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Antigua and Barbuda

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of Antigua and Barbuda encourages foreign direct investment, particularly in industries that create jobs, enhance economic activity, earn foreign currency, and have a positive impact on its citizens. Diversification of the economy remains a priority.

Through the ABIA, the government facilitates and supports foreign direct investment in the country and maintains an open dialogue with current and potential investors. All potential investors are afforded the same level of business facilitation services. ABIA offers complementary support services to investors exploring business opportunities, including facilitation of incentives and concessions, project monitoring, and general assistance. ABIA’s website is http://investantiguabarbuda.org . The government launched an additional website in early 2021 to serve as a “business hub for potential investors,” http://antiguabarbuda.com .

While the government welcomes all foreign direct investment, it has identified tourism and related services, manufacturing, agriculture and fisheries, information and communication technologies, business process outsourcing, financial services, health and wellness services, creative industries, education, yachting and marine services, real estate, and renewable energy as priority investment areas. Uncertainty about the trajectory of economic recovery of the tourism, commercial aviation, and cruise industries impacts the potential for projects in those sectors.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign control of investment and ownership in Antigua and Barbuda. Foreign investors may hold up to 100 percent of an investment, and a local or foreign entrepreneur needs about 40 days from start to finish to transfer the title on a piece of property. In 1995, the government established a permanent residency program to encourage high-net-worth individuals to establish residency in Antigua and Barbuda for up to three years. As residents, their income is free of local taxation. In 2020, the government established the Nomad Digital Residence Visa program in which eligible remote workers can apply for a two-year special resident authorization. These programs are separate from the Citizenship by Investment (CBI) program.

The ABIA evaluates all foreign direct investment proposals applying for government incentives and provides intelligence, business facilitation, and investment promotion to establish and expand profitable business enterprises. The ABIA also advises the government on issues that are important to the private sector and potential investors to increase the international competitiveness of the local economy.

The government of Antigua and Barbuda treats foreign and local investors equally with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.

Other Investment Policy Reviews

The OECS, of which Antigua and Barbuda is a member, has not conducted a trade policy review in the last three years.

Business Facilitation

Established in 2006, the ABIA facilitates foreign direct investment in priority sectors and advises the government on the formation and implementation of policies and programs to attract investment. The ABIA provides business support services and market intelligence to all investors. Its website is http://investantiguabarbuda.org . It also offers an online guide that is useful for navigating the laws, rules, procedures, and registration requirements for foreign investors. The guide is available at http://www.theiguides.org/public-docs/guides/antiguabarbuda .

All potential investors applying for government incentives must submit their proposals for review by the ABIA to ensure the project is consistent with national interests and provides economic benefits to the country.

In the World Bank’s 2020 Doing Business Report, Antigua and Barbuda ranked 130th out of 190 in the ease of starting a business. The establishment of a new business takes nine procedures and 19 days to complete. This time was reduced by three days because the government made improvements to the exchange of information between public entities involved in company incorporation. The general practice is to retain a local attorney who prepares all the relevant incorporation documents. A business must register with the Intellectual Property and Commercial Office (IPCO), the Inland Revenue Department, the Medical Benefits Scheme, the Social Security Scheme, and the Board of Education.

The Antigua and Barbuda Science Innovation Park (ABSIP) launched in 2019 to support and create business startup opportunities that will generate sustainable business enterprises. ABSIP provides business incubation and financing, access to business financing, branding, training, partnership establishment, and other services. ABSIP’s website is http://absip.gov.ag .

The Prime Minister’s Entrepreneurial Development Programme (EDP) supports the creation of micro and small businesses with the intent of increasing the Antiguan and Barbudan ownership share of the country’s economy. Priority sectors in which EDP grants loans are agriculture and agroprocessing, manufacturing, information technology, e-business, and tourism.

Outward Investment

Although the government of Antigua and Barbuda prioritizes investment return as a key component of its overall economic strategy, there are no formal mechanisms in place to achieve this. To sustain future economic growth, Antigua and Barbuda’s economy depends on significant foreign direct investment.

There is no restriction on domestic investors seeking to do business abroad. Local companies in Antigua and Barbuda are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME).

5. Protection of Property Rights

Real Property

The government owns 55 percent of Antigua’s land, and the remaining 45 percent is privately owned. The Lands Division in the Ministry of Agriculture, Lands, Fisheries and Barbuda Affairs is the custodian of Crown lands on behalf of the government.

By custom, the residents of Barbuda own all land on Barbuda communally; private land ownership is prohibited. Any citizen over 18 years old has the right to occupy residential land, graze animals, and use land for commercial purposes, as long as projects are not considered major developments. In the aftermath of 2017’s Hurricane Irma, the government attempted to introduce a private property system through amending and repealing the Barbuda Land Act and replacing it with the Crown Land Regulation Act, which would allow private ownership of land in Barbuda by non-Barbudans. Barbudan representatives have filed a legal challenge to the constitutionality of this legislation in the Eastern Caribbean Supreme Court. Therefore, the Crown Land Regulation Act has not yet taken effect.

Citizens and non-citizens can lease or buy land on the island of Antigua from the government or the private sector. Land sold to non-citizens is subject to the Non-Citizen Land Holding Regulation Act, which requires buyers to obtain a license to purchase land. Buyers are advised to consult with a local attorney. All land titles and purchases must be registered at the Land Registry.

The Town and Country Planning office of the Development Control Authority designates land use areas, including for commercial, agricultural, industrial, or tourism use. The government’s Free Trade and Processing Zone manages land and facilities which are geared towards attracting foreign direct investment in export sectors.

Because Antigua and Barbuda is a member of the ECCU, lending institutions in Antigua and Barbuda generally follow the guidelines published by the ECCB. However, the lack of capital market depth in the sub-region makes the use of securitization difficult.

In the World Bank’s 2020 Doing Business Report, Antigua and Barbuda ranked 124th out of 190 countries for ease of registering property. It takes about 32 days to complete seven necessary procedures, and the cost is about 10.8 percent of the value.

Intellectual Property Rights

Antigua and Barbuda has an extensive legislative framework supporting the protection of intellectual property rights (IPR). However, enforcement efforts are inconsistent. Antigua and Barbuda is a member of the United Nations World Intellectual Property Organization (WIPO). It is a signatory to the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, and the Berne Convention for the Protection of Literacy and Artistic Works.

Article 66 of the Revised Treaty of Chaguaramas establishing the CSME commits all 15 members to implement stronger intellectual property protection and enforcement. The CARIFORUM-EU EPA contains the most detailed obligations regarding intellectual property in any trade agreement to which Antigua and Barbuda is a party. The EPA recognizes the protection and enforcement of IPR. Article 139 of the EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties, and of the WTO Agreement on Trade Related Aspects of Intellectual Property (TRIPS).” As a member of the WTO, Antigua and Barbuda recognizes the WTO TRIPS Agreement.

The Comptroller of Customs leads enforcement and prevention efforts against counterfeit goods, which include detention, seizure, and forfeiture. The Royal Police Force of Antigua and Barbuda has extensive powers of search and seizure in the investigation of alleged infringements and has the power to confiscate suspected infringing copies.

Antigua and Barbuda is not included in the United States Trade Representative 2021 Special 301 Report or the 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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

6. Financial Sector

Capital Markets and Portfolio Investment

As a member of the ECCU, Antigua and Barbuda is also a member of the Eastern Caribbean Stock Exchange (ECSE) and the Regional Government Securities Market. The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing securities market activities. As of March 31, 2020, there were 154 securities listed on the ECSE, comprising 134 sovereign debt instruments, 13 equities, and seven corporate bonds. Market capitalization stood at $666 million (1.8 billion Eastern Caribbean dollars), representing a 0.3 percent decrease from the previous year. Antigua and Barbuda is open to portfolio investment.

Antigua and Barbuda accepted the obligations of Article VIII of the International Monetary Fund Agreement Sections 2, 3, and 4, and maintains an exchange system free of restrictions on making international payments and transfers. The government normally does not grant foreign tax credits except in cases where taxes are paid in a Commonwealth country that grants similar relief for Antigua and Barbuda taxes, or where an applicable tax treaty provides a credit. The private sector has access to credit on the local market through loans, purchases of non-equity services, and trade credits, as well as other accounts receivable that establish a claim for repayment.

Money and Banking System

Antigua and Barbuda is a signatory to the 1983 agreement establishing the ECCB. The ECCB controls Antigua and Barbuda’s currency and regulates its domestic banks.

The Banking Act 2015 is a harmonized piece of legislation across the ECCU member states. The ECCB and the Ministers of Finance of member states jointly carry out banking supervision under the Act. The Minsters of Finance usually act in consultation with the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Domestic and foreign banks can establish operations in Antigua and Barbuda. The Banking Act requires all commercial banks and other institutions to be licensed. The ECCB regulates financial institutions. As part of supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB. In its latest annual report, the ECCB listed the commercial banking sector as stable. Assessments including effects of the pandemic are not yet available. Assets of commercial banks totaled $2.07 billion (5.6 billion Eastern Caribbean dollars) at the end of December 2019 and remained relatively consistent during the previous year. The reserve requirement for commercial banks was six percent of deposit liabilities.

Antigua and Barbuda is well-served by bank and non-bank financial institutions. There are minimal alternative financial services offered. Some people still participate in informal community group lending, but the practice is declining.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S., Canadian, and European banks due to risk management concerns. CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to continue to monitor the issue.

Antigua and Barbuda’s Digital Assets Business Bill 2020 created a comprehensive regulatory framework for digital asset businesses, clients, and customers. The bill states that all digital asset businesses in the country must obtain a license for issuing, selling, or redeeming virtual coins, operating as a payment service or electronic exchange, providing custodial wallet services, among other activities. The government aspires to develop Antigua and Barbuda into a regional center for blockchain and cryptocurrency. At the end of 2020, over 40 major businesses accepted bitcoin cash.

Bitt, a Barbadian company, developed digital currency DCash in partnership with the ECCB. The first successful DCash retail central bank digital currency (CDBC) consumer-to-merchant transaction took place in Grenada in February 2021 following a multi-year development process. The CBB and the FSC established a regulatory sandbox in 2018 where financial technology entities can do live testing of their products and services. This allowed regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers. Bitt completed its participation and formally exited the sandbox in 2019. Bitt launched DCash in Antigua and Barbuda in March 2021.

Foreign Exchange and Remittances

Foreign Exchange

Antigua and Barbuda is a member of the ECCU and the ECCB. The currency of exchange is the Eastern Caribbean dollar (XCD). As a member of the OECS, Antigua and Barbuda has a foreign exchange system that is fully liberalized. The Eastern Caribbean dollar has been pegged to the U.S. dollar at a rate of XCD 2.70 to USD 1.00 since 1976. As a result, the Eastern Caribbean dollar does not fluctuate, creating a stable currency environment for trade and investment in Antigua and Barbuda.

Remittance Policies

Companies registered in Antigua and Barbuda have the right to repatriate all capital, royalties, dividends, and profits free of all taxes or any other charges on foreign exchange transactions. The government levies withholding taxes on non-resident corporations and individuals receiving income in the form of dividends, preferred share dividends, interest and rentals, management fees, and royalties, as well as on interest on bank deposits to non-resident corporations. A person must be present on the island for no less than four years without interruption to be considered a resident. Antigua and Barbuda is a member of the CFATF.

In 2017, the government of Antigua and Barbuda signed an intergovernmental agreement in observance of the FATCA, making it mandatory for banks in Antigua and Barbuda to report the banking information of U.S. citizens.

Sovereign Wealth Funds

Neither the government of Antigua and Barbuda nor the ECCB, of which Antigua and Barbuda is a member, maintains a sovereign wealth fund.

8. Responsible Business Conduct

Responsible business conduct by producers and consumers is positively regarded in Antigua and Barbuda. The private sector is involved in projects that benefit society, including in support of environmental, social, and cultural causes.

The NGO community, while comparatively small, is involved in fundraising and volunteerism in gender, health, environmental, and community projects. The government at times partners with NGOs in their activities and encourages philanthropy.

Antigua and Barbuda is not a signatory of the Montreux Document on Private Military and Security Companies or a participant in the International Code of Conduct for Private Security Service Providers’ Association.

Additional Resources 

Department of State

Department of Labor

9. Corruption

The law provides criminal penalties for corruption by officials, and the government generally implements these laws if corruption is proven. Allegations of corruption against government officials in Antigua and Barbuda are fairly common. Both major political parties frequently accuse the other of corruption, but investigations yield few results. Antigua and Barbuda is party to the Inter-American Convention Against Corruption and the UN Anti-Corruption Convention.

The Integrity in Public Life Act requires all public officials to disclose all income, assets (including those of spouses and children), and personal gifts received while in public office. An Integrity Commission, established by the Act and appointed by the Governor General, receives and investigates complaints regarding noncompliance with or violations of this law or of the Prevention of Corruption Act. As the only agency charged with combatting corruption, the Commission was independent but understaffed and under-resourced. Critics stated the legislation was inadequately enforced and that the act should be strengthened.

The Office of National Drug and Money Laundering Control Policy is the independent law enforcement agency with specific authority to investigate reports of suspicious activity concerning specified offenses and the proceeds of crime.

The Freedom of Information Act gives citizens the statutory right to access official documents from public authorities and agencies, and created a commissioner to oversee the process. In practice, citizens found it difficult to obtain documents, possibly due to government funding constraints rather than obstruction. The Act created a special unit mandated to monitor and verify disclosures. By law, the disclosures are not public. There are criminal and administrative sanctions for noncompliance.

Resources to Report Corruption

Sydney P. Christian
Chairman
Integrity Commission
R.I.O.A. (Francis) Building, High Street, St. John’s (268) 562-5512/14
(268) 562-5512/14

Lt Col Edward Croft
Director
Office of National Drug and Money Laundering Control Policy
Camp Blizzard, St. George’s, Antigua (268) 562-3255/6
(268) 562-3255/6 ondcp@candw.ag
ondcp@candw.ag

Bahamas

1. Openness To, and Restrictions Upon, Foreign Investment

Policies towards Foreign Direct Investment

The government encourages FDI, particularly in the tourism and financial services sector. The National Investment Policy (NIP) and the Commercial Enterprises Act (CEA) explicitly encourage foreign investment in certain sectors of the economy: touristic resorts; upscale villas, condominium, timeshare, and second home development; international business centers; aircraft and maritime services; marinas; information and data processing; information technology services; light industry manufacturing and assembly; agro-industries; mari-culture; food and beverage processing; banking and other financial services; offshore medical centers and services; e-commerce; arbitration; international arbitrage; computer programming; software design and writing; bioinformatics and analytics; and data storage and warehousing.

The Bahamas has an investment promotion strategy that includes multiple government agencies working to attract foreign direct investment. The Bahamas Investment Authority (BIA) ( www.bahamas.gov.bs/bia ) takes the lead on administering investment policies, functions as the investment facilitation agency, and acts as a ‘one stop shop’ to assist investors in navigating the cumbersome approvals process. All foreign investors must apply for approval from the BIA. Each administration has consistently supported new investment and has generally honored agreements made by previous administrations. The current government has introduced policies and legislative support for Small and Medium Enterprises (which represent 85 percent of registered businesses), and in 2018 launched the Small Business Development Centre (SBDC). The SBDC provides business advisory services, training, professional development opportunities, incubation services, access to capital, and advocacy for individual businesses. In response to the pandemic and to create opportunities for Bahamian entrepreneurs, the government earmarked $250 million in 2020 for loans and grants over five years to local small and medium enterprises.

The Bahamas reserves certain sectors of the economy for Bahamian investors. The reserved areas are: wholesale and retail operations (although international investors may engage in the wholesale distribution of any product they produce locally); agencies engaged in import or export; real estate agencies and domestic property management; domestic newspapers and magazine publications; domestic advertising and public relations firms; nightclubs and restaurants except specialty, gourmet, and ethnic restaurants, and those operating in a hotel, resort or tourist attraction; security services; domestic distribution of building supplies; construction companies except for special structures requiring foreign expertise; personal cosmetic or beauty establishments; commercial fishing including both deep water fishing and shallow water fishing of crustaceans, mollusks, fish, and sponges; auto and appliance services; public transportation including boat charters; and domestic gaming. The government does make exceptions to this policy on a case-by-case basis, and the Embassy is aware of several cases in which the Bahamian government has granted foreign investors full market access.

With the exception of these sectors, the Bahamian government does not give preferential treatment to investors based on nationality, and investors have equal access to incentives, which include land grants, tax concessions, and direct marketing and budgetary support. The government provides guidelines for investment through the National Investment Policy (NIP), administered by the BIA, and through the Commercial Enterprises Act (CEA) administered by the Ministry of Financial Services, Trade & Industry and Immigration. The CEA provides incentives to domestic and foreign investors to establish specific investment projects, including approval of a specified number of work permits for senior posts and the expedited issuance of work permits.

Large foreign investment projects, particularly those that require environmental and economic impact assessments, require approval by the National Economic Council (NEC) of The Bahamas. This process generally requires review by multiple government agencies prior to NEC consideration. Bureaucratic impediments are not limited to the NEC approvals process, and the country continues to lag on international metrics related to starting a business. According to the 2020 World Bank Doing Business rankings, The Bahamas scores 119 out of 190 countries overall, 181 in registering property, 77 in getting construction permits, 152 in access to credit, and 71 in resolving insolvency. All these categories saw a decrease in ratings from 2019 metrics, with the exception of getting construction permits. The Embassy is aware of cases of significant delays in the approvals process, including cases where the Bahamian government failed to respond to investment applications. Despite bureaucratic challenges and the impact of COVID-19, investment continues in tourism, finance, construction, and fast-food franchises.

In response to the losses from Hurricane Dorian and the economic fallout from COVID-19, the government announced efforts to accelerate FDI, including liberalization of requirements for investment and accelerating the review process for proposals. In April 2020, the government also appointed an Economic Recovery Committee (ERC) – a public-private coalition to develop recommendations for government policies to addresses the economic impact of the COVID-19 pandemic. The ERC’s full report can be accessed via https://opm.gov.bs/economic-recovery-committee-executive-summary-report-2020/ .

The ERC’s nearly two dozen recommendations were intended to transform the Bahamian investment regime, remove structural impediments, and incentivize domestic and foreign investment. The government accepted certain recommendations, including the establishment of an entrepreneur visa for persons wishing to work or study from The Bahamas for one year ( www.bahamasbeats.com ), limiting approvals for projects under $10 million, creating special economic zones on lesser developed islands, and establishing an autonomous agency to oversee a modern investment regime (INVESTBAHAMAS). With this new agency in place, bureaucratic delays, functionality and transparency are expected to improve. The agency will reportedly give priority to high-tech financial products, biotechnology, renewable energy investments, and climate adaptability projects. INVESTBAHAMAS remains in the planning stages.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors have the right to establish private enterprises and, after approval, most companies operate unencumbered. Key considerations for approval include economic impact, job creation, infrastructural development, economic diversification, environmental protection and corporate social responsibility. With the assistance of a local attorney, investors can create the following types of businesses: sole proprietorship, limited or general partnership, joint stock company, or subsidiary of a foreign company. The most popular all-purpose vehicles for foreign investors are the International Business Company (IBC) and the Limited Duration Company (LDC). Both benefit from income, capital gains, gift, estate, inheritance, and succession tax exemptions. Investors are required to establish a local company and be registered to operate in The Bahamas.

Other Investment Policy Reviews

The Bahamas ranks 119 out of 190 countries in terms of “ease of doing business” in the 2020 World Bank Doing Business Report. See http://doingbusiness.org/rankings . The Bahamas is the only Western Hemisphere country not in the WTO, and therefore has never benefitted from a WTO trade policy review. The current government launched accession negotiations with the WTO in April 2019, initially announcing the goal of full membership later the same year. However, the government later described the 2019 target as purely aspirational, confirming it was unlikely accession would take place before 2025. A vocal domestic constituency opposes WTO accession on the grounds that membership will hurt domestic producers and service providers.

Neither the OECD nor UNCTAD have conducted investment policy reviews. The Bahamas achieved the G-20 standard on transparency and cooperation on tax matters, a standard initially advanced by the OECD.

Business Facilitation

According to the 2020 World Bank Doing Business Index, starting a business in The Bahamas takes 12 days, requires seven procedures, and costs the same for both men and women. In 2017, the Bahamian government streamlined this process and launched an e-business portal, which allowed companies to apply for or renew their business licenses online ( http://inlandrevenue.finance.gov.bs/business-licence/copy-applying-b-l/ ).

In 2020, as part of the business license application process, the government expanded provisional licenses for many small, domestic businesses so the majority would be able to start operations while awaiting formal approval. The government also removed the fee for starting a new business and renewed business licenses in under 48 hours. Foreign companies and most larger businesses are not eligible for provisional licenses, expedited renewals, or new business license fee exemptions.

All companies with an annual turnover of $100,000 or more are required to register with the government to receive a Tax Identification Number and a Value Added Tax Certificate. The lengthy registration processes are generally viewed as an impediment to the ease of doing business.

Outward Investment

The Bahamian government neither promotes nor prohibits its citizens from investing internationally, however, all outward direct investments by residents require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas ( https://www.centralbankbahamas.com/exchange-control-notes-and-guidelines ). Applications are considered in light of the probable impact the investments may have on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.

5. Protection of Property Rights

Real Property

Despite the high number of second-home owners in The Bahamas, the country’s score for ease of “registering property” in the World Bank’s 2020 Doing Business Report is 181 out of 190 countries. This makes it among the worst in the world. The cost of registering property in The Bahamas increased to 11.8 percent of property value, compared with 5.9 percent for Latin America and The Caribbean, and 4.7 percent for OECD high-income countries. The time to complete the registration process remains high at 122 days, and there has been limited progress in creating digital land registries or establishing time limits for procedures. These facts resulted in a World Bank ranking of 3 for quality of land administration (on a scale of 0 to 30). The Bahamian government does not publish an official number citing the proportion of land without clear title. Unoccupied property cannot revert to other owners, such as squatters. This leads to a high incidence of unoccupied, derelict, and partially constructed residences in The Bahamas, with little evidence of successful government policies to encourage their sale or productive use. Abandoned buildings are also in evidence in commercial districts, such as downtown Nassau.

The various forms of land ownership in The Bahamas have their foundation in English law and can include crown land, commonage land, and generational land. The legal system facilitates the investor’s secured interest in both mobile and immobile property and is recognized and enforced by law. Mortgages in real property and legal rights in personal property are recorded with the Registrar General of The Bahamas.

The Embassy has received reports of problems obtaining clear title to property, either because the seller had no legal right to convey, or because separate claims to ownership arose after a purchase was made.

Intellectual Property Rights

The Bahamian government is taking steps to strengthen Intellectual Property Rights (IPR) in response to pressure from the business community and as part of its protracted WTO accession process. These new regulations cover patents, trademarks, copyrights, integrated circuits, false trade descriptions act, new plant varieties, and geographical indicators. The government anticipates the new regulations will bring The Bahamas into compliance with the terms of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

The Bahamas is a member of the World Intellectual Property Organization (WIPO) but has not ratified the WIPO Internet treaties. The Bahamas is also signatory to the following intellectual property conventions and agreements:

  • Berne Convention for the Protection of Literary and Artistic Works;
  • Paris Convention for the Protection of Industrial Property;
  • Universal Copyright Convention (UCC);
  • Convention establishing the World Intellectual Property Organization (WIPO);
  • Convention on the means of prohibiting and preventing the illicit import, export, and transfer of ownership of cultural property.

The Bahamas has not recently been listed as a country of concern in the U.S. Trade Representative’s (USTR) Special 301 Report and is not included in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

The Bahamas’ intellectual property registry is maintained by the Department of the Registrar General ( https://www.bahamas.gov.bs/rgd ), and enforcement is coordinated by the Royal Bahamas Police Force with support from Bahamas Customs. The Copyright Royalty Tribunal (established under the Copyright Act) is responsible for royalty-related activities, such as collecting and distributing royalties.

The government and the Economic Recovery Commission (ERC) have recognized the need to strengthen the intellectual property regime in The Bahamas. The government announced plans to develop a functional and efficient Intellectual Property/Copyright Legislative Department and accelerate the digitization of intellectual property registration and interconnectivity of government agency systems.

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

6. Financial Sector

Capital Markets and Portfolio Investment

The government encourages the free flow of capital markets, and the Central Bank supports this flow through its regulatory functions. The Bahamas is an Article VIII member of the IMF and has agreed not to place restrictions on currency transactions, such as payments for imports. The Bahamas Securities Commission regulates the activities of investment funds, securities, and capital markets ( www.scb.gov.bs ). The fledgling local stock market, established in 1999, excludes foreign investors but is effectively regulated by the Securities Commission.

There are no legal limitations on foreigners’ access to the domestic credit market, and commercial banks make credit available at market rates. The government encourages Bahamian-foreign joint ventures, which are eligible for financing through both commercial banks and the Bahamas Development Bank ( http://www.bahamasdevelopmentbank.com/ ).

Customarily, the government does not prohibit its citizens from investing internationally. However, all outward direct investments by residents, including foreign portfolio investments, require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas ( www.centralbankbahamas.com/exchange – controls). Applications are assessed by their probable impact on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.

In an effort to maintain adequate foreign reserves during the economic crisis brought on by COVID-19, the Central Bank suspended purchases of foreign currency on May 4, 2020 for specific transactions that could drain reserves and jeopardize the country’s ability to maintain a fixed, one-to-one exchange rate with the U.S. dollar. The Central Bank also suspended Bahamian investments in U.S.-dollar denominated investment funds created by local brokers seeking higher returns in overseas markets. The Central Bank warned it was prepared to act swiftly in imposing even harsher restrictions, if necessary, to maintain the country’s fixed exchange rate and to conserve foreign currency reserves. The suspension remained in place throughout 2020 and had not been lifted as of spring 2021.

Money and Banking System

The financial sector of The Bahamas is highly developed and consists of savings banks, trust companies, offshore banks, insurance companies, a development bank, a publicly controlled pension fund, a housing corporation, a public savings bank, private pension funds, cooperative societies, credit unions, commercial banks, and the state-owned Bank of The Bahamas. These institutions provide a wide array of services via several types of financial intermediaries. The financial sector is regulated by The Central Bank of The Bahamas, the Securities Commission, Insurance Commission, the Inspector of Financial and Corporate Service Providers, and the Compliance Commission.

According to the Central Bank’s Quarterly Economic Review of December 2020, the contraction in domestic credit outpaced the reduction in the deposit base during the fourth quarter of 2020. Consequently, both bank liquidity and external reserves expanded, bolstered by foreign currency inflows from the government’s external borrowings. However, banks’ credit indicators deteriorated during the fourth quarter due to the adverse impact of the COVID-19 pandemic. Further, data from the third quarter revealed a reduction in banks’ overall profitability, reflecting higher levels of provisioning for bad debt.

In the external sector, the estimated current account balance went from a surplus in 2019 to a deficit during the final quarter of 2020. The services account also moved from surplus to deficit, as travel restrictions associated with the COVID-19 pandemic led to a significant reduction in travel receipts. In contrast, the surplus on the capital and financial account increased considerably, owing primarily to an expansion in debt-financed government spending.

In the domestic banking sector, four of the eight commercial banks are subsidiaries of Canadian banks, three are locally owned, and one is a branch of a U.S.-based institution. Continued reorganization by the Canadian banks has severely limited banking services on some of the less populated islands.

The Central Bank’s strategic goals include responding to the loss of brick-and-mortar banks by implementing digital banking across the country. To this end, the Central Bank introduced the “Sand Dollar” in December 2019, the first central bank-backed digital currency in the world. The introduction of the new currency aims to provide individuals with efficient and non-discriminatory access to financial services. Since its launch, domestic financial and political elites have welcomed the financial inclusion of unbanked and underbanked residents. To date, nine firms (including clearing banks, money transfer services, credit unions and payment service providers) have successfully completed the cybersecurity assessment and been authorized to distribute Sand Dollars within their proprietary mobile wallets.

Although Sand Dollar accounts and transactions are theoretically subject to the same stringent anti-money laundering and Know Your Customer (KYC) safeguards as traditional commercial banks, the Central Bank’s capacity to enforce these safeguards, as well as account audit capabilities, may be limited. Additional information on the Sand Dollar can be accessed via www.sanddollar.bs/ .

Foreign Exchange and Remittances

Foreign Exchange Policies

The Bahamas maintains a fixed exchange rate policy, which pegs the Bahamian dollar one-to-one with the U.S. dollar. The legal basis for the policy is the Exchange Control Act of 1974 and Exchange Control Regulations. The controls ensure adequate foreign exchange flows are always available to support the fixed parity of the Bahamian dollar against the U.S. dollar. The peg removes issues of rate conversions and allows for unified pricing of goods and services for tourists and residents. To maintain this structure, individuals and corporations resident in The Bahamas are subject to restrictions on foreign exchange transactions, including currency purchases, payments, and investments. Similarly, Bahamians cannot make payments or investments in foreign currencies without Central Bank approval.

Exchange controls are not an impediment to foreign investment in the country. The government requires all non-resident investors in The Bahamas to register with the Central Bank, and the government allows non-resident investors who finance their projects substantially from foreign currency transferred into The Bahamas to convert and repatriate profits and capital gains freely. They do this with minimal bureaucratic formalities and without limitations on the inflows or outflows of funds.

In the administration of exchange controls, the Central Bank does not withhold or delay approval for legitimate foreign exchange purchases for currency transactions and, in the interest of facilitating international trade, it delegates this authority to major commercial banks and selected trust companies. International and local commercial banks, which are registered by the Central Bank as ‘Authorized Dealers,’ may administer and conduct foreign currency transactions with residents of The Bahamas. Similarly, private banks and trust companies which are designated as ‘Authorized Agents’ are permitted to act as depositories for foreign securities of residents and to conduct securities transactions for non-resident companies under their management.

The Central Bank directly approves foreign exchange transactions that fall outside of the delegated authority, including loans, dividends, issues and transfer of shares, travel facilities, and investment currency. The government has continued gradual liberalization of exchange controls over the years with the most recent measure implemented in April 2016. The most recent measures delegated increased authority to commercial banks for exchange control and seek to regularize nationals holding accounts in the United States by allowing nationals to open U.S. dollar denominated accounts within the jurisdiction.

Remittance Policies

There are no restrictions on investment remittances. Foreign investors who receive a Central Bank designation as a non-resident may open foreign currency-denominated bank accounts and repatriate those funds freely. In addition, with Central Bank approval, a foreign investor may open an account denominated in Bahamian currency to pay local expenses. As mentioned, increased authority has been delegated to commercial banks and money transfer businesses.

The Bahamas is one of 25 member countries that make up the Caribbean Financial Action Task Force (CFATF), an organization dedicated to address the problem of money laundering. The organization’s most recent peer review evaluation and follow-up reports can be found at ( https://www.cfatf-gafic.org/index.php/member-countries/the-bahamas ).

Sovereign Wealth Funds

The Bahamian government passed omnibus legislation for the effective management of the oil and gas sector in 2017, which included the creation of a sovereign wealth fund, but has not yet promulgated supporting regulations. Discussions of a possible sovereign wealth fund were reignited when the Bahamas Petroleum Company, an Isle of Man-registered company, began exploratory oil drilling in Bahamian waters. The company confirmed in February 2021 that its exploratory drilling did not produce commercially viable quantities of oil.

The government nevertheless announced plans in January 2021 to accelerate the establishment of a Sovereign Wealth Fund and an accompanying National Infrastructure Fund. The government stressed the funds would derive income from royalty payments from all the country’s natural resources (such as salt, sand, rock and aragonite exports), not just potential earnings from oil exploration. The government suggested both funds would mobilize public assets and private capital to generate hundreds of millions of dollars in infrastructure investments across the country. The government committed to embrace international best practices designed to address issues of transparency, accountability and the governance structure of such funds.

8. Responsible Business Conduct

Local and foreign companies operating in The Bahamas have recently become more committed to the tenets of responsible business conduct (RBC). Local and foreign companies have led RBC-related initiatives, including educational programs directed at capacity building for specific industries, the maintenance of public spaces, and financial and technical assistance to charitable organizations.

The government encourages RBC through legislation, but enforcement has been slow. The government has also enacted laws protecting individuals with disabilities from discrimination in the workplace, but again, enforcement is limited. There have been no high-profile or controversial instances of corporate violations of human rights, but civil society remains active in bringing attention to social issues.

Recent steps in support of RBC also include a requirement for local gaming houses to allocate three percent of net profits to community-based social development programs. Several have established foundations that support issues ranging from the environment to education. The Bahamas has strong trade unions, and labor laws prohibit discrimination in employment based on race, creed, sex, marital status, political opinion, age, HIV status, or disability.

The Bahamas is not an adhering government to the OECD Guidelines for Multinational Enterprise.

Additional Resources 

Department of State

Department of Labor

9. Corruption

The government has laws to combat corruption among public officials, but they have been inconsistently applied. The law provides criminal penalties for corruption by public officials, and the government generally implemented the law effectively. However, there was limited enforcement of conflicts of interest related to government contracts and isolated reports of officials engaged in corrupt practices, including by accepting small-scale “bribes of convenience”. The political system is plagued by reports of corruption, including allegations of widespread patronage, the routine directing of contracts to political supporters, and favorable treatment for wealthy or politically connected individuals. In The Bahamas, bribery of a government official is a criminal act carrying a fine of up to $10,000, a prison term of up to four years, or both.

In May 2017, the current government won the election on a platform to end corruption. Early in the administration, the government charged a number of former officials with various crimes including extortion and bribery, theft by reason of employment, and defrauding the government. These cases were either dismissed, ended in acquittals, or are ongoing. The government reported no new cases of corruption in the executive, legislative, and judicial branches during 2020. Nevertheless, three Cabinet Ministers resigned in the first three years of the current administration under allegations of corruption, including the Deputy Prime Minister, the Minister of Financial Services, and the Minister of Youth, Sports and Culture.

The Public Disclosure Act requires senior public officials, including senators and members of Parliament, to declare their assets, income, and liabilities annually. For the 2020 deadlines, the government gave extensions to all who were late to comply. The government did not publish a summary of the individual declarations, and there was no independent verification of the information submitted.

The campaign finance system remains largely unregulated, with few safeguards against quid pro quo donations, creating a vulnerability to corruption and foreign influence. The procurement process also remains susceptible to corruption, as it contains no requirement to engage in open public tenders, although the government routinely did so. In February 2021, the government passed the Public Procurement Bill (2020), which reportedly overhauls current governance arrangements for government contracts to improve transparency and accountability.

According to Transparency International’s 2020 Corruption Perceptions Index, The Bahamas ranked 30 out of 180 countries with a score of 63 out of 100. There are no protections for NGOs involved in investigating corruption. U.S firms have identified corruption as an obstacle to FDI and have reported perceived corruption in government procurement and in the FDI approvals process.

The government does not, as a matter of government policy, encourage or facilitate illicit drug production or distribution, nor is it involved in laundering the proceeds of the sale of illicit drugs.  No charges of drug-related corruption were filed against government officials in 2020.

The Bahamas ratified major international corruption instruments, including the Inter-American Convention against Corruption (signed in 1998, ratified in 2000), and has been a party to the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption (MESICIC) since 2001. The Bahamas is not party to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

Royal Bahamas Police Force
Anti- Corruption Unit
P.O. Box N-458
(242) 322-4444
Email: info@rbpf.bs 

Contacts at “watchdog” organizations:

Citizens for a Better Bahamas
Transparency International (Bahamas Chapter)
(242) 322-4195
Website: www.abetterbahamas.org 
Email: info@abetterbahamas.org 

Organization for Responsible Governance (ORG)
Bay Street Business Center, Bethell Estates
East Bay Street (at Deveaux St.)
Website: www.orgbahamas.com 
Phone: 1-242-828-4459
Email:  info@orgbahamas.com 

Barbados

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of Barbados, through Invest Barbados, welcomes foreign direct investment with the stated goals of creating jobs, earning foreign exchange, transferring technology, enhancing skills, and contributing to economic growth. In 2021, the government announced plans to focus on encouraging foreign direct investment in renewable energy, manufacturing, technology, and biogenetic engineering.

Barbados encourages investment in the following key sectors: international financial services, information technology, and ship registration, as well as developing areas like financial technology, creative industries, agricultural processing, medical schools, medical tourism, and renewable energy. In the international financial services sector, the government maintains regulatory oversight via the Central Bank of Barbados to prevent money laundering and tax evasion.

Through Invest Barbados, the government facilitates domestic and foreign private investment. Invest Barbados’ mandate is to actively promote Barbados as a desirable investment location, to provide advice, and to assist prospective investors. Invest Barbados also provides customized support for investors to assist with the expansion and sustainability of the initial investment. It also serves as the primary liaison for existing investors. In April 2020, the government established a Jobs and Investment Council charged with supporting economic activity during the COVID-19 pandemic and post-pandemic recovery. In March 2021, the government announced plans to establish a Barbados Free Zone to help attract foreign direct investment.

Investors interested in doing business in Barbados must register in person with the country’s Corporate Affairs and Intellectual Property Office. While this is a requirement for foreign and domestic investors, the continuing barriers to international travel posed by COVID-19 currently make it more difficult for foreign investors without established local partners and legal representation to comply with this requirement. The government of Barbados has announced plans to fully digitize the registration process before the end of 2021.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign control in Barbados. Nationals and non-nationals may establish and own private enterprises and private property in Barbados. These rights extend to the acquisition and disposition of interests in private enterprises.

No industries are closed to private enterprise, although the government reserves the right not to allow certain investments. Some activities, such as telecommunications, utilities, broadcasting, franchises, banking, and insurance require a government license. There are no quotas or other restrictions on foreign ownership of a local enterprise or participation in a joint venture.

Other Investment Policy Reviews

Barbados has not conducted a trade policy review in the last three years.

Business Facilitation

Invest Barbados is the main investment promotion agency that attracts and facilitates foreign investment. Invest Barbados offers guidance and direction to new and established investors seeking to pursue investment opportunities in Barbados. The process is transparent and considers the size of capital investment as well as the economic impact of a proposed project.

Invest Barbados offers a website that is useful for navigating applicable laws, rules, procedures, and registration requirements for foreign investors. This is available at http://www.investbarbados.org . Invest Barbados’ iGuide website is an online guide which provides local and foreign investors with up-to-date information required to make certain investment decisions, including steps for setting up a business, opportunities for investment, labor and other business costs, and legal requirements, among other data. This is available at https://www.theiguides.org/public-docs/guides/barbados . The Corporate Affairs and Intellectual Property Office (CAIPO) maintains an online e-registry filing service for matters pertaining to the Corporate Registry. It is available to registered agents, who are usually attorneys. Information is available at www.caipo.gov.bb .

Barbados ranks 102nd out of 190 countries in the ease of starting a business, which takes seven procedures and approximately 16 days on average to complete, according to the 2020 World Bank Doing Business report. The general practice is to retain an attorney to prepare relevant incorporation documents. The business must register with CAIPO, the Barbados Revenue Authority, the Customs and Excise Department, and any relevant sector-specific licensing agencies.

The government of Barbados continues to facilitate programs and partnerships to assist entrepreneurs who are women and/or people with disabilities. The government of Barbados remains committed to working with civil society and other organizations to meet the UN Sustainable Development Goals by 2030.

Outward Investment

While no incentives are offered, Barbados generally encourages local companies to invest in other countries, particularly within the Caribbean region. Local companies in Barbados are actively encouraged to take advantage of export opportunities related to the country’s membership in the Caribbean Community (CARICOM) and the Caribbean Single Market and Economy (CSME). The Barbados Investment Development Corporation (BIDC) provides market development support for domestic companies seeking to enhance their export potential.

5. Protection of Property Rights

Real Property

There are no restrictions on foreign ownership of property in Barbados. Foreign investors and locals are treated equally regarding property taxes. Civil law protects physical property and mortgage claims. The CBB must verify real property purchases for non-residents. If a non-resident uses foreign funds and pays for the property in Barbados, the CBB will normally endorse the transaction. The sale of property is subject to a 2.5 percent property transfer tax in addition to a one percent stamp duty. Brokerage and legal fees are not included in these levies. Buyers should seek the advice of a local attorney when purchasing property.

Commercial, industrial, hotel, and villa properties are subject to a 0.95 percent land tax on the improved value of the property. Holders of a certificate from the Barbados Tourism Authority enjoy rebates of 50 percent for hotels and 25 percent from villas. The Commissioner of Land Tax charges an annual fee based on the assessed property value on residential property as follows: 0% on the first 75,000 USD (150,000 Barbados dollars)

  • 0% on the first 75,000 USD (150,000 Barbados dollars)
  • 0.1% on amounts between 75,001 USD and 225,000 USD (150,001 and 550,000 Barbados dollars)
  • 0.7% on amounts between 225,001 USD and 425,000 USD (550,001 and 850,000 Barbados dollars)
  • 1.0% on amounts greater than 425,000 USD (850,000 Barados dollars)
  • 0.8% on vacant land under 4,000 square feet
  • 1.0% on all other vacant lands

Barbados ranks 118th out of 190 countries in ease of registering property in the 2020 World Bank Doing Business Report. It takes approximately 50 days to complete seven procedures and the cost is about 4.5 percent of the property value. The government has included an additional procedure that has increased the time to record the conveyance at the Land Registry and pay transfer fees and stamp duties. This has made transferring property more onerous. The Land Registry has digitized records dating back to 1952 and plans to further digitize deeds dating back to 1640. A landowner may lose his or her title to land if a trespasser or squatter takes possession for a period of ten years.

Intellectual Property Rights

Barbados has a legislative framework governing intellectual property rights (IPR), though enforcement needs improvement. Barbados is a member of the World Intellectual Property Organization (WIPO) and is party to the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, and the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks. The government of Barbados has enacted IPR legislation on topics including patents, copyrights, trademarks, industrial designs, integrated circuits topography, plant breeders’ rights, geographical indications, and protection against unfair competition. Barbados’ Trademark and Industrial Designs Act meets international standards.

