Cambodia

1. Openness To, and Restrictions Upon, Foreign Investment

Cambodia has a liberal foreign investment regime and actively courts FDI. In 2021, the RGC enacted a new Law on Investment to attract more FDI in emerging sectors including agro-processing, electronics/machinery, health, industrial parts, infrastructure, and green energy. The government permits 100 percent foreign ownership of companies in most sectors. In a handful of sectors, such as cigarette manufacturing, movie production, rice milling, and gemstone mining and processing, foreign investment is subject to local equity participation or prior authorization from authorities.  While there is little or no official legal discrimination against foreign investors, some foreign businesses report disadvantages vis-a-vis Cambodian or other foreign rivals that engage in acts of corruption or tax evasion or take advantage of Cambodia’s weak regulatory environment.

The Council for the Development of Cambodia ( CDC ) is the principal government agency responsible for providing incentives to stimulate investment. Investors are required to submit an investment proposal to either the CDC or the Provincial-Municipal Investment Sub-committee to obtain a Qualified Investment Project (QIP) status depending on capital level and location of the investment in question.  QIPs are then eligible for specific investment incentives.

The CDC also serves as the secretariat to Cambodia’s Government-Private Sector Forum (G-PSF), a public-private consultation mechanism that facilitates dialogue within and among 10 government/private sector working groups.

Cambodia has created special economic zones (SEZs) to further facilitate foreign investment. As of 2021, there are 25 SEZs in Cambodia.  These zones provide companies with access to land, infrastructure, and services to facilitate the set-up and operation of businesses. Services provided include utilities, tax services, customs clearance, and other administrative services designed to support import-export processes. Cambodia offers incentives to projects within the SEZs such as tax holidays, zero rate VAT, and import duty exemptions for raw materials, machinery, and equipment. The primary authority responsible for Cambodia’s SEZs is the Cambodia Special Economic Zone Board (CSEZB). The largest of its SEZs is in Sihanoukville and hosts primarily Chinese companies.

There are few limitations on foreign control and ownership of business enterprises in Cambodia. Foreign investors may own 100 percent of investment projects except in the sectors mentioned above. According to Cambodia’s new Law on Investment and related sub-decrees, there are no limitations based on shareholder nationality nor discrimination against foreign investors except for land ownership as stipulated in the Constitution of the Kingdom of Cambodia.

For property, land title must be held by one or more Cambodian citizens.  For state-owned enterprises, the Law on Public Enterprise provides that the Cambodian government must directly or indirectly hold more than 51 percent of the capital or veto rights in state-owned enterprises.

For agriculture investments, foreign investors may request economic land concessions, if they meet certain criteria including provisions on land use, productivities, job creation, and environmental protection and natural resource management.

There are some limitations on the employment of foreigners in Cambodia. A QIP allows employers to obtain visas and work permits for foreign citizens as skilled workers, but the

employer may be required to prove to the Ministry of Labor and Vocational Training that the skillset is not available among Cambodia workers. The Cambodian Bar has periodically taken actions to restrict or impede the work of foreign lawyers or foreign law firms in the country.

The OECD Investment Policy Review of Cambodia in 2018 is available at the following link .

The World Trade Organization (WTO) last reviewed Cambodia’s trade policies in 2017, which can be found at this link .

All businesses are required to register with the Ministry of Commerce (MOC), the General Department of Taxation (GDT), and the Ministry of Labor and Vocational Training (MOLVT).  Registration with MOC is possible through an online business registration portal at this link , while the GDT’s online portal is also available here .  To further facilitate the process, the Ministry of Economy and Finance (MEF) in 2020 launched the “ Single Portal ” – found at here , where businesses can register at the three ministries through a single online platform.

In addition, new businesses may also be required to register with other relevant ministries governing their sector and business activities. For example, travel agencies must also register with the Ministry of Tourism, and private universities must also register with the Ministry of Education, Youth, and Sport.

There are no restrictions on Cambodian citizens investing abroad. Some Cambodian companies have invested in neighboring countries – notably, Thailand, Laos, and Myanmar.  Cambodia’s foreign direct investment abroad reached approximately $127 million in 2020.

3. Legal Regime

Cambodia’s regulatory system, while improving, still lacks transparency. This is the result of a lack of legislation and the limited capacity of key institutions, which is further exacerbated by a weak court system. Investors often complain that the decisions of Cambodian regulatory agencies are inconsistent, arbitrary, and influenced by corruption. For example, in May 2016, in what was perceived as a populist move, the government set caps on retail fuel prices, with little consultation with petroleum companies.  In April 2017, the National Bank of Cambodia introduced an interest rate cap on loans provided by the microfinance industry with no consultation with relevant stakeholders. More recently, investors have regularly expressed concern overdraft legislation that has not been subject to stakeholder consultations.

Cambodian ministries and regulatory agencies are not legally obligated to publish the text of proposed regulations before their enactment. Draft regulations are only selectively and inconsistently available for public consultation with relevant non-governmental organizations (NGOs), private sector, or other parties before their enactment. Approved or passed laws are available on websites of some ministries but are not always up to date. The Council of Jurists,

the government body that reviews laws and regulations, publishes a list of updated laws and regulations on its website.

Businesses are not required to have audited financial statements or publish their financial reports unless they are financial institutions (banks/microfinance institutions) or publicly listed companies.

The RGC does not mandate companies to make environmental, social, and governance (ESG) disclosures with respect to investments.

As a member of ASEAN since 1999, Cambodia is required to comply with certain rules and regulations regarding free trade agreements with the 10 ASEAN member states. These include tariff-free importation of information and communication technology (ICT) equipment, harmonizing custom coding, harmonizing the medical device market, as well as compliance with tax regulations on multi-activity businesses, among others.

As a member of the WTO since 2004, Cambodia has both drafted and modified laws and regulations to comply with WTO rules. Relevant laws and regulations are notified to the WTO legal committee only after their adoption. A list of Cambodian legal updates in compliance with the WTO is described in the above section regarding Other Investment Policy Reviews.

The Cambodian legal system is primarily based on French civil law. Under the 1993 Constitution, the King is the head of state and the elected Prime Minister is the head of government. Legislative power is vested in a bicameral parliament, while the judiciary makes up the third branch of government. Contractual enforcement is governed by Decree Number 38 D Referring to Contract and Other Liabilities. More information on this decree can be found at this link .

Although the Cambodian Constitution calls for an independent judiciary, both local and foreign businesses report problems with inconsistent judicial rulings, corruption, and difficulty enforcing judgments. For these reasons, many commercial disputes are resolved through negotiations facilitated by the Ministry of Commerce, the Council for the Development of Cambodia, the Cambodian Chamber of Commerce, and other institutions. Foreign investors often build into their contracts clauses that dictate that investment disputes must be resolved in a third country, such as Singapore.

Cambodia’s new Law on Investment, passed in October 2021, regulates the approval process for FDI and provides incentives to potential investors, both domestic and foreign. Sub-decree No. 111 (2005) lays out detailed procedures for registering a QIP with the CDC and provincial/municipal investment subcommittees.

The new Law on Investment introduces an online registration process for QIP applications and shortens the timeline for the CDC’s issuance of a Registration Certificate to 20 working days. The portal for QIP registration with CDC can be found at this link .

Information about investment procedures and incentives in Cambodia may be found on the CDC’s website .

Cambodia’s Competition Law was signed in October 2021, following the enactment of a Law on Consumer Protection in 2019. Cambodia’s Consumer Protection Competition and Fraud Repression Directorate-General ( CCF ), is mandated to enforce these laws and investigate complaints. When disputes arise, individuals or businesses can file complaints with the CCF, with courts acting as the final arbitrator.

Land rights are a contentious issue in Cambodia, complicated by the fact that most property holders do not have legal documentation of their ownership because of the policies and social upheaval during Khmer Rouge era in the 1970s. Numerous cases have been reported of influential individuals or groups acquiring land titles or concessions through political and/or financial connections and then using force to displace communities to make way for commercial enterprises.

In late 2009, the National Assembly approved the Law on Expropriation, which sets broad guidelines on land-taking procedures for public interest purposes. It defines public interest activities to include construction, rehabilitation, preservation, or expansion of infrastructure

projects, and development of buildings for national defense and civil security. These provisions include construction of border crossing posts, facilities for research and exploitation of natural resources, and oil pipeline and gas networks. Property can also be expropriated for natural disasters and emergencies, as determined by the government. Legal procedures regarding compensation and appeals are expected to be established in a forthcoming sub-decree, which is under internal discussion at the Ministry of Economy and Finance.

The government has shown willingness to use tax issues for political purposes. For instance, in 2017, a U.S.-owned independent newspaper had its bank account frozen purportedly for failure to pay taxes. It is believed that, while the company may have had some tax liability, the General Department of Taxation inflated the assessment to pressure the newspaper to halt operations. The action took place in the context of a widespread government crackdown on independent media in the country.

Cambodia’s 2007 Law on Insolvency is intended to provide collective, orderly, and fair satisfaction of creditor claims from debtor properties and, where appropriate, the rehabilitation of the debtor’s business. The law applies to the assets of all businesspeople and legal entities in Cambodia.

In 2012, Credit Bureau Cambodia (CBC) was established to create a more transparent credit market in the country. CBC’s main role is to provide credit scores to banks and financial institutions and to improve access to credit information.

Dominica

1. Openness To, and Restrictions Upon, Foreign Investment

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

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

The IDA launched a new Investment Promotion Strategy in 2021.  The new strategy is focused on four sectors: agriculture and agri-business, renewable energy, tourism, and knowledge services such as business processing operations.  Other sectors include film, music, and video production, manufacturing, bulk water export and bottled water operations, medical and nursing schools, and English language training services.  The government continuously reviews these sectors. While these sectors are priorities, the government broadly welcomes FDI.

Local laws do not place limits on foreign control in Dominica.  Foreign investment in Dominica is not subject to restrictions, and foreign investors are entitled to receive the same treatment as nationals of Dominica. Foreign investors are entitled to hold up to 100 percent of their investment.  However, there is a requirement for foreign investors seeking to purchase property for residential or commercial purposes to obtain an Alien Landholders License. Local enterprises generally welcome joint ventures with foreign investors in order to access technology, expertise, markets, and capital.

The OECS, of which Dominica is a member, has not conducted a World Trade Organization (WTO) trade policy review since 2014. There have also not been any investment policy reviews by civil society organizations in the past five years.

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

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

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

Businesses must register with CIPO, the Tax Authority, and the Social Services Institute. The general practice for registration is to retain an attorney who prepares all the relevant incorporation documents.

Local laws do not place any restrictions on domestic investors seeking to do business abroad. Local companies in Dominica are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.

2. Bilateral Investment Agreements and Taxation Treaties

Dominica has not signed a bilateral investment treaty with the United States.  It benefits from the Caribbean Basin Economic Recovery Act (CBERA), which was implemented in January 1984. CBERA is intended to facilitate the development of stable Caribbean Basin economies by providing beneficiary countries with duty-free access to the U.S. market for most goods. Dominica has bilateral investment treaties with the UK and Germany.  Dominica has bilateral tax treaties with the United States and the UK.

Dominica is a member of the OECD Inclusive Framework on Base Erosion and Profit Sharing and is party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

Dominica is also party to the following agreements:

Caribbean Community (CARICOM)

The Treaty of Chaguaramas established CARICOM in 1973 to promote economic integration among its 15 member states.  Investors operating in Dominica have preferential access to the entire CARICOM market.  The Revised Treaty of Chaguaramas established the CSME, which permits the free movement of goods, capital, and labor within CARICOM member states.

Organization of Eastern Caribbean States

The Revised Treaty of Basseterre established the OECS.  The OECS consists of seven full members: Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines, and four associate members: Anguilla, Martinique, Guadeloupe, and the British Virgin Islands.  The OECS aims to promote harmonization among member states concerning foreign policy, defense and security, and economic affairs.  The six independent countries of the OECS ratified the Revised Treaty of Basseterre, establishing the OECS Economic Union 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.

CARIFORUM- EU Economic Partnership Agreement

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

CARIFORUM-UK Economic Partnership Agreement

The UK and CARIFORUM signed an EPA in 2019, committing to trade continuity after Britain’s departure from the European Union.  The CARIFORUM-UK EPA eliminates tariffs on all goods imported from CARIFORUM states into the UK, while those Caribbean states will continue to gradually cut import tariffs on most of the region’s imports from the UK.

Caribbean Basin Initiative

The objective of the Caribbean Basin Initiative is to promote economic development through private sector initiatives in Central America and the Caribbean by expanding foreign and domestic investment in non-traditional sectors, diversifying economies, and expanding exports.  It permits duty-free entry of products manufactured or assembled in Dominica into the United States.

Caribbean/Canada Trade Agreement

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

3. Legal Regime

The Government of Dominica provides a legal framework to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety.  The Ministry of Finance and the IDA provide oversight of the transparency of the system as it relates to investment.

Rule-making and regulatory authority lies within the unicameral parliament.  The parliament has 21 members elected for a five-year term in single-seat constituencies, nine appointed members, one speaker, and one clerk.

Relevant ministries develop laws which are drafted by the Ministry of National Security and Home Affairs.  FDI is governed principally through the laws that oversee the IDA and the Citizenship by Investment program.  Laws are available online at  http://www.dominica.gov.dm/laws-of-dominica .

Although some draft bills are not subject to public consultation, the government generally solicits input from various stakeholder groups in the formulation of laws.  In some instances, the government convenes a special committee to make recommendations on provisions outlined in the law.  The government uses public awareness campaigns to sensitize the general population on legislative reforms. Copies of proposed regulations are published in the official gazette shortly before the bills are taken to parliament.  Although Dominica does not have legislation guaranteeing access to information or freedom of expression, access to information is generally available in practice.  The government maintains a website and an information service on which it posts information such as directories of officials and a summary of laws and press releases.

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

The Office of the Parliamentary Commissioner or Ombudsman guards against excesses by government officers in the performance of their duties.  The Ombudsman is responsible for investigating complaints related to any decision or act of any government officer or body in any case in which a member of the public claims to be aggrieved or appears to the Ombudsman to be the victim of injustice as a result of the exercise of the administrative function of that officer or body. The government does not promote nor require companies’ environmental, social, and governance disclosures.

Dominica’s membership in regional organizations, particularly the OECS and its Economic Union, commits it to implement all appropriate measures to ensure the fulfillment of its various treaty obligations.  For example, the Banking Act, which establishes a single banking space and the harmonization of banking regulations in the Economic Union, is uniformly in force in the eight member territories of the ECCU, although there are some minor differences in implementation from country to country.

The enforcement mechanisms of these regulations include penalties or legal sanctions.  The IDA can revoke an issued investment certificate if the holder fails to comply with certain stipulations detailed in the IDA Act and its regulations. The regulatory enforcement process is not digitized.

As a member of the OECS and the ECCU, Dominica subscribes to a set of 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, Dominica is obligated to implement regionally developed regulations such as legislation passed under OECS authority, unless specific concessions are sought.

The Dominica Bureau of Standards develops, maintains, and promotes standards for improving industrial development, industrial efficiency, promoting the health and safety of consumers, protecting the environment, and facilitating trade.  It also conducts national training and consultations in international standards practices.  As a signatory to the WTO Agreement on the Technical Barriers to Trade, Dominica, through the Dominica Bureau of Standards, is obligated to harmonize all national standards to international norms to avoid creating technical barriers to trade.

Dominica ratified the WTO Trade Facilitation Agreement (TFA) in 2016.  Ratification of the Agreement is an important signal to investors of the country’s commitment to improving its business environment for trade.  The TFA aims to improve the speed and efficiency of border procedures, facilitate trade costs reduction, and enhance participation in the global value chain.  Dominica has already implemented a number of TFA requirements.  A full list is available at  https://tfadatabase.org/members/dominica/measure-breakdown .

As a member of CARICOM, Dominica utilizes the Advanced Cargo Information System, a computer-based system developed by the United Nations Conference on Trade and Development (UNCTAD) to harmonize and standardize electronic cargo information in order to improve the capability to track cargo efficiently and to support regional and international trade. The Advance Cargo Information System forms a critical part of the World Customs Organization SAFE Framework of Standards. Dominica has also fully implemented the Automated System for Customs Data.

Dominica bases its legal system on British common law.  The Attorney General, the Chief Justice of the Eastern Caribbean Supreme Court, junior judges, and magistrates administer justice in the country.  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 matters and makes determinations on the interpretation of the constitution.  Parties may appeal to the Eastern Caribbean Supreme Court, an itinerant court that hears appeals from all OECS members.

The Caribbean Court of Justice (CCJ) is the regional judicial tribunal.  The CCJ has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas.  In 2015, Dominica acceded to the CCJ, making the CCJ its final court of appeal.

The United States and Dominica are both parties 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.

The main laws concerning investment in Dominica are the Invest Dominica Authority Act (2007), the Tourism Act (2005), and the Fiscal Incentives Act.  Regulatory amendments have been made to the Income Tax Act, the Value Added Tax Act, the Title by Registration Act, the Alien Landholding Regulation Act, and the Residential Levy Act. The IDA provides a full list of the relevant legislation on their website.

The IDA reviews all proposals for investment concessions and incentives to ensure the project is consistent with the national interest and provides economic benefits to the country.  The Cabinet makes the final decision on investment proposals.

Under Dominica’s citizenship by investment program, qualified foreign investors may obtain citizenship without voting rights.  Applicants can contribute a minimum of $100,000 to the Economic Diversification Fund for a single person or invest in designated real estate with a value of at least $200,000.  Applicants must also provide a full medical certificate, undergo a background check, and provide evidence of the source of funds before proceeding to the final stage of an interview.  The government introduced a citizen by investment certificate in order to minimize the risk of unlawful duplication.  Further information is available at  http://cbiu.gov.dm .

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 to apply rules of competition regarding anti-competitive cross-border business conduct.  CARICOM competition policy addresses anti-competitive business conduct such as agreements 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 CARICOM, and actions by which an enterprise abuses its dominant position within CARICOM.  Dominica does not have domestic legislation to regulate competition.

There are no known pending expropriation cases involving American citizens.  In such an event, Dominica would employ a system of eminent domain to pay compensation when property must be acquired in the public interest.  There were no reported tendencies of the government to discriminate against U.S. investments, companies, or landholdings.  There are no laws mandating local ownership in specified sectors.

Under the Bankruptcy Act (1990), Dominica has a bankruptcy framework that grants certain rights to debtor and creditor. A full copy of the act is available for download from the government’s website .

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Host Country Statistical source* USG or international statistical source USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $503.7 2020 $504.2 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A N/A N/A BEA data available at https://apps.bea.gov/international/factsheet/ 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $0 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP N/A N/A 2020 66.8% UNCTAD data available at https://unctad.org/topic/investment/world-investment-report 

* Source for Host Country Data: Eastern Caribbean Central Bank  https://www.eccb-centralbank.org/statistics/dashboard-datas/ .

Table 3: Sources and Destination of FDIData not available.

Dominica

1. Openness To, and Restrictions Upon, Foreign Investment

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

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

The IDA launched a new Investment Promotion Strategy in 2021.  The new strategy is focused on four sectors: agriculture and agri-business, renewable energy, tourism, and knowledge services such as business processing operations.  Other sectors include film, music, and video production, manufacturing, bulk water export and bottled water operations, medical and nursing schools, and English language training services.  The government continuously reviews these sectors. While these sectors are priorities, the government broadly welcomes FDI.

Local laws do not place limits on foreign control in Dominica.  Foreign investment in Dominica is not subject to restrictions, and foreign investors are entitled to receive the same treatment as nationals of Dominica. Foreign investors are entitled to hold up to 100 percent of their investment.  However, there is a requirement for foreign investors seeking to purchase property for residential or commercial purposes to obtain an Alien Landholders License. Local enterprises generally welcome joint ventures with foreign investors in order to access technology, expertise, markets, and capital.

The OECS, of which Dominica is a member, has not conducted a World Trade Organization (WTO) trade policy review since 2014. There have also not been any investment policy reviews by civil society organizations in the past five years.

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

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

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

Businesses must register with CIPO, the Tax Authority, and the Social Services Institute. The general practice for registration is to retain an attorney who prepares all the relevant incorporation documents.

Local laws do not place any restrictions on domestic investors seeking to do business abroad. Local companies in Dominica are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.

2. Bilateral Investment Agreements and Taxation Treaties

Dominica has not signed a bilateral investment treaty with the United States.  It benefits from the Caribbean Basin Economic Recovery Act (CBERA), which was implemented in January 1984. CBERA is intended to facilitate the development of stable Caribbean Basin economies by providing beneficiary countries with duty-free access to the U.S. market for most goods. Dominica has bilateral investment treaties with the UK and Germany.  Dominica has bilateral tax treaties with the United States and the UK.

Dominica is a member of the OECD Inclusive Framework on Base Erosion and Profit Sharing and is party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

Dominica is also party to the following agreements:

Caribbean Community (CARICOM)

The Treaty of Chaguaramas established CARICOM in 1973 to promote economic integration among its 15 member states.  Investors operating in Dominica have preferential access to the entire CARICOM market.  The Revised Treaty of Chaguaramas established the CSME, which permits the free movement of goods, capital, and labor within CARICOM member states.

Organization of Eastern Caribbean States

The Revised Treaty of Basseterre established the OECS.  The OECS consists of seven full members: Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines, and four associate members: Anguilla, Martinique, Guadeloupe, and the British Virgin Islands.  The OECS aims to promote harmonization among member states concerning foreign policy, defense and security, and economic affairs.  The six independent countries of the OECS ratified the Revised Treaty of Basseterre, establishing the OECS Economic Union 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.

CARIFORUM- EU Economic Partnership Agreement

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

CARIFORUM-UK Economic Partnership Agreement

The UK and CARIFORUM signed an EPA in 2019, committing to trade continuity after Britain’s departure from the European Union.  The CARIFORUM-UK EPA eliminates tariffs on all goods imported from CARIFORUM states into the UK, while those Caribbean states will continue to gradually cut import tariffs on most of the region’s imports from the UK.

Caribbean Basin Initiative

The objective of the Caribbean Basin Initiative is to promote economic development through private sector initiatives in Central America and the Caribbean by expanding foreign and domestic investment in non-traditional sectors, diversifying economies, and expanding exports.  It permits duty-free entry of products manufactured or assembled in Dominica into the United States.

Caribbean/Canada Trade Agreement

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

3. Legal Regime

The Government of Dominica provides a legal framework to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety.  The Ministry of Finance and the IDA provide oversight of the transparency of the system as it relates to investment.

Rule-making and regulatory authority lies within the unicameral parliament.  The parliament has 21 members elected for a five-year term in single-seat constituencies, nine appointed members, one speaker, and one clerk.

Relevant ministries develop laws which are drafted by the Ministry of National Security and Home Affairs.  FDI is governed principally through the laws that oversee the IDA and the Citizenship by Investment program.  Laws are available online at  http://www.dominica.gov.dm/laws-of-dominica .

