s ability to establish a bank account.

The Fair Trading Act of 2006 contains antitrust legislation that regulates mergers, anticompetitive agreements, and monopolies, and provides for the establishment of a Fair Trade Commission. Under the Act, merging enterprises are required to apply to the Commission for permission to merge if their assets exceed TTD 50 million (approximately US$8 million). The Act requires the Commission to make a determination within one month. As of March 2015, some posts on the Commission remain unfilled and the regulations have not been implemented.

The GOTT has established a Securities and Exchange Commission for the purpose of supervising and regulating the securities market and market actors. Foreign investors must obtain a license from the Ministry of Finance before they can legally acquire more than 30 percent of a publicly held company.

Cross-shareholding arrangements that would inhibit foreign investment through mergers and acquisitions are uncommon outside the financial services sector. The banking system is generally considered sound. There are no laws authorizing firms to adopt articles of incorporation that limit or prohibit foreign investment, participation, or control.

9. Competition from State-Owned EnterprisesShare    

TT has 117 State Owned Enterprises (SOEs) in sectors like energy, manufacturing, agriculture, tourism, financial services, transportation, and communication. According to TT’s Constitution, the Government is entitled to:

  • exercise control directly or indirectly over the affairs of the enterprise
  • appoint a majority of directors of the board of directors of the enterprise
  • hold at least 50 per cent of the ordinary share capital of the enterprise

An annually updated list of State enterprises can be found here: http://www.finance.gov.tt/content/state-enterprise-company-portfolio.pdf.

The Investments Division of the Ministry of Finance is responsible for conducting management and performance audits of State Enterprises, which includes 47 wholly-owned companies, seven majority-owned companies, five minority-owned companies (i.e. less than fifty percent holdings), and 51 companies held indirectly as subsidiaries of wholly-owned companies. There are also seven statutory corporations.

The Investments Division also has the responsibility to appoint directors to the board of state enterprises. The Division submits the Annual Audited Accounts of State Enterprises to the Public Accounts Committee, and the Audited Annual Reports are available to the public. State-owned companies are required to disclose the financial interests and decision making processes of their executives. SOEs are often informally or explicitly obligated to consult with government officials before making major business decisions. In sectors that are open to both the private sector and foreign competition, SOEs are sometimes favored for government contracts.

SOEs frequently undertake commercial activities as well as their public function mandates. They also purchase goods from the private sector including foreign firms. Some prominent SOEs include the Urban Development Company of Trinidad and Tobago (UDECOTT) and the National Infrastructure Development Company (NIDCO), both of which are responsible for large-scale construction projects. In the energy sector, Trinidad and Tobago has three fully state-owned companies, the Petroleum Company of Trinidad and Tobago, the National Gas Company, and the National Petroleum Marketing Company; it also holds an interest in several joint ventures.

No information is available concerning the percentage of expenditures allocated to Research and Development (R&D). TT is not party to the Government Procurement Agreement within the framework of the WTO.

Private enterprises have the same access to financing as SOE’s. SOE’s are subject to the same tax burden and tax rebate policies as their private sector competitors. SOE’s are subject to hard budget constraints under the law and these are enforced through the allocations they are disbursed on a quarterly basis.

OECD Guidelines on Corporate Governance of SOEs

While there is no specific document that oversees ownership policies and guidelines of SOEs in TT, the key legal references are:

  • The Companies Act (1995)
  • Integrity in Public Life Act (2000)
  • The State Enterprises Performance Monitoring Manual (2011)
  • The Trinidad and Tobago Corporate Governance Code (2013)

The persistence of civil society groups advocating for good corporate governance at SOEs in light of recurring scandals led to the development of the TT’s corporate governance code in 2013, which adheres to the OECD Guidelines on Corporate Governance of SOEs (https://caribbeangovernance.org/T&T-Corporate-Governance-Code-2013-(TTCGC-2013)).

The TT code sets standards of good practice in relation to board leadership and effectiveness, compensation, accountability, and relations with shareholders, but adherence to the TT Corporate Governance Code is not mandatory and compliance varies according to each SOE based on factors like the level of capacity and existing leadership. Seats on SOE boards are generally allocated based on political allegiance. The only SOEs that have been analyzed by international investment banks and credit agencies are in the energy sector and the ties to the government are very close. Court processes are generally transparent and non-discriminatory; however, the prohibitive length of time for resolution discourages many investment disputes from going to the courts.

