Trinidad and Tobago
Trinidad and Tobago (TT) is a high-income developing country with a gross domestic product (GDP) per capita of $17,397 and an annual GDP of $24.3 billion (2019). It has the largest economy in the English-speaking Caribbean and is the third most populous country in the region with 1.4 million inhabitants. The International Monetary Fund predicts GDP for 2021 will increase by 2.6 percent as the economy rebounds following the economic impact of coronavirus mitigation. TT’s investment climate is generally open and most investment barriers have been eliminated, but stifling bureaucracy and opaque procedures remain.
Energy exploration and production drive TT’s economy. This sector has historically attracted the most foreign direct investment. The energy sector usually accounts for approximately half of GDP and 80 percent of export earnings. Petrochemicals and steel are other sectors accounting for significant foreign investment. Since the economy is tethered to the energy sector, it is particularly vulnerable to fluctuating prices for hydrocarbons and petrochemicals.
3. Legal Regime
Transparency of the Regulatory System
Through the Trinidad and Tobago Fair Trading Commission, the government 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 government 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.
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 government often solicits private sector and business community comments on proposed legislation, though there is no timeframe for the length of a consultation period when it happens, nor is reporting on the consultations mandatory.
The U.S. Mission is not aware of an oversight or enforcement mechanism that ensures that the government 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
International Regulatory Considerations
Trinidad and Tobago is not a part of a regional economic block, though it is part of the Caribbean Community (CARICOM), a regional trading bloc that gives duty-free access to member goods, free movement to some members 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 government has not consistently notified the World Trade Organization (WTO) Committee on Technical Barriers to Trade (TBT) of draft technical regulations.
Legal System and Judicial Independence
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, making the resolution of legal claims 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, Trinidad and Tobago 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.
Laws and Regulations on Foreign Direct Investment
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.
Competition and Antitrust Laws
The Trinidad and Tobago 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. Legislation operationalizing this agency in 2006 was not proclaimed by the president until February 2020, and in that time no cases that involve foreign investment have arisen.
Expropriation and Compensation
The government 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.
ICSID Convention and New York Convention
TT is a party to the International Centre for the Settlement of Investment Disputes (ICSID Convention) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention).
Local courts recognize and enforce foreign arbitral awards according to chapter 20 of the Arbitration (Foreign Arbitral Awards) Act 1996.
Investor-State Dispute Settlement
The bilateral investment treaty between the United States and TT recognizes binding arbitration of investment disputes.
The U.S. Mission is not aware of any claims by U.S. investors under the bilateral investment treaty with the United States.
The U.S. Mission is unaware of any disputes involving U.S. or other foreign investors over the past 10 years. There is no history of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
Some of the available types of alternative dispute resolution include mediation and arbitration. The Civil Proceedings Rules encourage parties to make reasonable attempts to resolve their disputes amicably with litigation as a last resort. Mediation and arbitration are most commonly used.
There is a domestic dispute resolution center that offers arbitration services. Domestic legislation, the Arbitration Act of 1939, is based on early English arbitration legislation and is not modeled on internationally accepted regulations.
The U.S. Mission has no records of any investment disputes involving an state-owned enterprises (SOEs).
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.
4. Industrial Policies
Investment incentives include the following: exemption from import duties and customs duties; tax credits and deferrals; cash refunds; carry-over of losses; and access to loans. These are available equally to foreign and domestic investors, but delays in cash refund payments are a frequent complaint of those due them. Additional information is available on the following websites:
The government sometimes jointly finances foreign direct investment projects, but it is not common.
Foreign Trade Zones/Free Ports/Trade Facilitation
The Free Zones Act of 1988 (last amended in 1997) established the TT Free Zones Company (TTFZ) to promote export development and encourage both foreign and local investment projects in a relatively bureaucracy-free, duty-free, and tax-free environment. Foreign owned firms have the same investment opportunities as Trinidad and Tobago entities. There are currently 15 approved enterprises located in 12 free zones. Just three are located within a multiple-user site in north-central Trinidad. The minister of trade and industry can designate any suitable area in TT as a free zone.
Free zone enterprises are exempt from customs duties on capital goods, parts, and raw materials for use in the construction and equipping of premises and in connection with the approved activity; import and export licensing requirements; land and building taxes; work permit fees; foreign currency and property ownership restrictions; capital gains taxes; withholding taxes on distribution of profits and corporation taxes or levies on sales or profits; VAT on goods supplied to a free zone; and duty on vehicles for use only within the free zone.
A corporation tax exemption for entities that qualify for free zone status is also in force. Application to carry out an approved activity in an existing free zone area is made on specified forms to the TTFZ.
Free zone activities that qualify for approval include manufacturing for export, international trading in products, services for export, and development and management of free zones. Activities that may be carried on in a free zone but do not qualify as approved activities include exploration and production activities involving petroleum, natural gas, or petrochemicals. For more information, please review the following website:
Performance and Data Localization Requirements
The government does not mandate – although it strongly encourages through negotiable incentives – projects that generate employment and foreign exchange; provide training and/or technology transfer; boost exports or reduce imports; have local content; and generally contribute to the welfare of the country.
The government does not mandate that locals be recruited to senior management and boards of directors.
Several foreign firms have encountered inconsistencies leading to long delays in the issuance of long-term work permits, but there are no explicit, onerous requirements.
There are no government/authority-imposed conditions on permission to invest.
There are no forced localization requirements.
There are no performance requirements, and thus no enforcement procedures. There is no indication of an intention to implement across-the-board performance requirements.