Although some draft bills are not subject to public consultation, the government generally solicits input from various stakeholder groups in the formulation of laws.  In some instances, the government convenes a special committee to make recommendations on provisions outlined in the law.  The government uses public awareness campaigns to sensitize the general population on legislative reforms. Copies of proposed regulations are published in the official gazette shortly before the bills are taken to parliament.  Although Dominica does not have legislation guaranteeing access to information or freedom of expression, access to information is generally available in practice.  The government maintains a website and an information service on which it posts information such as directories of officials and a summary of laws and press releases.

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

The Office of the Parliamentary Commissioner or Ombudsman guards against excesses by government officers in the performance of their duties.  The Ombudsman is responsible for investigating complaints related to any decision or act of any government officer or body in any case in which a member of the public claims to be aggrieved or appears to the Ombudsman to be the victim of injustice as a result of the exercise of the administrative function of that officer or body. The government does not promote nor require companies’ environmental, social, and governance disclosures.

Dominica’s membership in regional organizations, particularly the OECS and its Economic Union, commits it to implement all appropriate measures to ensure the fulfillment of its various treaty obligations.  For example, the Banking Act, which establishes a single banking space and the harmonization of banking regulations in the Economic Union, is uniformly in force in the eight member territories of the ECCU, although there are some minor differences in implementation from country to country.

The enforcement mechanisms of these regulations include penalties or legal sanctions.  The IDA can revoke an issued investment certificate if the holder fails to comply with certain stipulations detailed in the IDA Act and its regulations. The regulatory enforcement process is not digitized.

As a member of the OECS and the ECCU, Dominica subscribes to a set of 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, Dominica is obligated to implement regionally developed regulations such as legislation passed under OECS authority, unless specific concessions are sought.

The Dominica Bureau of Standards develops, maintains, and promotes standards for improving industrial development, industrial efficiency, promoting the health and safety of consumers, protecting the environment, and facilitating trade.  It also conducts national training and consultations in international standards practices.  As a signatory to the WTO Agreement on the Technical Barriers to Trade, Dominica, through the Dominica Bureau of Standards, is obligated to harmonize all national standards to international norms to avoid creating technical barriers to trade.

Dominica ratified the WTO Trade Facilitation Agreement (TFA) in 2016.  Ratification of the Agreement is an important signal to investors of the country’s commitment to improving its business environment for trade.  The TFA aims to improve the speed and efficiency of border procedures, facilitate trade costs reduction, and enhance participation in the global value chain.  Dominica has already implemented a number of TFA requirements.  A full list is available at  https://tfadatabase.org/members/dominica/measure-breakdown .

As a member of CARICOM, Dominica utilizes the Advanced Cargo Information System, a computer-based system developed by the United Nations Conference on Trade and Development (UNCTAD) to harmonize and standardize electronic cargo information in order to improve the capability to track cargo efficiently and to support regional and international trade. The Advance Cargo Information System forms a critical part of the World Customs Organization SAFE Framework of Standards. Dominica has also fully implemented the Automated System for Customs Data.

Dominica bases its legal system on British common law.  The Attorney General, the Chief Justice of the Eastern Caribbean Supreme Court, junior judges, and magistrates administer justice in the country.  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 matters and makes determinations on the interpretation of the constitution.  Parties may appeal to the Eastern Caribbean Supreme Court, an itinerant court that hears appeals from all OECS members.

The Caribbean Court of Justice (CCJ) is the regional judicial tribunal.  The CCJ has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas.  In 2015, Dominica acceded to the CCJ, making the CCJ its final court of appeal.

The United States and Dominica are both parties 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.

The main laws concerning investment in Dominica are the Invest Dominica Authority Act (2007), the Tourism Act (2005), and the Fiscal Incentives Act.  Regulatory amendments have been made to the Income Tax Act, the Value Added Tax Act, the Title by Registration Act, the Alien Landholding Regulation Act, and the Residential Levy Act. The IDA provides a full list of the relevant legislation on their website.

The IDA reviews all proposals for investment concessions and incentives to ensure the project is consistent with the national interest and provides economic benefits to the country.  The Cabinet makes the final decision on investment proposals.

Under Dominica’s citizenship by investment program, qualified foreign investors may obtain citizenship without voting rights.  Applicants can contribute a minimum of $100,000 to the Economic Diversification Fund for a single person or invest in designated real estate with a value of at least $200,000.  Applicants must also provide a full medical certificate, undergo a background check, and provide evidence of the source of funds before proceeding to the final stage of an interview.  The government introduced a citizen by investment certificate in order to minimize the risk of unlawful duplication.  Further information is available at  http://cbiu.gov.dm .

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 to apply rules of competition regarding anti-competitive cross-border business conduct.  CARICOM competition policy addresses anti-competitive business conduct such as agreements 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 CARICOM, and actions by which an enterprise abuses its dominant position within CARICOM.  Dominica does not have domestic legislation to regulate competition.

There are no known pending expropriation cases involving American citizens.  In such an event, Dominica would employ a system of eminent domain to pay compensation when property must be acquired in the public interest.  There were no reported tendencies of the government to discriminate against U.S. investments, companies, or landholdings.  There are no laws mandating local ownership in specified sectors.

Under the Bankruptcy Act (1990), Dominica has a bankruptcy framework that grants certain rights to debtor and creditor. A full copy of the act is available for download from the government’s website .

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $503.7 2020 $504.2 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A N/A N/A BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $0 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A 2020 66.8% UNCTAD data available at

https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: Eastern Caribbean Central Bank  https://www.eccb-centralbank.org/statistics/dashboard-datas/ .

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

France and Monaco

1. Openness To, and Restrictions Upon, Foreign Investment

France welcomes foreign investment. In the current economic climate, the French government sees foreign investment as a means to create additional jobs and stimulate growth. Investment regulations are simple, and a range of financial incentives are available to foreign investors. Surveys of U.S. investors in 2021 showed the greatest optimism about the business operating environment in France since 2008. U.S. companies find France’s good infrastructure, advanced technology, and central location in Europe attractive. France’s membership in the European Union (EU) and the Eurozone facilitates the efficient movement of people, services, capital, and goods. However, notwithstanding recent French efforts at structural reform, including a reduction in corporate and production tax, and advocacy for a global minimum tax within the European Union, perceived disincentives to investing in France include the persistently high tax environment, ongoing labor law rigidity, and a shortage of skilled labor.

France is among the least restrictive countries for foreign investment. With a few exceptions in certain specified sectors, there are no statutory limits on foreign ownership of companies. Foreign entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.

France maintains a national security review mechanism to screen high-risk investments. French law stipulates that control by acquisition of a domiciled company or subsidiary operating in certain sectors deemed crucial to France’s national interests relating to public order, public security and national defense are subject to prior notification, review, and approval by the Economy and Finance Minister. Other sectors requiring approval include energy infrastructure; transportation networks; public water supplies; electronic communication networks; public health protection; and installations vital to national security. In 2018, four additional categories – semiconductors, data storage, artificial intelligence and robotics – were added to the list requiring a national security review. For all listed sectors, France can block foreign takeovers of French companies according to the provisions of the 2014 Montebourg Decree.

On December 31, 2019 the government issued a decree to lower the threshold for vetting of foreign investment from outside Europe from 33 to 25 percent and then lowered it again to 10 percent on July 22, 2020, a temporary provision to prevent predatory investment during the COVID-19 crisis. This lower threshold is set to expire at the end of 2022. The decree also enhanced government-imposed conditions and penalties in cases of non-compliance and introduced a mechanism to coordinate the national security review of foreign direct investments with the European Union (EU Regulation 2019/452). The new European rules entered into force on October 11, 2020. The list of strategic sectors was also expanded to include the following activities listed in the EU Regulation 2019/452: agricultural products, when such products contribute to national food supply security; the editing, printing, or distribution of press publications related to politics or general matters; and R&D activities relating to quantum technologies and energy storage technologies. Separately, France expanded the scope of sensitive sectors on April 30, 2020, to include biotechnology companies.

Procedurally, the Minister of Economy, Finance, and Recovery has 30 business days following the receipt of a request for authorization to either: 1) declare that the investor is not required to obtain such authorization; 2) grant its authorization without conditions; or 3) declare that an additional review is required to determine whether a conditional authorization is sufficient to protect national interests. If an additional review is required, the Minister has an additional 45 business days to either clear the transaction (possibly subject to conditions) or prohibit it. The Minister is further allowed to deny clearance based on the investor’s ties with a foreign government or public authority. The absence of a decision within the applicable timeframe is a de facto rejection of the authorization.

The government also expanded the breadth of information required in the approval request. For example, a foreign investor must now disclose any financial relationship with or significant financial support from a State or public entity; a list of French and foreign competitors of the investor and of the target; or a signed statement that the investor has not, over the past five years, been subject to any sanctions for non-compliance with French FDI regulations.

In 2020, the government blocked at least one transaction—the attempted acquisition of a French firm by a U.S. company in the defense sector. In early 2021, the French government blocked the acquisition of French supermarket chain Carrefour by Canada’s Alimentation Couche-Tard on the basis that it was a threat to France’s food security and national sovereignty.

France has not recently been the subject of international organizations’ investment policy reviews. The OECD Economic Survey for France (November 2021) can be found here:  https://www.oecd.org/economy/france-economic-snapshot/ .

Business France is a government agency established with the purpose of promoting new foreign investment, expansion, technology partnerships, and financial investment. Business France provides services to help investors understand regulatory, tax, and employment policies as well as state and local investment incentives and government support programs. Business France also helps companies find project financing and equity capital. The agency unveiled a website in English to help prospective businesses that are considering investments in the French market ( https://www.businessfrance.fr/en/invest-in-France ). The U.S. Embassy in Paris also collaborated with Business France to create a map of U.S. investment in each region of France ( https://investinfrance.fr/wp-content/uploads/2017/08/Entreprises-americaines.pdf ).

In addition, France’s public investment bank, Bpifrance, assists foreign businesses to find local investors when setting up a subsidiary in France. It also supports foreign startups in France through the government’s French Tech Ticket program, which provides them with funding, a resident’s permit, and incubation facilities. Both business facilitation mechanisms provide for equitable treatment of women and minorities.

President Macron prioritized innovation early in his five-year mandate. In 2017, he launched a €10 billion ($11 billion) fund to back disruptive innovation in energy, the digital sector, and the climate transition by privatizing state-owned enterprises and introduced a four-year tech visa for entrepreneurs to come to France. He also introduced tax reforms that would tax capital gains, interest and dividends at a flat 30 percent, instead of the existing top rate of 45 percent.

In June 2020, the French government introduced a new €1.2 billion ($1.3 billion) plan to support French startups, concentrating on the health, quantum, artificial intelligence, and cybersecurity sectors. The plan included the creation of a €500 million ($550 million) investment fund to help startups overcome the COVID-19 crisis and continue to innovate. It also comprised a “French Tech Sovereignty Fund” launched in December 2020 by France’s public investment bank Bpifrance, with an initial commitment of €150 million ($165 million).

In October 2021, President Macron unveiled a €34 billion ($37.4billion) innovation investment strategy between 2022 and 2027, which mirrors the priorities of the European Commission’s investments in digital innovation and decarbonisation. France will invest by 2030 in breakthrough innovation in a wide variety of areas, including small nuclear fission reactors, green hydrogen production facilities, the production of two million electric and hybrid vehicles every year, research on developing France’s first low-carbon airplane, healthy and sustainable foods, and 20 drugs for cancer and chronic diseases as well as the development of new medical devices. Major industrial groups are encouraged to work with startups, which will also benefit from funding under this new plan. This plan comes on top of the €20 billion ($22 billion) from the 2021 Fourth Future Investment Program. A new Secretary General for Investment was appointed in January 2022 to ensure the coordination of these two innovation programs.

France’s sectors that traditionally attracted the most investment include aeronautics, agro-foods, digital, nuclear, rail, auto, chemicals and materials, forestry, eco-industries, shipbuilding, health, luxury, and extractive industries. However, Business France and Bpifrance are particularly interested in attracting foreign investment in the tech sector. The French government has developed the “French Tech” initiative to promote France as a location for start-ups and high-growth digital companies. French Tech offices have been established in 17 French cities and over 100 cities globally, including New York, San Francisco, Los Angeles, Shanghai, Hong Kong, Vietnam, Moscow, and Berlin. French Tech has special programs to provide support to startups at various stages of their development. The latest effort has been the creation of the French Tech 120 Program, which provides financial and administrative support to some 123 most promising tech companies. In 2019, €5 billion ($5.9 billion) in venture funding was raised by French startups, an increase of nearly threefold since 2015. Venture capital investment in French startups has doubled from €5.1 billion ($5.6 billion) in 2020 to over €10 billion ($11 billion) in 2021.

In March 2021, France launched, with the support of the European Commission and other member states, the Scale-Up Europe initiative bringing together over 300 start-up and scale-up founders, investors, researchers, and corporations, with the goal of creating 10 tech giants each valued at more than €100 billion ($110 billion) by 2030. French authorities supported the Scale-up Europe initiative designed to promote businesses across Europe to expand beyond their local and European markets. As part of that initiative, on February 8, 2022, France inaugurated a new European Investment Fund designed to increase European venture capital funds’ capacity to provide late-stage funding to EU-based start-ups and scale-ups. France and Germany have each committed €1 billion ($1.1 billion), along with €500 million ($565 million) from the European Investment Bank.

The website Guichet Enterprises ( https://www.guichet-entreprises.fr/fr/ ) is designed to be a one-stop website for registering a business. The site, managed by the National Institute of Industrial Property (INPI), is available in both French and English although some fact sheets on regulated industries are only available in French on the website.

French firms invest more in the United States than in any other country and support approximately 765,100 American jobs. Total French investment in the United States reached $314.9 billion in 2020. France was still our tenth largest trading partner with approximately $115.7 billion in bilateral trade in 2021. The business promotion agency Business France also assists French firms with outward investment, which it does not restrict.

3. Legal Regime

The French government has made considerable progress in the last decade on the transparency and accessibility of its regulatory system. The government generally engages in industry and public consultation before drafting legislation or rulemaking through a regular but variable process directed by the relevant ministry. However, the text of draft legislation is not always publicly available before parliamentary approval. U.S. firms may also find it useful to become members of industry associations, which can play an influential role in developing government policies. Even “observer” status can offer insight into new investment opportunities and greater access to government-sponsored projects.

To increase transparency in the legislative process, all ministries are required to attach an impact assessment to their draft bills. The Prime Minister’s Secretariat General (SGG for Secretariat General du Gouvernement) is responsible for ensuring that impact studies are undertaken in the early stages of the drafting process. The State Council (Conseil d’Etat), which must be consulted on all draft laws and regulations, may reject a draft bill if the impact assessment is inadequate.

After experimenting with new online consultations, the Macron Administration is regularly using this means to achieve consensus on its major reform bills. These consultations are often open to professionals as well as citizens at large. Another innovation is to impose regular impact assessments after a bill has been implemented to ensure its maximum efficiency, revising, as necessary, provisions that do not work in favor of those that do.

Over past decades, major reforms have extended the investigative and decision-making powers of France’s Competition Authority. On April 11, 2019, France implemented the European Competition Network (ECN) Directive, which widens the powers of all European national competition authorities to impose larger fines and temporary measures. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position. It issues specific guidance on competition law compliance, and government ministers, companies, consumer organizations, and trade associations now have the right to petition the authority to investigate anti-competitive practices. While the Authority alone examines the impact of mergers on competition, the Minister of the Economy retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.  The Competition Authority continues to simplify takeover and merger notifications with online procedures via a dedicated platform in 2020 and updated guidelines in English released on January 11, 2021. Since January 2021, the Competition Authority has a new President, Benoît Cœuré, who intends to focus on the impact of the Cloud on all sectors of the French economy.

France’s budget documents are comprehensive and cover all expenditures of the central government. An annex to the budget also provides estimates of cost sharing contributions, though these are not included in the budget estimates. Last September, the French government published its first “Green Budget,” as an annex to the 2021 Finance Bill. This event attests to France’s strong commitment, notably under the OECD-led “Paris Collaborative on Green Budgeting” (which France joined in December 2017), to integrate “green” tools into the budget process. In its spring report each year, the National Economic Commission outlines the deficits for the two previous years, the current year, and the year ahead, including consolidated figures on taxes, debt, and expenditures. Since 1999, the budget accounts have also included contingent liabilities from government guarantees and pension liabilities.  The government publishes its debt data promptly on the French Treasury’s website and in other documents. Data on nonnegotiable debt is available 15 days after the end of the month, and data on negotiable debt is available 35 days after the end of the month.  Annual data on debt guaranteed by the state is published in summary in the CGAF Report and in detail in the Compte de la dette publique. More information can be found at:  https://www.imf.org/external/np/rosc/fra/fiscal.htm 

France was the first country to include extra-financial reporting in its 2001 New Economic Regulations Law. To encourage companies to develop a social responsibility strategy and limit the negative externalities of globalized trade, the law requires French companies with more than 500 employees and annual revenues above €100 million ($106 million) to report on the social and environmental consequences of their activities and include them in their annual management report. A 2012 decree on corporate social and environmental transparency obligations requires portfolio management companies to incorporate environmental, social, and governance (ESG) criteria in their investment process.

France’s 2015 Law on Energy Transition for Green Growth strengthened mandatory carbon disclosure requirements for listed companies and introduced carbon reporting for institutional investors. It requires investors (defined as asset owners and investment managers) to disclose in their annual investor’s report and on their website how they factor ESG criteria and carbon-related considerations into their investment policies. The regulation concerns all asset classes: listed assets, venture capital, bonds, physical assets, etc.

France is a founding member of the European Union, created in 1957. As such, France incorporates EU laws and regulatory norms into its domestic law. France has been a World Trade Organization (WTO) member since 1995 and a member of GATT since 1948. While developing new draft regulations, the French government submits a copy to the WTO for review to ensure the prospective legislation is consistent with its WTO obligations. France ratified the Trade Facilitation Agreement in October 2015 and has implemented all of its TFA commitments.

French law is codified into what is sometimes referred to as the Napoleonic Code, but is officially the Code Civil des Français, or French Civil Code. Private law governs interactions between individuals (e.g., civil, commercial, and employment law) and public law governs the relationship between the government and the people (e.g., criminal, administrative, and constitutional law).

France has an administrative court system to challenge a decision by local governments and the national government; the State Council (Conseil d’Etat) is the appellate court. France enforces foreign legal decisions such as judgments, rulings, and arbitral awards through the procedure of exequatur introduced before the Tribunal de Grande Instance (TGI), which is the court of original jurisdiction in the French legal system.

France’s Commercial Tribunal (Tribunal de Commerce or TDC) specializes in commercial litigation.  Magistrates of the commercial tribunals are lay judges, who are well known in the business community and have experience in the sectors they represent. Decisions by the commercial courts can be appealed before the Court of Appeals. France’s judicial system is procedurally competent, fair, and reliable and is independent of the government.

The judiciary – although its members are state employees – is independent of the executive branch. The judicial process in France is known to be competent, fair, thorough, and time-consuming. There is a right of appeal. The Appellate Court (cour d’appel) re-examines judgments rendered in civil, commercial, employment or criminal law cases. It re-examines the legal basis of judgments, checking for errors in due process and reexamines case facts. It may either confirm or set aside the judgment of the lower court, in whole or in part. Decisions of the Appellate Court may be appealed to the Highest Court in France (cour de cassation).

The French Financial Prosecution Office (Parquet National Financier, or PNF), specialized in serious economic and financial crimes, was set up by a December 6, 2013 law and began its activities on February 1, 2014.

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all sorts of remunerative activities. U.S. investment in France is subject to the provisions of the Convention of Establishment between the United States of America and France, which was signed in 1959 and remains in force. The rights it provides U.S. nationals and companies include:  rights equivalent to those of French nationals in all commercial activities (excluding communications, air transportation, water transportation, banking, the exploitation of natural resources, the production of electricity, and professions of a scientific, literary, artistic, and educational nature, as well as certain regulated professions like doctors and lawyers). Treatment equivalent to that of French or third-country nationals is provided with respect to transfer of funds between France and the United States. Property is protected from expropriation except for public purposes; in that case it is accompanied by payment that is just, realizable and prompt.

Potential investors can find relevant investment information and links to laws and investment regulations at  http://www.businessfrance.fr/ .

Major reforms have extended the investigative and decision-making powers of France’s Competition Authority. France implemented the European Competition Network, or ECN Directive, on April 11, 2019, allowing the French Competition Authority to impose heftier fines (above €3 million / $3.3 million) and temporary measures to prevent an infringement that may cause harm. The Authority issues decisions and opinions mostly on antitrust issues, but its influence on competition issues is growing. For example, following a complaint in November 2019 by several French, European, and international associations of press publishers against Google over the use of their content online without compensation, the Authority ordered the U.S. company to start negotiating in good faith with news publishers over the use of their content online. On December 20, 2019, Google was fined €150 million ($177 million) for abuse of dominant position. Following an in-depth review of the online ad sector, the Competition Authority found Google Ads to be “opaque and difficult to understand” and applied in “an unfair and random manner.” On November 17, 2021, the Competition Authority brokered a “pioneering” five-year deal between the CEOs of Google and French news agency Agence France-Presse for the search giant to pay for the French news agency’s content. The deal covers the entirety of the EU and follows 18 months of negotiations. It is the first such deal by a news agency under Article 15 of the 2019 European directive creating a neighboring right for the benefit of press agencies and press publishers when online services reproduce press publications in search engine results. France was the first EU member state to implement Article 15 through its July 24, 2019 law, which came into force on October 24, 2019.

Additional U.S. firms also continue to fall under review of the Competition Authority. For example, it fined Apple $1.3 billion on March 16, 2020, for antitrust infringements involving the restriction of intra-brand competition and the rarely used French law concept of “abuse of economic dependency.”

The Competition Authority launches regular in-depth investigations into various sectors of the economy, which may lead to formal investigations and fines. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position. It issues specific guidance on competition law compliance. Government ministers, companies, consumer organizations and trade associations have the right to petition the authority to investigate anti-competitive practices. While the Authority alone examines the impact of mergers on competition, the Minister of the Economy retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.

A new law on Economic Growth, Activity and Equal Opportunities (known as the “Macron Law”), adopted in August 2016, vested the Competition Authority with the power to review mergers and alliances between retailers ex-ante (beforehand). The law provides that all contracts binding a retail business to a distribution network shall expire at the same time. This enables the retailer to switch to another distribution network more easily. Furthermore, distributors are prohibited from restricting a retailer’s commercial activity via post-contract terms. The civil fine incurred for restrictive practices can now amount to up to five percent of the business’s revenue earned in France.

In accordance with international law, the national or local governments cannot legally expropriate property to build public infrastructure without fair market compensation. There have been no expropriations of note during the reporting period.

