Policies Toward Foreign Direct Investment

The Algerian economy is both challenging and potentially highly rewarding.  While the Algerian government publicly welcomes FDI, a difficult business climate, an inconsistent regulatory environment, and contradictory government policies complicate foreign investment.  There are business opportunities in nearly every sector, including energy, power, water, healthcare, telecommunications, transportation, recycling, agribusiness, and consumer goods. 

Algerians’ urgency to diversify their economy away from reliance on hydrocarbons has increased amid low and fluctuating oil prices since mid-2014.  The government has sought to reduce the country’s trade deficit through import substitution policies and import tariffs. Despite higher oil prices in 2018 that helped shrink the trade deficit, Algeria’s decreasing hydrocarbons exports has kept government rhetoric focused on the need to diversify Algeria’s economy.  On January 29, 2019 the government implemented tariffs between 30-200 percent on over 1,000 goods it believes are destined for direct sale to consumers. Companies that set up local manufacturing operations can receive permission to import materials the government would not otherwise approve for import if the importer can show those materials will be used in local production.  Certain regulations explicitly favor local firms at the expense of foreign competitors, most prominently in the pharmaceutical sector, where an outright import ban the government implemented in 2009 remains in place on more than 360 medicines and medical devices. The arbitrary nature of the government’s frequent changes to business regulations has added to the uncertainty in the market.

Algerian state enterprises have a “right of first refusal” on transfers of foreign holdings to foreign shareholders.  Companies must notify the Council for State Participation (CPE) of these transfers. 

There are two main agencies responsible for attracting foreign investment, the National Agency of Investment Development (ANDI) and the National Agency for the Valorization of Hydrocarbons (ALNAFT).

ANDI is the primary Algerian government agency tasked with recruiting and retaining foreign investment.  ANDI runs branches in each of Algeria’s 48 governorates (“wilayas”) which are tasked with facilitating business registration, tax payments, and other administrative procedures for both domestic and foreign investors.  In practice, U.S. companies report that the agency is under-staffed and ineffective. Its “one-stop shops” only operate out of physical offices, and there are no efforts to maintain dialogue with investors after they have initiated an investment.  The agency’s effectiveness is undercut by its lack of decision-making authority, particularly for industrial projects, which is exercised by the Ministry of Industry and Mines, the Minister of Industry himself, and in many cases the Prime Minister.

ALNAFT is charged with attracting foreign investment to Algeria’s upstream oil and gas sector.  In addition to organizing events marketing upstream opportunities in Algeria to potential investors, the agency maintains a paid-access digital database with extensive technical information about Algeria’s hydrocarbons resources. 

Limits on Foreign Control and Right to Private Ownership and Establishment

Establishing a presence in Algeria can take any of three basic forms: 1) a liaison office with no local partner requirement and no authority to perform commercial operations, 2) a branch office to execute a specific contract, with no obligation to have a local partner, allowing the parent company to conduct commercial activity (considered a resident Algerian entity without full legal authority), or 3) a local company with 51 percent of share-capital held by a local company or shareholders.  A business entity can be incorporated as a joint stock company (JSC), a limited liability company (LLC), a limited partnership (LP), a limited partnership with shares (LPS), or an undeclared partnership. Groups and consortia are also used by foreign companies when partnering with other foreign companies or with local firms.

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.  However, the 51/49 rule requires majority Algerian ownership (at least 51 percent) in all projects involving foreign investments. This requirement was first adopted in 2006 for the hydrocarbons sector and was expanded across all sectors in the 2009 investments law.  The rule was removed from the 2016 Investment Law, but remains in force by virtue of its inclusion in the 2016 annual finance law, which requires foreign investment activities be subject to the incorporation of an Algerian company in which at least 51 percent of capital stock is held by resident national shareholder(s). 

Algerian government officials have defended the 51/49 requirement as necessary to prevent capital flight, protect Algerian businesses, and provide foreign businesses with local expertise.  The government has argued the rule is not an impediment to attracting foreign investment and is needed to diversify investment in Algeria’s economy, foster private sector growth, create employment for nationals, transfer technology and expertise, and develop local training initiatives.  Additionally, officials contend, and some foreign investors agree, a range of tailored measures can mitigate the effect of the 51/49 rule and allow the minority foreign shareholder to exercise other means of control. Some foreign investors use multiple local partners in the same venture, effectively reducing ownership of each individual local partner to enable the foreign partner to own the largest share.

The 51/49 investment rule poses challenges for various types of investors.  For example, the requirement hampers market access for foreign small and medium-sized enterprises (SMEs), as they often do not have the human resources or financial capital to navigate complex legal and regulatory requirements.  Large companies can find creative ways to work within the law, sometimes with the cooperation of local authorities who are more flexible with large investments that promise of significant job creation and technology and equipment transfers.  SMEs usually do not receive this same consideration. There are also allegations that Algerian partners sometimes refuse to invest the required funds in the company’s business, require non-contract funds to win contracts, and send unqualified workers to job sites.  Manufacturers are also concerned about intellectual property rights (IPR), as foreign companies do not want to surrender control of their designs and patents. Several U.S. companies have reported they have internal policies that preclude them from investing overseas without maintaining a majority share, out of concerns for both IPR and financial control of the local venture, which correspondingly prevent them from establishing businesses in Algeria.

The Algerian government does not officially screen FDI, though Algerian state enterprises have a “right of first refusal” on transfers of foreign holdings to foreign shareholders.  Companies must notify the Council for State Participation (CPE) of these transfers. In addition, initial foreign investments are still subject to approvals from a host of ministries that cover the proposed project, most often the Ministries of Commerce, Health, Energy, and Industry and Mines.  U.S. companies have reported that certain high-profile industrial proposals, such as for automotive assembly, are subject to informal approval by the Prime Minister. In 2017, the government instituted an Investments Review Council chaired by Prime Minister for the purpose of “following up” on investments; in practice, the establishment of the council means FDI proposals are subject to additional government scrutiny.  According to the 2016 Investment Law, projects registered through the ANDI deemed to have special interest for the national economy or high employment generating potential may be eligible for extensive investment advantages. For any project over 5 billion dinars (approximately USD 44 million) to benefit from these advantages, it must be approved by the Prime Minister-chaired National Investments Council (CNI). The CNI meets regularly, though it is not clear how the agenda of projects considered at each meeting is determined. 

Other Investment Policy Reviews

Algeria has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO).  The last investment policy review by a third party was conducted by the United Nations Conference on Trade and Development (UNCTAD) in 2003 and published in 2004.

Business Facilitation

Algeria’s online information portal dedicated to business creation www.jecreemonentreprise.dz   and the business registration website www.cnrc.org.dz   are currently under maintenance.  The websites provide information about several business registration steps applicable for registering certain kinds of businesses.  Entrepreneurs report that additional information about requirements or regulation updates for business registration are available only in person at the various offices involved in the creation and registration process.

In the World Bank’s 2019 Doing Business report, Algeria’s ranking for starting a business dropped from 145 to 157 (http://www.doingbusiness.org/en/data/exploreeconomies/algeria  ) despite seeing improvement in rankings for half of the ten indicator categories, including reforms which made getting electricity and trading across borders simpler.  The World Bank report lists 12 procedures that cumulatively take an average of 17.5 days to complete to register a new business. New business owners seeking to establish their enterprises have sometimes reported the process takes longer, noting that the most updated version of regulations and required forms are only available in person at multiple offices, therefore requiring multiple visits.

Outward Investment

Algeria does not currently have any restrictions on domestic investors from investing overseas, provided they can access foreign currency for such investments.  The exchange of Algerian dinars outside of Algerian territory is illegal, as is the carrying abroad of more than 3,000 dinars in cash at a time (approximately USD 26; see section 7 for more details on currency exchange restrictions).

Algeria’s National Agency to Promote External Trade (ALGEX), housed in the Ministry of Commerce, is the lead agency responsible for supporting Algerian businesses outside the hydrocarbons sector that want to export abroad.  ALGEX controls a special promotion fund to promote exports but the funds can only be accessed for very limited purposes. For example, funds might be provided to pay for construction of a booth at a trade fair, but travel costs associated with getting to the fair – which can be expensive for overseas shows – would not be covered.  The Algerian Company of Insurance and Guarantees to Exporters (CAGEX), also housed under the Ministry of Commerce, provides insurance to exporters. In 2003, Algeria established a National Consultative Council for Promotion of Exports (CCNCPE) that is supposed to meet annually. Algerian exporters claim difficulties working with ALGEX including long delays in obtaining support funds, and the lack of ALGEX offices overseas despite a 2003 law for their creation.  The Bank of Algeria’s 2002 Money and Credit law allows Algerians to request the conversion of dinars to foreign currency in order to finance their export activities, but exporters must repatriate an equivalent amount to any funds spent abroad, for example money spent on marketing or other business costs incurred.

Algeria has signed bilateral investment treaties with Argentina, Austria, Bahrain, BLEU (Belgium-Luxembourg Economic Union), Bulgaria, China, Cuba, Denmark, Egypt, Ethiopia, Finland, France, Germany, Greece, Indonesia, Iran, Italy, Jordan, Kuwait, Libya, Malaysia, Mali, Mauritania, Mozambique, Netherlands, Niger, Nigeria, Oman, Portugal, Qatar, Romania, Russian Federation, Serbia, South Africa, South Korea, Spain, Sudan, Sweden, Switzerland, Syria, Tajikistan, Tunisia, Turkey, Ukraine, United Arab Emirates, Vietnam, and Yemen.

In 2001, Algeria and the United States signed a Trade and Investment Framework Agreement (TIFA), and its council met most recently in Washington, D.C. in October 2018.

Algeria has trade agreements with the European Union and the Arab League, although neither has been fully implemented.  Recently instituted import barriers violate the terms of both agreements. The Algerian government concluded two years of “renegotiation” talks with the European Union in March 2017.  None of the trade terms of the 2005 EU-Algeria Association Agreement were modified, but the European Union committed to approximately USD 43 million of technical assistance for various Algerian ministries.

