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Ecuador

Executive Summary

The Government of Ecuador under President Moreno has taken a distinct path from the policies of his predecessor, focusing on reducing the size of the public sector and its influence on the economy and seeking instead private sector investment to drive economic growth. Facing serious budget deficits, the Moreno Administration is rationalizing the size of government, merging ministries, and planning a reduction in the number of state-owned enterprises. Other cost cutting measures include reducing fuel subsidies and mandatory reductions in the number of public employees. Still, Ecuador is saddled with a very large public sector, and Moreno has committed to continue government spending on social welfare programs. To fund these programs and continue reforms, the Ecuadorian government reached in March 2019 an agreement with the International Monetary Fund (IMF) and international financial institutions for financial assistance totaling USD 10.2 billion over three years. The IMF program is in line with the government’s efforts to correct fiscal imbalances and to improve transparency and efficiency in public finance. While the March 2019 IMF program has been cancelled, the Moreno administration has opened negotiations with the IMF for a new agreement, expected to be reached in August 2020.

To increase private sector engagement in the economy and attract Foreign Direct Investment (FDI), the Ecuadorian government passed a Productive Development Law in 2018 to spur investment, has in recent years changed tax and regulatory policies for mining, and seeks to develop a Public-Private Partnership law to increase private investment in infrastructure projects. Ecuador is a dollarized economy that has few limits on foreign investment or repatriation of profits, with the exception of a five percent capital exit tax, and is actively seeking foreign investors. It has a population that views the United States positively, and the Moreno Administration has expanded bilateral ties and significantly increased cooperation with the United States on a broad range of economic, security, political, and cultural issues.

Despite these efforts, FDI inflow to Ecuador has remained very low compared to other countries in the region, due to a number of problems, most notably corruption. Ecuador is ranked in the bottom third of countries surveyed for Transparency International’s Corruption Perceptions Index. Two high-profile cases of official corruption involving the state-owned petroleum company PetroEcuador and Brazilian construction firm Odebrecht exemplify challenges that confront investors. Numerous officials have been charged for corruption related offenses, and several have been convicted, including former Vice President Jorge Glas, who was sentenced to six years in prison in December 2017. In addition, economic, commercial, and investment policies are subject to frequent changes and can increase the risks and costs of doing business in Ecuador.

Sectors of Interest to Foreign Investors

Petroleum: Per the 2008 Constitution, all subsurface resources belong to the state, and the petroleum sector is controlled by two state-owned enterprises (SOEs) that cannot be privatized. To improve efficiencies, the government may offer concessions of its refineries and is seeking ways to better target fuel subsidies. An effort to eliminate subsidies in October 2019 sparked violent civil unrest that forced the government to walk back the measure. The Ecuadorian government held a successful public tender for oil production sharing contracts (Intracampos I) in 2019 and reportedly plans to move to production sharing contracts as the standard for future tenders.

Mining: The Ecuadorian government has reduced taxes in the mining sector to attract FDI. Presidential Decree 475, published in October 2014, made minor reductions to the windfall tax and sovereign adjustment calculations. The Organic Law for Production Incentives and Tax Fraud Prevention, passed in December 2014, included provisions to improve tax stability and lower the income tax rate in the mining sector. The previous Correa administration also developed mining sector incentives such as fiscal stability agreements, limited VAT reimbursements, remittance tax exceptions, and mechanisms for companies to recover their investments before certain taxes are applied.

Electricity: The government is seeking to offer concessions to develop wind, solar, hydro and gas fired electrical generation plants to further diversify the energy matrix, as well as improve the electrical transmission connection with Peru. Non-hydro renewable energy projects in Ecuador are eligible for U.S. International Development Finance Corporation (DFC) financing.

Telecommunications: The government seeks to increase national coverage of the 4G network, as well as eventually introduce 5G into Ecuador. It plans to offer a concession of the state-owned telecommunications company CNT, as well as diversify its hardware away from Chinese vendors.

ECommerce: ECommerce sales comprise approximately one percent of Ecuadorian GDP but are a fast growing market. While many Ecuadorians are interested in purchasing online, they are limited in their ability to receive international shipments due to logistics and customs problems upon arrival in Ecuador.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 93 of 198 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 129 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 99 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2018 $898 http://apps.bea.gov/international/
factsheet/
World Bank GNI per capita 2018 $6,110 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Ecuador is open to FDI in most sectors. The 2008 Constitution established that the state reserves the right to manage strategic sectors through state-owned or controlled companies. The sectors identified are energy, telecommunications, non-renewable natural resources, transportation, hydrocarbon refining, water, biodiversity, and genetic patrimony. Although in recent years Ecuador took steps to attract FDI, its overall investment climate remains challenging as economic, commercial, and investment policies are subject to frequent change. In 2019, total flows of FDI in Ecuador fell to USD 966 million from USD 1.4 billion in 2018. FDI continues to be very low compared to other countries in the region.

There are no laws or practices that discriminate against foreign investors, but the legal complexity resulting from the inconsistent application and interpretation of existing laws and regulations increases the risks and costs of doing business in Ecuador. Under the prior Correa administration disputes involving U.S. companies were politicized, especially in sensitive areas such as the energy sector. This resulted in a number of high-profile international investment dispute cases, with several companies awarded damages in international arbitration rulings against Ecuador in the last several years. In addition, several cases are pending final arbitration rulings.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities are allowed to establish and own business enterprises and engage in all forms of remunerative activity, with limitations in strategic sectors as enumerated in the Constitution. There are no investment screening mechanisms for inbound investment, and the Ecuadorian government actively seeks international investors. One hundred percent foreign equity ownership is allowed.

For license and franchise transactions, no limits exist on royalties that may be remitted, although financial outflows are subject to a five percent capital exit tax. All license and franchise agreements must be registered with the National Service for Intellectual Property Rights (SENADI). In addition to registering with the Superintendence of Companies, Securities, and Insurance, foreign investors must register investments with Ecuador’s Central Bank for statistical purposes.

Other Investment Policy Reviews

Ecuador conducted a trade policy review with the World Trade Organization in March 2019; information can be found at https://www.wto.org/english/tratop_e/tpr_e/tp483_e.htm 

In the past three years, Ecuador has not conducted an investment policy review with the Organization for Economic Cooperation and Development (OECD) or the United Nations Conference on Trade and Development (UNCTAD).

Business Facilitation

In 2018 Ecuador folded ProEcuador (https://www.proecuador.gob.ec/ ), the entity that is responsible for promoting economic development through exports, imports, and investment in Ecuador, into the Ministry of Production, Foreign Trade, Investments and Fisheries (MPCIEP). ProEcuador is now a Vice Ministry within MPCIEP and has 29 offices in 26 countries, including four in the United States. Ecuador is ranked 129th out of 190 countries in the World Bank’s Ease of Doing Business report for 2019, with particularly low rankings for Starting a Business (177), Resolving Insolvency (160) and Paying Taxes (147).

A newly created company will at a minimum be required to register with the Superintendence of Companies, Securities, and Insurance (http://www.supercias.gob.ec/.), the municipal government, the Internal Revenue Service, and the Social Security Institute. The registry with the Superintendence of Companies is a completely online process as of April 2019.

Outward Investment

Ecuador does not restrict domestic investors from investing abroad. ProEcuador (see above) is responsible for promotion of outward investment from Ecuador. Foreign investments are subject to a capital exit tax of five percent.

In February 2017, voters passed a government-backed referendum prohibiting elected officials and public servants from having financial dealings in tax havens and other suspect jurisdictions. The list includes several U.S. states and territories that do not have state income taxes. The prohibition entered into effect in September 2017.

3. Legal Regime

Transparency of the Regulatory System

While there is a focus within the Moreno administration to improve transparency and government accountability, progress has been slow. Economic, commercial, and investment policies are subject to frequent changes and can increase the risks and costs of doing business in Ecuador. National and municipal level regulations can conflict with each other. Regulatory agencies are not required to publish proposed regulations before enactment and rulemaking bodies are not required to solicit public comments on proposed regulations, although there has been some movement towards prior consultation processes. Government ministries generally consult with relevant national actors when drafting regulations, but not always.

The Government of Ecuador publishes regulatory actions in the Official Registry and posts them online at https://www.registroficial.gob.ec/. Publicly listed companies generally adhere to International Financial Reporting Standards (IFRS). While there are some transparency enforcement mechanisms within the government, they tend to be weak and rarely enforced.

There are no identified informal regulatory processes led by private sector associations or nongovernmental organizations.

International Regulatory Considerations

Ecuador is a member of the Andean Community of Nations (CAN) along with Bolivia, Colombia, and Peru. Ecuador is an associate member of the Southern Cone Common Market (MERCOSUR). Ecuador is a member of the WTO and notifies draft regulations to the WTO TBT Committee. Ecuador ratified the WTO Trade Facilitation Agreement on October 16, 2018.

Legal System and Judicial Independence

Ecuador has a civil codified legal system. Systemic weakness in the judicial system and its susceptibility to political and economic pressures constitute challenges faced by U.S. companies investing in Ecuador. While Ecuador updated its Commercial Code in May 2019, enforcement of contract rights, equal treatment under the law, intellectual property protections, and unstable regulatory regimes continue to be concerns for foreign investors.

Laws and Regulations on Foreign Direct Investment

Ecuador does not have laws specifically on FDI, but several have effects on overall investment. The Organic Law for Production Incentives and Tax Fraud Prevention, passed in December 2014, includes provisions to improve tax stability and lower the income tax rate in the mining sector. The Organic Law of Incentives for Public-Private Associations and Foreign Investment from 2015 includes provisions to improve legal stability, reduce red tape, and exempt public private partnerships from paying income and capital exit taxes under certain conditions. The Productive Development Law of 2018 enumerates tax incentives for new investments and investments in rural or border areas. ProEcuador’s website https://www.proecuador.gob.ec/  provides a guide for investors in English and Spanish and highlights the procedures to register a company, types of incentives for investors, and relevant taxes related to investing in Ecuador.

Competition and Anti-Trust Laws

The Superintendence of Control of Market Power reviews transactions for competition-related concerns. Ecuador’s 2011 Organic Law for Regulation and Control of Market Power includes mechanisms to control and sanction market power abuses, restrictive market practices, market concentration, and unfair competition. The Superintendence of Control of Market Power can fine companies found to be in violation of the law up to 12 percent of gross revenue.

Expropriation and Compensation

The Constitution establishes that the state is in charge of managing the use and access to land, while recognizing and guaranteeing the right to private property. It also provides for the redistribution of land if it has not been in active use for more than two years. The 2015 Telecommunications Law allows expropriation of private land in accordance with the rules and procedures of the law when necessary for the installation of network infrastructure. The prior Correa administration’s use of a 99 percent excess profits tax on some investments was determined by international arbitration panels to be an indirect expropriation.

Dispute Settlement

ICSID Convention and New York Convention

Ecuador withdrew from the International Centre for the Settlement of Investment Disputes (ICSID Convention) in 2010. Ecuador is a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

Ecuador’s National Assembly voted on May 3, 2017 to terminate 12 of its bilateral investment treaties, including its agreement with the United States. The Government of Ecuador notified the U.S. government of its withdrawal from the BIT on May 18, 2017, with the effective date of May 18, 2018. The treaty further specifies that all U.S. investments in place at the date of termination enjoy the protections of the treaty for the subsequent ten years. There have been numerous claims against Ecuador under the BIT that have gone to international arbitration. There are two active cases awaiting a final decision.

International Commercial Arbitration and Foreign Courts

A number of U.S. companies operating in Ecuador, most notably in the petroleum sector, have filed for international arbitration due to investment claims. The Government of Ecuador has in the past treated these disputes as a political issue, speaking negatively about investors involved in these cases. Payment of arbitration awards has taken more than a year, though the Government of Ecuador has paid all final awards. Ecuador’s 2008 Constitution limited investor-state arbitration to regional arbitration entities, and was the primary driver of the 2017 termination of BITs.

Bankruptcy Regulations

Ecuador is ranked 160 out of 190 in the category of Ease of Resolving Insolvency in the World Bank’s 2020 Ease of Doing Business Report. With the goal of protecting consumers and preventing a real estate bubble, the National Assembly approved in June 2012 a law that allows homeowners to default on their first home and car loan without penalty if they forfeit the asset. The provisions do not apply to homes with a market value of more than 500 times the basic monthly salary (currently USD 200,000) or vehicles worth more than 100 times the basic monthly salary (currently USD 40,000).

