1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Belize’s government encourages FDI to relieve fiscal pressure and diversify the economy. While the central government is interested in attracting FDI, certain bureaucratic and regulatory requirements impede investment and growth.
There are no laws that explicitly discriminate against foreign investors. In practice, however, investors complain that lack of transparency, land insecurity, bureaucracy, delays, and corruption are factors that make it difficult to do business in Belize.
The Belize Trade and Investment Development Service (BELTRAIDE; www.belizeinvest.org.bz ) is the investment and export promotion agency. It promotes FDI through various incentive packages and identified priority sectors for investment such as agriculture, agro-processing, fisheries and aquaculture, logistics and light manufacturing, food processing and packaging, tourism and tourism-related industries, business process outsourcing (BPOs), and sustainable energy.
The Economic Development Council is a public-private sector advisor body established to advance public sector reforms, to promote private sector development and to inform policies for growth and development. The Cabinet has also created a Sub–Committee on Investment composed of ministers whose portfolios are directly involved in considering and approving investment proposals. Additionally, there is an Office of the Ombudsman who addresses issues of official wrongdoing.
Limits on Foreign Control and Right to Private Ownership and Establishment
Belize acknowledges the right for foreign and domestic private entities to establish and own business enterprises and engage in remunerative activities. Foreign and domestic entities must first register their business before engaging in business. They must also register for the appropriate taxes, including business tax and general sales tax, as well as obtain a social security number and trade license.
Generally, Belize has no restrictions on foreign ownership and control of companies; however, foreign investments must be registered with the Central Bank of Belize. To register a business name with the government, foreigners must apply with a Belizean partner or someone with a permanent residence. Additionally, persons seeking to open a bank account must also comply with Central Bank regulations. These may differ based on the applicant’s residency status and whether the individual is seeking to establish a local or foreign currency account. Note: many Belizeans perceive foreigners to receive favorable treatment from the government over access to capital during the start-up process.
Foreign investments must be registered and obtain an “Approved Status” from the Central Bank to facilitate inflows and outflows of foreign currency. Investments with “Approved Status” are generally granted permission to repatriate funds gained from profits, dividends, loan payments and interest. The Central Bank also reserves the right to request evidence supporting applications for repatriation.
Some investment incentives show preference to Belizean-owned companies. For example, to qualify for a tour operator license, a business must be majority-owned by Belizeans or permanent residents of Belize (http://www.belizetourismboard.org ). This qualification is negotiable particularly where a tour operation would expand into a new sector of the market and does not result in competition with local operators. The government does not impose any intellectual property transfer requirements.
The Government’s Cabinet Sub-Committee on Investment investigates investment projects which do not fall within Belize’s incentive regime or which may require special considerations. For example, an investment may require legislative changes, a customized memorandum of understanding or agreement from the government, or a public–private partnership. The government assesses proposals based on size, scope, and the incentives requested. In addition, proposals are assessed on a five-point system that analyses: 1) socio-economic acceptability of the project; 2) revenues to the government; 3) employment; 4) foreign exchange earnings; and 5) environmental considerations. The Cabinet Sub-Committee is composed of five cabinet ministers, including the Minister with responsibility for Investment, Trade and Commerce as Chairperson. The other members include the ministers with responsibility for Tourism and Civil Aviation; Agriculture, Fisheries, Forestry, the Environment and Immigration Services and Refugees; and Natural Resources, along with the Attorney General. There is no statutory timeframe for considering projects as the process largely depends on the nature and complexity of the project.
When considering investment, foreign investors undertaking large capital investments must be aware of environmental laws and regulations. Government requires project developers to prepare an Environmental Impact Assessment (EIA), should a project meet certain parameters such as land area, location, or industry criteria. When purchasing land or planning to develop in or near an ecologically sensitive zone, government recommends that the EIA fully address any measures by the investor to mitigate environmental risks. Developers must obtain environmental clearance prior to the start of site development. The Department of Environment website, http://www.doe.gov.bz has more information on the Environmental Protection Act and other regulations, applications and guidelines.
Other Investment Policy Reviews
In the past three years, there has been no investment policy review of Belize by the Organization for Economic Cooperation and Development (OECD) or the United Nations Conference on Trade and Development (UNCTAD). Belize concluded its third Trade Policy Review in the World Trade Organization (WTO) in 2017.
BELTRAIDE (http://www.belizeinvest.org.bz ), a statutory body of the Government of Belize, operates as the country’s investment and export promotion agency. Its investment facilitation services are open to all investors – foreign and domestic. While there are support measures to advance greater inclusion of women and minorities in entrepreneurial initiatives and training, the business facilitation measures do not distinguish by gender or economic status.
The Belize Companies and Corporate Affairs Registry (tel: +501 822 0421; email: email@example.com) is responsible for the registration process of all local businesses and companies. This office does not have a public website to provide online services. Belize does not operate a single-window registration process.
Businesses must register with the tax department to pay business and general sales tax. They must also register with their local city council or town board to obtain a trade license to operate a business. An employer should also register employees for social security. The 2020 Doing Business report (http://www.doingbusiness.org ) estimates it takes on average 48 days to start a company in Belize. The same report ranks Belize at 135 of 190 economies, losing ten spots compared to 2019.