France has extensive and detailed bankruptcy laws and regulations. Any creditor, regardless of the amount owed, may file suit in bankruptcy court against a debtor. Foreign creditors, equity shareholders and foreign contract holders have the same rights as their French counterparts. Monetary judgments by French courts on firms established in France are generally made in euros.  Not bankruptcy itself, but bankruptcy fraud – the misstatement by a debtor of his financial position in the context of a bankruptcy – is criminalized. Under France’s bankruptcy code managers and other entities responsible for the bankruptcy of a French company are prevented from escaping liability by shielding their assets (Law 2012-346).  France has adopted a law that enables debtors to implement a restructuring plan with financial creditors only, without affecting trade creditors.  France’s Commercial Code incorporates European Directive 2014/59/EU establishing a framework for the recovery and resolution of claims on insolvent credit institutions and investment firms.  In the World Bank’s 2020 Doing Business Index, France ranked 32nd of 190 countries on ease of resolving insolvency.

The Bank of France, the country’s only credit monitor, maintains files on persons having written unfunded checks, having declared bankruptcy, or having participated in fraudulent activities. Commercial credit reporting agencies do not exist in France.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
French Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
France’s Gross Domestic Product (GDP) ($M USD) 2020 $2,542,370 2020 $ 2,630,317 www.worldbank.org/en/country 
Foreign Direct Investment French Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in France ($M USD, stock positions) 2020 $67,195 2020 $91,153 BEA data available at https://apps.bea.gov/international/factsheet/ 
France’s FDI in the United States ($M USD, stock positions) 2020 $213,390 2020 $314,979 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP 2020 34.1% 2019 37.2% UNCTAD data available at

https://stats.unctad.org/handbook/
EconomicTrends/Fdi.html
 

* French Source : INSEE database for GDP figures and French Central Bank (Banque de France) for FDI figures. Accessed on March 21, 2022.

Table 3: Sources and Destination of FDI
Direct Investment from/in France Economy Data 2020
From Top Five Sources/To Top Five Destinations (U/S. Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 897,115 100% Total Outward 1,440,715 100%
Luxembourg 164,501 18% The Netherlands 221,098 15%
Switzerland 119,020 13%  United States 213,390 15%
United Kingdom 115,093 12% Belgium 166,713 11%
 The Netherlands 107,709 12% United Kingdom 137,138 9%
Germany 98,303 10% Italy 76,091 5%
“0” reflects amounts rounded to +/- USD 500,000.

Source: Bank of France.

Note: These figures represent the stock of foreign direct investment (FDI), not the annual flow of FDI. The United States was the second top investor by number of projects recorded in 2021 but remained in first place for jobs generated (10,118).

Georgia

1. Openness To, and Restrictions Upon, Foreign Investment

Georgia is open to foreign investment. Legislation establishes favorable conditions for foreign investment, but not preferential treatment for foreign investors. The Law on Promotion and Guarantee of Investment Activity protects foreign investors from subsequent legislation that alters the condition of their investments for a period of ten years. Investment promotion authority is vested in the Investment Division of Enterprise Georgia, a legal entity of public law under the Ministry of Economic and Sustainable Development. The Investment Division’s primary role is to attract, promote, and develop foreign direct investment in Georgia. For this purpose, it acts as the moderator between foreign investors and the Georgian government, ensures access to updated information, provides a means of communication with government bodies, and serves as a “one-stop-shop” to support investors throughout the investment process. ( http://www.enterprisegeorgia.gov.ge/en/about ). Enterprise Georgia also operated the website for foreign investors: www.investingeorgia.org .

Georgia’s Investors Council, an advisory body operating since 2015, aims to promote dialogue among the private business community, international organizations, donors, and the Georgian government for the development of a favorable, non-discriminatory, transparent, and fair business and investment climate in Georgia ( http://ics.ge ). The Business Ombudsman, who is a member of the Investors Council, is another tool for protecting investors’ rights in Georgia ( http://businessombudsman.ge ).

Georgia does not have comprehensive mechanisms in place for screening foreign investment and Georgia does not have FDI thresholds. Governmental reviews of investment projects in Georgia are ad hoc.  The Ministry of Economy and Sustainable Development’s Investment Policy and Support Department is responsible for analyzing proposed foreign investment projects at the request of state agencies.  Georgia’s State Security Service, National Security Council (NSC), Revenue Service, Ministry of Regional Development and Infrastructure, National Bank, Ministry of Finance, Ministry of Justice, Ministry of Internal Affairs, and Ministry of Defense all have potential equities and could play a role in reviewing a foreign transaction or investment proposal for national security concerns in certain circumstances. Georgia’s NSC is currently drafting critical infrastructure protection legislation that is linked to NSC’s investment screening efforts.

Foreign investors have participated in most major privatizations of state-owned property. Transparency of privatization has been an issue at times. No law or regulation authorizes private firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control. Cross-shareholder or stable-shareholder arrangements are not used by private firms in Georgia. Georgian legislation does not protect private firms from takeovers. There are no regulations authorizing private firms to restrict foreign partners’ investment activity or limit foreign partners’ ability to gain control over domestic enterprises.

There are no specific licensing requirements for foreign investment other than those that apply to all companies. The government requires licenses for activities that affect public health, national security, and the financial sector: weapons and explosives production, narcotics, poisonous and pharmaceutical substances, exploration and exploitation of renewable or non-renewable substances, exploitation of natural resource deposits, establishment of casinos and gambling houses and the organization of games and lotteries, banking, insurance, securities trading, wireless communication services, and the establishment of radio and television channels. The law requires the state to retain a controlling interest in air traffic control, shipping traffic control, railroad control systems, defense and weapons industries, and nuclear energy. For investment projects requiring licenses or permits, the relevant government ministries and agencies have the right to review the project for national security concerns.  By law, the government has 30 days to make a decision on licenses, and if the licensing authority does not state a reasonable ground for rejection within that period, the government must approve the license or permit for issuance. In the real estate sector, only Georgian nationals or companies, with some exceptions, may own agricultural land.

Per Georgian law, it is illegal to undertake any type of economic activity in Abkhazia or South Ossetia if such activities require permits, licenses, or registration in accordance with Georgian legislation. Laws also ban mineral exploration, money transfers, and international transit via Abkhazia or South Ossetia. Only the state may issue currency, banknotes, and certificates for goods made from precious metals, import narcotics for medical purposes, and produce control systems for the energy sector.

The Organization for Economic Cooperation and Development (OECD) published an Investment Policy Review in December 2020 ( http://www.oecd.org/investment/oecd-investment-policy-reviews-georgia-0d33d7b7-en.htm ). The most recent WTO Investment Policy Review on Georgia was done in 2016 ( https://www.wto.org/english/tratop_e/tpr_e/tp428_e.htm ), and by UNCTAD in 2014.

Registering a business in Georgia is relatively quick and streamlined. Registration takes one day to complete through Georgia’s single window registration process. The National Agency of Public Registry (NAPR) ( www.napr.gov.ge  – webpage is in Georgian only), located in Public Service Halls (PSH) under the Ministry of Justice of Georgia, carries out company registration. The PSH website (https://www.psh.gov.ge/https://www.psh.gov.ge/main/page/2/85) outlines procedures and requirements for business registration in English. For registration purposes, the law does not require a verification of the amount or existence of charter capital. A company is not required to complete a separate tax registration; the initial registration includes both the revenue service and national business registration. The following information is required to register a business in Georgia: bio data for the founder and principal officers, articles of incorporation, and the company’s area of business activity. Other required documents depend on the type of entity to be established.

To register a business, the potential owner must first pay the registration fee, register the company with the Entrepreneurial Register, and obtain an identification number and certificate of state and tax registration. Registration fees are GEL100 (around $30) for a regular registration and GEL200 (around $60) for an expedited registration, plus a GEL1 bank processing fee. The owner must also open a bank account (free).

Georgia’s business facilitation mechanism provides equitable treatment of women and men. There are a variety of state-run and donor-supported projects that aim to promote women entrepreneurs through specific training or other programs, including access to financing and business training.

The Georgian government does not have any specific policy on promoting or restricting domestic investors from investing abroad and Georgia’s outward investment is insignificant.

According to Georgia’s central bank, the net international investment position of Georgia, which measures the difference between external financial assets and liabilities of a country, totaled negative $26.3 billion as of December 31, 2021.

3. Legal Regime

Georgia’s legal, regulatory, and accounting systems are transparent and consistent with international norms, and the Georgian government has committed to achieving even greater transparency and simplicity of regulations for these systems.

In Georgia, the lawmaking process involves Parliament (drafting and consideration) and the President (signing). Under Georgia’s constitution, the following subjects have the right to initiate legislation: the President, the government, members of Parliament, a committee, faction, the representative bodies of the Autonomous Republics of Abkhazia and Adjara, and groups of at least 30,000 voters.

A subject who does not have the right to launch a legislative initiative does, however, has the right to submit a “legislative proposal,” which should be a well-reasoned address to Parliament advocating for the adoption of a new law or of changes/amendments to existing legislation. According to Article 150 of the Law on Parliament, the following can submit a legislative proposal: citizens of Georgia, state bodies (except the establishments of the executive branch of government), the representative and executive bodies of local self-government, political and public unions registered in Georgia according to the established rule, and other legal entities.

There are no informal regulatory processes managed by nongovernmental organizations or private sector associations, except their entitlement for participating in the law-making process prescribed by the above law. Publicly listed companies are required to prepare financial statements in accordance with IFRS – International Financial Reporting Standards. Draft bills or regulations are available for public comment. NGOs, professional associations, and business chambers actively participate in public hearings on legislation. The government publishes laws and regulations in Georgian in the official online legislative herald gazette, the Legislative Messenger, ‘Matsne’ ( www.matsne.gov.ge ). Another online tool to research Georgian legislation is www.codex.ge  or the webpage of the Parliament of Georgia, www.parliament.ge .

General oversight of the executive branch is vested in the parliament. The new Constitution, which entered into force in December 2018, and subsequently adopted new Parliamentary Rules and Procedures, aims to strengthen Parliament’s oversight role. Under their strengthened roles, public officials are obliged to respond to Parliament’s questions. Government institutions also submit annual reports. However, local watchdog organizations continue to raise concerns that one party controls all branches of government, undermining checks and balances. Independent agencies, such as the State Audit Office the Ombudsman’s office (including the Business Ombudsman), and business associations also provide an oversight function. Georgia maintains an active civil society that frequently reports on government activities.

Georgia has six types of taxes: corporate profit tax (0% or 15%; no corporate income tax on retained and reinvested profit; profit tax applies only to distributed earnings), value added tax (VAT; 18%), property tax (up to 1%), personal income tax (20%), excise (on few selected goods), and import tax (0%, 5% or 12%). Dividend income tax is five percent. There are no dividend or capital gains taxes for publicly traded equities (a free float in excess of 25 percent). Georgia imposes excise taxes on cigarettes, alcohol, fuel, and mobile telecommunication. Most goods, except for some agricultural products, have no import tariffs. For goods with tariffs, the rates are five or 12 percent, unless excluded by an FTA.

Detailed information on the types and rates of taxes applicable to businesses and individuals, as well as a payment calendar, is available on the Georgia Revenue Service website: http://www.rs.ge/ .

In 2019, the Georgian government introduced new regulations to simplify the tax regime and streamline processes for small businesses. The new legislation decreased turnover tax from five percent to one percent for small businesses and defined small business as those with less than GEL 500,000 ($160,000) annual turnover, a fivefold increase from the previous GEL 100,000 ($30,000) threshold. In addition, the new regulations allow small businesses to pay taxes by the end of month, instead of requiring advance payments. For medium and large businesses, the reform introduced an automatic system of VAT returns and activated a special system whereby entrepreneurs can pay VAT returns in five to seven business days by filling out an electronic application.

Enterprise Georgia operates the Business Service Center in Tbilisi, which provides domestic and foreign businesses with information on doing business in Georgia. The Business Service Center facilitates an online chat tool for interested individuals ( http://www.enterprisegeorgia.gov.ge/en/SERVICE-CENTER ). Additionally, the Investor’s Council provides an opportunity for the private sector to discuss legislative reforms, economic development plans, and actions to spur economic growth with the government. Different commercial chambers, such as the American Chamber of Commerce ( www.amcham.ge ), International Chamber of Commerce ( www.icc.ge ), Business Association of Georgia ( www.bag.ge ), Georgian Chamber of Commerce and Industry ( www.gcci.ge ), and EU-Georgia Business Council ( http://eugbc.net ) remain important tools for facilitating ongoing dialogue between domestic and foreign business communities and the government.

International accounting standards are binding for joint stock companies, banks, insurance companies, companies operating in the insurance field, limited liability companies, limited partnerships, joint liability companies, and cooperatives. Private companies are required to perform accounting and financial reporting in accordance with international accounting standards. Sole entrepreneurs, small businesses, and non-commercial legal entities perform accounting and financial reporting according to simplified interim standards approved by the Parliamentary Accounting Commission. Shortcomings in the use of international accounting standards persist, and qualified accounting personnel are in short supply.

The Law of Georgia on Free Trade and Competition provides for the establishment of an independent structure, the Competition Agency, to exercise effective state supervision over a free, fair, and competitive market environment. Nonetheless, certain companies have dominant positions in pharmaceutical, petroleum, and other sectors.

Public finances and debt obligations are transparent, and Georgia’s budget and information on debt obligations were widely and easily accessible to the public through government websites including the Ministry of Finance’s site ( www.mof.gov.ge ). Georgia’s State Audit Office ( www.sao.ge ) reviews the government’s accounts and makes its reports publicly available.

Georgia’s Association Agreement of 2014 with the European Union introduced a preferential trade regime, the DCFTA, which increased market access between the EU and Georgia based on better-aligned regulations. The agreement is designed to introduce European standards gradually in all spheres of Georgia’s economy and sectoral policy: infrastructure, energy, the environment, agriculture, tourism, technological development, employment and social policy, health protection, education, culture, civil society, and regional development. It also provides for the approximation of Georgian laws with nearly 300 separate European legislative acts.

The DCFTA should promote a gradual approximation with European standards for food safety, establish a transparent and stable business environment in Georgia, increase Georgia’s potential to attract investment, introduce innovative approaches and new technologies, stimulate economic growth, and support the country’s economic development. The latest progress report, adopted by the European Parliament on September 17, 2020, confirmed Georgia’s continued progress on the implementation of the agreement.

Georgia has been a WTO member since 2000 and consistently meets requirements and obligations included in the Agreement on Trade Related Investment Measures. Since WTO accession, Georgia has not introduced any Technical Barriers to Trade. In January 2016, Georgia ratified the WTO Trade Facilitation Agreement.

Georgia’s legal system is based on civil law and the country has a three-tiered court system. The first tier consists of 25 trial courts throughout the country that hear criminal, civil, and administrative cases. Two appellate courts, Tbilisi Appeal Court (East Georgia) and Kutaisi Appeal Court (West Georgia), represent the second tier. The Supreme Court of Georgia occupies the third, or the highest, instance and acts as the highest appellate court. In addition, there is a separate Constitutional Court for arbitrating constitutional disputes between branches of government and ruling on individual claims concerning human rights violations stemming from the Constitution.

Georgia does not have an integrated commercial code. There are several different laws and codes (Tax Code, Law on Entrepreneurs, and Law on Insolvency) that regulate commercial activity in Georgia. There are no specialized courts, such as a commercial court, to handle commercial disputes; however, in Tbilisi there are specialized court panels that handle high value disputes, including some commercial disputes. The Ministry of Justice’s Public Service Halls provide property registration.

The lack of independence of Georgia’s judiciary and political inference in the judicial system, especially in high-profile cases, is troubling.  Concerns regarding the integrity of the judicial appointment process and the capacity of the courts to deliver quality outcomes continue to affect investor confidence in the court system.  The Government’s hesitance to conduct a full assessment of the judicial system to ensure full compliance with Venice Commission recommendations further undermines faith in the independence of the judiciary.  OECD’s 2020 IPR notes the Georgian government’s efforts to strengthen the judiciary to improve the country’s business and investment environment under its Georgia 2020 strategy.  However, the report highlights that “the existing framework for adjudication of civil disputes in Georgian courts nonetheless continues to suffer from several significant problems despite the reforms.  Foremost of these are persisting concerns with the independence, accountability, and capacity of the High Council of Justice and the judiciary.  Many investors perceive Georgia’s court processes as slow, inefficient, lacking in transparency, and hampered by a lack of technical expertise.  All these issues affect public trust in the judicial system.  They are among the most pressing concerns for investors in their assessments of the investment climate in Georgia.”  The full OECD report is available at https://www.oecd.org/countries/georgia/oecd-investment-policy-reviews-georgia-0d33d7b7-en.htm. Regulations and enforcement actions are appealable and are adjudicated in the national court system.

The U.S.-Georgia Bilateral Investment Treaty (BIT) guarantees U.S. investors national treatment and most favored nation treatment. Exceptions to national treatment have been carved out for Georgia in certain sectors, such as maritime fisheries, air, and maritime transport and related activities, ownership of broadcast, common carrier, or aeronautical radio stations, communications satellites, government-supported loans, guarantees, and insurance, and landing of submarine cables.

Georgia’s legal system is based on civil law. Legislation governing foreign investment includes the Constitution, the Civil Code, the Tax Code, and the Customs Code. Other relevant legislation includes the Law on Entrepreneurs, the Law on Promotion and Guarantee of Investment Activity, the Bankruptcy Law, the Law on Courts and General Jurisdiction, the Law on Limitation of Monopolistic Activity, the Accounting Law, and the Securities Market Law.

Ownership and privatization of property is governed by the following acts: the Civil Code, the Law on Ownership of Agricultural Land, the Law on Private Ownership of Non-Agricultural Land, the Law on Management of State-Owned Non-Agricultural Land, and the Law on Privatization of State Property. Property rights in extractive industries are governed by the Law on Concessions, the Law on Deposits, and the Law on Oil and Gas. Intellectual property rights are protected under the Civil Code and the Law on Patents and Trademarks. Financial sector legislation includes the Law on Commercial Banks, the Law on National Banks, and the Law on Insurance Activities.

Information about the procedures and requirements during the investment process is available in English Language at the Invest in Georgia (by Enterprise Georgia) website: https://investingeorgia.org/en/downloads/useful-guides 

The Georgian Law “On Free Trade and Competition” of 2005 that governs competition is in line with the Georgian Constitution and international agreements.

The agency in charge of reviewing transactions for competition-related concerns is the Competition Agency, an independent legal entity of public law, subordinated to the Prime Minister of Georgia. The agency aims to promote market liberalization, free trade, and competition ( www.competition.ge ). Competition Agency decisions can be appealed at court. Georgia has also signed several international agreements containing competition provisions, including the EU-Georgia Association Agreement (AA). The DCFTA within the AA goes further than most FTAs, with regulatory alignment, the elimination of non-tariff barriers, and binding rules on investments and services.

In July 2020, Georgia adopted the Law of Georgia on the Introduction of Anti-dumping Measures in Trade  that became effective January 1, 2021. The aim of the law is to protect local industry from price dumping on imports. The Law establishes the basic conditions and rules for the introduction of anti-dumping measures to be implemented when importing goods via the customs territory of Georgia.

In 2022, the Georgian Parliament adopted a bill on Consumer Protection, which is an essential component among the obligations under the EU-Georgia Association Agreement; it establishes rules for consumer protection and prohibits “unfair commercial practices” that violate the values of “trust and good faith.”  The National Competition Agency is responsible for executing the Consumer Protection law.

The Georgian Constitution protects property ownership rights, including ownership, acquisition, disposal, and inheritance of property. Foreign citizens living in Georgia possess rights and obligations equal to those of the citizens of Georgia, except for certain property rights (see Section 5). The Constitution allows restriction or revocation of property rights only in cases of extreme public necessity, and then only as allowed by law.

The Law on Procedures for Forfeiture of Property for Public Needs establishes the rules for expropriation in Georgia. The law allows expropriation for certain enumerated public needs, establishes a mechanism for valuation and payment of compensation, and provides for court review of the valuation at the option of any party. The Georgian Law on Investment allows expropriation of foreign investments only with appropriate compensation. Amendments to the Law on Procedures for Forfeiture of Property for Public Needs allow payment of compensation with property of equal value as well as money. Compensation includes all expenses associated with the valuation and delivery of expropriated property. Compensation must be paid without delay and must include both the value of the expropriated property as well as the loss suffered by the foreign investor because of expropriation. The foreign investor has a right to review an expropriation in a Georgian court. In 2007, Parliament passed a law generally prohibiting the government from contesting the privatization of real estate sold by the government before August 2007. The law is not applicable, however, to certain enumerated properties.

The U.S.-Georgia BIT permits expropriation of covered investments only for a public purpose, in a non-discriminatory manner, upon payment of prompt, adequate and effective compensation, and in accordance with due process of law and general principles of fair treatment.

Expropriation disputes are not common in Georgia, although under the previous government there were cases of property transfers that lacked transparency and allegedly were implemented under coercion.

On 1 April 2021, a new insolvency law, “On Rehabilitation and Collective Satisfaction of Creditors,” entered into force in Georgia. The main aim of the law is to protect the interests of the creditors, promote mechanisms for rehabilitation, strengthen the role of the courts during the insolvency proceedings, and separate and clarify the rights and responsibilities of individuals involved in the process and the creation of fair regulations. This law has eased the process for struggling businesses to return to growth.

The law defines two types of creditors: secured and non-secured. Creditors can file a court claim for opening an insolvency proceeding, given certain conditions are satisfied (conditions vary, depending on the outstanding debt amount and the delayed days of repayment). Creditor meetings are held in court and chaired by a judge. The creditor meeting can decide several issues, including the appointment of a supervisor of the bankruptcy or rehabilitation proceedings, and the appointment of a member of the facilitation council.

Secured creditors: Secured creditors must make unanimous decisions on approving a debtor’s new debts, the encumbrance of the debtor’s property, and suretyship. If there are no secured creditors, the creditor’s meeting is authorized to make the same decisions. The secured creditors, in a creditor’s meeting, may suspend enforcement of the material conditions of the agreement with the bankruptcy or rehabilitation supervisor or on the definition of the terms of the rehabilitation. After the debtor’s property is sold on auction, secured creditors have priority for being repaid. All secured creditors must approve the rehabilitation plan and plan amendments. New equity investment in the debtor’s company is only possible if there are prior consents from all secured creditors and the rehabilitation supervisor.

Non-secured creditors: Non-secured creditors are satisfied only after all secured creditors are satisfied (unless otherwise agreed by all creditors unanimously). Non-secured creditors do not have voting rights for the rehabilitation plan approval.

The priority system shall not apply to creditors whose claim is secured by financial collateral.

Foreign creditors: The law provides additional time for foreign creditors to file claims. Creditors may file claims to the court and request to declare the agreements made by the insolvent debtor voidable and/or request reimbursement of damages, if such agreements inflicted damages to the creditor.