In cases of foreclosure, the average time for banks to collect on debts is 5.3 years, usually taking 4.5 years for courts to approve the initiation of foreclosures. After the appointment and acceptance of an auctioneer, it would take about six months for the auction to take place. World Bank’s Doing Business Report estimates that the foreclosure proceedings would result in costs equal to about 18% of the value of the estate in question, and a recovery rate of 18.3 cents on the dollar.

4. Industrial Policies

Investment Incentives

In August 2018 the National Assembly approved the Productive Development Law that provides income tax exemptions and VAT exemptions to attract investments, good for 12 years in all areas except the cities of Quito and Guayaquil, where it is 8 years, and 20 years in border regions. In December 2015, Ecuador’s National Assembly approved a Public-Private Partnership law intended to attract investment. The law offers incentives, including the reduction of the income tax, value added tax, and capital exit tax, for investors in certain projects. It designates Latin American arbitration bodies as the dispute resolution mechanism. The law came into effect upon publication in the Official Registry on December 18, 2015. The Organic Law of Production Incentives and Tax Fraud Prevention, which took effect on December 30, 2014, provides tax incentives related to depreciation calculations and income tax rates, which could benefit some foreign investors. The Ecuadorian government is moving to a Public-Private Partnership model to attract investments particularly in the energy and transportation sectors, but does not yet offer sovereign guarantees or joint finance on those projects.

Foreign Trade Zones/Free Ports/Trade Facilitation

The 2010 Production Code authorized the creation of Special Economic Development Zones (ZEDEs) that are subject to reduced taxes and tariffs. The government considers the extent to which projects promote technology transfer, innovation, and industrial diversification when granting ZEDE status; foreign owned firms have the same investment opportunities as national firms.

Performance and Data Localization Requirements

Nationally the government does not mandate local employment, however the Organic Law of the Amazon, approved by the National Assembly on May 21, 2018, mandates that any company, national or foreign, operating within the area covered by the law (the Amazon Basin) must hire at least 70% of their staff locally, unless they cannot find qualified labor from that area.

There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption. Companies can transmit data freely into and out of Ecuador, and there are no requirements to store data within the country. A draft Data Protection Law has been presented to the National Assembly, but it does not contain provisions that would affect foreign investors any more than local investors.

On October 11, 2016, Ecuador’s National Assembly passed the Code of the Social Economy of Knowledge, Creativity, and Innovation, covering a wide range of intellectual property matters. Article 148 of the Code establishes that agencies must give preference to open source software with content developed in Ecuador when procuring software for government use. Executive Decree 1073 of June 2020 mandated an order of preference when procuring software for the government: 1) Open Source; 2) Ecuadorian Developed 3) Software with Some Ecuadorian Content and 4) Internationally Developed.

Visa and residency requirements are relatively relaxed and do not inhibit foreign investment.

5. Protection of Property Rights

Real Property

Ecuador ranks 73rd out of 190 in the 2018 World Bank’s Doing Business Report’s category for Ease of Registering Property. Foreign citizens are allowed to own land. Mortgages are available and the recording system is generally reliable.

Intellectual Property Rights

Enforcement against intellectual property rights (IPR) infringement remains a problem in Ecuador. In April 2016, the United States Trade Representative moved Ecuador from Priority Watch List to Watch List in its annual Special 301 Report on intellectual property, and Ecuador has remained on the Watch List since then. The government has drafted implementing regulations for the 2016 Code of the Social Economy of Knowledge, Creativity, and Innovation, which is the legislation that covers Intellectual Property Rights, and allowed for public input into the regulations. However those regulations have not yet been approved. The Ecuadorian government plans to revise the Code but with no date for completion.

Ecuador is on the Notorious Markets List. Piracy of computer software and counterfeit activity in brand name apparel is widespread, and enforcement is weak. Pirated CDs and DVDs are readily available on many streets and in shopping malls, and copyright enforcement remains a significant problem. A lack of ex-officio authority for the Ecuadorian Customs Service limits its scope of action to seize IPR infringing products, and there have been few enforcement actions to protect IPR. The National Service for Intellectual Rights (SENADI – formerly Ecuadorian Intellectual Property Institute (IEPI)) was established in January 1999 to handle patent, trademark, and copyright registrations. SENADI reports information on its activities on its website at http://www.propiedadintelectual.gob.ec/ .

Ecuador is a member of the World Intellectual Property Organization (WIPO). For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

6. Financial Sector

Capital Markets and Portfolio Investment

The 2014 Law to Strengthen and Optimize Business Partnerships and Stock Markets created the Securities Market Regulation Board to oversee the stock markets. Investment options on the Quito and Guayaquil stock exchanges are very limited. Sufficient liquidity to enter and exit sizeable positions does not exist in the local markets. The five percent capital exit tax also inhibits free flow of financial resources into the product and factor markets. Foreigners are able to access credit on the local market but interest rates are high and the number of credit instruments is limited.

Money and Banking System

Ecuador is a dollarized economy, and its banking sector is healthy. According to the Banking Association (ASOBANCA), approximately 51 percent of the population has access to a bank account. Ecuador’s banks hold in total USD 43.7 billion in assets, with the largest banks being Banco Pichincha with about USD 11.4 billion in assets, Banco Pacifico with about USD 6.1 billion, Banco Guayaquil with about USD 5.1 billion, and Banco Produbanco with about USD 4.9 billion. ASOBANCA estimates 3.4% of loans are non-performing. Foreigners require residency to open checking accounts in Ecuador.

Ecuador’s Superintendence of Banks regulates the financial sector. Between 2012 and 2013, the financial sector was the target of numerous new restrictions. By 2012, most banks had sold off their brokerage firms, mutual funds, and insurance companies to comply with Constitutional changes following a May 2010 referendum. The amendment to Article 312 of the Constitution required banks and their senior managers and shareholders with more than six percent equity in financial entities to divest entirely from any interest in all non-financial companies by July 2012. These provisions were incorporated into the Anti-Monopoly Law passed in September 2011.

The Organic Monetary and Financial Code, published in the Official Registry September 12, 2014, created a five-person Monetary and Financial Policy and Regulation Board of presidential appointees to regulate the banking sector. The law gives the Monetary and Financial Policy and Regulation Board the ability to prioritize certain sectors for lending from private banks. The Code also established that finance companies had to become banks, merge, or close their operations by 2017. Of the 10 finance companies in Ecuador, two became banks; six closed their operations or are in the process of closing; and two were absorbed by other financial institutions.

Electronic currency appeared in 2014 with the approval of the Organic Monetary and Financial Code, which established the exclusive management of the system by Ecuador’s Central Bank. In 2017, with the approval of the Law for the Reactivation of the Economy, Strengthening of Dollarization and Modernization of Financial Management, electronic currency management was transferred to private banks. The Central Bank issued Regulation 29 in July 2012 requiring all financial transfers (inflows and outflows) to be channeled through the Central Bank’s accounts. In principle the regulation increases monetary authorities’ oversight and prevents banks from netting their inflows and outflows to avoid paying the five percent capital exit tax.

Foreign Exchange and Remittances

Foreign Exchange

Ecuador adopted the U.S. dollar as the official currency in 2000. Foreign investors may remit 100 percent of net profits and capital, subject to a five percent capital exit tax. There are no restrictions placed on foreign investors in transferring or repatriating funds associated with an investment.

Remittance Policies

Resolution 107-2015-F from Ecuador’s Monetary and Finance Board issued in July 2015 exempted some payments to foreign lenders from the capital exit tax. Among other requirements, the duration of the loan must be more than 360 days, the loan must be registered with the Central Bank, and the resources must be destined for specific purposes such as to fund small businesses or social housing.

The Financial Action Task Force (FATF) announced October 23, 2015 that it had removed Ecuador from the list of countries with strategic deficiencies in anti-money laundering and countering the financing of terrorism (AML/CFT) regimes. Ecuador will undergo its next FATF mutual evaluation in 2021.

Sovereign Wealth Funds

The Government of Ecuador does not maintain a Sovereign Wealth Fund (SWF). Public Finance reforms under debate at the time of writing this report included the establishment of sovereign funds to invest revenue from extractive industries and hedge against oil and metals price fluctuations.

7. State-Owned Enterprises

The SOEs in Ecuador are concentrated primarily in the petroleum, electricity, and telecommunications sectors and combined have approximately 30,000 employees. The government owns an airline, a railroad company, a cement company, and a university. As part of the government’s austerity measures to deal with the COVID-19-related economic crisis, the government announced in May 2020 the liquidation of the airline and the closing of the railroad company. Two SOEs, Petroamazonas and Petroecuador, control the petroleum sector. The government has an optimization plan for some of these entities, reducing the total from an original of 22 to 15 by merging some and dissolving others. Ecuador’s Coordinator of Public Companies maintains a list of SOEs at http://www.emco.gob.ec/Emco2/empresas-publicas-2/ .

The 2009 Organic Law of Public Enterprises regulates state-owned enterprises (SOEs). SOEs are most active in areas designated by the 2008 Constitution as strategic sectors. SOEs follow a special procurement regime with greater flexibility and limited oversight. The Law of Public Enterprises requires SOEs to follow generally accepted accounting principles; however, SOEs are not required to follow the same accounting practices as the central government, nor do they have to participate in the electronic financial management system used in most of the public sector for budget and accounting management. SOEs are eligible for government guarantees, and face lower tax burdens than private companies.

Ecuador is not party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization.

Privatization Program

The Ecuadorian Constitution prohibits privatization of state-owned enterprises, but the Ecuadorian government is seeking to offer long term concessions to operate some of its assets, such as the Sopladora hydroelectric plant. In addition, the Ministry of Production, Trade, Investment and Fisheries is proposing a number of projects to be developed as potential public private partnerships.

8. Responsible Business Conduct

Article 66 of the 2008 Constitution guarantees the right to pursue economic activities in a manner that is socially and environmentally responsible. NGOs such as the Institute of Corporate Social Responsibility and the Ecuadorian Consortium for Social Responsibility promote responsible business conduct. Many Ecuadorian companies have programs to further responsible business conduct within their organizations. The GOE committed in March 2018 to implement the Extractive Industries Transparency Initiative (EITI), and has set up a multi-stakeholder group and developed an EITI work plan, but has not yet fully adhered to the initiative.

9. Corruption

Corruption is a serious problem in Ecuador, and one that the government is confronting. Numerous cases of corruption have recently been tried, resulting in convictions of high-level officials, including former Vice President Jorge Glas. U.S. companies have cited corruption as an obstacle to investment, with concerns related specifically to non-transparent public tenders, dispute resolution and payment of arbitration awards.

Ecuadorian law provides criminal penalties for corruption by public officials, but the government has not implemented the law effectively, and officials have engaged in corrupt practices. Ecuador ranked 93 out of 198 countries surveyed for Transparency International’s 2019 Corruption Perceptions Index and received a score of 38 out of 100. High-profile cases of alleged official corruption involving state-owned petroleum company PetroEcuador and Brazilian construction firm Odebrecht illustrate the significant challenges that confront Ecuador with regards to corruption.

Illicit payments for official favors and theft of public funds reportedly take place frequently. Dispute settlement procedures are complicated by the lack of transparency and inefficiency in the judicial system. Offering or accepting a bribe is illegal and punishable by imprisonment for up to five years. The Controller General is responsible for the oversight of public funds and there are frequent investigations and occasional prosecutions for irregularities.

Ecuador ratified the UN Anticorruption Convention in September 2005. Ecuador is not a signatory to the OECD Convention on Combating Bribery. The 2008 Constitution created the Transparency and Social Control (CPCCS) branch of government, tasked with preventing and combating corruption, among other things. The 2018 national referendum converted the CPCCS from an appointed to a popularly elected body. In December 2008, President Correa issued a decree that created the National Secretariat for Transparency (SNTG) to investigate and denounce acts of corruption in the public sector. The SNTG became an undersecretariat and was merged with the National Secretariat of Public Administration June 2013. President Moreno established the Anticorruption Secretariat within the Presidency in February 2019 but disbanded it in May 2020 for allegedly intervening in corruption investigations conducted by the Office of the Prosecutor General. The CPCCS can receive complaints and conduct investigations into alleged acts of corruption. Responsibility for prosecution remains with the Office of the Prosecutor General.

Resources to Report Corruption

Through the Function of Transparency and Social Control, alleged acts of corruption can be reported by dialing 159 within Ecuador. The Council for Citizen Participation and Social Control also maintains a web portal for reporting alleged acts of corruption: http://www.cpccs.gob.ec . The Attorney General’s Office actively pursues corruption cases and receives reports of corruption as well.