Algeria does not have a bilateral taxation treaty with the United States.  Algeria has bilateral taxation treaties with the Arab Maghreb Union (Libya, Mauritania, Morocco, and Tunisia), Austria, Bahrain, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Egypt, France, Germany, Indonesia, Iran, Italy, Lebanon, Portugal, Qatar, Romania, South Africa, South Korea, Spain, Switzerland, Turkey, and United Arab Emirates.

Transparency of the Regulatory System

The national government manages all regulatory processes.  Legal and regulatory procedures, as written, are considered consistent with international norms, although the decision-making process is at times opaque.

Algeria implemented a new accounting system called Financial Accounting System (FAS) in 2010.  Though legislation does not make explicit references, FAS appears to be based on International Accounting Standards Board and International Financial Reporting Standards (IFRS).  Operators generally find accounting standards to follow international norms, though they note that some particularly complex processes in IFRS have detailed explanations and instructions but by comparison are explained relatively briefly in FAS.

There is no specific mechanism for public comment on draft laws, regulations or regulatory procedures.  Typically, government officials give testimony to Parliament on draft legislation, and that testimony receive press coverage.  Occasionally copies of bills are leaked to the media.  However, full-text copies of draft laws are not made publicly accessible before enactment.  All laws and some regulations are published in the Official Gazette (www.joradp.dz  ) in Arabic and French, but the database has only limited online search features, and no summaries are published.  Often secondary legislation and/or administrative acts (known as ‘circulaires’ or ‘directives’) provide important details on how to implement laws and procedures.  Administrative acts are generally written at the ministry-level and not made public, though may be available if requested in person at a particular agency or ministry.  Public tenders are often accompanied by a book of specifications which is not made public, but only provided upon payment.

In some cases, authority over a matter may rest among multiple ministries, which imposes additional bureaucratic steps and the likelihood of either inaction or the issuance of conflicting regulations due to errors or unusual circumstances.  The development of regulations occurs largely away from public view; internal discussions at or between ministries are not usually made public.  In some instances, the only public interaction on regulations development is a press release from the official state press service at the conclusion of the process; in other cases, a press release is issued earlier.  Regulatory enforcement mechanisms and agencies exist at some ministries, but they are usually understaffed and enforcement remains weak.

The National Economic and Social Council (CNES) looks broadly at the effects of Algerian government policies and regulations in economic and social spheres.  The CNES has also been known to provide feedback on proposed legislation, though this is not required and neither the feedback nor legislation are necessarily made public.

Information on external debt obligations up to fiscal year 2018 was publicly available via the Central Bank’s quarterly statistical bulletin online  .  The statistical bulletin only describes external debt and not public debt, but the Ministry of Finance’s budget execution summaries reflect amalgamated debt totals.  The Ministry of Finance is working on a project to create an electronic, consolidated database of internal and external debt information. An amendment of the law on currency and credit authorizes the Central Bank to purchase bonds directly from the Treasury for a period of up to five years.  The Ministry of Finance indicated this would include purchasing debt from state enterprises, a process they described as the Central Bank transferring money to the treasury, which then provides the cash to, for example, state owned enterprises, in exchange for their debt. 

International Regulatory Considerations

Algeria is not a member of any regional economic bloc or of the WTO.  The structure of Algerian regulations largely follows European—specifically French—standards.

Legal System and Judicial Independence

Algeria’s legal system is based on the French civil law tradition.  The commercial law was established in 1975 and most recently updated in 2007 (www.joradp.dz/TRV/FCom.pdf ).  The judiciary is nominally independent from the executive branch, but U.S. companies have reported allegations of political pressure exerted on the courts by the executive.  Regulation enforcement actions are adjudicated in the national courts system and are appealable. Algeria has a system of administrative tribunals for adjudicating disputes with the government, distinct from the courts that handle civil disputes and criminal cases.  Decisions made under treaties or conventions to which Algeria is a signatory are binding and enforceable under Algerian law.

Laws and Regulations on Foreign Direct Investment

The 51/49 rule in the 2016 annual finance law requires a majority Algerian partner for any foreign investment (see section 2), but otherwise there are few laws restricting foreign investment.  In practice, the many regulatory and bureaucratic requirements for business operations provide officials avenues to advance informally political or protectionist policies. The investments law enacted in 2016 charged ANDI with creating four new branches to assist with business establishment and the management of investment incentives.  ANDI’s website (www.andi.dz/index.php/en/investir-en-algerie  ) lists the relevant laws, rules, procedures, and reporting requirements for investors.  However, much of the information lacks detail—particularly for the new incentives elaborated in the 2016 investments law—and refers prospective investors to ANDI’s physical “one-stop shops” located throughout the country. 

There is an ongoing effort by customs, under the Ministry of Finance, to establish a new digital platform featuring one-stop shops for importers and exports to streamline bureaucratic processes.

Competition and Anti-Trust Laws

The National Competition Council (www.conseil-concurrence.dz/  ) is responsible for reviewing both domestic and foreign competition related concerns.  Established in late 2013, it is housed under the Ministry of Commerce. Once the economic concentration of enterprises exceeds 40 percent of a market’s sales or purchases, the Competition Council is authorized to investigate, though a 2008 directive from the Ministry of Commerce exempted economic operators working for national economic progress from this review/approval.

Expropriation and Compensation

The Algerian state can expropriate property under limited circumstances proscribed by law, with the state mandated to pay “just and equitable” compensation to the defendants for the property.  Expropriation of property is extremely rare, with no cases within the last 10 years. However, in late 2018 a government measure required farmers to comply with a new regulation altering the concession contracts of their land in a way that would cede more control to the government.  Those who refused to switch contract type by December 31, 2018 lost their right to their land. 

Dispute Settlement

ICSID Convention and New York Convention

Algeria is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention) and the Convention on the International Center for the Settlement of Investment Disputes (ICSID Convention).  The Algerian code of civil procedure allows both private and public companies full recourse to international arbitration. Algeria permits the inclusion of international arbitration clauses in contracts. 

Investor-State Dispute Settlement

Investment disputes sometimes occur, especially on major projects.  These disputes can be settled informally through negotiations between the parties or via the domestic court system.  For disputes with foreign investors, cases can be decided during international arbitration. The most common disputes in the last several years have involved state-owned oil and gas company Sonatrach and its foreign partners concerning the retroactive application since 2006 of a windfall profits tax on hydrocarbons production.  Sonatrach won a case in October 2016 against Spanish oil company Repsol and two Korean firms. In 2018 Sonatrach announced it had settled all outstanding international disputes.

The most recent investment dispute involving a U.S. company dates to 2012.  The company, which had encountered bureaucratic blocks on the expatriation of dividends from a 2005 investment, did not resort to arbitration.  The dispute was resolved in 2017, with the government permitting the company to expatriate the dividends.

There is no U.S.-Algeria Bilateral Investment Treaty or Free Trade Agreement.

International Commercial Arbitration and Foreign Courts

The Algerian Chamber of Commerce and Industry (CACI), the nationwide, state-supported chamber of commerce, has the authority to arbitrate investment disputes as an agent of the court.  The bureaucratic nature of Algeria’s economic and legal system, as well as its opaque decision-making process, means that disputes can drag on for years before a resolution is reached. Businesses have reported cases in the court system are subject to political influence and generally tend to favor the government’s position.

Local courts recognize and have the authority to enforce foreign arbitral awards.  Disputes between state-owned enterprises (SOEs) and foreign investors are rarely decided in domestic courts, since nearly all contracts between foreign and Algerian partners include clauses for international arbitration.  The Ministry of Justice is in charge of enforcing arbitral awards against SOEs.

Bankruptcy Regulations

Algeria’s bankruptcy law generally follows international norms.  While bankruptcy per se is not criminalized, management decisions (such as company spending, investment decisions, and even procedural mistakes) are subject to criminal penalties, ranging from fines to jail time, so decisions that lead to bankruptcy can be punishable under Algerian criminal law.  However, bankruptcy cases rarely proceed to a full dissolution of assets. The Algerian government generally props up public companies on the verge of bankruptcy via cash infusions from the public banking system. According to the World Bank’s Doing Business report, both debtors and creditors may file for both liquidation and reorganization.

Investment Incentives

Any incentive offered by the Algerian government is generally available to any company, though there are multiple tiers of “common, additional, and exceptional” incentives under the 2016 investments law (www.joradp.dz/FTP/jo-francais/2016/F2016046.pdf ).  “Common” incentives available to all investors include exemption from customs duties for all imported production inputs, exemption from value-added sales tax (VAT) for all imported goods and services that enter directly into the implementation of the investment project, a 90 percent reduction on tenancy fees during construction, and a 10-year exemption on real estate taxes.  Investors also benefit from a three-year exemption on corporate and professional activity taxes and a 50 percent reduction for three years on tenancy fees after construction is completed. Additional incentives are available for investments made outside the coastal regions, namely the reduction of tenancy fees to a symbolic dinar (USD .01) per square meter of land for 10 years in the High Plateau region and 15 years in the south of Algeria, plus a 50 percent reduction thereafter.  The law also charges the state to cover, in part or in full, the necessary infrastructure works for the realization of the investment. “Exceptional” incentives apply for investments “of special interest to the national economy,” including the extension of the common tax incentives to 10 years. The sectors of “special interest” have not yet been publicly specified. An investment must receive the approval of the National Investments Council in order to qualify for the exceptional incentives. 

Regulations passed in a March 2017 executive decree exclude approximately 150 economic activities from eligibility for the incentives (www.joradp.dz/FTP/jo-francais/2017/F2017016.pdf ).  The list of excluded investments is concentrated on the services sector but also includes manufacturing for some products.  All investments in sales, whether retail or wholesale, and imports business are ineligible.