Investment incentives are uniform for domestic and foreign investors but offered on a case-by-case, vice across-the-board, basis.
There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption.
There are no measures that prevent or restrict companies from freely transmitting customer or other business-related data outside the country.
There are no rules on local data storage within Trinidad and Tobago.
5. Protection of Property Rights
Property rights and interests are enforced in court. Mortgages and liens exist. TT has a dual system of land titles, the old common law system and the registered land title system governed by the Real Property Act of 1946. Nearly 80 percent of land in TT remains under the more complicated common law system, which is not reliable for recording secured interests.
The Foreign Investment Act of 1990 governs the acquisition of any interest in land by foreign investors. It states that foreign investors wishing to acquire land larger than five acres must obtain a license from the Ministry of Finance. Licenses are generally granted in practice per the criteria provided here: .
It is not clear what proportion of land does not have clear title. The government does not make a defined effort to identify property owners and register land titles.
In the World Bank’s Doing Business 2020 report, Trinidad and Tobago ranked 158 out of 190 countries in ease of registering property. Reasons for the poor score include the number of procedures required (more than the regional average), the length of time required (more than the regional average) and the cost of registering property as a percentage of the property value.
Property ownership can revert to squatters if they can prove exclusive possession of another’s land, without permission, for at least 16 years in the case of private lands and 30 years on State lands.
Intellectual Property Rights
The process of protecting intellectual property involves applying for and registering patents, trademarks, or designs. Trinidad and Tobago’s intellectual property rights (IPR) legal structure is strong, but enforcement is generally weak. Infringement on rights and theft is common.
Trinidad and Tobago is a member of the World Intellectual Property Organization (WIPO). In 2020, Trinidad and Tobago acceded to the Madrid Protocol on Trademarks. Implementing regulations remain in drafting for the 2000 Patent Law Treaty and the Hague Agreement on Industrial Designs.
Trinidad and Tobago does not track seizures of counterfeit goods. At its May 2019 WTO Trade Policy Review, it reported one seizure in 2018. The country has prosecuted IPR violations in the past, but such prosecutions are uncommon.
TT is listed in the United States Trade Representative’s (USTR) Special 301 Report Watch List for 2021. Challenges concern widespread copyright infringement and the country’s lack of institutional commitment to enforce IPR.
Trinidad and Tobago is not included in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.
6. Financial Sector
Capital Markets and Portfolio Investment
The government welcomes foreign portfolio investment.
TT has its own stock market and has an established regulatory framework to encourage and facilitate portfolio investment. There is enough liquidity in the markets to enter and exit sizeable positions.
Existing policies facilitate the free flow of financial resources into the product and factor markets.
The government and central bank respect IMF article VIII by refraining from restrictions on payment and transfers for current international transactions. Shortages of foreign exchange, exacerbated by the government’s maintenance of the local currency at values higher than those which the market would bear, however, cause considerable delays in payments and transfers for international transactions.
A full range of credit instruments is available to the private sector. There are no restrictions on borrowing by foreign investors, who are able to access credit. Credit is allocated on market terms, but interest rates tend to be higher for foreign borrowers.
Money and Banking System
Banking services are widespread throughout urban areas, but penetration is significantly lower in rural areas.
Although the banking sector is healthy and well-capitalized, the IMF in its 2020 Financial Stability Assessment Program noted Trinidad and Tobago’s banks are exposed to sovereign risk and potential liquidity risks stemming from non-bank financial entities in the group. The financial system as a whole faces risks of increasing household debt, a lack of supervisory independence and out-of-date regulatory frameworks, the sovereign-bank nexus and the absence of a macro-prudential toolkit, and contagion risks between investment funds and banks. The report further states that the financial sector legislation and regulation have not kept pace with international best practice. The supervisors operate with guidelines in key areas instead of binding powers, which limits their authority
In 2019, the estimated total assets of Trinidad and Tobago’s largest banks was $21.9 billion.
TT has a central bank system. Foreign banks may establish operations in TT provided they obtain a license from the central bank. Trinidad and Tobago has lost correspondent banking relationships in the past three years. The U.S. Mission is not aware of any current correspondent banking relationships that are in jeopardy.
There are no restrictions on a foreigner’s ability to establish a bank account.
Foreign Exchange and Remittances
There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.
Shortages of foreign exchange, exacerbated by the government’s maintenance of the local currency at values higher than those which the market would bear, cause considerable delays in conversion into world currencies. Businesses continue to report a cumbersome bureaucratic process and a minimum three-month delay in such conversions.
The central bank intervenes to maintain an unofficial peg to the U.S. dollar, using a managed float in which the exchange rate fluctuates mildly day-to-day, and limits the availability of foreign currency.
While there are no recent changes or plans to change investment remittance policies to tighten or relax access to foreign exchange for investment remittances, commercial banks have enacted policies that limit access to foreign exchange due to national shortages, on guidance from the Ministry of Finance and the central bank.
Although there are no official time limitations on remittances, timeliness of remittances depends on availability of foreign currency.
Sovereign Wealth Funds
The value of TT’s Heritage and Stabilization Fund the fund as of September 2020 is approximately $5.7 billion. The fund invests in U.S. short duration fixed income, U.S. core domestic fixed income, U.S. core domestic equities, and non-U.S. core international equities.
The sovereign wealth fund (SWF) follows the voluntary code of good practices known as the Santiago Principles. TT participates in the IMF-hosted International Working Group on Sovereign Wealth Funds.
None of the SWF is invested domestically. There are no potentially negative ramifications for U.S. investors in the local market.