10. Political and Security Environment

Popular protests in 1997, 2000, and 2005 contributed to the removal of three elected presidents before the end of their terms. Large-scale but peaceful demonstrations against the Correa government occurred in June 2015. Some indigenous communities opposed to natural resource development have blocked access by petroleum and mining companies. Nationwide violent protests erupted in October 2019 to oppose the government’s decision to remove fuel subsidies, paralyzing the country for ten days and causing significant property damage. A dialogue between the government and indigenous protest leaders, mediated by the United Nations and the Catholic Church, led to the government’s decision to restore the fuel subsidies. Security along the border with Colombia deteriorated significantly in late 2017 and early 2018, when dissident FARC narcoguerrilla groups attacked police and military units and kidnapped civilians, resulting in several deaths. Military and police increased their presence in the zone and violence in the northern border area calmed in 2019, although illicit activities continue.

11. Labor Policies and Practices

While Ecuador’s Statistics Institute shows 65 percent workforce participation, and an unemployment rate of 3.8 percent, the official underemployment rate is 17.8 percent, and it is estimated that up to 60 percent of workers are in the informal sector. Semi-skilled and unskilled workers are relatively abundant at low wages. The supply of available workers is high due to layoffs in sectors affected by Ecuador’s flat economic growth since 2014. The COVID-19 economic crisis is estimated to have resulted in the loss of 200,000 jobs in the formal sector. In addition, first Colombian and now Venezuelan migrants have added to the labor pool. The National Wages Council and Ministry of Labor Relations set minimum compensation levels for private sector employees annually. The minimum basic monthly salary for 2020 is USD 400 per month.

Ecuador’s Production Code requires that workers be paid a dignified wage, defined as an amount that would enable a family of four with 1.6 wage earners to be able to afford basic necessities. The cost and the products that are considered basic necessities are determined by Ecuador’s Statistics Institute (INEC). In December 2019, the cost of basic necessities was USD 717.08, while the official family wage level is at USD 735.47. As of December 2019, INEC estimated 38.8 percent of workers had adequate employment. INEC defines adequate employment as earning at least the minimum basic salary working 40 hours per week.

Ecuador’s National Assembly approved in June 2020 limited labor reforms in an emergency law valid for two years to address the economic impacts of COVID-19. These reforms allowed for the reduction of working hours up to 50 percent and salary up to 45 percent; ability to modify a labor contract with mutual agreement between employer and employee; new temporary contracts for new investments that can be changed to permanent contracts at the end of the temporary period; and layoffs without severance payments only when the company closes entirely.

Ecuador’s National Assembly passed a labor reform law in March 2016 intended to promote youth employment, support unemployed workers, and introduce greater labor flexibility for companies suffering from reduced revenue. The law established a new unemployment insurance program, a subsidized youth employment scheme, temporary reductions in workers’ hours for financially strapped companies, and nine months of unpaid maternity or paternity leave.

The Law for Labor Justice and Recognition of Work in the Home, which included several changes related to labor and social security, took effect in April 2015. The law limits the yearly bonus paid to employees, which is equal to 15 percent of companies’ profits and is required by law, to 24 times the minimum wage. Any surplus profits are to be handed over to IESS. The law also mandates that employees’ thirteenth and fourteenth month bonuses, which are required by law, be paid in installments throughout the year instead of in lump sums. Employees have the option to opt out of this change and continue to receive the payments in lump sums. The law eliminates fixed-term employee contracts and replaced them with indefinite contracts, which shortens the allowable trial period for employees to 90 days. The law also allows participation in social security pensions for non-paid work at home.

The Labor Code provides for a 40-hour work week, 15 calendar days of annual paid vacation, restrictions and sanctions for those who employ child labor, general protection of worker health and safety, minimum wages and bonuses, maternity leave, and employer-provided benefits. The 2008 Constitution bans child labor, requires hiring workers with disabilities, and prohibits strikes in most of the public sector. Unpaid internships are not permitted in Ecuador.

Most workers in the private sector and at SOEs have the constitutional right to form trade unions and local law allows for unionization of any company with more than 30 employees. Private employers are required to engage in collective bargaining with recognized unions. The Labor Code provides for resolution of conflicts through a tripartite arbitration and conciliation board process. The Code also prohibits discrimination against union members and requires that employers provide space for union activities.

Workers fired for organizing a labor union are entitled to limited financial indemnification, but the law does not mandate reinstatement. The Public Service Law enacted in October 2010 prohibits the vast majority of public sector workers from joining unions, exercising collective bargaining rights, or paralyzing public services in general. The Constitution lists health; environmental sanitation; education; justice; fire brigade; social security; electrical energy; drinking water and sewerage; hydrocarbon production; processing, transport, and distribution of fuel; public transport; and post and telecommunications as strategic sectors. Public workers who are not under the Public Service Law may join a union and bargain collectively since they are governed by the provisions under the Labor Code.

12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs

DFC operates in Ecuador under a pre-existing OPIC agreement and has signed several loan agreements aimed at increasing local bank lending to small and medium enterprises and female entrepreneurs. DFC is also looking at possible loans to infrastructure projects in the energy sector. Ecuador is a signatory to the Multilateral Investment Guarantee Agreement.

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) ($B USD) 2018 $107.4 2018 $108.4 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2018 $898 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 2018 $30 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 2018 17.4% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

* Source for Host Country Data: Central Bank of Ecuador. The Central Bank publishes FDI calculated as net flows only. Outward Direct Investment statistics are not published by the 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 $966.2 100% Total Outward Amount 100%
Canada $237.9 25% N/A N/A
Spain $149.6 15% N/A N/A
Netherlands $110.9 11% N/A N/A
United States $75.6 7% N/A N/A
Germany $45.1 5% N/A N/A
“0” reflects amounts rounded to +/- USD 500,000.

Source: Ecuador Central Bank, no Information available on the IMF’s CDIS website, and there is no information available on Outward Direct Investment

Table 4: Sources of Portfolio Investment
Data not available.

14. Contact for More Information

Post contact for this report at Embassy Quito is Geoffrey Schadrack at schadrackgf@state.gov.

Guyana

Executive Summary

Guyana is located on South America’s North Atlantic coast, bordering Venezuela, Suriname, and Brazil. Guyana is an upper middle-income country according to the World Bank. In 2019, estimated inflation was below 2.5 percent with a 4.4 percent growth Gross Domestic Product (GDP). With the advent of first oil, the Guyanese economy is poised to become one of the best performing economies in the Western Hemisphere with an optimistic projected GDP growth rate in 2020 exceeding 50 percent. In response to COVID-19, the Bank of Guyana anticipated a 10 percent contraction in non-oil sectors for 2020. Guyana’s economy is driven primarily by commodities such as gold, bauxite, rice, and sugar. The United States was Guyana’s largest trading partner in 2019.

Guyana’s medium-term prospects remain positive with the discovery of vast oil reserves in Guyana’s waters that will provide decades of substantial oil revenues. The Government of Guyana (GoG) created a sovereign wealth fund for the oil revenues and plans to spend most of the near-term revenue on education, health, and infrastructure.

Outside the oil industry, Guyana’s economy has been hampered by political uncertainty that started in December of 2018 when the ruling administration fell to a no-confidence vote. Elections were finally held on March 2, but due to various legal and political delays, results were delayed, leaving many foreign investors in a holding pattern. In addition to the political uncertainty, the COVID-19 pandemic resulted in the government closing the airport to international flights, closing non-essential businesses, and implementing a curfew from 6 a.m. until 6 p.m. that resulted in a further contraction of the economy. Despite these challenges, Guyana is still projected to lead the Caribbean in GDP growth for 2020.

The Government of Guyana (GoG) actively encourages foreign direct investment (FDI) and offers tax concessions for priority projects through its Guyana Office for Investment (GO-INVEST). According to the Bank of Guyana’s Half -Year Report for 2019, Guyana’s FDI increased from $514.8M to $826.4M, an increase of 60.5 percent. This growth in FDI was fuelled mainly by developments within the oil and gas sector and all the industries that support it. Guyana recently developed a local content policy to help local companies take advantage of this business sector. Legislation to enforce the preliminary local content policy is still forthcoming, so the impact on oil and gas companies investing in Guyana is unknown.

Guyana offers both foreign and domestic potential investors a broad spectrum of investment choices, including agriculture, petroleum, construction, wholesale and retail, health, transportation, and agro-processing. Furthermore, opportunities exist within the services sector such as renewable energy, business process outsourcing (BPO), call centers, information technology services, hospitality, and tourism. Guyana is the only English-speaking country in South America and has a sizeable labor market, creating unique potential for call centers and other industries. The construction, wholesale and retail, transportation, and storage sectors experienced notable growth in 2019.

In 2015, ExxonMobil began exploratory drilling off Guyana’s coast, investing nearly $4 billion into the project thus far. ExxonMobil found recoverable oil in 16 out of 18 attempts and increased its estimate of recoverable oil to 8 billion barrels of -equivalent, with ongoing exploration from several international oil companies.

Guyana’s Green State Development Strategy, which was finalized in May 2019, serves as the guiding document for government priorities under the administration of President David Granger. These priorities include a focus on agriculture, supporting emerging and value-added industries, improving business climate, investing in sea defence, and transitioning to nearly 100 percent renewable energy.

Perceptions of corruption persist in Guyana. Transparency International’s 2019 report scored Guyana at 85 out of 180 ranked economies. One key concern was the insufficient response to a high crime rate. Guyana also ranked 134 out of 190 countries in the World Bank’s 2019 report on Ease of Doing Business. The major shortcomings included a weak judicial system, lack of intellectual property protection, corruption, and bureaucracy.

Guyana continues to benefit from official development assistance from multiple donors with projects focused on health care, education, economic development, climate change adaptation, disaster mitigation, and citizen security.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 85 of 180 https://www.transparency.org/cpi2019
World Bank’s Doing Business Report 2019 134 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) N/A N/A http://apps.bea.gov/
international/factsheet/
World Bank GNI per capita 2018 USD 4,770 https://data.worldbank.org/
country/guyana?view=chart

1. Openness To, and Restrictions Upon, Foreign Investment

Policies toward Foreign Direct Investment

The Government of Guyana (GoG) recognizes foreign direct investment (FDI) as a critical part of growing the economy. In 2019, the GoG published its Green State Development Strategy (GSDS) which highlights the priority areas over the next 20 years. These priorities include investment in agriculture, agro-processing, light manufacturing, renewable energy, tourism, and Information and Communications Technology (ICT).

The Government of Guyana promotes FDI through its Guyana Office for Investment (GO-INVEST). There are no laws and practices that discriminate against foreign investors. Companies willing to invest in Guyana may negotiate tax concessions with the GoG through its investment facilitation agency GO-INVEST.

GO-INVEST focuses primarily on agriculture and agro-processing, tourism, manufacturing, ICT, seafood and aquaculture, and wood processing. Potential investors should note that GO-INVEST is the first point of contact to obtain necessary permits and tax concessions upon which an investment agreement is prepared by GO-INVEST and sent to the Guyana Revenue Authority (GRA). GO-INVEST has been targeted by Guyana’s Ministry of Business for capacity-building assistance to help improve its operations in support of interested investors.

In January of 2020, the GoG released its local content policy framework which is intended to provide a guideline for future legislation on the subject. Criticism of the policy within Guyana’s business community emphasizes the absence of first preference to local companies. Presently, the policy focuses on upstream oil and gas activities. The GoG intends to develop the policy further to include skills development of Guyanese nationals and supplier development of Guyanese companies.

Limits on Foreign Control and Right to Private Ownership and Establishment

Guyana’s constitution specifically protects the rights of foreigners to own property or land in Guyana. Foreign and domestic firms possess the right to establish and own business enterprises and engage in all forms of remunerative activity. Private entities are governed by the Companies Act and are free to acquire or dispose of interest in accordance with the law.

Foreign and domestic firms have the right to establish and own business enterprises and engage in all forms of remunerative activity. Some key sectors like aviation, forestry, banking, and tourism are heavily regulated and require licensing. The process to obtain licenses can be time consuming and may in some instances require approval by subject minister.

According to GO-INVEST’s “Investor’s Roadmap,” the estimated processing time to obtain the approvals to lease state or government-owned lands is about one year. Some investors report much longer processing times. Restrictions on foreign ownership of property exist in the mining sector for small-and-medium-scale mining concessions. Foreign investors interested in participating in the industry at those levels may establish joint ventures with Guyanese nationals, under which the two parties agree to jointly develop a mining property. This type of relationship can carry a high level of risk because arrangements are governed only by private contracts and the sector’s regulatory agency, Guyana Geology and Mines Commission, does not oversee them. The U.S. Embassy strongly encourages investors to exercise due diligence when exploring their options.