The 2016 investments law also provided state guarantees for the transfer of incoming investment capital and outgoing profits.  Pre-existing incentives established by other laws and regulations also include favorable loan rates well below inflation from public banks for qualified investments.

Foreign Trade Zones/Free Ports/Trade Facilitation

Algeria does not have any foreign trade zones or free ports.

Performance and Data Localization Requirements

The Algerian government does not officially mandate local employment, but companies usually must provide extensive justification to various levels of the government as to why an expatriate worker is needed.  Some businesses have reported instances of the government pressuring foreign companies operating in Algeria, particularly in the hydrocarbons sector, to limit the number of expatriate middle and senior managers so that Algerians can be hired for these positions.  Any person or legal entity employing a foreign citizen is required to notify the Ministry of Labor. Contacts at multinational companies have alleged this pressure is applied via visa applications for expatriate workers. U.S. companies in the hydrocarbons industry have reported that, when granted, expatriate work permits are usually valid for no longer than six months and are delivered up to three months late, requiring firms to apply perpetually for renewals.

In 2017, the Algerian government began instituting forced localization in the auto sector.  Industry regulations issued in December 2017 require companies producing or assembling cars in the country to achieve a local integration rate of at least 15 percent within three years of operation.  The threshold rises to between 40 and 60 percent after a company’s fifth year of operation. Since 2014, the government has required car dealers to invest in industrial or “semi-industrial” activities as a condition for doing business in Algeria.  Dealers seeking to import new vehicles must obtain an import license from the Ministry of Commerce. Since January 2017, the Ministry has not issued any licenses. As the Algerian government further restricts imports, localization requirements are expected to broaden to other manufacturing industries over the next several years.  For example, a tender launched in 2018 for 150 megawatts of photovoltaic solar energy power plants mandated that bidders be Algerian legal entities.

Information technology providers are not required to turn over source codes or encryption keys, but all hardware and software imported to Algeria must be approved by the Agency for Regulation of Post and Electronic Communications (ARPCE), under the Ministry of Post, Information Technology and Communication.  The ARPCE was created in May 2018, dissolving and taking over the function of the previous Agency for Regulation of Post and Telecommunications (APRT). In practice, the Algerian government requires public sector entities to store data on servers within the country.

Real Property

Secured interests in property are generally recognized and enforceable, but court proceedings can be lengthy and results unpredictable.  All property not clearly titled to private owners remains under government ownership. As a result, the government controls most real property in Algeria, and instances of unclear titling have resulted in conflicting claims of ownership, which has made purchasing and financing real estate difficult.  Several business contacts have reported significant difficulty in obtaining land from the government to develop new industrial activities; the state prefers to lease land for 33-year terms, renewable twice, rather than sell outright. The procedures and criteria for awarding land contracts are opaque.

Property sales are subject to registration at the tax inspection and publication office at the Mortgage Register Center and are part of the public record of that agency.  All property contracts must go through a notary.

According to the 2019 World Bank Doing Business report, Algeria ranks 165/190 for ease of registering property.

Intellectual Property Rights

Patent and trademark protection in Algeria is covered by a series of ordinances dating back to 2003 and 2005.  U.S. company representatives operating in Algeria reported that these laws were satisfactory in terms of both the scope of what they cover and the mandated penalties for violations.  A 2015 government decree to pursue patent and trademark infringements increased coordination between the National Office of Copyrights and Related Rights (ONDA), the National Institute for Industrial Property (INAPI), and law enforcement.  However, U.S. companies note that enforcement remains an issue.

ONDA, under the Ministry of Culture, and INAPI, under the Ministry of Industry and Mines, are the two separate entities within the Algerian government that have primary responsibility for IP protections.  ONDA covers literary and artistic copyrights as well as digital software rights, while INAPI oversees the registration and protection of industrial trademarks and patents. Despite strengthened efforts at ONDA, INAPI, and the General Directorate for Customs (under the Ministry of Finance), which have seen local production of pirated or counterfeit goods nearly disappear since 2011, imported counterfeit goods are prevalent and easily obtained.  Algerian law enforcement agencies annually confiscate several hundred items, including clothing, cosmetics, sports items, foodstuffs, automotive spare parts, and home appliances. ONDA destroyed more than 100,000 copies of pirated media to commemorate World Intellectual Property Day in 2017, but software firms estimate that more than 85 percent of the software used in Algeria, and a similar percentage of titles used by government institutions and state-owned companies, is not licensed.

Algeria has remained on the Priority Watch List of USTR’s Special 301 Report   since 2009.

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

Capital Markets and Portfolio Investment

The Algiers Stock Exchange has five stocks listed—each at no more than 35 percent equity—with a total market capitalization representing less than 0.1 percent of Algeria’s GDP.  Daily trading volume on the exchange averages around USD 2,000. Despite its small size, the market functions well and is adequately regulated by an independent oversight commission that enforces compliance requirements on listed companies and traders.

Officials aim to reach a capitalization of USD 7.8 billion in the next five years and enlist up to 50 new companies.  However, attempts to list additional companies have been stymied by a lack both of public awareness and appetite for portfolio investment, as well as by private and public companies’ unpreparedness to satisfy due diligence requirements that would attract investors.  Proposed privatizations of state-owned companies have also been opposed by the public. Algerian society generally prefers material investment vehicles for savings, namely cash. Public banks, which dominate the banking sector (see below), are required to purchase government securities when offered, meaning they have little leftover liquidity to make other investments.  Foreign portfolio investment is prohibited—the purchase of any investment product in Algeria, whether a government or corporate bond or equity stock, is limited to Algerian residents only.

Money and Banking System

The banking sector is roughly 85 percent public and 15 percent private as measured by value of assets held, and is regulated by an independent central bank.  Publicly available data from private institutions and U.S. Federal Reserve Economic Data show estimated total assets in the commercial banking sector in 2017 were roughly 13.9 trillion dinars (USD 116.7 billion) against 9.2 trillion dinars (USD 77.2 billion) in liabilities.  The central bank had mandated a 12 percent minimum ratio for assets to liabilities until mid-2016, when in response to a drop in liquidity the bank lowered the threshold to8 percent. In August 2017, the ratio was further reduced to 4 percent in an effort to inject further liquidity into the banking system.  The decrease in liquidity was a result of all public banks buying government bonds in the first public bond issuance in more than 10 years; buying at least 5 percent of the offered bonds is required for banks to participate as primary dealers in the government securities market. The bond issuance essentially returned funds to the state that it had parked in funds at local banks during years of excess hydrocarbons profits.  In January 2018, the bank increased the retention ratio from 4 percent to 8 percent, followed by a further increase in February 2019 to a 12 percent ratio in response in anticipation of a rise in bank liquidity due to the government’s non-conventional financing policy, which allows the Treasury to borrow directly from the central bank to pay state debts.

Banks are considered financially healthy, although the IMF and Bank of Algeria have noted moderate growth in non-performing assets, currently estimated between 10-12 percent of total assets.  The quality of service in public banks is generally considered low as generations of public banking executives and workers trained to operate in a statist economy lack familiarity with modern banking practices.  Most transactions are still materialized (non-electronic). Many areas of the country suffer from a dearth of branches, leaving large amounts of the population without access to banking services. ATMs are not widespread, especially outside the major cities, and few accept foreign bank cards.  Outside of major hotels with international clientele, hardly any retail establishments accept credit cards. Algerian banks do issue debit cards, but the system is distinct from any international payment system. In addition, approximately 4.6 trillion dinars (USD 40 billion), or one-third, of the money supply is estimated to circulate in the informal economy.

Foreigners can open foreign currency accounts without restriction, but proof of a work permit or residency is required to open an account in Algerian dinars.  Foreign banks are permitted to establish operations in the country, but they must be legally distinct entities from their overseas home offices. Of the handful of foreign banks with a presence in Algeria, all are engaged exclusively in commercial banking; none offers retail banking services.

In 2015, the Financial Action Task Force (FATF) removed Algeria from its Public Statement, and in 2016 it removed Algeria from the “gray list.”  The FATF recognized Algeria’s significant progress and the improvement in its anti-money laundering/counter terrorist financing (AML/CFT) regime.  The FATF also indicated Algeria has substantially addressed its action plan since strategic deficiencies were identified in 2011.

Foreign Exchange and Remittances

Foreign Exchange

There are few statutory restrictions on foreign investors converting, transferring, or repatriating funds, according to banking executives.  Monies cannot be expatriated to pay royalties or to pay for services provided by resident foreign companies. The difficultly with conversions and transfers results more from the procedures of the transfers rather than the statutory limitations: the process is heavily bureaucratic and requires almost 30 different steps from start to finish.  The slightest misstep at any stage can slow down or completely halt the process. In theory, it should take roughly one month to complete, but in reality, it often takes three to six months. Also, the Algerian government has been known to delay the process as leverage in commercial and financial disputes with foreign companies.

Expatriated funds can be converted to any world currency.  The IMF classifies the exchange rate regime as an “other managed arrangement,” with the central bank pegging the value of the Algerian dinar to a “basket” composed of 64 percent of the value of the U.S. dollar and 36 percent of the value of the euro.  The currency’s value is not controlled by any market mechanism and is set solely by the central bank. As the Central Bank has full control of the official exchange rate of the Dinar, any change in its value could be considered currency manipulation. When dollar-denominated hydrocarbons profits fell starting in mid-2014, the central bank allowed a slow depreciation of the dinar against the dollar over 24 months, culminating in about a 30 percent fall in its value before stabilizing around 110 dinars to USD 1 in late 2016.  However, the dinar lost only about 10 percent of its value against the euro in the same time frame. The government announced in mid-2018 its intention to maintain the exchange rate between 118-119 dinars to USD 1 through 2020. The parallel market rate saw the dinar devalue by more than 3 percent against the dollar between January and April 2019.