Barbados remains on the Office of the United States Trade Representative (USTR) Special 301 Report Watch List in 2021. Barbados acceded to the WIPO Internet Treaties in 2019 and has convened a public-private Advisory Committee on Intellectual Property Rights to redraft its Copyright Act. Once passed by Parliament, this will enable Barbados to implement its WIPO Internet Treaties obligations. CAIPO will be reorganized into two separate entities, one for business registration and one for IPR registration. The former CAIPO director was appointed as Master of the High Court in 2020, which will deepen the court’s IPR expertise. These measures, along with the updates and upgrades to CAIPO’s database by the end of 2021, are intended to strengthen IPR enforcement.

Currently, Barbados’ judicial system is unable to provide timely and effective relief on IPR violations due to a serious case backlog across all types of civil and criminal matters. Ongoing cases include the unauthorized transmission of U.S. broadcasts and cable programming by local cable operators, including state-owned broadcasters, without adequate compensation to U.S. right holders, and the refusal of Barbadian television and radio broadcasters and cable and satellite operators to pay for public performances of music.

Article 66 of the Revised Treaty of Chaguaramas establishing the CSME commits all 15 members to implement stronger intellectual property rights protection and enforcement. The CARIFORUM-EU EPA contains the most detailed obligations regarding intellectual property in any trade agreement to which Barbados is a party. The EPA provides for protection and enforcement of IPR. Article 139 of the EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties and of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS).”

It is the responsibility of the importer to pay for and destroy counterfeit goods. Failure to observe certain standards regarding the importation of goods may result in a recommendation to the Comptroller of Barbados’ Custom and Excises Department to have the goods destroyed. If the goods fall under the Ministry of Health’s jurisdiction, they are destroyed under that ministry’s guidance. If the goods are prohibited and do not pertain to the Ministry of Health, the Customs and Excise Department will destroy them as appropriate. Information on the prevalence of counterfeit goods in the local market is not readily available, as there is no tracking method in place to collect data. Barbados is listed in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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

6. Financial Sector

Capital Markets and Portfolio Investment

Barbados has a small stock exchange, an active banking sector, and opportunities for portfolio investment. Local policies seek to facilitate the free flow of financial resources, although some restrictions may be imposed during exceptional periods of low liquidity. The CBB independently raises or lowers interest rates without government intervention. There are a variety of credit instruments in the commercial and public sectors that local and foreign investors may access.

Barbados continues to review legislation in the financial sector to strengthen and improve the regulatory regime and attract and facilitate retention of foreign portfolio investments. The government continues to improve its legal, regulatory, and supervisory frameworks to strengthen the banking system. The Anti-Money Laundering Authority and its operating arm, the government’s Financial Intelligence Unit, review anti-money laundering policy documents and analyze prudential returns.

The Securities Exchange Act of 1982 established the Securities Exchange of Barbados, which was reincorporated as the Barbados Stock Exchange (BSE) in 2001. The BSE operates a two-tier electronic trading system comprised of a regular market and an innovation and growth market (formerly the junior market). Companies applying for listing on the regular market must observe and comply with certain requirements. Specifically, they must have assets of at least 500,000 USD (1 million Barbados dollars) and adequate working capital, based on the last three years of their financial performance, as well as three-year performance projections. Companies must also demonstrate competent management and be incorporated under the laws of Barbados or another regulated jurisdiction approved by the Financial Services Commission. Applications for listing on the innovation and growth market are less onerous, requiring minimum equity of one million shares at a stated minimum value of 100,000 USD (200,000 Barbados dollars). Reporting and disclosure requirements for all listed companies include interim financial statements and an annual report and questionnaire. Non-nationals must obtain exchange control approval from the CBB to trade securities on the BSE.

The BSE has computerized clearance and settlement of share certificates through the Barbados Central Securities Depository Inc., a wholly owned subsidiary of the BSE. Under the Property Transfer Tax Act, the FSC can accommodate investors requiring a traditional certificate for a small fee. The FSC also regulates mutual funds in accordance with the Mutual Funds Act.

The BSE adheres to rules in accordance with International Organization of Securities Commissions guidelines designed to protect investors; ensure a fair, efficient, and transparent market; and reduce systemic risk. Public companies must file audited financial statements with the BSE no later than 90 days after the close of their financial year. The authorities may impose a fine not exceeding 5,000 USD (10,000 Barbados dollars) for any person under the jurisdiction of the BSE who contravenes or is not in compliance with any regulatory requirements.

The BSE launched the International Securities Market (ISM) in 2016. It is designed to operate as a separate market, allowing issuers from Barbados and other international markets. To date, the ISM has five listing sponsors.

The BSE collaborates with its regional partners, the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange, through shared trading software. The capacity for this inter-exchange connectivity provides a wealth of potential investment opportunities for local and regional investors. The BSE obtained designated recognized stock exchange status from the UK in 2019. It is also a member of the World Federation of Exchanges.

Barbados has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement and maintains an exchange system free of restrictions on current account transactions.

Money and Banking System

The government established the Central Bank of Barbados (CBB) in 1972. The CBB manages Barbados’ currency and regulates its domestic banks.

The Barbados Deposit Insurance Corporation (BDIC) provides protection for depositors. Oversight of the entire financial system is conducted by the Financial Oversight Management Committee, which consists of the CBB, the BDIC, and the FSC. The private sector has access to financing on the local market through short-term borrowing and credit, asset financing, project financing, and mortgage financing.

Commercial banks and other deposit-taking institutions set their own interest rates. The CBB requires banks to hold 17.5 percent of their domestic deposits in stipulated securities.

Bitt, a Barbadian company, developed digital currency DCash in partnership with the Eastern Caribbean Central Bank (ECCB). The first successful DCash retail central bank digital currency (CDBC) consumer-to-merchant transaction took place in Grenada in February following a multi-year development process. The CBB and the FSC established a regulatory sandbox in 2018 where financial technology entities can do live testing of their products and services. This allowed regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers. Bitt completed its participation and formally exited the sandbox in 2019. Bitt has no immediate plans to launch DCash in Barbados, and will focus first on four of Barbados’ Eastern Caribbean neighbors. Bitt also offers a digital access exchange, remittance channel, and merchant-processing gateway available via mMoney, a mobile application.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S., Canadian, and European banks in recent years due to concerns that the region is high-risk.

Foreign Exchange and Remittances

Foreign Exchange

Barbados’ currency of exchange is the Barbadian dollar (BBD). It is issued by the CBB. Barbados’ foreign exchange operates under a liberal system. The Barbadian dollar has been pegged to the U.S. dollar at a rate of BBD 2.00: USD 1.00 since 1975. This creates a stable currency environment for trade and investment in Barbados.

Remittance Policies

Companies can freely repatriate profits and capital from foreign direct investment if they are registered with the CBB at the time of investment. The CBB has the right to stagger these conversions depending on the level of international reserves available to the CBB at the time capital repatriation is requested.

The Ministry of Finance, Economic Affairs and Investment controls the flow of foreign exchange and the Exchange Control Division of the CBB executes foreign exchange policy under the Exchange Control Act. Individuals may apply through a local bank to convert the equivalent of 10,000 USD (20,000 Barbados dollars) per year for personal travel and up to a maximum of 25,000 USD (50,000 Barbados dollars) for business travel. The CBB must approve conversion of any amount over these limits. International businesses, including insurance companies, are exempt from these exchange control regulations.

Barbados is a member of the CFATF. In 2014, the government of Barbados signed an Intergovernmental Agreement in observance of FATCA, making it mandatory for banks in Barbados to report the banking information of U.S. citizens.

Sovereign Wealth Funds

Currently, the CBB does not maintain a sovereign wealth fund. In the past, the government announced plans to create a sovereign wealth fund to ensure national wealth is available for present and future generations of Barbados. Barbadians 18 years and older are expected to gain a stake in the fund after it is established. It is envisioned that the fund will hold governmental assets, including on- and offshore real property, revenues from oil and gas products, and non-tangible assets such as trademarks, patents, and intellectual property.

8. Responsible Business Conduct

The private sector is involved in projects that benefit society, including in support of environmental, social, and cultural causes. The non-governmental organization (NGO) community, while comparatively small, is involved in fundraising and volunteerism in gender, health, environmental, and community projects. The government periodically partners with NGOs and encourages philanthropy.

While Barbados has been on the Tier 2 Watch List for trafficking in persons for two years, there are no known human or labor rights concerns relating to responsible business conduct of which foreign businesses should be aware.

Adoption of broad corporate governance codes such as the OECD guidelines is voluntary, as is disclosure of corporate governance practices. In practice, many companies in Barbados are influenced by international best practices. CBB and FSC guidelines regulate the purpose and role of the board of directors. The accounting profession is regulated by the Institute of Chartered Accountants of Barbados, which is a member of the International Federation of Accountants.

Barbados is not a signatory of the Montreux Document on Private Military and Security Companies or a participant in the International Code of Conduct for Private Security Service Providers’ Association.

Additional Resources 

Department of State

Department of Labor

9. Corruption

The law provides criminal penalties for official corruption, and the government generally implemented these laws effectively. Barbados signed but did not yet ratify the UN Convention on Corruption and the Inter-American Convention Against Corruption.

In 2012, Barbados enacted the Prevention of Corruption Act, which includes standards of integrity in public life. It has not been proclaimed by the Governor General and consequently is not in force. The Integrity of Public Life Bill 2020, which mandated declaration of assets by all politicians, senior public officers, chairpeople, and high-ranking managers of SOEs, passed in Barbados’ Parliament but was ultimately defeated in the Senate. Prime Minister Mia Mottley’s administration plans to bring the bill back to Parliament in 2021 but has acknowledged the need to reach agreement with opposing forces in the Senate.

The government of Barbados has announced its intention to establish a public investment dashboard to provide information relevant to public sector investment projects, including cost overruns, procurement procedures, and company selection. The government also hopes to establish an independent statistics and data analytics authority, and plans to introduce a Freedom of Information Act.

A government minister with the previous administration was arrested in the United States on charges of laundering proceeds from bribes paid in Barbados. He was found guilty on two charges of money laundering and one count of conspiracy to commit money laundering.

Barbados is a member of the regional Association of Integrity Commissions and Anti-Corruption Bodies in the Commonwealth Caribbean.

Resources to Report Corruption

The Director
Financial Intelligence Unit
P.O. Box 1327, Bridgetown
246-436-4734
director@barbadosfiu.gov.bb 

Belize

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Belize’s government encourages FDI to relieve fiscal pressure and diversify the economy.  While the government is interested in attracting FDI, certain bureaucratic and regulatory requirements impede investment and growth.

There are no laws that explicitly discriminate against foreign investors.  In practice, however, investors complain that lack of transparency, land insecurity, bureaucracy, delays, and corruption are factors that make it difficult to do business in Belize. In 2020, businesses increasingly complained that foreign exchange shortages constrained both local and foreign owned operations as the Central Bank of Belize tighten measures to obtain approval for foreign exchange. U.S. firms have also identified challenges in participating and competing in areas related to the bidding, procurement and dispute settlement processes, particular to SOEs.

The Belize Trade and Investment Development Service (BELTRAIDE; www.belizeinvest.org.bz ) is the investment and export promotion agency.  It promotes FDI through various incentive packages and identified priority sectors for investment such as agriculture, agro-processing, fisheries and aquaculture, logistics and light manufacturing, food processing and packaging, tourism and tourism-related industries, business process outsourcing (BPOs), and sustainable energy.  Export-orientated businesses operating in less developed areas also receive preferential treatment.

The Economic Development Council, https://edc.gov.bz , is a public-private sector advisor body established to advance public sector reforms, to promote private sector development and to inform policies for growth and development.  The Cabinet Sub–Committee on Investment is composed of ministers whose portfolios are directly involved in considering and approving investment proposals.  Additionally, there is an Office of the Ombudsman who addresses issues of official wrongdoing.

Limits on Foreign Control and Right to Private Ownership and Establishment

Belize acknowledges the right for foreign and domestic private entities to establish and own business enterprises and engage in remunerative activities.  Foreign and domestic entities must first register their business before engaging in business. They must also register for the appropriate taxes, including business tax and general sales tax, as well as obtain a social security number and trade license.

Generally, Belize has no restrictions on foreign ownership and control of companies; however, foreign investments must be registered with the Central Bank of Belize and adhere to the Exchange Control Act and related regulations.  To register a business name with the government, foreigners must apply with a Belizean partner or someone with a permanent residence. Additionally, persons seeking to open a bank account must also comply with Central Bank regulations. These may differ based on the applicant’s residency status and whether the individual is seeking to establish a local or foreign currency account.  Note: many Belizeans perceive foreigners to receive favorable treatment from the government over access to capital during the start-up process.

Foreign investments must be registered and obtain an “Approved Status” from the Central Bank to facilitate inflows and outflows of foreign currency.  Investments with “Approved Status” are generally granted permission to repatriate funds gained from profits, dividends, loan payments and interest.  Additionally, the Exchange Control Regulation Act was amended in 2020 to relax the requirement for non-residents to obtain prior permission from the Central Bank to conduct transaction in securities and real estate. The amendment now provides for prior written notice to the Central Bank with full particulars of the transaction.

Some investment incentives show preference to Belizean-owned companies.  For example, to qualify for a tour operator license, a business must be majority-owned by Belizeans or permanent residents of Belize ( http://www.belizetourismboard.org ).  This qualification is negotiable particularly where a tour operation would expand into a new sector of the market and does not result in competition with local operators.  The government does not impose any intellectual property transfer requirements.

The Cabinet Sub-Committee on Investment investigates investment projects which do not fall within Belize’s incentive regime or which may require special considerations.  For example, an investment may require legislative changes, a customized memorandum of understanding or agreement from the government, or a public–private partnership.  The government assesses proposals based on size, scope, and the incentives requested.  In addition, proposals are assessed on a five-point system that analyses: 1) socio-economic acceptability of the project; 2) revenues to the government; 3) employment; 4) foreign exchange earnings; and 5) environmental considerations.  There is no statutory timeframe for considering projects as the process largely depends on the nature and complexity of the project.

Foreign investors undertaking large capital investments are advised to adhere to environmental laws and regulations.  Government requires project developers to prepare an Environmental Impact Assessment (EIA), should a project meet certain parameters such as land area, location, or industry criteria.  When purchasing land or planning to develop in or near an ecologically sensitive zone, government recommends that the EIA fully address any measures by the investor to mitigate environmental risks.  Developers must obtain environmental clearance prior to the start of site development.  The Department of Environment website, http://www.doe.gov.bz  has more information on the Environmental Protection Act and other regulations, applications and guidelines.

Other Investment Policy Reviews

In the past three years, there has been no investment policy review of Belize by the Organization for Economic Cooperation and Development (OECD) or the United Nations Conference on Trade and Development (UNCTAD).  Belize concluded its third Trade Policy Review in the World Trade Organization (WTO) in 2017.

Business Facilitation

BELTRAIDE ( http://www.belizeinvest.org.bz  ), a statutory body of the Government of Belize, operates as the country’s investment and export promotion agency.  Its investment facilitation services are open to all investors – foreign and domestic.  While there are support measures to advance greater inclusion of women and minorities in entrepreneurial initiatives and training, the business facilitation measures do not generally distinguish by gender or economic status.

In the midst of the COVID-19 pandemic, the government launched its National Economic Recovery Strategy, as well as, various fiscal and economic stimulus packages. In April 2020, BELTRAIDE concluded an online National Rapid Private Sector Economic Impact Assessment Survey to determine some of the challenges MSMEs faced as a result of the pandemic. Government thereafter launched its MSME Support Program (MSP) in August 2020 to offer an estimated US $7 million in financial relief through small grants, loans and wage subsidies to enterprises affected by the pandemic.

The Belize Companies and Corporate Affairs Registry (tel: +501 822 0421; email: info@belizecompaniesregistry.gov.bz ; website: https://belizecompaniesregistry.gov.bz  ) is responsible for the registration process of all local businesses and companies.  On line services are available by downloading requisite forms off the Registry’s website, making payments to a local bank and emailing proof of payments. Belize does not operate a single-window registration process.

Businesses must register with the tax department to pay business and general sales tax.  They must also register with their local city council or town board to obtain a trade license to operate a business.  An employer should also register employees for social security.  The 2020 Doing Business report ( http://www.doingbusiness.org  ) estimates it takes on average 48 days to start a company in Belize.  The same report ranks Belize at 135 of 190 economies, losing ten spots compared to 2019.

Outward Investment

Belize does not promote or incentivize outward investments.  Its government does not restrict domestic investors from investing abroad.  However, the Central Bank places currency controls on investment abroad, with Central Bank approval required prior to foreign currency outflows.

5. Protection of Property Rights

Real Property

The Preamble of the Belize Constitution preserves the right of the individual to own private property and the right to operate private businesses.  Common law, Belizean legislation, and case law all reinforce property rights and interests.  Private entities, whether foreign or local, have the right to freely establish, acquire, and dispose of interests in property and business enterprises.  Generally, the country has no restrictions on foreign ownership and control; however, foreign investments in Belize must be registered at the Central Bank of Belize and adhere to the Exchange Control Act and related regulations.

Mortgages and liens exist and related real estate is recorded with the registry of the Lands and Survey Department.  The Lands and Survey Department has a history of corruption, and there have been charges of land fraud, abuses, and cronyism leveled against the Department during each administration.  Investors are strongly advised to do their due diligence prior to purchasing property.

Foreign and/or non-resident investors are not allowed to acquire national lease property but may acquire titled privately owned property.  The Central Bank regulates real estate transactions involving non-residents for exchange control purposes.  Accordingly, real estate transactions between residents and non-residents must be in Belize dollars.  Additionally, the rate of stamp duty chargeable on land transfers involving foreign persons or a foreign controlled company is eight percent for land transfers valued in excess of US $10,000, as opposed to five percent on transfers involving Belizeans and CARICOM nationals.

There are three different types of titles to freehold property in Belize: Deed of Conveyance, Transfer of Certificate of Title, and Land Certificate.  Leasehold property from the government is available to Belizeans who can then apply for conversion to a fee simple title.

Squatters’ rights do exist, but are only enforceable by order of the Supreme Court after the resident has proven uninterrupted possession for at least 30 years on National and Conveyed lands or at least 12 years on registered lands.

Intellectual Property Rights

Belize is a member of the WTO and has implemented the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).  Generally, Intellectual Property (IP) rights must be registered and enforced in Belize.  IP protections are enforceable through civil proceedings initiated by the IP holder.  The Belize Intellectual Property Office (BELIPO) (http://belipo.bz) was established to administer IP laws and functions as the country’s national intellectual property registry.  Its mandate covers the protection of copyrights, industrial designs, patents, trademarks, new plant varieties, and topographies of integrated circuits.

In practice, however, there is no active enforcement of IP protections, though there is active pursuit and prosecution of contraband.  Bootleg CDs and DVDs are widespread and are marketed throughout the country, being especially prevalent in areas around the Free Zones.

During the past year, Belize enacted the Electronic Transactions Amendment Act, 2020 and the Cybercrime Act, 2020 that are IP-related. The Electronic Transactions Amendment Act is cited to promote the development of the legal and business infrastructure necessary to implement secure electronic commerce, to facilitate electronic filing with public bodies and to promote electronic service delivery and electronic records by public bodies. The Cybercrime Act is a comprehensive piece of legislation aimed to combat cybercrime by creating offences, providing for penalties, investigation, and prosecution of cybercrime and related offenses. Offenses extend from the illegal use, access, and interference of another’s computer, data and computer system, to forgery, identity fraud and theft, to the use of a computer with the intent or for engaging a child in sexually related activities, using sexually related data without consent, and using a computer system to damage another’s property, for threat or violence against another or their family.

There has been no report on seizures of counterfeit goods and no prosecution of IPR violations in the last year.  While the Customs Department of Belize does track seizures of counterfeit goods, it does not properly document IP and contraband seizures.  Belize is not listed in the U.S. Trade Representative’s 2021 Special 301 Report nor the 2020 Review of Notorious Markets for Counterfeiting and Piracy.

6. Financial Sector

Capital Markets and Portfolio Investment

Belize’s financial system is small with little to no foreign portfolio investment transactions.  It does not have a stock exchange and capital market operations are rudimentary.  The government securities market is underdeveloped and the market for corporate bonds is almost non-existent.

Temporary restrictions are currently in place for certain current international transactions that relate to the IMF’s Article VIII obligation not to restrict payments and transfers for current international transactions.

Additionally, credit is made available on market terms with interest rates largely set by local market conditions prevailing within the commercial banks.  The credit instruments accessible to the private sector include loans, overdrafts, lines of credit, credit cards, and bank guarantees.  Foreign investors can access credit on the local market.  Under the International Banking Act, foreign investors/nonresidents may access credit from international banks registered and licensed in Belize. However, permission to access credit from the domestic banks requires Central Bank approval.

The Belize Development Finance Corporation (DFC), a state-owned development bank, offers loan financing services in various sectors.  To qualify for a loan from DFC, an individual must be a Belizean resident or citizen, while a company must be majority 51 percent Belizean owned.  The National Bank of Belize is a state-owned bank that provides concessionary credit primarily to public officers, teachers, and low income Belizeans.

Money and Banking System

A financial inclusion survey undertaken by the Central Bank of Belize in 2019 showed that approximately 65.5 percent of adult Belizeans had access to a financial account.  Belize’s financial system remains underdeveloped with a banking sector that may be characterized as stable but fragile.  The Central Bank of Belize (CBB) ( https://www.centralbank.org.bz ) is responsible for formulating and implementing monetary policy focusing on the stability of the exchange rate and economic growth.

The Central Bank of Belize in November 2020 approved the sale of Scotia Bank Belize Limited by the Caribbean International Holdings Limited, the parent company Belize Bank Limited. The approval effectively makes the controversial Lord Ashcroft’s Belize Bank Limited the largest bank in the country. Concerns were initially raised on the possible effects on Belize’ correspondent banking situation and the potential withdraw of foreign exchange from the banking system.

To respond to the economic fallout caused by the COVID-19 pandemic, the Central Bank in April 2020 reduced the statutory liquid asset and cash reserve requirement by two percent points in an effort to expand liquidity and facilitate credit flow in the economy. In March 2021, the Government amended the Central Bank Act authorizing the Central Bank to provide emergency programs and facilities to a wide array of institutions including banks, financial institutions, statutory corporations and other similar bodies. These emergency programs and facilities will allow for wider array of financial support to businesses including the “purchase of financial assets including debt, equity and securities, credit facilities or discounting of notes, drafts or bills of exchange.” Through this measure the Government hopes to make available US $25 million in liquidity to invest in the productive sector, particularly in tourism businesses.

Additionally, this amendment increased the limit of direct advances that the Central Bank can make to Central Government from 8.5 percent to 12 percent of the previous year’s recurrent revenues.

Other measures which the Central Bank has put in place in the last year, to position the banking sector withstand shocks include several guidance to ease banking customers’ debt service payments like moratoria on interest and principal payments, consolidating and restructuring credit facilities, waiving loan, credit, and penalty fees. The Central Bank also issued guidance whereby forbearance measures to extend to December 2021.

Generally, there are no restrictions on foreigners opening bank accounts in Belize.  However, persons seeking to open a bank account must comply with Central Bank regulations. Regulations differ based on residency status and whether the individual is seeking to establish a local bank account or a foreign currency account.   Foreign banks and branches are allowed to operate in the country with all banks subject to Central Bank measures and regulations.  Since 2015, all banks have regained correspondent banking relations.  These relationships are still tenuous, with delays in transactions, and fewer services offered at higher costs.

In the last few years, Belize has enacted a number of reforms to strengthen the anti-money laundering and counterterrorism-financing regime, including amendments to the Money Laundering and Terrorism (Prevention) Amendment Act and the International Business Companies (Amendment) Act.  In addition, the National Anti-Money Laundering Committee (NAMLC) is headed by the Financial Intelligence Unit with inter-agency support from key financial and law enforcement authorities.

Foreign Exchange and Remittances

Foreign Exchange

Belize has a stable currency, with the Belize dollar pegged to the United States Dollar since May 1976 at a fixed exchange rate of BZ $2.00 to the US $1.00.

The Government of Belize has established currency controls, and foreign investors seeking to convert, transfer, or repatriate funds must comply with Central Bank regulations.  Foreign investments must be registered at the Central Bank to facilitate inflows and outflows of foreign currency.  Foreign investors must register their inflow of funds to obtain an “Approved Status” for their investment and generally are approved for repatriation of funds thereafter. Additionally, he Exchange Control Regulation Act was amended in 2020 to relax the requirement for non-residents to obtain prior permission from the Central Bank to conduct transaction in securities and real estate. The amendment now provides for prior written notice to the Central Bank with full particulars of the transaction.

Businesses complained that foreign exchange shortages in 2020 constrained both local and foreign operations as the Central Bank of Belize tighten measures to obtain approval for foreign exchange. As such domestic banks prioritized foreign exchange sales to ensure that payments for essential goods and services are covered.

Remittance Policies

As mentioned above, foreign investors must obtain an “Approved Status” for their investment and register their inflow and outflow of funds with the Central Bank. Additionally, the Exchange Control Regulation Act was amended in 2020 to relax the requirement for non-residents to obtain prior permission from the Central Bank to conduct transaction in securities and real estate. The amendment now provides for prior written notice to the Central Bank with full particulars of the transaction.

Generally, there are no time limitations on remittances.  Where there is a waiting period, it depends on the availability of foreign exchange, but does not generally exceed 60 days. The Central Bank however, placed a temporary suspension on all payments of cash dividends and repatriation of profits effective December 29, 2020 to June 30, 2021.

Sovereign Wealth Funds

Belize does not have a sovereign wealth fund.

8. Responsible Business Conduct

Belize generally lacks broad awareness of the expectations and standards for responsible business conduct (RBC).  However, many foreign and local companies engage in responsible corporate behaviors, and partner with NGOs or international organizations to reinvest in community development and charitable work.  Companies sponsor, inter alia, educational scholarships, sports related activities, community enhancement projects, or entrepreneurship activities.  There is a strong thread of environmental awareness that also impacts business decision-making.  BELTRAIDE, in its official public outreach, also promotes civic responsibility, especially in its outreach to entrepreneurs and young aspiring businesspeople.

Several civil society agencies seek to protect individuals and address human rights, labor rights, consumer protection, and environmental concerns but they do not directly engage in promoting or monitoring RBC.  There are no formal government measures or policies to promote RBC.

The Office of the Ombudsman is responsible for investigating complaints of official corruption and abuse of power.  As required by law, the Ombudsman is active in filing annual reports to the National Assembly and investigating incidents of alleged misconduct, particularly of police abuses.   This Office continues to be constrained by the lack of enforcement powers, political pressure, and limited resources.

In the area of environment, certain projects require the Department of the Environment’s approval for Environmental Impact Assessments or Environmental Compliance Plans. The Department of Environment website, http://www.doe.gov.bz , has more information on the Environmental Protection Act, various regulations, applications and guidelines.

Belize has not adopted a particular accounting framework as its national standards. The International Financial Reporting Standards (IFRS) are required for domestic banks under the Domestic Bank and Financial Institutions Act (DBFIA) of Belize. Also under the DBFIA, the Central Bank of Belize has a practice direction on corporate governance applicable to all banks and financial institutions operating and supervised by the Central Bank.

For other companies, Belize permits companies to use IFRS Standards and the IFRS for SMEs as the financial reporting framework for preparing their financial statements. The Institute of Chartered Accountants of Belize regards IFRS Standards as an allowed accounting framework under its professional standards. Alternatively, non-bank companies are permitted to use other internationally recognized standards. As such, the US Generally Accepted Accounting Principles (GAAP) and Canadian GAAP are often used. There are no government measures relating executive compensation standards and RBC policies are not factored into procurement decisions.  Opposition party political pronouncements often target official malfeasance in procurement and cronyism in government contracts, but these concerns are historically muted once the opposition takes power.        Belize has no recent cases of private sector impact on human rights and no NGOs, investment funds, worker organizations/unions, or business associations specifically promote or monitor RBC.  There are similarly no alleged or reported human or labor rights concerns relating to RBC. In recent years, labor unions and business associations have become actively engaged in advocating for stronger measures against corruption.

Belize has no recent cases of private sector impact on human rights and no NGOs, investment funds, worker organizations/unions, or business associations specifically promote or monitor RBC.  There are similarly no alleged or reported human or labor rights concerns relating to RBC. In recent years, labor unions and business associations have become actively engaged in advocating for stronger measures against corruption.           Belize does not have a highly developed mineral sector and is not a conflict or high-risk country.  As such, it does not adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas.  Belize’s extractive/mining industry is not highly developed, and it does not participate in the Extractive Industries Transparency Initiative (EITI) and/or the Voluntary Principles on Security and Human Rights.

Belize does not have a highly developed mineral sector and is not a conflict or high-risk country.  As such, it does not adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas.  Belize’s extractive/mining industry is not highly developed, and it does not participate in the Extractive Industries Transparency Initiative (EITI) and/or the Voluntary Principles on Security and Human Rights.

The private security industry is nascent and comprised of a handful of local private security companies. As such, the country is not a signatory of The Montreux Document on Private Military and Security Companies, nor is it a supporter of the International Code of Conduct or Private Security Service Providers, and is not a participant in the International Code of Conduct for Private Security Service Providers’ Association.

Additional Resources

Department of State

Department of Labor

9. Corruption

Belize has anti-corruption laws that are seldom enforced.  Under the Prevention of Corruption in Public Life Act, public officials are required to make annual financial disclosures, but there is little adherence and poor enforcement.  The Act criminalizes acts of corruption by public officials and includes measures on the use of office for private gain; code of conduct breaches; the misuse of public funds; and bribery.  Section 24 of the Act covers punishment for breach, which may include a fine of up to US $5,000, severe reprimand, forfeiture of property acquired by corruption, and removal from office.  This Act also established an Integrity Commission mandated to monitor, prevent, and combat corruption by examining declarations of physical assets and financial positions filed by public officers.  The Commission is able to investigate allegations of corrupt activities by public officials, including members of the National Assembly, Mayors and Councilors of all cities, and Town Boards.  In practice, the office is understaffed, and charges are almost never brought against officials.  It is not uncommon for politicians disgraced in corruption scandals to return to government after a short period of time has elapsed.

The Money Laundering and Terrorism (Prevention) Act identifies “politically exposed persons” to include family members or close associates of any politician.

The Ministry of Finance issues the Belize Stores Orders and Financial Orders – policies and procedures for government procurement.  The Manual for the Control of Public Finances provides the framework for the registration and use of public funds to procure goods and services.

Despite these legislative and regulatory measures, many businesspeople complain that both major political parties practice partisanship bias that affects businesses in terms of receiving licenses, the importation of goods, winning government contracts for procurement of goods and services, and transfer of government land to private owners.  Some middle-class citizens and business owners throughout the country have complained of government officials, including police, soliciting bribes.  A Select Senate Committee on Immigration deliberated for most of 2017 on such allegations by known members of the United Democratic Party.  It concluded its inquiry in December 2017 and published its findings and recommendations.
Private companies are not required to establish internal codes of conduct.  There are few non-governmental institutions that monitor government activities; two of which are: the Citizens Organized for Liberty through Action (COLA) and the National Trade Union Congress of Belize (NTUCB).  The first is comprised of concerned private citizens; the latter is an umbrella organization comprised of the various Belizean workers’ unions.  Environmental NGOs and the Belize Chamber of Commerce and Industry often make statements regarding government policy as it affects their respective spheres of activity.  The Government does not provide protection to NGOs investigating corruption.

Private companies are not required to establish internal codes of conduct.  There are few non-governmental institutions that monitor government activities; two of which are: the Citizens Organized for Liberty through Action (COLA) and the National Trade Union Congress of Belize (NTUCB).  The first is comprised of concerned private citizens; the latter is an umbrella organization comprised of the various Belizean workers’ unions.  Environmental NGOs and the Belize Chamber of Commerce and Industry often make statements regarding government policy as it affects their respective spheres of activity.  The Government does not provide protection to NGOs investigating corruption.

Private companies do not use internal controls, ethics or compliance programs to detect and prevent bribery of government officials.  Bribery is officially considered a criminal act in Belize, but laws against bribery are rarely enforced. Complaints related to government corruption relating to customs, land, and immigration are quite common. U.S. firms have anecdotally identified corruption as an obstacle to FDI, including in areas related to the bidding process and the award of licenses, concessions, and contracts by government bodies and state owned enterprises, and dispute settlement.

In June 2001, the Government of Belize signed the Organization of American States (OAS) Inter-American Convention on Corruption, which undergoes periodic review as provided for under the Convention.  In December 2016, Belize acceded to the United Nations Convention Against Corruption (UNCAC) amid public pressure and demonstrations from the teachers’ unions.  Government continues to be criticized for the lack of political will to fully implement UNCAC.

Resources to Report Corruption

Office of the Ombudsman
91 Freetown Road
Belize City, Belize
T: +501-223-3594
E:   ombudsman@btl.net 
W:   www.ombudsman.gov.bz

For specific complaints within the police force:

Professional Standards Branch
1902 Constitutions Drive
Belmopan, Belize
T: +501-822-2218 or 822-2674

Bermuda

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment 

Bermuda welcomes foreign direct investment (FDI). The Bermuda Business Development Agency (BDA) is an independent, public-private partnership, funded by both the Bermuda Government and the private sector. The agency is governed by a Board of Directors comprised of senior industry professionals representing the diversity of Bermuda’s financial services sector.  The BDA carries out pro-active, targeted marketing and business development strategies to stimulate growth in the Bermuda economy and create and maintain jobs. (http://bda.bm)

The BDA acts as a partner for existing Bermuda-based companies and assists entities that are considering establishing operations in Bermuda. It connects prospective companies with industry partners and relevant representatives in the Bermuda Monetary Authority (BMA) and the Bermuda Government’s Business Development Unit, making formal introductions, troubleshooting, and communicating with clients to simplify the process. The BDA has segmented its business development efforts into four distinct pillars or industry areas of focus: Risk (insurance, reinsurance, captives, and insurance linked securities), Asset Management, Trust & Private Client, and International Commerce (technology, international markets, etc.). These are key sectors of the Bermuda marketplace, or areas for potential growth, and the BDA has separate business development managers, strategies and goals for each.

Limits on Foreign Control and Right to Private Ownership and Establishment 

The 60/40 rule in Bermuda requires all companies to be controlled by at least 60% Bermudians. In February 2020, the Bermuda Government proposed to introduce a bill that will reduce the current required ownership regulations for a local company from 60% owned by a Bermudian, to 40%, as outlined in the 2020 Budget Report, to help stimulate and promote economic competition.

Some local businesses support relaxing the 60/40 rule to encourage FDI, increase liquidity in the local market, and boost the economy. Other businesses oppose it out of concern that they might not be able to compete with majority foreign-owned businesses.

In addition to ownership regulations, there are restrictions governing ownership of land by businesses.

‘Control’ is defined as the percentage of Bermudian directors, and the percentage of its shares beneficially owned by Bermudians, in the company being not less than 60% in each case. Amendments are expected to create more opportunities and foreign investments by Permanent Resident Certificate (PRC) holders who reside on the island.

Local companies can be exempted from the 60/40 rule by obtaining a license (pursuant to section 114B of the Companies Act) from the Minister of Finance, who decides if the granting of a license is in the best interest of the country. When considering an application for a Section 114B license, the Minister considers:

  • The economic situation in Bermuda and the due protection of persons already engaged in business in Bermuda.
  • The nature and previous conduct of the company and the persons having an interest in the company whether as directors, shareholders or otherwise.
  • Any advantage or disadvantage which may result from the company carrying on business in Bermuda.
  • The desirability of retaining in the control of Bermudians the economic resources of Bermuda.

Certain activities are excluded from the requirement of a license, including:

  • Doing business with other exempted undertakings (e.g., exempted companies, permit companies, exempted partnerships and exempted unit trust schemes) in furtherance of the business of the exempted company that is being conducted outside Bermuda.
  • Dealing in securities of exempted undertakings, local companies, or partnerships; and
  • Carrying on business as manager or agent for, or consultant or advisor to, any exempted company or permit company which is affiliated (whether or not incorporated in Bermuda) with the exempted company or an exempted partnership in which the exempted company is a partner or, in the case of mutual funds, selling or distributing their shares in Bermuda.

In 2012 local companies were exempted from the 60/40 rule if its shares were listed on a designated Stock Exchange, the company conducted business in a material way in a ‘prescribed industry,’ or if the company was a wholly owned subsidiary of such a listed company.

The prescribed industries are capital-heavy and include, inter alia, telecommunications, energy, insurance, hotel operations, banking, or international transportation services (by ship or aircraft).

Other Investment Policy Reviews 

Bermuda is a World Trade Organization (WTO) member through the United Kingdom. Bermuda has not conducted an investment policy review through the OECD, WTO, or UNCTAD within the past three years.

Business Facilitation 

The Investment Business Act 2003 is the statutory basis for regulating investment business in Bermuda. The act provides a licensing regime for any person or entity (unless otherwise exempted or excluded) engaging in investment business, as defined by the act, either in or from Bermuda.

There are several options for registering a business in Bermuda which depend on the nature of the business and whether business will be conducted in the local market. The Registrar of Companies (ROC) is responsible for the day-to-day responsibilities regarding the administration of companies including name reservation, fees, insolvency and real estate. (https://www.gov.bm/department/registrar-companies).

Formation of a limited company, partnership or LLC, which does not require consent of the Minister of Finance may be accomplished within one day after an application is received. Where a business requires the consent from the Minister, the processing time can take up to one week. The ROC reviews all information relating to the company, and all personal declarations from the proposed beneficial owners.

The Bermuda Government requires those seeking to establish a limited company, partnership or LLC, to get assistance from a law firm, accounting firm, or corporate service provider (CSP) located in Bermuda for guidance on completing steps towards establishing a company, including:

  • Name reservation
  • Disclosure and vetting of proposed beneficial owners of the company, including personal declarations where required
  • Drafting the Memorandum of Association and byelaws of the company
  • Based on the nature of the proposed business activities, any license or permit applications required to be submitted
  • Selecting a registered office in Bermuda
  • Selection of directors, officers, and company secretary
  • Payment of government fees
  • Regulations for the emerging Fintech industry have been established. Fintech Bermuda offers information to assist those seeking to establish a digital business on the island (https://fintech.bm/start-a-business/) In 2018, the Government of Bermuda established the Digital Asset Business Act, which outlines the foundation for the government’s regulatory approach towards the industry. The Bermuda Business Development Agency (BDA) also provides guidance for those seeking to establish a digital business on the island and can provide information about immigration, tax and social insurance applications. The BDA also liaises with the Bermuda Monetary Authority, Department of Immigration, Ministry of Finance, Fintech Business Unit and ROC as needed for new incorporations and to monitor the processing of new applications.

Outward Investment 

Bermuda is not involved in outward investment.

5.Protection of Property Rights

Real Property 

Bermuda law recognizes and enforces secured interests in movable and real property.  The Registry General, the Land Tax Office and the Land Valuations Office regulate the acquisition and disposition of property, including land, buildings, and mortgages.  The Land Title Registration Act 2011 moved Bermuda from a deeds-based property transaction to a parcel-based land registration system.

Individuals, businesses or organizations who become landowners or own interests in land must apply to the Land Title and Registration Office to register land, register a new owner of a registered property following a sale and register an interest affecting registered land, such as a mortgage, lease or a right of way.

Intellectual Property Rights 

Under the Ministry of Home Affairs, the Registry General manages the registration and restrictions for Intellectual Property. Intellectual Property registered in the UK can be applied in Bermuda if permission from the UK certificate of registration extends it.

In 2014, the Government of Bermuda reviewed its intellectual property legislation and in 2015 began dialog with the UK Intellectual Property Office to extend to Bermuda, as a UK Overseas Territory, the right to join the WTO’s Trade Related Intellectual Property Rights (TRIPS) Agreement, the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (“the Madrid Protocol”), the Paris Convention for the Protection of Literary and Artistic Works, the Patent Cooperation Treaty, and the Hague Agreement Concerning the International Registration of Designs. Bermuda has yet to sign the World Intellectual Property Organization (WIPO) internet treaties, the WIPO Copyright Treaty (WCT), or the WIPO Performances and Phonograms Treaty.

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/.

Counterfeit goods are not prevalent in Bermuda.  About 70 percent of imported goods derive from the United States.

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

6.Financial Sector

Capital Markets and Portfolio Investment 

The Bermuda Stock Exchange (BSX) offers a variety of domestic and international listing options. Established in 1971, the BSX is globally recognized for commercially sensible listing requirements and partners with the Bermuda Monetary Authority (BMA) and Bermuda Business Development Agency (BBDA) to further develop Bermuda’s reputation.

Bermuda does not have a central bank, but the BMA issues and redeems notes and coins, supervises, regulates, and inspects financial institutions which operate in or from Bermuda, and generally promotes the financial stability and soundness of financial institutions.  The BMA does not, however, determine interest rates, which are set by the market, regulated by the Ministry of Finance, and usually follow the Federal Reserve System rates.

Bermuda does not have developed capital markets and does not control monetary policy.  Commercial credit lines are normally arranged through U.S. or other overseas institutions.  Credit is allocated on market terms, and foreign investors may get credit on the local and international markets.  The private sector has access to various credit instruments via local banks.  Many companies, particularly the larger ones, maintain external banking relationships.

Money and Banking System 

Bermuda is a highly successful offshore financial center. The Bermuda Monetary Authority (BMA) oversees financial services with a risk-based approach to the regulation and supervision of banks and deposit companies in Bermuda. The regulatory and supervisory framework is supported by principal legislation, The Banks and Deposit Companies Act 1999, which is regularly supplemented with updated statements of principles, policy and guidance.