Other Investment Policy Reviews

Guyana’s macro-economic fundamentals have remained stable over the past decade. The current administration has articulated its policy focus through the Green State Development Strategy. The developmental policies include incentives for priority areas including renewable energy, agriculture, and agro-processing. The Ministry of Finance published its Public Private Partnership framework to finance such priority areas.

Guyana remains of key economic significance to the Caribbean region with its exceptional growth rate attributed to its oil discoveries. Government policy focuses on attracting inward FDI. The GoG applies national treatment to all economic activities, except for certain mining operations, though some foreign-owned companies conduct large-scale mining operations in the country. During the past year, the GoG took actions to improve the business environment, such as lowering corporate income tax rates. Incentives for FDI include income tax holidays, and tariff and value-added tax (VAT) exemptions.

The World Trade Organization (WTO) published a trade policy review in 2015.

  • WTO –

Business Facilitation

All companies operating in Guyana must register with the Registrar of Companies.  Registration fees are lower for companies incorporated in Guyana than those incorporated abroad.  Locally incorporated companies are subjected to a flat fee of approximately $300 and a company incorporated abroad is subject to a fee of approximately $400. Businesses in the sectors requiring specific licenses, such as mining, telecommunications, forestry, and banking must obtain operation licenses from the relevant competent authorities before commencing operations.

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

Outward Investment

The GoG is focused on attracting inward investment into Guyana.  GO-INVEST also supports Guyanese investors and exporters looking to operate overseas.  In 2019, the Natural Resource Fund act was passed for the creation of a sovereign wealth fund. The act provides the Minister of Finance with the responsibility and overall management of the fund.  The act provides for the minister to enter into an agreement with the Bank of Guyana for the operational management of the fund.  This fund is currently held at the Federal Reserve Bank of New York and received its first US $55M deposit from oil revenue in March, along with the country’s first 2% royalty payment from the total sale of the oil.

3. Legal Regime

Transparency of the Regulatory System

Legal, regulatory, and accounting systems are consistent with international norms. Guyana is a democratic state and a separation of powers exists among the executive, legislative, and judiciary.

As captured in the World Bank’s Doing Business Report, bureaucratic procedures are cumbersome, often requiring the involvement of multiple ministries. Investors report having received conflicting messages from various officials, and difficulty determining where the authority for decision-making lies.  In the absence of adequate legislation, much decision-making remains centralized. An extraordinary number of issues continue to be resolved in the presidential cabinet, a process that is commonly perceived as opaque and slow. Attempts to reform Guyana’s many bureaucratic procedures have not succeeded in reducing red tape.

Draft pieces of legislation are available in the Parliament Library and on the National Assembly website (http://parliament.gov.gy/ ) for public review.

International Regulatory Considerations 

Guyana has been a World Trade Organization (WTO) member since 1995 and adheres to Trade-Related Investment Measures (TRIMs) guidelines. Guyana is a member of the Caribbean Community (CARICOM) and seeks to harmonize its regulatory systems with the rest of the members. The Forest Stewardship Council, Verification and Legal Origin, Reduce Emissions from Deforestation and Forest Degradation (REDD+), are some of the norms incorporated in the regulations.

Guyana has laws on intellectual property rights and patents. However, the lack of enforcement allows for the spread of illegally obtained content.

Laws and Regulations on Foreign Direct Investment 

Legislation exists in Guyana to support foreign investment in the country, but the implementation of relevant legislation continues to be inadequate. The objectives of the Investment Act of 2004 and Industries and Aid and Encouragement act 1951 are to stimulate socio-economic development by attracting and facilitating foreign investment. Other relevant laws include: the Income Tax Act, the Customs Act, the Procurement Act of 2003, the Companies Act of 1991, the Securities Act of 1998, and the Small Business Act. Regulatory actions are still required for much of this legislation to be effectively implemented. The Companies Act provides special provisions for companies incorporated outside of Guyana called “external companies.”

Guyana has no known examples of executive interference in the court system that have adversely affected foreign investors. The judicial system is generally perceived to be slow and ineffective in enforcing legal contracts. The 2020 World Bank’s Doing Business Report, states that it takes 581 days to enforce a contract in Guyana.

Competition and Anti-Trust Laws 

The Competition Commission of Guyana was established under the Competition and Fair Trading Act of 2006. The Competition and Fair Trading act seeks to promote, maintain, and encourage competition; to prohibit the prevention, restriction, or distortion of competition and the abuse of dominant positions in trade; and, to promote the welfare and interests of consumers. The Competition Commission and Consumer Affairs Commission (CCAC) is responsible for investigating complaints by agencies and consumers, eliminating anti-competitive agreements, and may institute or participate in proceedings before a Court of Law.

Expropriation and Compensation 

The government can expropriate property in the public interest under the Acquisition of Land for Public Purposes Act 2001. There is adequate legislation to promote and protect foreign investment. However, the effectiveness of implementation remains cumbersome. Many reports view the judicial system as being slow and ineffective in enforcing legal contracts. There have been no recent cases of expropriation.  All companies are encouraged to conduct due diligence and seek appropriate legal counsel for any potential questions prior to doing business in Guyana.

Dispute Settlement 

Guyana is a party to the International Centre for Settlement of Investment Disputes (ICSID Convention). Additionally, Guyana has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), which went into force in December of 2014.

Investor-State Dispute Settlement 

Guyana does not have a bilateral investment treaty with the United States. Negotiations began in 1993 but broke down in 1995. Since then, the two countries have not conducted subsequent negotiations.

Double taxation treaties are in force with Canada (1987), the United Kingdom (1992), and CARICOM (1995). Other double taxation agreements remain under negotiation with India, Kuwait, and the Seychelles. The CARICOM-Dominican Republic Free Trade Agreement provides for the negotiation of a double taxation agreement, but no significant developments have occurred since March 2009.

There are two ongoing investment disputes involving U.S. interests in Guyana. U.S. company Atlantic Tele-Networks owns 80 percent of Guyana Telephone and Telegraph (GTT). The current administration would like to end GTT’s monopoly on international data transmissions and increase competition. GTT’s competitor, Digicel, is allegedly sending data to a satellite facility in Suriname, illegally bypassing GTT’s international data link. Despite GTT’s protests to the government, Digicel has continued to operate, apparently in violation of the monopoly agreement. GTT is also accused of owing $44 million in outstanding taxes since 1991, which could be used to negotiate out the monopoly. All three issues are linked, and negotiations between the government and GTT are proceeding. U.S. company Caribbean Telecommunications Ltd. has filed a lawsuit against Guyana Telephone and Telegraph (GTT), alleging that GTT engaged in unfair trade practices to cancel the company’s license to provide cellular services in Guyana.

International Commercial Arbitration and Foreign Courts 

International arbitration decisions are enforceable under the Arbitration Act of British Guiana of 1931, as amended in 1998. The Act is based on the Geneva Convention for the Execution of Foreign Arbitral Awards of 1927. The GoG enforces foreign awards by way of judicial decisions or action, and such awards must be in line with the policies and laws of Guyana.

According to the 2020 World Bank’s Doing Business Report, resolving disputes in Guyana takes 581 days, and costs 27 percent of the value of the claim on average. According to many businesses, suspected corrupt practices and long delays make the courts an unattractive option for settling investment or contractual disputes, particularly for foreign investors unfamiliar with Guyana.

The GoG has set up the Commercial Court has been set up to expedite commercial disputes, but this court only has one judge presiding, and companies have reported that it is overwhelmed by a backlog of cases.  The Caribbean Court of Justice, based in Trinidad and Tobago, is Guyana’s court of final instance.

Bankruptcy Regulations 

The 1998 Guyana Insolvency Act provides for the facilitation of insolvency proceedings.  The Financial Institutions Act of 2004, gives the Central Bank power to take temporary control of financial institutions in trouble.  This Act provides legal authority for the Central Bank to take a more proactive role in helping insolvent local banks.

According to data collected by the World Bank Doing Business Report, resolving insolvency in Guyana takes three years on average and costs 28.5 percent of the debtor’s estate, with the most likely outcome being that the company will be sold piecemeal.  The average recovery rate is 18 cents on the dollar. Globally, Guyana stands at 163 in the ranking of 190 economies on the Ease of Resolving Insolvency Report.

4. Industrial Policies

Investment Incentives 

Investment Incentives are designed to advance broader policy goals, such as boosting research and development or promoting regional economies. Guyana’s economy is undergoing economic transformation. The current administration identified a green agenda through its Green State Development Strategy which seeks to develop a “green economy” through supporting sustainable sectors such as renewable energy, agriculture, and manufacturing. The GoG provides tax concessions for these priority sectors.

Guyana offers an array of incentives to foreign and domestic investors alike in the form of exemption from various taxes, accelerated depreciation rates, full and unrestricted repatriation of capital, profits, and dividends. The first point of contact in applying for tax concessions is the Guyana Office for Investment (GO-INVEST). The purpose of GO-INVEST is to promote and encourage investment in Guyana. The GoG encourages investment in the following industries: agriculture and agro-processing, light manufacturing, and services.   Guyana was awarded the “Best Eco-Tourism Award at the ITB global travel fair in Berlin, Germany. Conde Nast Traveller magazine listed Guyana as one of its suggested 20 destinations to visit in 2020.  Research and Development

Research and Development

The GoG’s research and development is decentralized. For the rice industry, the Guyana Rice Development Board creates new variants of rice and the Guyana Sugar Corporation has an extensive program to create various variations of sugar cane. The Ministry of business has a business incubator program which supports the development of new entrepreneurs. University of Guyana is widely viewed as a major stakeholder in research and development. Foreign firms are encouraged to initiate research and development initiatives. ExxonMobil has developed partnerships with the University of Guyana and Conservation International for research and development.

Opportunities can be found on the following websites:

Guyana Office for Investment:  http://goinvest.gov.gy/investment/investment-guide/

The National Procurement & Tender Administration (NPTA):  http://www.npta.gov.gy/

National Industrial & Commercial Investment Limited: http://www.privatisation.gov.gy/

Ministry of Finance : https://finance.gov.gy/procurements/

Foreign Trade Zones/Free Ports/Trade Facilitation

Guyana does not operate free trade zones. However, consideration is ongoing for establishing such zones in Lethem, a Guyanese town on the Brazilian border that relies heavily on commerce in both countries. The GoG announced plans to build a road from Lethem to Georgetown to provide a cheaper and faster method for transporting goods from Brazil to the Guyanese coast.

Guyana became the 53rd WTO member and first South American country to ratify the new Trade Facilitation Agreement (TFA).  The WTO Secretariat received the country’s instrument of acceptance on November 30, 2015. 

Performance and Data Localization Requirements

There are no data localization requirements.  Foreign investors are not required to establish or maintain a certain amount of data storage within the country.

A requirement to hire locally at least 80 percent of employees is applied equally to domestic and foreign investment projects.  Although no explicit government policy regarding performance requirements exists, some are written into contracts with foreign investors and could include the requirement of a performance bond.  Some contracts require a certain minimum level of investment. Investors are not required to source locally, nor must they export a certain percentage of output.   Foreign exchange is not rationed in proportion to exports, nor are there any requirements for national ownership or technology transfer.

5. Protection of Property Rights

Real Property

Guyana ranks 128 out of 190 countries in the 2020 World Bank ranking for Ease of Business registering property. Guyana has a dual registry system of property rights with distinct requirements, processes, and enforcement mechanisms.  The two types of registry systems are deeds (Deeds and Commercial Registry) and title (Land Registry) registries that operate in separate jurisdictions, which in theory helps avoid the problem of double entry and dual registration.   Companies have complained about Guyana’s property rights being overly bureaucratic and complex, with opaque regulations that overlap and compete. Some report that this affects the proper allocation, enforcement, and effectiveness of property rights, as well as the efficiency of property-based markets, such real estate and financial markets (especially primary ones, such as mortgage markets).  The judicial system is generally perceived to be slow and ineffective in enforcing legal contracts. The World Bank’s Doing Business report 2020 reports it takes 581 days to enforce such contracts. 

Intellectual Property Rights

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

No modern legislation exists to protect the foreign-registered rights of investors. Guyana joined the World Intellectual Property Organization (WIPO) and acceded to the Berne and Paris Conventions in late 1994. Guyana has not ratified a bilateral intellectual property rights agreement with the United States. The Granger administration has drafted intellectual property rights legislation which has yet to be tabled in Parliament.