The Debt Registry of the National Agency of the Public Register is Georgia’s credit monitoring authority.

Jamaica

1. Openness To, and Restrictions Upon, Foreign Investment

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

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

Jamaica’s commitment to regulatory reform is an intentional effort to become a more attractive destination for foreign investment. According to the World Bank’s “Doing Business 2020” report, Jamaica ranked 71 out of 190 economies, above average compared to Latin American and Caribbean countries. The country improved or held firm on all metrics assessed in the 2020 report, moving most significantly in the area registering property. The GoJ replaced the Ad Valorem Stamp Duty rate payable on the registration of collateral, such as property used to secure loan instruments, with a flat rate duty. Additionally, the transfer tax, payable on the change of ownership from one person to another, was also reduced during the year from five to two percent. Jamaica is ranked 80 out of 141 countries in the World Economic Forum’s 2019 Global Competitiveness Index. Bureaucracy remains a major impediment, with the country continuing to underperform in the areas of trading across borders, paying taxes, and enforcing contracts.

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

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

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

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

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

Jamaica has not undertaken any investment policy reviews within the last three years in conjunction with the Organization for Economic Cooperation and Development (OECD) or United Nations Conference on Trade and Development (UNCTAD).  The GOJ’s previous WTO review took place in 2017 and an OECD review took place in 2004. 

No domestic or foreign civil society organizations have provided useful reviews of investment policy-related concerns within the past five years.

Businesses can easily register using the “Super Form,” a single Business Registration Form for New Companies and Business Names.  The ORC acts as a “one-stop-shop,” effectively reducing the registration time to between one and three days.  Foreign companies can register using these forms, with or without the assistance of an attorney or notary.  The “Super Form” can be accessed under Forms at the ORC’s website (https://www.orcjamaica.com).  All that is needed is a device with access to the internet, an approved reserved name, proof of address (any recent document used to verify your current address such as a utility bill or driver’s license), and a valid ID (Driver’s License, Passport or Voters Id).  The website gives detailed instructions throughout the process.

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

3. Legal Regime

Jamaica’s regulatory systems are transparent and consistent with international norms.  Proposed legislation is available for public review at japarliament.gov.jm, and submissions are generally invited from members of the public when there is a distinct policy shift or for sensitive changes.  There is no law that requires the rulemaking body to solicit comments on proposed regulation and no timeframe for the length of a consultation period when it happens.  Furthermore, the law does not require reporting on public consultations, but the government presents the consultations directly to interested stakeholders in one unified report.  Laws in effect are available at japarliament.gov.jm or moj.gov.jm.  Companies interested in doing business in a particular sector should seek guidance from the relevant regulator(s), including the Office of Utilities Regulation (OUR) for utilities, the Bank of Jamaica (BOJ) for deposit taking institutions (DTIs) and the Financial Services Commission (FSC) for non-DTIs.

Jamaica is compliant with established benchmarks for public disclosure of its budget, the establishment and functioning of an independent and supreme audit body, and the award of contracts for natural resource extraction.  Additionally, Jamaica’s Public Debt Management Act (PDMA) of 2012 has codified a gradual reduction in its contingent liability or Government Guaranteed Loans (GGL).  The PDMA targets a three percent GGL-to-GDP ratio by 2027. 

Jamaica has adopted IFRS Standards including the IFRS for SMEs Standard for all companies. Jamaica adopted IFRS Standards in 2000 by Resolution of the members of the ICAJ.

The Jamaica Corporate Governance Code 2021 was officially launched on Friday, February 25, 2022. The Code remains the only tool of its kind to date in the Caribbean aimed at helping entities – public and private – to implement Corporate Governance best practices in keeping with international standards.  The Code, which was prepared by the PSOJ Corporate Governance Committee through funding by IDB Invest is available for viewing and download here: https://www.psoj.org/corporate-governance-2/.

The GOJ tends to adopt Commonwealth standards for its regulatory system, especially from Canada and the United Kingdom.  In 2001, CARICOM member states established the Regional Organization for Standards and Quality (CROSQ) under Article 67 of the Revised Treaty of Chaguaramas.  CROSQ is intended to harmonize regional standards to facilitate the smooth movement of goods in the common market.  Jamaica is also a full member of the WTO and is required to notify all draft technical regulations to the WTO Committee of Technical Barriers to Trade (TBT).

Jamaica has a common law legal system and court decisions are generally based on past judicial declarations.  The Jamaican Constitution provides for an independent judiciary with a three-tier court structure.  A party seeking to enforce ownership or contractual rights can file a claim in the Resident Magistrate or Supreme Court.  Appeals on decisions made in these courts can be taken before the Court of Appeal and then to the Judicial Committee of the Privy Council in the United Kingdom.  The Caribbean Court of Justice (CCJ), in its original jurisdiction, is the court of the 15-member Caribbean Community (CARICOM), but Jamaica has not signed on to its appellate jurisdiction.

Jamaica does not have a single written commercial or contractual law and case law is therefore supplemented by the following pieces of legislation: (1) Arbitration (Recognition and Enforcement of Foreign Awards) Act; (2) Companies Act; (3) Consumer Protection Act; (4) Fair Competition Act; (5) Investment Disputes Awards (Enforcement) Act; (6) Judgment (Foreign) (Reciprocal Enforcement) Act; (7) Law Reform (Frustrated Contracts) Act; (8) Loans (Equity Investment Bonds) Act; (9) Partnership (Limited) Act; (10) Registration of Business Names Act; (11) Sale of Goods Act; (12) Standards Act; and, (13) Trade Act.  The commercial and civil divisions of the Supreme Court have jurisdiction to hear intellectual property claims. 

Jamaica enforces the judgments of foreign courts through: (1) The Judgment and Awards (Reciprocal Enforcement) Act; (2) The Judgment (Foreign) (Reciprocal Enforcement) Act; and (3) The Maintenance Orders (Facilities for Enforcement) Act.  Under these acts, judgments of foreign courts are accepted where there is a reciprocal enforcement of judgment treaty with the relevant foreign state.  International arbitration is also accepted as a means for settling investment disputes between private parties.  

The Jamaican judicial system has a long tradition of being fair, but court cases can take years or even decades to resolve.  A new Chief Justice appointed in 2018 has set aggressive benchmarks to streamline the delivery of judgments, bring greater levels of efficiency to court administration, and target throughput rates in line with international best practice.  Efforts are currently underway to provide hearing date certainty and disposition of cases within 24 months, barring exceptional circumstances.  The deployment of new courtrooms and the appointment of additional Appeal Court Judges are indicators of Jamaica’s commitment to justice reform.  

Challenges with dispute resolution usually reflect broader problems within the court system, including long delays and resource constraints.  Subsequent enforcement of court decisions or arbitration awards is usually adequate, and the local court will recognize the enforcement of an international arbitration award. 

A specialized Commercial Court was established in 2001 to expedite the resolution of commercial cases.  The rules do not make it mandatory for commercial cases to be filed in the Commercial Court and the Court is largely underutilized by litigants. 

Jamaica ranked 119 in the 2019 World Bank Doing Business Report on the metric of enforcement of contracts, scoring 64.8 in the length of time taken for enforcement, 43.6 for costs associated with litigation and 52.8 on the quality of judicial processes.

There are no specific laws or regulations specifically related to foreign investment.  Since foreign companies are treated similar to Jamaican companies when investing, the relevant sections of the applicable laws are applied equally. 

The Fair-Trading Commission (FTC), an agency of the Ministry of Industry, Investment and Commerce, administers the Fair Competition Act (FCA).  The major objective of the FCA is to foster competitive behavior and provide consumer protection.  The Act proscribes the following anti-competitive practices: resale price maintenance; tied selling; price fixing; collusion and cartels; and bid rigging.  The Act does not specifically prohibit mergers or acquisitions that could lead to the creation of a monopoly.  The FTC is empowered to investigate breaches of the Act and businesses or individuals in breach can be taken to court if they fail to implement corrective measures outlined by the FTC.

Expropriation is generally not an issue in Jamaica, although land may be expropriated for national development under the Land Acquisition Act, which provides for compensation on the basis of market value.  The U.S. government is not aware of any current expropriation-related litigation between the Jamaican government and any private individual or company.  However, the U.S. government assisted investors who had property expropriated during the 1970’s socialist regime, with a payment in one such case received in 2010.

Jamaica enacted new insolvency legislation in 2014 that replaced the Bankruptcy Act of 1880 and seeks to make the insolvency process more efficient.  The Act prescribes the circumstances under which bankruptcy is committed; the procedure for filing a bankruptcy petition; and the procedures to be followed in the administration of the estates of bankrupts.  The reform addresses bankruptcy; insolvency, receiverships; provisional supervision; and winding up proceedings.  The law addresses corporate and individual insolvency and facilitates the rehabilitation of insolvent debtors, while removing the stigma formerly associated with either form of insolvency.  Both insolvents and “looming insolvents” (persons who will become insolvent within twelve months of the filing of the proposal if corrective or preventative action is not taken) are addressed in the reforms.

The Act contains a provision for debtors to make a proposal to their creditors for the restructuring of debts, subject to acceptance by the creditor.  Creditors can also invoke bankruptcy proceedings against the debtor if the amount owed is not less than the prescribed threshold or if the debtor has committed an act of bankruptcy.  The filing of a proposal or notice of intention to file a proposal creates a temporary stay of proceedings.  During this period, the creditor is precluded from enforcing claims against the debtor.  The stay does not apply to secured creditors who take possession of secured assets before the proposal is filed; gives notice of intention to enforce against a security at least 10 days before the notice of intention or actual proposal is filed; or rejects the proposal.  The 2014 legislation makes it a criminal offence if a bankrupt entity defaults on certain obligations set out in the legislation.

Jamaica ranked 34 on Resolving Insolvency in the 2020 World Bank’s Doing Business Report.  Bankruptcy proceedings take about a year to resolve, costing 18 percent of the estate value with an average recovery rate of 65 percent.

The text of the Bankruptcy and Insolvency Act can be found at: http://www.japarliament.gov.jm/attachments/341_The%20Insolvency%20Act%202014%20No.14%20rotated.pdf  

Macau

1. Openness To, and Restrictions Upon, Foreign Investment

The Joint Declaration of the Government of the People’s Republic of China and the Government of the Portuguese Republic on the question of Macau was signed in March 1987, which established the constitutional principle of “One Country, Two Systems.”. The “One Country, Two Systems” principle guarantees that the rights related to autonomy, its capitalist system, its legal regime, and the liberal society enjoyed by Macau would remain unchanged until at least 2049. Drafted based on the Joint Declaration, Macau’s Basic Law came into effect in December 1999 and laid out the basic principles of Macau’s governance under Chinese sovereignty. The Basic Law also guaranteed that “One Country, Two Systems” would remain essentially unchanged in Macau until at least 2049.

Macau has separate membership in the World Trade Organization (WTO) from that of mainland China. According to the 2018 Index of Economic Freedom released by The Wall Street Journal and The Heritage Foundation, Macau ranked 34th among 180 worldwide economies and ranked the 9th in the Asia Pacific region. However, Macau was excluded from the 2021 Index published in March 2021. The Heritage Foundation explained the decision to exclude Macau by saying that developments over the past few years have demonstrated unambiguously that those policies offering economic freedom to Macau are ultimately controlled from Beijing.

There are no restrictions placed on foreign investment in Macau as there are no special rules governing foreign investment. Both overseas and domestic firms register under, and are subject to, the same regulations on business, such as the Commercial Code (Decree 40/99/M).

Macau is heavily dependent on the gaming sector and tourism. The GOM aims to diversify Macau’s economy by attracting foreign investment and is committed to maintaining an investor-friendly environment. Corporate taxes are low, with a tax rate of 12 percent for companies whose net profits exceed MOP 600,000 (USD 75,000). Companies whose net profits are less than USD 75,000 are exempt from tax. The top personal tax rate is 12 percent and the first MOP 144,000 (USD 18,000) of an individual’s taxable income is exempt from personal tax. The tax rate of casino concessionaries is 35 percent on gross gaming revenue, plus a four percent contribution to a combined culture, infrastructure, tourism, and a social security fund.

Macau is attempting to position itself as a regional center for incentive travel, conventions, and tourism. The concessions of all six of Macau’s gambling concessionaires and sub-concessionaires are now set to be extended for a period of six months from the original date of expiration to December 31, 2022, as the ongoing legislative review of the gaming law is taking longer than expected. The Legislative Assembly of Macau is currently reviewing and proposing amendments to the draft bill on the amendment to the gaming law ahead of the re-tendering of concessions. A fresh public tender process with up to six winning bidders granted ten-year concessions will follow once the bill is passed.

The Macau Trade and Investment Promotion Institute (IPIM) is the GOM agency responsible for promoting trade and investment activities. IPIM provides one-stop services, including notary servicesfor business registration, and it applies legal and administrative procedures to all local and foreign individuals or organizations interested in setting up a company in Macau.

Macau maintains an ongoing dialogue with investors through various business networks and platforms, such as the IPIM, the Macau Chamber of Commerce, American Chamber of Commerce Macau, and the Macau Association of Banks. Macau participates in the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries, a liaison platform that strengthens economic and commercial cooperation among Lusophone nations. The Forum hosts a ministerial-level conference in Macau on a triennial basis to gather businesspeople and government officials from the participating countries as well as representatives from international trade organizations and trade promotion entities..

Foreign firms and individuals are free to establish companies, branches, and representative offices without discrimination or undue regulation in Macau. There are no restrictions on the ownership of such establishments. Company directors are not required to be citizens of, or resident in, Macau, except for the following three professional services which impose residency requirements:

Education: An individual applying to establish a school must have a Certificate of Identity or have the right to reside in Macau. The principal of a school must be a Macau resident.

Newspapers and magazines: Applicants must first apply for business registration and register with the Government Information Bureau as an organization or an individual. The publisher of a newspaper or magazine must be a Macau resident or have the right to reside in Macau.

Legal services: Lawyers from foreign jurisdictions who seek to practice Macau law must first obtain residency in Macau. Foreign lawyers must also pass an examination before they can register with the Lawyers’ Association, a self-regulatory body. The examination is given in Chinese or Portuguese. After passing the examination, foreign lawyers are required to serve an 18-month uninterrupted internship before they can practice law in Macau.

Macau last conducted the WTO Trade Policy Review in November 2020. See

https://www.wto.org/english/tratop_e/tpr_e/s402_e.pdf

The IPIM helps foreign investors in registering a company and liaising with the involved agencies for entry into the Macau market. The business registration process typically takes less than 10 working days. Company registration procedures can be found here: http://www.ipim.gov.mo/en/services/one-stop-service/handle-company-registration-procedures/ 

Macau does not promote or incentivize outward investment, nor does it restrict domestic investors from investing abroad. In 2020, the latest available data, outward direct investment flows of Macau enterprises increased by 34.6 percent year-on-year to MOP 9.44 billion while the stock of outward direct investment increased 21.6 percent year-on-year to MOP 69.89 billion. Hong Kong and mainland China remained the top two destinations.

3. Legal Regime

The GOM typically conducts a two-month public consultation when amending or making legislation, including investment laws, and will prepare a draft bill based on the results of the public consultation. The lawmakers then discuss the draft bill before putting it to a final vote. All of the processes are transparent and consistent with international norms.

Public comments received by the GOM are not made available online to the public. The draft bills are made available at the Legislative Assembly’s website (http://www.al.gov.mo/zh/), while this website http://www.io.gov.mo/ links to the GOM’s Printing Bureau, which publishes laws, rules, and procedures.

Macau’s anti-corruption agency, the Commission Against Corruption (known by its Portuguese acronym CCAC), carries out ombudsman functions to safeguard rights, freedoms, and legitimate interests of individuals and to ensure the impartiality and efficiency of public administration.

Macau’s law on the budgetary framework (Decree 15/2017) aims to reinforce monitoring of public finances and to enhance transparency in the preparation and execution of the fiscal budget.

Macau does not owe debt to any countries. The public can retrieve up-to-date data on public finance from the Financial Services Bureau website https://www.dsf.gov.mo/financialReport/?lang=en  at all times.

Macau is a member of the WTO since 1995 and adopts international norms. The GOM notified all draft technical regulations to the WTO Committee on Technical Barriers to Trade.

Macau, as a signatory to the Trade Facilitation Agreement (TFA), has achieved a 100 percent rate of implementation commitments.

Under “one country, two systems”, Macau maintains Continental European law as the foundation of its legal system, which is based on the rule of law and the independence of the judiciary. The current judicial process is procedurally competent, fair, and reliable. Macau has written commercial law and contract law. The Commercial Code is a comprehensive source of commercial law, while the Civil Code serves as a fundamental source of contractual law. Courts in Macau include the Court of Final Appeal, Intermediate Courts, and Primary Courts. There is also an Administrative Court, which has jurisdiction over administrative and tax cases. These provide an effective means for enforcing property and contractual rights. Currently, the Court of Final Appeal has three judges; the Intermediate Courts have nine judges; and the Primary Courts have 33 judges. The Public Prosecutions Office has 36 prosecutors.

Macau passed a National Security Law in 2009 that prohibits and punishes crimes against national security, including treason, secession, sedition, subversion, theft of state secrets, and collusion with foreign political organizations. Preparatory acts leading to any of these crimes may also constitute a criminal offense.

Macau’s courts still have jurisdiction over all local cases except those related to defense and foreign affairs. The 2009 National Security Law did not affect this jurisdiction.

Macau’s legal system is based on the rule of law and the independence of the judiciary. Foreign and domestic companies register under the same rules and are subject to the same set of commercial and bankruptcy laws (Decree 40/99/M).

Macau has no agency that reviews transactions for competition-related concerns, nor does it have a competition law. The Commercial Code (Law No. 16/2009) contains basic elements of a competition policy for commercial practices that can distort the proper functioning of markets. In response to public outcries of price-fixing schemes in the Macau oil and food retail industries, in March 2019, the GOM commissioned Macau University of Science and Technology to conduct research on how to optimize market institutions to help foster healthy private sector competition. The research results were released to the public in May 2020. Based on this research, the GOM claimed that a legislative solution such as an anti-monopoly or anti-trust law would not necessarily bring about lower prices. Rather, the GOM appointed the Macau Consumer Council to monitor the local market prices and determine when the need for new legislation on market competition is warranted. Speaking at a Legislative Assembly plenary meeting on consumer rights protection law in June 2021, the Secretary for Economy and Finance revealed that the authorities still do not have a specific timetable for enacting competition and antitrust laws, explaining that Macau is a civilized society, and legislation is always the last resort to promote ethical conduct and integrity.

The U.S. Consulate General is not aware of any direct or indirect actions to expropriate. Legal expropriations of private property may occur if it is in the public interest. In such cases, the GOM will exchange the private property with an equivalent public property based on the fair market value and conditions of the former. The exchange of property is in accordance with established principles of international law. There is no remunerative compensation.

ICSID Convention and New York Convention

Both the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) apply to Macau. The Law on International Commercial Arbitration (Decree 55/98/M) provides for enforcement of awards under the 1958 New York Convention.

Investor-State Dispute Settlement

The U.S. Consulate General is aware of one previous investment dispute involving U.S. or other foreign investors or contractors and the GOM. In March 2010, a low-cost airline carrier was reportedly forced to cancel flight services because of a credit dispute with its fuel provider, triggering events which led to the airline’s de-licensing. Macau courts declared the airline bankrupt in September 2010. The airline’s major shareholder, a U.S. private investment company, filed a case in the Macau courts seeking a judgment as to whether a GOM administrative act led to the airline’s demise. The Court of Second Instance held hearings in May and June 2012. In November 2013, the Court of Second Instance rejected the appeal. Private investment disputes are normally handled in the courts or via private negotiation. Alternatively, disputes may be referred to the Hong Kong International Arbitration Center or the World Trade Center Macau Arbitration Center. The Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Cases between the Hong Kong Special Administrative Region and the Macau Special Administrative Region came into effect in August 2020, significantly accelerating the service of such judicial documents between the two regions.

International Commercial Arbitration and Foreign Courts

Macau has an arbitration law (Decree 55/98/M), which adopts the UN Commission on International Trade Law (UNCITRAL) model law for international commercial arbitration. The GOM accepts international arbitration of investment disputes between itself and investors. Local courts recognize and enforce foreign arbitral awards. The GOM in May 2020 enacted the New Arbitration Law, which unifies the laws governing domestic and international arbitration in Macau. This arbitration reform incorporated best international practices with effective dispute resolution techniques for investment disputes, including the introduction of emergency arbitrator mechanism, limitation on rights of appeal, procedure for courts assistance in taking of evidence, recognition and enforcement of interim measures, and publication of arbitral awards.

Macau established the World Trade Center Macau Arbitration Center in June 1998. The objective of the Center is to promote the resolution of disputes through arbitration and conciliation, providing the disputing parties with alternative resolutions other than judicial litigation.

Foreign judgments in civil and commercial matters may be enforced in Macau. The enforcement of foreign judgments is stipulated in Articles 1199 and 1200 of the Civil Procedure Code. A foreign court decision will be recognized and enforced in Macau if it qualifies as a final decision supported by authentic documentation and that its enforcement will not breach Macau’s public policy.

Commercial and bankruptcy laws are written under the Macau Commercial Code, the Civil Procedure Code, and the Penal Code. Bankruptcy proceedings can be invoked by an application from the bankrupt business, by petition of the creditor, or by the Public Prosecutor. There are four methods used to prevent the occurrence of bankruptcy: the creditors meeting, the audit of the company’s assets, the amicable settlement, and the creditor agreement. According to Articles 615-618 of the Civil Code and Article 351-353 of the Civil Procedure Code, a creditor who has a justified fear of losing the guarantee of his credits may request seizure of the assets of the debtor. Bankruptcy offenses are subject to criminal liability.

In October 2020, Macau Post and Telecommunications Bureau announced the establishment of a credit information system, allowing banks to inquire about the credit status of lenders when approving individual customer credit applications, while mandating those who want to borrow money from banks to apply for a personal credit report from the new system for the bank’s assessment. The new system is expected to enter service as soon as the second quarter of 2022.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $24,300 2020 $25,586 https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=MO 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2018 $398 2019 $2,530 BEA data available at https://apps.bea.gov/international/
factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2017 $17 BEA data available at https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2019 80% 2019 71.3% UNCTAD data available at

https://unctad.org/topic/investment/
world-investment-report
  

*Source for Host Country Data: Macau Statistics and Census Service 

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (through 2020)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 37,012 100% Total Outward 8,557 100%
China, P.R: Hong Kong 10,190 28% China, P.R: Mainland 7,480 87%
Cayman Island 8,720 24% China, P.R: Hong Kong 1,263 15%
China, P.R: Mainland 7,341 20% Vietnam 56 1%
British Virgin Islands 5,913 16%
United States 2,094 6%
“0” reflects amounts rounded to +/- USD 500,000.