There are four banks on the island – HSBC Bank Bermuda Ltd., Clarien Bank Ltd., Bank of Butterfield Ltd. and Bermuda Commercial Bank.

The BMA published the ‘Basel III for Bermuda Banks – Final Rule’ effective from 1 January 2015, which was updated in November 2017. The Authority’s final Basel III document outlines a range of new capital and liquidity standards as prescribed by the Basel Committee on Banking Supervision (BCBS). The Authority has adopted all three pillars as proposed by Basel III: i) Pillar I – minimum capital requirements; ii) Pillar II – supervisory review process; and iii) Pillar III – market discipline.

Whilst the final Basel III rules supersede Basel II, elements of Basel II and corresponding guidance will remain in force subject to future revisions, and as such relevant components of the Authority’s ‘Revised Framework for Regulatory Capital Assessment’ remain applicable.

Guidance for Basel III and Basel II can be found at, https://www.bma.bm/document-centre/policy-and-guidance-banking 

The BMA updated its regulatory framework in response to new international standards proposed by the Basel Committee. The following changes were introduced throughout 2018 and 2019:

  • Net Stable Funding Ratio (NSFR) as a new component to our liquidity requirements
  • Revisions to our stress testing guidance to include new standards around Interest Rate Risk in the Banking Book (IRRBB)
  • New required forms and templates for the Pillar 3 Disclosure requirement
  • Transitional arrangements for the regulatory treatment of new accounting standards around provisions

The BMA helped to establish a Banking Liaison Panel (BLP) in 2017 – a statutory body contemplated in the Banking (Special Resolution Regime) Act 2016. In addition, the Authority joined the IAIS Resolution Working Group with a view to commencing work on a special resolution regime for large international insurers.

The Banks and Deposit Companies Act 1999 implemented the Base Committee’s Core Principles for Effective Banking Supervision.  Bermuda banks are compliant with the Basel II Accord and have either implemented or are moving toward full implementation of Basel III.

Supervision is intended to assist the Authority with assessing the ongoing financial viability of a money service provider, the fitness and propriety of its management, the prudent conduct of its business and its compliance with the Money Service Business Act 2016 (the Act).

The BMA’s supervision of money service businesses involves regular meetings with senior management of licensed firms, together with scrutiny of financial and statistical information in connection with the institution’s business activities and periodic compliance visits to the institution’s premises. In addition to prudential assessments, a review of compliance in relation to the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 also forms part of the Authority’s visits.

The Authority expects licensed institutions to cooperate fully in providing all relevant information and documents without its having routine recourse to legal powers as provided under the Act.

Section 2 of the Act defines money service business as “the business of providing any or all of the following services to the public”, including:

  • Money transmission services.
  • Cashing checks which are made payable to customers and guaranteeing checks.
  • Issuing, selling or redeeming drafts, money orders or traveler’s checks for cash.
  • Payment services business.
  • Operating a bureau de change whereby cash in one currency is exchanged for cash in another currency.”

Institutions licensed under the Banks and Deposit Companies Act 1999 are exempted from the Act. In addition, where a company provides any of the services listed above as an ancillary service to its clients and does not levy a separate charge, the Authority is not likely to treat such an activity as being within scope of the Act. For further details, please refer to section 7 of the Guidance Notes.

The Digital Asset Business Act 2018 (the Act) is the statutory basis for regulating Digital Asset Business (DAB) in Bermuda. The Act provides for a licensing regime for any person or undertaking (unless otherwise exempted) which carries out any of the following activities:

  • Issuing, selling or redeeming virtual coins, tokens or any other form of digital assets.
  • Operating as a payment service provider business utilizing digital assets which
  • Includes the provision of services for the transfer of funds.
  • Operating as an electronic exchange.
  • Providing custodial wallet services.
  • Operating as a digital asset’s services vendor.

According to the Act, “digital asset” means anything that exists in binary format and comes with the right to use it and includes a digital representation of value that—

  • Is used as a medium of exchange, unit of account, or store of value and is
  • Not legal tender, whether or not denominated in legal tender;
  • Is intended to represent assets such as debt or equity in the promoter;
  • Is otherwise intended to represent any assets or rights associated with such assets; but does not include—
  • A transaction in which a person grants value as part of an affinity or rewards program, which value cannot be taken from or exchanged with the person for legal tender, bank credit or any digital asset, or a
  • Digital representation of value issued by or on behalf of the publisher and used within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.

There have been notable employment changes at the Rosebank location of Butterfield Bank. Eleven positions were made redundant in April 2019 and over thirty employees accepted early retirement packages. It was reported that the closure was a result of increased use of electronic services, causing a fifty percent reduction in the volume of in-person transactions. Butterfield Bank has three other locations on the island that are still operating at full capacity.

Foreign Exchange and Remittances 

Foreign Exchange

The Bermuda Dollar (BMD) is interchangeable with U.S. currency with an exchange rate of 1:1. Both currencies are freely interchangeable and transferable without any restrictions.

The BMA issues Bermuda’s national currency and manages exchange control transactions. It administers the Exchange Control Act 1972 that states that no capital or exchange controls apply to non-residents or to the various forms of offshore entities, which are free to import and export funds in all currencies.

The Exchange Control Regulations 1973 and the Companies Act 1981 regulate the issue, transfer, redemption, and repurchase of securities.  For exchange control purposes, the BMA must give prior approval for issues to and transfers of securities in Bermuda companies involving non-residents, except where general permission has been granted pursuant to the Notice to the Public of June 2005.

The 2009 Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Amendment gave the BMA the authority to oversee all money transactions involving wire transfers.  The act requires financial institutions to verify the accuracy and completeness of the information on the payer before authorizing the transfer of funds. The institution must also retain all the records pertaining to the transaction for a period of no less than five years.  In 2013, amendments created an obligation to report suspicious money transactions which could possibly be linked to money laundering or to monies being used to fund terrorism. It established a civil proceeding before the Supreme Court for the purpose of recovering money obtained through unlawful conduct.

In 2009, Bermuda updated the 1898 Revenue Act to strengthen the requirements related to cross-border transporting of currency and negotiable instruments.  The threshold was set at USD 10,000, after a financial transaction surpasses that amount; the financial institution is automatically required to report the transaction.  Passengers arriving to Bermuda (regardless of point of embarkation) must complete a mandatory declaration form. This mandatory disclosure system applies to all outgoing passengers traveling to the U.S., Canada, and the UK.

The 2010 Foreign Currency Purchase Tax Amendment Act is applied to the purchase of all non-local currencies, including the USD.

Bermuda is a member of the Caribbean Financial Action Task Force (CFATF), an organization of states and territories of the Caribbean basin which have agreed to implement common countermeasures against money laundering, and it is listed under the 2014 International Narcotics Control Strategy Report (INCSR) as being a monitored country.

The Bermuda Financial Network (BFN) Limited is a local international financial services firm. Its main objective is to facilitate banking transactions for consumer and business including e-commerce and money service businesses. In May 2008, the BFN was granted a Money Service Business License from the Bermuda Monetary Authority (BMA) in conjunction with the launch of its Western Union agency in Bermuda which offers international money transfer services. The BFN provides guidance on compliance policies and procedures with local regulations. Money transfer services are popular among foreign workers looking to send funds to their families overseas. The Money Shop is another business providing financial services in Bermuda with money transfer options through MoneyGram or wire transfers.

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

Remittance Policies

The Bermuda Financial Network (BFN) Limited is a local international financial services firm. Their main objective is to facilitate banking transactions for consumer and business including e-commerce and money service businesses. The BFN provides guidance on compliance policies and procedures with local regulations. Money transfer services are popular among foreign workers looking to send funds to their families overseas through businesses including The Money Shop, MoneyGram and Western Union.

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

Sovereign Wealth Funds 

Not applicable/information unavailable.

8. Responsible Business Conduct

The concept of responsible business conduct is strong in Bermuda, particularly among international companies.  The Bermuda Monetary Authority (BMA) has issued the Insurance Code of Conduct, the Banking Code of Conduct, the Code of Conduct for Fund Administrators, the Advertising Code of Conduct, the Investment Business Code of Conduct, and the General Business Conduct and Practice Code of Conduct. There have been no high-profile, controversial instances of corporate impact on human rights.  The Bermuda government effectively and fairly enforces domestic laws.

The BMA is responsible for the supervision, regulation and inspection of Bermuda’s insurance companies and for the licensing of all insurance companies, brokers, agents and managers. Applications are subject to internal and independent review by a committee of senior staff and are closely vetted for the fitness, propriety and underwriting experience of the management, the plausibility of the proposed business plan and the level of capitalization relative to the proposed risk profile, amongst other factors.  The BMA maintains a register giving details of each licensed insurer that is available for public inspection at the Registrar of Companies.

The BMA conducts banking supervision and regulation in accordance with the standards established by the Basel Committee on Banking Supervision, in particular with the revised Concordat and with the precepts for the supervision of cross-border banking. It liaises closely with other regulators, both domestically and internationally, in order to ensure effective consolidated supervision, both in relation to entities for which the BMA acts as consolidated group wide supervisor and where licensed institutions may form part of international banking groups. The BMA’s supervision involves regular on-site visits and off-site surveillance, which includes the review of prudential returns on both a solo and consolidated basis and regular prudential meetings with senior management of licensed financial institutions. The BMA has also introduced a stress testing methodology and monitors on a regular basis a set of Financial Stability Indicators based on the IMF’s core and encouraged set.

The Corporate Service Provider Business Act 2012 and the Corporate Service Provider Business Amendment Act 2014 prohibit a person from carrying on corporate service provider business in or from within Bermuda unless that person is a licensed undertaking under the Act.  The BMA has regulatory and information gathering powers over Corporate Service Providers.

The BMA supervises and regulates all investment business operating in or from Bermuda. As a guideline for the development and ongoing developments of the BMA’s investment business policies, the Authority refers to the core principles issued by the International Organization of Securities Commissions (IOSCO). To ensure the highest standards are upheld, the BMA liaises closely with other regulators, both domestically and internationally, to provide the most effective consolidated supervision. Supervision involves regular prudential and strategy discussions with senior management, together with off-site analysis and review of prudential data and certain on-site work, conducted both in Bermuda and in significant group operations abroad.

The BMA also supervises and regulates trusts.  Trusts must provide audited financial statements and a Certificate of Compliance to the BMA within four months of their year-end. These are discussed with the undertaking, along with changes to strategy, staffing, etc., as part of the Authority’s off-site supervision. Routine on-site review visits are undertaken by BMA staff (including anti-money laundering compliance testing) and the Authority also has the power to commission reports from reporting accountants on key aspects of systems and controls.

The Bermuda and Canada Institutes of Chartered Accountants (CICA) work together to develop and enforce high standards to protect the public interest and maintain the good reputation and integrity of the CA profession.  In addition, throughout their professional careers, CAs are subject to ongoing regulation in order to safeguard the public interest.  They are subject to enforcement of exacting Rules of Professional Conduct; continuing professional development requirements; and comprehensive public oversight and discipline mechanisms. In addition, CAs practicing public accounting are subject to mandatory practice inspection and professional liability insurance programs. The Institute has a comprehensive complaints investigation and discipline process.

The Bermuda Bar Association is responsible for both the regulation and discipline of members of the legal profession in Bermuda. All members of the Bermuda Bar are bound by the Barristers’ Code of Conduct, which requires that members carry out their duties to their clients, the court, members of the public and their colleagues with integrity and in accordance with the code of professional conduct. Further, they are required to conduct themselves within or outside the professional sphere in a manner that will not be likely to impair a client’s trust in them as a legal advisor.

The Trade Union Act 1965 requires trade unions to exercise good governance and transparency when dealing with matters of finance.  Union officers have a duty to render accounts to member trustees.  Trade unions may impose penalties on any officer, member or person employed by the trade union for withholding money or falsifying an account.

The Government of Bermuda does factor Responsible Business Conduct (RBC) policies or practices into its procurement, through the Public Treasury (Administration and Payments) Act 1969 and the Good Governance Acts of 2011 and 2012.  The legislation accords with the principles of the UN Convention against Corruption (UNCAC), and Bermuda has committed to identify and address gaps in the Bermuda legislation regarding the UNCAC.

The Code of Practice for Project Management and Procurement that sets out the rules for the procurement of goods, services and works, including procedures for tendering, evaluating proposals and selecting contractors; financial thresholds; requirements for awarding, monitoring, extending and varying contracts; and procedures for debriefing bidders, handling complaints, resolving disputes, retaining records and inspecting records.

The Government of Bermuda is also working with the Bermuda Economic Development Corporation to develop a government contracting program in support of small and medium-sized businesses.  In addition, an electronic purchasing and tendering system is being implemented to facilitate public access to tenders, increase competition and improve transparency.  The GOB’s procurement processes provide for the application of social, environmental, and economic criteria in the tender evaluation and selection process.  Principles of environmental and sustainable development are being embedded in tender documentation and contracts.

Additional Resources

Department of State

Department of Labor

9.Corruption

Bermuda has laws, regulations and penalties to combat corruption, and effectively enforces them. The Good Governance Act 2012 discourages financial abuse by ministers and members of the civil service and protects whistleblowers. Under the Act, politicians who attempt to influence the award of government contracts could face a USD 10,000 fine and a year-long jail sentence. The penalties also apply to contractors and public officers found guilty of collusion. The Act also improved the transparency and accountability of government contracts, strengthened requirements for internal audits, and established an Office of Project Management and Procurement to strengthen oversight/control of government projects.

The Bermuda Criminal Code and the Proceeds of Crime Act provide for punishing corrupt practices in the area of investments, particularly for misleading statements and practices, market manipulation, and insider trading.

To distance itself from perceived impropriety often associated with offshore banking centers, Bermuda continues to update its regulatory framework to meet international standards, including those of the IMF, the Financial Action Task Force (FATF) and the OECD.

Resources to Report Corruption

Regulatory Authority
1st Floor, Craig Appin House
8 Wesley Street
Hamilton, HM11
441-405-6000
info@rab.bm 

Financial Intelligence Agency
441-292-3422
https://www.fia.bm/ 

Bermuda Police Service
Organized Economic Crime Department
10 Headquarters Hill, Prospect
441-295-0011

Bermuda Monetary Authority
BMA House
43 Victoria Street, Hamilton
441-295-5278
www.bma.bm

Colombia

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Colombian government actively encourages foreign direct investment (FDI). The economic liberalization reforms of the early 1990s provided for national treatment of foreign investors, lifted controls on remittance of profits and capital, and allowed foreign investment in most sectors. Colombia imposes the same investment restrictions on foreign investors that it does on national investors. Generally, foreign investors may participate in the privatization of state-owned enterprises without restrictions. All FDI involving the establishment of a commercial presence in Colombia requires registration with the Superintendence of Corporations and the local chamber of commerce. All conditions being equal during tender processes, national offers are preferred over foreign offers. Assuming equal conditions among foreign bidders, those with major Colombian national workforce resources, significant national capital, and/or better conditions to facilitate technology transfers are preferred.

ProColombia is the Colombian government entity that promotes international tourism, foreign investment, and non-traditional exports. ProColombia assists foreign companies that wish to enter the Colombian market by addressing specific needs, such as identifying contacts in the public and private sectors, organizing visit agendas, and accompanying companies during visits to Colombia. All services are free of charge and confidential. Priority sectors include business process outsourcing, software and IT services, cosmetics, health services, automotive manufacturing, textiles, graphic communications, and electric energy. ProColombia’s “Invest in Colombia” web portal offers detailed information about opportunities in agribusiness, manufacturing, and services in Colombia (www.investincolombia.com.co/sectors ). The Duque administration – including senior leaders at the Presidency, ProColombia, and the Ministry of Commerce, Industry, and Trade – continue to stress Colombia’s openness to foreign investors and aggressively market Colombia as an investment destination.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investment in the financial, hydrocarbon, and mining sectors is subject to special regimes, such as investment registration and concession agreements with the Colombian government, but is not restricted in the amount of foreign capital. The following sectors require that foreign investors have a legal local representative and/or commercial presence in Colombia: travel and tourism agency services; money order operators; customs brokerage; postal and courier services; merchandise warehousing; merchandise transportation under customs control; international cargo agents; public service companies, including sewage and water works, waste disposal, electricity, gas and fuel distribution, and public telephone services; insurance firms; legal services; and special air services, including aerial fire-fighting, sightseeing, and surveying.

According to the Colombian constitution and foreign investment regulations, foreign investment in Colombia receives the same treatment as an investment made by Colombian nationals. Foreign investment is permitted in all sectors, except in activities related to defense, national security, and toxic waste handling and disposal. There are no performance requirements explicitly applicable to the entry and establishment of foreign investment in Colombia.

Foreign investors face specific exceptions and restrictions in the following sectors:

Media: Only Colombian nationals or legally constituted entities may provide radio or subscription-based television services. For National Open Television and Nationwide Private Television Operators, only Colombian nationals or legal entities may be granted concessions to provide television services. Foreign investment in national television is limited to a maximum of 40 percent ownership of an operator.

Accounting, Auditing, and Data Processing: To practice in Colombia, providers of accounting services must register with the Central Accountants Board and have uninterrupted domicile in Colombia for at least three years prior to registry. A legal commercial presence is required to provide data processing and information services in Colombia.

Banking: Foreign investors may own 100 percent of financial institutions in Colombia, but are required to obtain approval from the Financial Superintendent before making a direct investment of ten percent or more in any one entity. Foreign banks must establish a local commercial presence and comply with the same capital and other requirements as local financial institutions. Every investment of foreign capital in portfolios must be through a Colombian administrator company, including brokerage firms, trust companies, and investment management companies.

Fishing: A foreign vessel may engage in fishing activities in Colombian territorial waters only through association with a Colombian company holding a valid fishing permit. If a ship’s flag corresponds to a country with which Colombia has a complementary bilateral agreement, this agreement shall determine whether the association requirement applies for the process required to obtain a fishing license. The costs of fishing permits are greater for foreign flag vessels.

Private Security and Surveillance Companies: Companies constituted with foreign capital prior to February 11, 1994 cannot increase the share of foreign capital. Those constituted after that date can only have Colombian nationals as shareholders.

Transportation: Foreign companies can only provide multimodal freight services within or from Colombian territory if they have a domiciled agent or representative legally responsible for its activities in Colombia. International cabotage companies can provide cabotage services (i.e. between two points within Colombia) “only when there is no national capacity to provide the service.” Colombia prohibits foreign ownership of commercial ships licensed in Colombia. The owners of a concession providing port services must be legally constituted in Colombia, and only Colombian ships may provide port services within Colombian maritime jurisdiction, unless there are no capable Colombian-flag vessels.

Other Investment Policy Reviews

The WTO most recently reviewed Colombia’s trade policy in June 2018. https://www.wto.org/english/tratop_e/tpr_e/tp472_e.htm 

Business Facilitation

New businesses must register with the chamber of commerce of the city in which the company will reside. Applicants also register using the Colombian tax authority’s (DIAN) portal at: www.dian.gov.co  to obtain a taxpayer ID (RUT). Business founders must visit DIAN offices to obtain an electronic signature for company legal representatives, and obtain – in-person or online – an authorization for company invoices from DIAN. In 2019, Colombia made starting a business a step easier by lifting a requirement of opening a local bank account to obtain invoice authorization. Companies must submit a unified electronic form to self-assess and pay social security and payroll contributions to the Governmental Learning Service (Servicio Nacional de Aprendizaje, or SENA), the Colombian Family Welfare Institute (Instituto Colombiano de Bienestar Familiar, or ICBF), and the Family Compensation Fund (Caja de Compensación Familiar). After that, companies must register employees for public health coverage, affiliate the company to a public or private pension fund, affiliate the company and employees to an administrator of professional risks, and affiliate employees with a severance fund.

According to the World Bank’s “Doing Business 2020” report, recent reforms simplified starting a business, trading across borders, and resolving insolvency. According to the report, starting a company in Colombia requires seven procedures and takes an average of 10 days. Information on starting a company can be found at http://www.ccb.org.co/en/Creating-a-company/Company-start-up/Step-by-step-company-creation ; https://investincolombia.com.co/how-to-invest.html ; and http://www.dian.gov.co .

Outward Investment

Colombia does not incentivize outward investment nor does it restrict domestic investors from investing abroad.

5. Protection of Property Rights

Real Property

The 1991 Constitution explicitly protects individual rights against state actions and upholds the right to private property. Secured interests in real property, and to a lesser degree movable property, are recognized and generally enforced after the property is properly registered. In terms of protecting third-party purchasers, existing law is inadequate. The concepts of a mortgage, trust, deed, and other types of liens exist, as does a reliable system of recording such secured interests. Deeds, however, present some legal risk due to the prevalence of transactions that have never been registered with the Public Instruments Registry. According to a survey made shortly before the signing of the FARC peace accord, some eight million hectares of land – 14 percent of the country – had been abandoned or acquired illegally. The government is working to title these plots and has started a formalization program for land restitution. The 2020 Doing Business report ranked Colombia 62nd for ease of registering property.

Intellectual Property Rights

In Colombia, the granting, registration, and administration of intellectual property rights (IPR) are carried out by four primary government entities. The SIC acts as the Colombian patent and trademark office. The Colombian Agricultural Institute (ICA) is in charge of issuing plant variety protections and data protections for agricultural products. The Ministry of Interior administers copyrights through the National Copyright Directorate (DNDA). The Ministry of Health and Social Protection handles data protection for products registered through the National Food and Drug Institute (INVIMA). Primary responsibility for enforcement resides with the Fiscalia General de la Republica (FGR), the Tax and Customs Authority (DIAN), and the Fiscal and Customs Police (POLFA).

The Intersectoral Intellectual Property Commission (CIPI) serves as the interagency technical body for IPR issues. Colombia aims to ratify the Treaty of Marrakesh in 2021, and CIPI has also mentioned progress toward ratification of the Beijing Treaty, the reactivation and update of the Anti-Piracy Agreement for Colombia, and the possible accession of Colombia to the Hague System on Industrial Designs. The last comprehensive interagency policy for IPR issues (Conpes 3533) was issued by the National Planning Department in 2008; the pandemic delayed its planned 2020 publication of a new national policy for IPR. Colombia is subject to Andean Community Decision 486 on trade secret protection, which is fully implemented domestically by the Unfair Competition Law of 1996.

Colombia provides a 20-year protection period for patents, a 10-year term for industrial designs, and 20- or 15-year protection for new plant varieties, depending on the species. Colombia has been on the U.S. Trade Representative’s Special 301 Watch List every year since 1991, and in 2019 was upgraded from “Priority Watch List” to “Watch List” status.

The CTPA improved standards for the protection and enforcement of a broad range of IPR. Improvements include state-of-the-art protections for digital products such as software, music, text, and videos; stronger protection for U.S. patents, trademarks, and test data; and prevention of piracy and counterfeiting by criminalizing end-use piracy. However, Colombia has outstanding CTPA commitments related to IPR. Colombian officials continue discussing with the United States draft legislation regulating internet service providers on issues such as compulsory takedown of online content and the protection of intermediaries with “safe harbor” provisions for unintentional copyright infringement. The legislation has not yet been introduced to Congress. Colombia has not yet signed the International Union for the Protection of New Varieties of Plants (UPOV 91). Colombia maintains that the existing Andean Community Decision 345 is in effect and equivalent to UPOV 91, but this is not an interpretation shared by the United States. On Colombia’s request, UPOV conducted a review and identified a non-conformity that Colombia asserts are addressed by two decrees, 2468 and 2687. Colombia is a member of the Inter-American Convention for Trademark and Commercial Protection.

Colombia reformed its copyright law under Decree 1915 of July 2018. The bill extends the term of copyright protection, imposes civil liability for circumvention of technological protection measures, and strengthens enforcement of copyright and related rights. On July 31, 2019 the Colombian Constitutional Court issued ruling C-345-19 that recognizes the constitutionality of statutory damages for copyright infringement.

Colombia’s success combating counterfeiting and IPR violations, and enforcement in the digital space, remains limited.  In March 2021, Colombia’s National Copyright Directorate (DNDA) imposed an order requiring internet providers to block IP addresses used to transmit pirated digital content, the first such order in Colombia.  Industry advocates called this an important precedent for combatting IP theft. A 2015 law increased penalties for those involved in running contraband, but more effective implementation is needed. Colombian authorities coordinate with the United States on investigations, but key agencies often do not have the requisite authorities or sufficient numbers of trained personnel to effectively inspect and seize merchandise and to investigate smugglers and counterfeiters. Despite high-profile seizures of counterfeit goods, such goods remain widely available in Colombia’s “San Andresitos” markets. No Colombian markets are listed in the U.S. Trade Representative’s (USTR) Review of Notorious Markets for Counterfeiting and Piracy.

U.S. stakeholders continue to raise concerns about Colombia’s regulation of the pharmaceutical sector, where regulatory barriers, a focus by the government on cost containment over health outcomes, delays in processing pharmaceutical registrations at INVIMA, and Congressional proposals to limit pharmaceutical IP restrict market entry and reduce the attractiveness of Colombia as a place to invest and do business.

Colombia is on the Watch List in USTR’s 2021 Special 301 Report.

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

6. Financial Sector

Capital Markets and Portfolio Investment

The Colombian Securities Exchange (BVC after its acronym in Spanish) is the main forum for trading and securities transactions in Colombia. The BVC is a private company listed on the stock market. The BVC, as a multi-product and multi-market exchange, offers trading platforms for the stock market, along with fixed income and standard derivatives. The BVC also provides listing services for issuers.

Foreign investors can participate in capital markets by negotiating and acquiring shares, bonds, and other securities listed by the Foreign Investment Statute. These activities must be conducted by a local administrator, such as trust companies or Financial Superintendence-authorized stock brokerage firms. Direct and portfolio foreign investments must be registered with the Central Bank. Foreigners can establish a bank account in Colombia as long as they have a valid visa and Colombian government identification.

The market has sufficient liquidity for investors to enter and exit sizeable positions. The central bank respects IMF Article VIII and does not restrict payments and transfers for current international transactions. The financial sector in Colombia offers credit to nationals and foreigners that comply with the requisite legal requirements.

Money and Banking System

In 2005, Colombia consolidated supervision of all aspects of the banking, financial, securities, and insurance sectors under the Financial Superintendence. Colombia has an effective regulatory system that encourages portfolio investment, and the country’s financial system is strong by regional standards. Commercial banks are the principal source of long-term corporate and project finance in Colombia. Loans rarely have a maturity in excess of five years. Unofficial private lenders play a major role in meeting the working capital needs of small and medium-sized companies. Only the largest of Colombia’s companies participate in the local stock or bond markets, with the majority meeting their financing needs either through the banking system, by reinvesting their profits, or through credit from suppliers.

Colombia’s central bank is charged with managing inflation and unemployment through monetary policy. Foreign banks are allowed to establish operations in the country, and must set up a Colombian subsidiary in order to do so. The Colombian central bank has a variety of correspondent banks abroad.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions on transferring funds associated with FDI. Foreign investment into Colombia must be registered with the central bank in order to secure the right to repatriate capital and profits. Direct and portfolio investments are considered registered when the exchange declaration for operations channeled through the official exchange market is presented, with few exceptions. The official exchange rate is determined by the central bank. The rate is based on the free market flow of the previous day. Colombia does not manipulate its currency to gain competitive advantages.

Remittance Policies

The government permits full remittance of all net profits regardless of the type or amount of investment. Foreign investments must be channeled through the foreign exchange market and registered with the central bank’s foreign exchange office within one year in order for those investments to be repatriated or reinvested. There are no restrictions on the repatriation of revenues generated from the sale or closure of a business, reduction of investment, or transfer of a portfolio. Colombian law authorizes the government to restrict remittances in the event that international reserves fall below three months’ worth of imports. International reserves have remained well above this threshold for decades.

Sovereign Wealth Funds

In 2012, Colombia began operating a sovereign wealth fund called the Savings and Stabilization Fund (FAE), which is administered by the central bank with the objective of promoting savings and economic stability in the country. Colombia is not a member of the International Forum of Sovereign Wealth Funds. The fund can administer up to 30 percent of annual royalties from the extractives industry. Its primary investments are in fixed securities, sovereign and quasi-sovereign debt (both domestic and international), and corporate securities, with just eight percent invested in stocks. The government transfers royalties not dedicated to the fund to other internal funds to boost national economic productivity through strategic projects, technological investments, and innovation. In 2020, the government authorized up to 80 percent of the FAE’s USD 3.9 billion in assets to be lent to the Fund for the Mitigation of Emergencies (FOME) created in response to the pandemic.

8. Responsible Business Conduct

In 2020, the Colombian government released its second National Action Plan on Business and Human Rights for the period 2020-2022, which responds to the UN Guiding Principles on Business and Human Rights and the OECD’s Guidelines for Multinational Enterprises. Colombia also adheres to the corporate social responsibility (CSR) principles outlined in the OECD Guidelines for Multinational Enterprises. CSR cuts across many industries and Colombia encourages public and private enterprises to follow OECD CSR guidelines. Beneficiaries of CSR programs include students, children, populations vulnerable to Colombia’s armed conflict, victims of violence, and the environment. Larger companies structure their CSR programs in accordance with accepted international principles. Companies in Colombia have been recognized on an international level for their CSR initiatives, including by the State Department.

Overall, Colombia has adequate environmental laws, is proactive at the federal level in enacting environmental protections, and does not waive labor or environmental regulations to attract investors. Colombian law also has provisions requiring consultations with indigenous communities before many large projects. However, the Colombian government struggles with enforcement, particularly in more remote areas. Geography, lack of infrastructure, and lack of state presence all play a role, as does a general shortage of resources in national and regional institutions. Environmental defenders face threats from narcotics traffickers, paramilitaries, and other illegal armed groups, particularly in areas with limited state presence. The Environmental Chapter of the CTPA requires Colombia to maintain and enforce environmental laws, protect biodiversity, and promote opportunities for public participation. Colombia participates in the Extractive Industries Transparency Initiative (EITI).

In parallel with its OECD accession, the Colombian government worked with the OECD in a series of assessments in order to develop and implement the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas, especially related to gold mining. The Colombian government faces challenges in formalizing illegal gold mining operations. Colombia ratified the Minamata Convention on Mercury in 2018 and banned the use of mercury in mining. It has committed to phase out mercury use from all other industries by 2023. Colombia is still determining how to enforce laws to achieve this goal.

Buyers, sellers, traders, and refiners of gold may wish to conduct additional due diligence as part of their risk management regimes to account for the influx of illegally-mined Colombian gold into existing supply chains. Throughout the country, Colombian authorities have taken some steps to dismantle illegal gold mining operations that are responsible for negative environmental, criminal, and human health impacts, and often employ forced labor. The Colombian government has focused its efforts on transnational criminal elements involved in the production, laundering, and sale of illegally-mined gold, and the fraudulent documentation that is used to obscure the origin of illegally-mined gold. Colombia is actively pursuing new policies, proposing new legislation, and changing mechanisms to enforce laws against illegal gold mining.

Colombia has not signed the Montreux Document. In 2020, its National Organization for Accreditation (ONAC) and Institute for Technical Standards and Certification (ICONTEC) began ISO 18788 compliance certification processes for private security companies.

Additional Resources 

Department of State

Department of Labor

9. Corruption

Corruption, and the perception of it, is a serious obstacle for companies operating or planning to invest in Colombia. Analyses of the business environment, such as the WEF Global Competitiveness Index, consistently cite corruption as a problematic factor, along with high tax rates, inadequate infrastructure, and inefficient government bureaucracy. Transparency International’s latest “Corruption Perceptions Index” ranked Colombia 92nd out of 180 countries assessed and assigned it a score of 39/100, a slight improvement from the year prior. Customs, taxation, and public works contracts are commonly-cited areas where corruption exists.

Colombia has adopted the OECD Convention on Combating Bribery of Foreign Public Officials and is a member of the OECD Anti-Bribery Committee. It also passed a domestic anti-bribery law in 2016. It has signed and ratified the UN Anticorruption Convention and adopted the OAS Convention against Corruption. The CTPA protects the integrity of procurement practices and criminalizes both offering and soliciting bribes to/from public officials. It requires both countries to make all laws, regulations, and procedures regarding any matter under the CTPA publicly available. Both countries must also establish procedures for reviews and appeals by any entities affected by actions, rulings, measures, or procedures under the CTPA.

Resources to Report Corruption

Useful resources and contact information for those concerned about combating corruption in Colombia include the following:

  • The Transparency and Anti-Corruption Observatory is an interactive tool of the Colombian government aimed at promoting transparency and combating corruption available at http://www.anticorrupcion.gov.co/ 
  • The Transparency and Anti-Corruption Observatory is an interactive tool of the Colombian government aimed at promoting transparency and combating corruption available at http://www.anticorrupcion.gov.co/  • The National Civil Commission for Fighting Corruption, or Comisión Nacional Ciudadana para la Lucha Contra la Corrupción (CNCLCC), was established by Law 1474 of 2011 to give civil society a forum to discuss and propose policies and actions to fight corruption in the country. Transparencia por Colombia is the technical secretariat of the commission. http://ciudadanoscontralacorrupcion.org/es/inicio 
  • The National Civil Commission for Fighting Corruption, or Comisión Nacional Ciudadana para la Lucha Contra la Corrupción (CNCLCC), was established by Law 1474 of 2011 to give civil society a forum to discuss and propose policies and actions to fight corruption in the country. Transparencia por Colombia is the technical secretariat of the commission. http://ciudadanoscontralacorrupcion.org/es/inicio 
  • The Presidential Secretariat of Transparency advises and assists the president to formulate, design, and coordinate the implementation of public policy about transparency and anti-corruption. http://wsp.presidencia.gov.co/secretaria-transparencia/Paginas/default.aspx/ 

Government Agency:
Secretary of Transparency
Calle 7 No.6-54, Bogota (+57)1 562 9300
contacto@presidencia.gov.co

Watchdog Organization:
Transparencia Por Colombia (local chapter of Transparency International)
Cra. 45A No. 93 – 61, Barrio La Castellana, Bogota
(+57)1 610 0822
comunicaciones@transparenciacolombia.org.co

Costa Rica

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Costa Rica actively courts FDI, placing a high priority on attracting and retaining high-quality foreign investment. There are some limitations to both private and foreign participation in specific sectors, as detailed in the following section.

PROCOMER and CINDE lead Costa Rica’s investment promotion efforts. CINDE has had great success over the last several decades in attracting and retaining investment in specific areas, currently services, advanced manufacturing, life sciences, light manufacturing, and the food industry. In addition, the Tourism Institute (ICT) attends to potential investors in the tourism sector. CINDE, PROCOMER, and ICT are strong and effective guides and advocates for their client companies, prioritizing investment retention and maintaining an ongoing dialogue with investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

Costa Rica recognizes and encourages the right of foreign and domestic private entities to establish and own business enterprises and engage in most forms of remunerative activity. The exceptions are in sectors that are reserved for the state (legal monopolies – see #7 below “State Owned Enterprises, first paragraph) or that require participation of at least a certain percentage of Costa Rican citizens or residents (electrical power generation, transport services, professional services, and aspects of broadcasting). Properties in the Maritime Zone (from 50 to 200 meters above the mean high-tide mark) may only be leased from the state and with residency requirements. In the areas of medical services, telecommunications, finance and insurance, state-owned entities dominate, but that does not preclude private sector competition. Costa Rica does not have an investment screening mechanism for inbound foreign investment, beyond those applied under anti-money laundering procedures. U.S. investors are not disadvantaged or singled out by any control mechanism or sector restrictions; to the contrary, U.S. investors figure prominently among the various major categories of FDI.

Other Investment Policy Reviews

The OECD accession process for Costa Rica, which began in 2015, resulted in a wide swath of legal and technical changes across the economy that should help the economy function in a more just and competitive manner. Toward that goal, the OECD will continue to monitor Costa Rican progress in a number of areas and will publish periodic progress updates and sector analysis that may be useful to prospective investors. A comprehensive review of the Costa Rican economy was published by the OECD at the conclusion of the accession process, which offered valuable insights into challenges faced by the economy, “OECD Economic Surveys Costa Rica 2020: https://www.oecd.org/countries/costarica/oecd-economic-surveys-costa-rica-2020-2e0fea6c-en.htm  . In the same context, the OECD offers a review of international investment in Costa Rica: https://www.oecd.org/countries/costarica/OECD-Review-of-international-investment-in-Costa-Rica.pdf .

Additionally, in recent years the OECD has published a number of reports focused on specific aspects of economic growth and investment policy – several of these reports are referenced elsewhere in this report. For the index of OECD reports on Costa Rica, go to https://www.oecd.org/countries/costarica/3/ .

The World Trade Organization (WTO) conducted its 2019 “Trade Policy Review” of Costa Rica in September of that year. Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals: https://www.wto.org/english/tratop_e/tpr_e/tp492_e.htm  .

The United Nations Conference on Trade and Development (UNCTAD) produced in 2019 the report Overview of Economic and Trade Aspects of Fisheries and Seafood Sectors in Costa Rica: https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2583  .

https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2583  .

Business Facilitation

Costa Rica’s single-window business registration website, crearempresa.go.cr  , brings together the various entities – municipalities and central government agencies – which must be consulted in the process of registering a business in Costa Rica. A new company in Costa Rica must typically register with the National Registry (company and capital registry), Internal Revenue Directorate of the Finance Ministry (taxpayer registration), National Insurance Institute (INS) (basic workers’ comp), Ministry of Health (sanitary permit), Social Security Administration (CCSS) (registry as employer), and the local Municipality (business permit). Legal fees are the biggest single business start-up cost, as all firms registered to individuals must hire a lawyer for a portion of the necessary paperwork. Crearempresa is rated 17th of 33 national business registration sites evaluated by “Global Enterprise Registration” ( www.GER.co ), which awards Costa Rica a relatively lackluster rating because Crearempresa has little payment facility and provides only some of the possible online certificates.

Traditionally, the Costa Rican government’s small business promotion efforts have tended to focus on participation by women and underserved communities.  The National Institute for Women (INAMU), National Training Institute (INA), the Ministry of Economy (MEIC), and PROCOMER through its supply chain initiative have all collaborated extensively to promote small and medium enterprise with an emphasis on women’s entrepreneurship. In 2020, INA launched a network of centers to support small and medium-sized enterprises based upon the U.S. Small Business Development Center (SBDC) model.

Within the World Bank’s “Doing Business” evaluation for 2020, http://www.doingbusiness.org , Costa Rica is ranked 144/190 for “starting a business”, with the process taking 10 days.

Outward Investment

The Costa Rican government does not promote or incentivize outward investment. Neither does the government discourage or restrict domestic investors from investing abroad.

5. Protection of Property Rights

Real Property

The laws governing investments in land, buildings, and mortgages are generally transparent. Secured interests in both chattel and real property are recognized and enforced. Mortgage and title recording are mandatory and the vast majority of land in Costa Rica has clear title. However, the National Registry, the government entity that records property titles, has been successfully targeted on occasion with fraudulent filing, which has led in some cases to overlapping title to real property. Costa Rican law allows long-time occupants of a property belonging to someone else (i.e. squatters) to eventually take legal possession of that property if unopposed by the property owner. Potential investors in Costa Rican real estate should also be aware that the right to use traditional paths is enshrined in law and can be used to obtain court-ordered easements on land bearing private title; disputes over easements are particularly common when access to a beach is an issue. Costa Rica is ranked 49th of 190 for ease of “registering property” within the World Bank 2020 Doing Business Report.

Foreigners are subject to the same land lease and acquisition laws and regulations as Costa Ricans with the exception of concessions within the Maritime Zone (Zona Maritima Terrestre – ZMT). Almost all beachfront is public property for a distance of 200 meters from the mean high tide line, with an exception for long-established port cities and a few beaches such as Jaco. The first 50 meters from the mean high tide line cannot be used for any reason by private parties. The next 150 meters, also owned by the state, is the Maritime Zone and can only be leased from the local municipalities or the Costa Rican Tourism Institute (ICT) for specified periods and particular uses, such as tourism installation or vacation homes. Concessions in this zone cannot be given to foreigners or foreign-owned companies.

Intellectual Property Rights

Costa Rica’s legal structure for protecting intellectual property rights (IPR) is quite strong, but enforcement is sporadic and does not always get the attention and resources required to be effective. In the 2019 United States Trade Representative (USTR) Special 301 Report, USTR noted the substantial progress made by Costa Rica in protecting IPR. As a result, USTR did not include Costa Rica in the 2020 or 2021 Special 301 reports. Costa Rica was not listed in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

Costa Rica is a signatory of many major international agreements and conventions regarding intellectual property.  Building on the existent regulatory and legal framework, the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) required Costa Rica to strengthen and clarify its IPR regime further, with several new IPR laws added to the books in 2008.  Prior to that, the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) took effect in Costa Rica on January 1, 2000.  In 2002, Costa Rica ratified the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty and the WIPO Copyright Treaty.

The IP Registry presented two bills to the General Directorate of the National Registry on January 12, 2021 for approval before sending to the National Assembly for final approval. In 2020, the IP Registry drafted a bill that will include the new proposed reform of the Law on Invention Patents, Industrial Designs, and Utility Models.  This bill will adjust the current law to international standards to make it a more useful tool for the promotion of innovation in the country. Additionally, the National Registry merged the Law on Copyrights and Related Rights and the Law on Procedures for the Enforcement of Intellectual Property Rights into a single draft bill, with the aim of incorporating the provisions of the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled and the Beijing Treaty on Audiovisual Performances.

On June 22, 2020, the General Directorate of the National Registry merged the Registry of Industrial Property and the Registry of Copyright and Related Rights into a single Registry of Intellectual Property, improving the National Registry’s efficiency and fulfilling a reform called for in the National Registry Law from 2010.