Many businesses reported registration time for a patent or trademark may take in excess of six months. However, there is a lack of effective enforcement to protect intellectual property rights. Patent and trademark infringement are common, as is evident among local television broadcasts of pirated and rebroadcasted TV satellite signals. Media sources reported that piracy of foreign academic textbooks is common. Guyana’s laws have not been amended to fully conform to the requirements of the Trade Related Intellectual Property Rights (TRIPS) Agreement.

Guyana is not listed on USTR’s Special 301 Report to congress or the Notorious Markets List.

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

6. Financial Sector

Capital Markets and Portfolio Investment

Guyana has its own stock market, which is supervised by the Guyana Association of Securities Companies and Intermediaries (GASCI).   Guyana’s local stock market has performed well in 2019 with a year on year increase of 20 percent market capitalization.  Guyana’s financial services sector is estimated to have grown by 4.1 percent at mid-year 2019. Credit is available on market terms. The prime lending rate as at half year was 10.5 percent.  There continues to be significant interest in Guyana’s financial sector. 

Money and Banking System

Monetary policy remains accommodative, aimed at achieving price stability and controlling liquidity within the economy.  The financial sector is regulated by the Bank of Guyana (BOG), the country’s central bank.  The BOG is empowered under the Financial Institutions Act 1995 and Bank of Guyana Act to regulate the financial sector.   Regulation highlights include high levels of liquidity, a strong deposit and asset base, and profitable financial institutions.  Liquidity in the banking system increased by 16.8 percent on account of higher excess reserves and higher balances due from banks abroad.  Net domestic credit of the banking system expanded by 12.8 percent to $1.33M from the December 2018 level of $1.2M on account of higher credit to both the public and private sectors.

Nevertheless,  private sector contacts report that access to finance remains an issue for conducting business.  The prime lending rate contracted by 2.5 percent to 10.5 percent from 13.0 percent as of the third quarter 2019.  The BOG maintains a floating exchange rate.  According to the BoG half-year report, monetary aggregates of broad money expanded by 3.3% while that of reserve money contracted by 1.6%.

Guyana has six commercial banks.  Foreign banks provide domestic services or enter the market with the applicable license from the BoG.  Foreigners may establish a bank account without restrictions.

Guyana continues to strengthen its financial system through implementation of its Anti Money Laundering/Counter Financing of Terrorism (CFT) program and the passage of the National Payments Act 2018.  

Foreign Exchange and Remittances

Foreign Exchange

The Guyana dollar (GYD) is fully convertible and transferable.  The Guyanese dollar is also generally stable and its value against the U.S. dollar. The Guyana dollar weighted mid-rate, relevant for official transactions, remained constant at GYD208.50. The un-weighted average mid-rate was GYD214.04 compared with GYD215.78 for the corresponding period in 2018. Foreign exchange transactions increased by 23.0 percent to $4,646.5 million on account of higher turnovers at banks, private trading houses known as cambios, foreign currency accounts, and hard currency transactions. Aggregate purchases were higher than sales, resulting in a net purchase of $4.9M.

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

Remittance Policies 

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

Sovereign Wealth Fund

The Natural Resources Fund (NRF) Act was passed in the National Assembly in January 2019, providing the framework for the establishment of a sovereign wealth fund.  Shortly after the enactment of the NRF,  Guyana became an associate member of the International Forum of Sovereign Wealth Funds (IFSWF).  The Bank of Guyana manages the NRF, which is held at the Federal Reserve Bank of New York. The opposition party has signalled its intent to repeal the NRF Act based on concerns that the bill was passed after the government was defeated by a vote of no confidence without sufficient input from the political opposition.

7. State-Owned Enterprises

Guyana has ten state-owned enterprises (SOEs) including: National Industrial and Commercial Investments Ltd. (NICIL), Guyana Sugar Corporation (GUYSUCO), MARDS Rice Complex Ltd., National Insurance Scheme (NIS), Guyana Power and Light (GPL), Guyana Rice Development Board (GRDB), Guyana National Newspapers Ltd.(GNNL), Guyana National Shipping Corporation (GNSC), and Guyana National Printers Ltd. (GNPL).

The private sector competes with (SOEs) for market share, credit, and business opportunities.  It is common for (SOEs) in Guyana to have political interventions.  This is driven through the board of directors which are filled with political appointees.  Furthermore, procurement on behalf of SOEs may be passed through the National Procurement and Tender Administration.

The Public Corporation Act requires public corporations to publish an annual report no later than six months after the end of the calendar year. These reports must be audited by an independent auditor.

Privatization Program

In the 1990s, Guyana underwent significant privatization with the divestment of many sectors.  In 1993, the Privatisation Policy Framework Paper known as the “Privatisation White Paper” was tabled in Parliament and made way for the creation of the Privatisation Unit (PU). Its function was to co-ordinate the implementation of the Government of Guyana’s (GoG’s) privatization program. The Privatisation Unit was tasked with:

  • Combining the functions of the Public Corporations Secretariat (PCS) and the National Industrial & Commercial Investments Limited (NICIL);
  • Preparing for Cabinet’s approval, the programme strategy and annual programme targets for privatization or liquidation;
  • Implementing the privatization of State-Owned-Enterprises (SOEs) and assets selected for inclusion in the program;
  • Participating in negotiations for the privatization of SOEs;
  • Reviewing offers and make recommendations to Cabinet on the terms and conditions for the sale of SOEs;
  • Preparing financial and administrative audits of SOEs not selected for privatization;
  • Developing a strategy to build public understanding and support for privatization;
  • Ensuring that transparency of the privatization programm is strictly respected and followed;
  • Monitoring operations of privatised entities in accordance with the terms and conditions of each respective contract;
  • Preparing for Cabinet, broad guidelines on operating policies for privatization, develop action plans for implementation, conduct a public relations campaign and help to build national consensus in support of government’s program.

Foreign investors have an equal access to privatization opportunities. However, there are many reports that the process lacks transparency. Currently, the government is seeking to divest from the sugar industry.

U.S. firms are generally given equal access to these projects through a public bidding process. In some cases, allegations have been made that this bidding process has been less than transparent.  In cases where international financial institution (IFI) funding has been involved in the project, such allegations have been credibly addressed. In cases where the project relied solely on GoG funds, redress has been more problematic to achieve.

8. Responsible Business Conduct

Compared to responsible business conduct (RBC) norms in North America and Europe, Guyana-based businesses lag in adopting RBC policies and activities. Local companies have improved RBC as firms react to increased levels of competition, partly to compete or subcontract with companies in the oil and gas sector that emphasize it.  Guyanese consumers are growing in awareness to RBC principles as the population becomes better sensitized. The GoG has expressed hope that large multinational companies will lead the way on RBC practices, setting an example for smaller local firms to follow, particularly in the extractive industries sector.

With Guyana’s major petroleum discovery, and anticipated production, Guyana joined the Extractive Industries Transparency Initiative (EITI) as a candidate country in October 2017.

9. Corruption 

The law provides criminal penalties for corruption by officials, but the government generally does not enforce the law effectively or uniformly. The relevant laws enacted include: the Integrity Commission Act, State Assets Recovery Act, and the Audit Act. Officials appear to engage in corrupt practices at times with impunity. Several media outlets reported on government corruption in recent years and it remains a significant public concern.  Media and civil society organizations continued to criticize the government for being slow to prosecute corruption cases.  Although the government passed legislation in 1997 that requires public officials to disclose their assets to an Integrity Commission prior to assuming office, media reports suggest that a significant section of public officials did not honor this requirement in 2019.

Widespread concerns remain about inefficiencies and corruption regarding the awarding of contracts, particularly with respect to concerns of collusion and non-transparency.  In his annual report, the Auditor General noted continuous disregard for the procedures, rules, and the laws that govern public procurement system.  There were reports on overpayments of contracts and procurement breaches.  Nevertheless, the country has made some improvements.  According to Transparency International’s 2019 Corruption Perceptions Index (CPI), Guyana is ranked 85 out of 180 countries for perceptions of corruption, advancing 8 spots in comparison to 2018.

10. Political and Security Environment 

Guyana is categorized as a “flawed” democracy according to the Economist Intelligence Unit (EIU). In December 2018 the Government of Guyana fell following the passing of the “no confidence” motion. Subsequently, a series of court cases and eventually the dissolution of Parliament at the end of 2019 allowed for national and regional elections to be held on March 2, 2020. However, ten weeks after elections the results are still unknown. Observers reported that polling on the day of elections were well administered and reflected international standards for democratic elections. Observers reported that the credibility of the process deteriorated during the tabulation of votes. The security environment has further deteriorated following the elections impasse. The security environment in the country continues to be a concern for many businesses. Businesses which are considering investing in Guyana are strongly encouraged to develop adequate security systems.  11. Labor Policies and Practices

11. Labor Policies and Practices

Local legislation governing labor in Guyana includes the National Insurance Act, Guyana Labour Act, Occupation Health and Safety Act, and the Termination of Severance and Pay Act.

According to a 2017  survey by the Guyana Bureau of Statistics, the local labor force was estimated at 299,000 with an unemployment rate of 12.2 percent  and youth unemployment of 22.9 percent .  Rural unemployed population represents the vast majority of the total unemployed (72.9 %), and the unemployment rate for women appears to be substantially higher than that for men (15.6 percent vs. 9.9 percent ).  The survey estimates that between 48.6 percent and 52.7 percent of the employed labor force is holding informal jobs. The percentage of male workers holding informal jobs is higher than that of female workers.  Most Guyanese are employed in the agriculture, wholesale and retail trade sectors.  Given the abundance of unskilled labor following divestment of the sugar industry, the economy is undergoing a structural change with retraining programs and structural changes with the preferred skillset of workers.  Guyana’s HDI for 2018 increased to 0.67 from 0.537, an increase of 24.8 percent.  Guyana’s literacy rate is estimated at 90 percent. There is an ongoing push for Information and Communications Technology (ICT) development within schools which has created a talent pool for this industry.  Recently, there has been a focus on ICT and attracting BPOs.

Guyana has one of the highest emigration rates of tertiary educated nationals. A significant number of businesses report having challenges with staff recruitment and retention.  These issues are linked to a small pool of semi-skilled and skilled workers.  Companies entering Guyana should consider training of employees.

The Trade Union Recognition Act of 1997 requires businesses operating in Guyana to recognize and collectively bargain with the trade union selected by a majority of its workers.  The government, on occasion, has unilaterally imposed wage increases. Guyana adheres to the International Labour Organization (ILO) Convention, protecting worker rights.  Labor dispute mechanisms, such as arbitration, are commonplace. In 2019, the minimum wage of the public sector workers increased to approximately $50 monthly. The private sector has a minimum wage of approximately $210.

12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) renewed its support for U.S. investors in Guyana in 2000, following the settlement of a long-standing dispute between an OPIC client and the GoG.

The Export-Import Bank of the United States (EX-IM) offers insurance and financing to support U.S. firms exporting to Guyana.  EX-IM will consider financing projects in which the total term of the financing is one to twelve months or one to seven 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 2016 $3,504 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A N/A N/A BEA data available at
https://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 2017 $3,185 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 2017 88.7% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

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

Table 4: Sources of Portfolio Investment
Data not available.

14. Contact for More Information

Alexandra King Pile
Political and Economic Counselor

Richard Leo
Economic and Commercial Specialist
Embassy of the United States of America
100 Duke and Young Streets, Kingston
Georgetown, Guyana
Telephone: + (592) 225-4900-9 Ext. 4220 and Ext. 4213
Fax: + (592) 225-8597
Email: commercegeorgetown@state.gov
https://gy.usembassy.gov

Suriname

Executive Summary

The Government of Suriname (GOS) officially supports and encourages business development through local and foreign investment. The overall investment climate favors U.S. investors with experience working in developing countries. To attract foreign direct investment (FDI), authorities have planned to update institutional and legal frameworks to protect investors and eliminate restrictions regarding investment income transfers and control related FDI flows. However, the World Trade Organization’s 2019 Trade Policy Review concluded that Suriname’s investment regime has not changed since its last review in 2013.  The report states that the overall regime, particularly the approval of FDI, may be discretionary rather than rules-based.

The extractives sector has historically attracted significant foreign direct investment, but numerous factors negatively impact the investment climate as a whole. These factors include an unclear process for awarding concessions and public tenders, corruption, institutional capacity constraints, and a lack of overall transparency. Suriname joined the Extractive Industries Transparency Initiative (EITI) in May 2017, but failed to publish its first report and was suspended as of February 2019. The EITI Board reinstated Suriname after it completed its first report in May 2019. Suriname submitted its second report on time, in December 2019.