Remittance Policies

There have been no recent changes to remittance policies.  Algerian exchange control law remains strict and complex. There are no specific time limitations, although the bureaucracy involved in remittances can often slow the process to as long as six months.  Personal transfers of foreign currency into the country must be justified and declared as not for business purpose. There is no legal parallel market by which investors can remit; however, there is a substantial black market currency exchange system in Algeria.  Exchange rates for the dollar and euro are about 50 percent stronger on the black market than the official rates. With the more favorable informal rates, local sources report that most remittances occur via foreign currency hand-carried into the country. Under central bank regulations revised in September 2016, travelers to Algeria are permitted to enter the country with up to 1,000 euros or equivalent without declaring the funds to customs.  However, any non-resident can only exchange dinars back to a foreign currency with proof of initial conversion from the foreign currency. The same regulations prohibit the transfer of more than 3,000 dinars (USD 26) outside Algeria.

Private citizens may convert up to 15,000 dinars (USD 127) per year for travel abroad.  To do the conversion, they must demonstrate proof of their intention to travel abroad through plane tickets or other official documents.

In April 2019, the Finance Ministry announced the creation of a vigilance committee to monitor and control financial transactions to foreign countries.  It divided operations into three categories relating to 1) imports 2) investments abroad 3) transfer abroad of profits.

Sovereign Wealth Funds

Algeria’s sovereign wealth fund (SWF) is the “Fonds de Regulation des Recettes (FRR).”  The Finance Ministry’s website shows the fund decreased from 4408.2 billion dinars (USD 37.36 billion) in 2014 to 784.5 billion dinars (USD 6.65 billion) in 2016.  Algerian media reported the FRR was spent down to zero as of February 2017. Algeria is not known to have participated in the IMF-hosted International Working Group on SWFs.

More than half of the formal Algerian economy is comprised of state-owned enterprises (SOEs), led by the national oil and gas company Sonatrach, although SOEs are present in all sectors of the economy.  SOEs are so prevalent that a comprehensive public list does not exist; rather all SOEs are amalgamated into a single line of the state budget. SOEs are listed in the official business registry. To be defined as an SOE, a company must be at least 51 percent owned by the state.

Algerian SOEs are generally heavily bureaucratic and may be subject to political influence.  There are competing lines of authority at the mid-levels, and contacts report mid- and upper-level managers are reluctant to make decisions because internal accusations of favoritism or corruption are often used to settle political scores.  Senior management teams at SOEs report to their relevant ministries; CEOs of the larger companies such as Sonatrach, electric and gas utility Sonelgaz, and airline Air Algerie report directly to ministers. Boards of directors are appointed by the state, and the allocation of these seats is considered political.  SOEs are not known to adhere to the OECD Guidelines on Corporate Governance.

Legally, public and private companies compete under the same terms with respect to market share, products and services, and incentives.  In reality, private enterprises assert that public companies sometimes receive more favorable treatment. Private enterprises have the same access to financing as SOEs, but they tend to work more with private banks and they are far less bureaucratic than are their public counterparts.  Public companies generally refrain from doing business with private banks. In 2008, a government directive ordered public companies to work only with public banks. The directive was later officially rescinded, but the effect has held as a self-imposed practice by public companies. SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors, but business contacts report that the government favors SOEs over private sector companies in terms of access to land.

SOEs are subject to budget constraints.  Audits of public companies are conducted by the Court of Auditors, a financially autonomous institution.  A Constitutional revision of Article 192 in March 2016 enshrined the independence of the Court. The constitution explicitly charges it with “ex post inspection of the finances of the state, collectivities, public services, and commercial capital of the state,” as well as preparing and submitting an annual report to the President, heads of both chambers of Parliament, and Prime Minister.  The previous constitution of 1996 had not included the state’s commercial capital in the Court’s mandate, nor had it required its annual report be shared with anyone but the President. Now, the Court makes its audits public on its website, for free.

The Court conducts audits simultaneously but independently from the Ministry of Finance’s year-end reports.  The Court makes its reports available online once they are finalized and delivered to the Parliament, whereas the Ministry withholds publishing year-end reports until after the Parliament and President have approved them.  The Court’s audit reports cover the entire implemented national budget by fiscal year and examine each annual planning budget that is passed by Parliament.

The General Inspectorate of Finance (IGF), the public auditing body under the supervision of the Ministry of Finance, can conduct “no-notice” audits of public companies.  The results of these audits are sent directly to the Minister of Finance, and the offices of the President and Prime Minister. They are not made available publicly. The Court of Auditors and IFG previously had joint responsibility for auditing certain accounts, but they are in the process of eliminating this redundancy.

Privatization Program

There has been very limited privatization of certain projects previously managed by SOEs in the water sector and likely other sectors.  However, the privatization of SOEs remains a highly sensitive issue and has been halted.

Multinational and particularly U.S. firms operating in Algeria are spreading the concept of responsible business conduct (RBC), which has traditionally been less common among domestic firms, with a few notable exceptions.  Companies such as Anadarko, Cisco, Microsoft, Boeing, Dow, and Berlitz have supported programs aimed at youth employment, education, and entrepreneurship. RBC activities are gaining acceptance as a way for companies to contribute to local communities while often addressing business needs, such as a better-educated workforce.  The national oil and gas company, Sonatrach, funds some social services for its employees and supports desert communities near production sites. Still, many Algerian companies view social programs as areas of government responsibility and do not consider such activities in their corporate decision-making process. While state entities welcome foreign companies’ RBC activities, the government does not factor them into procurement decisions, nor does it require companies to disclose their RBC activities.  Algerian laws for consumer and environmental protections exist but are weakly enforced.

Algeria does not adhere to the OECD or UN Guiding Principles and does not participate in the Extractive Industries Transparency Initiative.  Algeria ranks 73/89 for resource governance, and does not comply with rules set for disclosing environmental impact assessments and mitigation management plans, according to the most recent report by National Resource Governance Index.

The current anti-corruption law dates to 2006.  A new bill that would have amended the 2006 law passed the lower chamber of Algeria’s bicameral legislative body in February 2019, but is pending approval by the senate.  If approved, the law would create a financial penal division within the court of Algiers, with a national territorial jurisdiction and whose mission is to research, investigate, prosecute individuals who commit financial offenses of great complexity, and any other offenses related to bribery, tax evasion and avoidance, unlawful financing of associations as well as currency and banking offenses.  It would also provide protection of whistle-blowers reporting acts detrimental to their employment or working conditions.

In 2013, the Algerian government created the Central Office for the Suppression of Corruption (OCRC) to investigate and prosecute any form of bribery in Algeria.  The current number of cases currently being investigated by the OCRC is not available. In 2010, the government created the National Organization for the Prevention and Fight Against Corruption (ONPLC) as stipulated in the 2006 anti-corruption law.  The Chairman and members of this commission are appointed by a presidential decree. The commission studies financial holdings of public officials and carries out studies. Since 2013, the Financial Intelligence Unit has been strengthened by new regulations that have given the unit more authority to address illegal monetary transactions and terrorism funding.  In 2016, the government updated its anti-money laundering and counter-terrorist finance legislation to bolster the authority of the financial intelligence unit to monitor suspicious financial transactions and refer violations of the law to prosecutorial magistrates. Algeria signed the UN Convention Against Corruption in 2003.

The Algerian government does not have a policy that requires private companies to establish internal codes of conduct that prohibit bribery of public officials.  The use of internal controls against bribery of government officials varies by company, with some upholding those standards and others rumored to offer bribes. Algeria is not a participant in regional or international anti-corruption initiatives.  While Algeria does not provide protections to NGOs involved in investigating corruption, there are whistleblower protections for Algerian citizens who report corruption.

International and Algerian economic operators have identified corruption as an obstacle to FDI, indicating that foreign companies with strict compliance standards cannot compete against those companies who can offer special incentives to those making decisions about contract awards.  Economic operators have also indicated that complex bureaucratic procedures are sometimes manipulated by political actors to ensure economic benefits accrue to favored individuals in a non-transparent way. 

Corruption issues recently garnered significant headlines in Algeria.  On April 1, press reported the Prosecutor General’s Office of the Algiers court had opened investigations into corruption and the illegal transfer of capital abroad.  Shortly after, Algeria’s Army Chief of Staff Ahmed Gaid Salah accused unnamed parties of stealing from the Algerian people, and announced the Ministry of Justice’s intention to reopen old corruption cases, including a case regarding corruption in the state hydrocarbons company Sonatrach, though he did not specify which cases.

Resources to Report Corruption

Official government agencies

Central Office for the Suppression of Corruption (OCRC)
Mohamed Mokhtar Rahmani, General Director
Placette el Qods, Hydra, Algiers
Telephone: +213 21 68 63 12
www.facebook.com/263685900503591/  
No email address publicly available

National Organization for the Prevention and Fight Against Corruption (ONPLC)
Tarek Kour, President
14 Rue Souidani Boudjemaa, El Mouradia, Algiers
Telephone: +213 21 23 94 76
Email: contact@onplc.org.dz
www.onplc.org.dz/index.php/  

Watchdog organization:

Djilali Hadjadj
President
Algerian Association Against Corruption (AACC)
Telephone: +213 07 71 43 97 08
Email: aaccalgerie@yahoo.fr
www.facebook.com/215181501888412/  

Beginning on February 22, nationwide peaceful demonstrations against longtime president Abdelaziz Bouteteflika began, with the largest gatherings occurring on Fridays.  The exact number of demonstrators is estimated to be in the millions, though participation varies across city and week. During weekdays, various professional trade groups and student groups have peacefully demonstrated with hundreds to thousands of marchers converging on symbolic points, mainly in Algeria’s large coastal cities.  The demonstrations lead to the April 2 resignation of President Bouteflika.

Prior to February, demonstrations that occurred in Algeria tended to concern housing and other social programs, and were generally limited to tens or a few hundred participants.  While the majority of those small protests were generally peaceful, there were occasional outbreaks of violence that resulted in injuries, sometimes resulting from efforts of security forces to disperse the protests.