 

Table 4: Sources of Portfolio Investment
Portfolio Investment Assets
Top Five Partners (Millions, current US Dollars)
Total Equity Securities Total Debt Securities
All Countries  

134,753

100% All Countries  

46,333

100% All Countries  

88,420

100%
China, P.R: Mainland  

51,181

 

38%

China, P.R: Mainland  

16,612

36% China, P.R: Mainland  

34,569

39%
China, P.R.: Hong Kong  

16,327

 

12%

China, P.R.: Hong Kong  

8,218

18% British Virgin Islands  

10,039

11%
 

United States

 

14,743

11% Cayman Islands  

6,178

13% United States  

8,965

10%
 

Cayman Islands

 

12,119

9% United States  

5,777

12%  

China, P.R.: Hong Kong

 

8,109

9%
British Virgin Islands  

10,051

7% Luxembourg  

2,964

6% Cayman Islands 5,941 7%

 

Nepal

1. Openness To, and Restrictions Upon, Foreign Investment

There is recognition within the GoN that foreign investment is necessary to boost economic growth to meet the GoN’s target of becoming a middle-income country by 2030. While the GoN’s stated attitude toward FDI is positive, this has yet to translate into meaningful practice.

The most significant foreign investment laws are the revised Foreign Investment and Technology Transfer Act (FITTA) of 2019, the Public-Private Partnership and Investment Act (PPIA) of 2019, the Foreign Exchange Regulation Act of 1962, the Immigration Rules of 1994, the Customs Act of 2007 (a revised act is under Parliamentary review), the Industrial Enterprise Act of 2016 (and its 2020 revision), the Special Economic Zone (SEZ) Act of 2016 (and its 2019 amendment), the Company Act (2006), the Electricity Act of 1992, the Privatization Act of 1994, and the Income Tax Act (2002).  Also important is the annual budget, which outlines customs, duties, export service charges, sales, airfreight and income taxes, and other excise taxes that affect foreign investment.

The FITTA attempted to create a friendlier environment for foreign investors.  It streamlined the process for inbound foreign investment by requiring approval of FDI within seven days of application.  Similarly, the FITTA streamlined the profit repatriation approval process, mandating decisions within 15 days.  The revised FITTA set up a Single Window Service Center, through which foreign investors can avail themselves of the full range of services provided by the various government entities involved in investment approvals, including the Ministry of Industry, Commerce, and Supplies (MOICS), the Labor and Immigration Departments, and the Central Bank.  The FITTA included a provision requiring the government to set a minimum threshold for foreign investment and publish it in the Nepal Gazette.  On May 23, 2019, citing that provision, the government raised the minimum foreign investment threshold ten-fold to NPR 50 million (USD415,000) from the existing NPR 5 million (USD41,500).  The new FITTA commits to providing “national treatment” to all foreign investors and that foreign companies will not be nationalized.  Under the FITTA, investments up to NPR 6 billion (USD52 million) come under the purview, including approval authority, of the MOICS Department of Industry (DOI), and anything above that amount falls under the authority of the Investment Board of Nepal (IBN).

Other relevant laws include the Industrial Enterprise Act, the SEZ Act, an updated Labor Act (2017), and a pending Intellectual Property Rights Act.  The Industrial Enterprise Act is intended to promote industrial growth in the private sector, includes a “no work, no pay” provision, and allows companies to take certain steps – such as buying land and establishing a line of credit – while environmental assessments and other regulatory requirements are being carried out.  In practice, U.S. and other foreign companies comment that corruption, bureaucracy, inefficient implementation of existing procedures and requirements, and a weak regulatory environment make investing in Nepal a tough proposition.

Another significant piece of legislation that could affect investment decisions in Nepal is the Customs Act (2007), which established invoice-based customs valuations and replaced many investment tax incentives with a lower, uniform rate.  In 2017, the Department of Customs started to use the Automated System for Customs Data (ASYCUDA) world software platform.  In addition, the Electricity Act includes special terms and conditions for investment in hydropower development and the Privatization Act of 1994 authorizes and defines the procedures for privatization of state-owned enterprises.

There is no public evidence of direct executive interference in the court system that could affect foreign investors.  However, in recent years there has been public and media criticism of the politicization of the judiciary, including appointments of judges to Appellate Courts and the Supreme Court allegedly based on their political affiliations.

The IBN, a high-level government body chaired by the Prime Minister, was formed in 2011 to promote economic development in Nepal.  In addition to approving large-scale investment projects, the IBN is also the GoN body charged with assessing and managing public-private partnership (PPP) projects.  It has the task of attracting large foreign investors to Nepal and was a key organizer of the last two Investment Summits in 2017 and 2019.  It is the primary point of contact for large investors (above USD50 million), especially those engaged in public infrastructure projects.

The Nepal Business Forum (http://www.nepalbusinessforum.org/) was formed in 2010 with the “aim of improving the business environment in Nepal through better interaction between the business community and government officials.”  The NBF does not meet according to a regularized schedule, and the Embassy is not aware of any formal mechanisms or platforms to enable on-going dialogue, aside from the IBN, DOI, and the NBF.

Foreign and domestic private entities have the right to establish and own business enterprises in Nepal and engage in various forms of remunerative activity.  The FITTA 2019 slightly increased the number of sectors open to foreign investment.  Outside of the restricted sectors listed below, foreign investment up to 100 percent ownership is permitted in most sectors.  The GoN announced the opening of FDI in the primary agricultural sector for exports in January 2021.  However, the matter is sub judice at the Supreme Court (as of March 2022), and so remains unimplemented.

During 2018 and 2019, the Market Monitoring Unit of the MOICS’s Department of Supply Management raided business establishments, seized records, closed business outlets, and brought charges against private businesses in various sectors, including retail, healthcare, and education, alleging that companies were charging prices that were too high.  Such raids are sporadic rather than a matter of sustained policy but contribute to creating an uncertain business environment.

The sectors excluded from foreign investment are listed in the annex of the FITTA 2019 and include:

  1. Primary agricultural sectors including animal husbandry, fisheries, beekeeping, oil-processing (from seeds or legumes), milk-based product processing; (Note:  The GoN is attempting to open this sector for FDI if 75 percent of the products are exported.  However, the matter is under review at the Supreme Court.)
  2. Small and cottage enterprises;
  3. Personal business services (haircutting, tailoring, driving, etc.);
  4. Arms and ammunition, bullets, gunpowder and explosives, nuclear, chemical and biological weapons, industries related to atomic energy and radioactive materials;
  5. Real estate (excluding construction industries), retail business, domestic courier services, catering services, money exchange and remittance services;
  6. Tourism-related services – trekking, mountaineering and travel agents, tourist guides, rural tourism including arranging homestays;
  7. Mass media (print, radio, television, and online news), feature films in national languages;
  8. Management, accounting, engineering, legal consultancy services, language, music, and computer training; and
  9. Any consultancy services in which foreign investment is above 51 percent.

Investment proposals are screened by the DOI or the IBN to ensure compliance with the FITTA and other relevant laws.  Historically, the lack of clear, objective criteria and timeframes for decisions have resulted in complaints from prospective investors.  While the GoN intended the FITTA to address these issues, the regulations enabling the implementation of the Act were only completed in January 2021, and anecdotal evidence suggests services to prospective investors through the One Window Service Center at the DOI are slowly improving.

The IBN website provides resources to prospective investors including the Nepal Investment Guide (http://www.ibn.gov.np/).  Similarly, the DOI maintains a website that should be helpful to investors (http://www.investnepal.gov.np).

U.S. investors are not disadvantaged or singled out relative to other foreign investors by any of the ownership or control mechanisms, sector restrictions, or investment screening mechanisms.  U.S. companies often note that they struggle to compete with firms from neighboring countries when it comes to cost, but this is not a factor resulting from any specific GoN policy.

There have been no recent investment policy reviews of Nepal.  The last one by the United Nations Conference on Trade and Development (UNCTAD) was conducted in 2003.  The World Trade Organization (WTO) conducted a trade policy review in 2019, available online at:  https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=((%20@Title=%20nepal)%20or%20(@CountryConcerned=%20nepal))%20and%20(%20(%20@Symbol=%20wt/tpr/g/*%20))&Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true# and https://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm#bycountry.  The International Finance Corporation (IFC) conducted a Country Private Sector Diagnostics, available at:  https://www.ifc.org/wps/wcm/connect/publications_ext_content/ifc_external_publication_site/publications_listing_page/creating+markets+in+nepal+country+private+sector+diagnostic.

In recent years, GoN officials have proclaimed Nepal “open for business” and explicitly welcomed foreign investment.  While the GoN likes to appear enthusiastic in its efforts to attract foreign investors, the reality has not yet matched the rhetoric.  Three laws directly affecting foreign investment (FITTA, PPP, and SEZ) were hurriedly revised and passed by Parliament but left little time for stakeholder consultations or transparency in the process.  Both foreign and domestic private sector representatives often state that the GoN has not done enough to improve the business environment.  While welcome provisions were included in the FITTA—for example, a streamlined approval process and single window service center—an assessment of the true effects of the reforms await full implementation.

After obtaining a letter of approval from DOI or IBN, Nepal’s Office of Company Registrar (OCR) maintains a website (http://ocr.gov.np/index.php) on which foreign companies can register.  OCR’s website also links to an information portal (http://www.theiguides.org/public-docs/guides/nepal), maintained by UNCTAD and the International Chamber of Commerce, with resources and information for potential investors interested in Nepal.  According to the portal, registering a company takes “between three days and a week with the law authorizing up to 15 days.”  Independent think tanks, however, have noted the online system does not eliminate corruption, and bureaucrats frequently request additional documentation that must be submitted in person, rather than online.  Users ranked the Nepal portion of the OCR business registration website a four out of ten, according to the UNCTAD supported Global Enterprise Registration website www.GER.co.

The Act Restricting Investment Abroad (ARIA) of 1964 prohibits outbound investment from Nepal.  Some enterprising Nepalis have found ways around the Act, but for most Nepali investors, outward investment is a practical impossibility.  The GoN is currently in the process of revising the Foreign Exchange Regulation Act, which is expected to annul the ARIA, paving the way to limited capital account convertibility.

2. Bilateral Investment Agreements and Taxation Treaties

Nepal has Bilateral Investment Agreements in force with four countries:  France (1985), Germany (1988), the United Kingdom (1993), and Finland (2011).  In addition, Nepal has Bilateral Investment Agreement signed (but not in force) with Mauritius (signed 1999).  Another one was signed with India in 2011 but was terminated in 2017.

Nepal has a free trade agreement with India, the Indo-Nepal Treaty of Trade, signed in 2002.  Nepal is a member of the South Asian Free Trade Area (SAFTA) along with Bangladesh, Bhutan, India, Pakistan, Sri Lanka, and the Maldives.

Nepal is also a member of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Free Trade Area, along with Bhutan, Myanmar, Sri Lanka, Bangladesh, India, and Thailand.

Nepal does not have a bilateral investment treaty or free trade agreement with the United States, but has a Trade and Investment Framework Agreement (TIFA). Nepal has “Double Tax Avoidance” treaties with China, India, Mauritius, Sri Lanka, Pakistan, South Korea, Thailand, Austria, Norway, and Qatar.  The United States Embassy in Nepal (Post) is not aware of any recent or upcoming changes to the taxation regime.  Nepal’s shift to a federalist structure, however, means that there will be new tax policies at the local and provincial levels.

How consistent Nepal’s tax regime is with international standards is questionable.  In 2019, a Malaysian company, Axiata (owner of NCell, the largest private telecom company in Nepal), was made to pay $450 million for alleged tax evasion over the 2016 transfer of NCell’s ownership from its previous owners, Swedish firm Telia Sonera.  The Supreme Court’s verdict on this case has set the precedent for placing buyers on the hook for the tax liabilities of the sellers.  Axiata has taken the matter to the International Center for Settlement of Investment Disputes (ICSID), which is still deliberating on the case.    More recently, Bottlers Nepal Ltd (BNL), a subsidiary of the Coca-Cola Company, is similarly embroiled in a tax evasion dispute with the GoN in relation to a 2014 offshore transfer of ownership.  Nepal’s Department of Revenue Investigation (DRI) has taken BNL to court under the Income Tax Act 2002 and the Revenue Leakage (Investigation and Control) Act 1996.  While the final verdict is pending from the ICSID (on Ncell) and BNL’s case has only just entered the local court, the current implication of both these cases is that Nepal’s tax regime—particularly the above two Acts—needs to be carefully considered by foreign investors when buying/selling companies in Nepal to understand their local tax liabilities.

3. Legal Regime

The GoN has many laws, policies, and regulations that look good on paper, but are often not fully and consistently enforced.  Frequent government changes and staff rotations within the civil service result in officials who are often unclear on applicable laws and policies or interpret them differently than their predecessors.  Many foreign investors note that Nepal’s regulatory system is based largely on personal relationships with government officials, rather than systematic and routine processes.  Legal, regulatory, and accounting systems are not transparent and are not consistent with international norms.  The World Bank gives Nepal a score of 1.75 (on a scale of one to five) on its “Global Indicators of Regulatory Governance” index https://rulemaking.worldbank.org/en/data/explorecountries/nepal, and notes that ministries in Nepal do not routinely create lists of “anticipated regulatory changes or proposals” and do not have the “legal obligation to publish the text of proposed regulations before their enactment.”

Historically, rule-making and regulatory authority resided almost exclusively with the central government in Kathmandu.  Nepal’s 2015 Constitution outlines a three-tiered federalist model.  Following elections in 2017, seven provincial governments and 753 local government units were established.  Foreign businesses can expect to continue to interact with bureaucrats at the central government level in the near term, as national regulations remain the most relevant for foreign businesses.  However, this could change over time as provincial governments become more established.

Traditionally, once acts are drafted and passed by Parliament, it has been incumbent upon the related government agencies and ministries to draft regulations to enforce the acts.  Regulations are passed by the cabinet and do not need parliamentary approval.  Nepal still lacks an established mechanism or system for the review of regulations based on scientific or data-driven assessments, or for conducting quantitative analyses for such purposes.  The World Bank notes that the GoN is not required by law to solicit comments on proposed regulations, nor do ministries or regulatory agencies report on the results of the consultation on proposed regulations.  Post is not aware of any informal regulatory processes that are managed by nongovernmental organizations or private sector associations.

Legal, regulatory, and accounting systems are neither fully transparent nor consistent with international norms.  Though auditing is mandatory, professional accounting standards are low, and practitioners may be poorly trained.  As a result, published financial reports can be unreliable, and investors often rely instead on businesses reputations unless companies voluntarily use international accounting standards.

Publicly listed companies in Nepal follow the 2013 Nepal Financial Reporting Standards (NFRSs), which were prepared on the basis of the International Financial Reporting Standards (IFRSs) 2012, developed by the IFRS Foundation and their standard-setting body, the International Accounting Standards Board.  Audited reports of publicly listed companies are usually made available.

Draft bills or regulations are sometimes made available for public comment, although there is no legal obligation to do so.  The government agency that drafts the bill is responsible for undertaking a public consultation process with key stakeholders by issuing federal notices for comments and recommendations, although it is unclear in practice how many government agencies actually do so.  Additionally, all parliamentarians are given copies of the draft bills to share with their constituencies.  This applies to all draft laws, regulations, and policies.  Parliamentary rules, however, require that draft amendments to bills be proposed only within 72 hours of a bill’s introduction, giving minimal time for lawmakers, constituents, or stakeholders to submit considered feedback.  In practice, post’s observation has been that there is no clear timeline for the process of creating and passing bills, including the time period provided for public or stakeholder consultation.

Generally, the government agency that drafted the bill, legislation, policy, or regulation posts the actual draft (in Nepali language) online.  Once approved, the Department of Printing, an office that is part of the Ministry of Communications and Information Technology, posts all acts online.  Regulatory actions and summaries of these actions are available at the Office of the Auditor General and the Ministry of Finance.  Both of these government agencies post periodic reports on the regulatory actions taken against agencies violating laws, rules, and regulations.  Such summaries and reports are available online in Nepali.

Individual ministries are responsible for enforcement of regulations under their purview.  The enforcement process is legally reviewable, making the agencies publicly accountable.  There are several government entities, including the Parliamentary Accounts Committee, the Office of the Auditor General, and the Commission for the Investigation of Abuse of Authority (CIAA) that oversee the government’s administrative and regulatory processes.  Post is not aware of any regulatory reform efforts.

Nepal’s budget and information on debt obligations are widely and easily accessible to the general public.  The annual budget is substantially complete and considered generally reliable.  Nepal’s supreme audit institution reviews the government’s accounts, and its reports are publicly available.

Nepal is one of eight members of the South Asian Association for Regional Cooperation (SAARC), an intergovernmental organization and geopolitical union of nations in South Asia including:  Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.  Under SAARC, Nepal is also a member of the South Asian Free Trade Area (SAFTA) which came into force on January 1, 2006 with the goal of creating a duty-free trade regime among SAARC member countries.  According to SAFTA rules, member countries were supposed to reduce formal tariff rates to zero by 2016.  However, tariff barriers remain in place for hundreds of “sensitive” goods produced by various SAARC member countries that do not qualify for duty-free status.

Nepal is also a member of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), an international organization of seven South Asian and Southeast Asian nations:  Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan, and Nepal.

Bangladesh, Bhutan, India, and Nepal – known collectively as BBIN – are working together to develop a platform for sub-regional cooperation in such areas as water resources management, power connectivity, transportation, and infrastructure development.  The four BBIN nations agreed on a motor vehicle agreement (MVA – both cargo and passengers) in 2015.  In early 2018, Bangladesh, India, and Nepal also agreed on operating procedures for the movement of passenger vehicles, and in early 2020, the same three countries met to draft a memorandum of understanding to implement the MVA, without obligation to Bhutan.

Nepal’s regulatory system generally relies on international norms and standards developed by the United Nations, World Bank, World Trade Organization (WTO), and other international organizations and regulatory agencies.

Nepal joined the WTO in March 2004.  According to its WTO accession commitments, the GoN agreed to provide notice of all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).  However, GoN officials are unable to confirm whether this procedure is followed consistently.

Nepal ratified the WTO’s Trade Facilitation Agreement (TFA) in January 2017.  As a least developed country (LDC), Nepal could benefit from additional technical assistance from WTO members through the TFA Facility.  A 2017 Asia Development Bank report noted, “Nepal has been making progress in undertaking trade facilitation reforms over the years, particularly those related to the customs.”  The WTO’s December 2018 policy review (https://www.wto.org/english/tratop_e/tpr_e/tp481_crc_e.htm) noted Nepal’s efforts to diversify its narrow production and export base and encouraged Nepal to pursue further economic reform, including through its National Trade Integration Strategy (https://www.oecd.org/aidfortrade/countryprofiles/dtis/Napal-DTIS-2016.pdf) as well as address its supply side constraints, most notably high transit and transportation costs.  According to the TFA Facility’s website (http://www.tfafacility.org), Nepal has submitted provisions for all three categories, a key step for implementing TFA Category A, B, and C requisites.

Nepal’s court system is based on common law and its legal system is generally categorized under civil and criminal offences and laws.  Contract law is codified.  In theory, contracts are automatically enforced, and a breach of contract can be challenged in a court of law.  In practice, enforcement of contracts is weak. Nepal’s contracts are guided by the Contract Act of 2000.  Nepal does not have a commercial code.  All civil courts are authorized to hear commercial complaints.  A ‘commercial bench’ has been established at the High Court, but judges who preside on this bench are the same judges dealing with civil and criminal cases as well.

The judicial system is independent of the executive branch.  Regulations or enforcement actions are appealable, and they are adjudicated in the national court system.  In general, the judicial process is procedurally competent, fair, and reliable.  In some isolated or high-profile cases, however, court judgments have come under criticism for alleged political interference favoring particular individuals and groups.  There remains widespread public perception that bribery and judicial conflicts of interest affect some judicial outcomes.

In March 2019, three laws directly affecting foreign investment (FITTA, PPP, and SEZ) were hurriedly revised and passed by Parliament ahead of the 2019 Investment Summit.  This left little time for effective stakeholder consultations and transparency.  While welcome provisions were included in the FITTA (a promised single window service center and a streamlined approval process, for example), the regulations to implement the reforms were only completed in January 2021 and observers remain skeptical given the GoN’s record of making lofty announcements without delivering on them in practice.  As drafted, even these pieces of reform legislation retain various institutional and procedural impediments to smooth businesses practices which will dissuade all but the most risk-tolerant investors.

The Competition Promotion and Market Protection Board, comprised of GoN officials from various ministries and chaired by the Minister of Industry, Commerce, and Supplies, is responsible for reviewing competition-related concerns.  Post is not aware of any competition cases that have involved foreign investors.  MOICS’ Department of Supplies Management has a mandate to crack down on cartels and protect consumers.  In the previous two years, it has played a more active role in cracking down on businesses—ranging from retailers to healthcare facilities to private schools—for alleged price-gouging.  However, private sector representatives have said that this department is interfering with the free market and is being used by businesses with political connections to target competitors, rather than as a mechanism to protect consumers.

Nepal’s private sector is dominated by cartels and syndicates—often under the banner of business associations – which are often successful in limiting competition from new market entrants in multiple sectors.  In 2018, the GoN issued new permits for transportation companies, and the Minister of Physical Infrastructure and Transport called the cartels “a curse to the nation.”  Subsequently, however, the GoN has taken few additional steps to crack down on cartels.

The Industrial Enterprise Act of 2016 states that “no industry shall be nationalized.”  To date, there have been no cases of nationalization in Nepal, nor are there any official policies that suggest expropriation should be a concern for prospective investors.  However, companies can be sealed or confiscated if they do not pay taxes in accordance with Nepali law, and bank accounts can be frozen if authorities have suspicions of money laundering or other financial crimes.  Nepal does not have a history of expropriations.  There have been no government actions or shifts in government policy that indicate expropriations will become more likely in the foreseeable future.

There is no single specific act in Nepal that exclusively covers bankruptcy.  The 2006 Insolvency Act provides guidelines for insolvency proceedings in Nepal and specifies the conditions under which such proceedings can occur.  Additionally, the General Code of 1963 covers bankruptcy-related issues.  Creditors, shareholders, or debenture holders can initiate insolvency proceedings against a company by filing a petition at the court.

If a company is solvent, its liquidation is covered by the Company Act of 2006.  If the company is insolvent and unable to pay its liabilities, or if its liabilities exceed its assets, then liquidation is covered by the Insolvency Act of 2006.  Under the Company Act, the order of claimant priority is as follows:  1) government revenue; 2) creditors; and 3) shareholders.  Under the Insolvency Act, the government is equal to all other unsecured creditors.  Monetary judgments are made in local currency.  Firms and entrepreneurs who have declared bankruptcy are blacklisted from receiving loans for 10 years.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) N/A N/A 2020 USD33.7 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 USD51.7 N/A https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2021 USD 0 2021 USD 0 Not permitted under Nepali law
Total inbound stock of FDI as % host GDP N/A 2020 5% https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: Nepal Rastra (central) Bank

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward USD1,682 100% Total Outward Amount 100%
India USD529 31% N/A
China, P.R.: Mainland USD262 16% N/A
West Indies (St. Kitts & Nevis) USD129 8% N/A
Ireland USD109 7% N/A
Singapore USD105 6% N/A
“0” reflects amounts rounded to +/- USD 500,000.