In January 2020, Apache and Total announced a “significant oil discovery” off the coast of Suriname, followed by a similar discovery in April 2020. Experts estimate that it will take 5-10 years to begin offshore oil production, assuming world oil prices support it. The CEO of state-owned oil company Staatsolie estimates that the government of Suriname could earn $10-$15 billion over the course of 20 years if production reaches similar levels as in neighboring Guyana. U.S.-based Newmont Corporation and Canadian-based IAMGOLD – the two major multinational gold companies in Suriname – expect to produce similar amounts of gold in 2020 as in 2019. On several occasions, local media have reported that Surinamese officials have explored selling a variety of Suriname’s gold and petroleum interests to foreign investors, including the China National Offshore Oil Corporation (CNOOC). Although the government has indicated that such talks have taken place, Suriname did not sell any of its interests in offshore oil or gold production.

Public debt has increased. The government’s debt burden reached 75 percent of gross domestic product (GDP) in 2019, up from 43 percent in 2015. In November 2019, the National Assembly raised the country’s debt ceiling from 60 percent of GDP to 95 percent of GDP. In December 2019, Suriname completed a $125 million sovereign bond offering that allowed the government to take ownership of the Afobaka Hydroelectric Dam. In February 2020, the government admitted that it had taken $197 million from the Central Bank for imports, debt payments, and other unspecified purposes. The money came from term deposits and commercial banks’ foreign currency cash reserves, and was reportedly used without their permission or knowledge. The value of the Surinamese dollar has decreased, foreign currency reserves have fallen, and prices on consumer goods have risen. These developments led to a series of downgrades from international credit rating agencies. In January, Fitch downgraded Suriname’s Long-Term Foreign Currency Issuer Default Rating from B- to CCC. In April, Standard & Poor lowered Suriname’s long-term sovereign credit rating from B+ to CCC+, while Moody’s changed its outlook on Suriname from stable to negative.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 70/180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 162/190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 N/A https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 N/A http://apps.bea.gov/
international/factsheet/
World Bank GNI per capita 2018 $13,820 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Suriname (GOS) officially supports and encourages business development through foreign and local investment. The overall investment climate favors U.S. investors with experience working in developing countries. Investment opportunities exist in mining, agriculture, oil and gas sector, timber, fishing, financial technology, and tourism.

With the exception of petroleum, Suriname has no sector-specific laws or practices that discriminate against foreign investors, including U.S. investors, by prohibiting, limiting or conditioning foreign investment. In the oil sector, the state oil company, Staatsolie, maintains sole ownership of all oil-related activities. Foreign investment is possible through exploration and product sharing agreements with Staatsolie. Staatsolie executes oil exploration agreements with foreign firms through a fair and competitive bidding process. Six U.S. companies operate in Surinamese waters, as well eight firms from other countries. InvestSur is Suriname’s official investment agency. It officially launched in 2018, and its mission is to be the first and primary contact for potential investors, to promote Surinamese exports, and to increase FDI in Suriname. Its staff and its activities are limited. In February 2020, InvestSur received a $10 million loan as part of a program from the Inter-American Development Bank (IDB). According to the IDB, the objectives of the program are to strengthen the capacity of InvestSur, enhance awareness about the Suriname brand, and support exporters and connect local suppliers with investors. Suriname does not have a formal business roundtable or ombudsman aimed at investment retention or maintaining an ongoing dialogue with investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities can establish and own business enterprises and engage in all forms of remunerative activity.

There are no general limits on foreign ownership or control – statutory, de facto, or otherwise. No law requires that domestic nationals own a minimum percentage of domestic companies or that foreign nationals hold seats on the board. No law caps or reduces the percentage of foreign ownership of any private business enterprise.

Except for petroleum, there are no sector-specific restrictions applied to foreign ownership and control. Within the petroleum sector, the law limits ownership to Staatsolie, the state-owned oil company, which maintains sole ownership of all petroleum-related activities. Caribbean Single Market and Economy (CSME) countries do enjoy favored status over other sources of foreign investment, but in practice international firms from beyond the CSME are not denied investment opportunities. An Economic Partnership Agreement (EPA) with the European Union aims to provide European companies better access to Suriname. Suriname has not yet ratified the EPA. Government ministries screen inbound foreign investments intended for the sector of the economy that they oversee. Special commissions screen all necessary legal and financial documents. Screening criteria vary, but are intended to determine a proposed investment’s compliance with local law. The screening process is neither public nor transparent, and therefore could be considered a barrier to investment. One stated goal of InvestSur is to make this process more transparent and to standardize screening for investments.

There is no indication that U.S. investors are especially disadvantaged or singled out by any of the ownership or control mechanisms, sector restrictions, or investment screening mechanisms, relative to other foreign investors.

Other Investment Policy Reviews

The World Trade Organization (WTO) conducted an investment policy review of Suriname in 2019: https://www.wto.org/english/tratop_e/tpr_e/tp491_e.htm 

The Inter-American Development Bank published a report called Framework for Private Development in Suriname in 2013.The World Bank Group published Suriname Sector Competitiveness Analysis, focusing on the agribusiness and extractive sectors in 2017.

Business Facilitation

Legislation has been drafted on competition policy, limited liability company formation, electronic gazettes to reduce company startup costs, intellectual property, consumer protection, electronic transactions, and establishing a secured transaction framework. However, these laws are still pending. The Ministry of Trade, Industry, and Tourism stated that privacy legislation, tourism law, and intellectual property rights were a top priority to get approved before national elections in May 25. However, the National Assembly did not take up those matters. A draft law regarding government procurement is with parliament for discussion. In 2017, parliament adopted new legislation regarding financial statements and reduction of licensed professions. The authorities also plan to implement procedural reforms to streamline cross-border trade. In November 2018, the government passed legislation to establish a Center for Innovation and Productivity. The center is envisioned to collaborate between trade unions, employers, and the government to promote local production and export. In February 2019, the government created a National Training Authority to implement continuing education programs based on input from the private sector. The World Bank’s Doing Business report indicates starting a business requires 66 days. The local Chamber of Commerce and Industry states it can take as little as 30 days. There is no online registration system. Companies must register with the local Chamber of Commerce and Industry, which provides guidance on registration procedures. At the time of registration, the company needs a local notary’s assent to ratify the company bylaws. For non-residents, the notary also sends a request to the Foreign Exchange Commission for approval. Applicants must obtain a tax number at the registration office of the tax department. Applications then go to the Ministry of Justice and Police and finally to the President for approval. The Ministry of Trade, Industry and Tourism launched the Suriname Electronic Single Window (SESW) in September 2019. Online submission and processing of documents required for import, transit of goods, and export is now possible. Outward Investment

The Government does not promote or incentivize outward investment. Suriname’s outward investment is negligible.

The GOS does not restrict domestic investors from investing abroad, but there are no specific mechanisms in place to promote the practice. Due to the small size of the local market, some domestic companies have expanded to CARICOM member states, such as Guyana and Trinidad.

3. Legal Regime

Transparency of the Regulatory System

Suriname does not use transparent policies and effective laws to foster competition. The National Assembly has delayed its vote on a draft competition law. The Competitiveness Unit Suriname coordinates and monitors national competitiveness and is working towards establishing policies and suggesting legislation to foster competition. Current legislation such as tax, environment, health and safety, or other laws are not purposely used to impede investment, but may still form obstacles. Employment protection legislation is among the most stringent in the world. Labor laws, for instance, prohibit employers from firing an employee without the permission of the Ministry of Labor once the employee has fulfilled his or her probationary period, which by law is limited to two months. Tax laws are criticized for overburdening the formal business sector, while a large informal sector goes untaxed. Many public sector contracts and concessions are not awarded in a clear and transparent manner.

Legal, regulatory, and accounting systems are often outdated and therefore not transparent nor consistent with international norms. The National Assembly passed the Act on Annual Accounts in 2017 to create more fiscal transparency by requiring all companies, including state owned enterprises, to publish annual accounts based on the International Financial Reporting Standards (IFRS). The law will go into effect in 2020 for large companies and 2021 for small and medium sized companies.

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

Rule-making and regulatory authority exist within relevant ministries at the national level. It is this level of regulation that is most relevant for foreign businesses. The government may consult with relevant stakeholders on regulations but there is no required public process. The government presents draft laws and regulations to the Council of Minsters for discussion and approval. Once approved, the president’s advisory body, the State Council, considers the draft. If approved, the government presents a draft to the National Assembly for discussion, amendment, and approval, and then to the President for signature. Legislation only goes into effect with the signature of the President and after publication in the National Gazette.

There is no current requirement for specific accounting standards. Some companies create financial reports using The Netherlands Generally Accepted Accounting Principles (NL GAAP), some develop standards internal to the company, and some larger firms use resident international firms for their accounting needs. Not all companies prepare financial statements. There is no current requirement for companies to be audited, though some companies include it in their Articles of Association.

Suriname passed new legislation in October 2018 to professionalize and institute better standards in the accountancy profession. The legislation created the Suriname Chartered Accountants Institute (SCAI) and makes membership mandatory for accountants in Suriname. The board of the SCAI has the responsibility to monitor the quality of the profession and apply disciplinary measures. As per 2020, companies (there is an exception for small companies) are obliged to implement IFRS in their financial reports.

Draft bills or regulations are discussed in view of the public and relevant stakeholders may be consulted. The National Assembly has established the email address feedbackwetgeving@dna.sr as a place where individuals can give their opinion on draft legislation.

There is no centralized online location similar to the Federal Register in the United States where key regulatory actions are published. However, the National Assembly publishes the actual text of adopted laws on its website.

It is unclear what the regulatory enforcement mechanisms that ensure the government follows administrative processes might be, as the processes have not been made accountable to the public. There is no public administration law. The Auditor General’s office is an independent body in charge of supervising the financial management of government funds. The Supreme Audit Institution reports to the National Assembly. The Central Accountant Service exercises control on administrative processes at the ministries and reports to the Ministry of Finance. There is no centralized online location where key regulatory actions or their summaries are published, similar to the Federal Register in the United States.

The minimum wage law was revised by State Decree on July 18, 2019. The government will determine the minimum wage biennially.

Regulatory reform efforts announced in prior years have largely not been fully implemented. Suriname has been planning to introduce VAT for a number of years, but adoption and implementation of a VAT law have been delayed so far.

Regulations are developed by ministries that have jurisdiction over the relevant area, in consultation with involved stakeholders.

It is unclear what the regulatory enforcement mechanisms are, as the process has not been made public.

Regulation is not reviewed on the basis of scientific or data-driven assessments. Scientific studies or quantitative analysis on the impact of regulations or rarely conducted and/or not publicly available for comment.

The government’s executive budget proposal and enacted budget are easily accessible to the public. Actual revenues and expenditures regularly deviate from the enacted budget, and the origin and level of accuracy of some information in the budget were not reliable. A full end-of-year report is not publicly available. The Supreme Audit Institution publishes a limited audit based on self-reporting by the ministries.

The State Debt Management Office (SDMO) is responsible for the operational management of the public debt of the government. Data regarding public debt is published every three months in the Government Gazette of Suriname and on the SDMO website.

International Regulatory Considerations

As a member of CARICOM, Suriname has committed to regionally-coordinated regulatory systems. Suriname uses national and international standards. Standards developed by other (international/regional) standardization bodies that Suriname utilizes include: ISO, Codex Alimentarius, International Electro Technical Commission, CROSQ, ASTM International, COPANT, SMIIC (Standards and Metrology Institute for Islamic Countries), NEN (Nederland Normalisatie Instituut), ETSI, GLOBAL GAP, etc.

Suriname uses national and international standards. Standards developed by other (international/regional) standardization bodies that Suriname utilizes include: ISO, Codex Alimentarius, International Electro Technical Commission, CROSQ, ASTM International, COPANT, SMIIC (Standards and Metrology Institute for Islamic Countries), NEN (Nederland Normalisatie Instituut), ETSI, GLOBAL GAP, etc.

Suriname is a member of the World Trade Organization (WTO). The WTO Committee on Technical Barriers to Trade (TBT) lists only one notification from Suriname in 2015.

Legal System and Judicial Independence

Suriname’s legal system is based on the Dutch civil system. Judges uphold the sanctity of contracts, and enforce them in accordance with their terms. When an individual or company disputes a signed contract, they have the right to take the case to court. The judiciary consistently upholds local law, applies it, and enforces it for local and international businesses. Laws are defined in criminal, civil, and commercial codes and verdicts are based on the judge’s interpretation of those codes. There is no specialized commercial court. The commercial codes contain commercial legislation.