While online piracy remains a concern for the country, in February 2019, Costa Rica modified the existing regulation on internet service providers (ISPs) to shorten significantly the 45 days previously allowed for notice and takedown of pirated online content, creating an expeditious safe harbor system for ISPs in Costa Rica. To meet a longstanding CAFTA-DR requirement mandating government use of legal software, in March 2020, the National Registry launched LegalSoft, a new software program to track software licenses and renewal dates across 95 government institutions, with all agencies set to report by July 2020, followed by external audits to verify implementation. With the tracking program now in place, Costa Rica has a systematic solution for monitoring and ensuring the purchase and use of legal software.

In August 2020, Costa Rica’s Intellectual Property Registry launched a WIPO online platform that will allow interested parties to submit online applications to register trademarks.  The online service has improved efficiency and encouraged registrations from small-to-medium-sized companies across the country. During 2019, the National Registry of Industrial Property announced implementation of TMview and DesignView, search tools that allow users to consult trademarks and industrial design data.

The Costa Rican government does not release official statistics on the seizure of counterfeit goods, but the Chamber of Commerce compiles statistics from Costa Rican government sources: http://observatorio.co.cr/  In 2020, Costa Rica’s Economic Crimes Prosecutor investigated 14 IPR cases, down from the totals in the last four years. As in years past, prosecutors ultimately dismissed several cases due to lack of interest, collaboration, and follow-up by the representatives of trademark rights holders.  Government authorities complained that the lack of response by trademark representatives is a recurring behavior dating back to at least 2016 and may explain the drop in IPR cases.  In 2020, the Prosecutor’s Office established a specialized cybercrime unit with the purpose of improving the country’s response toward computer-oriented crimes, including copyrights infringements. The Costa Rican government publishes statistics on IPR criminal enforcement at http://www.comex.go.cr/estad percentC3 percentADsticas-y-estudios/otras-estad percentC3 percentADsticas/ .

On September 4, 2019, Costa Rican Customs issued an executive decree titled “Contact of the Representatives of Intellectual Property Rights for Enforcement Issues” establishing a formal customs recordation system for trademarks that allows customs officers to make full use of their ex officio authority to inspect and detain goods. Under the decree, customs offices have the power to include new trademark rights holders in a formal database for use by customs officials in the field. As of 2020, 150 trademarks are included in this database.

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

Resources for Rights Holders

Contact at the U.S. Embassy in Costa Rica:

Attention: Investment Climate Statement
Economics Section
Embassy San Jose, Costa Rica
2519-2000
SanJoseEcon@state.gov 

6. Financial Sector

Capital Markets and Portfolio Investment

The Costa Rican government’s general attitude towards foreign portfolio investment is cautiously welcoming, seeking to facilitate the free flow of financial resources into the economy while minimizing the instability that might be caused by the sudden entry or exit of funds. The securities exchange (Bolsa Nacional de Valores) is small and is dominated by trading in bonds. Stock trading is of limited significance and involves less than 10 of the country’s larger companies, resulting in an illiquid secondary market. There is a small secondary market in commercial paper and repurchase agreements. The Costa Rican government has in recent years explicitly welcomed foreign institutional investors purchasing significant volumes of Costa Rican dollar-denominated government debt in the local market. The securities exchange regulator (SUGEVAL) is generally perceived to be effective.

Costa Rica accepted the obligations of IMF Article VIII, agreeing not to impose restrictions on payments and transfers for current international transactions or engage in discriminatory currency arrangements, except with IMF approval. There are no controls on capital flows in or out of Costa Rica or on portfolio investment in publicly traded companies. Some capital flows are subject to a withholding tax (see section on Foreign Exchange and Remittances). Within Costa Rica, credit is largely allocated on market terms, although long-term capital is scarce. Favorable lending terms for USD-denominated loans compared to colon-denominated loans have made USD-denominated mortgage financing popular and common. Foreign investors are able to borrow in the local market; they are also free to borrow from abroad, although withholding tax may apply.

Money and Banking System

Costa Rica’s financial system boasts a relatively high financial inclusion rate, estimated by the Central Bank by August 2020 at 81.5 percent (the percentage of adults over the age of 15 holding a bank account). Non-resident foreigners may open what are termed “simplified accounts” in Costa Rican financial institutions, while resident foreigners have full access to all banking services.

The banking sector is healthy, although the 2020 non-performing loan ratio of 2.46 percent of total loans as of December 2020 would be significantly higher if not for Covid-19 temporary regulatory measures allowing banks to readjust loans. The state-owned commercial banks had a higher 3.24 percent average. The country hosts a large number of smaller private banks, credit unions, and factoring houses, although the four state-owned banks are still dominant, accounting for just under 50 percent of the country’s financial system assets. Consolidated total assets of those state-owned banks were approximately USD 29.5 billion in December 2020, while consolidated total assets of the eleven private commercial and cooperative banks were about USD 21.5 billion. Combined assets of all bank groups (public banks, private banks and others) were approximately USD 63.1 billion as of December 2020. As of February 2020, Costa Rica adopted a deposit guarantee fund and bank resolution regime for the financial system, ending the previous much-criticized situation in which only publicly owned banks benefitted from de-facto state guarantees.

Costa Rica’s Central Bank performs the functions of a central bank while also providing support to the four autonomous financial superintendencies (Banking, Securities, Pensions and Insurance) under the supervision of the national council for the supervision of the financial system (CONASSIF). The Central Bank developed and operates the financial system’s transaction settlement and direct transfer mechanism “SINPE” through which clients transfer money to and from accounts with any other account in the financial system. The Central Bank’s governance structure is strong, having benefitted in 2019 from reforms that increase the Bank’s autonomy from the Executive Branch.

Foreign banks may establish both full operations and branch operations in the country under the supervision of the banking regulator SUGEF. The Central Bank has a good reputation and has had no problem maintaining sufficient correspondent relationships. Costa Rica is steadily improving its ability to ensure the efficacy of anti-money laundering and anti-terrorism finance. The Costa Rican financial sector in broad terms appears to be satisfied to date with the available correspondent banking services.

The OECD 2020 report “review of the financial system” for Costa Rica is an excellent resource for those seeking more detail on the current state of Costa Rica’s financial system: https://www.oecd.org/countries/costarica/Costa-Rica-Review-of-Financial-System-2020.pdf .

Foreign Exchange and Remittances

Foreign Exchange

No restrictions are imposed on expatriation of royalties or capital except when these rights are otherwise stipulated in contractual agreements with the government of Costa Rica. However, Costa Rican sourced rents and benefits remitted overseas, including royalties, are subject to a withholding tax (see below). When such remittances are paid to a parent company or related legal entity, transfer pricing rules and certain limitations apply.

There are no restrictions on receiving, holding, or transferring foreign exchange. There are no delays for foreign exchange, which is readily available at market clearing rates and readily transferable through the banking system. Dollar bonds and other dollar instruments may be traded legally. Euros are increasingly available in the market. Costa Rica has a floating exchange rate regime in which the Central Bank is ready to intervene, if necessary, to smooth any exchange rate volatility.

Remittance Policies

Costa Rica does not have restrictions on remittances of funds to any foreign country; however, all funds remitted are subject to applicable withholding taxes that are paid to the country’s tax administration.  The default level of withholding tax is 30 percent with royalties capped at 25 percent, dividends at 15 percent, professional services at 25 percent, transportation and communication services at 8.5 percent, and reinsurance at 5.5 percent (different withholding taxes also apply for other types of services).  By Costa Rican law, in order to pay dividends, procedures need to be followed that include being in business in the corresponding fiscal year and paying all applicable local taxes.  Those procedures for declaring dividends in effect put a timing restriction on them.  Withholding tax does not apply to payment of interest to multilateral and bilateral banks that promote economic and social growth, and companies located in free trade zones pay no dividend withholding tax.  Spain, Germany, and Mexico have double-taxation tax treaties with Costa Rica, lowering the withholding tax on dividends paid by companies from those countries.

Sovereign Wealth Funds

Costa Rica does not have a Sovereign Wealth Fund.

8. Responsible Business Conduct

Corporations in Costa Rica, particularly those in the export and tourism sectors, generally enjoy a positive reputation within the country as engines of growth and practitioners of Responsible Business Conduct (RBC). The Costa Rica government actively highlights its role in attracting high-tech companies to Costa Rica; the strong RBC culture that many of those companies cultivate has become part of that winning package. Large multinational companies commonly pursue RBC goals in line with their corporate goals and have found it beneficial to publicize RBC orientation and activities in Costa Rica. Many smaller companies, particularly in the tourism sector, have integrated community outreach activities into their way of doing business. There is a general awareness of RBC among both producers and consumers in Costa Rica.

Multinational enterprises in Costa Rica have not been associated in recent decades in any systematic or high-profile way with alleged human or labor rights violations. The Costa Rican government maintains and enforces laws with respect to labor and employment rights, consumer protection and environmental protection. Costa Rica has no legal mineral extraction industry with its accompanying issues, but illegal small scale gold mining, particularly in the north of the country, is a focal point of serious environmental damage, organized crime, and social disruption. Costa Rica encourages foreign and local enterprises to follow generally accepted RBC principles such as the OECD Guidelines for Multinational Enterprises (MNE) and maintains a national contact point for OECD MNE guidelines within the Ministry of Foreign Trade (see https://www.comex.go.cr/punto-nacional-de-contacto/  or http://www.oecd.org/investment/mne/ncps.htm ).

Costa Rica has been a participant since 2011 in the Montreux Document reaffirming the obligations of states regarding private military and security companies during armed conflict.

Additional Resources

Department of State

Department of Labor

9. Corruption

Costa Rica has laws, regulations, and penalties to combat corruption. Though the resources available to enforce those laws are limited, Costa Rica’s institutional framework is strong, such that those cases that are prosecuted are generally perceived as legitimate. Anti-corruption laws extend to family members of officials, contemplate conflict-of-interest in both procurement and contract award, and penalizes bribery by local businessmen of both local and foreign government officials. Public officials convicted of receiving bribes are subject to prison sentences up to ten years, according to the Costa Rican Criminal Code (Articles 347-360). Entrepreneurs may not deduct the costs of bribes or any other criminal activity as business expenses. In recent decades, Costa Rica saw several publicized cases of firms prosecuted under the terms of the U.S. Foreign Corrupt Practices Act.

Costa Rica ratified the Inter-American Convention Against Corruption in 1997. This initiative of the OECD and the Organization of American States (OAS) obligates subscribing nations to implement criminal sanctions for corruption and implies a series of follow up actions: http://www.oas.org/juridico/english/cri.htm . Costa Rica also ratified the UN Anti-Corruption Convention in March 2007, has been a member of the Open Government Partnership (OGP) since 2012, and as of July 2017 is a party to the OECD Convention on Combatting Bribery of Foreign Public Officials.

The Costa Rican government has encouraged civil society interest in good governance, open government and fiscal transparency, with a number of NGO’s operating unimpeded in this space. While U.S. firms do not identify corruption as a major obstacle to doing business in Costa Rica, some have made allegations of corruption in the administration of public tenders and in approvals or timely processing of permits. Developers of tourism facilities periodically cite municipal-level corruption as a problem when attempting to gain a concession to build and operate in the restricted maritime zone.

For further material on anti-bribery and corruption in Costa Rica, see the OECD study: https://www.oecd.org/countries/costarica/costa-rica-has-improved-its-foreign-bribery-legislation-but-must-strengthen-enforcement-and-close-legal-loopholes.htm 

Also on the OECD website, information relating to Costa Rica’s membership in the OECD anti-bribery convention: https://www.oecd.org/countries/costarica/costarica-oecdanti-briberyconvention.htm 

Resources to Report Corruption

Contact within government Anti-Corruption Agency:

Name: Armando López Baltodano
Title: Procurador Director de la Area de la Etica Publica, PGR
Organization: Procuraduria General de la Republica (PGR)
Address: Avenida 2 y 6, Calle 13. San Jose, Costa Rica.
Telephone Number: 2243-8330, 2243-8321
Email Address: evelynhk@pgr.go.cr 

Contact at “watchdog” organization:

Evelyn Villarreal F.
Asociación Costa Rica Íntegra
Tel:. (506) 8355 3762
Email 1: evelyn.villarreal@cr.transparency.org 
Email 2: crintegra.vice@gmail.com 

Dominica

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Dominica strongly encourages foreign direct investment, particularly in industries that create jobs, earn foreign currency, and have a positive impact on local citizens.

Through the Invest Dominica Authority (IDA), the government instituted a number of investment incentives for businesses considering locating in Dominica.  Government policies provide liberal tax holidays, duty-free import of equipment and materials, exemption from value added tax on some capital investments, and withholding tax exemptions on dividends, interest payments, and some external payments and income.  The IDA additionally provides support to approved citizenship by investment (CBI) projects.

In late December 2020, the IDA announced plans to launch a new Investment Promotion Strategy in 2021.  The new strategy will focus on four broad areas: agriculture and agri-business, renewable energy, tourism and knowledge services such as business processing operations.  Other sectors include film, music, and video production, manufacturing, bulk water export and bottled water operations, medical and nursing schools, and English language training services.  The government continuously reviews these sectors and has signaled that it is also willing to consider additional sectors.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign control in Dominica.  Foreign investment in Dominica is not subject to any restrictions, and foreign investors are entitled to receive the same treatment as nationals of Dominica.  Foreign investors are entitled to hold up to 100 percent of their investment.  The only restriction is the requirement to obtain an Alien Landholders License for foreign investors seeking to purchase property for residential or commercial purposes.  Local enterprises generally welcome joint ventures with foreign investors in order to access technology, expertise, markets, and capital.

Other Investment Policy Reviews

The OECS, of which Dominica is a member, has not conducted a World Trade Organization (WTO) trade policy review since 2014.

Business Facilitation

The IDA is Dominica’s main business facilitation unit.  It facilitates foreign direct investment into priority sectors and advises the government on the formation and implementation of policies and programs to attract investment in Dominica.  The IDA provides business support services and market intelligence to all investors.  It offers an online tool useful for navigating laws, rules, procedures, and registration requirements for foreign investors.  Its website is http://investdominica.com.

All potential investors applying for government incentives must submit their proposals for review by the IDA to ensure the project is consistent with the national interest and provides economic benefits to the country.

The Companies and Intellectual Property Office (CIPO) maintains an e-filing portal for most of its services, including company registration on its website.  However, this only allows for the preliminary processing of applications prior to the investor physically making a payment at the Supreme Court office.  Investors are advised to seek the advice of a local attorney prior to starting the process.  Further information is available at http://www.cipo.gov.dm.

The World Bank’s Doing Business Report for 2020 ranks Dominica 71st out of 190 countries in the ease of starting a business.  It takes five procedures and about 12 days to complete the process.  The general practice is to retain an attorney who prepares all the relevant incorporation documents.  A business must register with CIPO, the Tax Authority, and the Social Services Institute.

Outward Investment

There is no restriction on domestic investors seeking to do business abroad.  Local companies in Dominica are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.

5. Protection of Property Rights

Real Property

Civil law protects physical property and mortgage claims.  There are some special license requirements for the acquisition of land, development of buildings, and expansion of existing construction, and special standards for various aspects of the tourism industry.  Individuals or corporate bodies who are not citizens and who are seeking to acquire land require an Alien Landholders License prior to the execution of transactions, depending upon the amount of land in question.  A foreign national may hold less than one acre of land for residential purposes or less than three acres for commercial purposes without obtaining an alien landholding license.

If more land is required then a license must be obtained, and the applicant must pay a fee of $2,220 (6,000 Eastern Caribbean dollars) to the Office of the Accountant-General.  Applicants must meet all the submission requirements before Cabinet can consider granting the license.  Failure to apply for the license will result in a penalty of $7,400 (20,000 Eastern Caribbean dollars).  Upon acquiring land under Section 5 for an approved development, foreign investors must apply for development permission under the Physical Planning Act within six months of acquiring the land and must start construction of the approved development within one year of receipt of development permission.

Dominica is ranked 179th of 190 countries for ease of registering property in the World Bank Doing Business Report 2020.  It takes about 125 days to complete the five necessary procedures and the cost is about 13.3 percent of the property value.  The report describes the procedure for purchasing and registering property in Dominica.

If property legally purchased is unoccupied for over twelve years, property ownership can revert to other owners, such as squatters.  This was affirmed by the CCJ in a 2019 ruling.

Intellectual Property Rights

Dominica has a legislative framework supporting its commitment to the protection of intellectual property rights (IPR).  While the legal structures governing IPR are generally adequate, enforcement could be strengthened.  The Attorney General is responsible for the administration of IPR laws.  The Companies & Intellectual Properties Office (CIPO) registers patents, trademarks, and service marks.

Dominica is signatory to the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, and the Berne Convention for the Protection of Literary and Artistic Works.  It is also a member of the UN World Intellectual Property Organization (WIPO).

Article 66 of the Revised Treaty of Chaguaramas (2001) establishing the CSME commits all 15 members to implement IPR protection and enforcement.  The CARIFORUM-EU EPA contains the most detailed obligations regarding IPR in any trade agreement to which Dominica is party.  The CARIFORUM-EU EPA recognizes the protection and enforcement of IPR.  Article 139 of the CARIFORUM-EU EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties, and of the [WTO] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).”

The Comptroller of Customs of Dominica spearheads the enforcement of IPR, which includes the detention, seizure, and forfeiture of goods.  The Customs and Excise Department investigates customs offenses and administers fines and penalties.

Dominica is not included in the United States Trade Representative (USTR) 2021 Special 301 Report or the 2020 USTR Review of Notorious Markets for Counterfeiting and Piracy.

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

6. Financial Sector

Capital Markets and Portfolio Investment

Dominica is a member of the ECCU.  As such, it is a member of the Eastern Caribbean Securities Exchange (ECSE) and the Regional Government Securities Market.  The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories.  In 2020, the ECSE listed 155 securities, comprising 135 sovereign debt instruments, 13 equities, and seven corporate debt securities.  Market capitalization stood at $1.8 billion. Dominica is open to portfolio investment.

Dominica has accepted the obligations of Article VIII of the International Monetary Fund (IMF) Agreement, Sections 2, 3, and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  Dominica does not normally grant foreign tax credits except in the case of taxes paid in a British Commonwealth country that grants similar relief for Dominica taxes or where an applicable tax treaty provides a credit.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, and trade credits and other accounts receivable that establish a claim for repayment.

Money and Banking System

The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act.  The Act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters. Dominica is a signatory to this agreement and the ECCB controls Dominica’s currency and regulates its domestic banks.

The Banking Act is a harmonized piece of legislation across the ECCU.  The Minister of Finance usually acts in consultation with, and on the recommendation of, the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Domestic and foreign banks can establish operations in Dominica.  The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business.  The ECCB regulates financial institutions.  As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.  In its latest annual report, the ECCB listed the commercial banking sector in Dominica as stable.  Assets of commercial banks totaled $781.8 million (2.1 billion Eastern Caribbean dollars) at the end of 2019. Dominica is well served by bank and non-financial institutions.  There are minimal alternative financial services.

The Caribbean region has witnessed a withdrawal of correspondent banking services by the U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

In 2019, the ECCB launched an 18-month financial technology pilot to launch a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc.  An accompanying mobile application, DCash was officially launched on March 31, 2021 in four pilot countries.  The DCash pilot phase will run for 12 months.  The pilot program is expected to become operational in Dominica later in the year.  The digital Eastern Caribbean currency will operate alongside physical Eastern Caribbean currency.  Dominica does not have any specific legislation to regulate cryptocurrencies.

Foreign Exchange and Remittances

Foreign Exchange

Dominica is a member of the ECCU and the ECCB.  The currency of exchange is the Eastern Caribbean dollar (denoted as XCD).  As a member of the OECS, Dominica has a fully liberalized foreign exchange system.  The XCD has been pegged to the United States dollar at a rate of 2.7 to $1.00 since 1976.  As a result, the XCD does not fluctuate, creating a stable currency environment for trade and investment in Dominica.

Remittance Policies

Companies registered in Dominica have the right to repatriate all capital, royalties, dividends, and profits free of all taxes or any other charges on foreign exchange transactions.  There are no restrictions on the repatriation of dividends for totally foreign-owned firms.  However, a mixed foreign-domestic company may repatriate profits to the extent of its foreign participation.

As a member of the OECS, there are no exchange controls in Dominica and the invoicing of foreign trade transactions are allowed in any currency.  Importers are not required to make prior deposits in local funds and export proceedings do not have to be surrendered to government authorities or to authorized banks.  There are no controls on transfers of funds.  Dominica is a member of the Caribbean Financial Action Task Force (CFATF).

Sovereign Wealth Funds

Neither the Government of Dominica, nor the ECCB, of which Dominica is a member, maintains a sovereign wealth fund.

8. Responsible Business Conduct

The private sector is involved in projects that benefit society, including support of environmental, social, and cultural causes.  The government encourages philanthropy, but does not have regulations in place to mandate such activities by private company.

Additional Resources

Department of State

Department of Labor

9. Corruption

The law provides criminal penalties for corruption by officials, but the government implemented the law inconsistently.  According to civil society representatives and members of the political opposition, officials sometimes engaged in corrupt practices with impunity.  Local media and opposition leadership continued to raise allegations of corruption within the government, including in the Citizenship by Investment program.  Dominica acceded to the United Nations Convention Against Corruption in 2010.  The country is party to the Inter-American Convention against Corruption.

The Integrity in Public Office Act, 2003 and the Integrity in Public Office (Amendment) Act 2015 require government officials to account annually for their income, assets, and gifts.  All offenses under the act, including the late filing of declarations, are criminalized.  The Integrity Commission was established and functions under this Act.  The Integrity Commission’s mandate and decisions can be found at http://www.integritycommission.gov.dm.  Generally, the Integrity Commission reports on late submissions and on inappropriately completed forms but does not share financial disclosures of officials with the Office of the Director of Public Prosecutions. Additionally, the Integrity Commission has not updated documents on its website since 2015.

The Director of Public Prosecutions is responsible for prosecuting corruption offenses, but it lacks adequate personnel and resources to handle complicated money laundering and public corruption cases.

Resources to Report Corruption

Steve Hyacinth
Chairman, Integrity Commission
Cross Street, Roseau, Dominica
Tel: 1-767-266-3436
Email: integritycommission@dominica.gov.dm

Dominican Republic

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Dominican Republic presents both opportunities and challenges for foreign investment. The government strongly promotes inward FDI and has prioritized creating a sound enabling environment for foreign investors. While the government has established formal programs to attract FDI, a lack of clear rules and uneven enforcement of existing rules can lead to difficulties.

The Dominican Republic provides tax incentives for investment in tourism, renewable energy, film production, Haiti-Dominican Republic border development, and the industrial sector. The country is also a signatory of CAFTA-DR, which mandates non-discriminatory treatment, free transferability of funds, protection against expropriation, and procedures for the resolution of investment disputes. However, some foreign investors indicate that the uneven enforcement of regulations and laws, or political interference in legal processes, creates difficulties for investment.

There are two main government agencies responsible for attracting foreign investment, the Export and Investment Center of the Dominican Republic (CEI-RD) and the National Council of Free Trade Zones for Export (CNZFE). CEI-RD promotes foreign investment and aids prospective foreign investors with business registration, matching services, and identification of investment opportunities. It publishes an annual “Investment Guide of the Dominican Republic,” highlighting many of the tools, incentives, and opportunities available for prospective investors. The CEI-RD also oversees “ProDominicana,” a branding and marketing program for the country launched in 2017 that promotes the DR as an investment destination and exporter. CNZFE aids foreign companies looking to establish operations in the country’s 75 free trade zones for export outside Dominican territory.

There are a variety of business associations that promote dialogue between the government and private sector, including the Association of Foreign Investor Businesses (ASIEX).

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign Investment Law No. 16-95 states that unlimited foreign investment is permitted in all sectors, with a few exceptions for hazardous materials or materials linked to national security. Private entities, both foreign and domestic, have the right to establish and own business enterprises and engage in all legal remunerative activity. Foreign companies are not restricted in their access to foreign exchange, there are no requirements that foreign equity be reduced over time or that technology be transferred according to defined terms, and the government imposes no conditions on foreign investors concerning location, local ownership, local content, or export requirements. See Section 3 Legal Regime for more information.

The Dominican Republic does not maintain a formalized investment screening and approval mechanism for inbound foreign investment. Details on the established mechanisms for registering a business or investment are elaborated in the Business Facilitations section below.

Other Investment Policy Reviews

The Dominican Republic has not been reviewed recently by multilateral organizations regarding investment policy. The most recent reviews occurred in 2015. This included a trade policy review by the World Trade Organization (WTO) and a follow-up review by the United Nations Conference on Trade and Development (UNCTAD) regarding its 2009 investment policy recommendations.

2009 UNCTAD – https://unctad.org/en/pages/PublicationArchive.aspx?publicationid=6343 

2015 WTO – https://www.wto.org/english/tratop_e/tpr_e/s319_e.pdf

2015 UNCTAD – https://unctad.org/en/PublicationsLibrary/diaepcb2016d2_en.pdf

Business Facilitation

Foreign investment does not require any prior approval in the Dominican Republic, but once made it must be registered with the CEI-RD. Investments in free zones must be registered with the CNZFE, which will notify the CEI-RD.  Foreign investment registration is compulsory, but failure to do so is not subject to any sanction.  In the World Bank’s “Doing Business” report, the Dominican Republic’s overall ranking for ease of doing business fell from 102 in 2019 to 115 in 2020, reflecting stagnant performance in several of the indicator categories.

Law No. 16-95 Foreign Investment, Law No. 98-03 on the Creation of the CEI-RD, and Regulation 214-04 govern foreign investment in the Dominican Republic and require an interested foreign investor to file an application form at the offices of CEI-RD within 180 calendar days from the date on which the foreign investment took place. The required documents include the application for registration, containing information on the invested capital and the area of the investment; proof of entry into the country of the foreign capital or physical or tangible goods; and documents of commercial incorporation or the authorization of operation of a branch office through the setting up of legal domicile in the country.  The reinvestment of profits (in the same or a different firm) must be registered within 90 days. Once the documents have been approved, the CEI-RD issues a certificate of registration within 15 business days subject to the payment of a fee which varies depending on the amount of the investment.

Lack of registration does not affect the validity of the foreign investment; but the fact that it is needed to fulfil various types of procedures, makes registration necessary in practice. For example, the registration certificate has to be presented to repatriate profits or investment in the event of sale or liquidation and to purchase foreign exchange from the authorized agencies for transfers abroad, as well as to process the residency of the investor.  In April 2021, CEI-RD launched an online Registry of Foreign Direct Investment, which aims to streamline and make the registration processes more transparent to investors. For more information on becoming an investor or exporter, visit the CEI-RD ProDominicana website at https://prodominicana.gob.do .

The Dominican Republic has a single-window registration website for registering a limited liability company (SRL by its Spanish acronym) that offers a one-stop shop for registration needs ( https://www.formalizate.gob.do/ ). Foreign companies may use the registration website. However, this electronic method of registration is not widely used in practice and consultation with a local lawyer is recommended for company registrations. According to the “Doing Business” report, starting a SRL in the Dominican Republic is a seven-step process that requires 16.5 days. However, some businesses advise the full incorporation process can take two to three times longer than the advertised process.

In order to set up a business in a free trade zone, a formal request must be made to the CNZFE, the entity responsible for issuing the operating licenses needed to be a free zone company or operator. CNZFE assesses the application and determines its feasibility. For more information on the procedure to apply for an operating license, visit the website of the CNZFE at http://www.cnzfe.gov.do .

Outward Investment

There are no legal or government restrictions on Dominican investment abroad, although the government does little to promote it. Outbound foreign investment is significantly lower than inbound investment. The largest recipient of Dominican outward investment is the United States.

5. Protection of Property Rights

Real Property

The Dominican Constitution guarantees the right to own private property and provides that the state shall promote the acquisition of property, especially titled real property, however, a patchwork history of land titling systems and sometimes violent political change has complicated land titling in the Dominican Republic. By law, all land must be registered, and that which is not registered is considered state land. There are no restrictions or specific regulations on foreigners or non-resident owners of land.

In 2008, the country transitioned to a new system based on GPS coordinates and has been working towards establishing clear titles, but, in March 2021, an industry source estimated that only 25 percent of all land titles were clear. The government advises that investors are ultimately responsible for due diligence and recommends partnering with experienced attorneys to ensure that all documentation, ranging from title searches to surveys, have been properly verified and processed.

Land tenure insecurity has been fueled by government land expropriations, institutional weaknesses, lack of effective law enforcement, and local community support for land invasions and squatting. Political expediency, corruption, and fraud have all been cited as practices that have complicated the issuance of titles or respect for the rights of existing title holders. Moreover, while on the decline, long-standing titling practices, such as issuing provisional titles that are never completed or providing titles to land to multiple owners without requiring individualization of parcels, have created ambiguity in property rights and undermined the reliability of existing records.

The Dominican Republic’s rank for ease of registering property in the 2020 World Bank’s “Doing Business” report improved from 77 to 74 (out of 190 countries). Registering property in the Dominican Republic requires 6 steps, an average of 33 days, and payment of 3.4 percent of the land value as a registration fee. In the last decade, the Dominican government received a $10-million, Inter-American Development Bank (IDB) loan to modernize its property title registration process, address deficiencies and gaps in the land administration system, and strengthen land tenure security. The project involved digitization of land records, decentralization of registries, establishment of a fund to compensate people for title errors, separation of the legal and administrative functions within the agency, and redefinition of the roles and responsibilities of judges and courts.

Mortgages and liens do exist in the Dominican Republic. The Title Registry Office maintains the system for recording titles, as well as a complementary registry of third-party rights, such as mortgages, liens, easements, and encumbrances. Property owners maintain ownership of legally purchased property whether unoccupied or occupied by squatters, however, it can be difficult and costly to enforce private rights against squatters. This may in part be due to a provision in the law known as “adverse possession,” which allows squatters to acquire legal ownership of land without a title (thereby state-owned).

Intellectual Property Rights

The Dominican Republic has strong intellectual property rights (IPR) laws and is meeting its IP obligations under international agreements such as the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Nevertheless, weak institutions and limited enforcement can present challenges for investors. Under the Abinader administration, the country’s posture toward the protection and enforcement of IPR appears to have improved. Still, illicit and counterfeit goods, as well as online and signal piracy, are common and continue to present challenges for authorities. In the Dominican Republic, illicit or counterfeit goods include the full gamut of fashion apparel and accessories, electronics, pharmaceuticals, cosmetics, cigarettes, and alcohol.

Several IP authorities in the Dominican Republic grant intellectual property rights. The National Office of Industrial Property (ONAPI) issues trademarks and patents, the National Copyright Office (ONDA) issues copyrights, the Ministry of Public Health and Social Assistance (MISPAS) issues sanitary registrations required for marketing foods, pharmaceuticals, and health products, and the Directorate of International Trade (DICOEX) has jurisdiction over the implementation of geographical indications. IPR registration processes have improved in recent years, but delays and questionable adjudication decisions are still common. These institutions are in the process of implementing electronic filing systems to streamline procedures, however.

IPR Enforcement is carried out by the Customs Authority (DGA), the National Police, the National Copyright Office (ONDA), the Dominican Institute of Telecommunications (Indotel), the Special Office of the Attorney General for Matters of Health, and the Special Office of the Attorney General for High Tech Crimes. Although the Dominican government has taken steps that appear to indicate a strengthened posture and commitment to IP enforcement, in practice, the country faced challenges in 2020 that contributed to a net decrease in counterfeit seizures, arrests, and convictions. The government attributed much of this decrease to the pandemic and ensuing safety measures, which hampered enforcement activities for much of the year.

Although the Dominican Republic did not enact any new IP-related laws or regulations in the past year, the Office of the Attorney General launched a new IP Unit in November 2020. This unit plans not only to pursue more IP cases but also to develop an interagency mechanism uniting all the institutions involved in IP prevention and prosecution. As a result, these institutions are expected to collaborate more in enforcement activities and in capacity building efforts. For example, in February 2021, the new IP Unit partnered with ONAPI and ONDA to launch an IP training academy for prosecutors and judges to improve the country’s judicial capacity.

Since 2003, the U.S. Trade Representative (USTR) has designated the Dominican Republic as a Special 301 Watch List country for serious IPR deficiencies. The country, however, is not listed in USTR”s Review of Notorious Markets for Counterfeiting and Piracy.

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

6. Financial Sector

Capital Markets and Portfolio Investment

The Dominican Stock Market (BVRD by its Spanish acronym) is the only stock exchange in the Dominican Republic. It began operations in 1991 and is viewed as a cornerstone of the country’s integration into the global economy and domestic development. It is regulated by the Securities Market Law No. 249-17 and supervised by the Superintendency of Securities, which approves all public securities offerings. Since many companies do not wish to sell shares to the public (a common theme among family-owned companies in Latin America), the majority of activity has been in the capital and fixed income markets.

The private sector has access to a variety of credit instruments. Foreign investors are able to obtain credit on the local market but tend to prefer less expensive offshore sources. The Central Bank regularly issues certificates of deposit using an auction process to determine interest rates and maturities.

In recent years, the local stock market has continued to expand, in terms of the securities traded on the BVRD. There are very few publicly traded companies on the exchange, as credit from financial institutions is widely available and many of the large Dominican companies are family-owned enterprises. Most of the securities traded in the BVRD are fixed-income securities issued by the Dominican State.

Money and Banking System

Dominican Republic’s financial sector is relatively stable, and the IMF declared the financial system largely satisfactory during 2019 Article IV consultations, citing a strengthened banking system as a driver of solid economic performance over the past decade. According to a Global Partnership for Financial Inclusion report from 2017, approximately 56 percent of Dominican adults have bank accounts. However, financial depth is relatively constrained. Private lending to GDP (around 27 percent, according to the IMF) is low by international and regional standards, representing around half the average for Latin America. Real interest rates, driven in part by large interest rate spreads, are also relatively high. The country’s relatively shallow financial markets can be attributed to a number of factors, including high fiscal deficits crowding out private investment; complicated and lengthy regulatory procedures for issuing securities in primary markets; and high levels of consolidation in the banking sector.

Dominican banking consists of 113 entities, as follows: 48 financial intermediation entities (including large commercial banks, savings and loans associations, financial intermediation public entities, credit corporations), 40 foreign exchange and remittance agents (specifically, 36 exchange brokers and 6 remittances and foreign exchange agents), and 24 trustees. According to the latest available information (January 2021), total bank assets were $40.8 billion. The three largest banks hold 69.5 percent of the total assets – Banreservas 30.0 percent, Banco Popular 23.1 percent, and BHD Leon 16.4 percent. While full-service bank branches tend to be in urban areas, several banks employ sub-agents to extend services in more rural areas. Technology has also helped extend banking services throughout the country.

The Dominican Monetary and Banking system is regulated by the Monetary and Financial Law No. 183-02, and is overseen by the Monetary Board, the Central Bank, and the Superintendency of Banks. The mission of the Dominican Central Bank is to maintain the stability of prices, promote the strength and stability of the financial system, and ensure the proper functioning of payment systems. The Superintendency of Banks carries out the supervision of financial intermediation entities, in order to verify compliance by said entities with the provisions of the law.

Foreign banks may establish operations in the Dominican Republic, although it may require a special decree for the foreign financial institution to establish domicile in the country. Foreign banks not domiciled in the Dominican Republic may establish representative offices in accordance with current regulations. To operate, both local and foreign banks must obtain the prior authorization of the Monetary Board and the Superintendency of Banks. Major U.S. banks have a commercial presence in the country, but most focus on corporate banking services as opposed to retail banking. Some other foreign banks offer retail banking. There are no restrictions on foreigners opening bank accounts, although identification requirements do apply.

Foreign Exchange and Remittances

Foreign Exchange

The Dominican exchange system is a market with free convertibility of the peso. Economic agents perform their transactions of foreign currencies under free market conditions. There are generally no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

The Central Bank sets the exchange rates and practices a managed float policy. Some firms have had repeated difficulties obtaining dollars during periods of high demand. Importers may obtain foreign currency directly from commercial banks and exchange agents. The Central Bank participates in this market in pursuit of monetary policy objectives, buying or selling currencies and performing any other operation in the market to minimize volatility.

Remittance Policies

Law No. 16-95 on Foreign Investment in the Dominican Republic grants special allowances to foreign investors and national individuals residing abroad who make contributions to a company operating in the Dominican Republic. It regulates the types of investments, the areas of investment, and the rights and obligations of investors, among others. Decree No. 214-04 on the Registration of Foreign Investment in the Dominican Republic establishes the requirements for the registration of foreign investments, the remittance of profits, the repatriation of capital, and the requirements for the sale of foreign currency, among other issues related with investments.

Foreign investors can repatriate or remit both the profits obtained and the entire capital of the investment without prior authorization of the Central Bank. Article 5 of the aforementioned decree states that “the foreign investor, whose capital is registered with the CEI-RD, shall have the right to remit or repatriate it…”

Sovereign Wealth Funds

The Dominican government does not maintain a sovereign wealth fund.

8. Responsible Business Conduct

The government does not have an official position or policy on responsible business conduct, including corporate social responsibility (CSR). Although there is not a local culture of CSR, large foreign companies normally have active CSR programs, as do some of the larger local business groups. While most local firms do not follow OECD principles regarding CSR, the firms that do are viewed favorably, especially when their CSR programs are effectively publicized.

The Dominican Constitution states, “Everyone has the right to have quality goods and services, to objective, truthful and timely information about the content and characteristics of the products and services that they use and consume.” To that end, the national consumer protection agency, ProConsumidor, offers consumer advocacy services.

The country joined the Extractive Industries Transparency Initiative (EITI) as a candidate in 2016. The government incorporates EITI standards into its mining transparency framework. In 2019, EITI conducted a validation study of the Dominican Republic’s implementation of EITI standards.

Additional Resources 

Department of State

Department of Labor

9. Corruption

The Dominican Republic has a legal framework that includes laws and regulations to combat corruption and provides criminal penalties for corruption by officials. However, enforcement of existing laws is often ineffective. Individuals and NGOs noted the greatest hindrance to effective investigations was a lack of political will to prosecute individuals accused of corruption, particularly well-connected individuals or high-level politicians. Government corruption remained a serious problem and a public grievance, so much so, that it was a primary political motivation in the 2020 elections, leading to widespread protests. The Dominican Republic’s rank on the Transparency International Corruption Perception Index held at 137 in 2020 (out of 180 countries assessed) but indicated that “the election of a new government…raised hopes for the fight against corruption.”

U.S. companies identified corruption as a barrier to FDI and some firms reported being solicited by public officials for bribes. U.S. investors indicate corruption occurs at all phases of investment, not just in public procurement or during the process for awarding tenders or concessions, as is most often alleged. At least one firm said it intended to back out of a competition for a public concession as a result of a solicitation from government officials. U.S. businesses operating in the Dominican Republic often need to take extensive measures to ensure compliance with the Foreign Corrupt Practices Act.

In September 2019, the Dominican Supreme Court began a trial against six of the 14 defendants indicted in 2017 for alleged links to $92 million in bribes paid by aBrazilian construction company to obtain public works contracts. A 2016 plea agreement between the U.S. Department of Justice and the Brazilian company implicated high-level public officials in the Dominican Republic; the six current defendants include a senator, a lower house representative, a former senator, and a former minister of public works. Civil society welcomed the trial as a step forward in the fight against corruption, but activists highlighted what they perceived as a lack of political will to investigate thoroughly the case, which involved the country’s political and economic elites. U.S. companies also frequently cite the government’s slow response to the Odebrecht scandal as contributing to a culture of perceived impunity for high-level government officials, which fuels widespread acceptance and tolerance of corruption at all levels.

President Abinader has made it clear since his inauguration in August 2020 that fighting corruption will be a top priority of his administration. He appointed officials with reputations for professionalism and independence including a career anti-corruption advocate now serving as head of the Public Procurement General Directorate. In addition, the Abinader administration created the Directorate of Transparency, Prevention, and Control of Public Spending, and implemented other administrative and legislative measures that should increase internal auditing mechanisms.

In November 2020, the Attorney General’s Office detained 11 former officials and alleged front men, including two siblings of former President Danilo Medina, as part of the “Anti-octopus operation.” They are accused of “having used their family connections” to gain privileged access to the public procurement process and, consequently, of having accumulated fortunes illicitly during the past administration. Analysts have suggested that these arrests dealt a blow to the widespread practice of impunity around issues of corruption, particularly where politically connected people and families were involved, and sent a strong warning against such behavior. The arrests also appear to have appeased the demands of civil society, who threatened to protest if arrests did not happen before January 2021. However, it remains to be seen the extent to which the government will prioritize passage of legislative reforms to strengthen rule of law and prevent similar abuses in the future.

Civil society has been a critical voice in anti-corruption campaigns to date. Several non-governmental organizations are particularly active in transparency and anti-corruption, notably the Foundation for Institutionalization and Justice (FINJUS), Citizen Participation (Participacion Ciudadana), and the Dominican Alliance Against Corruption (ADOCCO).

The Dominican Republic signed and ratified the UN Anticorruption Convention. The Dominican Republic is not a party to the OECD Convention on Combating Bribery.

Resources to Report Corruption

Procuraduría Especializada contra la Corrupción Administrativa (PEPCA)
Calle Hipólito Herrera Billini esq. Calle Juan B. Pérez,
Centro de los Heroes, Santo Domingo, República Dominicana
Telephone: (809) 533-3522
Email: pepca@pgr.gob.do 

Linea 311 (government service for filing complaints and denunciations)
Phone: 311 (from inside the country)
Website: http://www.311.gob.do/ 

Participación Ciudadana
Wenceslao Alvarez #8, Zona Universitaria
Phone: 809 685 6200
Website: https://pciudadana.org/
Email: info@pciudadana.org 

Grenada

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Grenada employs a liberal approach to foreign direct investment (FDI) and actively promotes foreign investment into the country.