Nepalis are prohibited from investing abroad as per the Act Restricting Investment Abroad (ARIA), 1964.  Post has heard this Law might be abrogated soon, but as of April 2022, no outward investment is permitted from Nepal.

Qatar

1. Openness To, and Restrictions Upon, Foreign Investment

Over the past few years, the government of Qatar enacted reforms to incentivize and attract foreign direct investment (FDI). Recent FDI-friendly legislations include Law 1/2019 permitting full foreign ownership in most economic sectors, Law 16/2018 regulating foreign real estate investment and ownership, and Law 12/2020 regulating public-private partnerships. Implementing regulations for some of these laws is still pending. In 2019, the Ministry of Commerce and Industry set up the Investment Promotion Agency-Qatar to further attract inward FDI. Other FDI facilitating bodies include the Qatar Financial Centre, Qatar Science and Technology Park, and the Qatar Free Zones Authority, all of which offer full foreign ownership and repatriation of profits, tax incentives, and investment funds for small- and medium-sized enterprises.

The government’s economic spending plans are also expected to create additional opportunities for foreign investors. For 2022, the government has allocated $20 billion for new non-oil sector projects, including new residential land development and the improvement of public services. The government also plans to increase LNG production, its primary source of revenue, to 126 million metric tons by 2027, and Qatari officials expect significant investment opportunities for international companies in the upstream and downstream sectors.

The government extends preferential treatment to suppliers who use local content in their bids on government contracts. Participation in tenders with a value of five million Qatari riyals ($1.37 million) or less is limited to local contractors, suppliers, and merchants registered with the Qatar Chamber of Commerce and Industry. Higher-value tenders, in theory, do not require any local commercial registration; in practice, certain exceptions exist.

Qatar maintains an ongoing dialogue with the United States through both official and private sector tracks, including the annual U.S.-Qatar Strategic Dialogue and official trade missions. Qatari officials have repeatedly emphasized a desire to increase American investments in Qatar and Qatari investments in the United States.

Although Law 1/2019 on Regulating the Investment of Non-Qatari Capital in Economic Activity (replacing Law 13/2000) grants foreign investors the ability to invest in Qatar – either by partnering with a Qatari investor owning 51 percent or more of the enterprise or by applying to the Ministry of Commerce and Industry for up to 100 percent foreign ownership – not all sectors are open to foreign investment. Law 1/2019 limits foreign ownership to 49 percent in the sectors of banking, insurance, and commercial agencies, barring a special dispensation from the Cabinet. Some sectors, such as telecommunications, are monopolized by local state-owned enterprises and are closed off to domestic or foreign competition.

Law 16/2018 on Regulating Non-Qatari Ownership and Use of Properties allows foreign individuals, companies, and real estate developers freehold ownership of real estate but limits ownership to nine designated zones and ‎usufructuary rights up to 99 years in 16 other zones. Foreigners may also own villas within selected residential complexes and retail outlets in specific commercial complexes. Foreign real estate investors and owners are eligible for residency in Qatar for as long as they own their property. The Ministry of Justice created a Committee on Non-Qatari Ownership and Use of Real Estate in December 2018 to regulate non-Qatari real estate ownership and use.

The Invest in Qatar Center within the Ministry of Commerce and Industry is the entity responsible for vetting full foreign ownership applications. U.S. investors and companies are not disadvantaged by existing ownership or control mechanisms, sector restrictions, or investment screening mechanisms more than other foreign investors.

Qatar underwent a World Trade Organization (WTO) policy review in April 2021. The review may be viewed on the WTO website: https://www.wto.org/english/tratop_e/tpr_e/tp396_e.htm 

Recent reforms have further streamlined the commercial registration process. Local and foreign investors may apply for a commercial license through the Ministry of Commerce and Industry’s physical one-stop-shop or online through the Invest in Qatar Center’s portal. Per Law 1/2019, upon submitting a complete application, the Ministry will issue its decision within 15 days. Rejected applications can be resubmitted or appealed. Upon approval, registering a small-size limited liability company in Qatar is estimated to take eight to nine days. For more information on the application and required documentation, visit: https://invest.gov.qa 

Domestic and foreign companies may also opt to register in one of Qatar’s economic zones:

Qatar does not restrict domestic investors from investing abroad. According to the World Bank, Qatar’s outward foreign investment stock reached $2.7 billion in 2020. Sectors that accounted for most of Qatar’s outward FDI are finance and insurance, transportation, storage, information and communication, and mining and quarrying. Per the latest statistics, Qatari investment firms held investments in over 80 countries, the top destinations being the European Union, the Gulf Cooperation Council, and other Arab countries.

3. Legal Regime

Qatar has taken measures to protect competition and ensure a free and efficient economy. The World Trade Organization recognizes Qatar’s legal framework to be conducive to private investment and entrepreneurship and enabling the development of an independent judiciary system. In addition to the National Competition Protection and Anti-Monopoly Committee, regulatory authorities exist for most economic sectors and are mandated to monitor economic activity and ensure fair practices.

According to the World Bank’s Global Indicators of Regulatory Governance, Qatar lacks a transparent rulemaking mechanism. Government ministries and regulatory agencies do not share regulatory plans or publish draft laws for public consideration. An official public consultation process does not exist in Qatar. Relevant ministries develop Laws and regulations. The 45-member Shura Council (30 of which are publicly elected officials) must reach a consensus to pass draft legislation, which is then returned to the Cabinet for further review and to the Amir for final approval. The text of all legislation is published online and in local newspapers upon approval by the Amir. All Qatari laws are issued in Arabic and eventually translated to English. Qatar-based legal firms provide translations of Qatari legislation to their clients. Each approved law explicitly tasks one or more government entities with implementing and enforcing legislation. These entities are clearly defined in the text of each law. In some cases, the law also sets up regulatory and oversight committees consisting of representatives of concerned government entities to safeguard enforcement. Qatar’s official legal portal is http://www.almeezan.qa .

Qatar’s primary commercial regulator is the Ministry of Commerce and Industry. Commercial Companies’ Law 11/2015 requires that publicly traded companies submit financial statements to the Ministry in compliance with the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS). Publicly listed companies must also publish financial statements at least 15 days before annual general meetings in two local newspapers (in Arabic and English) and on their websites. All companies must prepare accounting records according to standards promulgated by the IAS Board.

Since joining the United Nations’ initiative on sustainable development (SSEI) in 2016, the Qatar Stock Exchange (QSE) has encouraged, but not required, publicly traded companies to report on environmental, social, and governance issues (ESG). In November 2021, the QSE launched an ESG Index listing the top 20 securities with the best ESG profile, indicating that ESG disclosures may soon become a requirement of all listed companies.

The Qatar Central Bank (QCB) is the primary financial regulator that oversees all financial institutions in Qatar, per Law 13/2012, which established a Financial Stability and Risk Control Committee to promote financial stability and enhance regulatory coordination, headed by the QCB Governor. According to Law 7/2005, the Qatar Financial Centre (QFC) Regulatory Authority is the independent regulator of the QFC firms and individuals conducting financial services in or from the QFC. Still, the QCB also oversees financial markets housed within QFC. QFC regulations are available at http://www.qfcra.com/en-us/legislation/ .

The government of Qatar is transparent about its public finances and debt obligations. QCB publishes quarterly banking data, including external government debt, government bonds, treasury bills, and Sukuk (Islamic bonds) at http://qcb.gov.qa/English/Publications/Pages/Publications.aspx 

Qatar is a member of the Gulf Cooperation Council (GCC) – a political and economic regional bloc. Laws based on GCC regulations must be approved through Qatar’s domestic legislative process and are reviewed by the Qatari Cabinet and the Shura Council before implementation. Qatar has been a member of the World Trade Organization (WTO) since 1996 and usually notifies its draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

Qatar’s legal system is based on civil and Islamic Sharia laws. The Constitution takes precedence over all laws, followed by legislation, decrees, and ministerial resolutions. The Supreme Judicial Council appoints all judges under Law 10/2003, oversees Qatari courts, and functions independently from the executive branch of the government, per the Constitution. Qatari courts adjudicate civil and commercial disputes per civil and Sharia laws. International agreements have equal status with Qatari laws; the Constitution ensures that international pacts, treaties, and agreements to which Qatar is party are respected. Contract enforcement is governed by the Civil Code Law 22/2004.

Law 21/2021 promogulated the establishment of an Investment and Commerce Court to oversee all commercial lawsuits and disputes. Pending the establishment of the new court, domestic and commercial disputes continue to be settled in civil courts. Decisions made in civil courts and the new Investment and Commerce Court can be appealed before the Court of Appeals or later the Court of Cassation. Law 20/2021 on Mediation in the Settlement of Civil and Commercial Disputes is applied when parties agree to mediate and settle commercial disputes.

Companies registered with the Ministry of Commerce and Industry are subject to Qatari courts and laws, primarily the Commercial Companies Law 11/2015. Meanwhile, companies set up through Qatar Financial Center (QFC) are regulated by commercial laws based on English Common Law and the courts of the QFC Regulatory Authority. The QFC legal regime is separate from the Qatari legal system—except for criminal law—and is only applicable to companies licensed by the QFC. Similarly, companies registered within the Qatar Free Zones Authority are governed by specialized regulations.

Law 1/2019 on Regulating the Investment of Non-Qatari Capital in Economic Activity and Law 16/2018 on Regulating Non-Qatari Ownership and Use of Properties aim to encourage greater foreign investment in the economy by authorizing, incentivizing, and protecting foreign ownership. The MOCI’s Invest in Qatar Center is Qatar’s main investment registration body. It gives preference to investments that add value to the local economy and align with the country’s national development plans. It has a physical “one-stop-shop” and an online portal. For more information on investment opportunities, commercial registration application, and required documentation, visit https://invest.gov.qa .

Different laws and regulations govern foreign direct investment at the Qatar Financial Centre ( http://www.qfc.qa/ ), the Qatar Free Zones Authority (https://qfz.gov.qa/), the Qatar Science and Technology Park ( https://qstp.org.qa/ ), and Manateq ( https://www.manateq.qa/ ).

Specific sectors are not open for domestic or foreign competition, such as public transportation and fuel distribution and marketing. In such sectors, semi-public companies maintain a predominant role. Law 19/2006 for the Protection of Competition and Prevention of Monopolistic Practice established the Competition Protection and Anti-Monopoly Committee to receive complaints about anti-competition violations. The law protects against monopolistic behavior by entities outside the state if deemed to impact the Qatari market. The law also allows state institutions and government-owned companies absolute or predominant roles in some sectors.

Qatari laws permit international law firms with at least 15 years of continuous experience in their countries of origin to operate in Qatar; however, they can only be licensed if Qatari authorities deem their fields of specialization useful to Qatar. Cabinet Decision Number 57/2010 stipulates that the Doha office of an international law firm can practice in Qatar only if its main office in the country of origin remains open.

Under current legislation (Law 1/2019 and Law 16/2018), the government protects foreign investment and property from direct or indirect expropriation, unless for public benefit, in a non-discriminatory manner, and after providing adequate compensation. Law 13/1988 covers the rules of expropriation for public benefit. The same procedures are applied to the expropriated property of Qatari citizens. Expropriation is unlikely to occur in the investment zones where foreigners may purchase or obtain rights to property. However, the law does not restrict the expropriation power in these areas. There were two Cabinet-approved expropriation decisions in 2021 and one decision in 2020.

Two concurrent bankruptcy regimes exist in Qatar. The first is the local regime, set out in Commercial Law 27/2006 (Articles 606-846). The bankruptcy of a Qatari citizen or a Qatari-owned company is rarely announced. The law aims to protect creditors from a bankrupted debtor whose assets are insufficient to meet the amount of the debts. The government sometimes plays the role of the guarantor to prop up domestic businesses and safeguard creditors’ rights. Bankruptcy is punishable by imprisonment, but the length of the prison sentence depends on violations of other penal codes, such as concealment or destruction of company records, embezzlement, or knowingly contributing to insolvency. The second bankruptcy regime is encoded in QFC’s Insolvency Regulations of 2005 and applies to corporate bodies and branches registered within the QFC. Some firms offer full dissolution bankruptcy services to QFC-registered companies.

The Qatar Central Bank (QCB) established the Qatar Credit Bureau in 2010 to promote credit growth in Qatar. The Credit Bureau provides QCB and the banking sector with a centralized credit database to inform economic and financial policies and support the implementation of risk management techniques as outlined in the Basel II Accord.

Saint Lucia

1. Openness To, and Restrictions Upon, Foreign Investment

The Government of Saint Lucia strongly encourages foreign direct investment (FDI).  Invest Saint Lucia has introduced several investment incentives for businesses that consider locating in Saint Lucia, encouraging both domestic and foreign private investment.  Invest Saint Lucia is managed by a Chief Executive Director and is overseen by a board of directors appointed by the government under the Office of the Prime Minister and Minister of Commerce, International Trade, Investment, Enterprise Development and Consumer Affairs. The state-run agency Invest Saint Lucia provides “one-stop shop” facilitation services to investors, helping to guide them through the various stages of the investment process.  It assesses investment proposals for viability and in accordance with the laws of Saint Lucia and provides investment promotion services.

Applicable government agencies, rather than Invest Saint Lucia, grant investment concessions. Government policies provide liberal tax holidays, a waiver of import duty on imported plant machinery and equipment and imported raw and packaging materials, and export allowance or tax relief on export earnings.  Various laws provide fiscal incentives to encourage establishing and expanding foreign and domestic investment.

The Saint Lucian government encourages investment in all sectors, but targeted sectors include tourism, smart manufacturing and infrastructure, information and communication technologies, alternative energy, education, and business/knowledge processing operations.

Local laws do not place any limits on the amount of foreign ownership or control in the establishment of a business in Saint Lucia.  The government allows 100 percent foreign ownership of companies in any sector.  Currently, there are no restrictions on foreigners investing in military or security-related businesses or natural resources.  Trade licenses and other approvals/licenses may be required before establishment.

Invest Saint Lucia evaluates all FDI proposals and provides intelligence, business facilitation, and investment promotion to establish and expand profitable business enterprises in Saint Lucia.  Invest Saint Lucia also advises the government on issues that are important to the private sector and potential investors and advocates for an improved business climate, growth in investment opportunities, and improvements in the international competitiveness of the local economy.  It focuses on building and promoting Saint Lucia as an ideal location for investors, seeking and generating new investment in strategic sectors, facilitating domestic and foreign direct investment as a one stop shop for investors, and identifying major issues and measures geared towards assisting the government in the ongoing development of a National Investment Policy.

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

The OECS, of which Saint Lucia is a member, has not conducted a World Trade Organization (WTO) trade policy review since 2014. There have also not been any investment policy reviews by civil society organizations in the past five years.

All potential investors applying for government incentives must submit their proposals for review by Invest Saint Lucia to ensure the projects are consistent with the national interest and provide economic benefits to the country.  Invest Saint Lucia offers an online resource that is useful for navigating the laws, rules, procedures, and registration requirements for foreign investors.  It is available at  http://www.investstlucia.com/ .

The Registry of Companies and Intellectual Property office maintains an e-filing portal for most of its services, including company registration.  Relevant officials can review applications submitted electronically.  Applicants, however, must pay the registration fee in-person at the Registry office.  The Registry of Companies and Intellectual Property office can only accept payment in the form of cash and checks.  Personal checks are not accepted.  It is advisable to consult a local attorney prior to starting the process.  Further information is available at  http://www.rocip.gov.lc .

The general practice for starting a business is to retain an attorney to prepare all incorporation documents.  A business must register with the Registry of Companies and Intellectual Property Office, the Inland Revenue Authority, and the National Insurance Corporation.  The Government of Saint Lucia continues to support the growth of women-led businesses.  The government seeks to support equitable treatment of women in the private sector through non-discriminatory processes for business registration, awarding of fiscal incentives, and assessing investments.

The Government of Saint Lucia is committed to the full participation of people with disabilities in the society and the economy.  It actively engages with people with disabilities in society to ensure the equal participation of people with disabilities in formal and informal sectors of the economy.

The Government of Saint Lucia prioritizes investment retention as a key component of its overall economic strategy.  While the Government of Saint Lucia is encouraging more domestic savings, it continues to require significant foreign investment to fill the investment gap.

Local laws do not place ay restrictions on domestic investors seeking to do business abroad.  The government actively encourages local companies in Saint Lucia 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.

2. Bilateral Investment Agreements and Taxation Treaties

Saint Lucia does not have a bilateral investment treaty with the United States.  Saint Lucia has bilateral investment treaties with the United Kingdom, Germany, and the Caribbean Community (CARICOM).  Saint Lucia is also party to the following:

Saint Lucia has signed taxation agreements with other CARICOM countries.  There is no taxation treaty with the United States, but there is a bilateral Tax Information Agreement.

3. Legal Regime

The legal framework in Saint Lucia seeks to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety.  The Ministry of Commerce, International Trade, Investment, Enterprise Development, and Consumer Affairs in the Office of the Prime Minister and Invest Saint Lucia provide oversight on the transparency of the system as it relates to investment.  The government offers a range of incentives for foreign investors.  The Invest Saint Lucia Act addresses government policy for attracting investment.  The Trade License Act, Aliens Licensing Act, Special Development Areas Act, Income Tax Act, Free Zones Act, Tourism Incentives Act, Investment and Stimulus Act, and Fiscal Incentives Act also impact foreign investment.  The government announced plans to update these pieces of legislation to ensure that Saint Lucia remains compliant with international tax and exchange of information requirements.

Rulemaking and regulatory authority lie with the bicameral parliament.  The parliament consists of a lower house, which has 17 members elected for five-year terms in single-seat constituencies, and a Senate with 11 appointed members.

Relevant laws govern all regulations relating to foreign investment in Saint Lucia.  These laws are developed in the respective ministries and drafted by the Office of the Attorney General.  FDI is covered by the enacting legislation for Invest Saint Lucia, the citizenship by investment program, and some sector-specific laws such as the Fiscal Incentives Act or tourism-related laws.  Saint Lucia’s laws are available online at  http://www.govt.lc .

Although some draft bills are not subject to public consultation, the government often solicits input from various stakeholder groups and via town hall meetings when formulating new legislation.  The government also uses public awareness efforts such as television and radio call-in programs to inform and shape public opinion.  The government publishes copies of proposed laws and regulations in the Official Gazette before they are presented in the House of Assembly.  Although Saint Lucia does not have legislation guaranteeing access to information or freedom of expression, access to information is generally available in practice.  The government maintains an information service website on which it posts information such as directories of officials and a summary of laws and press releases.  The government budget and an audit of that budget are available on the website.  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 in Saint Lucia.  The most recent Caribbean Financial Action Task Force (CFATF) Mutual Evaluation assessment found Saint Lucia to be largely compliant.  The ECCB is the supervisory authority over financial institutions registered under the Banking Act of 2015.

The Office of the Parliamentary Commissioner or Ombudsman is a constitutional entity created to guard against abuses of power by government officers in the performance of their duties.  The Office of the Parliamentary Commissioner is independent.  The Parliamentary Commissioner investigates complaints relating to actions or omissions by any government official or government body where such actions or omissions cause an injustice or harm a member of the public.

In developing regulations, respective ministries advise the Ministry of Home Affairs, Justice, and National Security regarding necessary elements and parameters of proposed legislation.  The Ministry of Home Affairs, Justice, and National Security subsequently drafts legislation, ensuring compatibility with the nation’s domestic and international legal commitments.  Invest Saint Lucia has the main responsibility for investment supervision, whereas the Ministry of Finance monitors investments to collect information for national statistics and reporting purposes.  Saint Lucia’s membership in regional organizations, particularly the OECS and its Economic Union, commits the state to ensure the fulfillment of its various treaty obligations, although there are some minor differences in implementation from country to country.  The enforcement mechanisms of these regulations include financial penalties and other sanctions.

As a member of the OECS and the ECCU, Saint Lucia subscribes to a set of principles and policies outlined in the Revised Treaty of Basseterre.  Each participating member state is expected to coordinate and adopt, where possible, common national policies, with the objective of progressive harmonization of relevant policies and systems across the region.  Saint Lucia is obligated to implement regionally developed regulations, such as legislation passed under OECS authority, unless it seeks specific concessions not to implement such regulations.

The Saint Lucia Bureau of Standards is a statutory body established under the Standards Act.  It establishes, maintains, and promotes standards for improving industrial development and efficiency, promoting the health and safety of consumers, and protecting the environment, food products, quality of life, and the facilitation of trade.  It also conducts international standards consultations and training.  As a signatory to the WTO Agreement on the Technical Barriers to Trade, Saint Lucia is obligated to harmonize all national standards to international norms to avoid creating technical barriers to trade.  Saint Lucia is working to improve customs efficiency, modernize customs operations, and address inefficiencies in the clearance of goods.

Saint Lucia ratified the WTO Trade Facilitation Agreement (TFA) in December 2015.  Ratification of the Agreement is an important signal to investors of the country’s commitment to improving its business environment for trade.  The TFA aims to improve the speed and efficiency of border procedures, facilitate reductions in trade costs, and enhance participation in the global value chain.  Saint Lucia has already implemented several TFA requirements.

Saint Lucia bases its legal system on the British common law system, but its civil code and property law are influenced by French law.  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 matters and makes determinations on the interpretation of the constitution. Parties may appeal first to the Eastern Caribbean Supreme Court.  The final court of appeal is the Judicial Committee of the Privy Council of the United Kingdom.

The Caribbean Court of Justice (CCJ) is the regional judicial tribunal, established in 2001 by the Agreement Establishing the CARICOM Single Market and Economy.  The CCJ has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas.  In its appellate jurisdiction, the CCJ considers and determines appeals from the CARICOM member states that are parties to the Agreement Establishing the CCJ.  Currently, Saint Lucia is subject only to the original jurisdiction of the CCJ.

The United States and Saint Lucia are both parties 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.

The judicial system remains relatively independent of the executive branch of government and is free of political interference in judicial matters.

Invest Saint Lucia’s FDI policy is to actively pursue FDI in priority sectors and advise the government on the formation and implementation of policies and programs to attract sustainable investment.  Invest Saint Lucia reviews all proposals for investment concessions and incentives to ensure the projects are consistent with the national interest and provide economic benefits to the country.

Invest Saint Lucia provides “one-stop shop” facilitation services to investors to guide them through the various stages of the investment process.  Invest Saint Lucia offers a website that is useful to navigate the laws, rules, procedures, and registration requirements for foreign investors:  http://www.investstlucia.com/ .