Historically, the judicial system has been considered to be independent of the executive branch. Most observers consider the judicial system to be procedurally competent, fair, reliable, and free of overt government interference. Due to a shortage of judges and administrative staff, processing of civil cases can be delayed. Last year, the Court of Justice appointed seven new judges to ease the delay in court cases. The number of judges is now 26.In November 2019, a Court Martial found President Desire Delano Bouterse guilty of the 1982 murder of fifteen political dissidents during a military regime he headed in the 1980s. In January 2020, President Bouterse was due in court to deliver an objection to the verdict, but the hearing was adjourned and postponed. In August 2019, the National Assembly passed legislation to create a Constitutional Court, which could eventually rule on aspects of the President’s murder case.

Draft regulations may be reviewed by involved stakeholders and they may be given the opportunity to comment. Since October 2019, individuals have also had the option to comment on draft legislation via email at feedbackwetgeving@dna.sr. There is no formal, required public consultation process. Suriname has no general administrative law, so there are no special administrative tribunals. Judges of the regular courts also hear cases of administrative law.Laws and Regulations on Foreign Direct Investment

The overall regime, and more particularly the approval of foreign direct investment (FDI), may be discretionary rather than rules-based, leading to heightened unpredictability and uncertainty, and associated risks of favoritism and corruption.

The National Assembly approved the amendment of the commercial code chapter regarding the establishment of a limited liability company in 2016. Parameters addressing enforcement are forthcoming. In 2019, no new legislation or regulation regarding investments was drafted or implemented.

In March 2019, The National Assembly adopted legislation to join the Kimberley Process Certificate of the World Diamond Council Association.

In August 2019, the National Assembly passed legislation to create a Constitutional Court.

In November 2019, the National Assembly amended the State Debt Act, which raised the government’s debt ceiling from 60% of GDP to 95% of GDP.

In February 2020, former Central Bank Governor Robert van Trikt was arrested on fraud charges. As of May 2020, he remained in custody and his legal case was ongoing. In April 2020, the Attorney General asked the National Assembly to indict Finance Minister Gillmore Hoefdraad on charges related to corruption and money laundering.In March 2020, the National Assembly passed the Foreign Exchange Act, which places constraints on the use of foreign currency in cash transactions and establishes a strict exchange rate for the Surinamese dollar. It also grants the government broad authorities to enforce the law, as well as the power to halt the import of “non-essential” goods. In May 2020, a judge suspended the law over questions concerning its constitutionality. The fate of the law will likely be determined by the nascent Constitutional Court.

In April 2020, the National Assembly passed the COVID-19 State of Emergency Law, which grants the government broad powers to enforce COVID-19-related precautionary measures. It also created a $53 million fund to assist struggling businesses, and it allowed the government to take all loans and advances from local institutions since 2002 and consolidate them into a single mega-loan.

There is no primary one-stop-shop website for investments that provide relevant laws, rules, procedures, and reporting requirements for investors.

Competition and Anti-Trust Laws

There are no domestic agencies currently reviewing transactions for competition-related concerns. There are draft laws on competition and consumer protection that have been pending review by the National Assembly for five years now. According to the authorities, no date for enactment is foreseen. Both draft laws also cover state-owned enterprises. The CARICOM Competition Commission is based in Suriname, and it monitors potential anti-competitive practices for enterprises operating within the CARICOM Single Market and Economy.

Expropriation and Compensation

According to Article 34 of Suriname’s constitution, expropriation will take place “only for reasons of public utility” and with prior compensation. In practice, the government has no history of expropriations. However, Article 42 of Suriname’s constitution specifically refers to all natural resources as property of the nation, and states that the nation has inalienable rights to take possession of all natural resources to utilize them for the economic, social, and cultural development of Suriname.There is no history of expropriation.

According to Article 34 of Suriname’s constitution, expropriation will take place “only for reasons of public utility” and with prior compensation. In practice, the government has no history of expropriations. However, Article 42 of Suriname’s constitution specifically refers to all natural resources as property of the nation, and states that the nation has inalienable rights to take possession of all natural resources to utilize them for the economic, social, and cultural development of Suriname.There is no history of expropriation.

Dispute Settlement

ICSID Convention and New York Convention

Suriname is not a party to the Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID). Suriname has been a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards since 1964, when the country was still a colony of the Netherlands. Upon becoming independent in 1975, Suriname automatically continued its membership in international conventions and treaties.

There is no specific domestic legislation providing enforcement of awards under the 1958 New York Convention and /or under the ICSID convention.

Investor-State Dispute Settlement

The government is a signatory to the Multilateral Investment Guarantee Agency (MIGA).

Suriname has no BIT or FTA with an investment chapter with the United States.

There have been no publicly known investment disputes in the past 10 years involving a U.S person or other foreign investor. Every effort is made to settle investment disputes outside the court system or via arbitration.

Judgments of foreign arbitral awards are enforced by the local courts only if Suriname has a legal treaty of jurisprudence with the foreign country involved. If not, the foreign judgment can be brought before the Surinamese court for consideration as long as the court determines it has jurisdiction and doing so does not otherwise violate any Surinamese laws. With Suriname’s participation and membership in the Caribbean Court of Justice, judgments from this court are also binding for local courts. Cases have been successfully filed against Suriname before the Inter-American Court of Justice and the Organization of American States. Judgments from these courts have been upheld by the Surinamese legal system.

There is no known history of extrajudicial action against foreign investors.International Commercial Arbitration and Foreign Court

Suriname’s civil law includes options for arbitration. The government reactivated the Suriname Arbitration Institute (SAI) in August 2014 to offer arbitration and mediation services. The SAI collaborates with the Dutch Arbitration Institute.

Local courts only recognize and enforce foreign arbitral awards if doing so is stipulated in the contract or agreement and it does not contradict local law. Foreign arbitration is an accepted means of settling disputes between private parties, but only if local alternatives are exhausted.

There have been no publicly known investment disputes in which state-owned enterprises are involved. Court processes are in general considered transparent and non-discriminatory.Bankruptcy Regulation

Suriname has bankruptcy legislation. Creditors, equity shareholders, and holders of other financial contracts, including foreign contract holders, have the right to file for liquidation of debts due to insolvency. In a case where there is a loan from a commercial bank, repayment of the bank loan takes precedence. Bankruptcy, in principle, is not criminalized. However, in cases where a board of directors encouraged a company to pursue bankruptcy to avoid creditors, courts have viewed this behavior as a criminal offense. In the World Bank’s Doing Business Report, Suriname stands at 138 in the ranking of 190 economies on the ease of resolving insolvency.

4. Industrial Policies

Investment Incentives

Under current regulations, foreign investors can benefit from both tax and non-tax based incentives. Tax-based incentives include a nine-year tax holiday that can be extended by one year if the investment is at least USD 13 million; accelerated depreciation of assets; and tax consolidation. Under the Raw Minerals Act, the government grants an exemption of duties for the import of raw materials from CARICOM member countries. Exemptions are also granted in the food industry, the soft drink industry, and the fruit juice industry. In 2011, the government eliminated import duties on computers and related items. The law accords special consideration on investments exceeding USD 50 million and investments in the exploration and exploitation of bauxite, hydrocarbons, gold, and radioactive minerals. Large investments in the mining sector are subject to extensive negotiations between the government and investors. The government maintains the ability to grant incentives that depart from the provisions in the 2001 Investment Law, for example, incentives related to the provisions of infrastructure. The government does not have a practice of issuing guarantees or jointly financing foreign direct investment projects.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are no duty-free import zones in Suriname.

Performance and Data Localization Requirements

There are no policies that mandate hiring local employment; however, the Work Permits Act prohibits employers from employing foreigners without a work permit granted by the Ministry of Labor. Some large multinationals have specific agreements with the government mandating hiring local employees.

There are no policies requiring that senior management and board of directors should be Surinamese nationals.

There are no excessively onerous visa, residence, or work permit requirements inhibiting foreign investors’ mobility. Foreigners with short-term business in Suriname can apply online for a e-visa at: https://suriname.vfsevisa.com/ . Business visas require a letter of introduction from the business the applicant will be working with in Suriname. Foreigners who want to work in Suriname first need to apply for a residency permit at the Ministry of Justice and Police, after which they can apply for a work permit at the Ministry of Labor. The free movement of artists, university graduates, media workers, musicians, and athletes of CARICOM origin is arranged through CSME regulations. CSME regulations also provide for the free movement for those seeking to establish or conduct business within the community.

There are no government/authority-imposed conditions on permission to invest. In practice, large foreign investments, especially in the extractives sector, require approval from the relevant Minister.

The government does not impose forced localization policies on foreign investors.

There are no enforcement procedures for performance requirements on investors.

The 2001 Investment Law authorizes the Minister of Finance to grant both tax and non-tax incentives for new investments and for the expansion of existing investments. Incentives for new investments are on a case-by-case basis at the discretion of the Ministry of Finance. Incentives are available for both domestic and foreign investors, but investors must apply for these incentives before the initial investment is made.

Foreign IT providers are not required to turn over source code and/or provide access to encryption.

There are no measures that prevent or unduly impede companies from freely transmitting customer or other business-related data outside the country’s territory.

There are no mechanisms used to enforce any rules on local data storage within the country.

5. Protection of Property Rights

Real Property

Interest in property is enforced. Mortgages and liens are common. Mortgages are registered with the Mortgage Office. However, no effective registration system exists for other types of liens.

Non-residents can request to lease land from the government if they have established a company under Surinamese law. However, the process from application to approval is lengthy.The percentage of land in Suriname that lacks a clear land title remains unknown. There is no sustained effort by the government to identify property owners and register land titles. Article 1-1 of the L-1 decree, Principles of Land Policy, states that “all land, to which others have not proven their right to ownership, is domain of the State.” Furthermore, Article 41 of the Surinamese constitution states that wealth and resources are property of the nation and shall be used to promote economic, social, and cultural development. There is no effective demarcation of substantial land claims by indigenous people in the interior. Unoccupied, legally-purchased property cannot be reverted to other owners, such as squatters.

Intellectual Property Rights

Suriname is a member of the WTO and the World Intellectual Property Organization (WIPO); however, it has not ratified the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Even though Suriname is party to multiple agreements, intellectual property rights (IPR) enforcement is weak. The current legal framework mentions protection of copyright, trademarks, and patents, but ;that legislation dates back to 1912 (amended in 2001). Although the National Assembly passed amendments to the Music Copyright Law of 1913 in March 2015, there is no enforcement. Infringement on rights and theft are not uncommon due to the absence of enforcement capacity. There is also no protection provided for industrial designs, utility models, geographical indications, layout designs of integrated circuits or undisclosed information.

No IPR-related laws or regulations have been enacted in the past year. A draft IPR bill has been pending since 2015. Currently, patents and copyrights must be registered abroad due to a lack of local legislation. In 2012, the Suriname Port Unit was established to improve port security and prevent the illegal use of sea containers in drug trafficking and transnational organized criminal activities, such as trafficking in chemicals used in the manufacture of drugs (precursors), smuggling of goods (including counterfeit goods), tax evasion and possible terrorist acts.

In 2012, the Suriname Port Unit was established to improve port security and prevent the illegal use of sea containers in drug trafficking and transnational organized criminal activities, such as trafficking in chemicals used in the manufacture of drugs (precursors), smuggling of goods (including counterfeit goods), tax evasion and possible terrorist acts.

Suriname is not mentioned in the United States Trade Representative’s Special 301 Report, nor is it named in the Notorious Markets List.

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

6. Financial Sector

Capital Markets and Portfolio Investment

The government does not promote portfolio investment.

There is a small self-regulating stock market with eleven companies registered. It meets twice a month but does not have an electronic exchange. There is no effective regulatory system to encourage and facilitate portfolio investment. At present, Suriname is facing liquidity shortfalls.

Sufficient policies do exist to facilitate the free flow of financial resources.

As an IMF Article VIII member, Suriname has agreed to refrain from restrictions on payments and transfers for current international transactions.

Credit is allocated on market terms and at market rates. Foreign investors that establish businesses in Suriname are able to get credit on the local market, usually with a payment guarantee from the parent company. The private sector has access to a variety of credit instruments. Larger companies can obtain customized credit products. There is, however, a Central Bank regulation that limits a commercial bank’s credit exposure to a single client.

Money and Banking System.

The private sector has access to a variety of credit instruments. Larger companies can obtain customized credit products.

According to the IMF Article IV Consultation in 2019, the banking system faces pressing vulnerabilities. Based on the latest (July 2019) data, the capital adequacy ratio for the banking system stood at 10.5 percent (above the 10 percent minimum requirement), but non-performing loans in the banking system remained high (12.5 percent of gross loans), and profitability was low (0.7 percent return on assets). Deposit and loan dollarization remain high.