The government of Grenada identified five priority sectors for investment:

  • Tourism and hospitality services
  • Education and health services
  • Information and communication technology
  • Agribusiness
  • Energy development

The Grenada Investment Development Corporation (GIDC) is the country’s investment promotion agency. It was established in 1985 to stimulate, facilitate, and encourage the creation and development of industry.

The GIDC is a “one-stop shop” offering:

  • Investment and trade information
  • Investment incentives
  • Investment facilitation and aftercare
  • Entrepreneurial/business skills training
  • Small business support services
  • Industrial facilities
  • Policy advice

To promote FDI, the GIDC adopts a targeted approach to promote investment opportunities, provides investor facilitation and entrepreneurial development services, and advocates for a supportive environment for investors to develop and grow businesses, trade, and industries.

Investment retention is a priority in Grenada and is maintained through ongoing dialogue with investors facilitated by the GIDC.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no economic and industrial strategies that discriminate against foreign investors. Non-Grenadian investors may be required to obtain an Alien Landholding License and pay a property transfer tax, which levies a 10 percent fee on the purchase of shares in a Grenadian registered company or real estate. In addition, the sale of such shares or real estate to non-nationals will attract a property transfer tax of 15 percent payable by the seller if the seller is a non-Grenadian. Foreign investors employed in Grenada are required to obtain a work permit, renewable annually. U.S. investors must pay a fee of USD $1,111 or XCD $3,000 for work permits. The renewal fee varies based on the investor’s country of citizenship.

There are no limits on foreign ownership or control, except for enterprises deemed prejudicial to national security, the environment, public health, or national culture, or which contravene the laws of Grenada. Grenada has accepted but not yet implemented regional anti-competition obligations. U.S investors are not disadvantaged or singled out by any of the ownership or control mechanisms, sector restrictions, or investment screening mechanisms in Grenada relative to other foreign investors.

Other Investment Policy Reviews

Grenada passed its most recent Investment Promotion Act in 2014. The legislation promotes, encourages, and protects investment in Grenada by providing investors with a stable framework of fundamental and enforceable rights. It seeks to guarantee and ensure security and fairness in strict accordance with the rule of law and best international standards and practices. The 2014 Act is also in compliance with WTO regulations, the Economic Partnership Agreement (EPA) between the EU and the Caribbean Community (CARICOM), and the Agreement between the Caribbean Forum (CARIFORUM) and the EU.

The incentives regime enacted in 2016 grants incentives to ensure that all new tax exemptions are codified, restricts discretionary exemptions, and requires that the beneficiaries of exemptions file appropriate tax returns and comply with tax requirements. It also sets streamlined, simple, and non-discretionary system/process for the granting of incentives. The Customs and Inland Revenue Departments (CIRD) administer exemptions through a clearly defined rule-based system in contrast with past incentive schemes that required each case to be approved at the cabinet level.

Under this regime, the CIRD grants incentives to projects within the priority sectors for investment. They are tourism, manufacturing, agriculture and agribusiness, information technology services, telecommunication providers and business process outsourcing operations, education and training, health and wellness, creative industries, energy, and research and development. Other sectors also include student accommodation, heavy equipment operators, investment projects above particular investment thresholds, and projects within specific geographical locations.

The incentive regime seeks to provide investment incentives on a performance basis (i.e., the more one invests, the more incentives one can receive). Therefore, based on the level of investment, CIRD grants different levels of incentives in a transparent, predictable, and non-discriminatory manner.

In the past three years, the government was not subject to third-party investment policy reviews through multilateral organizations such as the Organization for Economic Cooperation and Development (OECD), the WTO, and the UN Conference on Trade and Development.

Business Facilitation

An investor must register a business name and identify whether it is a partnership or limited liability company. A registered business can be wholly owned or a joint venture. The official website of the GIDC includes an investor’s guide that details the procedures for starting and operating a business in Grenada. The guide has a business procedure flow chart and gives step-by-step instructions for various tasks from registering a business and owning properties to obtaining permits and licenses. Detailed information on business registration and timelines can be found at: http://grenadaidc.com/investor-centre/investors-guide/starting-up-a-business/#.WKxXdfnQe70 

The GIDC provides business facilitation mechanisms and ensures the equitable treatment of women and underrepresented minorities in the economy.

Outward Investment

The government of Grenada does not promote or incentivize outward investment. The Revised Treaty of Chaguaramas, to which Grenada is a party, includes a chapter on service agreements under the European Partnership Agreement (EPA). Under certain circumstances, provisions in these agreements may offer incentives to the potential investor. Grenada does not restrict domestic investors from investing abroad.

5. Protection of Property Rights

Real Property

The Aliens Landholding Regulation Act No. 29 of 1968 (last amended in 2009) is the primary legislative instrument governing the right to private ownership by non-citizens. Investors may purchase or lease privately owned land and dispose of, or transfer, interests in the land under the Act. Investors may hold state lands by grant or lease from the state.

Property rights and interests are enforced under the Aliens Landholding Regulation Act. The only specific regulation regarding land lease or acquisition by a foreign or non-resident investor is the requirement to acquire an Alien Landholding License. The application process is described on the following website: http://grenadaidc.com/investor-centre/investors-guide/starting-up-a-business/#.WLBEUvnQe70 

Before a deed is issued, there is a title search on the previous owner, followed by conveyance, and the registering of the property to a new owner. A clear title must first be identified before the process moves forward. Once the landholder possesses a deed, the property remains legally theirs, occupied or not, until the deed is signed over to someone else.

Grenada ranked 147 out of 190 for the ease of registering property on the World Bank’s 2020 Doing Business Report.

Intellectual Property Rights

The Patents Act (Cap. 227 of the Consolidated Laws of Grenada) or the Trademarks Act (Cap. 284 of the Consolidated Laws of Grenada), or the Copyright Act Cap. 32 of 1988 (Cap. 67 of the Consolidated Laws of Grenada) guarantees the intellectual property rights of investors and investment enterprises e.g., patents, trademarks, brand names, and copyrighted materials in printed, recorded, or electronic formats. Grenada is a member of the World Intellectual Property Organization (WIPO), the Paris Convention, the Berne Convention, and the Patent Cooperation Treaty.

Domestic legislation regarding intellectual property protection has not been fully amended to bring it in line with the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement. However, updates to existing legislation are currently being drafted and reviewed.

Trademarks

The Trademarks Act of 2012 regulates trademarks.

Patents

The Registration of United Kingdom Patents Act Cap 283 of the Continuous Revised Laws of Grenada is still in force, although outdated. In accordance with the act, any person being the grantee of a patent in the United Kingdom or any person deriving right from such grantee may apply within three years from the date of issue of the patent in in the UK to have it registered in Grenada.

The Patent Act Cap 227 of the Continuous Revised Laws of Grenada is not TRIPS compliant. Implementation of the Patent Act No. 16 of 2011 has been slow due to the lack of implementing regulations, but the government has indicated that this a priority.

Copyright

The Copyright Act No. 21 of 2011 is in force.  In accordance with Berne Convention, there is no existing formal system of registration of copyrighted works. There are current discussions with WIPO, in conjunction with the intellectual property offices in the region, to consider a voluntary system of registration for copyrighted works.

Geographic Indication Bill

The geographic indication bills have been drafted but not yet enacted. The 2012 Trademarks Act provides for registration of collective marks in the absence of a geographic indication act.

Industrial Designs Bill

The Industrial Design Bill is a work in progress. According to the Office of Corporate Affairs, its enactment is a priority in 2021.

Administration of intellectual property laws in Grenada is the responsibility of the Ministry of Legal Affairs. The Corporate Affairs and Intellectual Property Office (CAIPO) is currently responsible for the registration of trademarks, re-registration of UK patents, and all other IP matters.

Post is unaware of any current or past prosecutions of IPR violations. Grenada is not listed in the U.S. Trade Representative’s Special 301 Report or in the 2020 Review of Notorious Markets for Counterfeiting and Piracy,

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

6. Financial Sector

Capital Markets and Portfolio Investment

Grenada possesses a robust legislative and policy framework that facilitates free flow of financial resources. Its currency, the Eastern Caribbean dollar, has a fixed exchange rate established by the regional Eastern Caribbean Central Bank (ECCB). Foreign employees of investment enterprises and their families may repatriate their earnings after paying personal income tax and all other taxes due. The government of Grenada encourages foreign investors to seek investment capital from financial institutions chartered outside Grenada due to the short domestic supply of capital. Foreign investors are more likely to tap local financial markets for working capital. The government, local banks, and the ECCB respect IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.

The private sector has access to the limited number of credit instruments. Grenadian stocks are traded on the Eastern Caribbean Securities Exchange, whose limited liquidity may pose difficulties in conducting transactions.

Money and Banking System

The financial industry in Grenada is regulated by two entities: The ECCB and the Grenada Authority for Regulation of the Financial Industry (GARFIN). The ECCB regulates the banking system. GARFIN oversees non-banking financial institutions through a regulatory system that encourages and facilitates portfolio investment. The estimated total assets of the largest banks are USD $1.03 billion. Information on the percentage of non-performing assets is not available. Grenada has not experienced cross-shareholding or hostile takeovers. As of November 30, 2020, commercial banks in Grenada deferred debt service on 4,069 commercial bank loans due to job losses and a reduction in salaries caused by the COVID-19 pandemic. This was the second highest number of deferrals in the Eastern Caribbean Currency Union (ECCU).

Foreign banks or branches can establish operations in Grenada subject to prudential measures and regulations governed by the ECCB. For the requirements and procedures, foreign banks can refer to the following website: https://www.eccb-centralbank.org/p/grenada-1 

There is correspondent banking available with all licensed commercial banks. No correspondent banking relationships have been lost in the past three years. There are no restrictions on a foreigner’s ability to establish a bank account.

In addition to the banking sector, there are alternative financial services provided through credit unions. GARFIN regulates credit unions.

Foreign Exchange and Remittances

Foreign Exchange

Grenada’s currency is the Eastern Caribbean dollar issued by the ECCB located in Saint Kitts and Nevis. The exchange rate is also determined by the ECCB. The Eastern Caribbean dollar is pegged to the U.S. dollar at 2.7, adding to the stability of trade and investment in Grenada. The national currency rate does not fluctuate.

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with investments. Funds associated with any form of investment can be freely converted. Banks reserve the right to delay transactions if deemed suspicious or outside the typical level of activity on the account.

Remittance Policies

There are no difficulties or delays regarding remittances and no proposed policy changes that would either tighten or relax access to foreign exchange for investment remittances.

Transfers of currency are protected by Article VII of the International Monetary Fund Articles of Agreement. Grenada is also a member of the Caribbean Financial Action Task Force.

Sovereign Wealth Funds

Grenada does not have a sovereign wealth fund.

8. Responsible Business Conduct

Corporate social responsibility (CSR), interchangeably used with responsible business conduct, is a concept that was introduced to Grenada relatively recently by multinational and regional corporations. Local businesses are slowly incorporating this principle into their operations.

Some social responsibility initiatives undertaken by the private sector and non-governmental organizations (NGOs) include education programs, fitness programs, sporting activities, and cultural endeavors. These are predominantly implemented by the telecommunication companies Digicel and LIME, along with financial institutions. There is also a recent push towards environmentally friendly business practices and development projects.

While firms that promote CSR are more favorably viewed by the community, there is little familiarity with international CSR standards. Activities are deemed to be responsible business conduct if they are lawful, not a threat to national security, and not detrimental to the environment, health, and culture of the Grenadian people. Other than this being a requirement for any company operating in Grenada, CSR is not built into the laws governing the operations of a company.

There has been no high profile, controversial instances of private sector impact on human rights or resolution of such cases in the recent past. Grenada generally enforces domestic laws in relation to human rights, labor rights, consumer protection, environmental protection, and other laws/regulations intended to protect individuals from adverse business impacts. Local labor unions play a role in promoting and monitoring responsible business conduct. Grenada uses private security companies but is not a signatory to The Montreux Document or the International Code of Conduct or Private Security Service Providers.

Additional Resources 

Department of State

Department of Labor

9. Corruption

Grenada is a party to the Inter-American Convention against Corruption. The Integrity in Public Life Act (Act No.24 of 2013) requires that all public servants report their income and assets to the independent Integrity Commission for review. The Integrity in Public Life Commission monitors and verifies disclosures, although disclosures are not made public except in court. Failure to file a disclosure should be noted in the Official Gazette. If the office holder in question fails to file in response to this notification, the commission can seek a court order to enforce compliance.

The Office of the Ombudsman received 59 complaints in 2019, compared to 64 in 2018. Of the 59 complaints, six were closed, 19 are ongoing, advice/referrals were given to 25, and nine were outside the jurisdiction of the Ombudsman. Private entities received the highest number of complaints totaling 18, followed by the Ministry of Labor with 14. Of the 18 complaints, advice/referrals were given to 12, and six were beyond the jurisdiction of the Ombudsman. Of the 14 complaints against the Ministry of Labor, one was closed, 10 are ongoing, and three received advice/referrals.

Bribery is illegal in Grenada. For the most part, the enforcement of anti-bribery laws and procedures is effective and non-discriminatory.

Grenada is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The country accepted and acknowledged the UN Convention against Corruption but has not yet signed or ratified it.

U.S. firms have not identified corruption as an obstacle to FDI in Grenada.

Resources to Report Corruption

Tafawa Pierre
Superintendent of Police/Head of FIU
Financial Intelligence Unit (FIU)
The Carenage, St. George’s, Grenada
(473) 435-2373 / 2374
gdafiu@spiceisle.com 

Allison Miller
Acting Ombudsman
Office of the Ombudsman
Tanteen, St. George’s, Grenada
(473) 435-9315
ombudsmangd@spiceisle.com 

Contact at “watchdog” organization:

Lady Anande Trotman-Joseph
Chairperson
Office of the Integrity Commission
Archibald Avenue, St. George’s, Grenada
(473) 439-9212/ 534-5190
office@grenadaintegritycommission.org 

Guatemala

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Guatemalan government continues to promote investment opportunities and work on reforms to enhance competitiveness and the business environment. As part of the government’s efforts to promote economic recovery during and after the COVID-19 pandemic, the Ministry of Economy (MINECO) began implementing an economic recovery plan, which focuses on recovering lost jobs and generating new jobs, attracting new strategic investment, and promoting consumption of Guatemalan goods and services locally and globally. Private consultants contributed to the government’s September 2020 economic recovery plan, which focuses on increasing exports and attracting foreign direct investment.

Guatemala’s investment promotion office operates within MINECO´s National Competitiveness Program (PRONACOM). PRONACOM supports potential foreign investors by offering information, assessment, coordination of country visits, contact referrals, and support with procedures and permits necessary to operate in the country. Services are offered to all investors without discrimination. The World Bank’s Doing Business 2020 report ranked Guatemala 96 out of 190 countries, one position lower than its rank in 2019. The two areas where the country had the highest rankings were electricity and access to credit. The areas of the lowest ranking were protecting minority investors, enforcing contracts, and resolving insolvency.

International investors tend to engage with the Guatemalan government via chambers of commerce and industry associations, or directly with specific government ministries. PRONACOM began to prioritize investment retention in 2020.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Guatemalan Constitution recognizes the right to hold private property and to engage in business activity. Foreign private entities can establish, acquire, and dispose freely of virtually any type of business interest, with the exception of some professional services as noted below. The Foreign Investment Law specifically notes that foreign investors enjoy the same rights of use, benefits, and ownership of property as Guatemalan citizens. Guatemalan law prohibits foreigners, however, from owning land immediately adjacent to rivers, oceans, and international borders.

Guatemalan law does not prohibit the formation of joint ventures or the purchase of local companies by foreign investors. The absence of a developed, liquid, and efficient capital market, in which shares of publicly owned firms are traded, makes equity acquisitions in the open market difficult. Most foreign firms operate through locally incorporated subsidiaries.

The law does not restrict foreign investment in the telecommunications, electrical power generation, airline, or ground-transportation sectors. The Foreign Investment Law removed limitations to foreign ownership in domestic airlines and ground-transport companies in January 2004. The Guatemalan government does not have any screening mechanisms for inbound foreign investment.

Some professional services may only be supplied by professionals with locally recognized academic credentials. Public notaries must be Guatemalan nationals. Foreign enterprises may provide licensed, professional services in Guatemala through a contract or other relationship with a Guatemalan company. In July 2010, the Guatemalan congress approved an insurance law that allows foreign insurance companies to open branches in Guatemala, a requirement under CAFTA-DR. This law requires foreign insurance companies to fully capitalize in Guatemala.

Other Investment Policy Reviews

Guatemala has been a World Trade Organization (WTO) member since 1995. The Guatemalan government had its last WTO trade policy review (TPR) in November 2016. In 2011, the United Nations Conference on Trade and Development (UNCTAD) conducted an investment policy review on Guatemala. The WTO TPR highlighted Guatemala’s efforts to increase trade liberalization and economic reform efforts by eliminating export subsidies for free trade zones, export-focused manufacturing and assembly operations (maquilas) regimes, as well as amendments to the government procurement law to improve transparency and efficiency. The WTO TPR noted that Guatemala continues to lack a general competition law and a corresponding competition authority. The UNCTAD IPR recommended strengthening the public sector’s institutional capacity and highlighted that adopting a competition law and policy should be a priority in Guatemala’s development agenda. The government agreed to approve a competition law by November 2016 as part of its commitments under the Association Agreement with the European Union, but the draft law has not been approved as of March 2021. Other important recommendations from the UNCTAD IPR were to further explore alternative dispute resolution mechanisms and the establishment of courts for commercial and land disputes, though the government had not made substantive progress on these recommendations as of March 2021.

Business Facilitation

The Guatemalan government has a business registration website (https://minegocio.gt/), which facilitates on-line registration procedures for new businesses. Foreign companies that are incorporated locally are able to use the online business registration window, but the system is not yet available to other foreign companies. As a result of the entry into force of the commercial code amendments in January 2018, the time to register a new business online for a locally incorporated company went down from an average of 18.5 days in 2016 to an average of six days in 2019. The legal cost to register a business also fell by approximately 75 percent. The new procedures allow locally incorporated businesses to receive their business registration certificates online. Every company must register with the business registry, the tax administration authority, the social security institute, and the labor ministry.

Outward Investment

Guatemala does not incentivize nor restrict outward investment.

5. Protection of Property Rights

Real Property

Guatemala follows the real property registry system. Defects in the titles and ownership gaps in the public record can lead to conflicting claims of land ownership, especially in rural areas. The government stepped up efforts to enforce property rights by helping to provide a clear property title. Nevertheless, when rightful ownership is in dispute, it can be difficult to obtain and subsequently enforce eviction notices.

Mortgages are available to finance homes and businesses. Most banks offer mortgage loans with terms as long as 20 years for residential real estate. Mortgages and liens are recorded at the real estate property registry. According to the 2020 World Bank’s Doing Business Report, registering property in Guatemala takes 24 days, and it costs 3.6 percent of the property value. In the 2020 report, Guatemala ranked 89 out of 190 countries in the category of Registering Property.

The legal system is accessible to foreigners who may buy, sell, and file suit under the law. However, the legal system is not easily navigated without competent counsel. Foreign investors are advised to seek reliable local counsel early in the investment process.

Intellectual Property Rights

Guatemala has been a member of the WTO since 1995 and the World Intellectual Property Organization (WIPO) since 1983. It is also a signatory to the Paris Convention, Berne Convention, Rome Convention, Phonograms Convention, and the Nairobi Treaty. Guatemala has ratified the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). In June 2006, as part of CAFTA-DR implementation, Guatemala ratified the Patent Cooperation Treaty and the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure. Also in June 2006, the Guatemalan congress approved the International Convention for the Protection of New Varieties of Plants (UPOV Convention). Implementing legislation that would allow Guatemala to become a party to the convention, however, is still pending. The Guatemalan congress approved the Trademark Law Treaty (TLT) and the Marrakesh Treaty in February 2016.. The Guatemalan government is currently reviewing draft amendments to the Industrial Property Law to incorporate TLT provisions into local law.

Guatemala has a registry for intellectual property. Trademarks, copyrights, patents rights, industrial designs, and other forms of intellectual property must be registered in Guatemala to obtain protection in the country.

Guatemala has a sound intellectual property rights (IPR) legal framework. The Guatemalan congress passed an industrial property law in August 2000, bringing the country’s intellectual property rights laws into compliance with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Congress modified the legislation in 2003 to provide pharmaceutical test data protection consistent with international practice and again in 2005 to comply with IPR protection requirements in CAFTA-DR. CAFTA-DR provides for improved standards for the protection and enforcement of a broad range of IPR, which are consistent with U.S. standards of protection and enforcement as well as emerging international standards. Congress approved a law to prohibit the production and sale of counterfeit medicine in November 2011. It approved amendments to the Industrial Property Law in June 2013 to allow the registration of geographical indications (GI), as required under the Association Agreement with the European Union. Guatemalan administrative authorities issued rulings on applications to register GIs that appear sound and well-reasoned for compound GI names, but U.S. exporters are concerned that 2014 rulings on single-name GIs will effectively prohibit new U.S. products in the Guatemalan market from using what appear to be generic or common names when identifying their goods locally.

Guatemala remains on the U.S. Trade Representative (USTR) Special 301 Report’s Watch List in 2021 and has been on the Watch List for more than 10 years. Despite a generally strong legal framework, IPR enforcement is weak due to lack of resource prioritization and poor coordination among law enforcement agencies. Piracy and copyright and trademark infringement, including those of some major U.S. food and pharmaceutical brands, remain problematic in Guatemala.

Guatemala is not included in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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/ .

6. Financial Sector

Capital Markets and Portfolio Investment

Guatemala’s capital markets are weak and inefficient because they lack a securities regulator. The local stock exchange (Bolsa Nacional de Valores) deals almost exclusively in commercial paper, repurchase agreements (repos), and government bonds. The Guatemalan Central Bank (Banguat) and the Superintendent of Banks (SIB) were drafting an updated capital markets bill that included a chapter on securitization companies and the securitization process as of March 2021. Notwithstanding the lack of a modern capital markets law, the government debt market continues to develop. Domestic treasury bonds represented 56.9 percent of total public debt as of December 2020.

Guatemala lacks a market for publicly traded equities, which raises the cost of capital and complicates mergers and acquisitions. As of December 2020, borrowers faced a weighted average annual interest rate of 15.5 percent in local currency and 6.6 percent in foreign currency, with some banks charging over 40 percent on consumer or micro-credit loans. Commercial loans to large businesses offered the lowest rates and were on average 6.8 percent in local currency as of December 2020. Dollar-denominated loans typically are some percentage points lower than those issued in local currency. Foreigners rarely rely on the local credit market to finance investments.

Money and Banking System

Overall, the banking system remains stable. The Monetary Board, Banguat, and SIB approved various temporary measures during 2020 to increase liquidity of the banking system during the first months of the pandemic and to allow banks to approve restructuring of loans or deferral of loans to businesses and individuals affected by the pandemic. Non-performing loans represented 2 percent of total loans as of January 2021. According to information from the SIB, Guatemala’s 17 commercial banks had an estimated $51 billion in assets in December 2020. The six largest banks control about 87 percent of total assets. In addition, Guatemala has 11 non-bank financial institutions, which perform primarily investment banking and medium- and long-term lending, and three exchange houses. Access to financial services is very high in Guatemala City, as well as in major regional cities. Guatemala has 17.2 access points per 10,000 adults at the national level and 24.1 access points per 10,000 adults in the capitol area as of December 2020. There were 15,024 banking accounts per 10,000 adult at the national level and 35,901 banking accounts per 10,000 adults in the capital area as of December 2020. Most banks offer a variety of online banking services.

Foreigners are normally able to open a bank account by presenting their passport and a utility bill or some other proof of residence. However, requirements may vary by bank.

In April 2002, the Guatemalan congress passed a package of financial sector regulatory reforms that increased the regulatory and supervisory authority of the SIB, which is responsible for regulating the financial services industry. The reforms brought local practices more in line with international standards and spurred a round of bank consolidations and restructurings. The 2002 reforms required that non-performing assets held offshore be included in loan-loss-provision and capital-adequacy ratios. As a result, a number of smaller banks sought new capital, buyers, or mergers with stronger banks, reducing the number of banks from 27 in 2005 to 17 in 2020.

Guatemalan banking and supervisory authorities and the Guatemalan congress actively work on new laws in the business and financial sectors. In August 2012, the Guatemalan congress approved reforms to the Banking and Financial Groups Law and to the Central Bank Organic Law that strengthened supervision and prudential regulation of the financial sector and resolution mechanisms for failed or failing banks. The Guatemalan government submitted to congress proposed amendments to the Banking and Financial Groups Law in November 2016 and an anti-money laundering and counter-terrorism financing draft law in August 2020. Both proposed laws were pending congressional approval as of April 2021.

Foreign banks may open branches or subsidiaries in Guatemala subject to Guatemalan financial controls and regulations. These include a rule requiring local subsidiaries of foreign banks and financial institutions operating in Guatemala to meet Guatemalan capital and lending requirements as if they were stand-alone operations. Groups of affiliated credit card, insurance, financial, commercial banking, leasing, and related companies must issue consolidated financial statements prepared in accordance with uniform, generally accepted, accounting practices. The groups are audited and supervised on a consolidated basis.

The total number of correspondent banking relationships with Guatemala’s financial sector showed a slight decline in 2016, but the changes in the relationships were similar to those seen throughout the region and reflected a trend of de-risking. The situation stabilized in 2017. The number of correspondent banking relationships increased in 2020.

Alternative financial services in Guatemala include credit and savings unions and microfinance institutions.

Foreign Exchange and Remittances

Foreign Exchange

Guatemala’s Foreign Investment Law and CAFTA-DR commitments protect the investor’s right to remit profits and repatriate capital. There are no restrictions on converting or transferring funds associated with an investment into a freely usable currency at a market-clearing rate. U.S. dollars are freely available and easy to obtain within the Guatemalan banking system. In October 2010, monetary authorities approved a regulation to establish limits for cash transactions of foreign currency to reduce the risks of money laundering and terrorism financing. The regulation establishes that monthly deposits over $3,000 will be subject to additional requirements, including a sworn statement by the depositor stating that the money comes from legitimate activities. There are no legal constraints on the quantity of remittances or any other capital flows and there have been no reports of unusual delays in the remittance of investment returns.

The Law of Free Negotiation of Currencies allows Guatemalan banks to offer different types of foreign-currency-denominated accounts. In practice, the majority of such accounts are in U.S. dollars. Some banks offer pay through dollar-denominated accounts in which depositors make deposits and withdrawals at a local bank while the bank maintains the actual account on behalf of depositors in an offshore bank.

Capital can be transferred from Guatemala to any other jurisdiction without restriction. The exchange rate moves in response to market conditions. The government sets one exchange rate as reference, which it applies only to its own transactions and which is based on the commercial rate. The Central Bank intervenes in the foreign exchange market only to prevent sharp movements. The reference exchange rate of quetzals (GTQ) to the U.S. dollar has remained relatively stable since 1999. However, as U.S. inflation has been lower than Guatemalan inflation over this period there has been significant real exchange appreciation of about 100 percent of the quetzal against the dollar since 1999 that has reduced Guatemala’s export competitiveness.

Remittance Policies

There are no time limitations on remitting different types of investment returns.

Sovereign Wealth Funds

Guatemala does not have a sovereign wealth fund.

8. Responsible Business Conduct

There is a general awareness of expectations of standards for responsible business conduct (RBC) on the part of producers and service providers, as well as Guatemalan business chambers. A local organization called the Center for Socially Responsible Business Action (CentraRSE) promotes, advocates, and monitors RBC in Guatemala. They operate freely with multiple partner organizations, ranging from private sector to United Nations entities. CentraRSE currently has over 100 affiliated companies from 20 different sectors that provide employment to over 150,000 individuals. CentraRSE defines RBC as a business culture based on ethical principles, strong law enforcement, and respect for individuals, families, communities, and the environment, which contributes to businesses competitiveness, general welfare, and sustainable development. The Guatemalan government does not have a definition of RBC as of March 2021. Guatemala joined the Extractive Industries Transparency Initiative (EITI) in February 2011 and was designated EITI compliant in March 2014. The EITI board suspended Guatemala in February 2019 for failing to publish the 2016 EITI report and the 2017 annual progress report by the December 31, 2018 deadline. Guatemala published the 2016-2017 EITI report and the 2017 annual progress report in February and March 2019. The EITI board suspended Guatemala again in January 2020 after deciding that Guatemala has made inadequate progress in implementing the 2016 EITI standard. The EITI board requested Guatemala to undertake corrective actions before a second validation related to the requirements starts on July 23, 2021. On December 24, 2020, the EITI board agreed to postpone the date to start Guatemala’s second validation process to April 1, 2022.

In January 2014, the State Department recognized a U.S.-based company as one of twelve finalists for the Secretary of State’s 2013 Award for Corporate Excellence for its contributions to sustainable development in Guatemala. The Department has also recognized U.S. companies such as McDonald’s, Starbucks, and Denimatrix for corporate social responsibility (CSR) programs in Guatemala that aimed to foster safe and productive workplaces as well as provide health and education programs to workers, their families, and local communities. Communities with low levels of government funding for health, education, and infrastructure generally expect companies to implement CSR practices.

Conflict surrounding certain industrial projects – in particular mining and hydroelectric projects – is frequent, and there have been several cases of violence against protestors in the recent past, including several instances of murder. The Guatemalan government continues to improve its capacity to respond to protests and help facilitate a peaceful resolution. Protests against companies are normally peaceful and usually take place only after the aggrieved parties have attempted to dialogue directly with the company in question.

Additional Resources

Department of State

Department of Labor

9. Corruption

Bribery is illegal under Guatemala’s Penal Code. However, corruption remains a serious problem that companies may encounter at many levels. Guatemala scored 25 out of 100 points on Transparency International’s 2020 Corruption Perception Index, ranking it 149 out of 180 countries globally, and 28 out of 32 countries in the region. The score dropped one point compared to the score observed in the 2019 report.

Investors find corruption pervasive in government procurement. In the past few years, the Public Ministry (MP – equivalent to the U.S. Department of Justice) has investigated and prosecuted various corruption cases that involved the payment of bribes in exchange for awarding public construction contracts. Investors and importers are frequently frustrated by opaque customs transactions, particularly at ports and borders away from the capital. The Tax and Customs Authority (SAT) launched a customs modernization program in 2006, which implemented an advanced electronic manifest system and resulted in the removal of many corrupt officials. However, reports of corruption within customs’ processes remain. From 2006 to 2019, the UN-sponsored International Commission against Impunity in Guatemala (CICIG) undertook numerous high-profile official corruption investigations, leading to significant indictments. Notably, CICIG unveiled a customs corruption scheme in 2015 that led to the resignations of the former president and vice president.

Guatemala’s Government Procurement Law requires most government purchases over $116,580 to be submitted for public competitive bidding. Since March 2004, Guatemalan government entities are required to use Guatecompras (https://www.guatecompras.gt/), an Internet-based electronic procurement system to track government procurement processes. Guatemalan government entities must also comply with government procurement commitments under CAFTA-DR. In August 2009, the Guatemalan congress approved reforms to the Government Procurement Law, which simplified bidding procedures; eliminated the fee previously charged to receive bidding documents; and provided an additional opportunity for suppliers to raise objections over the bidding process. Despite these reforms, large government procurements are often subject to appeals and injunctions based on claims of irregularities in the bidding process (e.g., documentation issues and lack of transparency). In November 2015, the Guatemalan congress approved additional amendments to the Government Procurement Law that improved transparency of procurement processes by barring government contracts for some financers of political campaigns and parties, members of congress, other elected officials, government workers, and their immediate family members. The 2015 reforms expanded the scope of procurement oversight to include public trust funds and all institutions (including NGOs) executing public funds. The U.S. government continues to advocate for the use of open, fair, and transparent tenders in government procurement as well as procedures that comply with CAFTA-DR obligations, which would allow open participation by U.S. companies.

Guatemala ratified the U.N. Convention against Corruption in November 2006, and the Inter-American Convention against Corruption in July 2001. Guatemala is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In October 2012, the Guatemalan congress approved an anti-corruption law that increases penalties for existing crimes and adds new crimes such as illicit enrichment, trafficking in influence, and illegal charging of commissions.

Resources to Report Corruption

Contact at government agencies responsible for combating corruption:

Public Ministry
Address: 23 Calle 0-22 Zona 1, Ciudad de Guatemala
Phone: (502) 2251-4105; (502) 2251-4219; (502) 2251-5327; (502) 2251-8480; (502) 2251-9225
Email address: fiscaliacontracorrupcion@mp.gob.gt 

Comptroller General’s Office
Address: 7a Avenida 7-32 Zona 13
Phone: (502) 2417-8700

Contact at “watchdog” organization:

Accion Ciudadana (Guatemalan Chapter of Transparency International)
Address: Avenida Reforma 12-01 Zona 10, Edificio Reforma Montufar, Nivel 17, Oficina 1701
Phone: (502) 2388- 3400
Toll free to submit corruption complaints: 1-801-8111-011
Email address: alac@accionciudadana.org.gt ; accionciudadana@accionciudadana.org  

Guyana

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GoG recognizes foreign direct investment (FDI) as critical for growing and diversifying the Guyanese economy. Guyanese law does not discriminate against foreign investors. Shortly after being sworn in, President Ali committed to institute an electronic single window application process to expedite business registration, permitting, and improve the country’s Ease of Doing Business ranking. The GoG has prioritized investments in the following sectors: agriculture, agro-processing, light manufacturing, renewable energy, tourism and information and communications technology (ICT). The Guyana Office for Investment (GO-INVEST) is the GoG’s primary vehicle for promoting FDI opportunities and assisting foreign corporations with their business registrations and applying for tax concessions. Companies and investors are encouraged to do their due diligence and have robust business plans completed before approaching GOINVEST.

The GoG expects to table local content legislation before Parliament in the second quarter of 2021, which will set baseline requirements for foreign firms to hire Guyanese and establish taxation standards to foster greater local participation in the oil and gas sector. The aim of this legislation is to promote long term investments in Guyana, build local capacity, and avoid the resource curse.

Limits on Foreign Control and Right to Private Ownership and Establishment

Guyana’s constitution protects the rights of foreigners to own property in Guyana. Foreign and domestic firms possess the right to establish and own business enterprises and engage in all forms of commerce. Private entities are governed by the 1991 Companies Act (amended in 1995) under which they have the right to establish business enterprises and are free to acquire or dispose of interest in accordance with the law. Some key sectors like aviation, forestry, banking, mining, and tourism are heavily regulated and require licensing. The process to obtain licenses can be time consuming and may in some instances require ministerial approval.

The GoG prohibits foreign ownership of small-and-medium-scale mining (ASM) concessions. Foreign investors interested in participating in the industry at those levels may establish joint ventures with Guyanese nationals, under which the two parties agree to jointly develop a mining property. However, this type of relationship can carry a high level of risk because arrangements are governed only by private contracts and the sector’s regulatory agency, the Guyana Geology and Mines Commission (GGMC), offers little recourse for ASM disputes. The U.S. Embassy strongly encourages investors to thoroughly conduct their due diligence when exploring business opportunities.

Other Investment Policy Reviews

Guyana’s macro-economic fundamentals have remained stable over the past decade. The Ali administration is revising its Low Carbon Development Strategy (LCDS) to balance sustainable development goals with booming oil production. Developmental policies include incentives for priority areas, including education, health, renewable energy, agriculture, and agro-processing.

Government policy focuses on attracting inward FDI. The GoG applies national treatment to all economic activities, except for certain mining operations, although some foreign-owned companies conduct large-scale mining operations in the country. During its first months in office, the Ali administration took actions to improve the business environment such as repealing of taxes on corporate taxes on health, education, and construction materials. Incentives for FDI includes income tax holidays, and tariff and value-added tax (VAT) exemptions.

The World Trade Organization (WTO) published its most recent trade policy review of Guyana in 2015: https://www.wto.org/english/tratop_e/tpr_e/tp420_e.htm 

Business Facilitation

All companies operating in Guyana must register with the Registrar of Companies. Registration fees are lower for companies incorporated in Guyana than those incorporated abroad.  Locally incorporated companies are subjected to a flat fee of approximately $300 and a company incorporated abroad is subject to a fee of approximately $400. Depending on the type of business, registration may take three weeks or more. Newly registered businesses are encouraged to visit the Guyana Revenue Authority and apply for a tax identification number (TIN). If a company employs Guyanese workers, the company must demonstrate compliance with the National Insurance Scheme (social security). Businesses in the sectors requiring specific licenses, such as mining, telecommunications, forestry, and banking must obtain operation licenses from the relevant authorities before commencing operations. Guyana has six municipal authorities which also assess municipal taxes: Anna Regina, Corriverton, Georgetown, Linden, New Amsterdam, and Rosehall.

GO-INVEST advises the GoG on the formulation and implementation of national investment policies and provides facilitation services to foreign investors, particularly in completing administrative formalities, such as commercial registration and applications for land purchases or leases.  Under the Status of Aliens Act, foreign and domestic investors have the same rights to purchase and lease land. However, the process to access licensing can be complex and many foreign companies have opted to partner with local companies which may assist with acquiring a license. The Investment Act specifies that there should be no discrimination between foreign and domestic private investors, or among foreign investors from different countries. The authorities maintain that foreign investors have equal access to opportunities arising from privatization of state-owned companies.

Resources

Guyana Deeds and Commercial Registry: https://dcra.gov.gy/ 
GO-INVEST: https://goinvest.gov.gy/ 
Guyana Revenue Authority: https://www.gra.gov.gy/ 

Outward Investment

While the GoG is focused on attracting inward investment into Guyana, there are no restrictions for domestic investors to invest abroad. GO-INVEST supports Guyanese investors and exporters looking to operate overseas.  In 2019, the Natural Resource Fund Act (NRF) was passed which created Guyana’s sovereign wealth fund. The Act provides the Minister of Finance with responsibility for the overall management of the fund.  The NRF is currently held at the Federal Reserve Bank of New York and, as of February 2021, has a balance of $246.5 million from its nascent oil revenues and royalty payments. The Ali administration plans to amend the existing Natural Resource Fund Act and has committed to leave all funds on deposit until a new regulatory framework is adopted. The GoG has not stated an official investment policy for the sovereign wealth fund as of March 2021.

5. Protection of Property Rights

Real Property

Property rights are enforced but it is often time consuming to determine the rightful owner of a particular plot of land. Ownership of property can be unclear even among government entities and potential investors are encouraged to have a local lawyer review any potential property purchase before executing the deal.

Guyana has a dual registry system of property rights with distinct requirements, processes, and enforcement mechanisms.  The two types of registry systems are deeds (regulated by the Deeds and Commercial Registry) and title (regulated by the Land Registry) registries that operate in separate jurisdictions, which in theory helps avoid the problem of double entry and dual registration.  Companies often complain about Guyana’s property rights being overly bureaucratic and complex, with opaque regulations that overlap and compete. Some report that this affects the proper allocation, enforcement, and effectiveness of property rights, as well as the efficiency of property-based markets, such as real estate and financial markets (especially primary ones, such as mortgage markets).  As previously stated, the judicial system is generally perceived to be slow and ineffective in enforcing legal contracts. The GoG is the country’s largest landowner. Property can be reverted to squatters who have squatted for over 10 years, but in most instances the GoG repossesses the land.

Intellectual Property Rights

Upon independence in 1966, Guyana adopted British law on intellectual property rights (IPR). Guyana’s relevant laws governing intellectual property rights (IPR) are the 1956 Copyright Act and the 1973 Trademark Act and Patents and Design Act.  Local contacts report that numerous attempts to pass comprehensive reforms to this legislation have been unsuccessful. However, piecemeal modernization amendments contained in the 2005 Geographic Indication Act, the 2006 Competition and Fair Trading Act, the 2000 Business Names Registration Act, and the 1999 Deeds Registry Authority Act have offered additional protection to local products and companies.

No modern legislation exists to protect the foreign-registered rights of investors. However, investors are encouraged to seek a lawyer to register and/or make an application for intellectual property. In the case of trademarks, registration is done through writing to the registrar, which once accepted after advertisement in the official gazette, the registrar inserts the particulars and issues a registration bearing the seal of the patent office. Guyana joined the World Intellectual Property Organization (WIPO) and acceded to the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Property in 1994. Guyana has not ratified a bilateral IPR agreement with the United States. The previous government drafted IPR legislation, which has yet to be taken up in Parliament.

Many businesses report that the registration time for a patent or trademark may take in excess of six months. However, there is a lack of effective enforcement to protect intellectual property rights. Patent and trademark infringement are common, as is evident among local television broadcasts of pirated and rebroadcasted TV satellite signals. Guyana has seen seizures of counterfeited food items by the Guyana Foods and Drugs Analyst Department (GFDD). However, the GFDD is severely short staffed and unable to police all commerce effectively. Local news media sources report that piracy of foreign academic textbooks is common. Guyana’s laws have not been amended to fully conform to the requirements of the Trade Related Intellectual Property Rights (TRIPS) Agreement.

Guyana is not listed in the U.S. Trade Representative’s 2021 Special 301 Report or its 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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/ .

6. Financial Sector

Capital Markets and Portfolio Investment

Guyana has its own stock market, which is supervised by the Guyana Association of Securities Companies and Intermediaries (GASCI).  Dividends earned from the local stock exchange are tax free.  Guyana’s local stock market performed well in 2020 with a 15 percent increase in its market capitalization.  Credit is available on market terms. The Central Bank respects IMF Article VIII with regard to payments and transfers for international transactions.

Money and Banking System

Guyana relies heavily on cash payments for most financial transactions, but credit cards and mobile payment options are increasingly common. The GoG’s monetary policy remains accommodative, aimed at achieving price stability and controlling liquidity within the economy. The financial sector is regulated by the Bank of Guyana (BOG), the country’s central bank.  The BOG is empowered under the 1995 Financial Institutions Act and the Bank of Guyana Act to regulate the financial sector.  Under these regulations a bank operating in Guyana must maintain high levels of liquidity and a strong deposit and asset base.