Sovereign Wealth Funds

TT established its Heritage and Stabilization Fund (HSF) in 2007 as the country’s sole sovereign wealth fund. Its stated purpose is to save and invest surplus petroleum revenues (in excess of 60 percent of estimated revenues) in order to both sustain public expenditure capacity during periods of revenue downturn and provide a heritage for future generations of citizens. The value of the fund is approximately US$ 5.7 Billion. The 2007 legislation mandates that the Fund be maintained in U.S. dollars and prohibits domestic or petroleum–related investments. The fund invests in U.S. Short duration fixed income, U.S. Core Domestic Fixed Income, U.S. Core Domestic Equities and Non-U.S. Core International Equities.

The Fund’s day-to-day operations are managed by the Central Bank and governed by a five member Board, including one representative from the Central Bank and one representative from the Ministry of Finance. They adopt a passive role as portfolio investors and manage the fund largely in accordance with the Santiago Principles. TT participates in the IMF hosted International Working Group on Sovereign Wealth Funds.

10. Responsible Business ConductShare    

There is some awareness of responsible business conduct (RBC) among large and mid-size businesses in TT. The government has not put forward a clear definition of responsible business conduct nor does it have specific policies to promote and encourage it. Despite this, efforts by civil society have encouraged the Government to consider legislation relating to public procurement (in which the private sector participates fully) and whistleblowing. TT has laws to ensure protection of labor rights, consumer protection, and environmental protection. Enforcement, however, is lacking due to staffing shortages, capacity issues, and a bureaucratic judiciary. There have not been any high-profile, controversial instances of corporate impact on human rights.

There is no TT National Contact Point for the OECD Multinational Enterprises Guidelines. GOTT updated legislation for the financial sector that would encourage responsible business conduct. The Government in collaboration with civil society created the TT Corporate Governance Code that incorporates governance, accounting, and executive compensation standards to protect shareholders. The Code is not mandatory.

As a member of the EITI, the GOTT agreed to publicly declare annually all revenues received from companies engaged in the extractive industries (oil and gas upstream activities, initially) and the companies, in turn, agreed to publicly declare monies paid to GOTT.

11. Political ViolenceShare    

There have been no serious incidents of political violence since an unsuccessful coup attempt in 1990. While non-violent demonstrations occur on occasion, widespread civil disorder is not typical.

12. CorruptionShare    

Bribes are not regularly required to facilitate routine operations; however, reports of corruption are common. Allegations seldom work through the legal system, resulting in a scarcity of cases with legal outcomes.

Various pieces of legislation address corruption of public officials:

  • The Integrity in Public Life Act requires public officials to disclose assets upon taking office and at the end of tenure.
  • The Freedom of Information Act gives members of the public a general right (with specified exceptions) of access to official documents of public authorities. The intention of the Act was to address the public’s concerns of corruption and to promote a system of open and good governance. In compliance with the Act, designated officers have been appointed in each Ministry and statutory authority to process the applications for information.
  • The Police Complaints Authority Act establishes a mechanism for complaints against police officers in relation to, among other things, police misconduct and police corruption.
  • The Prevention of Corruption Act provides for certain offences and punishment of corruption in public office.

The laws are non-discriminatory in their infrequent application. The laws do not extend to family members of officials or to political parties. TT’s rank in the Corruption perception index has trended downward since 2001. The local press actively reports on allegations of waste, fraud, or abuse of public resources. Successive governments have been elected on mandates to stop corruption. The current government says it will pursue whistleblower legislation, procurement reform, and campaign finance reform.

In recent years, the GOTT has established a number of commissions of inquiry into inappropriate conduct in public contracting, but no one has been found guilty. The fine for non-appearance at the commission of inquiry is US$300. Some private companies, particularly the larger ones, use internal controls and compliance programs to detect and prevent bribery of government officials. There are no protections for NGOs involved in investigating corruption.

TT’s procurement processes are not fully transparent. U.S. firms have identified corruption as an obstacle to FDI, specifically in government procurement. Government ministries and special purpose public companies have, on occasion, manipulated or bypassed established procurement procedures to favor specific vendors, raising questions about the government’s commitment to transparency. Nevertheless, a number of U.S. companies have secured government service contracts in recent years. TT is not a party to the WTO Government Procurement Agreement.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

TT signed and ratified the UN Anticorruption Convention, the Inter-American Convention Against Corruption. TT is not party to the OECD Convention on Combating Bribery.