Under Saint Lucia’s CBI program, foreign individuals may obtain citizenship in accordance with the Citizenship by Investment Act of 2015, which grants the right to citizenship by investment.  Program applicants are required to submit to a due diligence process before citizenship can be granted.  The minimum investment for a single applicant to qualify is a $100,000 contribution to the National Economic Fund.  A $190,000 contribution covers a family of four made up of the principal applicant, spouse, and up to two dependents.  Alternatively, a real estate purchase valued at $300,000 or more will also qualify.  There are also provisions for enterprise investment in approved projects and a government bond option.  In response to the Covid-19 pandemic, the unit also created a special Covid-19 Relief Bond with a minimum investment of $250,000.  This bond option is available until the end of 2022.  More information on the citizenship by investment program is available at  https://www.cipsaintlucia.com .

Chapter 8 of the Revised Treaty of Chaguaramas outlines the competition policy applicable to CARICOM member states.  Member states are required to establish and maintain a national competition authority. CARICOM established a Caribbean Competition Commission to apply rules of competition regarding anti-competitive cross-border business conduct.  CARICOM competition policy addresses anti-competitive business conduct such as agreements 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 CARICOM, and actions by which an enterprise abuses its dominant position within CARICOM. Saint Lucia does not yet have legislation regulating competition. The OECS agreed to establish a regional competition body to handle competition matters within its single market.

Under the Land Acquisition Act, the government can acquire land for a public purpose.  The government must serve a notice of acquisition to the person from whom the land is acquired.  Saint Lucia employs a system of eminent domain to pay compensation in such cases.  There were no reports that the government discriminated against U.S. investments, companies, or landholdings.  There are no laws forcing local ownership in specified sectors.

There is one case of expropriation involving an American citizen-owned property. An American citizen purchased 32 acres of land in Saint Lucia in 1970. The government expropriated the land in 1985 by an act of law. The claimant has been seeking redress and those efforts have been unsuccessful to date. The government denied the claimant’s request without explanation in 2014. The government has been largely unresponsive to repeated attempts by the claimant to appeal the decision. The government also claims to have lost property records that the claimant says support their ownership claim. The U.S. Embassy in Bridgetown continues to advocate with the government to ensure the claimant is allowed to fully exercise their due process rights.

Saint Lucia has a limited bankruptcy framework that grants certain rights to debtors and creditors. The act was updated in 2020.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) N/A N/A 2019 2119 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2019 433 BEA data available at
https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2019 11 BEA data available at
https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP N/A N/A 2020 65.7% UNCTAD data available at
https://unctad.org/topic/investment/world-investment-report 

* Source for Host Country Data: Eastern Caribbean Central Bank –  https://www.eccb-centralbank.org/statistics/gdp-datas/comparative-report/1 

Table 3: Sources and Destination of FDI
Data not available; Saint Lucia does not appear in the IMF’s Coordinated Direct Investment Survey (CDIS).

Table 4: Sources of Portfolio Investment
Data not available; Saint Lucia does not appear in the IMF Coordinated Portfolio Investment Survey (CPIS).

Saint Vincent and the Grenadines

1. Openness To, and Restrictions Upon, Foreign Investment

The government of St. Vincent and the Grenadines, through Invest SVG, strongly encourages FDI, particularly in industries that create jobs and earn foreign currency.  The government is open to all investment, but is currently prioritizing investment in niche markets, particularly tourism, international financial services, agricultural processing, light manufacturing, renewable energy, scientific and medical research, creative industries, and information and communication technologies.

Invest SVG’s FDI policy is designed to attract investment into priority sectors.  It advises the government on the formation and implementation of policies and programs that attract and facilitate investment.  The government offers special incentive packages for foreign investments in the hotel industry and light manufacturing.  The government offers other incentive packages on an ad hoc basis.

There are no limits on foreign control in St. Vincent and the Grenadines, nor are there requirements for local investment or ownership in locally registered companies, although non-nationals must apply for a license from the Prime Minister’s Office to acquire more than 50 percent of a company.  An attorney must submit the application and Cabinet must approve it.  Companies holding at least five acres of land may restrict or prohibit the issue or transfer of their shares or debentures to non-nationals.

The government has not officially closed any industries to private investment, although some activities such as telecommunications, utilities, broadcasting, banking, and insurance require a government license.

The OECS, of which Saint Vincent and the Grenadines is a member, has not conducted a World Trade Organization (WTO) trade policy review since 2014. There have also not been any investment policy reviews by civil society organizations in the past five years.

Invest SVG facilitates domestic and foreign direct investment in priority sectors and advises the government on the formation and implementation of policies and programs to attract investment.  Invest SVG provides business support services and market intelligence to all investors.  It also reviews all investment projects applying for government incentives to ensure they conform to national interests and provide economic benefits to the country.  Its website is  http://www.investsvg.com .  In addition to its website, the country offers an online guide that is useful for navigating the laws, rules, procedures, and registration requirements for foreign investors.  The guide is available at  http://theiguides.org/public-docs/guides/saintvincentandthegrenadines .

The general practice is to retain an attorney to prepare all incorporation documents.  Local laws dictate that a business must register with the Commerce and Intellectual Property Office (CIPO), the Ministry of Trade, the Inland Revenue Department, and the National Insurance Service.  The CIPO has an online information portal that describes the steps to register a business in St. Vincent and the Grenadines.  There is no online registration process, but the required forms are available online.  These must be printed and submitted to the CIPO.  More information is available at  http://www.cipo.gov.vc .

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

2. Bilateral Investment Agreements and Taxation Treaties

St. Vincent and the Grenadines has not signed a bilateral investment treaty with the United States.  The country, however, has bilateral tax treaties with the United States, Canada, the UK, Denmark, Norway, Sweden, and Switzerland.   In 1989, Germany and St. Vincent and the Grenadines signed a treaty for the Encouragement and Reciprocal Protection of Investment.  In 2018, St. Vincent and the Grenadines and the UAE concluded an Agreement on the Avoidance of Double Taxation on Income and an Agreement for the Promotion and Protection of Investments.  St. Vincent and the Grenadines 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 St. Vincent and the Grenadines have preferential access to the entire CARICOM market.  The Revised Treaty of Chaguaramas (RTC) established the CSME, which permits the free movement of goods, capital, and labor among 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 established the OECS.  The OECS consists of seven full members (Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines), and three associate members (Anguilla, Martinique, and the British Virgin Islands).  Guadeloupe signed an accession agreement to the OECS in 2019.  The purpose of the Treaty is to promote harmonization among member states in foreign policy, defense and security, and economic affairs.  The six independent countries and Montserrat 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 goods, services, and people move without hindrance.

CARIFORUM-EU 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 EPA promotes trade-related developments in areas such as competition, intellectual property, public procurement, the environment, and the protection of personal data.

CARIFORUM-UK Economic Partnership Agreement

The UK and the CARIFORUM states signed an EPA in 2019, committing to trade continuity after Britain’s departure from the European Union.  The CARIFORUM-UK EPA eliminates all tariffs on all goods imported from CARIFORUM states into the UK, while those Caribbean states will continue to gradually cut import tariffs on most of the region’s imports from the UK.

Caribbean Basin Initiative

The Caribbean Basin Initiative facilitates the economic development and export diversification of the Caribbean Basin economies.  It promotes economic development through private sector initiatives in Central America and the Caribbean by expanding foreign and domestic investment in non-traditional sectors, diversifying country economies, and expanding their imports.  The Caribbean Basin Initiative 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 St. Vincent and the Grenadines into the United States.

Caribbean/Canada Trade Agreement (CARIBCAN)

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 most products originating in Commonwealth Caribbean countries.

3. Legal Regime

St. Vincent and the Grenadines uses transparent policies and laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety.  Accounting, legal, and regulatory practices are generally transparent and consistent with international norms.  The International Financial Accounting Standards, which stem from the General Accepted Accounting Principles, govern the profession in St. Vincent and the Grenadines.

Rulemaking and regulatory authority rests in the unicameral House of Assembly, which has fifteen elected members and six appointed senators who sit for a five-year term.  The Public Accounts Committee and Director of Audits ensure the government follows administrative processes.

National laws govern all regulations relating to foreign investment.  Ministries develop these laws, and the Ministry of Legal Affairs drafts them.  Laws pertaining to Invest SVG also govern FDI.  Invest SVG has the main responsibility for investment supervision, while the Ministry of Economic Planning, Sustainable Development, Industry, Information, and Labor tracks investments to collect information for national statistics and reporting purposes.

The government publishes most draft bills in local newspapers for public comment.  In addition, the government circulates bills at stakeholder meetings.  Some bills and laws are published on the government website at  www.gov.vc .  The government sometimes establishes a select committee to suggest amendments to specific draft bills.  In some instances, these mechanisms may also apply to investment laws and regulations.  There is no obligation for the government to consider proposed amendments prior to implementation.  The government discloses information on public finances and debt obligations.  The annual budget address can be found online.

The country’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.  For example, the Banking Act, which establishes a single banking space and the harmonization of banking regulations in the Economic Union, is uniformly in force in the eight member territories of the ECCU, although there are some minor differences in implementation from country to country.  The most recent Caribbean Financial Action Task Force (CFATF) Mutual Evaluation assessment found St. Vincent and the Grenadines to be largely compliant.  The ECCB is the supervisory authority over financial institutions registered under the Banking Act of 2015.

Local laws dictate that an external company must be registered with the Commercial Registry in St. Vincent and the Grenadines if it wishes to operate in the country.  Companies using or manufacturing chemicals must first obtain approval of their environmental and health practices from the St. Vincent and the Grenadines National Standards Institution and the Environmental Division of the Ministry of Health.

As a member of the OECS and the ECCU, St. Vincent and the Grenadines subscribes to a set of 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, the country must implement regionally developed regulations, such as legislation passed under the OECS Authority, unless it seeks specific concessions not to do so.

The country’s Bureau of Standards is a statutory body which prepares and promulgates standards in relation to goods, services, processes, and practices.  As a signatory to the WTO Agreement on the Technical Barriers to Trade, St. Vincent and the Grenadines must harmonize all national standards to international norms to avoid creating technical barriers to trade.

St. Vincent and the Grenadines ratified the WTO Trade Facilitation Agreement (TFA) in 2017 and subsequently notified its Category A measures.  Included in the Trade Facilitation Agreement are measures to improve risk management techniques and a post-clearance audit system to eliminate delays and congestion at the port.  While St. Vincent and the Grenadines has implemented some TFA requirements, it has missed two implementation deadlines.  A full list of measures undertaken pursuant to the TFA is available at  https://tfadatabase.org/members/saint-vincent-and-the-grenadines .

The country’s legal system is based on the British common law system.  The constitution guarantees the independence of the judiciary.  The judicial system consists of lower courts, called magistrates’ courts, and a family court.  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 constitutional matters.  Parties may appeal first to the Eastern Caribbean Supreme Court, a court that hears appeals from all OECS members.  The final court of appeal is the Judicial Committee of the UK Privy Council.

The country has a strong judicial system that upholds the sanctity of contracts and prevents unwarranted discrimination towards foreign investors.  The government treats foreign investors and local investors equally with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.  The police and court systems are generally unbiased in commercial matters.

The Caribbean Court of Justice (CCJ) is the regional judicial tribunal.  The CCJ has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas.  St. Vincent and the Grenadines is only subject to the original jurisdiction of the CCJ.

The United States and St. Vincent and the Grenadines are both parties 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.

Invest SVG provides guidance on the relevant laws, rules, procedures, and reporting requirements for investors.  Invest SVG has the authority to screen and review FDI projects.  The review process is transparent and contingent on the size of capital investment and the project’s projected economic impact.  The investor must complete a series of steps to obtain a business license.  These steps are listed at  http://www.investsvg.com .  All potential investors seeking an incentive package must submit their proposals for review by Invest SVG to ensure the project is consistent with the nation’s laws and interests and would provide economic benefits to the country.

Local enterprises generally welcome joint ventures with foreign investors to access technology, expertise, markets, and capital.

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 to apply rules of competition regarding anti-competitive cross-border business conduct.  CARICOM competition policy addresses anti-competitive business conduct such as agreements 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 CARICOM, and actions by which an enterprise abuses its dominant position within CARICOM.  There is no legislation to regulate competition in St. Vincent and the Grenadines.

Under the Land Acquisition Act, the government may acquire land for a public purpose.  The government must serve a notice of acquisition to the person from whom the land is acquired.  A Board of Assessment determines compensation and files its award in the High Court.  The value of the land is based on the amount for which the land would be sold on the open market by a willing seller.  Under the Alien’s (Land-Holding Regulation) Act, the government can hold properties forfeit without compensation if the terms of investment are not met.  The U.S. Embassy is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in St. Vincent and the Grenadines.

The Bankruptcy and Insolvency Act governs the country’s bankruptcy framework and grants certain rights to debtors and creditors.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2019 $823 2019 825 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 7 BEA data available at
https://apps.bea.gov/international/factsheet/ 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 1 BEA data available at
https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP N/A N/A 2019 199.5 UNCTAD data available at
https://unctad.org/topic/investment/world-investment-report 

* Source for Host Country Data: Eastern Caribbean Central Bank https://eccb-centralbank.org/statistics/dashboard-datas/ 

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Saudi Arabia

1. Openness To, and Restrictions Upon, Foreign Investment

The SAG seeks to attract $3 trillion in foreign investment to promote economic development, transfer foreign expertise and technology to Saudi Arabia, create jobs for Saudi nationals, and increase Saudi Arabia’s non-oil exports.

In October 2021, Saudi Arabia announced its National Investment Strategy, which will help it deliver on its Vision 2030 goals. The National Investment Strategy outlines investment plans for sectors including manufacturing, renewable energy, transport and logistics, tourism, digital infrastructure, and health care. The strategy aims to grow the Saudi economy by raising private sector contribution to 65 percent of total GDP and increasing foreign direct investment to 5.7 percent of total GDP. The National Investment Strategy aims to raise net foreign direct investment flows to $103 billion annually and increase domestic investment to about $450 billion annually by 2030.

The Ministry of Investment of Saudi Arabia (MISA), formerly the Saudi Arabian General Investment Authority (SAGIA), governs and regulates foreign investment in the Kingdom, issues licenses to prospective investors, and works to foster and promote investment opportunities across the economy. Established originally as a regulatory agency, MISA has increasingly shifted its focus to investment promotion and assistance, offering potential investors detailed guidance and a catalogue of current investment opportunities on its website https://investsaudi.sa/en/sectors-opportunities /.

The SAG has adopted reforms to improve the Kingdom’s attractiveness as an investment destination. It has reduced the license approval period from days to hours, decreased required customs documents, reduced the customs clearance period from weeks to hours, and increased the investor license period to five years. It has launched e-licenses to provide a more efficient and user-friendly process and an online “instant” license issuance or renewal service to foreign investors that are listed on a local or international stock market and meet certain conditions. The SAG allows 100 percent foreign ownership in most sectors.

Saudi Arabia’s burgeoning entertainment sector provides opportunities for foreign investment. In a country where most public entertainment was once forbidden, the SAG now regularly sponsors and promotes entertainment programming, including live concerts, dance exhibitions, sports competitions, and other public performances. The audiences for many of these events are now gender-mixed, representing a larger consumer base. In addition to reopening cinemas in 2018, the SAG has hosted Formula One and Formula E races, professional golf and tennis tournaments, and a world heavyweight boxing title match. Saudi Arabia’s General Entertainment Authority launched the Saudi Seasons initiative in 2019, which hosts tourism and cultural events in each of the country’s 11 regions. The second iteration of Saudi Seasons began in October 2021 after a pause due to COVID. Riyadh Season attracted more than 15 million people and more than 1,200 companies participated, providing 150,000 job opportunities. The program included more than 7,500 entertainment events, including Arab and international concerts, international exhibitions, theatrical shows, and a freestyle wrestling tournament. The initiative also featured 200 restaurants and 70 coffee shops at 14 entertainment zones across Riyadh.

The SAG is also seeking foreign investment for its “economic cities” and “giga-projects” that are at various stages of construction. These projects are large-scale, self-contained developments in different regions focusing on particular industries, such as technology, energy, logistics, tourism, entertainment, and infrastructure. These projects include:

  • NEOM: a $500 billion long-term development project to build a futuristic “independent economic zone” and city in northwest Saudi Arabia. This initiative aims to create 380,000 jobs and contribute $48 billon to domestic GDP by 2030. This project includes:
    • The Line: a 100 mile-long, urban smart city that will have no cars, no streets, and no carbon emissions.
    • Oxagon: NEOM’s economic and industrial hub focusing on innovation, research, and technology. Built on the coast, it will include the world’s largest floating structure.
    • Trojena: NEOM’s mountain destination blending natural and developed landscapes. This project will include a man-made lake, a wildlife reserve, and a ski resort.
  • Qiddiya: a large-scale entertainment, amusement, sports, and cultural complex near Riyadh.
  • King Abdullah Financial District: a commercial center development with nearly 60 skyscrapers in Riyadh.
  • Red Sea Project: a massive tourism development on the archipelago of islands along the western Saudi coast, which aims to create 70,000 jobs and attract one million tourists per year.
  • Diriyah Gate: a $50 billion project transforming Diriyah, a suburb of Riyadh, into a premiere destination for culture and heritage, entertainment, hospitality, retail, and education.
  • Amaala: a wellness, healthy living, and meditation resort on the Kingdom’s northwest coast, projected to include more than 2,500 luxury hotel rooms and 700 villas.
  • Asir: a $13 billion project to develop the southwestern region of Asir into a global tourism hub, aiming to attract more than 10 million visitors by 2030.

To attract tourists to these new sites, the SAG introduced a new tourism visa in 2019 for non-religious travelers, and the Kingdom no longer requires foreign travelers staying in the same hotel room to provide proof of marriage or family relations. The SAG is facilitating private investments through its Tourism Development Fund, which has initial capital of $4 billion, and the Kafalah program, which provides loan guarantees of up to $400 million. In addition, the Tourism Fund signed MOUs with local banks to finance projects valued up to $40 billion to stimulate tourism investment and increase the sector’s contribution to GDP.

Investment opportunities in Saudi Arabia’s mining sector continue to expand. In June 2020, the SAG approved a new law allowing foreign companies to enter the mining sector and invest in the Kingdom’s vast mining resources. The law will facilitate the establishment of a mining fund to provide sustainable finance, support geological survey and exploration programs, and optimize national mineral resources valued at $1.3 trillion. The law could increase the sector’s contribution to GDP by $64 billion, reduce imports by $9.8 billion, and create 200,000 direct and indirect jobs by 2030. Saudi Arabia’s national mining company, Ma’aden, has a $12 billion joint venture with Alcoa for bauxite mining and aluminum production and a $7 billion joint venture with the leading American fertilizer firm Mosaic and the Saudi chemical giant SABIC to produce phosphate-based fertilizers.

Saudi Arabia’s transportation sector also provides ample opportunity for international investment. In June 2021, Crown Prince Mohammed bin Salman launched the National Transport and Logistics Strategy to upgrade transportation infrastructure throughout Saudi Arabia. The strategy aims to enhance Saudi Arabia’s position as a global logistics center, improve quality of life, and balance the public budget. The strategy calls for the launch of a new national air carrier, with the goal of increasing the number of international destinations served by the country to more than 250. The SAG also aims to raise air freight sector capacity to more than 4.5 million tons. The strategy includes an initiative to connect Saudi Arabia with the other Arab Gulf states via a railway line. The SAG plans to invest $147 billion in transport and logistics over the next eight years.

Lastly, the Kingdom’s infrastructure sector is open to foreign investment. The SAG launched an $800 billion project to double the size of Riyadh city in the next decade and transform it into an economic, social, and cultural hub for the region. The project includes 18 “mega-projects” in the capital city to improve livability, strengthen economic growth, and more than double the population to 15-20 million by 2030. The SAG is seeking private sector financing of $250 billion for these projects, with similar contributions from income generated by its financial, tourism, and entertainment sectors.

Saudi Arabia fully recognizes rights to private ownership and the establishment of private business. However, the SAG excludes foreign investors from some economic sectors and places some limits on foreign control.

Foreign investors must contend with increasingly strict requirements to base a certain percentage of production within Saudi Arabia (localization), labor policy requirements to hire more Saudi nationals (usually at higher wages than expatriate workers), an increasingly restrictive visa policy for foreign workers, and gender segregation in business and social settings (though this is becoming more relaxed as socio-economic reforms progress).

The SAG implemented new taxes and fees in 2017 and early 2018, including significant visa fee increases. In 2020, the SAG increased the value-added tax (VAT) from five to 15 percent.

In February 2021, MISA and the Royal Commission for Riyadh City (RCRC) announced a new directive requiring that companies wanting to contract with the SAG establish their regional headquarters in Saudi Arabia – preferably in Riyadh – by 2024. MISA has yet to publish details regarding this mandate. According to MISA, companies that relocate their regional headquarters to Riyadh will benefit from incentives including relaxed Saudization, spouse work permits, waivers of professional accreditation, visa acceleration, and end-to-end business, personal, and concierge services. Saudi officials have confirmed that offices cannot be headquarters “in name only” but, rather, must be legitimate headquarters offices with C-level executive staff in Riyadh overseeing operations and staff in the rest of the region. Companies choosing to maintain their regional headquarters in another country will not be awarded public sector contracts beginning in 2024. Implementing regulations for this new directive have not been issued and it remains unclear if the rule would affect contracting by parastatal organizations such as Saudi Aramco.

Foreign investment is currently prohibited in ten sectors:

  1. Oil exploration, drilling, and production except services related to the mining sector listed under Central Product Classification (CPC) 5115+883
  2. Catering to military sectors
  3. Security and detective services
  4. Real estate investment in the holy cities, Mecca and Medina (Note: Foreign investment in real estate in Mecca and Medina is allowed in certain locations and limited to 99-year leases.)
  5. Tourist orientation and guidance services for religious tourism related to Hajj and Umrah
  6. Recruitment offices
  7. Commission agents internationally classified under CPC 621
  8. Services provided by midwives, nurses, physical therapy services, and quasi-doctoral services classified under CPC 93191
  9. Fisheries
  10. Poison centers, blood banks, and quarantine services

Foreign firms are barred from investing in the upstream hydrocarbon sector, but the SAG permits foreign investment in the downstream energy sector, including refining and petrochemicals. ExxonMobil, Shell, China’s Sinopec, and Japan’s Sumitomo Chemical are partners with Saudi Aramco in domestic refineries. ExxonMobil, Chevron, Shell, and other international investors have joint ventures with Saudi Aramco and/or the Saudi Basic Industries Corporation (SABIC, a wholly-owned subsidiary of Saudi Aramco since 2020) in large-scale petrochemical plants. The Dow Chemical Company and Saudi Aramco are partners in the $20 billion Sadara joint venture with the world’s largest integrated petrochemical production complex.

Saudi Aramco also maintains a group of contractors to provide engineering, procurement, construction, hook-up, commissioning and maintenance, and modifications and operations jobs for its offshore oil and gas infrastructure.