In the middle of 2020, licensed depository financial institutions’ (LDFIs’) capital levels continued to be high, while non-performing loans (NPLs) increased marginally during the first half of 2020. The capital adequacy ratio (CAR) remained well above the prudential benchmark of 8.0 percent at 30.7 percent. The stock of NPLs deteriorated to 10.6 percent of total loans. Stress testing was performed by the Central bank with preliminary results indicating that the banking industry’s and individual institutions’ shock absorptive capacities remained adequate under the various scenarios for foreign currency and liquidity. However, vulnerabilities were observed in the investment and credit portfolios. Guyana’s Banking Stability index strengthened from -0.22 in March 2020 to 0.15 in June 2020 attributed to improvement in liquidity. The commercial banking sector grew by 7.2 percent from March 2019 to March 2020. Foreign banks seeking to open operations in Guyana are encouraged to engage with the Bank of Guyana and GO-INVEST.

Guyana has six commercial banks.  Foreign banks can provide domestic services or enter the market with a license from the BoG.  There are no restrictions on a foreigner’s ability to establish a bank account.

Foreign Exchange and Remittances

Foreign Exchange

The Guyanese Dollar (GYD) is fully convertible and transferable, and generally stable in its value against the U.S. dollar. The Guyana dollar weighted mid-rate, relevant for official transactions, remained constant at GYD 208.50 as at half year 2020. Guyana employs a de jure float exchange rate.

No limits exist on inflows or repatriation of funds. However, regulations require that all persons entering and exiting Guyana declare all currency in excess of $10,000 to customs authorities at the port of entry. It is common practice for foreign investors to use subsidiaries outside of Guyana to handle earnings generated by exports.

Remittance Policies 

There is no limit on the acquisition of foreign currency, although the government limits the amount that several state-owned firms may keep for their own purchases.  Regulations on foreign currency denominated bank accounts in Guyana allow funds to be wired in and out of the country electronically without having to go through cumbersome exchange procedures.  Foreign companies operating in Guyana have not reported experiencing government-induced difficulties in repatriating earnings in recent years.

Sovereign Wealth Funds

Guyana established a sovereign wealth fund, the Natural Resource Fund (NRF), in 2019, which is governed by the 2019 Natural Resources Act in accordance with the Santiago Principles. In December 2019, the Ministry of Finance and Bank of Guyana signed an operational agreement for the NRF . However, the Ali administration, noting the NRF’s passage under a previous government, has committed to repeal and replace the act to further insulate the NRF from potential political intervention. Until the NRF is amended the GoG does not expect to access the funds which has are held in the New York Federal Reserve Bank. As at March 10, 2021, the SWF held a balance of approximately $268 million.

8. Responsible Business Conduct

Compared to responsible business conduct (RBC) norms in North America and Europe, Guyana-based businesses lag in adopting RBC policies and activities. Most companies conform to their business responsibilities outlined by the Organization for Economic Co-operation and Development (OECD), including human rights and labor rights, information disclosure, environment, bribery, consumer interests, science and technology, competition, and taxation. Guyana’s laws align with the guidelines for RBC by the OECD. Despite these improvements, Guyana has human rights concerns, especially involving child labor in outlying regions.

Local companies have improved RBC as firms react to increased levels of competition, partly to compete or subcontract with companies in the oil and gas sector that emphasize it.  Guyanese consumers are increasingly aware of RBC principles as the population becomes more sensitized. The GoG has expressed hope that large multinational companies will lead the way on RBC practices, setting an example for smaller local firms to follow, particularly in the extractive industries sector.  Guyana joined the Extractive Industries Transparency Initiative (EITI) as a candidate country in October 2017.  Guyana is not a signatory of the Montreux Document.

Additional Resources

Department of State

Department of Labor

9. Corruption

The law provides criminal penalties for corrupt practices by public officials. The relevant laws enacted include the Integrity Commission Act, State Assets Recovery Act, and the Audit Act. Several media outlets reported on government corruption in recent years and it remains a significant public concern.  Guyana has regulations to counter conflict of interests in the award of contracts. There are instances where the previous administration engaged in those practices, and it remains to be seen if the current administration will continue the trend; new administrations often seek legal action against members of previous administrations based on charges of fraudulent dealings. Media and civil society organizations continued to criticize the government for being slow to prosecute corruption cases.  The government passed legislation in 1997 that requires public officials to disclose their assets to an Integrity Commission prior to assuming office.  There are no significant compliance programs to detect bribery of government officials.

Widespread concerns remain about inefficiencies and corruption regarding the awarding of contracts, particularly with respect to concerns of collusion and non-transparency.  In his 2020 annual report, the Auditor General noted continuous disregard for the procedures, rules, and the laws that govern public procurement system.  There were reports of overpayments of contracts and procurement breaches.  Nevertheless, the country has made some improvements. According to Transparency International’s 2020 Corruption Perceptions Index (CPI), Guyana ranked 83 out of 180 countries for perceptions of corruption, falling 2 spots in comparison to 2019.

Companies interested in doing business in Guyana may contact a “watchdog” organization (international, regional, local nongovernmental organization operating in the country/economy that monitors corruption, such as Transparency International) for more information:

Transparency Institute of Guyana Inc.
157 Waterloo Street
Second Floor Private Sector Commission Building
North Cummingsburg
Georgetown
+592 231 9586
infotransparencygy@gmail.com 

Haiti

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Haiti’s legislation encourages foreign direct investment. Import and export policies are non-discriminatory and are not based on nationality. Haitian and foreign investors have the same rights, privileges and protections under the 1987 investment code. The Haitian government has made some progress in recent years to improve the legal framework, create and strengthen core public institutions, and enhance economic governance. The Haitian Central Bank continues to work with the International Monetary Fund (IMF) and the World Bank to implement measures aimed at creating a stable macroeconomic environment. The IMF concluded its most recent Article IV economic consultation with Haiti in January 2020 (www.imf.org/en/countries/hti). In April 2020, the IMF loaned Haiti $112 million through its rapid credit facility mechanism to provide liquidity to Haiti for expenditures to address COVID-19.

While not discriminatory towards international investment specifically, the Haitian government’s economic policies fall short of providing a sound enabling environment for foreign direct investment. The Haitian Central Bank announced in August 2020 the intention to use up to $150 million of its international reserves to intervene in the foreign exchange market, resulting in a rapid appreciation of the country’s local currency, the Haitian gourde (HTG), relative to the U.S. dollar (USD). The gourde appreciated from about 121 HTG/USD to 62 HTG/USD over two months and began steadily depreciating in November 2020 to its rate of 80 HTG/USD as of April 2021. The gourde’s sudden and unexpected change in value has resulted in sustained increased costs for export-oriented businesses, including international investors.

Despite passing anti-money laundering and anti-corruption laws to ensure that Haiti’s legislation corresponds with international standards, the government has not strictly followed the legal framework of these laws, and has failed to incentivize investment in Haiti. In early 2017, the Parliament enacted legislation making electronic signatures and electronic transactions legally binding. Other pieces of legislation that may improve Haiti’s investment climate remain pending, including incorporation procedures, a new mining code, and an insurance code. Haiti’s Finance Ministry is implementing measures to improve revenue collection and control spending. The Ministry signed an agreement with Haiti’s Central Bank in November 2019 to strengthen fiscal discipline and limit government monetary financing. Despite these measures, the rate of monetary financing over fiscal year (FY) 2021 appears to be outpacing the annual budgeted amount of $462 million (3.6 percent of FY2021 IMF-projected GDP), standing at $377 million (3.0 percent of GDP) as of March 4, 2021, less than six months into the fiscal year. The Center for the Facilitation of Investments (CFI), which operates under Haitian Ministry of Commerce oversight, was established to promote domestic and international investment opportunities in Haiti. In concept, the CFI could streamline the investment process by: working with other government agencies to simplify procedures related to trade and investment; providing updated economic and commercial information to local and foreign investors; making proposals on investor incentives; and promoting investment in priority sectors. The CFI aims to offer tailored services to large international investors, but has been unable to operate at full capacity during the pandemic. In practice, the CFI has made limited progress to incentivize job creation and boost national production in agriculture, apparel assembly, and tourism. As an example, prior to the COVID-19 pandemic, Haiti’s Tourism Association reported a 60 percent loss of jobs in the sector in 2019.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Haitian government does not impose discriminatory requirements on foreign investors. Haitian laws related to residency status and employment are reciprocal. Foreigners who are legal residents in Haiti and wish to engage in trade have, within the framework of laws and regulations, the same rights granted to Haitian citizens. However, Article 5 of the Decree on the Profession of Merchants reserves the function of manufacturer’s agent for Haitian nationals.

Foreign firms are also encouraged to participate in government-financed development projects. Performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

Foreign investors are permitted to own 100 percent of a company or subsidiary. As a Haitian entity, such companies enjoy all rights and privileges provided under the law. Additionally, foreign investors are permitted to operate businesses without equity-to-debt ratio requirements. Accounting law allows foreigners to capitalize using tangible and intangible assets in lieu of cash investments.

Foreign investors are free to enter into joint ventures with Haitian citizens. The distribution of shares is a private matter between the two parties. However, the government regulates the sale and purchase of company shares. Investment in certain sectors, such as health and agriculture, requires special Haitian government authorization. Investment in “sensitive” sectors such as electricity, water, telecommunications, and mining require a Haitian government concession as well as authorization from the appropriate governmental agency. In general, natural resources are the property of the state, and the exploitation of mineral and energy resources requires concessions and permitting from the Ministry of Public Works’ Bureau of Mining and Energy. Mining, prospecting, and operating permits may only be granted to companies established and resident in Haiti, and the establishment of new industrial mines cannot take place until an elected parliament passes an updated mining law, along the lines of a draft law initially presented in 2017.

Entrepreneurs are free to dispose of their properties and assets, and to organize production and marketing activities in accordance with local laws.

Investors in Haiti can create the following types of businesses: sole proprietorship, limited or general partnership, joint-stock company, public company (corporation), subsidiary of a foreign company, and co-operative society. The most common business structures in Haiti are corporations. A draft law (Société de Droits law), which would facilitate the creation of other types of businesses in Haiti, such as LLCs, remains pending parliamentary approval when parliament is restored.

Other Investment Policy Reviews

Haiti’s last investment policy review from the United Nations Conference on Trade and Development occurred in 2012. In general, Haiti’s political instability, weak institutions, and inconsistent economic policies impede the country’s ability to attract and direct foreign direct investment.

The World Trade Organization’s (WTO) 2015 Trade Policy Review stated that Haiti’s Investment Code and Law on Free Trade Zones is fully compliant with the Agreement on Trade-Related Investment Measures. The full report can be viewed at https://www.wto.org/english/tratop_e/tpr_e/tp427_e.htm .

Business Facilitation

While the Haitian government has made efforts to facilitate the launching and operating of businesses, the average time to start a business in Haiti is 189 days, according to the World Bank’s 2020 Ease of Doing Business Report. At present, it takes between 90 and 120 days to complete registration with the Commercial Registry at the Ministry of Commerce and obtain the authorization of operations (Droit de fonctionnement). The Center for Facilitation of Investments (CFI), a public-private organization, also offers a service providing pre-registered and fully authorized companies in manufacturing, agribusiness, and real estate the opportunity to reduce their registration time. Once the Inter-Ministerial Investment Commission validates these established companies, the shares are transferred to the new owners.

Both foreign and domestic businesses can register at Haiti’s CFI: http://cfihaiti.com . All businesses must register with the Ministry of Commerce, the Haitian tax office, the state-owned Banque Nationale de Crédit, the social security office, and the retirement insurance office.

The Ministry of Commerce and Industry’s internet registry allows investors to search for and verify the existence of a business in Haiti. The registry will eventually provide online registration of companies through an electronic one-stop shop. In October 2020, CFI launched Spotlight, an initiative with the aim of promoting visibility of companies already established in Haiti and registered in the CFI database.

Outward Investment

Neither the law nor the Haitian government restricts domestic investors from investing abroad. Still, Haiti’s outward investment is limited to a few enterprises with small investments. These investors are generally businesspersons with dual citizenship and others of Haitian origin who presently reside in the country in which their firms operate. The majority of these firms are service providers and not investment firms. There is no current program or incentive in place to encourage Haitian entrepreneurs to invest abroad.

5. Protection of Property Rights

Real Property

Foreign investors have noted that real property interests are affected by the absence of a comprehensive civil registry (cadastre). Lease agreement regulations are the same for locals and foreign investors. Many companies report that legitimate property titles are often non-existent and, if they do exist, they often conflict with other titles for the same property. Verification of property titles can take several months, and often much longer. Mortgages exist, but real estate mortgages are expensive and involve allegedly cumbersome procedures. Additionally, mortgages are not always properly recorded under the debtor or creditor’s name. Banks are also risk-averse to issue loans or mortgages. Squatting is not a common practice but was popular in the aftermath of the 2010 earthquake. As a factor in its overall Ease of Doing Business ranking, the World Bank ranks Haiti 182 out of 187 among countries globally on ease of registering property.

Intellectual Property Rights

Haitian law protects copyrights, patent rights, and inventions, as well as industrial designs and models, special manufacturers’ marks, trademarks, and business names. The law penalizes individuals or enterprises involved in infringement, fraud, or unfair competition; however, enforcement is weak. Some report that weak enforcement mechanisms, inefficient courts, and judges’ inadequate knowledge of commercial law may impede the effectiveness of statutory protections.

Haiti is a member of the World Intellectual Property Organization (WIPO). Haiti has completed accession to the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Property. Haiti is a signatory to the Buenos Aires Convention of 1910, the Patent Law Treaty, and the Beijing Treaty on Audiovisual Performances.

Haiti is not mentioned in the United States Trade Representative (USTR) 2021 Special 301 Report or the USTR 2020 Review of Notorious Markets for Counterfeiting and Piracy. For additional information about the national laws and points of contact at local intellectual property offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

6. Financial Sector

Capital Markets and Portfolio Investment

The scale of financial services remains modest in Haiti. The banking sector is well capitalized and profitable. In principle, there are no limitations to foreigners’ access to the Haitian credit market, but limited credit is available through commercial banks. The free and efficient flow of capital, however, is hindered by Haitian accounting practices, which are below international standards. While there are no restrictions on foreign investment through mergers or acquisitions, there is no Haitian stock market, so there is no way for investors to purchase shares in a company outside of direct transactions. As summarized in the most recent (2020) IMF Article IV consultation for Haiti, however, the country has accepted the obligations of Article VIII and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions.

The standards that govern the Haitian legal, regulatory, and accounting systems do not comply with international norms. Haitian laws do not require external audits of domestic companies. Local firms calculate taxes, obtain credit or insurance, prepare for regulatory review, and assess real profit and loss. Accountants use basic accounting standards set by the Organization of Certified Professional Accountants in Haiti.

Administrative oversight in the banking sector is superior to oversight in other sectors. Under Haitian law, however, banks are not required to comply with internationally recognized accounting standards, and they are often not audited by internationally recognized accounting firms. Nevertheless, Haiti’s Central Bank requires that banks apply internal audit procedures. As part of their corporate governance all private banks also have in-house audit functions. Most private banks follow international accounting norms and use consolidated reporting principles. The Central Bank is generally viewed as one of the well-functioning Haitian government institutions.

Money and Banking System

The banking sector has concentrated on credit for trade financing and in the proliferation of bank branches to capture deposits and remittances. Telebanking has expanded access to banking services for Haitians. Foreign banks are free to establish operations in Haiti. Three major banking institutions (Unibank, Sogebank and Banque Nationale de Credit) hold roughly 80 percent, or HTG 325 billion (approximately $4 billion), of total banking sector assets. With its acquisition of the Haitian operations of Scotiabank in 2017, Unibank became Haiti’s largest banking company, with a deposit market share of 35 percent. As part of the deal, Scotiabank remains one of Unibank’s international correspondent banks. U.S.-based Citibank also has a correspondent banking relationship with Unibank.

The three major commercial banks also hold 76 percent of the country’s total loan portfolio, while 70 percent of total loans are monopolized by 10 percent of borrowers. The concentration of holdings and limited number of borrowers increases the Haitian banking system’s vulnerability to systemic credit risk and restricts the availability of capital. The quality of loan portfolios in the banking system has slightly improved. Per the Haitian Central Bank, the ratio of nonperforming loans over total loans was 5.37 percent in December 2020, compared to 6.89 percent in December 2019. The Central Bank conducts regular inspections to ensure that financial institutions are in compliance with minimum capital requirements, asset quality, currency, and credit risk management.

The Central Bank’s main challenge is maintaining sound monetary policy in the context of a larger-than-expected government deficit and a depreciating local currency. The exchange rate suffers from continued pressure on the foreign exchange market. The Central Bank has made a series of interventions with a prior objective to support the value of the gourde by increasing the dollar supply in the foreign exchange market. Selling U.S. dollars in the foreign exchange market has also allowed the Central Bank to dry up the excess liquidity of the gourde in the market with the potential effect of tempering the inflation rate. Annual inflation decelerated to 18.7 percent as of January 2021, remaining on a gradual downward trend since September 2020. As of the beginning of March 2021, Haiti’s stock of net international reserves was approximately $501 million.

There are no legal limitations on foreigners’ access to the domestic credit market. However, banks demand collateral of real property to grant loans. Given the lack of effective cadastral and civil registries, loan applicants face numerous challenges in obtaining credit. The banking sector is extremely conservative in its lending practices. Banks typically lend exclusively to their most trusted and credit-worthy clients. Based on a 2018 study by FinScope Haiti, only one percent of the adult population has access to a bank loan. The high concentration of assets does not allow for product innovation at major banks.

To provide greater access to financial services for individuals and prospective investors, the Haitian government’s banking laws recognize tangible movable property (such as portable machinery, furniture, and tangible personal property) as collateral for loans. These laws allow individuals to buy condominiums, and banks to accept personal property, such as cars, bank accounts, etc., as collateral for loans. USAID has a loan portfolio guarantee program with a diversified group of financial institutions to encourage them to expand credit to productive small and medium enterprises, and rural micro-enterprises. Haiti has a credit rating registry in effect for users of the banking sector but does not have the relevant legislation in place to establish a credit rating bureau.

Haiti’s Central Bank issued a series of monetary policy measures to alleviate the potential impact of COVID-19 on the financial system and the economy in March 2020. These measures included: a reduction in the Central Bank’s policy rate to help lower interest rates on loans; the decrease of reserve requirement ratios to reduce the cost for banks to capture resources and grant loans; a reduction in the Central Bank’s refinancing rate to lower the cost of access to liquidity; the alleviation of loan repayment conditions for customers over a three-month period; the waiver of the Central Bank’s fees on interbank transfers to reduce transaction costs for customers; and the increase of limits on transactions through mobile payment services.

Foreign Exchange and Remittances

Foreign Exchange

The Haitian gourde (HTG) is convertible for commercial and capital transactions. The Central Bank publishes a daily reference rate, which is a weighted average of exchange rates offered in the formal and informal exchange markets. The difference between buying and selling rates is generally less than five percent. Funds can be freely converted into specific currencies such as the U.S. dollar, Canadian dollar, the Euro, the Dominican Republic peso, and the Panamanian peso. The U.S. dollar is usually the most widely available currency, and may be available at times when conversion into another currency is not an option. Starting in the fall of 2020, however, a shortage of U.S. dollars in the formal foreign exchange market in Haiti has been a persistent issue for businesses engaging in international trade.

Remittance Policies

The Haitian government does not impose restrictions on the inflow or outflow of capital. The Law of 1989 governs international transfer operations and remittances. Remittances are Haiti’s primary source of foreign currency and are equivalent to approximately one-third of GDP. In 2020, Haiti received about $3.2 billion in remittances. There are no restrictions or controls on foreign payments or other fund transfer transactions. While restrictions apply on the amount of money that may be withdrawn per transaction, there is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad.

The Haitian government has expressed an intention to put in place stricter measures to monitor money transfers in accordance with Haiti’s efforts to deter illicit cash flows, as mandated by the 2013 Anti-Money Laundering Act. The Haitian Central Bank (BRH) issued a circular in June 2020 applicable to commercial banks and transfer houses. The circular, which went into force as of October 2020, specifies that international transfers must be paid in foreign currency if the beneficiary receives the funds in their U.S. dollar-denominated bank account, while transfers must be paid in gourdes if the beneficiary requests payment at any point of service (branch, agency, office, kiosk) on Haitian national territory. According to the circular, payments in gourdes are made at the daily reference exchange rate published by the Central Bank.

Sovereign Wealth Funds

To date Haiti does not have a Sovereign Wealth Fund.

Per information released by the Central Bank in September 2018, since 2011 Haiti has levied a tax of $1.50 on all transfers into and out of the country, with the proceeds designated for the National Fund for Education. According to a Central Bank report in September 2018, more than $120 million has been collected since July 2011 on taxes from remittances from the diaspora.

8. Responsible Business Conduct

Awareness of responsible business conduct among producers and consumers is limited but growing, including corporate social responsibility (CSR) activities. Irish-owned telecommunications company Digicel, for example, sponsors an Entrepreneur of the Year program and has built 120 schools in Haiti. Natcom provides free internet service to several public schools throughout the country. Les Moulins d’Haiti, partially owned by U.S. firm Seaboard Marine, provides some services, including electrical power, to surrounding communities. In the aftermath of the 2010 earthquake, many firms provided logistical or financial support to humanitarian initiatives, and many continue to contribute to reconstruction efforts. Haiti’s various chambers of commerce have also become more supportive of business ethics and social responsibility programs. During the COVID-19 pandemic, many Haitian, U.S., and other foreign-owned firms donated to prevention and treatment measures.

The Haitian government has not established any incentives to encourage to responsible business conduct.

Additional Resources

Department of State

Department of Labor

9. Corruption

Corruption, including bribery, raises the costs and risks of doing business in Haiti. U.S. firms have complained that corruption is a major obstacle to effective business operation in Haiti. They frequently point to requests for payment by customs officials in order to clear import shipments as examples of solicitation for bribes.

Haitian law, applicable to individuals and financial institutions, criminalizes corruption and money laundering. Bribes or attempted bribes toward a public official are a criminal act and are punishable by the criminal code (Article 173) for one to three years of imprisonment. The law also contains provisions for the forfeiture and seizure of assets. In practice, however, the law is unevenly and rarely applied.

Transparency International’s Corruption Perception Index for 2020 ranked Haiti in the second lowest spot in the Americas region and 170 out of 180 countries worldwide, with a score of 18 out of 100 in perceived levels of public corruption.

The Haitian government has made some progress in enforcing public accountability and transparency, but substantive institutional reforms are still needed. In 2004, the Government of Haiti established the Anti-Corruption Commission (ULCC), but the organization lacks the necessary resources and political independence to be effective. In 2008, parliament approved the law on disclosure of assets by civil servants and high public officials prepared by ULCC, but to date, compliance has been almost nonexistent.

Haiti’s Superior Court of Auditors and Administrative Disputes (CSCCA) is currently one of Haiti’s few independent government institutions, responsible for reviewing draft government contracts; conducting audits of government expenditures; and clearing all government officials, including those at the political level, to manage public funds. In November 2020, however, the Haitian government published a decree limiting the authority of the Audit Court. The CSCCA had issued three reports in January 2019, May 2019, and August 2020 citing improper management practices by the Haitian government and the alleged wastage of nearly $2 billion of the Petrocaribe funds. Public anger over the Petrocaribe scandal has since burgeoned into a grassroots movement against widespread corruption in Haiti.

Haiti is not a party to the OECD Anti-Bribery Convention.

Resources to Report Corruption

Any corruption-related activity can be reported to the Haitian Anti-Corruption Unit, responsible for combatting corruption:

Hans Jacques Ludwig Joseph
Director General
Unite de Lutte Contre la Corruption
13, rue Capotille, Pacot, Port-au-Prince, Haiti
Telephone: (509) 2811-0661 / (509) 2816-7071
Email: info@ulcc.gouv.ht 

Marilyn B. Allien
President
Fondation Heritage pour Haiti
Petion-Ville, Haiti
Telephone: (509) 3452-1570
Email: admlfhh@yahoo.com  / heritagehaiti@yahoo.com  

Honduras

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GOH is open to foreign investment, and low labor costs, proximity to the U.S. market, and the large Caribbean port of Puerto Cortes can make Honduras attractive to investors.

The legal framework for investment includes the Honduran constitution, the investment chapter of CAFTA-DR (which takes precedence over most domestic law), and the 2011 Law for the Promotion and Protection of Investments. The Honduran constitution requires all foreign investment to complement, but not substitute for, national investment. Honduras’ legal obligations guarantee national treatment and most favored nation treatment for U.S. investments in most sectors of the Honduran economy and include enhanced benefits in the areas of insurance and arbitration for domestic and foreign investors. CAFTA-DR has equal status with the constitution in most sectors of the Honduran economy.

Critics complain that lack of clarity and overlapping responsibilities among the multiple entities charged with attracting increased foreign direct investment undermine the government’s ability to effectively promote Honduras as a profitable destination for foreign capital. The National Investment Council, the Ministry of Investment Promotion, and the Ministry of Economic Development all have equities in attracting foreign investment and an ambitious job creation mandate.

Limits on Foreign Control and Right to Private Ownership and Establishment

Honduras’ Investment Law does not limit foreign ownership of businesses, except for those specifically reserved for Honduran investors, including small firms with capital less than $6,300 and the domestic air transportation industry. For all investments, at least 90 percent of companies’ labor forces must be Honduran, and companies must pay at least 85 percent of their payrolls to Hondurans. Majority ownership by Honduran citizens is required for companies in the commercial fishing sector, forestry, local transportation, radio, television, or benefiting from the Agrarian Reform Law. There is no screening or approval process specific to foreign direct investments in Honduras. Foreign investors are subject to the same requirements for environmental and other regulatory approvals as domestic investors.

According to the law, investors can establish, acquire, and dispose of enterprises at market prices under freely negotiated conditions without government intervention, but some foreign business operators report difficulty closing businesses. Private enterprises fairly compete with public enterprises on market access, credit, and other business operations. Foreign investors have the right to own property, subject to certain restrictions established by the Honduran constitution and several laws relating to property rights. Investors may acquire, profit, use, and dispose of property ownership with the exception of land within 40 kilometers of international borders and shorelines. Honduran law does permit, however, foreign individuals to purchase properties close to shorelines in designated “tourism zones.”

Other Investment Policy Reviews

In 2016, the World Trade Organization conducted a Trade Policy review of Honduras: https://www.wto.org/english/tratop_e/tpr_e/tp436_e.htm .

Business Facilitation

The Honduran government has worked to simplify administrative procedures for establishing a company in recent years, including by offering many processes online. GOH officials are pressing for, and have made good progress in, the digitalization of business, import, permitting and licensing, and taxation processes to increase efficiency and transparency, but procedural red tape to obtain government approval for investment activities remains common, especially at the local level. Honduras’ business registration information portal ( https://honduras.eregulations.org/ ) provides clear step-by-step information on registering a business, including fees, agencies, and required documents.

Honduras ratified the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) in July 2016, agreeing to expedite the movement, release, and clearance of goods, including goods in transit. The TFA also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. According to the WTO/TFA database, Honduras’ current rate of implementation of TFA Category A notification commitments stands at 59.2 percent.

During the past year the GOH moved 38 of its ministries and agencies into the newly finished Centro Civico government complex, where it hopes to achieve efficiencies in business facilitation and other processes. In addition to moving information storage to digital formats across the government, the GOH plans to streamline public services though use of single windows for multiple services at the new center.

Outward Investment

Honduras does not promote or incentivize outward investment.

5. Protection of Property Rights

Real Property

Honduran law recognizes secured interests in movable and real property. The Chamber of Commerce and Industry of Tegucigalpa (CCIT) and the Chamber of Commerce and Industry of San Pedro Sula (CCIC) both manage their own merchant records. The national property registry is managed by the Property Institute. The right for CCIT and CCIC to administer their own merchant registries is derived from a concession in Honduras’ secured transactions law.

Land title procedures have been an issue leading to investment disputes involving U.S. nationals who are landowners, especially, but not limited to, the tourist destination of Roatan. Title insurance is not widely available in Honduras and approximately 80 percent of the privately held land in the country is either untitled or improperly titled. Resolution of disputes in court often takes years. There are claims of widespread corruption in land sales, deed filing, and dispute resolution, including claims against attorneys, real estate companies, judges, and local officials. Although Honduras has made some progress, the property registration system is perceived as unreliable and represents a constraint on investment, particularly in the Bay Islands. In addition, a lack of implementing regulations leads to long delays in the awarding of titles in some regions.

Intellectual Property Rights

The legislative framework for the protection of intellectual property rights (IPR), which includes the Honduran copyright law and its industrial property law, is generally adequate but often poorly implemented. Honduras implements its obligations under the Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO). Honduran law protects data exclusivity for a period of five years and protects process patents, but does not recognize second-use patents. The Property Institute (IP) and Public Ministry handle IPR protection and enforcement.

CAFTA-DR Chapter 15 on Intellectual Property Rights further provides for the protection and enforcement of a range of IPR, which are consistent with U.S. and international standards as well as with emerging international standards of IPR protection and enforcement. There are also provisions on deterrence of piracy and counterfeiting. Additionally, CAFTA-DR provides authorities the ability to confiscate pirated goods and investigate intellectual property cases on their own initiative.

The Honduran legal framework provides deterrence against piracy and counterfeiting by requiring the seizure, forfeiture, and destruction of counterfeit and pirated goods and the equipment used to produce them. The law also provides for statutory damages for copyright and trademark infringement, to ensure monetary damages are awarded even when losses associated with an infringement are difficult to assign.

In spite of this regulatory framework, digital piracy is widespread and frequently ignored in Honduras, especially by telecommunications companies.

Honduras is not listed in United States Trade Representative’s 2021 Special 301 Report or its 2020 Review of Notorious Markets for Counterfeiting and Piracy.

Resources for Rights Holders

A list of local attorneys is available at https://hn.usembassy.gov/u-s-citizen-services/local-resources-of-u-s-citizens/attorneys/. The U.S. Commercial Service office also maintains a screened list of attorneys through its Business Service Provider (BSP) directory . The Honduran-American Chamber of Commerce works with U.S. and Honduran companies that encounter commercial challenges, including intellectual property rights issues ( http://www.amchamhonduras.org/ ). For additional information about national laws and points of contact at local IP offices, please see World Intellectual Property Organization’s country profiles: http://www.wipo.int/directory/en/ .

6. Financial Sector

Capital Markets and Portfolio Investment

There are no government restrictions on foreign investors’ access to local credit markets, though the local banking system generally extends only limited amounts of credit. Investors should not consider local banks a significant capital resource for new foreign ventures unless they use specific business development credit lines made available by bilateral or multilateral financial institutions such as the Central American Bank for Economic Integration.

A limited number of credit instruments are available in the local market. The only security exchange operating in the country is the Central American Securities Exchange (BCV) in Tegucigalpa, but investors should exercise caution before buying securities listed on it. Supervised by the National Banking and Insurance Commission (CNBS), the BCV theoretically offers instruments to trade bankers’ acceptances, repurchase agreements, short-term promissory notes, Honduran government private debt conversion bonds, and land reform repayment bonds. In practice, however, the BCV is almost entirely composed of short- and medium-term government securities and no formal secondary market for these bonds exists.

A few banks have offered fixed rate and floating rate notes with maturities of up to three years, but outside of the banks’ issuances, the private sector does not sell debt or corporate stock on the exchange. Any private business is eligible to trade its financial instruments on the BCV, and firms that participate are subject to a rigorous screening process, including public disclosure and ratings by a recognized rating agency. Historically, most traded firms have had economic ties to the other business and financial groups represented as shareholders of the exchange. As a result, risk management practices are lax and public confidence in the institution is limited.

Money and Banking System

The Honduran financial system is comprised of commercial banks, state-owned banks, savings and loans institutions, and financial companies. There are currently 16 commercial banks operating in Honduras. There is no offshore banking or homegrown blockchain technology in Honduras. Honduras has a highly professional, independent Central Bank and an effective banking regulator, the Comisión Nacional de Bancos y Seguros. While access to credit remains limited in Honduras, especially for historically underserved populations, the financial sector is a source of economic stability in the country.

Foreign Exchange and Remittances

Foreign Exchange

Article 10.8 of CAFTA-DR ensures the free transfer of funds related to a covered investment. Local financial institutions freely exchange U.S. dollars and other foreign currencies. Foreigners may open bank accounts with a valid passport. For deposits exceeding the maximum deposits specified for different account types (corporate or small-medium enterprises), banks require documentation verifying the fund’s origin.

The Investment Law guarantees foreign investors access to foreign currency needed to transfer funds associated with their investments in Honduras, including:

  • Imports of goods and services necessary to operate
  • Payment of royalty fees, rents, annuities, and technical assistance
  • Remittance of dividends and capital repatriation

The Central Bank of Honduras  instituted a crawling peg in 2011 that allows the lempira to fluctuate against the U.S. dollar by seven percent per year. The Central Bank mandates any daily price of the crawling peg be no greater than 100.075 percent of the average for the prior seven daily auctions. These restrictions limit devaluation to a maximum of 4.8 percent annually. As of March 31, 2021, the exchange rate is 24.0199 lempira to the U.S. dollar.

The Central Bank uses an auction system to allocate foreign exchange based on the following regulations:

  • The Central Bank sets base prices every five auctions according to the differential between the domestic inflation rate and the inflation rate of Honduras’ main commercial partners.
  • The Central Bank’s Board of Directors determines the procedure to set the base.
  • The Board of Directors establishes the exchange commission and the exchange agencies in their foreign exchange transactions.
  • Individuals and corporate bodies can participate in the auction system for dollar purchases, either by themselves or through an exchange agency. The offers can be no less than $10,000, no more than $300,000 for individuals, and no more than $1.2 million for corporations.

To date, the U.S. Embassy in Honduras has not received complaints from individuals regarding the process for converting or transferring funds associated with investments.

Remittance Policies

The Investment Law guarantees investors the right to remit their investment returns and, if they liquidate their investments, to remit the principal capital invested. Foreign investors that choose to remit their investment proceeds from Honduras do so through foreign exchange transactions at Honduran banks or foreign banks operating in Honduras. These exchange transactions are subject to the same foreign exchange process and regulation as other transactions.

Sovereign Wealth Funds

Honduras does not have a sovereign wealth fund.

8. Responsible Business Conduct

Awareness of the importance of Responsible Business Conduct (RBC) is growing among both producers and consumers in Honduras. An increasing number of local and foreign companies operating in Honduras include conduct-related responsibility practices in their business strategies. The Honduran Corporate Social Responsibility Foundation (FUNDAHRSE) has become a strong proponent in its efforts to promote transparency in the business climate and provides the Honduran private sector, particularly small- and medium-sized businesses, with the skills to engage in responsible business practices. FUNDAHRSE’s approximately110 members can apply for the foundation’s “Corporate Social Responsibility Enterprise” seal for exemplary responsible business conduct involving work in areas related to health, education, environment, codes of ethics, employment relations, and responsible marketing.

RBC related to the environment and outreach to local communities is especially important to the success of investment projects in Honduras. Several major foreign investment projects in Honduras have stalled due to concerns about environmental impact, land rights issues, lack of transparency, and problematic consultative processes with local communities, particularly indigenous communities. Although the International Labor Organization Convention 169 on Indigenous and Tribal Peoples was ratified by the GOH in 1995 and Honduras voted in favor of UN’s Indigenous People’s rights in 2007, there is still much to do in the area. There is still a need for foreign investors to build trust with local communities, while employing international best practices and standards to reduce the risk of conflict and promote sustainable and equitable development.

Examples of international best practices include the following:

  • Voluntary Principles on Security and Human Rights Initiative
  • The UN Guiding Principles on Business and Human Rights
  • The Organization for Economic Co-operation and Development Guidelines for Multinational Enterprises.

Additional Resources

Department of State

Department of Labor

9. Corruption

Despite international pressure, President Hernandez allowed the four-year mandate of the OAS Mission Against Corruption and Impunity in Honduras (MACCIH) to expire in January 2020.  MACCIH began work in 2015 following widespread anti-corruption protests in the wake of a scandal involving Honduras’ social security fund. During its tenure, MACCIH worked with the Public Ministry to bring cases against current and former public officials and to advance justice reform, including by presenting draft legislation for a Law of Effective Collaboration (plea-bargaining law) which remains stalled in Congress.  MACCIH and the Public Ministry created a special anti-corruption unit (UFECIC) to pursue large-scale corruption cases which continues to exist despite the end of MACCIH’s mandate. Its replacement, UFERCO, operates within the Public Ministry with fewer resources and personnel.

U.S. businesses and citizens report corruption in the public sector and the judiciary is a significant constraint to investment in Honduras.  Historically, corruption has been pervasive in government procurement, issuance of government permits, customs, real estate transactions (particularly land title transfers), performance requirements, and the regulatory system.  Civil society groups are critical of recent legislation granting qualified immunity to government officials and a law that gives the highly politicized government audit agency a first look at corruption cases.  In 2018, Congress passed a revision of the 1984 penal code that lowered penalties for some corruption offenses. The new code went into effect in June 2020 and was retroactively applied to several high-profile corruption cases resulting in a spate of dismissals and retrials.  Since 2012, the Honduran government has signed agreements with Transparency International, the Construction Sector Transparency Initiative, and the Extractive Industry Transparency Initiative.  In late 2020, the GOH created a new Ministry of Transparency to act as the government’s lead institution in coordinating and implementing efforts to promote transparency and integrity and prevent government corruption.

Honduras’s Rankings on Key Corruption Indicators:

Measure Year Index/Ranking
TI Corruption Index 2020 24/100, 157 of 180
World Bank Doing Business May 2020 133/190
MCC Government Effectiveness FY 2021 -0.19 (32 percent)
MCC Rule of Law FY 2021 -0.59 (7 percent)
MCC Control of Corruption FY 2021 -0.29 (18 percent)

The United States Foreign Corrupt Practices Act (FCPA) deems it unlawful for a U.S. person, and certain foreign issuers of securities to make corrupt payments to foreign public officials for the purpose of obtaining or retaining business for directing business to any person. The FCPA also applies to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States. For more information, see the FCPA Lay-Person’s Guide: http://www.justice.gov/criminal/fraud/ .

Honduras ratified the UN Anticorruption Convention, in December 2005. The UN Convention requires countries to establish criminal penalties for a wide range of acts of corruption. The UN Convention covers a broad range of issues from basic forms of corruption such as bribery and solicitation, embezzlement, trading in influence, and the concealment and laundering of the proceeds of corruption. The UN Convention contains transnational business bribery provisions that are functionally similar to those in the Organization for Economic Cooperation and Development Anti-Bribery Convention.

Honduras ratified the Inter-American Convention against Corruption (OAS Convention) in1998. The OAS Convention establishes a set of preventive measures against corruption; provides for the criminalization of certain acts of corruption, including transnational bribery and illicit enrichment; and contains a series of provisions to strengthen the cooperation between its states’ parties in areas such as mutual legal assistance and technical cooperation.

Resources to Report Corruption

Companies that face corruption-related challenges in Honduras may contact the following organizations to request assistance.

Public Ministry
Eva Nazar
Coordinator for External Cooperation
cooperacionexterna.mp@gmail.com 

The Public Ministry is the Honduran government agency responsible for criminal prosecutions, including corruption cases.

Association for a More Just Society (ASJ)
Yahayra Yohana Velasquez Duce
Director of Transparency
Residencial El Trapiche, 2da etapa Bloque B, Casa #25
+504-2235-2291
info@asjhonduras.com 

ASJ is a nongovernmental Honduran organization that works to reduce corruption and increase transparency. It is an affiliate of Transparency International.

National Anti-Corruption Council (CNA)
Alejandra Ferrera
Executive Board Assistant
Colonia San Carlos, calle Republica de Mexico
504-2221-1181
aferrera@cna.hn 

CNA is a Honduran civil society organization comprised of Honduran business groups, labor groups, religious organizations, and human rights groups.

U.S. Embassy Tegucigalpa, Honduras
Attention: Economic Section
Avenida La Paz
Tegucigalpa M.D.C., Honduras
Telephone Numbers: (504) 2236-9320, 2238-5114
Fax Number: (504) 2236-9037

Companies can also report corruption through the Department of Commerce Trade Compliance Center Report a Trade Barrier website: http://tcc.export.gov/Report_a_Barrier/index.asp .

Jamaica

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Jamaica (GOJ) is open to foreign investment in all sectors of the economy. The GOJ made significant structural changes to its economy, under International Monetary Fund (IMF) guidance during the six year period to 2019, resulting in an improved investment environment. Since 2013, Jamaica’s Parliament passed numerous pieces of legislation to improve the business environment and support economic growth through a simplified tax system and broadened tax base. The establishment of credit bureaus and a Collateral Registry under the Secured Interest in Personal Property (SIPP) legislation are improving access to credit. Jamaica made starting a business easier by consolidating forms and made electricity less expensive by reducing the cost of external connection works. The GOJ implemented an electronic platform for the payment of taxes and has established a 90-day window for development approvals.

The GOJ’s public procurement regime was amended, with effect from April 2019, to include provisions for domestic margins of preference, affording preferential treatment to Jamaican suppliers in public contracts in some circumstances, and setting aside a portion of the government’s procurement budget for local micro, small, and medium enterprises. Notwithstanding, U.S. businesses are encouraged to participate in GOJ open procurements, many of which are published in media and via the government’s electronic procurement website: https://www.gojep.gov.jm/ .