Resources to Report Corruption

Resources to report corruption:

The Integrity Commission
P.O. Box 1253, Port of Spain
The Integrity Commission of Trinidad and Tobago Level 14,
Tower D, International Waterfront Centre
1 A Wrightson Road, Port of Spain.
registrar@integritycommission.org.tt
868-623-8305

Trinidad and Tobago Transparency Institute (local chapter of Transparency International)
Unit 4-12, Building 7
Fernandes Industrial Centre, Laventille
admin@transparency.org.tt
868-626-5756

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

A Bilateral Investment Treaty (BIT) between the United States and TT came into force in 1996. The BIT requires that foreign investments in most sectors receive treatment no less favorable than that accorded to domestic investments (national treatment).

TT also has bilateral investment agreements with Canada, China, France, the United Kingdom, Germany, Korea, Spain, Mexico, and India.

A Convention between the United States of America and Trinidad and Tobago for the avoidance of double taxation, the prevention of fiscal evasion with respect to taxes on income, and the encouragement of international trade and development, was signed at Port of Spain on January 9, 1970.

14. OPIC and Other Investment Insurance ProgramsShare    

The Overseas Private Investment Corporation (OPIC) provides financial products like loans and guaranties, political risk insurance, and support for investment funds to help American businesses expand into emerging markets like TT.

15. LaborShare    

Trinidad and Tobago is a net importer of expatriate labor including doctors, nurses, construction workers, and extractive industry specialists. In March 2016 the unemployment rate was 3.4 percent, but it is artificially low due to government make-work programs that absorb excess labor. TT’s recession has resulted in a number of layoffs and plant closures that will be reflected in future labor reports. The labor market offers a high proportion of skilled and experienced workers, and the educational level of the population is among the top 10 in North America, according to the Human Development Index, though there is a gap between official literacy statistics and functional literacy. The youth unemployment rate (20-24 years of age) is above the national average at 7.3 percent. Agricultural employment accounts for four percent of total employment while employment in services accounts for over 60 percent of total employment.

The Industrial Relations Act (IRA) is the main piece of legislation governing labor relations in TT. It provides for dispute resolution through an industrial court in instances where the issue cannot be resolved at the collective bargaining table or through conciliation efforts by the Ministry of Labor. Additional legislation affecting the labor force in TT includes the Minimum Wage Act, the Occupational Health and Safety Act, the Workmen’s Compensation Act, and the Maternity Protection Act.

The IRA provides for the following:

  • free collective bargaining between employer and workers through their representative associations,
  • the development of a peaceful and expeditious procedure for the settlement of disputes,
  • the establishment of the Industrial Court,
  • the recognition and registration of trade unions,
  • the freedom to be represented by a trade union and the right not to associate, and
  • industrial action which may be taken by both employer and employee.

There are no restrictions on employers adjusting employment to respond to fluctuating market conditions, via severance. Labor laws differentiate between layoffs and firing. The Retrenchment and Severance Benefits Act is the legislation providing guidance on who is entitled to receive what based on specific circumstances. Severance pay is usually only paid to workers who have been made redundant or retirees. An employer is not required to pay severance to workers if everyone is severed, owing to the fact that the business is being closed down; however, the employer must pay severance if only a portion of the workforce is being made redundant. Unemployment insurance does not exist for workers who have been laid off for economic reasons, but programs designed to help job seekers get employed as quickly as possible are available.

The government has been employing a number of temporary workers for jobs that are not temporary, but the reasons for this are unclear. It is not common for labor laws to be waived in order to attract or retain investment. There are no different labor law provisions for special economic zones, trade zones, free ports, or the economy as a whole.

The law provides for the right of most workers, including those in state-owned enterprises, to form and join independent unions of their choosing without prior authorization. Employees listed in essential services, such as hospital, fire, and communication services do not have the right to strike, and walkouts can bring punishment of up to 18 months in prison. Employees in these sectors may instead hold “sickouts” or “work to rule”. Employees negotiate with the government’s chief personnel officer to resolve labor disputes. The law stipulates that only strikes over unresolved interest disputes may take place and that authorities may prohibit strikes at the request of one party if not called by a majority union. The Ministry of Labor offers conciliation services through a dedicated unit established to help resolve disputes between employers and unions (www.ttconnect.gov.tt/).