Belize does not promote or incentivize outward investments. Its government does not restrict domestic investors from investing abroad. However, the Central Bank places currency controls on investment abroad, with Central Bank approval required prior to foreign currency outflows.
6. Financial Sector
Capital Markets and Portfolio Investment
Belize’s financial system is small with little to no foreign portfolio investment transactions. It does not have a stock exchange and capital market operations are rudimentary. The government securities market is underdeveloped and the market for corporate bonds is almost non-existent. While foreign investments must be registered at the Central Bank, the government respects IMF Article VIII and does not restrict payments and transfers for current international transactions.
Additionally, credit is made available on market terms with interest rates largely set by local market conditions prevailing within the commercial banks. The credit instruments accessible to the private sector include loans, overdrafts, lines of credit, credit cards, and bank guarantees. Foreign investors can access credit on the local market. However, the Central Bank must approve the granting of any advance, whether a loan or overdraft, to a locally incorporated company with foreign shareholders or to non-residents.
The Belize Development Finance Corporation (DFC), a state-owned development bank, offers loan financing services in various sectors. To qualify for a loan from DFC, an individual must be a Belizean resident or citizen, while a company must be majority 51 percent Belizean owned. The National Bank of Belize is a state-owned bank that provides concessionary credit primarily to public officers, teachers, and low income Belizeans. NOTE: This Belize Development Finance Corporation is NOT the same as the U.S. re-branded Overseas Private Investment Company (OPIC).
Money and Banking System
A financial inclusion survey undertaken by the Central Bank of Belize in 2019 showed that approximately 65.5 percent of respondents had access to a financial account. Belize’s financial system remains underdeveloped with a banking sector that may be characterized as stable but fragile. The Central Bank of Belize (CBB) (https://www.centralbank.org.bz ) is responsible for formulating and implementing monetary policy focusing on the stability of the exchange rate and economic growth.
Non-performing loans stood at 2.23 percent of total loans at the end of February 2020, significantly below the 5.0 percent threshold. Additionally, the estimated total assets of the country’s largest bank were USD 0.625 billion at the end of February 2020.
Generally, there are no restrictions on foreigners opening bank accounts in Belize. However, persons seeking to open a bank account must comply with Central Bank regulations, which differ based on residency status and whether the individual is seeking to establish a local bank account or a foreign currency account. Foreign banks and branches are allowed to operate in the country with all banks subject to Central Bank measures and regulations. Since 2015, all banks have regained correspondent banking relations. These relationships are still tenuous, with delays in transactions, and fewer services offered at higher costs.
In the last few years, Belize has enacted a number of reforms to strengthen the anti-money laundering and counterterrorism-financing regime, including amendments to the Money Laundering and Terrorism (Prevention) Amendment Act and the International Business Companies (Amendment) Act. In addition, the National Anti-Money Laundering Committee (NAMLC) is headed by the Financial Intelligence Unit with inter-agency support from key financial and law enforcement authorities.
Foreign Exchange and Remittances
Belize has a stable currency, with the Belize dollar pegged to the United States Dollar since May 1976 at a fixed exchange rate of BZ $2.00 to the USD $1.00.
The Government of Belize has established currency controls, and foreign investors seeking to convert, transfer, or repatriate funds must comply with Central Bank regulations. Foreign investments must be registered at the Central Bank to facilitate inflows and outflows of foreign currency. Foreign investors must register their inflow of funds to obtain an “Approved Status” for their investment and generally are approved for repatriation of funds thereafter. The Central Bank does, however, reserve the right to request evidence supporting applications for repatriation.
There are no changes to investment remittance policies. As mentioned above, foreign investors must obtain an “Approved Status” for their investment and register their inflow and outflow of funds with the Central Bank. There are no time limitations on remittances. Where there is a waiting period, it depends on the availability of foreign exchange, but does not generally exceed 60 days.
Sovereign Wealth Funds
Belize does not have a sovereign wealth fund.
Belize has anti-corruption laws that are seldom enforced. Under the Prevention of Corruption in Public Life Act, public officials are required to make annual financial disclosures. The Act criminalizes acts of corruption by public officials and includes measures on the use of office for private gain; code of conduct breaches; the misuse of public funds; and bribery. Section 24 of the Act covers punishment for breach, which may include a fine of up to USD $5,000, severe reprimand, forfeiture of property acquired by corruption, and removal from office. This Act also established an Integrity Commission mandated to monitor, prevent, and combat corruption by examining declarations of physical assets and financial positions filed by public officers. The Commission is able to investigate allegations of corrupt activities by public officials, including members of the National Assembly, Mayors and Councilors of all cities, and Town Boards. In practice, the office is understaffed, and charges are almost never brought against officials. It is not uncommon for politicians disgraced in corruption scandals to return to government after a short period of time has elapsed.
The Money Laundering and Terrorism (Prevention) Act identifies “politically exposed persons” to include family members or close associates of the politically exposed person.