Jamaica’s commitment to regulatory reform is an intentional effort to become a more attractive destination for foreign investment. According to the World Bank’s “Doing Business 2020” report, Jamaica ranked 71 out of 190 economies, above average compared to Latin American and Caribbean countries. The country improved or held firm on all metrics assessed in the 2020 report, moving most significantly in the area registering property. The GoJ replaced the Ad Valorem Stamp Duty rate payable on the registration of collateral, such as property used to secure loan instruments, with a flat rate duty. Additionally, the transfer tax, payable on the change of ownership from one person to another, was also reduced during the year from five to two percent. Jamaica is ranked 80 out of 140 countries in the World Economic Forum’s 2019 Global Competitiveness Index. Some report that bureaucracy remains a major impediment, with the country continuing to underperform in the areas of trading across borders, paying taxes, and enforcing contracts.

Jamaica’s trade and investment promotion agency, Jamaica Promotions Corporation (JAMPRO), is the GOJ agency responsible for promoting business opportunities to local and foreign investors. While JAMPRO does not institute general criteria for FDI, the institution targets specific sectors for investment and promotes Jamaican exports (see  http://www.jamaicatradeandinvest.org/ ).

JAMPRO and the Jamaica Business Development Corporation assist micro, small, and medium-sized enterprises (MSME) primarily through business facilitation and capacity building. MSMEs tend to consist of less than 10 employees. Such fee-based services would be made available to foreign-owned MSMEs (see  https://www.jbdc.net/ ).

Limits on Foreign Control and Right to Private Ownership and Establishment

All private entities, foreign and domestic, are entitled to establish and own business enterprises, as well as to engage in all forms of remunerative activity subject to, inter alia, labor, registration, and environmental requirements. Jamaica does not impose limits on foreign ownership or control and local laws do not distinguish between local and foreign investors. There are no sector-specific restrictions that impede market access. A 2017 amendment to the Companies Act requires companies to disclose beneficial owners to the Companies Office of Jamaica (ORC).  The law mandates that the company retains records of legal and beneficial owners for seven years. The GOJ has proposed new legislation on the incorporation and operation of International Business Companies (IBC), which is designed to attract and facilitate a wide variety of international business activities to include: (1) holding companies providing asset protection for intellectual property rights, real property, and the shares of other companies; (2) serving as vehicles for licensing and franchising; (3) conducting international trade, and investment activities; (4) acting as special purpose vehicles in international financial transactions; and, (5) serving as the international headquarters for global companies.

The U.S. government is not aware of any discrimination against foreign investors at the time of initial investment or after the investment is made. However, under the Companies Act, investors are required to either establish a local company or register a branch office of a foreign-owned enterprise. Branches of companies incorporated abroad must register with the Registrar of Companies if they intend to operate in Jamaica. There are no laws or regulations requiring firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control. Incentives are available to local and foreign investors alike, including various levels of tax relief.

Other Investment Policy Reviews

Jamaica concluded a third-party trade policy review through the WTO in September 2017. The WTO Secretariat’s recommendations are listed here: https://www.wto.org/english/tratop_e/tpr_e/tp459_e.htm 

Jamaica has not undertaken any investment policy reviews within the last three years in conjunction with the Organization for Economic Cooperation and Development (OECD) or United Nations Conference on Trade and Development (UNCTAD). The GOJ’s previous WTO review took place in 2011 and an OECD review took place in 2004.

Business Facilitation

Businesses can register using the “Super Form,” a single Business Registration Form for New Companies and Business Names. The ORC acts as a “one-stop-shop,” effectively reducing the registration time to between one and three days. Foreign companies can register using these forms, with or without the assistance of an attorney or notary. The “Super Form” can be accessed under Forms at the ORC’s website ( https://www.orcjamaica.com ).

Outward Investment

While the GOJ does not actively promote an outward investment program, it does not restrict domestic investors from investing abroad.

5. Protection of Property Rights

Private entities, whether foreign or domestic, generally have the right to freely establish, own, acquire, and dispose of business enterprises and may engage in all forms of remunerative activity.

Real Property

Property rights are guaranteed by the Jamaican Constitution. The Registration of Titles Act recognizes and provides for the enforcement of secured interests in property by way of mortgage. It also facilitates and protects the acquisition and disposition of all property rights, though some report that working through Jamaica’s bureaucracy can result in significant delays. With less than half of land in Jamaica registered, it can take a long time for landowners to secure titles.

Squatting is also a major challenge in Jamaica, with nearly 20 percent of the population living as squatters. Three-quarters of these squatters reside on government lands. Under the Registration of Titles Act, a squatter can claim a property by adverse possession (without compensating the owner for the land) if a person can demonstrate that he or she has lived on government land for more than 60 years, or on private property for more than 12 years undisturbed (including without any payment to the landowner). There are no specific regulations regarding land lease or acquisition by foreign and/or non-resident investors.

The country’s World Bank Doing Business Report ranking for ease of “registering property” was 85 in 2020, improving significantly due to the reduction in cost associated with transferring and registering collateral using property. Jamaica continued to outperform other Latin America and Caribbean countries in the time required to close a property transaction.

Registration of Titles Act: http://moj.gov.jm/sites/default/files/laws/Registration%20of%20Titles.pdf

Intellectual Property Rights

Jamaica has one of the stronger intellectual property (IP) protection regimes in Latin America and the Caribbean, according to the International Property Rights Index, although legislative and enforcement gaps still exist. Jamaica is a member of the World Intellectual Property Organization (WIPO) and is a signatory of the Berne Convention for the Protection of Literary and Artistic Works. Jamaica and the United States have an Intellectual Property Rights Agreement and a Bilateral Investment Treaty, which provide assurances to protect intellectual property. It is relatively easy to register IP, and the Jamaica Intellectual Property Office (JIPO) assists parties interested in registering IP and supports investors’ efforts to enforce their rights. Overall, protections across all types of IP are improving.

Law enforcement efforts to combat counterfeit and pirated goods are improving on the ground but border enforcement remains a challenge. IP violations tend to be more in relation to physical goods, while electronic IP theft is less common.

The country’s trademark and copyright regimes satisfy the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). In January 2020, the country passed its long-awaited TRIPS compliant Patent and Designs Bill and has been removed from the USTR Special 301 Watchlist. The Geographical Indications Act (GI) of 2004 is now fully in force and TRIPS compliant, protecting products whose particular quality or reputation is attributable to its geographical origin. General law provides protection for trade secrets and protection against unfair competition is guaranteed under the Fair Competition Act.

In the area of copyright protection, amendments to the Copyright Act passed in June 2015 fulfilled Jamaica’s obligations under the WIPO Internet Treaties and extended copyright protection term from 50 to 95 years. The Copyright Act complies with the TRIPS Agreement and adheres to the principles of the Berne Convention, and it covers works ranging from books and music to computer programs. Amendments in June 1999 explicitly provided copyright protection on compilations of works such as databases and make it an offense for a person to manufacture or trade in decoders of encrypted transmissions. It also gives persons in encrypted transmissions or in broadcasting or cable program services a right of action against persons who infringe upon their rights.

Enforcement

The Jamaica Constabulary Force established a specialized intellectual property unit within its counter terrorism and organized crime branch (C-TOC) in 2015 to boost IP enforcement. The unit continued to work with the Contraband Enforcement Team of the Jamaica Customs Agency to seize and destroy counterfeit goods, while pursing criminal proceedings where possible. In 2020, CTOC destroyed USD1.3 million in counterfeit goods. The amount was lower than previous years due to the COVID-19 pandemic and lack of storage space. The most commonly counterfeited goods include shoes, alcohol, cigarettes, clothing, handbags, and pharmaceuticals. Jamaica’s border enforcement efforts are hampered by customs officers not having ex officio authority to seize and destroy counterfeit goods. Rights holders must first be provided with visual samples of suspect merchandise to verify the item as counterfeit, submit a declaration indicating the differences between the fake and actual brands, and provide an authorization to seize the merchandise.  Rights holders are responsible for paying the costs associated with storage and destruction of counterfeit goods, and in recent cases the cost started at USD250,000. Presently the Commissioner of Customs may grant up to 10 days for a rights holder to produce the required evidence and commitments before releasing suspected counterfeit goods that are in transit.

Jamaica is not included in the U.S. Trade Representative’s 2021 Special 301 Report or its 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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/ .

6. Financial Sector

Capital Markets and Portfolio Investment

Credit is available at market terms, and foreigners are allowed to borrow freely on the local market at market-determined rates of interest. A relatively effective regulatory system was established to encourage and facilitate portfolio investment. Jamaica has had its own stock exchange, the Jamaica Stock Exchange (JSE), since 1969. The JSE was the top performing capital market indices in 2018 and was among the top five performers in 2019. The Financial Services Commission (FSC) and the Bank of Jamaica (BOJ), the central bank, regulate these activities. Jamaica adheres to IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.

Money and Banking System

At the end of 2019 there were 11 deposit-taking institutions (DTIs) consisting of eight commercial banks, one merchant bank (Licensed under the Financial Institutions Act) and two building societies. The number of credit unions shrank from 47 at the end of 2009 to 25 at the end of 2019. Commercial banks held assets of approximately USD13 billion and liabilities of USD11.3 billion at the end of 2020. Non-performing loans (NPL) of USD185 million at end December 2020, were 2.9 percent of total loans. Five of the country’s eight commercial banks are foreign-owned. After a financial sector crisis in the mid-1990s led to consolidations, the sector has remained largely stable.

In October 2018, the GOJ took legislative steps to modernize and make the central bank operationally independent through the tabling of amendments to the Bank of Jamaica (BOJ) Act. The modernization program includes, inter alia, the institutionalization of the central bank independence, improved governance, and the transitioning of monetary policy towards inflation targeting. The modernization efforts continued in 2020 with the passage of the Bank of Jamaica Amendment Act to allow for, among other things: (1) full-fledged inflation targeting; (2) improved capitalization, governance, transparency, and accountability; (3) monetary policy decisions to be devolved to a monetary policy committee; and (4) the central bank Governor to account to Parliament. The Act will therefore remove the power of the government to give monetary policy direction to the central bank. These changes will move Jamaica’s financial governance framework closer in line with international standards.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions on holding funds or on converting, transferring, or repatriating funds associated with an investment. In 2017, the BOJ implemented a new system called the BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT) for the sale and purchase of foreign exchange (FX) to market players. The new system is a more efficient and transparent way of intervening in the FX market to smooth out demand and supply conditions.

Investment-related funds are freely convertible to regularly traded currencies, particularly into United States, Canadian dollars and United Kingdom pounds. However, foreign exchange transactions must be conducted through authorized foreign exchange dealers, “cambios,” and bureau de change. Foreign exchange is generally available and investors are free to remit their investment returns.

Remittance Policies

The country’s financial system is fully liberalized and subject to market conditions. There is no required waiting period for the remittance of investment returns. Any person or company can purchase instruments denominated in foreign currency. There are no restrictions or limitations on the inflow or outflow of funds for the remittance of profits or revenue. The country does not possess the financial muscle to engage in currency manipulation.

Jamaica was listed among the Major Money Laundering Jurisdictions in the U.S. Department of State’s 2020 International Narcotics Control Strategy Report (INCSR), while noting that the GoJ has enacted legislation to address corruption.

In February 2020, Jamaica was grey listed by the Financial Action Task Force, for failing to address some of the deficiencies identified in the 2017 Caribbean Financial Action Task Force Mutual Evaluation Report (MER) on anti-money laundering and counter-terrorist financing measures ( https://www.cfatf-gafic.org/index.php/documents/4th-round-meval-reports ).

Having entered an Observation Period following the 2017 publication of the MER, Jamaica’s progression towards remedying partially and non-compliant areas was slow. GoJ has developed a FAFT action plan which includes developing a broader understanding of its money laundering/terrorist financing risk and including all financial institutions and designated non-financial businesses and professions in the AML/CFT regime, and ensuring adequate risk-based supervision in all sectors.

Sovereign Wealth Funds

Jamaica does not have a sovereign wealth fund or an asset management bureau.

8. Responsible Business Conduct

Responsible Business Conduct (RBC) among many Jamaican companies is a developing practice, with more established companies further along the scale. In 2013, the government provided additional financial incentives for corporations to support charity work through the Charities Act, under which corporations and individuals can claim a tax deduction on contributions made to registered charitable organizations. Some large publicly listed companies and multinational corporations in Jamaica maintain their own foundations that carry out social and community projects to support education, youth employment, and entrepreneurship.

In 2018, the GOJ became party to the OECD’s Base Erosion and Profit Shifting Multilateral Convention, which updates the network of bilateral tax treaties and reduces opportunities for tax avoidance by multinational enterprises. GOJ also became signatory to the Convention on Mutual Administrative Assistance in Tax Matters, effective March 1, 2019, having deposited instruments of ratification in November 2018.

Additional Resources

Department of State

Department of Labor

9. Corruption

Jamaican law provides criminal penalties for corruption by public officials, however, there is at least circumstantial evidence that some officials engage in corrupt practice. There were also reports of government corruption in 2020 and it remained a significant cause of public concern. Media and civil society organizations continued to criticize the government for being slow and at times reluctant to tackle corruption.

Under the Corruption Prevention Act, public servants can be imprisoned for up to 10 years and fined as much as USD 100,000 if found guilty of engaging in acts of bribery, including bribes to foreign public officials.

In 2017, Jamaica passed an Integrity Commission Act that consolidated three agencies with anti-corruption mandates into a single entity, the Integrity Commission, which now has limited prosecutorial powers.  The three agencies are the precursor Integrity Commission, which received and monitored statutory declarations from parliamentarians; the Office of the Contractor General (OCG), which monitored government contracts; and the Commission for the Prevention of Corruption, which received the financial filings of specified public servants. A key area of concern for corruption is in government procurement. However, successful prosecutions – particularly for high-level corruption – are rare.

Two Ministers of government demitted office between 2018 and March 2019, in the wake of corruption allegations.

Corruption, and its apparent linkages with organized crime, appear to be one of the root causes of Jamaica’s high crime rate and economic stagnation.  In 2020, Transparency International gave Jamaica a score of 44 out of a possible 100 on the Corruption Perception Index (CPI).

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Jamaica ratified major international corruption instruments, including the Inter-American Convention Against Corruption and the United Nations Convention Against Corruption. Jamaica is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Major Organised Crime and Anti-Corruption Agency (MOCA)
24hr Hotline: 1-800-CORRUPT (1-800-267-7878)
Email: info@moca.gov.jm 

National Integrity Action
2 Holborn Road
Kingston 10, Jamaica
Phone: 1 876 906 4371/ Fax: 876-754-7951
Email: info@niajamaica.org 

Panama

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Panama depends heavily on foreign investment and has worked to make the investment process attractive and simple.  With few exceptions, the Government of Panama makes no distinction between domestic and foreign companies for investment purposes.  Panama benefits from stable and consistent economic policies, a dollarized economy, and a government that consistently supports trade and open markets and encourages foreign direct investment.

Prior to the pandemic, Panama had the highest level of Foreign Direct investment (FDI) in Central America.  Through the Multinational Headquarters Law (SEM), the Multinational Manufacturing Services Law (EMMA), and a Private Public Partnership framework, Panama offers tax breaks and other incentives to attract investment.  The Ministry of Commerce and Industry (MICI) is responsible for overseeing foreign investment, prepares an annual foreign investment promotion strategy, and provides services required by investors to expedite investments and project development.  MICI, in cooperation with the Minister Counselor for Investment, facilitates the initial investment process and provides integration assistance once a company is established in Panama.

Panama’s Attraction of Investment and Promotion of Exports (PROPANAMÁ) program, which operates under the auspices of the Ministry of Foreign Affairs (MFA), provides investors with information, expedites specific projects, leads investment-seeking missions abroad, and supports foreign investment missions to Panama.  In some cases, other government offices work with investors to ensure that regulations and requirements for land use, employment, special investment incentives, business licensing, and other conditions are met.  The Government of Panama (GoP) proposed a bill in February 2021 to make PROPANAMÁ an independent agency with its own budget (http://propanama.mire.gob.pa/sobre-propanama).

In 2020, the United States ran a $5.1 billion trade surplus in goods with Panama.  Both countries have signed a Trade Promotion Agreement (TPA) that entered into force in October 2012.  The U.S.-Panama TPA has significantly liberalized trade in goods and services, including financial services.  The TPA also includes sections on customs administration and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protections.

Panama is one of the few economies in Latin American that is predominantly services-based. Services represent nearly 80 percent of Panama’s GDP.  The TPA has improved U.S. firms’ access to Panama’s services sector and gives U.S. investors better access than other WTO members under the General Agreement on Trade in Services.  All services sectors are covered under the TPA, except where Panama has made specific exceptions.  Under the agreement, Panama has provided improved access to sectors like express delivery and granted new access in certain areas that had previously been reserved for Panamanian nationals. In addition, Panama is a full participant in the WTO Information Technology Agreement.

Panama passed a Private Public Partnership (PPP) law in 2019 and published regulations for the program in 2020, as an incentive for private investment, social development, and job creation. The law is a first-level legal framework that orders and formalizes how the private sector can invest in public projects, thereby expanding the State’s options to meet social needs.  Panama’s 2021 budget included funding to implement PPP projects.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Panamanian government imposes some limitations on foreign ownership in the retail and media sectors, in which, in most cases, owners must be Panamanian. However, foreign investors can continue to use franchise arrangements to own retail within the confines of Panamanian law (under the TPA, direct U.S. ownership of consumer retail is allowed in limited circumstances). There are also limits on the number of foreign workers in some foreign investment structures.

In addition to limitations on ownership, more than 200 professions are reserved for Panamanian nationals. Medical practitioners, lawyers, engineers, accountants, and customs brokers must be Panamanian citizens. Furthermore, the Panamanian government instituted a regulation that ride share platforms must use drivers who possess commercial licenses, which are available only to Panamanians.

With the exceptions of retail trade, the media, and many professions, foreign and domestic entities have the right to establish, own, and dispose of business interests in virtually all forms of remunerative activity, and the Panamanian government does not screen inbound investment. Foreigners do not need to be legally resident or physically present in Panama to establish corporations or obtain local operating licenses for a foreign corporation. Business visas (and even citizenship) are readily obtainable for significant investors.

Other Investment Policy Reviews

Panama has not undergone any third-party investment policy reviews (IPRs) through a multilateral organization in the past three years. Panama does not have a formal investment screening mechanism, but the government monitors large foreign investments, especially in the energy sector.

Business Facilitation

Procedures regarding how to register foreign and domestic businesses, as well as how to obtain a notice of operation, can be found on the Ministry of Commerce and Industry’s website (https://www.panamaemprende.gob.pa/), where one may register a foreign company, create a branch of a registered business, or register as an individual trader from any part of the world. Corporate applicants must submit notarized documents to the Mercantile Division of the Public Registry, the Ministry of Commerce and Industry, and the Social Security Institute. Panamanian government statistics show that applications from foreign businesses typically take between one to six days to process.

The process for online business registration is clear and available to foreign companies. Panama is ranked 51 out of 190 countries for ease of starting a business and 88 out of 190 for protecting minority investors, according to the 2019 World Bank’s Doing Business Report: https://www.doingbusiness.org/en/data/exploretopics/starting-a-business#close

Other agencies where companies typically register are:

Tax administration: https://dgi.mef.gob.pa/
Corporations, property, mortgage: https://www.rp.gob.pa
Social security: http://www.css.gob.pa|
Municipalities: https://mupa.gob.pa

Outward Investment

Panama does not promote or incentivize outward investment, but neither does it restrict domestic investors from investing abroad.

5. Protection of Property Rights

Real Property

Mortgages and liens are widely used in both rural and urban areas and the recording system is reliable. There are no specific regulations regarding land leasing or acquisition by foreign and/or non-resident investors.

A large portion of land in Panama, especially outside of Panama City, is not titled. A system of rights of possession exists, but there are multiple instances where such rights have been successfully challenged. The World Bank’s Doing Business 2020 report (http://www.doingbusiness.org/data/exploreeconomies/panama) notes that Panama is ranked 87 out of 190 countries on the Registering Property indicator and ranks 141st in enforcing contracts. Panama enacted Law 80 (2009) to address the lack of titled land in certain parts of the country; however, the law does not address deficiencies in government administration or the judicial system. In 2010, the National Assembly approved the creation of the National Land Management Authority (ANATI) to administer land titling; however, investors have complained about ANATI’s capabilities and lengthy adjudication timelines. ANATI has attempted to clean up some titling issues and sought international assistance to modernize.

The judicial system’s capacity to resolve contractual and property disputes is generally considered weak and susceptible to corruption, as illustrated by the most recent World Economic Forum’s Global Competitiveness Report 2019 (http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf), which ranks Panama’s judicial independence as 129 out of 141 countries. Americans should exercise greater due diligence in purchasing Panamanian real estate than they would in purchasing real estate in the United States. Engaging a reputable attorney and a licensed real estate broker is strongly recommended.

If legally purchased property is unoccupied, property ownership can revert to other owners (squatters) after 15 years of living on or working the land, although the parties must go to court to resolve ownership.

Intellectual Property Rights

Panama has an adequate and effective domestic legal framework to protect and enforce intellectual property rights (IPR). The legal structure is strong, enforcement is generally good, and infringement on rights and theft is uncommon. There were no new laws or regulations proposed or enacted in the past year, although Customs is in the process of modifying its contraband legislation. The U.S.-Panama TPA improved standards for the protection and enforcement of a broad range of IPR, including patents; trademarks; undisclosed tests and data required to obtain marketing approval for pharmaceutical and agricultural chemical products; and digital copyright products such as software, music, books, and videos. To implement the requirements of the TPA, Panama passed Law 62 of 2012  on industrial property and Law 64 of 2012  on copyrights. Law 64 also extended copyright protection to the life of the author plus 70 years, mandates the use of legal software in government agencies, and protects against the theft of encrypted satellite signals and the manufacturing or sale of tools to steal signals.

Panama is a member of the Paris Convention for the Protection of Industrial Property. Panama’s Industrial Property Law (Law 35 of 1996) provides 20 years of patent protection from the date of filing, or 15 years from the filing of pharmaceutical patents. Panama has expressed interest in participating in the Patent Protection Highway with the U.S. Patent and Trademark Office (USPTO). Law 35, amended by Law 61 of 2012, also provides trademark protection, simplified the registration of trademarks, and allows for renewals for 10-year periods. The law grants ex-officio authority to government agencies to conduct investigations and seize suspected counterfeit materials. Decree 123 of 1996 and Decree 79 of 1997 specify the procedures that National Customs Authority (ANA) and Colon Free Zone officials must follow to investigate and confiscate merchandise. In 1997, ANA created a special office for IPR enforcement; in 1998, the Colon Free Zone followed suit.

The Government of Panama is making efforts to strengthen the enforcement of IPR. A Committee for Intellectual Property (CIPI), comprising representatives from five government agencies (the Colon Free Zone, the Offices of Industrial Property and Copyright under the

Ministry of Commerce and Industry (MICI), the Customs Administration (ANA), and the Attorney General), under the leadership of the MICI, is responsible for the development of intellectual property policy. Since 1997, two district courts and one superior tribunal have exclusive jurisdiction of antitrust, patent, trademark, and copyright cases. Since January 2003, a specific prosecutor with national authority over IPR cases has consolidated and simplified the prosecution of such cases. Law 1 of 2004 added crimes against IPR as a predicate offense for money laundering, and Law 14 establishes a 5 to 12-year prison term.

Various Panamanian entities track and report on seizures of counterfeit goods, but there is no single repository or website that consolidates this information. Panama’s Public Ministry has a Specialized Prosecutors Office dedicated to IPR violations, but there have so far been no criminal prosecutions for IPR violations. Panama executes search warrants on businesses that trade in counterfeit goods, but such items are usually seized administratively without criminal prosecutions.

Panama is not included in the United States Trade Representative (USTR) 2021 Special 301 Report. According to USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy, a hosting provider reportedly operating from Panama supports sites offering IPR-infringing content.

For additional information about national laws 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

Embassy point of contact:

Colombia Primola
Economic Specialist
PrimolaCE@state.gov

Local lawyers list: https://pa.usembassy.gov/u-s-citizen-services/attorneys/

6. Financial Sector

Capital Markets and Portfolio Investment

Panama has a stock market with an effective regulatory system developed to support foreign investment. Article 44 of the constitution guarantees the protection of private ownership of real property and private investments. Some private companies, including multinational corporations, have issued bonds in the local securities market. Companies rarely issue stock on the local market and, when they do, often issue shares without voting rights. Investor demand is generally limited because of the small pool of qualified investors. While some Panamanians may hold overlapping interests in various businesses, there is no established practice of cross-shareholding or stable shareholder arrangements designed to restrict foreign investment through mergers and acquisitions. Panama has agreed to IMF Article VIII and pledged not to impose restrictions on payments and transfers for current international transactions.

In 2012, Panama modified its securities law to regulate brokers, fund managers, and matters related to the securities industry. The Commission structure was modified to follow the successful Banking Law model and now consists of a superintendent and a board of directors. The Superintendency of the Securities Market is generally considered a competent and effective regulator. Panama is a full signatory to the International Organization of Securities Commissions (IOSCO).

Government policy and law with respect to access to credit treat Panamanian and foreign investors equally. Panamanian interest rates closely follow international rates (i.e., the U.S. federal funds rate, the London Interbank Offered Rate, etc.), plus a country-risk premium.

Money and Banking System

Panama’s banking sector is developed and highly regulated and there are no restrictions on a foreigner’s ability to establish a bank account. Foreigners are required to present a passport and taxpayer identification number and an affidavit indicating that the inflow and outflow of money meets the tax obligations of the beneficiary’s tax residence. The adoption of financial technology in Panama is nascent, but there are several initiatives underway to modernize processes.

Some U.S. citizens and entities have had difficulty meeting the high documentary threshold for establishing the legitimacy of their activities both inside and outside Panama. Banking officials counter such complaints by citing the need to comply with international financial transparency standards. Several of Panama’s largest banks have gone so far as to refuse to establish banking relationships with whole sectors of the economy, such as casinos and e-commerce, in order to avoid all possible associated risks. Regulatory issues have made it difficult for some private U.S. citizens to open bank accounts in Panama, leaving some legitimate businesses without access to banking services in Panama. Panama has no central bank.

The banking sector is highly dependent on the operating environment in Panama, but it is generally well-positioned to withstand shocks. The banking sector could be impacted if Panama’s sovereign debt rating continues to fall. In early 2021, Fitch downgraded four private banks and one state-owned bank, based primarily on concerns about Panama’s pandemic-related weakening of public finances. As of this writing, three banks have been downgraded to non-investment grade. Approximately 4.7 percent of total banking sector assets are estimated to be non-performing. The four largest banks have total assets of $54.5 billion, which represents 47.07 percent of the National Banking System.

Panama’s 2008 Banking Law regulates the country’s financial sector. The law concentrates regulatory authority in the hands of a well-financed Banking Superintendent (https://www.superbancos.gob.pa/).

Traditional bank lending from the well-developed banking sector is relatively efficient and is the most common source of financing for both domestic and foreign investors, offering the private sector a variety of credit instruments. The free flow of capital is actively supported by the government and is viewed as essential to Panama’s 68 banks (2 official banks, 39 domestic banks, 17 international banks, and 10 bank representational offices).

Foreign banks can operate in Panama and are subject to the same regulatory regime as domestic banks. Panama has not lost any correspondent banking relationships in the last three years.

There are no restrictions on, nor practical measures to prevent, hostile foreign investor takeovers, nor are there regulatory provisions authorizing limitations on foreign participation or control, or other practices that restrict foreign participation. There are no government or private sector rules that prevent foreign participation in industry standards-setting consortia. Financing for consumers is relatively open for mortgages, credit cards, and personal loans, even to those earning modest incomes.

Panama’s strategic geographic location, dollarized economy, status as a regional financial, trade, and logistics hub, and favorable corporate and tax laws make it an attractive destination for money launderers. Money laundered in Panama is believed to come in large part from the proceeds of drug trafficking. Tax evasion, bank fraud, and corruption are also believed to be major sources of illicit funds in Panama. Criminals have been accused of laundering money through shell companies and via bulk cash smuggling and trade at airports and seaports, and in active free trade zones.

In 2015, Panama strengthened its legal framework, amended its criminal code, harmonized legislation with international standards, and passed a law on anti-money laundering/combating the financing of terrorism (AML/CFT). Panama also approved Law 18 (2015), which severely restricts the use of bearer shares; companies still using them must appoint a custodian and maintain strict controls over their use. In addition, Panama passed Law 70 (2019), which criminalizes tax evasion and defines it as a money laundering predicate offense.

In June 2019, the Financial Action Task Force (FATF) added Panama to its grey list of jurisdictions subject to ongoing monitoring due to strategic AML/CFT deficiencies. FATF cited Panama’s lack of “positive, tangible progress” in measures of effectiveness. Panama agreed to an Action Plan in four major areas: 1) risk, policy, and coordination; 2) supervision; 3) legal persons and arrangements; and 4) money laundering investigation and prosecution. The Action Plan outlined concrete measures that were to be completed in stages by May and September 2020. Due to the COVID-19 pandemic, FATF granted Panama two extensions, pushing the deadline to January 2021. At its plenary in February 2021, FATF left Panama on the grey list and noted its progress so far, but also pointed to Action Plan items that still need to be addressed.

Panama is only beginning to accurately track criminal prosecutions and convictions related to money laundering and tax evasion. Law enforcement needs more tools and training to conduct long-term, complex financial investigations, including undercover operations. The criminal justice system remains at risk for corruption. However, Panama has made progress in assessing high-risk sectors, improving inter-ministerial cooperation, and passing (though not yet implementing) a law on beneficial ownership. Additionally, the GoP and the United States recently signed an MOU to provide training to combat money laundering and corruption, through judicial investigations, prosecutions, and convictions.

Foreign Exchange and Remittances

Foreign Exchange

Panama’s official currency is the U.S. Dollar.

Remittance Policies

Panama has customer due diligence, bulk cash, and suspicious transaction reporting requirements for money service providers (MSB), including 18 remittance companies. Post is not aware of any time limits or waiting periods for remittances. In 2017, the Bank Superintendent assumed oversight of AML/CFT compliance for MSBs. The Ministry of Commerce and Industry (MICI) grants operating licenses for remittance companies under Law 48 (2003). There have not been any changes to the remittance policies in 2020.

Sovereign Wealth Funds

Panama started a sovereign wealth fund, called the Panama Savings Fund (FAP), in 2012 with an initial capitalization of $1.3 billion. The fund follows the Santiago Principles and is a member of the International Forum of Sovereign Wealth Funds. The law mandates that from 2015 onward contributions to the National Treasury from the Panama Canal Authority in excess of 3.5 percent of GDP must be deposited into the Fund. In October 2018, the rule for accumulation of the savings was modified to require  that when contributions from the Canal exceed 2.5 percent of GDP, half the surplus must go to national savings. At the end of 2020 the fund had $1.38 billion in equity, compared to $1.39 billion at the end of 2019, with less than 3 percent invested domestically. Panama withdrew $105 million from the FAP in 2020 for pandemic relief.  The fund had a gross income of $96 million in 2020.

8. Responsible Business Conduct

Panama maintains strict domestic laws relating to labor and employment rights and environmental protection. While enforcement of these laws is not always stringent, major construction projects are required to complete environmental assessments, guarantee worker protections, and comply with government standards for environmental stewardship.

The ILO program “Responsible Business Conduct in Latin America and the Caribbean” is active in Panama and has partnered with the National Council of Private Enterprise (CoNEP) to host events on gender equality. Panama does not yet have a State National Action Plan on Business and Human Rights.

In February 2012, Panama adopted ISO 26000 to guide businesses in the development of corporate social responsibility (CSR) platforms. In addition, business groups, including the Association of Panamanian Business Executives (APEDE) and the American Chamber of Commerce (AmCham), are active in encouraging and rewarding good CSR practices. Since 2009, the AmCham has given an annual award to recognize member companies for their positive impact on their local communities and environment.

Panama has two goods on the U.S. Department of Labor’s (DOL) “List of Goods Produced by Child Labor or Forced Labor”: melons and coffee. DOL removed sugarcane from the list in 2019. Child labor is also prevalent among street vendors and other informal occupations.

There have been several disputes over the resettlement of indigenous populations to make room for hydroelectric projects, such as at Barro Blanco and currently in Bocas del Toro. The government mediates in such cases to ensure that private companies are complying with the terms of resettlement agreements. An indigenous population in Bocas del Toro province is currently dissatisfied with the terms of a resettlement agreement and occasionally holds protests that close down the access road to a hydroelectric dam.

Despite human resource constraints, Panama enforces its labor and environmental laws effectively relative to the region and conducts inspections in a methodical and equitable manner. Panama encourages adherence to the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas and supports the Kimberley Process. Panama is not a government sponsor of either the Extractive Industries Transparency Initiative (EITI) or the Voluntary Principles on Security and Human Rights.

The National Council of Organized Workers (CONATO) and the National Confederation of Trade Union Unity (CONUSI) are the most active labor organizations advocating for worker rights in the private sector. They enjoy access to and dialogue with key decisionmakers. CONATO is currently participating in a nationwide dialogue to defend the sustainability of the workers retirement fund. CONUSI is focused on labor rights in the construction sector.

Panama is a signatory of the Montreux Document on Private Military and Security Companies. Panama follows the standards set by the International Standards Organization (ISO) and certifies security companies in quality management and security principles consistent with ISO standards.

Additional Resources

Department of State

Department of Labor

9. Corruption

Corruption is among Panama’s most significant challenges. Panama ranked 111 out of 180 countries in the 2020 Transparency International Corruption Perceptions Index (CPI), with its CPI Index score falling from 39 in 2015 to 35 in 2020. High-profile alleged procurement irregularities in 2020, including several related to pandemic response, contributed to public skepticism of government transparency. U.S. investors allege that corruption is present in the private sector and at all levels of the Panamanian government. Purchase managers and import/export businesses have been known to overbill or skim percentages off purchase orders, while judges, mayors, members of the National Assembly, and local representatives have reportedly accepted payments for facilitating land titling and favorable court rulings. The Foreign Corrupt Practice Act (FCPA) precludes U.S. companies from engaging in bribery or other similar activities, and U.S. companies look carefully at levels of corruption before investing or bidding on government contracts.

The process to apply for permits and titles can be opaque, and civil servants have been known to ask for payments at each step of the approval process. The land titling process has been troublesome for many U.S. companies, some of which have waited decades for cases to be resolved. U.S. investors in Panama also complain about a lack of transparency in government procurement. The parameters of government tenders often change during the bidding process, creating confusion and the perception that the government tailors tenders to specific companies. Panama passed legislation in 2019 to modernize its procurement system and address some of these concerns.

Panama’s government lacks strong systemic checks and balances that incentivize accountability. All citizens are bound by anti-corruption laws; however, under Panamanian law, only the National Assembly may initiate corruption investigations against Supreme Court judges, and only the Supreme Court may initiate investigations against members of the National Assembly, which has led to charges of a de facto “non-aggression pact” between the branches. Another key component of the judicial sector, the Public Ministry (Department of Justice), has struggled with a historical susceptibility to political influence.

In late 2016, Brazilian construction firm Odebrecht admitted to paying $59 million in bribes to win Panamanian contracts worth at least $175 million between 2010 and 2014. Odebrecht’s admission was confined to bribes paid during the Martinelli administration; however, former President Juan Carlos Varela (2014-2019) is also under investigation on charges of corruption related to Odebrecht. The scandal’s full reach  is still undetermined, and Odebrecht’s activities in Panama continue, including construction on a second metro line and an expansion of Tocumen airport.

Panama has anti-corruption mechanisms in place, including whistleblower and witness protection programs and conflict-of-interest rules. However, public perception is that anti-corruption laws are weak and not applied rigorously, and that government enforcement bodies and the courts are not effective in pursuing and prosecuting those accused of corruption. The lack of a strong professionalized career civil service in Panama’s public sector has also hindered systemic change. The fight against corruption is hampered by the government’s refusal to dismantle Panama’s dictatorship-era libel and contempt laws, which can be used to punish whistleblowers. Acts of corruption are seldom prosecuted and perpetrators are almost never jailed.

Under President Cortizo, Panama has taken some measures to improve the business climate and encourage transparency. These include a new public-private partnership (APP) law that covers construction, maintenance, and operations projects valued at more than $10 million. The law is designed to implement checks and balances and eliminate discretion in contracting, a positive

step that will increase transparency and create a level playing field for investors. In addition, the public procurement law that was approved in May 2020 is aimed at improving bidding processes so that no tenders can be “made to order”.

Panama ratified the UN’s Anti-Corruption Convention in 2005 and the Organization of American States’ Inter-American Convention Against Corruption in 1998. However, there is a perception that Panama should more effectively implement both conventions.

Resources to Report Corruption

ELSA FERNÁNDEZ AGUILAR
National Director
Autoridad Nacional de Transparencia y Acceso a la Informacion (ANTAI)
Ave. del Prado, Edificio 713, Balboa, Ancon, Panama, República de Panama
(507) 527-9270
efernandez@antai.gob.pa
www.antai.gob.pa

Olga de Obaldia
Executive Director
Fundacion Para el Desarrollo y Libertad Ciudadana (Panama’s TI Chapter)
Urbanización Nuevo Paitilla. Calle 59E. Dúplex Nº 25. Ciudad de Panamá. PANAMÁ
(507) 2234120
odeobaldia@libertadciudadana.org

Saint Kitts and Nevis

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of St. Kitts and Nevis strongly encourages foreign direct investment, particularly in industries that create jobs, earn foreign currency, and have a positive impact on its citizens.

The country is home to the ECCB, the Eastern Caribbean Securities Exchange (ECSE), and the Eastern Caribbean Securities Regulatory Commission (ECSRC).

In the federation, each island has a separate investment promotion agency, the St. Kitts Investment Promotion Agency (SKIPA) and the Nevis Investment Promotion Agency (NIPA).  Both agencies have introduced several investment incentives for businesses that consider locating in the federation.  SKIPA and NIPA provide “one-stop shop” facilitation services to investors, guiding them through the various stages of the investment process.

The federal government encourages investment in all sectors, but targeted sectors include financial services, tourism, real estate, agriculture, information and communication technologies, international education services, renewable energy, ship registries, and limited light manufacturing.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign control in St. Kitts and Nevis.  Foreign investors may hold up to 100 percent of an investment.  Local enterprises generally welcome joint ventures with foreign investors to access technology, expertise, markets, and capital.

Foreign investment in St. Kitts and Nevis is generally not subject to any restrictions, and foreign investors receive the same treatment as citizens.  The only exception to this is the requirement that foreign investors obtain an Alien Landholders License to purchase residential or commercial property.

Other Investment Policy Reviews

The OECS, of which St. Kitts and Nevis is a member, has not conducted a World Trade Organization (WTO) trade policy review in the last three years.

Business Facilitation

SKIPA and NIPA facilitate domestic and foreign direct investment in priority sectors and advise the government on the formation and implementation of policies and programs to attract investment.  Both agencies provide business support services and market intelligence to investors.

St. Kitts and Nevis ranks 109th of 190 countries in starting a business, which takes seven procedures and about 18.5 days to complete, according to the World Bank’s 2020 Doing Business Report.  It is not mandatory that an attorney prepare incorporation documents.  A business must register with the Financial Services Regulatory Commission, the Registrar of Companies, the Ministry of Finance, the Inland Revenue Department, and the Social Security Board.

Outward Investment

There is no restriction on domestic investors seeking to do business abroad.  Local companies in St. Kitts and Nevis are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.

5. Protection of Property Rights

Real Property

Civil law protects physical property and mortgage claims.  Foreign investors are required to obtain an Alien Landholders License to purchase residential or commercial property.  The cost of these licenses is ten percent of the value of the land, plus fees associated with an attorney or other local service provider.  Cabinet grants these licenses.  Foreign investors are not required to pay the Alien Landholders License Tax in areas designated as special development zones, such as Frigate Bay or certain parts of the South East Peninsula.  The Land Registry Act of 2017 was enacted to modernize records, identify property owners, and register clear land titles.

St. Kitts and Nevis ranks 185th of 190 countries in registering property in the World Bank’s 2020 Doing Business Report.

Intellectual Property Rights

St. Kitts and Nevis has a legislative framework supporting its commitment to the protection of intellectual property rights (IPR).  While the legal structures governing IPR are adequate, enforcement is inconsistent.  The Intellectual Property Office of St. Kitts and Nevis (IPOSKN) is responsible for administering all laws related to IPR and overseeing the registration of patents, trademarks, and service marks.  Its website is https://ipo.gov.kn.

St. Kitts and Nevis is signatory to the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, and the Berne Convention for the Protection of Literary and Artistic Works.  It is also a member of the UN World Intellectual Property Organization (WIPO).

Article 66 of the Revised Treaty of Chaguaramas  establishing the CSME commits all 15 members to implement IPR protection and enforcement.  The CARIFORUM-EU EPA contains the most detailed obligations regarding IPR in any trade agreement to which St. Kitts and Nevis is party.  The CARIFORUM-EU EPA recognizes to the protection and enforcement of IPR. Article 139 of the CARIFORUM-EU EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties and of the [WTO] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).”

The Customs Department of St. Kitts and Nevis can seize prohibited or counterfeit goods.  However, the courts rule on the forfeiture and disposal of such goods.  Complainants arrange with Customs to secure the goods until a judgment is rendered.  St. Kitts and Nevis is in the process of reviewing its existing laws in relation to the importation of counterfeit and prohibited goods.

St. Kitts and Nevis is not included in the United States Trade Representative (USTR) 2021 Special 301 Report or USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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

6. Financial Sector

Capital Markets and Portfolio Investment

St. Kitts and Nevis is a member of the ECCU.  As such, it is also a member of the ECSE and the Regional Government Securities Market.  The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories.  In 2020, the ECSE listed 155 securities, comprising 135 sovereign debt instruments, 13 equities, and seven corporate debt securities.  Market capitalization stood at $1.8 billion.  St. Kitts and Nevis is open to portfolio investment.