Government reactions to public unrest typically include tighter security control on movement between and within cities to prevent further clashes and promises of either greater public expenditures on local infrastructure or increased local hiring for state-owned companies.  During the first several months of 2015, there was a series of protests in several cities in the south of the country against the government’s program to drill test wells for shale gas. These protests were largely peaceful but sometimes resulted in clashes, injury, and rarely, property damage.  Announcements in 2017 that authorities would recommence shale gas exploration have not to date generated protests.

The Algerian government requires all foreign employees of foreign companies or organizations based in Algeria to contact the Foreigners Office of the Ministry of the Interior before traveling in the country’s interior so that the Government can evaluate need for police coordination.  The Algerian government also requires U.S. Embassy employees to request permission and police accompaniment to visit the Casbah in Algiers and to coordinate travel with the government any outside of the Algiers wilaya (province); for this reason U.S. consular services may be limited outside of the Algiers wilaya.

The government’s efforts to reduce terrorism have focused on active security services and social reconciliation and reintegration.  Isolated terrorist incidents still occasionally occur. There have been two major attacks on oil and gas installations in the last 10 years.  In March 2016, terrorists launched a homemade rocket attack on a gas facility in central Algeria that caused limited damage but no casualties.  In January 2013, there was a major attack at a remote oil and gas facility near the town of In Amenas in southeast Algeria (approximately 1,500 kilometers from Algiers) in which nearly 40 people – mostly western energy sector workers, including three Americans – were killed.  Other terrorist attacks claimed by ISIS include an August 2017 suicide attack in Tiaret that killed two police officers and a February 2017 attack that injured two police officers in Constantine. Each of these attacks prompted swift counter-terrorism responses by Algerian security services to uproot the militants responsible for the attacks.

Terrorist attacks usually target Algerian government interests and security forces outside of major cities and mainly in mountainous and remote areas, although attacks in 2017 and 2018 injured and killed police and security forces in the cities of Constantine and Tiaret, and the regions of Sidi Bel Abbas and Annaba.

U.S. citizens living or traveling in Algeria are encouraged to enroll in the Smart Traveler Enrollment Program (STEP) via the State Department’s travel registration website, https://step.state.gov/step, to receive security messages and make it easier to be located in an emergency.

There is a shortage of skilled labor in Algeria in all sectors.  Business contacts report difficulty in finding sufficiently skilled plumbers, electricians, carpenters, and other construction/vocational related areas.  Oil companies report they have difficulty retaining trained Algerian engineers and field workers because these workers often leave Algeria for higher wages in the Gulf.  Some white-collar employers also report a lack of skilled project managers, supply chain engineers, and even of sufficient numbers of office workers with requisite computer and soft skills.

Official unemployment figures are measured by the number of persons seeking work through the National Employment Agency (ANEM), and overall unemployment in 2018 held steady from the previous year, at 11.7 percent.  However, unemployment is significantly higher among certain demographics, including young people (ages 16-24) at 29.1 percent, up 5.2 percentage points from 2017, and college-educated workers, 27.9 percent. Notably, roughly 70 percent of the population is under 30.  Additionally, the International Labor Organization (ILO) estimates that more than one-third of all labor in Algeria is employed in the informal economy. To help train Algerians, including those who did not complete high school, the Ministry of Vocational Training sponsors programs that, according to government figures, offer training to at least 300,000 Algerians annually in various professional programs.

Companies must submit extensive justification to hire foreign employees, and report pressure to hire more locals (even if jobs could be replaced through mechanization) under implied threat of not approving the visa applications for expatriate staff.  There are no special economic zones or foreign trade zones in Algeria.

The constitution provides workers with the right to join and form unions of their choice provided they are citizens.  The country has ratified the International Labor Organization’s (ILO’s) conventions on freedom of association and collective bargaining but failed to enact legislation needed to implement these conventions fully.  The General Union of Algerian Workers (UGTA) is the largest union in Algeria and represents a broad spectrum of employees in the public sectors. The UGTA, an affiliate of the International Trade Union Conference, is an official member of the Algerian “tripartite,” a council of labor, government, and business officials that meets annually to collaborate on economic and labor policy.  The Algerian government chooses to liaise almost exclusively with the UGTA, however unions in the education, health, and administration sectors do meet and negotiate with government counterparts, especially under threat of strike. Collective bargaining is permitted under a law passed in 1990 and modified in 1997, but is not mandatory.

Algerian law provides mechanisms for monitoring labor abuses and health and safety standards, and international labor rights are recognized within domestic law, but are only effectively regulated in the formal economy.  The government has shown an increasing interest in understanding and monitoring the informal economy, and in 2018 partnered with the ILO on workshops and is cooperating with the World Bank on several projects aimed at better quantifying the informal sector.

Sector-specific strikes occur often in Algeria, though general strikes are less common.  The law provides for the right to strike, and workers exercise this right, subject to conditions.  Striking requires a secret ballot of the whole workforce, and the decision to strike must be approved by majority vote of workers at a general meeting.  The government may restrict strikes on a number of grounds, including economic crisis, obstruction of public services, or the possibility of subversive actions.  Furthermore, all public demonstrations, including protests and strikes, must receive prior government authorization. By law, workers may strike only after 14 days of mandatory conciliation or mediation.  The government occasionally offers to mediate disputes. The law states that decisions reached in mediation are binding on both parties. If mediation does not lead to an agreement, workers may strike legally after they vote by secret ballot to do so.  The law requires that a minimum level of essential public services must be maintained, and the government has broad legal authority to requisition public employees. The list of essential services includes services such as banking, radio, and television.  Penalties for unlawful work stoppages range from eight days to two months imprisonment.

In 2018, there were strikes in the beginning of the year, largely in the public health and public education sectors.  Medical residents went on strike demanding higher pay, better working conditions, and male residents sought an exemption from mandatory military service requirements.  After weeks of strikes, the Ministry of Health made some concessions in terms of additional benefits for doctors, and the residents resumed work. Teachers went on strike for higher pay and complained of perceived inequalities in the pay scale.  After weeks of strikes and a closed-door meeting, the Ministry of Education and unions came to an agreement. While the full details of the agreement were not disclosed, teachers noted in broad terms the Ministry expressed a willingness to meet their demands and resumed work.

Stringent labor-market regulations likely inhibit an increase in full-time, open-ended work.  Regulations do not allow for flexibility in hiring and firing in times of economic downturn, for example, employers are generally required to pay severance when laying off or firing workers.  Unemployment insurance eligibility requirements may discourage job seekers from collecting benefits probably due them, and the level of support claimants receive is minimal. Employers must have contributed up to 80 percent of the final year salary into the unemployment insurance scheme in order for them to qualify for unemployment benefits.

The law contains occupational health and safety standards, however enforcement of those standards may be uneven.  There were no known reports of workers dismissed for removing themselves from hazardous working conditions. If workers face such conditions, they are able to file a complaint with the Ministry of Labor, who would then send out labor inspectors to investigate the claim.  While this legal mechanism exists, the high demand for employment in the country gave an advantage to employers seeking to exploit employees.

Because Algerian law does not provide for temporary legal status for migrants, labor standards do not protect economic migrants from sub-Saharan Africa and elsewhere working in the country without legal immigration status, which makes them vulnerable to exploitation.  The law does not adequately cover migrant workers employed primarily in construction and occasionally as domestic workers – however migrant children are protected by law from working.

The Ministry of Labor enforces labor standards, including compliance with the minimum wage regulation and safety standards.  Companies that employ migrant workers or violate child labor laws are subject to fines and potentially even prosecution.

The law prohibits participation by minors in dangerous, unhealthy, or harmful work or in work considered inappropriate because of social and religious considerations – as do Algerian norms and practices.  The minimum legal age for employment is 16, but younger children may work as apprentices with permission from their parents or legal guardian. The law prohibits workers under age 19 from working at night.  While there is currently no list of hazardous occupations prohibited to minors, the government told us a list was being drafted and would be issued by presidential decree. Although specific data was unavailable, children reportedly worked mostly in the informal sector, largely in sales, often in family businesses, and also begging on the streets, or in agricultural work.  There were isolated reports that children were subjected to commercial sexual exploitation.

The Ministry of Labor is responsible for enforcing child labor laws.  There is no single office charged with this task, but all labor inspectors are responsible for enforcing laws regarding child labor.  In 2018, the Ministry of Labor focused one month specifically on investigating child labor violations, and in some cases prosecuted individuals for employing minors or breaking other child-related labor laws.  While the government claims to monitor both the formal and informal sectors, contacts note that in reality, their efforts largely land in the formal economy.

The National Authority of the Protection and Promotion of Children (ONPPE) is an inter-agency organization, created in 2016, which coordinates the protection and promotions of children’s rights.  As a part of its efforts, in 2018 ONPPE held educational sessions for officials from relevant ministries, civil society organizations, and journalists on issues related to children, including child labor and human trafficking.

An Overseas Private Investment Corporation (OPIC) agreement between the U.S and Algeria was signed in June 1990.  In 2005, the Algerian Energy Company entered a deal with Ionics Inc. of Watertown, Massachusetts, in which Ionics agreed to build a water desalination plant and the state water authority took a minority stake in the plant and agreed to purchase the bulk of the clean water produced.  OPIC provided a USD 200 million loan to Ionics, a desalination equipment manufacturer that was later acquired by General Electric. In 2017, GE sold its stake in the Algiers water desalination plant, OPIC’s first and only project in Algeria to date.

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

* Algeria Office of National Statistics: http://www.ons.dz/Au-deuxieme-trimestre-2018-les.html  

* National Agency for Investment Development.

Table 3: Sources and Destination of FDI

No information for Algeria is available on the IMF’s Coordinated Direct Investment Survey (CDIS) website.  Neither World Bank nor Algerian sources break down FDI to and from Algeria by individual countries.