Total estimated assets of Suriname’s largest banks:

DSB Bank (annual report, 2018): USD 1,007 billion

Hakrin Bank (annual report 28, 2018): USD 627.6. million

Republic Bank Limited (2019 annual report, Suriname-based assets): USD 473 million. (The Republic Bank Limited of Trinidad and Tobago acquired Royal Bank of Canada’s Suriname holdings in 2015.)

Finabank (annual report, 2018): $269 million.

Suriname has a central bank system Foreign banks or branches are allowed to establish operations in Suriname. They are subject to the same measures and regulations as local banks. According to an IMF assessment in 2016, banks in Suriname are among those in the region that have lost their correspondent relationships. The IMF notes that though the loss of correspondent banking relationships has not reached systemic proportions, a critical risk still exists. The Central Bank admits that compliance regarding legislation and procedures is lacking, and that strengthening of enforcement is needed. According to the IMF’s Article IV Consultation report in 2019, there is a possibility of losing corresponding banking relationships given recent overseas investigations of potential money laundering via Suriname’s financial sector. The reputational risk to both local and foreign banks acting as their correspondents is substantial. Suriname is in the process of completing a National Risk Assessment to identify and assess the money laundering risks.

There are no restrictions for foreigners to open a bank account. Banks require U.S. citizens to provide the information necessary to comply with the Foreign Accounts Tax Compliance Act (FATCA).

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment, such as remittances of investment capital, earnings, loan or lease payments, or royalties. There can be shortages in the availability of U.S. cash dollars at local banks, which can affect businesses.

Funds associated with any form of investment can be freely converted into a usable currency at legal market clearing rates with the permission of the Foreign Exchange Commission. However, the criteria for obtaining permissions are opaque.

Suriname maintains an official exchange rate of 7.52 Surinamese dollars (SR to $1.) government also registers and supervises money exchanges called cambios, which offer parallel exchange rates. For much of 2019, those parallel rates exchange rate fluctuated between 8.40 to 8.65 SRD to $1. In March 2020, they reached as high as 14 to 16 SRD

Remittance Policies

There are no recent changes or plans to change investment remittance policies.

The waiting period on remittances can be relatively short for dividends; return on investments, interest, and principal on private foreign debt; lease payments; royalties; and management fees. The time needed to process the requests depends on the sector and the amount transferred. Transfers through the banking system can range from same day to one week waiting times, contingent upon approval by the Foreign Exchange Commission.Sovereign Wealth Funds

On May 4, 2017, the National Assembly passed legislation establishing a Sovereign Wealth Fund (SWF). Suriname does not participate in the International Forum of Sovereign Wealth Funds.

7. State-Owned Enterprises

State owned enterprises (SOEs) operate in the oil, agribusiness, mining, communication, travel, energy, and financial sectors. SOEs provide little information regarding their operations. Only a few produce annual reports accessible to the public. Staatsolie, Suriname’s state-owned oil company, has publicly available audited accounts. As of 2020, all state-owned enterprises will be required to publish annual accounts. Several have been accused of fraud or corrupt practices.

There is no public list of SOEs.

SOEs receive advantages when competing in the domestic market. These include access to government guarantees and government loans otherwise unavailable to private enterprises. Additionally, SOEs have access to land and raw materials inaccessible to private entities.

The government does not yet adhere to the OECD Guidelines on Corporate Governance for SOEs.

Privatization Program

The GOS did announce a privatization program largely in the agricultural sector, but the only privatization was the state-owned banana company in 2014.

Foreign investors can participate in privatization programs. In 2014, the Belgium multinational UNIVEG acquired a 90 percent stake in the state-owned banana company through a public, international bidding process. The European Commission assisted with the bidding process. UNIVEG later pulled out of Suriname. As this is the only example of privatization within Suriname, no standard privatization or public bidding processes have been established by the GOS.

8. Responsible Business Conduct

There is a growing awareness of expectations of standards for responsible business conduct (RBC) among consumers and producers. Historically, Alcoa’s subsidiary, Suralco, took the lead on RBC in Suriname, and large multinationals such as Newmont continue to be the largest proponents of RBC. Some larger, state-owned and local companies also model RBC, including Staatsolie, Surinam Airways, Telesur, and the Fernandes Group of Companies, which holds the distribution rights for Coca-Cola, and the McDonalds franchise rights.

The government has not taken systematic measures to encourage or promote RBC. Companies are allowed to develop their own policies and standards. The government does incorporate RBC in some of its partnerships and agreements with multinational firms. For example, recent agreements between Staatsolie and foreign companies for offshore drilling include stipulations regarding RBC. The government has no national point of contact or ombudsman for stakeholders to acquire information or raise concerns about RBC. The GOS has not conducted a National Action Plan on RBC and/or Business and Human Rights. It is not known if RBC policies are part of the government’s procurement decisions.

There have been no recent high-profile controversial instances of private sector impact on human rights, though indigenous land rights in the interior is an ongoing issue.

The Labor Inspection Department from the Ministry of Labor supervises and enforces the observance of legal regulations regarding the conditions of employment and the protection of employees performing duties. Laws were enforced only in the formal sectors. Labor inspectors did not make regular occupational safety and health inspections. The government is drafting consumer and environmental protection laws. In March 2020, the National Assembly passed an Environment Framework Law.

Currently there is no legislation for corporate governance and executive compensation standards to protect shareholders. The Act on Annual Accounts will require companies to publish annual accounts based on the International Financial Reporting Standards (IFRS) starting in 2020.

The Suriname Trade and Business Association has taken the lead in promoting RBC. The Suriname Conservation Foundation initiated a Green Partnership Program this year signed by 14 enterprises, 13 of which are local, to stimulate awareness about a green economy and nature preservation. So far, no incidents have been reported indicating that those monitoring and or advocating around RBC cannot work freely.

The host government has not encouraged adherence to the OECD Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Afflicted and High-Risk Areas. In March 2019, the government adopted legislation to join the Kimberley Process Certificate Scheme in order to become a member of the World Diamond Council Association.

Suriname became a member of the Extractive Industry Transparency Initiative on May 24, 2017. The 2016 and 2017 reports were recently made publicly available. There are no domestic transparency measures requiring the disclosure of payments made to governments and/or other RBC/BHR policies or practices.

9. Corruption

Suriname’s legal code penalizes corruption, but there is virtually no enforcement. Government officials are occasionally removed from assignments, but convictions are rare. On September 1, 2017, parliament passed anti-corruption legislation, nearly 15 years after the initial draft bill was introduced to the National Assembly. As of May 2020, the President had not yet signed the measured into law, and the anti-corruption commission has not yet been installed. Suriname ranks on 70 out of 180 countries on the Corruption Index of Transparency International.

Existing laws that deal with corruption do not extend to family members of officials, or to political parties.

There are no laws or regulations to counter conflicts of interest in awarding contracts or government procurement. The government does not encourage or require private companies to establish internal codes of conduct prohibiting bribery of public officials.

The government does not encourage or require private companies to establish internal codes of conduct prohibiting bribery of public officials.

Local private companies do not use internal control, ethics, and compliance programs to detect and prevent bribery of government officials. Suriname has signed and ratified the Inter-American Convention against Corruption. Suriname has not yet signed and ratified the UN Convention against Corruption. Suriname is not a party to the OECD Convention on Combatting Bribery.

Suriname has signed and ratified the Inter-American Convention against Corruption. Suriname has not yet signed and ratified the UN Convention against Corruption. Suriname is not a party to the OECD Convention on Combatting Bribery.

There are no NGOs that focus exclusively on investigating corruption. U.S. firms have identified corruption as an obstacle to FDI. Corruption is believed to be most pervasive in government procurement, the awarding of licenses and concessions, customs, and taxation.

U.S. firms have identified corruption as an obstacle to FDI. Corruption is believed to be most pervasive in government procurement, the awarding of licenses and concessions, customs, and taxation.

Resources to Report Corruption

Fraud Department
Suriname Police Force
( Korps Politie Suriname)
Havenlaan, Paramaribo, Suriname
(597) 404-943

10. Political and Security Environment

Since the restoration of democracy in 1987, Suriname has not seen politically motivated violence or civil disturbance.In July 2019, illegal goldminers damaged property at the Rosebel goldmine after the company’s security personnel fatally shot an illegal goldminer. The mine was subsequently closed for one month, and then reopened. Suriname is increasingly polarized politically, however past elections were considered to be free and fair by international observers.

11. Labor Policies and Practices

In general, both skilled and unskilled labor is available in the local market. According to the IMF Article IV report the unemployment rate is around six percent. Foreign workers are mainly active in the extractive industries and agricultural sector. Not only Haitians, but also an influx of Cubans entered the workforce and are active in several sectors for lower wages. Documented foreign workers are protected by labor laws. The unemployment rate in 2019 was approximately 6.17 percent. An estimated 15 percent of the working-age population worked in the informal economy.

Heavy equipment operators, welders, and other skilled workers in the extractive industries are in high demand. In recent years, Suriname recruited physicians and ER nurses from the Philippines to work in hospital emergency rooms. Because of the economic downturn in 2015/2016, the majority of these workers have left the country, resulting in a shortage of nurses and medical staff. Since 2005, Suriname has welcomed Cuban medical professionals on a rolling basis. In March 2020, Cuba sent 20 doctors and 30 nurses to Suriname to assist with the government’s COVID-19 response.

There are no policies that require the hiring of nationals; however, the Work Permits Act prohibits employers from employing foreigners without a work permit granted by the Ministry of Labor.

Legislation makes it difficult for employers to respond to fluctuating market conditions. The Dismissal Permits Act prohibits employers from dismissing employees without permission from the Ministry of Labor. Collective redundancy for organizational or economic reasons is permitted in cases such as the closure or decline of a business.

Generally, when an employee is laid off, unions negotiate with the employer regarding a package and duration of social benefits. Labor organizations sometimes object to work based on contracts as opposed to full time, ongoing employment.

Labor laws are not waived to attract or retain investment. As Suriname has no special economic zones, foreign trade zones, or free ports with alternative labor policies, all entities are subject to existing legislation.

Collective bargaining agreements are widespread in both the private and public sector. Data regarding the percentage of the economy covered by collective bargaining agreements is unavailable. Employees of most large multi-national firms are unionized.

Labor dispute mechanisms are in place and freely used for mediation and arbitration.

Strikes that pose an investment risk are rare.

Suriname is a member of the International Labor Organization and recognizes international labor law in its domestic legislation. In 2018, Suriname made a moderate advancement in efforts to eliminate the worst forms of child labor. The government ratified International Labor Organization Convention 138 concerning the minimum age for admission to employment, acceded to the Protocol to the Forced Labor Convention, and amended the Law on Labor for Children and Young People, raising the minimum age of work to 16 years.

Labor laws incorporate freedom of association and the right to organize and bargain collectively, along with prohibitions against forced labor, child labor, and employment discrimination. Existing legislation also provides for humane working conditions, occupational safety and health, and standardized working hours. The Labor Inspection Department supervises observance of labor abuses, health, and safety standards. Laws were effectively enforced only in the formal sectors.

Suriname qualifies for the Generalized System of Preferences (GSP). The GSP framework includes clauses on labor standards.

In June 2019, the National Assembly adopted the family protection law regarding maternity and paternity leave. In July 2019, the National Assembly approved an update of the Minimum Wage Act which set the minimum wage at SRD 8.4 per hour, effective July 10. Every two years, starting 2020, a National Wage Board will advise on a new minimum wage to the Minister of Labor.

12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs

There are no DFC programs.

The Peoples Republic of China provides significant investment financing in Suriname. In many cases, these projects are funded by China’s Export-Import Bank and completed by Chinese companies.

Government-funded investment opportunities are rarely publicly advertised.

Suriname signed an Investment Incentive Agreement with the United States in 1993.

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) 2018 $4,300 2018 $3,591 www.worldbank.org/en/country 
www.cbvs.sr
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A N/A N/A BEA data available at
https://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 N/A N/A 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 N/A N/A UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

* Source for Host Country Data: Central Bank of Suriname

Table 3: Sources and Destination of FDI
Note: Suriname does not release foreign direct investment data publicly. The IMF’s Coordinated Direct Investment Survey (CDIS) has no information on Suriname. There are no tax haven sources of inward FDI.

Table 4: Sources of Portfolio Investment
Note: Portfolio investment data are not available in Suriname on the IMF’s Coordinated Portfolio Investment Survey. The host government does not publish portfolio investment data.

14. Contact for More Information

Frankie Sturm
Economic Officer
(597) 556-700
SturmWF@state.gov

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