St. Kitts and Nevis accepted the obligations of Article VIII of the International Monetary Fund Agreement, Sections 2, 3 and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, trade credits, and other accounts receivable that establish a claim for repayment.

Money and Banking System

The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act.  The Act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters.  St. Kitts and Nevis is a signatory to this agreement, and the ECCB controls St. Kitts and Nevis’s currency and regulates its domestic banks.

Domestic and foreign banks can establish operations in St. Kitts and Nevis.  The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business.  The ECCB regulates financial institutions.  As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.  In its latest annual report, the ECCB listed the commercial banking sector as stable.  Assets of commercial banks totaled $2.5 billion (6.8 billion Eastern Caribbean dollars) at the end of 2019.

St. Kitts and Nevis is well served by bank and non-bank financial institutions.  There are minimal alternative financial services.  Some citizens still participate in informal community group lending.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

In 2019, the ECCB started an 18-month financial technology pilot to launch a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc.  An accompanying mobile application, DCash, was officially launched on March 31, 2021 in four pilot countries including St. Kitts and Nevis.  The DCash pilot phase will run for 12 months.  The digital Eastern Caribbean currency will operate alongside physical Eastern Caribbean currency.

St. Kitts and Nevis enacted the Virtual Assets Bill, 2020, to regulate virtual currencies with the expectation that they will become increasingly prevalent.  The bill is intended to facilitate the ease of doing business in a cashless society, and to combat theft, fraud, money laundering, Ponzi schemes, and terrorist financing.

Foreign Exchange and Remittances

Foreign Exchange

St. Kitts and Nevis is a member of the ECCU and the ECCB.  The currency of exchange is the Eastern Caribbean Dollar (XCD).  As a member of the OECS, St. Kitts and Nevis has a fully liberalized foreign exchange system.  The XCD was pegged to the United States dollar at a rate of 2.70  Eastern Caribbean dollars to $1.00 in 1976.  As a result, the XCD does not fluctuate, creating a stable currency environment for trade and investment in St. Kitts and Nevis.

Remittance Policies

Companies registered in St. Kitts and Nevis have the right to repatriate all capital, royalties, dividends, and profits.  There are no restrictions on the repatriation of dividends for totally foreign-owned firms.  A mixed foreign-domestic company may repatriate profits to the extent of its foreign participation.

As a member of the OECS, there are no exchange controls in St. Kitts and Nevis and the invoicing of foreign trade transactions are allowed in any currency.  Importers are not required to make prior deposits in local funds and export proceeds do not have to be surrendered to government authorities or to authorized banks.  There are no controls on transfers of funds.  St. Kitts and Nevis is a member of the Caribbean Financial Action Task Force (CFATF).

The country passed the Anti-Money Laundering Bill, 2019.  The stated intent of this bill is to begin to bring the country into alignment with international standards for combating money laundering.  St. Kitts and Nevis also passed the Proceeds of Crime and Asset Recovery Bill, 2019, which aims to provide the government with an additional tool to combat money laundering and terrorist financing.

In 2016, the government signed an Intergovernmental Agreement in observance of FATCA, making it mandatory for banks in St. Kitts and Nevis to report the banking information of U.S. citizens.

Sovereign Wealth Funds

Neither the government of St. Kitts and Nevis, nor the ECCB, of which St. Kitts and Nevis is a member, maintains a sovereign wealth fund.

8. Responsible Business Conduct

The private sector is involved in projects that benefit society, including support of environmental, social, and cultural causes.  The government encourages corporate social responsibility, but does not have regulations in place to mandate such activities by private companies.

Additional Resources

Department of State

Department of Labor

9. Corruption

The law provides criminal penalties for official corruption, and the government generally implements these laws effectively.  Media and private citizens reported government corruption was a problem.

Public officials are not subject to financial disclosure laws.  The Financial Intelligence Unit and the police force’s white-collar crime unit investigate reports on suspicious financial transactions, but these reports were not available to the public.

Government agencies involved in enforcement of anti-corruption laws include the Royal St. Kitts and Nevis Police Force, the Director of Public Prosecutions, and the Financial Intelligence Unit.  The Financial Intelligence Unit investigates financial crimes, but no independent body has been established to handle allegations of government corruption.

Resources to Report Corruption

Simone Bullen-Thompson
Solicitor-General
Legal Department
Church Street, Basseterre, St. Kitts and Nevis
Tel: 869-465-2170
Email: simone_bullen@hotmail.com

Saint Lucia

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Saint Lucia strongly encourages foreign direct investment (FDI).  Invest Saint Lucia has introduced several investment incentives for businesses that consider locating in Saint Lucia, encouraging both domestic and foreign private investment.  Invest Saint Lucia is managed by a Chief Executive Director and is overseen by a board of directors appointed by the government under the Office of the Prime Minister and Minister of Commerce, International Trade, Investment, Enterprise Development and Consumer Affairs. The state-run agency Invest Saint Lucia provides “one-stop shop” facilitation services to investors, helping to guide them through the various stages of the investment process.  It assesses investment proposals for viability and in accordance with the laws of Saint Lucia and provides investment promotion services.

Applicable government agencies, rather than Invest Saint Lucia, grant investment concessions.  Government policies provide liberal tax holidays, a waiver of import duty on imported plant machinery and equipment and imported raw and packaging materials, and export allowance or tax relief on export earnings.  Various laws provide fiscal incentives to encourage establishing and expanding foreign and domestic investment.

The Saint Lucian government encourages investment in all sectors, but targeted sectors include tourism, smart manufacturing and infrastructure, information and communication technologies, alternative energy, education, and business/knowledge processing operations.

Limits on Foreign Control and Right to Private Ownership and Establishment

There is no limit on the amount of foreign ownership or control in the establishment of a business in Saint Lucia.  The government allows 100 percent foreign ownership of companies in any sector.  Currently, there are no restrictions on foreign investors investing in military or security-related businesses or natural resources.  Trade licenses and other approvals/licenses may be required before establishment.

Invest Saint Lucia evaluates all FDI proposals and provides intelligence, business facilitation, and investment promotion to establish and expand profitable business enterprises in Saint Lucia.  Invest Saint Lucia also advises the government on issues that are important to the private sector and potential investors and advocates for an improved business climate, growth in investment opportunities, and improvements in the international competitiveness of the local economy.  It focuses on building and promoting Saint Lucia as an ideal location for investors, seeking and generating new investment in strategic sectors, facilitating domestic and foreign direct investment as a one stop shop for investors, and identifying major issues and measures geared towards assisting the government in the ongoing development of a National Investment Policy.

The Government of Saint Lucia treats foreign and local investors equally with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.

Other Investment Policy Reviews

Saint Lucia, as a member state of the OECS, has not conducted a trade policy review in the last three years.

Business Facilitation

All potential investors applying for government incentives must submit their proposals for review by Invest Saint Lucia to ensure the projects are consistent with the national interest and provide economic benefits to the country.  Invest Saint Lucia offers an online resource that is useful for navigating the laws, rules, procedures and registration requirements for foreign investors.  It is available at http://www.investstlucia.com/.

The Registry of Companies and Intellectual Property office maintains an e-filing portal for most of its services, including company registration.  Relevant officials can review applications submitted electronically.  Applicants, however, must pay the registration fee in-person at the Registry office.  The Registry of Companies and Intellectual Property office can only accept payment in the form of cash and checks.  Personal checks are not accepted.  It is advisable to consult a local attorney prior to starting the process.  Further information is available at http://www.rocip.gov.lc.

According to the World Bank Doing Business Report for 2020, Saint Lucia ranked 69 out of 190 countries in the ease of starting a business.  The general practice for starting a business is to retain an attorney to prepare all incorporation documents.  A business must register with the Registry of Companies and Intellectual Property Office, the Inland Revenue Authority, and the National Insurance Corporation.  The Government of Saint Lucia continues to support the growth of women-led businesses.  The government seeks to support equitable treatment of women in the private sector through non-discriminatory processes for business registration, awarding of fiscal incentives, and assessing investments.

The Government of Saint Lucia is committed to the full participation of people with disabilities in the society and the economy.  It actively engages with people with disabilities in society to ensure the equal participation of people with disabilities in the formal and informal sectors of the economy.

Outward Investment

The Government of Saint Lucia prioritizes investment retention as a key component of its overall economic strategy.  While the Government of Saint Lucia is encouraging more domestic savings, it continues to require significant foreign investment to fill the investment gap.

There is no restriction on domestic investors seeking to do business abroad.  Local companies in Saint Lucia are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.

5. Protection of Property Rights

Real Property

Civil law protects physical property and mortgage claims.  There are some special license requirements pertaining to acquisition of land, development of buildings, and expansion of existing construction, and special standards for various aspects of the tourism industry. Individuals or corporate bodies who are not CARICOM nationals and who seek to acquire land must apply for and obtain an alien landholder’s license as required under the Alien Landholding Act prior to acquisition.

In the 2020 World Bank Doing Business Report, Saint Lucia ranked 107th out of 190 countries in the ease of registering property.  It takes about 17 days to complete the necessary procedures, at a cost of about 7.2 percent of the property value.

Intellectual Property Rights

Saint Lucia has two primary provisions governing the protection of intellectual property rights. They are the copyrights act and the trademarks act.

Copyright Act

This Act protects literary, dramatic, musical, artistic, creative products, and performances in Saint Lucia.  To be eligible for copyright protection, the work must be written down, recorded, or otherwise fixed in a material form.  Storage of the work in a computer can be regarded as a recording of the work in a material form.

Trademarks Act

A trademark may be registered for goods, services, or both.  Once registered, the owner has the exclusive rights to use the trademark, authorize its use by another person, and obtain relief under the Act if the holder’s rights have been violated.  A registered trademark is deemed personal property and is enforceable like the rights of personal property.

While the legal structures governing intellectual property are generally strong, enforcement is inconsistent.  The Attorney General is responsible for administering intellectual property laws.  The Registry of Companies and Intellectual Property Office administers the registration of patents, trademarks, and service marks.

Saint Lucia is a signatory to the Washington Treaty on Intellectual Property in Respect of Integrated Circuits, the WIPO Performances and Phonograms Treaty, the WIPO Copyright Treaty, the Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks, and the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms.  Saint Lucia is also a signatory to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, the Patent Cooperation Treaty, the Rome Convention for the Protection of Performers, and Producers of Phonograms and Broadcasting Organization.  In addition, Saint Lucia has signed the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, and the Convention Establishing the World Intellectual Property Organization.

Article 66 of the Revised Treaty of Chaguaramas (2001) establishing the CSME commits all 15 members to implement stronger intellectual property protection and enforcement.  The CARIFORUM-EU EPA contains the most detailed obligations with respect to intellectual property in any trade agreement to which Saint Lucia is a party.  The EPA gives recognition to the protection and enforcement of intellectual property.  Article 139 of the EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties and of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS).”

The Comptroller of Customs spearheads the preventative and enforcement aspects of intellectual property rights protection, which includes the detention, seizure, and forfeiture of counterfeit goods.  The Customs and Excise Department conducts investigations of customs offenses and administers fines and penalties.

Saint Lucia is not listed in the U.S. Trade Representative’s 2020  Review of Notorious Markets for Counterfeiting or Piracy or  in its 2021 Special 301 Report.  For additional information about treaty obligations and points of contact at local intellectual property offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en .

6. Financial Sector

Capital Markets and Portfolio Investment

Saint Lucia is a member of the ECCU.  As such, it is a member of the Eastern Caribbean Securities Exchange (ECSE) and the Regional Government Securities Market.  The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories.  In 2020, the ECSE listed 155 securities, comprising 135 sovereign debt instruments, 13 equities, and seven corporate debt securities.  Market capitalization stood at $1.8 billion.  Saint Lucia is open to portfolio investment.

Saint Lucia has accepted the obligations of Article VIII of the International Monetary Fund Agreement, Sections 2, 3 and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  Foreign tax credit is allowed for the lesser of the tax payable in the foreign country or the tax charged under Saint Lucia tax law.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, and trade credits and other accounts receivable that establish a claim for repayment.

Money and Banking System

The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act.  The Act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters.  Saint Lucia is a signatory to this agreement and the ECCB controls Saint Lucia’s currency and regulates its domestic banks.

The Banking Act is a harmonized piece of legislation across the ECCU.  The Minister of Finance usually acts in consultation with, and on the recommendation of, the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Domestic and foreign banks can establish operations in Saint Lucia.  The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business.  The ECCB regulates financial institutions.  As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.

In its latest annual report, the ECCB listed the commercial banking sector in Saint Lucia as stable.  Assets of commercial banks totaled $2.8 billion (6.4 billion Eastern Caribbean dollars) in at the end of 2019.  In its latest annual report, the ECCB listed the commercial banking sector in Saint Lucia as stable. Saint Lucia is well-served by bank and non-bank financial institutions.

The Caribbean region has witnessed a withdrawal of correspondent banking services by the U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

In 2019, the ECCB launched an 18-month financial technology pilot to launch a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc.  An accompanying mobile application, DCash was officially launched on March 31, 2021 in four pilot countries including Saint Lucia.  The DCash pilot phase will run for 12 months.  The digital Eastern Caribbean currency will operate alongside physical Eastern Caribbean currency.  Saint Lucia does not have any specific legislation to regulate cryptocurrencies.

Foreign Exchange and Remittances

Foreign Exchange

Saint Lucia is a member of the ECCU and the ECCB.  The currency of exchange is the Eastern Caribbean dollar (XCD).  Saint Lucia has a fully liberalized foreign exchange system.  The Eastern Caribbean dollar has been pegged to the United States dollar at a rate of XCD 2.70 to $1.00 since 1976.  As a result, the Eastern Caribbean dollar does not fluctuate, creating a stable currency environment for trade and investment in Saint Lucia.

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.  Funds can also be freely converted into any of the major world currencies.

Remittance Policies

Companies registered in Saint Lucia have the right to repatriate all capital, royalties, dividends, and profits.  There are no restrictions on the repatriation of dividends for totally foreign-owned firms.

As a member of the OECS, there are no exchange controls in Saint Lucia, and parties can invoice foreign trade transactions in any currency.  Importers are not required to make prior deposits in local funds and are not required to surrender export proceeds to government authorities or to authorized banks.  There are no controls on transfers of funds.  Saint Lucia is a member of the Caribbean Financial Action Task Force (CFATF).

Sovereign Wealth Funds

Neither the Government of Saint Lucia, nor the ECCB, of which Saint Lucia is a member, maintains a sovereign wealth fund.

8. Responsible Business Conduct

Saint Lucia’s government and citizens appreciate responsible business conduct.  The private sector typically engages in projects that benefit society, and support environmental, social, and cultural causes.

Additional Resources

Department of State

Department of Labor

9. Corruption

Most locals and foreigners do not view corruption related to foreign business and investment as a major problem in Saint Lucia.  There are, however, isolated reports of allegations of official corruption, particularly among customs officials.  Local laws provide for access to information.  The law also requires government officials to present their financial assets annually to the Integrity Commission.  While authorities do not make public the disclosure reports filed by individuals, the commission submits a report to parliament each year.  The commission lacked the ability to compel compliance with the law, and as a result, compliance was low.

The Parliamentary Commissioner, Auditor General, and Public Services Commission are responsible for combating corruption.  Parliament can also appoint a special committee to investigate specific allegations of corruption.  The country is a party to the Inter-American Convention against Corruption and acceded to the United Nations Convention against Corruption in 2011.

Saint Lucia has laws, regulations, and penalties to combat corruption, notably the Integrity in Public Life Act of 2004.  Government agencies involved in enforcement of anti-corruption laws include the Royal Saint Lucia Police Force, the Director of Public Prosecutions, the Integrity Commission, and the Financial Intelligence Unit.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

NAME: Pastor Sherwin Griffith
TITLE: Chairman
ORGANIZATION: Integrity Commission
ADDRESS: 2nd Floor, Graham Louisy Administrative Building, Waterfront Castries, Saint Lucia
TELEPHONE NUMBER: (758) 468-2187
EMAIL ADDRESS: icstlucia@gmail.com

NAME: Paul Thompson
TITLE: Director
ORGANIZATION: Financial Intelligence Authority
ADDRESS: Gablewoods North P.O., Castries LC02 501, Saint Lucia
TELEPHONE NUMBER: (758) 451-7126
EMAIL ADDRESS: slufia@candw.lc

Suriname

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Suriname (GOS) officially supports and encourages business development through foreign and local investment. The overall investment climate favors U.S. investors with experience working in developing countries. Investment opportunities exist in mining, agriculture, the oil and gas sector, timber, fishing, financial technology and tourism.

With the exception of petroleum, Suriname has no sector-specific laws or practices that discriminate against foreign investors, including U.S. investors, by prohibiting, limiting or conditioning foreign investment. In the oil sector, the state oil company, Staatsolie, maintains sole ownership of all oil-related activities. Foreign investment is possible through exploration and product sharing contracts (PSCs) with Staatsolie. Five U.S. companies participate in PSCs as operators and/or as contract partners. A full list of PSCs can be found on Staatsolie’s website: https://www.staatsolie.com/en/staatsolie-hydrocarbon-institute/active-production-sharing-contracts/ 

In February 2021, the Government of Suriname announced that it will terminate its two existing investment entities, namely the Institute for Promoting Investments in Suriname (InvestSur) and the Investment and Development Corporation of Suriname (IDCS) in order to establish a new investment company. In March 2021, the National Assembly launched debate on a draft law to establish a State-owned investment company to be named the Suriname Investment Enterprise NV. The government also created an International Business Directorate at the Ministry of Foreign Affairs to act as a first point of entry for foreign investors.

Suriname does not have a formal business roundtable or ombudsman aimed at investment retention or maintaining an ongoing dialogue with investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities can establish and own business enterprises and engage in all forms of remunerative activity.

There are no general limits on foreign ownership or control – statutory, de facto, or otherwise. No law requires that domestic nationals own a minimum percentage of domestic companies or that foreign nationals hold seats on the board. No law caps or reduces the percentage of foreign ownership of any private business enterprise.

Except for petroleum, there are no sector-specific restrictions applied to foreign ownership and control. Within the petroleum sector, the law limits ownership to Staatsolie, the state-owned oil company, which maintains sole ownership of all petroleum-related activities. Caribbean Single Market and Economy (CSME) countries do enjoy favored status over other sources of foreign investment, but in practice international firms from beyond the CSME are not denied investment opportunities. An Economic Partnership Agreement (EPA) with the European Union aims to provide European companies better access to Suriname. Suriname has not yet ratified the EPA.

Government ministries screen inbound foreign investments intended for the sector of the economy that they oversee. Special commissions screen all necessary legal and financial documents. Screening criteria vary, but are intended to determine a proposed investment’s compliance with local law. The screening process is neither public nor transparent, and therefore could be considered a barrier to investment. The Department of International Business at the Ministry of Foreign Affairs requests that prospective investors fill out an intake form. The intake form will enable its appraisal committee to conduct a quick scan and conclude whether the FDI in question fits the development goals of the government.

Other Investment Policy Reviews

The World Trade Organization (WTO) conducted an investment policy review of Suriname in 2019: https://www.wto.org/english/tratop_e/tpr_e/tp491_e.htm 

The Inter-American Development Bank published a report called Framework for Private Development in Suriname in 2013.The World Bank Group published Suriname Sector Competitiveness Analysis, focusing on the agribusiness and extractive sectors in 2017.

Business Facilitation

The Santokhi administration has emphasized its desire to diversify Suriname’s economy and deepen business ties with the United States, Europe, and others. In 2020, Suriname’s new government began publishing public tenders on the website of the Ministry of Public Works. The government created a Presidential Commission on the Surinamese Diaspora in an effort to explore possibilities for raising capital and increasing business ties with the Surinamese community in the Netherlands. In March 2021, the National Assembly launched debate on a draft law to establish a State-owned investment company to be named the Suriname Investment Enterprise NV. The government also created an International Business Directorate at the Ministry of Foreign Affairs to act as a first point of entry for foreign investors.

There is no online registration system. Companies must register with the local Chamber of Commerce and Industry, which provides guidance on registration procedures. At the time of registration, the company needs a local notary’s assent to ratify the company bylaws. For non-residents, the notary also sends a request to the Foreign Exchange Commission for approval. Applicants must obtain a tax number at the registration office of the tax department. Applications then go to the Ministry of Justice and Police and finally to the President for approval. The Ministry of Trade, Industry and Tourism launched the Suriname Electronic Single Window (SESW) in September 2019. Online submission and processing of documents required for import, transit of goods, and export is now possible. The World Bank’s Doing Business report indicates starting a business requires 66 days. The local Chamber of Commerce and Industry states it can take as little as 30 days.

Outward Investment

The Government does not promote or incentivize outward investment. Suriname’s outward investment is minimal.

The Government does not restrict domestic investors from investing abroad, but there are no specific mechanisms in place to promote the practice. Due to the small size of the local market, some domestic companies have expanded to CARICOM member states, such as Guyana and Trinidad & Tobago.

5. Protection of Property Rights

Real Property

Interest in property is enforced. Mortgages and liens are common. Mortgages are registered with the Mortgage Office. However, no effective registration system exists for other types of liens.

Non-residents can request to lease land from the government if they have established a company under Surinamese law. However, the process from application to approval is lengthy.

The percentage of land in Suriname that lacks a clear land title remains unknown. There is no sustained effort by the government to identify property owners and register land titles. Article 1-1 of the L-1 decree, Principles of Land Policy, states that “all land, to which others have not proven their right to ownership, is domain of the State.” Furthermore, Article 41 of the Surinamese constitution states that wealth and resources are property of the nation and shall be used to promote economic, social, and cultural development. There is no effective demarcation of substantial land claims by indigenous people in the interior.

Unoccupied, legally-purchased property cannot be reverted to other owners, such as squatters.

Intellectual Property Rights

Suriname is a member of the World Trade Organization and the World Intellectual Property Organization; however, it has not ratified the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Even though Suriname is party to multiple agreements, intellectual property rights (IPR) enforcement is weak. The current legal framework mentions protection of copyright, trademarks, and patents; however, that legislation dates back to 1912 (amended in 2001). Although the National Assembly passed amendments to the Music Copyright Law of 1913 in March 2015, there is no enforcement. Infringement on rights and theft are not uncommon due to the absence of enforcement capacity. There is also no protection provided for industrial designs, utility models, geographical indications, layout designs of integrated circuits or undisclosed information.

No IPR-related laws or regulations have been enacted in the past year. A draft IPR bill had been pending under the previous National Assembly (2015-2020), but it did not receive a vote. Currently, patents and copyrights must be registered abroad due to a lack of local legislation.

In 2012, the Suriname Port Unit was established to improve port security and prevent the illegal use of sea containers in drug trafficking and transnational organized criminal activities, such as trafficking in chemicals used in the manufacture of drugs (precursors), smuggling of goods (including counterfeit goods), tax evasion, and possible terrorist acts.

Suriname is not mentioned in the United States Trade Representative’s 2021 Special 301 Report , nor is it named in its 2020 Review of Notorious Markets for Counterfeiting and Piracy.

6. Financial Sector

Capital Markets and Portfolio Investment

The government does not promote portfolio investment.

There is a small self-regulating stock market with eleven companies registered. It meets twice a month but does not have an electronic exchange. There is no effective regulatory system to encourage and facilitate portfolio investment. At present, Suriname is facing liquidity shortfalls. Sufficient policies do exist to facilitate the free flow of financial resources.

As an IMF Article VIII member, Suriname has agreed to refrain from restrictions on payments and transfers for current international transactions.

Credit is allocated on market terms and at market rates. Foreign investors that establish businesses in Suriname 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 a commercial bank’s credit exposure to a single client.

Money and Banking System

The private sector has access to a variety of credit instruments. Larger companies can obtain customized credit products

According to the IMF Article IV Consultation in 2019, the banking system faces pressing vulnerabilities.

Based on the latest (July 2019) data, the capital adequacy ratio for the banking system stood at 10.5 percent (above the 10 percent minimum requirement), but non-performing loans in the banking system remained high (12.5 percent of gross loans), and profitability was low (0.7 percent return on assets). Deposit and loan dollarization remain high.

Total estimated assets of Suriname’s largest banks:

DSB Bank (annual report, 2018): $1,007 million. DSB annual report 2019 is delayed due to COVID-19 and time needed to implement IFRS.

Hakrin Bank (annual report 28, 2019): $671.2 million

Republic Bank Limited (2020 annual report, Suriname-based assets): $396.5 million. (The Republic Bank Limited of Trinidad and Tobago acquired Royal Bank of Canada’s Suriname holdings in 2015.)

Finabank (annual report, 2019): $322.8 million

Suriname has a central bank system.

Foreign banks or branches are allowed to establish operations in Suriname. They are subject to the same measures and regulations as local banks. According to an IMF assessment in 2016, banks in Suriname are among those in the region that have lost their correspondent relationships. The IMF notes that though the loss of correspondent banking relationships has not reached systemic proportions, a critical risk still exists. According to the IMF’s Article IV Consultation report in 2019, there is a possibility of losing corresponding banking relationships given recent overseas investigations of potential money laundering via Suriname’s financial sector. The reputational risk to both local and foreign banks acting as their correspondents is substantial. In March 2021, Suriname announced that it had completed a National Risk Assessment to identify and assess its vulnerability to money laundering and the financing of terrorism.

There are no restrictions for foreigners to open a bank account. Banks require U.S. citizens to provide the information necessary to comply with the Foreign Accounts Tax Compliance Act (FATCA).

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment, such as remittances of investment capital, earnings, loan or lease payments, or royalties. There can be shortages in the availability of U.S. cash dollars at local banks, which can affect businesses.

Funds associated with any form of investment can be freely converted into a usable currency at legal market clearing rates with the permission of the Foreign Exchange Commission. However, the criteria for obtaining permissions are opaque.

In September 2020, the Central Bank of Suriname (CBvS) announced the depreciation of the Surinamese Dollar (SRD). The previous official exchange rate was SRD7.52 to $1 dollar. The new sale rate was adjusted to SRD14.29 to $1 dollar. In March 2021, the CBvS announced that it had come to an agreement with the government to establish a minimum and maximum exchange rate for the U.S. dollar, namely that the rate must stay between SRD14.29 and SRD16.30 to $1. In addition to the official exchange rate, different rates are available unofficially in parallel exchange markets. Media reports indicate that exchange rate policy is a key component of Suriname’s negotiations with the International Monetary Fund – negotiations which began in 2020.

Remittance Policies

There are no recent changes or plans to change investment remittance policies.

The waiting period on remittances can be relatively short for dividends; return on investments, interest, and principal on private foreign debt; lease payments; royalties; and management fees. The time needed to process the requests depends on the sector and the amount transferred. Transfers through the banking system can range from same day to one week waiting times, contingent upon approval by the Foreign Exchange Commission.

Sovereign Wealth Funds

On May 4, 2017, the National Assembly passed legislation establishing a Sovereign Wealth Fund (SWF). In August 2020, President Santokhi announced that the government would operationalize Suriname’s SWF, as the previous government had not instituted the necessary state decrees to do so. In December 2020, the government held talks with experts from Norway to learn more from the Norwegian Sovereign Wealth Fund.

Suriname does not participate in the International Forum of Sovereign Wealth Funds.

8. Responsible Business Conduct

There is a growing awareness of expectations of standards for responsible business conduct (RBC) among consumers and producers. Historically, Alcoa’s subsidiary, Suralco, took the lead on RBC in Suriname, and large multinationals such as Newmont continue to be the largest proponents of RBC. Some larger, state-owned and local companies also model RBC, including Staatsolie, Surinam Airways, Telesur, and the Fernandes Group of Companies, which holds the distribution rights for Coca-Cola, and the McDonalds franchise rights. In March 2020, a number of prominent local companies and business leaders established the SU4SU COVID-19 support fund, which has raised money and donated medical equipment and PPE to local health authorities to assist their efforts in combatting the COVID-19 pandemic.

The government has not taken systematic measures to encourage or promote RBC. Companies are allowed to develop their own policies and standards. The government does incorporate RBC in some of its partnerships and agreements with multinational firms. For example, recent agreements between Staatsolie and foreign companies for offshore drilling include stipulations regarding RBC. The government has no national point of contact or ombudsman for stakeholders to acquire information or raise concerns about RBC. The GOS has not conducted a National Action Plan on RBC and/or Business and Human Rights. It is not known if RBC policies are part of the government’s procurement decisions.

There are no alleged/reported human or labor rights concern related to RBC.

There have been no recent high profile controversial instances of private sector impact on human rights, though indigenous land rights in the interior is an ongoing issue.

The Labor Inspection Department from the Ministry of Labor supervises and enforces the observance of legal regulations regarding the conditions of employment and the protection of employees performing duties. Laws were enforced only in the formal sectors. Labor inspectors did not make regular occupational safety and health inspections. The government is drafting consumer and environmental protection laws. In March 2020, the National Assembly passed an Environment Framework Law.

Currently there is no legislation for corporate governance and executive compensation standards to protect shareholders. The Act on Annual Accounts will require companies to publish annual accounts based on the International Financial Reporting Standards (IFRS) starting in 2020.

The Suriname Trade and Business Association has taken the lead in promoting RBC. The Suriname Conservation Foundation initiated a Green Partnership Program in 2020 signed by 14 enterprises, 13 of which are local, to stimulate awareness about a green economy and nature preservation. So far, no incidents have been reported indicating that those monitoring and or advocating around RBC cannot work freely.

The host government has not encouraged adherence to the OECD Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Afflicted and High-Risk Areas. In March 2019, the government adopted legislation to join the Kimberley Process Certification Scheme in order to become a member of the World Diamond Council Association.

The host government has not encouraged adherence to the OECD Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Afflicted and High-Risk Areas. Suriname became a member of the Extractive Industry Transparency Initiative in 2017. There are no domestic transparency measures requiring the disclosure of payments made to governments and/or other RBC/BHR policies or practices.

Suriname is not a signatory of The Montreux Document on Private Military and Security companies, nor a supporter of the International Code of Conduct or Private Security Providers nor a participant in the International Code of Conduct for Private Security Service Providers Association (ICoCA).

Additional Resources 

Department of State

Department of Labor

9. Corruption

Suriname’s legal code penalizes corruption, but there is virtually no enforcement. Government officials are occasionally removed from assignments, but convictions are rare. On September 1, 2017, parliament passed anti-corruption legislation nearly 15 years after the initial draft bill was introduced to the National Assembly. An anti-corruption commission, which is mandated by the legislation, has not yet been installed. In August 2020, President Santokhi installed a Presidential committee to conduct an inventory of executive orders and determine what mechanisms need to be put in place to install an anti-corruption commission. Suriname ranks on 94 out of 180 countries on the Corruption Index of Transparency International.

Existing laws that deal with corruption do not extend to family members of officials, or to political parties.

There are currently no laws or regulations to counter conflicts of interest in awarding contracts or government procurement. The Ministry of Public Works announced that it will soon adopt stricter, but also flexible measures for transparency in tenders. Legal requirements for tenders will be examined. Non-legal requirements will be adjusted and introduced shortly. Civil servants and politicians will be prohibited from taking part in tenders.

The government does not encourage or require private companies to establish internal codes of conduct prohibiting bribery of public officials.

Local private companies do not use internal control, ethics, and compliance programs to detect and prevent bribery of government officials.

Suriname has signed and ratified the Inter-American Convention against Corruption. Suriname has not yet signed and ratified the UN Convention against Corruption. Suriname is not a party to the OECD Convention on Combatting Bribery.

There are no NGOs that focus exclusively on investigating corruption.

U.S. firms have identified corruption as an obstacle to FDI. Corruption is believed to be most pervasive in government procurement, the awarding of licenses and concessions, customs, and taxation.

Resources to Report Corruption

Fraud Department
Suriname Police Force( Korps Politie Suriname)
Havenlaan, Paramaribo, Suriname
(597) 404-943

Trinidad and Tobago

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of Trinidad and Tobago seeks foreign direct investment and has traditionally welcomed U.S. investors.

The U.S. Mission is not aware of laws or practices that discriminate against foreign investors but some have seen the decision-making process for tenders and the subsequent awarding of contracts turn opaque without warning, especially when their interests compete with those of well-connected local firms.

InvesTT is the country’s investment promotion agency that assists investors through the process of setting up a non-energy business and provides aftercare services once established. Specifically, it provides market information; offers advice on accessing investment incentives; and assists with regulatory and registry issues; property and location services; creation of business linkages; problem solving; and advocacy to the government. The Trinidad and Tobago International Financial Center is another investment promotion agency whose mission is to attract and facilitate foreign direct investment in the financial services sector.

While Trinidad and Tobago prioritizes investment retention, the U.S. Mission is not aware of a formal, ongoing dialogue with investors, either through an Ombudsman or formal business roundtable.

Limits on Foreign Control and 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.

There are no limits on foreign ownership. Under the Foreign Investment Act of 1990, a foreign investor is permitted to own 100 percent of the share capital in a private company. A license is required to own more than a 30 percent of a public company.

The U.S. Mission is not aware of any sector-specific restrictions or limitations applied to U.S. investors.

Trinidad and Tobago maintains an investment screening mechanism for foreign investment related to specific projects that have been submitted for the purpose of accessing sector-specific incentives, such as for those offered in the tourism industry.

Other Investment Policy Reviews

The World Trade Organization conducted a trade policy review for Trinidad and Tobago in 2019: https://www.wto.org/english/tratop_e/tpr_e/tp488_e.htm 

Business Facilitation

The government’s business facilitation efforts focus primarily on investor services (helping deal with rules and procedures) through its investment promotion agency and trying to make the rules more transparent and predictable overall. However, more work needs to be done to achieve efficient administrative procedures and dispute resolution. Trinidad and Tobago ranks 158th of 190 countries for registering property, 174th for enforcing contracts, and 160th for payment of taxes in the World Bank’s Doing Business 2020 report, representing a deterioration of indicators that reflect a difficulty of doing business.

The business registration website is: www.ttbizlink.gov.tt . The Global Enterprise Registration Network (GER) gives the TT business registration website a below-average score of 3 out of 10 for its single electronic window, and 4.5 out of 10 for providing information on how to register a business (TTconnect.gov.tt). While the process is clear, the inability to make online payments, and submit certificates online requests are the two main reasons for the low score. A feedback mechanism allowing users to communicate with authorities is a strength of the TT business registration website. Foreign companies can use the website and business registration requires completion of seven procedures over a period of 10 days. The agencies with which a company must typically register include:

  • Companies Registry, Ministry of Legal Affairs
  • Board of Inland Revenue
  • National Insurance Board; and
  • Value Added Tax (VAT Office, Board of Inland Revenue)

Outward Investment

The host government does not promote or incentivize outward investment.

The host government does not restrict domestic investors from investing abroad.

5. Protection of Property Rights

Real Property

Property rights and interests are enforced in court. Mortgages and liens exist. TT has a dual system of land titles, the old common law system and the registered land title system governed by the Real Property Act of 1946. Nearly 80 percent of land in TT remains under the more complicated common law system, which is not reliable for recording secured interests.

The Foreign Investment Act of 1990 governs the acquisition of any interest in land by foreign investors. It states that foreign investors wishing to acquire land larger than five acres must obtain a license from the Ministry of Finance. Licenses are generally granted in practice per the criteria provided here: https://www.finance.gov.tt/wp-content/uploads/2014/05/51.pdf .

It is not clear what proportion of land does not have clear title. The government does not make a defined effort to identify property owners and register land titles.

In the World Bank’s Doing Business 2020 report, Trinidad and Tobago ranked 158 out of 190 countries in ease of registering property. Reasons for the poor score include the number of procedures required (more than the regional average), the length of time required (more than the regional average) and the cost of registering property as a percentage of the property value.

Property ownership can revert to squatters if they can prove exclusive possession of another’s land, without permission, for at least 16 years in the case of private lands and 30 years on State lands.

Intellectual Property Rights

The process of protecting intellectual property involves applying for and registering patents, trademarks, or designs. Trinidad and Tobago’s intellectual property rights (IPR) legal structure is strong, but enforcement is generally weak. Infringement on rights and theft is common.

Trinidad and Tobago is a member of the World Intellectual Property Organization (WIPO). In 2020, Trinidad and Tobago acceded to the Madrid Protocol on Trademarks. Implementing regulations remain in drafting for the 2000 Patent Law Treaty and the Hague Agreement on Industrial Designs.

Trinidad and Tobago does not track seizures of counterfeit goods. At its May 2019 WTO Trade Policy Review, it reported one seizure in 2018. The country has prosecuted IPR violations in the past, but such prosecutions are uncommon.

TT is listed in the United States Trade Representative’s (USTR) Special 301 Report Watch List for 2021. Challenges concern widespread copyright infringement and the country’s lack of institutional commitment to enforce IPR.

Trinidad and Tobago is not included in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

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

6. Financial Sector

Capital Markets and Portfolio Investment

The government welcomes foreign portfolio investment.

TT has its own stock market and has an established regulatory framework to encourage and facilitate portfolio investment. There is enough liquidity in the markets to enter and exit sizeable positions.

Existing policies facilitate the free flow of financial resources into the product and factor markets.

The government and central bank respect IMF article VIII by refraining from restrictions on payment and transfers for current international transactions. Shortages of foreign exchange, exacerbated by the government’s maintenance of the local currency at values higher than those which the market would bear, however, cause considerable delays in payments and transfers for international transactions.

A full range of credit instruments is available to the private sector. There are no restrictions on borrowing by foreign investors, who are able to access credit. Credit is allocated on market terms, but interest rates tend to be higher for foreign borrowers.

Money and Banking System

Banking services are widespread throughout urban areas, but penetration is significantly lower in rural areas.

Although the banking sector is healthy and well-capitalized, the IMF in its 2020 Financial Stability Assessment Program noted Trinidad and Tobago’s banks are exposed to sovereign risk and potential liquidity risks stemming from non-bank financial entities in the group. The financial system as a whole faces risks of increasing household debt, a lack of supervisory independence and out-of-date regulatory frameworks, the sovereign-bank nexus and the absence of a macro-prudential toolkit, and contagion risks between investment funds and banks. The report further states that the financial sector legislation and regulation have not kept pace with international best practice. The supervisors operate with guidelines in key areas instead of binding powers, which limits their authority

In 2019, the estimated total assets of Trinidad and Tobago’s largest banks was $21.9 billion.

TT has a central bank system. Foreign banks may establish operations in TT provided they obtain a license from the central bank. Trinidad and Tobago has lost correspondent banking relationships in the past three years. The U.S. Mission is not aware of any current correspondent banking relationships that are in jeopardy.

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

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

Shortages of foreign exchange, exacerbated by the government’s maintenance of the local currency at values higher than those which the market would bear, cause considerable delays in conversion into world currencies. Businesses continue to report a cumbersome bureaucratic process and a minimum three-month delay in such conversions.

The central bank intervenes to maintain an unofficial peg to the U.S. dollar, using a managed float in which the exchange rate fluctuates mildly day-to-day, and limits the availability of foreign currency.

Remittance Policies

While there are no recent changes or plans to change investment remittance policies to tighten or relax access to foreign exchange for investment remittances, commercial banks have enacted policies that limit access to foreign exchange due to national shortages, on guidance from the Ministry of Finance and the central bank.

Although there are no official time limitations on remittances, timeliness of remittances depends on availability of foreign currency.

Sovereign Wealth Funds

The value of TT’s Heritage and Stabilization Fund the fund as of September 2020 is approximately $5.7 billion. 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 sovereign wealth fund (SWF) follows the voluntary code of good practices known as the Santiago Principles. TT participates in the IMF-hosted International Working Group on Sovereign Wealth Funds.

None of the SWF is invested domestically. There are no potentially negative ramifications for U.S. investors in the local market.

8. Responsible Business Conduct

There is general awareness of expectations of, and standards for, responsible business conduct (RBC), including obligations to proactively conduct due diligence to ensure businesses are doing no harm, including with regards to environmental, social, and governance issues.

The government has not put forward a clear definition of responsible business conduct, nor does it have specific policies to promote and encourage it. The government has not conducted a national action plan on RBC, nor does it currently factor it into procurement decisions.

There have not been any high-profile, controversial instances of private sector impact on human rights.

TT has laws to ensure protection of human rights, labor rights, consumers, and the environment. Enforcement, however, is lacking due to staffing shortages, capacity issues, and a bureaucratic judiciary.

Government, in collaboration with civil society, created the TT Corporate Governance Code, which incorporates governance, accounting, and executive compensation standards to protect shareholders. The code, however, is not mandatory.

The Caribbean Corporate Governance Institute is a not-for-profit organization headquartered in Trinidad and Tobago that freely advocates for responsible business conduct and improved corporate governance practices in the Caribbean.

The government does not encourage adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas. There are no domestic measures requiring supply chain due diligence for companies sourcing minerals originating from conflict-affected areas.

As a member of the EITI, the government publicly declares annually all revenues received from companies engaged in the extractive industries. The companies, in turn, publicly declare payments to the government.

Trinidad and Tobago is not a signatory of the Montreux Document on Private Military and Security Companies.

Additional Resources

Department of State

Department of Labor

9. Corruption

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 in each ministry and statutory authority process 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. Effectiveness of these measures has been limited by a lack of thorough enforcement.

The laws do not extend to family members of officials or to political parties.

TT does not have laws or regulations to counter conflicts of interest in awarding contracts or government procurement.

The government has been a party to the development of corporate governance standards (non-binding) to encourage private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.

Some private companies, particularly the larger ones, use internal controls and compliance programs to detect and prevent bribery of government officials, though this is not a government requirement.

Trinidad and Tobago adheres to the UN Anticorruption Convention.

There are no protections for NGOs involved in investigating corruption, but investigations are not feared since corrupt actors are rarely punished.

U.S. firms often say corruption is an obstacle to FDI, particularly in government procurement, since TT’s procurement processes are not transparent.

Resources to Report Corruption

Mr. Justice Melville Baird
Chairman
The Integrity Commission
P.O. Box 1253, Port of Spain

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

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