Table 4: Sources of Portfolio Investment

No information for Algeria is available on the IMF’s Coordinated Direct Investment Survey (CDIS) website.  Neither World Bank nor Algerian sources break down FDI to and from Algeria by individual countries.

Amber Oliva
Economic Officer, U.S. Embassy Algiers
5 Chemin Cheikh Bachir El-Ibrahimi, El Biar Algiers, Algeria
Telephone: +213 0770 082 153
Email: Algiers_polecon@state.gov

Policies towards Foreign Direct Investment

The government of Antigua and Barbuda strongly encourages FDI, 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 FDI in the country and maintains an open dialogue with current and potential investors.  While the government welcomes all FDI interests, it has identified agriculture, diversified tourism, healthcare services, outsourcing and business support services, information and communication technologies, and international financial services as priority investment areas.

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 June 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. This program is separate from the Citizenship by Investment (CBI) program.

The ABIA evaluates all FDI proposals 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 the aforementioned 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. It also offers an online tool that is useful for navigating the laws, rules, procedures, and registration requirements for foreign investors.  The guide is available online at http://www.theiguides.org/public-docs/guides/antiguabarbuda  and http://investantiguabarbuda.org/ .

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 2019 Doing Business Report, Antigua and Barbuda ranks 131st out of 190 in the ease of starting a business.  The establishment of a new business takes nine procedures and 22 days to complete. 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 Commerce Office (IPCO), the Inland Revenue Department, the Medical Benefits Scheme, the Social Security Scheme, and the Board of Education.  Given the multiple agencies currently involved in the process, the government is exploring creating a Single Window facility to expedite the process.

In an effort to improve the standard of living for the population, the government of Antigua and Barbuda has put in place various initiatives to assist vulnerable citizens.  The Citizens’ Welfare Division within the Ministry of Social Transformation is responsible for the delivery of social services to vulnerable citizens, including the elderly, children, women, and people with disabilities.  The government of Antigua and Barbuda continues to advance the work of the Antigua and Barbuda Business Innovation Center, a two-year project to assist small business and entrepreneurs. The Antigua and Barbuda Innovation Center includes a business incubator and provides education, training, and investment opportunities to new and existing businesses.  The Innovation Center focuses on businesses in the healthcare, tourism, agriculture and environment sectors, as well as projects submitted by women.

Through the Prime Minister’s Entrepreneurial Development Program (EDP), people with disabilities can apply for a special incentive award.  The EDP will also provide opportunities for female and young entrepreneurs in keeping with government’s mandate to support the growth of niche markets, innovation, the intellectual capital and ingenuity of its citizens, and the development of micro-, small- and medium-sized enterprises.

Outward Investment

Although the government of Antigua and Barbuda prioritizes investment retention as a key component of its overall economic strategy, there are no formal mechanisms in place to achieve this.  Some companies have noted that the economy of Antigua and Barbuda. will continue to require significant foreign 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), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.

The corporate tax rate is 25 percent. The government of Antigua and Barbuda has said it intends to lower the corporate tax rate to 20 percent.  The government hopes to utilize this more competitive tax rate as a tool for attracting company headquarters and back-office operations from around the world.

Antigua and Barbuda has signed bilateral investment treaties with Germany and the United Kingdom.  It does not have a bilateral investment treaty or bilateral taxation treaty with the United States.  Antigua and Barbuda has bilateral taxation agreements with Denmark, Norway, Sweden, Switzerland, and the United Kingdom.  There are currently two double taxation agreements in force with the United Kingdom and the United Arab Emirates. Antigua and Barbuda currently has 22 Tax Information Exchange Agreements in force.  Antigua and Barbuda is also party to the following economic communities and organizations:

Caribbean Community

The Treaty of Chaguaramas established the Caribbean Community (CARICOM) in 1973.  Its purpose is to promote economic integration among its 15 member states. Investors operating in Antigua and Barbuda have preferential access to the entire CARICOM market.  The Revised Treaty of Chaguaramas establishes the CSME, which permits the free movement of goods, capital, and labor within CARICOM States. CARICOM has bilateral agreements with Cuba, Colombia, Costa Rica, the Dominican Republic, and Venezuela.  In 2013, CARICOM entered into a Trade and Investment Framework Agreement with the United States.

Organization of Eastern Caribbean States

The Revised Treaty of Basseterre establishes the OECS.  The OECS consists of seven full members (Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines), and three associate members (Anguilla, Martinique, and the British Virgin Islands).  Guadeloupe began the process of joining the OECS by signing an accession agreement in March 2019. The OECS promotes harmonization among member states in foreign policy, defense and security, and economic affairs. The six independent countries ratified the Revised Treaty of Basseterre establishing the OECS Economic Union, which entered into force in 2011.  The Economic Union established a single financial and economic space within which all factors of production, including goods, services, and people, move without hindrance.

Economic Partnership Agreement

The Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM) and the European Community signed an Economic Partnership Agreement (EPA) in 2008.  The overarching objectives of the EPA are to alleviate poverty, promote regional integration and economic cooperation, and foster the gradual integration of the CARIFORUM states into the world economy by improving trade capacity and creating an investment-conducive environment.  The Agreement promotes trade-related developments in areas such as competition, intellectual property, public procurement, the environment, and the protection of personal data.

Caribbean Basin Initiative

The trade programs known collectively as the Caribbean Basin Initiative (CBI) facilitate the economic development and export diversification of the Caribbean Basin economies.

Initially launched in 1983 through the Caribbean Basin Economic Recovery Act (CBERA), and substantially expanded in 2000 through the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), the Trade Act of 2002 further expanded the CBI. The CBI promotes economic development through private sector initiatives in Central America and the Caribbean islands by expanding foreign and domestic investment in non-traditional sectors, diversifying CBI country economies and expanding their exports.  The CBI provides beneficiary countries with duty-free access to the U.S. market for most goods. It permits duty free entry of products manufactured or assembled in Antigua and Barbuda into the United States.

Caribbean/Canada Trade Agreement

Caribbean/Canada Trade Agreement (CARIBCAN) is an economic and trade development assistance program for Commonwealth Caribbean countries in which Canada provides duty free access to its national market for the majority of products originating in Commonwealth Caribbean countries.

Transparency of the Regulatory System

Antigua and Barbuda seeks to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety.  The government of Antigua and Barbuda publishes laws, regulations, administrative practices, and procedures of general application and judicial decisions that affect or pertain to investments or investors in Antigua and Barbuda.  Where the national government establishes policies that affect or pertain to investments or investors that are not expressed in laws and regulations or by other means, the national government will make them publicly available.

Rulemaking and regulatory authority lies with the bicameral parliament of the government of Antigua and Barbuda.  The House of Representatives has 19 members, of which 17 memberselected for a five-year term in single-seat constituencies, one ex-officio member, and one Speaker.  The Senate has 17 appointed members.

Respective line ministries develop the relevant national laws and regulations, which are then drafted by the Ministry of Legal Affairs.  Laws relating to the ABIA and the CBI program are the main laws relevant to FDI. The laws of Antigua and Barbuda are available online at http://laws.gov.ag/new/index.php .  This website contains the full text of laws already in force, as well as those parliament is currently considering.

Although, some draft bills are not subject to public consultation, input from various stakeholder groups may be considered.  The process is detailed at:http://www.laws.gov.ag/makinglaws.htm  . The government encourages stakeholder organizations to support and contribute to the legal development process by participating in technical committees and commenting on drafts.

Accounting, legal, and regulatory procedures are generally transparent and consistent with international norms.  The International Financial Accounting Standards, which stem from the General Accepted Accounting Principles, govern the accounting profession.

The constitution provides for the independent Office of the Ombudsman to guard against abuses of power by government officials.  The Ombudsman is responsible for investigating complaints about acts or omissions by government officials that violate the rights of members of the public.  

The ABIA has the main responsibility for investment supervision, and the Ministry of Finance and Corporate Governance monitors investments to collect information for national statistics and reporting purposes.

Antigua and Barbuda’s membership in regional organizations, particularly the OECS and its Economic Union, commits the state to implement all appropriate measures to fulfill its various treaty obligations.  Therefore, the eight member states and territories of the ECCU tend to enact laws uniformly, although there may be some minor differences in implementation. The enforcement mechanisms of these regulations include penalties and other sanctions.  The ABIA can revoke an issued Investment Certificate if the holder fails to comply with certain stipulations detailed in the Investment Authority Act and its regulations.

The government of Antigua and Barbuda has stated its commitment to achieving better development outcomes through improved transparency and accountability in the management of public finances.  The government has developed a Medium-Term Debt Management Strategy (MTDS) (covering the period 2016-2020) aimed at minimizing debt servicing, budgetary costs, and risk exposure to government while making every effort to maintain debt at a sustainable level.

The government enacted the Miscellaneous Amendments Act 2018 in December 2018, which ensured a number of important international standards were reflected in national legislation.  The government has also reduced the proportion of revenue required to pay the interest on government debt. The most recent Caribbean Financial Action Task Force (CFATF) Mutual Evaluation assessment found Antigua and Barbuda to be largely compliant.

The ECCB is the supervisory authority over financial institutions registered under the Banking Act of 2015.

International Regulatory Considerations

As a member of the OECS and the ECCU, Antigua and Barbuda subscribes to principles and policies outlined in the Revised Treaty of Basseterre.  The relationship between national and regional systems is such that each participating member state is expected to coordinate and adopt, where possible, common national policies aimed at the progressive harmonization of relevant policies and systems across the region.  Thus, Antigua and Barbuda is obligated to implement regionally developed regulations, such as legislation passed under the authority of the OECS, unless it seeks specific concessions to do otherwise.

The Antigua and Barbuda Bureau of Standards is a statutory body that prepares and promulgates standards in relation to goods, services, processes, and practices.  Antigua and Barbuda is a signatory to the World Trade Organization (WTO) Agreement on the Technical Barriers to Trade.