The law also provides for mandatory recognition of a trade union when it represents 51 percent or more of the workers in a specified bargaining unit. The law allows unions to participate in collective bargaining and mandates reinstatement of workers illegally dismissed for union activities. The government enforces labor laws effectively, including with effective remedies and penalties. Worker organizations are independent of government and political parties. The law sets the minimum age for employment in public and private industries at 16. Children ages 14 to 16 may work in activities in which only family members are employed or that the Ministry of Education has approved as vocational or technical training. The law prohibits children under age 18 from working between the hours of 10 p.m. and 5 a.m., except in a family enterprise or within other limited exceptions.

The national minimum wage is TTD 15.00 (USD 2.37) per hour. The law establishes a 40-hour workweek, a daily period for lunch or rest, and premium pay for overtime. The law does not prohibit excessive or compulsory overtime. The law provides for paid leave, with the amount of leave varying according to length of service.

The law sets occupational health and safety standards, which the Occupational Safety and Health Agency (OSHA) enforces. The government’s occupational health and safety regulations apply to all workers, regardless of citizenship. Local labor laws generally protected foreign laborers brought into the country, a stipulation usually contained in their labor contract.

There are close to 30 active labor unions in TT and they are independent both legally and in practice. Collective bargaining is common with approximately 15 percent of the population covered by collective bargaining agreements. Government workers including civil servants, policemen, firemen, military personnel, and staff in several State Owned Enterprises are covered by collective bargaining agreements. Unions are also quite active in the energy, steel and telecommunications industries. In TT collective bargaining takes place between company and recognized majority union rather than on an industry wide basis. The Government as an employer also bargains collectively. The process of collective bargaining is regulated by the IRA.

In 2015 there was a number of strikes leading up to the general election, as several unions attempted to pressure the then ruling government for better wages. The unions achieved increased wages for all government workers.

The ILO has not identified any compliance gaps in law or practice regarding international labor standards that may pose a reputational risk to investors.

The government does not have a labor inspectorate system to identify and remediate labor violations; however, the labor relations court investigates and prosecutes unfair labor practices, such as harassment and/or dismissal of union members.

Trinidad and Tobago has ratified most key international conventions concerning child labor.

Child Labor Report: http://www.dol.gov/ilab/reports/child-labor/trinidad_tobago.htm

Annual Human Rights Report: http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?year=2014&dlid=236720

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

The Free Zones Act of 1988 (last amended in 1997) established the TT Free Zones Company (TTFZ) to promote export development and encourage both foreign and local investment projects in a relatively bureaucracy-free, duty-free, and tax-free environment. There are currently 15 approved enterprises located in eight free zones. The majority are located within a multiple-user site in D'Abadie, Trinidad, but any suitable area in TT can be designated as a free zone by the Minister of Trade and Industry.

Free zone enterprises are exempt from: customs duties on capital goods, parts, and raw materials for use in the construction and equipping of premises and in connection with the approved activity; import and export licensing requirements; land and building taxes; work permit fees; foreign currency and property ownership restrictions; capital gains and taxes; withholding taxes on distribution of profits and corporation taxes or levies on sales or profits; VAT on goods supplied to a free zone; and duty on vehicles for use only within the free zone.

A corporation tax exemption for entities that qualify for free zone status is also in force. Application to carry out an approved activity in an existing free zone area is made on specified forms to the TTFZ.

If the project requires designation of a new free zone area, a separate application form for designation is made to the TTFZ, which recommends designation to the Minister of Trade and Industry. Designation is effected by order of the Minister. Applications for work permit waivers are recommended by the TTFZ through the work permit secretariat of the Ministry of National Security. Free Zone activities that qualify for approval include manufacturing for export, international trading in products, services for export, and development and management of free zones. Activities that may be carried on in a Free Zone but do not qualify as approved activities include exploration and production activities involving petroleum, natural gas, or petrochemicals.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2014

$26.88

2014

$28.88 Billion

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2014

$222.2 Million

2014

$6,921Million

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States ($M USD, stock positions)

2014

N/A

2014

$230 Million

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2014

$Amt

2014

23%

N/A

*Source: Central Bank of TT. www.central-bank.org.tt


Table 3: Sources and Destination of FDI

Foreign direct investment position data are not available for Trinidad and Tobago.


Table 4: Sources of Portfolio Investment

Portfolio investment data are not available for Trinidad and Tobago.

18. Contact for More InformationShare    

Jacob Stevens, Economic Officer
Embassy of the United States
15 Queen’s Park West, Port of Spain,
Trinidad W.I.
868-822-5986

Marissa Nicholas, Commercial Assistant
Embassy of the United States
15 Queen’s Park West, Port of Spain,
Trinidad W.I.
868-822-5933