Joint ventures almost always take the form of limited liability partnerships in Saudi Arabia, to which there are some disadvantages. Foreign partners in service and contracting ventures organized as limited liability partnerships must pay, in cash or in kind, 100 percent of their contribution to authorized capital. MISA’s authorization is only the first step in setting up such a partnership.

Professionals, including architects, consultants, and consulting engineers, are required to register with, and be certified by, the Ministry of Commerce. In theory, these regulations permit the registration of Saudi-foreign joint venture consulting firms. As part of its WTO commitments, Saudi Arabia generally allows consulting firms to establish a local office without a Saudi partner. Foreign engineering consulting companies, however, must have been incorporated for at least 10 years and have operations in at least four different countries to qualify. Foreign entities practicing accounting and auditing, architecture, and civil planning, or providing healthcare, dental, or veterinary services, must still have a Saudi partner.

In recent years, Saudi Arabia has opened additional service markets to foreign investment, including financial and banking services; aircraft maintenance and repair; computer reservation systems; wholesale, retail, and franchise distribution services; basic and value-added telecom services; and investment in the computer and related services sectors. In 2016, Saudi Arabia formally approved full foreign ownership of retail and wholesale businesses in the Kingdom. While some companies have already received licenses under the new rules, the restrictions attached to obtaining full ownership – including a requirement to invest over $50 million during the first five years and ensure that 30 percent of all products sold are manufactured locally – have proven difficult to meet and have precluded many investors from taking full advantage of the reform.

Saudi Arabia completed its third WTO trade policy review in March 2021, which included investment policies. The review can be found on WTO’s website https://www.wto.org/english/tratop_e/tpr_e/tp507_e.htm .

In addition to applying for a license from MISA, foreign and local investors must register a new business via the Ministry of Commerce (MOC), which has begun offering online registration services for limited liability companies at https://mc.gov.sa/en/ . Though users may submit articles of association and apply for a business name within minutes on MOC’s website, final approval from the Ministry often takes a week or longer. Applicants must also complete several other steps to start a business, including obtaining a municipality (baladia) license for their office premises and registering separately with the Ministry of Human Resources and Social Development, Chamber of Commerce, Passport Office, Tax Department, and the General Organization for Social Insurance. From start to finish, registering a business in Saudi Arabia takes about three weeks.

Saudi officials have stated their intention to attract foreign small- and medium-sized enterprises (SMEs) to the Kingdom. Under Vision 2030, Saudi Arabia aims to increase SME contribution to its GDP to 35 percent by 2030. To facilitate and promote the growth of the SME sector, the SAG established the Small and Medium Enterprises General Authority, Monsha’at, in 2015 and released a new Companies Law in 2016, which was amended in 2018 to update the language vis-à-vis Joint Stock Companies (JSC) and Limited Liability Companies (LLC). It also substantially reduced the minimum capital and number of shareholders required to form a JSC from five to two. The SAG continues to roll out initiatives to spur the development of the SME ecosystem in Saudi Arabia. As of 2019, women no longer need a male guardian to apply for a business license. In February 2021, Monsha’at launched the Bank of Small and Medium Enterprises to provide a one-stop shop for SME financing. In March 2022, Monsha’at and the King Abdulaziz City for Science and Technology inaugurated the National Business Innovation Portal, which provides guidance and resources for SMEs.

Private Saudi citizens, Saudi companies, and SAG entities hold extensive overseas investments. The SAG has transformed its Public Investment Fund (PIF), into a major international investor and sovereign wealth fund. The PIF’s outward investment projects are covered in Section 6 (Financial Sector). Saudi Aramco and SABIC are also major investors in the United States. In 2017, Saudi Aramco acquired full ownership of Motiva, the largest refinery in North America, in Port Arthur, Texas. In December 2021, the ExxonMobil-SABIC $10-billion-dollar joint venture, Gulf Coast Growth Ventures, commenced operations at its new petrochemical facility near Corpus Christi, Texas.

3. Legal Regime

Saudi Arabia received the lowest score possible (zero out of five) in the World Bank’s 2017-2018 Global Indicators of Regulatory Governance project, which places the Kingdom in the bottom 13 countries among 186 countries surveyed ( http://rulemaking.worldbank.org/ ). Few aspects of the SAG’s regulatory system are entirely transparent, although Saudi investment policy is less opaque than other areas. Bureaucratic procedures are cumbersome, but red tape can generally be overcome with persistence. Foreign portfolio investment in the Saudi stock exchange is well-regulated by the Capital Markets Authority (CMA), with clear standards for interested foreign investors to qualify to trade on the local market. The CMA has progressively liberalized requirements for “qualified foreign investors” to trade in Saudi securities. Insurance companies and banks whose shares are listed on the Saudi stock exchange are required to publish financial statements according to International Financial Reporting Standards (IFRS) accounting standards. All other companies are required to follow accounting standards issued by the Saudi Organization for Certified Public Accountants.

Stakeholder consultation on regulatory issues is inconsistent. Some Saudi organizations are diligent in consulting businesses affected by the regulatory process, while others tend to issue regulations with no consultation at all. Proposed laws and regulations are not always published in draft form for public comment. An increasing number of government agencies, however, solicit public comments through their websites. In addition, in March 2021, Saudi Arabia’s National Competitiveness Center launched a public consultation platform called “Istitlaa” to solicit feedback on proposed laws and regulations before they are approved. That said, the processes and procedures for stakeholder consultation remain generally opaque and are not codified in law or regulations. There are no private sector or government efforts to restrict foreign participation in the industry standards-setting consortia or organizations that are available. There are no informal regulatory processes managed by NGOs or private sector associations.

Saudi Arabia uses technical regulations developed both by the Saudi Arabian Standards Organization (SASO) and by the Gulf Standards Organization (GSO). Although the GCC member states continue to work towards common requirements and standards, each individual member state, and Saudi Arabia through SASO, continues to maintain significant autonomy in developing, implementing, and enforcing technical regulations and conformity assessment procedures in its territory. More recently, Saudi Arabia has moved towards adoption of a single standard for technical regulations. This standard is often based on International Organization for Standardization (ISO) or International Electrotechnical Commission (IEC) standards, to the exclusion of other international standards, such as those developed by U.S.-domiciled standards development organizations (SDOs).

Saudi Arabia’s exclusion of these other international standards, which are often used by U.S. manufacturers, can create significant market access barriers for industrial and consumer products exported from the United States. The United States government has engaged Saudi authorities on the principles for international standards per the WTO Technical Barriers to Trade Committee Decision and encouraged Saudi Arabia to adopt standards developed according to such principles in their technical regulations, allowing all products that meet those standards to enter the Saudi market. Several U.S.-based standards organizations, including SDOs and individual companies, have also engaged SASO, with mixed success, in an effort to preserve market access for U.S. products, ranging from electrical equipment to footwear.

A member of the WTO, Saudi Arabia must notify the WTO Committee on Technical Barriers to Trade of all draft technical regulations.

The Saudi legal system is derived from Islamic law, known as sharia. Saudi commercial law, meanwhile, is still developing. In 2016, Saudi Arabia took a significant step in improving its dispute settlement regime with the establishment of the Saudi Center for Commercial Arbitration (see “Dispute Settlement” section below). Through its Commercial Law Development Program, the U.S. Department of Commerce has provided capacity-building programs for Saudi stakeholders in the areas of contract enforcement, public procurement, and insolvency.

The Saudi Ministry of Justice oversees the sharia-based judicial system, but most ministries have committees to rule on matters under their jurisdictions. Judicial and regulatory decisions can be appealed. Many disputes that would be handled in a court of law in the United States are handled through intra-ministerial administrative bodies and processes in Saudi Arabia. Generally, the Saudi Board of Grievances has jurisdiction over commercial disputes between the government and private contractors. The Board also reviews all foreign arbitral awards and foreign court decisions to ensure that they comply with sharia. This review process can be lengthy, and outcomes are unpredictable.

The Kingdom’s record of enforcing judgments issued by courts of other GCC states under the GCC Common Economic Agreement, and of other Arab League states under the Arab League Treaty, is somewhat better than enforcement of judgments from other foreign courts. Monetary judgments are based on the terms of the contract – e.g., if the contract is calculated in U.S. dollars, a judgment may be obtained in U.S. dollars. If unspecified, the judgment is denominated in Saudi riyals. Non-material damages and interest are not included in monetary judgments, based on the sharia prohibitions against interest and against indirect, consequential, and speculative damages.

As with any investment abroad, it is important that U.S. investors take steps to protect themselves by thoroughly researching the business record of a proposed Saudi partner, retaining legal counsel, complying scrupulously with all legal steps in the investment process, and securing a well-drafted agreement. Even after a decision is reached in a dispute, enforcement of a judgment can still take years. The U.S. government recommends consulting with local counsel in advance of investing to review legal options and appropriate contractual provisions for dispute resolution.

In 2021, the Crown Prince announced draft legal reforms including a new personal status law, civil transactions law, evidence law, and discretionary sentencing law that aim to increase predictability and transparency in the legal system, facilitating commerce and expanding protections for women. To date, Saudi Arabia has published the new evidence law and the new personal status law. The two new laws have not yet come into force, but if implemented effectively, these reforms could be a major step towards modernizing the Saudi legal system.

In January 2019, the Saudi government established the General Authority for Foreign Trade (GAFT), which aims to strengthen Saudi Arabia’s non-oil exports and investment, increase the private sector’s contribution to foreign trade, and resolve obstacles encountered by Saudi exporters and investors. The authority monitors the Kingdom’s obligations under international trade agreements and treaties, negotiates and enters into new international commercial and investment agreements, and represents the Kingdom before the WTO. The Governor of GAFT reports to the Minister of Commerce.

Despite the list of activities excluded from foreign investment (see “Limits on Foreign Control and Right to Private Ownership and Establishment” section), foreign minority ownership in joint ventures with Saudi partners may be allowed in some of these sectors. Foreign investors are no longer required to take local partners in many sectors and may own real estate for company activities. They are allowed to transfer money from their enterprises out of the country and can sponsor foreign employees, provided that “Saudization” quotas are met (see “Labor Policies” section). Minimum capital requirements to establish business entities range from zero to $8 million, depending on the sector and the type of investment.

MISA offers detailed information on the investment process, provides licenses and support services to foreign investors, and coordinates with government ministries to facilitate investment. According to MISA, it must grant or refuse a license within five days of receiving an application and supporting documentation from a prospective investor. MISA has established and posted online its licensing guidelines, but many companies looking to invest in Saudi Arabia continue to work with local representation to navigate the bureaucratic licensing process.

MISA licenses foreign investments by sector, each with its own regulations and requirements: (i) services, which comprise a wide range of activities including IT, healthcare, and tourism; (ii) industrial, (iii) real estate, (iv) public transportation, (v) entrepreneurial, (vi) contracting, (vii) audiovisual media, (viii) science and technical office, (ix) education (colleges and universities), and (x) domestic services employment recruitment. MISA also offers several special-purpose licenses for bidding on and performance of government contracts. Foreign firms must describe their planned commercial activities in some detail and will receive a license in one of these sectors at MISA’s discretion. Depending on the type of license issued, foreign firms may also require the approval of relevant competent authorities, such as the Ministry of Health or the Ministry of Tourism.

An important MISA objective is to ensure that investors do not just acquire and hold licenses without investing, and MISA sometimes cancels licenses of foreign investors that it deems do not contribute sufficiently to the local economy. MISA’s periodic license reviews, with the possibility of cancellation, add uncertainty for investors and can provide a disincentive to longer-term investment commitments.

MISA has agreements with various SAG agencies and ministries to facilitate and streamline foreign investment. These agreements permit MISA to facilitate the granting of visas, establish MISA branch offices at Saudi embassies in different countries, prolong tariff exemptions on imported raw materials to three years and on production and manufacturing equipment to two years, and establish commercial courts. To make it easier for businesspeople to visit the Kingdom, MISA can sponsor visa requests without involving a local company. Saudi Arabia has implemented a decree providing that sponsorship is no longer required for certain business visas. While MISA has set up the infrastructure to support foreign investment, many companies report that despite some improvements, the process remains cumbersome and time-consuming.

The General Authority for Competition (GAC) reviews merger transactions for competition-related concerns, investigates business conduct, including allegations of price fixing, can issue fines, and can approve applications for exemptions for certain business conduct.

The competition law, as amended in 2019, applies to all entities operating in Saudi Arabia, and covers all activities related to the production, distribution, purchase, and sale of commodities inside the Kingdom, as well as practices that occur outside of Saudi Arabia and that have an impact on domestic competition. The competition law prohibits anti-competitive practices and agreements. This may include certain aspects of vertically integrated business combinations. Consequently, companies doing business in Saudi Arabia may find it difficult to register exclusivity clauses in distribution agreements but are not necessarily precluded from enforcing such clauses in Saudi courts.

Certain merger transactions must be notified to the GAC, and each entity involved in the merger is obligated to notify the GAC. GAC may approve, conditionally approve, or reject a merger transaction.

The Embassy is not aware of any cases in Saudi Arabia of expropriation from foreign investors without adequate compensation. Some small- to medium-sized foreign investors, however, have complained that their investment licenses have been cancelled without justification, causing them to forfeit their investments.

In August 2018, the SAG implemented new bankruptcy legislation that seeks to “further facilitate a healthy business environment that encourages participation by foreign and domestic investors, as well as local small and medium enterprises.” The law clarifies procedural processes and recognizes distinct creditor classes (e.g., secured creditors). It also includes procedures for continued operation of a distressed company via financial restructuring. Alternatively, the parties may pursue an orderly liquidation of company assets, which would be managed by a court-appointed licensed bankruptcy trustee. Saudi courts have begun to accept and hear cases under this new legislation.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $700,118  2020 $700,118 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 $11,386 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $6,262 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A 2020 34.5% UNCTAD data available at

https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: Saudi General Authority for Statistics   

According to the UNCTAD World Investment Report, in 2020 Saudi Arabia’s total FDI inward stock was $241.862 billion and total FDI outward stock was $128.759 billion.

Detailed data for inward direct investment (below) is as of 2010, which is the latest available breakdown of inward FDI by country.

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $169,206 100% Total Outward N/A N/A
Kuwait $16,761 10% Country #1 N/A N/A
France $15,918 9% Country #2 N/A N/A
Japan $13,160 8% Country #3 N/A N/A
United Arab Emirates $12,601 7% Country #4 N/A N/A
China, P.R. $9,035 5% Country #5 N/A N/A
“0” reflects amounts rounded to +/- USD 500,000.

*Source: IMF Coordinated Direct Investment Survey (2010 – latest available complete data)

Trinidad and Tobago

1. Openness To, and Restrictions Upon, Foreign Investment

The GoTT seeks foreign direct investment and has traditionally welcomed U.S. investors.

The U.S. Mission is not aware of laws or practices that discriminate against foreign investors, but some have seen the decision-making process for tenders and the subsequent awarding of contracts turn opaque without warning, especially when their interests compete with those of well-connected local firms.

InvesTT is the country’s investment promotion agency that assists investors through the process of setting up a non-energy business and provides aftercare services once established. Specifically, it provides market information, offers advice on accessing investment incentives, assists with regulatory and registry issues, and provides property and location services. It also assists with general problem solving and advocacy to the government.

While TT prioritizes investment retention, the U.S. Mission is not aware of a formal, ongoing dialogue with investors, either through an Ombudsman or formal business roundtable.

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.

There are no limits on foreign ownership. Under the Foreign Investment Act of 1990, a foreign investor is permitted to own 100 percent of the share capital in a private company. A license is required to own more than a 30 percent of a public company.

The U.S. Mission is not aware of any sector-specific restrictions or limitations applied to U.S. investors.

TT maintains an investment screening mechanism for foreign investment related to specific projects that have been submitted for the purpose of accessing sector-specific incentives, such as for those offered in the tourism industry. Information on criteria to access the development incentives are listed in various legislative acts such as the Tourism Development Act of 2001.

The World Trade Organization conducted a trade policy review for TT in 2019: https://www.wto.org/english/tratop_e/tpr_e/tp488_e.htm 

The Business & Human Rights Resource Centre noted concerns about the expansion of Chinese investment in TT in 2019.

The GoTT’s business facilitation efforts focus primarily on investor services (helping deal with rules and procedures) through its investment promotion agency and is attempting to make the rules more transparent and predictable overall. However, more work needs to be done to achieve efficient administrative procedures and dispute resolution. TT ranks 158th of 190 countries for registering property, 174th for enforcing contracts, and 160th for payment of taxes in the World Bank’s Doing Business 2020 report, representing a deterioration of indicators that reflect a difficulty of doing business.

The business registration website is: www.ttbizlink.gov.tt . In 2022, the Global Enterprise Registration Network (GER) gives the TT business registration website an above-average score of 8.5 out of 10 for its single electronic window, and a below average score of 4 out of 10 for providing information on how to register a business ( http://www  .TTconnect.gov.tt ). While the process is clear, the inability to make online payments and submit online certificate requests are the two primary reasons for the low score. A feedback mechanism allowing users to communicate with authorities is a strength of the TT business registration website. Foreign companies can use the website and business registration requires completion of seven procedures over a period of 10 days. The agencies with which a company must typically register include:

  • Companies Registry, Ministry of Legal Affairs
  • Board of Inland Revenue
  • National Insurance Board; and
  • Value Added Tax (VAT Office, Board of Inland Revenue)

The GoTT does not promote or incentivize outward investment. The GoTT does not restrict domestic investors from investing abroad.

3. Legal Regime

Through the TT Fair Trading Commission, the GoTT develops transparent policies and effective laws to foster market-based competition on a non-discriminatory basis and establishes “clear rules of the game.” Legal, regulatory, and accounting systems are generally transparent and consistent with international norms

There are no informal regulatory processes managed by non-governmental organizations or private sector associations.

Rule-making and regulatory authority exist within the ministries and regulatory agencies at the national level. The government consults frequently, but not always, with international agencies and business associations in developing regulations. The GoTT submits draft regulations to parliament for approval. The process is the same for each ministry.

Accounting, legal, and regulatory procedures are transparent and consistent with international norms. International financial reporting standards are required for domestic public companies. The GoTT promotes but does not require companies’ environmental, social and corporate governance disclosures to facilitate transparency to help investors and consumers distinguish between high- and low-quality investments.

Proposed laws and regulations are often published in draft form electronically for public review at http://www.ttparliament.org/  , though there is no legal obligation to do so. The GoTT often solicits private sector and business community comments on proposed legislation, although there is no timeframe for the length of a consultation period when it happens, nor is reporting mandatory on the consultations.

All draft bills and regulations are printed in the official gazette and other websites:

The U.S. Mission is not aware of an oversight or enforcement mechanism that ensures that the GoTT follows administrative processes.

There has not been any announcement regarding reforms to the regulatory system, including enforcement, since the last ICS report. Regulatory reform efforts announced in prior years, such as the mechanism to calculate and collect property tax and the establishment of the revenue authority, have not been fully implemented.

Establishment of the revenue authority is intended to increase collections and streamline the system for paying taxes.

At present, regulatory enforcement mechanisms are usually a combination of moral suasion and the use of applicable administrative, civil, or criminal sanctions. The enforcement process is not legally reviewable.

Regulation is usually reviewed based on scientific or data-driven assessments. Scientific studies or quantitative analyses are not made publicly available. Public comments received by regulators are generally not made public.

Public finances and debt obligations are transparent and publicly available on the central bank website: https://www.central-bank.org.tt 

TT is not a part of a regional economic block, although it participates in the Caribbean Community (CARICOM), a regional trading bloc that gives duty-free access to member goods, free movement to some CARICOM nationals, and establishes common treatment of non-members on specific issues. The Caribbean Single Market and Economy (CSME) is an initiative currently being explored by CARICOM that would eventually integrate its member-states into a single economic unit. When fully completed, the CSME would succeed CARICOM.

Legal, regulatory, and accounting systems are generally consistent with United Kingdom standards.

The GoTT has not consistently notified the World Trade Organization (WTO) Committee on Technical Barriers to Trade (TBT) of draft technical regulations.

TT’s legal system is based on English common law. Contracts are legally enforced through the court system.

The country has a written commercial law. There are few specialized courts and resolution of legal claims is time consuming. An industrial court exclusively handles cases relating to labor practices but also suffers from severe backlogs and is widely seen to favor claimants.

Civil cases of less than $2,250 are heard by the Magistrate’s Court. Matters exceeding that amount are heard in the High Court of Justice, which can grant equitable relief. There is no court or division of a court dedicated solely to hearing commercial cases.

TT’s judicial system is independent of the executive, and the judicial process is competent, procedurally and substantively fair, and reliable, although very slow. According to the World Bank’s Doing Business 2020 report, TT ranks 174 of 190 in ease of enforcing contracts and its court system requires 1,340 days to resolve a contract claim, nearly double the Latin American and Caribbean regional average.

Decisions may be appealed to the Court of Appeal in the first instance. The United Kingdom Privy Council Judicial Committee is the final court of appeal.

TT’s judicial system respects the sanctity of contracts and generally provides a level playing field for foreign investors involved in court matters. Due to the backlog of cases, however, there can be major delays in the process. It is imperative that foreign investors seek competent local legal counsel. Some U.S. companies are hesitant to pursue legal remedies, preferring to attempt good faith negotiations in order to avoid an acrimonious relationship that could harm their interests in the country’s small, tight-knit business community.

There is no “one-stop-shop” website for investment providing relevant laws, rules, and procedures. Useful websites to help navigate foreign investment laws, rules, and procedures include:

The TT Fair Trading Commission is an independent statutory agency responsible for promoting and maintaining fair competition in the domestic market. It is tasked with investigating the various forms of anti-competitive business conduct set out in the Fair-Trading Act. No cases that involve foreign investment have arisen in the past 12 months. The agency adheres to fair and transparent norms and procedures. The agency’s decisions can be appealed to the judicial system.

The GoTT can legally expropriate property based on the needs of the country and only after due process including adequate compensation generally based on market value. Various pieces of legislation make provisions for compulsory licensing in the interest of public health or intellectual property rights.

The U.S. Mission is not aware of any direct or indirect expropriation actions since the 1980s. All prior expropriations were compensated to the satisfaction of the parties involved. Energy sector contacts occasionally describe the tax regime as confiscatory, pointing to after-the-fact withdrawal or weakening of tax incentives offered to entice investment once investment occurs.

Claimants did not allege a lack of due process in prior expropriation cases.

Creditors have the right to be notified within 10 days of the appointment of a receiver and to receive a final report, a statement of accounts, and an assessment of claim. Claims of secured creditors are prioritized under the Bankruptcy Act. No distinction is made between foreign and domestic creditors or contract holders. Bankruptcy is not criminalized.

The World Bank ranked TT 83rd out of 190 countries in resolving insolvency in its Doing Business 2020 report. This reflects TT’s recovery rate (cents on the dollar), which is worse than the regional average, and cost as a percentage of estate.