Antigua and Barbuda ratified the WTO Trade Facilitation Agreement (TFA) in November 2017. Ratification of the Agreement is an important signal to investors of the country’s commitment to improving its business environment for trade.  The TFA is intended to improve the speed and efficiency of border procedures, facilitate trade costs reduction, and enhance participation in the global value chain. Antigua and Barbuda has already implemented a number of TFA requirements.  A full list is available at:https://www.tfadatabase.org/members/antigua-and-barbuda/measure-breakdown .

The Advanced Cargo Information System (ACIS) is a CARICOM project that seeks to improve the capability to track cargo efficiently.  Antigua and Barbuda is one of three regional pilot countries who have already enacted the enabling legislation. Antigua and Barbuda has fully implemented the Automated System for Customs Data (ASYCUDA).  Importers are no longer required to produce a Certificate of Good Standing (Tax Compliance Certificate) for the importation of goods. This has reduced the time needed to clear goods. Legislative changes to the Customs Control and Management Act enabled the electronic processing of manifests.

Legal System and Judicial Independence

Antigua and Barbuda bases its legal system on the British Common law system.  The Attorney General, the Chief Justice of the Eastern Caribbean Supreme Court, junior judges, and magistrates administer justice.  The Eastern Caribbean Supreme Court Act establishes the Supreme Court of Judicature, which consists of the High Court and the Eastern Caribbean Court of Appeal.  The High Court hears criminal and civil (commercial) matters and makes determinations on the interpretation of the Constitution. Parties may appeal first to the Eastern Caribbean Supreme Court, an itinerant court that hears appeals from all OECS members.  The final appellate authority is the Judicial Committee of the Privy Council of the United Kingdom.

The Caribbean Court of Justice (CCJ) has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas.  Currently, Antigua and Barbuda is subject only to the original jurisdiction of the CCJ.

Antigua and Barbuda is a party to the WTO.  The WTO Dispute Settlement Panel and Appellate Body resolve disputes over WTO agreements, while courts of appropriate jurisdiction in both countries resolve private disputes.  Antigua and Barbuda brought a case against the United States before the WTO concerning the cross-border supply of gambling and betting services. The WTO ruled in favor of Antigua and Barbuda, but agreement on settlement terms remains outstanding.

Laws and Regulations on Foreign Direct Investment

The ABIA provides guidance on the relevant laws, rules, procedures, and reporting requirements for investors.  These are available at http://www.theiguides.org/public-docs/guides/antiguabarbuda  and http://investantiguabarbuda.org/ .

The government discontinued concessions provided under the Tourism and Business Special Incentives Act (2013) in 2018.  The government is currently reviewing its concessions regime.

Citizenship by Investment

Under the CBI program, foreign individuals can obtain citizenship in accordance with the Citizenship by Investment Act of 2013, which grants citizenship (without voting rights) to qualified investors.  Applicants are required to undergo a due diligence process before citizenship can be granted. The minimum contribution for investors under the CBI is a contribution of USD 100,000 to the National Development Fund for a family of up to four people and USD 125,000 for a family of five, with additional contributions of USD 15,000 per person for up to four additional family members.  Additionally, foreign individuals may contribute USD 150,000 to the University of the West Indies (UWI) Fund for a family of up to four people. This contribution entitles one member of the family to a one year tuition-only scholarship at UWI. Individual applicants can also qualify for the program by buying real estate valued at USD 400,000 or more or making a business investment of USD 1.5 million.  Alternatively, at least two applicants can propose to make a joint investment in an approved business with a total investment of at least USD 5 million.  Each investor must contribute at least USD 400,000 to the joint investment. Until October 31, 2019, two applications from related parties can make a joint investment, with each applicant investing a minimum of USD 200,000 in order to qualify.  CBI investors must own property for a minimum of five years before selling it.  All applicants must also pay relevant government and due diligence fees, as well as providing a full medical certificate, a police certificate, and evidence of the source of funds.  Further information is available at: http://www.cip.gov.ag/ .

Competition and Anti-Trust Laws

Chapter 8 of the Revised Treaty of Chaguaramas outlines the competition policy applicable to CARICOM states.  Member states are required to establish and maintain a national competition authority for implementing the rules of competition.  CARICOM established a Caribbean Competition Commission (CCC) to rule on complaints of anti-competitive cross-border business conduct.  CARICOM competition policy addresses anti-competitive business conduct such as collusion between enterprises, decisions by associations of enterprises, and concerted practices by enterprises that have as their object or effect the prevention, restriction, or distortion of competition within the Community, and actions by which an enterprise abuses its dominant position within the Community.  Antigua and Barbuda does not have any legislation regulating competition. The OECS agreed to establish a regional competition body to handle competition matters within its single market. The draft OECS bill is with the Ministry of Legal Affairs for review.

In March 2019, the CCC preliminarily ruled that parts of a proposed sale of the Bank of Nova Scotia’s banking assets in nine countries in the Caribbean, including OECS member countries,  to Republic Financial Holdings and life insurance operations in two other Caribbean countries to Sagicor Financial Corporation could have an anti-competitive impact in at least three member states.  The CCC stated it intends to liaise with national competition authorities and sector regulators for preliminary examinations of the proposed sales at the national level. The CCC has promised to monitor the situation and provide further updates.

Expropriation and Compensation

According to the Investment Authority Act of 2006, investments in Antigua and Barbuda will not be nationalized, expropriated, or subject to indirect measures having an equivalent effect, except as necessary for the public good, in accordance with due process of law, on a non-discriminatory basis, and accompanied by prompt, adequate, and effective compensation.  Compensation in such cases is the fair market value of the expropriated investment immediately before the expropriation or the impending expropriation became public knowledge, whichever is earlier. Compensation shall include interest from the date of dispossession of the expropriated property until the date of payment. Compensation is required to be paid without delay in convertible currency, and be effectively realizable and freely transferable.

There is an unresolved dispute regarding the expropriation of an American-owned property.  Although the government of Antigua and Barbuda paid the former property owner a total of USD 39.8 million in compensation, it still owes interest payments of USD 20 million.  In March 2019, a judge dismissed a case bought by the former property owners against the government for payment of the outstanding balance. However, the owners intend to appeal.  For this reason, the industry recommends continued caution when investing in real estate in Antigua and Barbuda.

Dispute Settlement

ICSID Convention and New York Convention

Antigua and Barbuda is not a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.  However, it is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Arbitration Convention.  Private parties may use international or national arbitration if specified in contracts. The Arbitration Act Cap. 33 (1975) is the main legislation which governs arbitration in Antigua and Barbuda.  It adheres to the New York Arbitration Convention.

Investor-State Dispute Settlement

Investors may use national or international arbitration to resolve contractual disputes with the state.  Antigua and Barbuda also has Bilateral Investment Treaties with Germany and the United Kingdom that recognize binding international arbitration of investment disputes.  Antigua and Barbuda does not have a Bilateral Investment Treaty or a Free Trade Agreement with an investment chapter with the United States. U.S. Embassy Bridgetown is not aware of any current investment disputes in Antigua and Barbuda.

Antigua and Barbuda ranks 34 out of 190 countries in enforcing contracts in the 2019 World Bank Doing Business Report.  According to the report, dispute resolution in Antigua and Barbuda generally takes an average of 476 days. The slow court system and bureaucracy are widely seen as the main hindrances to timely resolutions to commercial disputes.  Through the Arbitration Act, the local courts recognize and enforce foreign arbitral awards issued against the government.

International Commercial Arbitration and Foreign Courts

As mandated by the Arbitration Act, alternative dispute mechanisms are available as a means for settling disputes between two private parties.  Parties may also use voluntary mediation or conciliation. The Arbitration Act mandates the legal recognition and enforcement of judgments of foreign courts by local courts.  Thus, the High Court of Antigua and Barbuda recognizes and enforces foreign arbitral awards. The Eastern Caribbean Supreme Court’s Court of Appeal provides meditation on commercial contracts.

Bankruptcy Regulations

Under the Bankruptcy Act (1975), Antigua and Barbuda has a bankruptcy framework that grants certain rights to debtors and creditors.  The World Bank’s 2019 Doing Business Report addresses the strength of the framework and its limitations in resolving insolvency in Antigua and Barbuda. Antigua and Barbuda is ranked 132nd of 190 countries in this area.

Investment Incentives

In 2018, the government of Antigua and Barbuda made a policy decision to stop granting waivers for property taxes.  Foreign investors can still access other concessions, including the manufacturers’ incentive that grants exemption from the payment of import duties, revenue recovery charge, and sales tax on raw materials, packaging materials, tools, equipment, and machinery.

The government of Antigua and Barbuda has been proactively pursuing public-private partnerships (PPPs) through the National Asset Management Company (NAMCO).  NAMCO is a wholly owned government entity that holds the government’s stake in joint ventures and manages the investment proceeds that accrue.

Foreign Trade Zones/Free Ports/Trade Facilitation

The government established the Antigua and Barbuda Free Trade and Processing Zone (Free Zone) in 1994.  A commission, acting as a private enterprise, administers the Free Zone.

The Free Zone is part of a government initiative to diversify the economy.  The commission is mandated to attract investment in priority areas.

Performance and Data Localization Requirements

The government does not mandate employment of its citizens by foreign investors.  However, the provisions of the Labor Code outline requirements for acquiring a work permit and prohibit anyone who is not a citizen of Antigua and Barbuda (or the OECS) to work without a work permit.  In practice, work permits may be granted to senior managers if no qualified Antiguan nationals are available for the post. There are no excessively onerous visa or residency, requirements.