The Ministry of Finance issues the Belize Stores Orders and Financial Orders – policies and procedures for government procurement. The Manual for the Control of Public Finances provides the framework for the registration and use of public funds to procure goods and services.
Despite these legislative and regulatory measures, many businesspeople complain that both major political parties practice partisanship bias that affects businesses in terms of receiving licenses, the importation of goods, winning government contracts for procurement of goods and services, and transfer of government land to private owners. Some middle-class citizens and business owners throughout the country have complained of government officials, including police, soliciting bribes. A Select Senate Committee on Immigration deliberated for most of 2017 on such allegations by known members of the ruling United Democratic Party. It concluded its inquiry in December 2017 but has not published its findings and recommendations. Private companies are not required to establish internal codes of conduct. There are few non-governmental institutions that monitor government activities; two of which are: the Citizens Organized for Liberty through Action (COLA) and the National Trade Union Congress of Belize (NTUCB). The first is comprised of concerned private citizens; the latter is an umbrella organization comprised of the various Belizean workers’ unions. Environmental NGOs and the Belize Chamber of Commerce and Industry often make statements regarding government policy as it affects their respective spheres of activity. The Government does not provide protection to NGOs investigating corruption.
Private companies are not required to establish internal codes of conduct. There are few non-governmental institutions that monitor government activities; two of which are: the Citizens Organized for Liberty through Action (COLA) and the National Trade Union Congress of Belize (NTUCB). The first is comprised of concerned private citizens; the latter is an umbrella organization comprised of the various Belizean workers’ unions. Environmental NGOs and the Belize Chamber of Commerce and Industry often make statements regarding government policy as it affects their respective spheres of activity. The Government does not provide protection to NGOs investigating corruption.
Private companies do not use internal controls, ethics or compliance programs to detect and prevent bribery of government officials. Bribery is officially considered a criminal act in Belize, but laws against bribery are rarely enforced. Complaints related to government corruption relating to customs, land, and immigration are quite common.
In June 2001, the Government of Belize signed the Organization of American States (OAS) Inter-American Convention on Corruption, which undergoes periodic review as provided for under the Convention. In December 2016, Belize acceded to the United Nations Convention Against Corruption (UNCAC) amid public pressure and demonstrations from the teachers’ unions. Government continues to be criticized for the lack of political will to fully implement UNCAC.
Resources to Report Corruption
Office of the Ombudsman
91 Freetown Road
Belize City, Belize
For specific complaints within the police force:
Professional Standards Branch
1902 Constitutions Drive
T: +501-822-2218 or 822-2674
10. Political and Security Environment
Belize has traditionally enjoyed one of the most stable political environments in the region, having held peaceful and transparent democratic elections since independence on September 21, 1981. In general elections, the two major political parties usually trade leadership but the current United Democratic Party has held power since 2008 spanning three consecutive elections. At the municipal level, elections were held in March 2018 and while the opposition People’s United Party gained ground, the ruling United Democratic Party maintained its majority in six of the nine municipalities. The two parties are not strongly divergent in policy, being viewed largely as center-left and center-right, with party affiliation largely following family and place of origin.
Incidents including damage to projects or installations affecting investments in Belize are rare. In November 2014, the Belize Sugar Cane Farmers Association (BSCFA) and American Sugar Refineries (ASR) failed to reach a contract agreement before the harvesting season. While the dispute was eventually resolved, there were some reports of fields being burned and farmers being threatened for breaking ranks with BSCFA.
Neighboring Guatemala’s long-standing territorial claim on Belize that has persisted for almost two centuries has caused international political insecurity. The Organization of American States facilitated a special agreement in 2008, whereby both countries agreed to hold simultaneous referenda in their respective countries to vote on whether to refer the matter to the International Court of Justice (ICJ). After simultaneous referenda failed to materialize in 2013, Guatemala and Belize held separate referenda in April 2018 and in May 2019, respectively, agreeing to refer the dispute to the ICJ. Despite efforts to increase confidence building measures between the two countries, incursions by Guatemalan citizens along bordering areas continue, resulting in deforestation, illegal logging and extraction of exotic hardwoods, illegal harvesting of xate palm leaves (a decorative plant used in floral arrangements), panning for gold, wildlife poaching, and agriculture development. These activities have resulted in confrontations between Guatemalan nationals and Belize law enforcement authorities on Belizean territory. Tensions have also flared along the Sarstoon River, which forms the disputed southern border. In the last three years, Guatemala has increased its naval presence in the area and detained or questioned Belizean citizens wishing to navigate the river.
The second major security concern is the high level of crime countrywide. Some incidents are gang related while others are random targets against innocent civilians and tourists. While Belize has an unusually high murder rate per capita, violent crime has not historically targeted American citizens or businesses.
Turf and local gang-related crimes are often concentrated in south side Belize City. Nonetheless, Belize is seeing a nationwide emergence of MS-13, likely a result of gang members fleeing El Salvador. Although a small presence at this time, these gang members easily integrate into established El Salvadorian communities in Belize resulting in sporadic violence. Gang-related criminal activities increase the burden on an already stressed and under-resourced police force.