As a member of the WTO, Antigua and Barbuda is party to the Agreement to the Trade Related Investment Measures.  While there are no formal performance requirements, the government encourages investments that will create jobs and increase exports and foreign exchange earnings. There are no requirements for participation either by nationals or by the government in foreign investment projects.  There is no requirement that enterprises must purchase a fixed percentage of goods or technology from local sources, but the government encourages local sourcing. Foreign investors receive the same treatment as citizens. There are no requirements for foreign information technology providers to turn over source code and/or provide access to surveillance (for example, backdoors into hardware and software or keys for encryption).

Real Property

The government owns 55 percent of the country’s land, with 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 owned communally the land on the island.  In 2018, the government amended the Barbuda Land Act to allow Barbudans to have private ownership of land on Barbuda.  The government then announced plans to repeal the Barbuda Land Act, replacing it with a new Crown Land Regulation Act that would allow private ownership of land in Barbuda by non-Barbudans.  Many Barbudans are opposed to this legislation, which would allow the government to sell land on Barbuda for the commercial development of tourism facilities. Barbudan representatives have filed a legal challenge to the constitutionality of the new legislation in the Eastern Caribbean Supreme Court.

Both 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 that requires the buyer 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 lands 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. The country could potentially benefit from initiatives to expand the range of financial products offered by the Eastern Caribbean Securities Exchange (ECSE) and the Eastern Caribbean Home Mortgage Bank.

In the World Bank’s 2019 Doing Business Report, Antigua and Barbuda is ranked 120 out of 190 countries for ease of registering property.  The government of Antigua and Barbuda has instituted significant reforms in this area. It now takes about 32 days (compared to 108 days before the reforms) to complete seven necessary procedures, and the cost is about 10.8 percent of the property value.  

Intellectual Property Rights

Antigua and Barbuda has an extensive legislative framework supporting the protection of intellectual property rights.  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 Literary and Artistic Works.  

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 EPA between the CARIFORUM States and the European Community 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 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 enforcement and prevention efforts against counterfeit goods, which include detention, seizure, and forfeiture.

Antigua and Barbuda is not listed on the United States Trade Representative ’s  2019 Notorious Markets List, or in the 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 

Capital Markets and Portfolio Investment

As a member of the ECCU, Antigua and Barbuda 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 securities market activities.  As of March 31, 2018, there were 135 securities listed on the ECSE, comprising 112 sovereign debt instruments, 14 equities, and nine corporate bonds. Market capitalization stood at USD 3.07 billion.  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 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 securities, 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 Ministers of Finance usually act in consultation with the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.

Both 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 in Antigua and Barbuda as stable. Assets of commercial banks totaled USD 2.5 billion at the end of December 2018 and remained relatively consistent during the previous year.  The reserve requirement for commercial banks was 6 percent of deposit liabilities.

Antigua and Barbuda remains 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. 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 continue to monitor the issue.

The government of Antigua and Barbuda has announced plans to introduce legislation to operate and regulate blockchain technology as an integral part of developing Antigua and Barbuda as a regional center for blockchain and cryptocurrency. The government intends to collaborate with global oversight bodies in the implementation of international best practices that will make the jurisdiction attractive to international business.

In March 2019, the ECCB launched an 18-month financial technology pilot program establishing a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc.  The ECCB will work closely with Bitt to develop and test technology focusing on data management, compliance, and transaction monitoring systems for know your customer, anti-money laundering, and combating the financing of terrorism regulations.  This goal of the program is to improve the risk profile of the ECCU and mitigate against the trend of de-risking by the region’s correspondent banking partners. The pilot will also focus on developing a secure, resilient digital payment and settlement platform with embedded regional and global compliance.  The DXCD will operate alongside physical Eastern Caribbean currency. The ECCB will issue the DXCD to licensed bank and non-bank financial institutions on a private blockchain platform.

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 United States dollar at a rate of XCD 2.70 to USD 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 February 2017, the government of Antigua and Barbuda signed FATCA in observance of the United States’ Foreign Account Tax Compliance Act, 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, which Antigua and Barbuda is a member, maintains a sovereign wealth fund.

State-owned enterprises (SOEs) in Antigua and Barbuda are governed by their respective legislation and do not generally pose a threat to investors, as they are not designed for competition.  The government established many SOEs to create economic activity in areas where the private sector is perceived to have very little interest. A list of SOEs can be found at: http://ab.gov.ag/detail_page.php?page=1 .

SOEs are headed by boards of directors to which senior managers report.  In 2016, the Parliament passed the Statutory Corporations (General Provisions) Act, which specifies the ministerial responsibilities in the appointment and termination of board members, decisions of the board, and employment in these SOEs.  In order to promote diversity and independence on SOE boards, professional associations, non-governmental organizations (NGOs), and civil society may nominate directors for boards.

Privatization Program

Antigua and Barbuda does not currently have a targeted privatization program.

Responsible business conduct among both 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.  Individuals benefit from business-sponsored initiatives when local and foreign-owned enterprises pursue volunteer opportunities and make monetary or in-kind donations to local 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.

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 have been reported to be common. Many businesses have noted that both major political parties frequently accused the other of corruption, but investigations yielded few, if any results.  Antigua and Barbuda is party to the Inter-American Convention against Corruption and the United Nations 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 combating corruption, the Commission was independent but understaffed and under-resourced. Critics stated the legislation was inadequately enforced and the act should be strengthened.

The Freedom of Information Act gives citizens the statutory right to access official documents from public authorities and agencies, and it 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.

In 2015, twelve Commonwealth Caribbean countries, including Antigua and Barbuda, established a new regional body to enhance transparency and to help fight corruption.  The formation of the Association of Integrity Commissions and Anti-Corruption Bodies in the Commonwealth Caribbean was been presented as a potentially important step forward in regional efforts to support integrity and address corruption.

Resources to Report Corruption

Radford Hill
Chairman, Integrity Commission
R.I.O.A. (Francis Trading) Building,
Ground Floor, High Street,
St. John’s, Antigua
(268) 462-5939
clients@lawhillandhill.com

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.

http://ondcp.gov.ag/laws/regulation/ 
http://ondcp.gov.ag/about/overview-of-ondcp/ 

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

Antigua and Barbuda does not have a recent history of politically-motivated violence or civil disturbance. Elections are peaceful and regarded as being free and fair. The next general elections are constitutionally due by March 2023.

Antigua and Barbuda has a labor force of about 41,000 with a literacy rate of approximately 90 percent.  The minimum working age is 16 years old. People under 18 years old must have a medical clearance to work and may not work later than 10 p.m.  The Ministry of Labor, which conducts periodic workplace inspections, effectively enforces this law. The labor commissioner’s office also has an inspectorate that investigates child labor allegations.

Workers have the right to associate freely and to form labor unions.  Approximately 60 percent of workers in the formal sector belong to a union.  Unions are free to conduct activities without government interference. Labor unions form an important part of the membership of both political parties.  The law provides for the right of public and private sector workers to organize and bargain collectively without interference.

The labor code provides for the right to strike, but the Industrial Relations Court may limit this right in a given dispute.  Workers who provide essential services (including bus, telephone, port, petroleum, health, and safety workers) must give 21 days’ notice of intent to strike.  Once either party to a dispute requests that the court mediate, strikes are prohibited under penalty of imprisonment. Because of the delays associated with this process, unions often resolve labor disputes before calling a strike.  In addition, courts may issue an injunction against a legal strike when the national interest is threatened or affected. Labor law prohibits retaliation against strikers, and the government effectively enforces those laws. The labor code provides that the minister of labor may issue orders, which have the force of law, to establish a minimum wage.  The minimum wage is USD 3.03 an hour for all categories of labor. In practice, the great majority of workers earn substantially more than the minimum wage.

The customary standard workweek was 40 hours in five days.  The law provides that employers may not require workers to work more than a 48-hour, six-day workweek, and provides for 12 paid annual holidays.  The law requires that employees be paid one and a half times the employees’ basic wage per hour for overtime work in excess of the standard workweek.  The Ministry of Labor put few limitations on overtime, allowing it in temporary or occasional cases, but did not allow employers to make regular overtime compulsory.

Investors in Antigua and Barbuda are required to maintain workers’ rights and safeguard the environment.  While there are no specific health and safety regulations, the Labor Code provides general health and safety guidance to Labor Ministry inspectors.  The Labor Commission settles disputes over labor abuses, health, and safety conditions. The law gives the Labor Ministry the authority to require special safety measures, not otherwise defined in the law, to be put into place for worker safety.  Antigua and Barbuda is party to the International Labor Convention on Occupational Safety and Health No. 155 of 1981.

The labor inspectorate enforced standards in all sectors, including the informal sector.  The government enforced labor laws, including levying remedies and penalties of up to XCD 5,000 (USD USD 1,850) for nonpayment of work.  The government penalized overtime violations, but this was not always effective at deterring labor violations, according to some companies.

Workers have the right to report unsafe work environments without jeopardy to continued employment.  Inspectors then investigate such claims, and workers may leave such locations without jeopardy to their continued employment.

The Overseas Private Investment Corporation (OPIC) provides financing and political risk insurance to viable private sector projects, helps U.S. businesses invest overseas, and fosters economic development in new and emerging markets.  Antigua and Barbuda is a qualifying country for OPIC project. However, there are currently no active OPIC projects in the country.

Table 2: Key Macroeconomic Data, U.S. FDI in Antigua and Barbuda

* Source for Host Country Data: Eastern Caribbean Central Bank https://www.eccb-centralbank.org/statistics/dashboard-datas/   . All ECCB GDP figures for 2018 are estimates.

Table 3: Sources and Destination of FDI

Data not available. Antigua and Barbuda does not appear in the IMF’s Coordinated Direct Investment Survey (CDIS).

Table 4: Sources of Portfolio Investment

Data not available. Antigua and Barbuda does not appear the IMF Coordinated Portfolio Investment Survey (CPIS).

Political/Economic Section

U.S. Embassy to Barbados, the Eastern Caribbean and the Organization of Eastern Caribbean States
246-227-4000
BridgetownPolEcon@state.gov