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Albania

Executive Summary

Albania is an upper middle-income country with a gross domestic product (GDP) of USD 16.77 billion (2021 IMF estimate) and a population of approximately 2.9 million people.

In 2020, the economy contracted by 4 percent in the height of COVID-19 and in 2021 re-bounded with a growth rate of 8.7 percent. The increase was fueled by construction, easing of pandemic related restrictions, recovery of tourism sector, increase in the real estate sector, record domestic electricity production, and continued budgetary, monetary, and fiscal policy support, including IMF and EU pandemic and earthquake related support. The initial growth projection for 2022 was 4.1 percent, despite uncertainties related to the pandemic, elevated fiscal deficits and public debt, and external and internal inflationary pressures. However, uncertainties due to Russia’s 2022 invasion of Ukraine, surging energy prices, and inflationary pressures, coupled with limited room for fiscal maneuvering due to high public debt that exceeded 80 percent at the end of 2021, present challenges to the Albanian economy.

Albania joined NATO in 2009 and has been a member of WTO since 2000. The country signed the Stabilization and Association Agreement with the European Union in 2006, received the status of the EU candidate country in 2014, and began accession negotiations with the EU in July 2022.

Albania’s legal framework is in line with international standards in protecting and encouraging foreign investments and does not discriminate against foreign investors. The Law on Foreign Investments of 1993 outlines specific protections for foreign investors and allows 100 percent foreign ownership of companies in all but a few sectors. The U.S.-Albanian Bilateral Investment Treaty, which entered into force in 1998, ensures that U.S. investors receive national treatment and most-favored-nation treatment. Albania and the United States signed a Memorandum of Economic Cooperation in October 2020 with an aim of increasing trade and investment between the two countries. Since the signing multiple U.S. companies have signed agreements for major projects in the country.

As a developing country, Albania offers large untapped potential for foreign investments across many sectors including energy, tourism, healthcare, agriculture, oil and mining, and information and communications technology (ICT). In the last decade, Albania has been able to attract greater levels of foreign direct investment (FDI). According to the UNCTAD data, during 2010-2020, the flow of FDI has averaged USD 1.1 billion and stock FDI at the end of 2020 reached USD 10 billion or triple the amount of 2010. According to preliminary data of the Bank of Albania the FDI flow in 2021 is expected to reach USD 1 billion. Investments are concentrated in extractive industries and processing, real estate, the energy sector, banking and insurance, and information and communication technology. Switzerland, the Netherlands, Canada, Italy, Turkey, Austria, Bulgaria, and France are the largest sources of FDI. The stock FDI from United States accounts for a small, but rapidly growing share. At the end of Q3 2021, the United States stock FDI in Albania reached USD168 million, up from USD 99 million at the end of 2020, nearly a 70 percent increase.

Despite a sound legal framework, foreign investors perceive Albania as a difficult place to do business. They cite endemic corruption, including in the judiciary and public procurements, unfair competition, informal economy, frequent changes of the fiscal legislation, and poor enforcement of contracts as continuing challenges for investment and business in Albania. Reports of corruption in government procurement are commonplace. The continued use of public private partnership (PPP) contracts has reduced opportunities for competition, including by foreign investors, in infrastructure and other sectors. Poor cost-benefit analyses and a lack of technical expertise in drafting and monitoring PPP contracts are ongoing concerns. U.S. investors are challenged by corruption and the perpetuation of informal business practices. Several U.S. investors have faced contentious commercial disputes with both public and private entities, including some that went to international arbitration. In 2019 and 2020, a U.S. company’s attempted investment was allegedly thwarted by several judicial decisions and questionable actions of stakeholders involved in a dispute over the investment. The case is now in international arbitration.

Property rights continue to be a challenge in Albania because clear title is difficult to obtain. There have been instances of individuals allegedly manipulating the court system to obtain illegal land titles. Overlapping property titles is a serious and common issue. The compensation process for land confiscated by the former communist regime continues to be cumbersome, inefficient, and inadequate. Nevertheless, parliament passed a law on registering property claims on April 16, 2020, which will provide some relief for title holders.

In an attempt to limit opportunities for corruption, the GoA embarked on a comprehensive reform to digitalize all public services. As of March 2021, 1,200 services or 95 percent of all public services to citizens and businesses were available online through the E-Albania Portal . However, Albania continues to score poorly on the Transparency International’s Corruption Perceptions Index. In 2021, Albania declined to 110th out of 180 countries, a fall of six places from 2020. Albania continues to rank low in the Global Innovation Index, ranking 84 out of 132 countries.

To address endemic corruption, the GOA passed sweeping constitutional amendments to reform the country’s judicial system and improve the rule of law in 2016. The implementation of judicial reform is underway, heavily supported by the United States and the EU, including the vetting of judges and prosecutors for unexplained wealth. More than half the judges and prosecutors who have undergone vetting have been dismissed for unexplained wealth or ties to organized crime. The EU expects Albania to show progress on prosecuting judges and prosecutors whose vetting revealed possible criminal conduct. The implementation of judicial reform is ongoing, and its completion is expected to improve the investment climate in the country. The Albanian parliament voted overwhelmingly and unopposed to extend this vetting mandate in February 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 110 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 84 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2018 $35 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $ 5,210 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Political violence is rare, the more recent instances being an attempt led by a former Albanian leader designated by the USG for corruption to breach a party headquarters in January 2022 that required police intervention and political protests in 2019 that included instances of civil disobedience, low-level violence and damage to property, and the use of tear gas by police. Albania’s April 2021 elections and transition to a new government were peaceful, as were its June 2019 local elections. On January 21, 2011, security forces shot and killed four protesters during a violent political demonstration. In its external relations, Albania has usually encouraged stability in the region and maintains generally friendly relations with neighboring countries.

Algeria

Executive Summary

Algeria’s state enterprise-dominated economy is challenging for U.S. businesses, but multiple sectors offer opportunities for long-term growth. The government is prioritizing investment in agriculture, information and communications technology, mining, hydrocarbons (both upstream and downstream), renewable energy, and healthcare.

Following his December 2019 election, President Abdelmadjid Tebboune launched a series of political reforms, which led to the adoption of a new constitution in December 2020 and the election of a new parliament in June 2021. Tebboune has declared his intention to focus on economic issues in 2022 and beyond.

In 2020, the government eliminated the so-called “51/49” restriction that required majority Algerian ownership of all new businesses, though it retained the requirement for “strategic sectors,” identified as energy, mining, defense, transportation infrastructure, and pharmaceuticals manufacturing (with the exception of innovative products). In the 2021 Finance Law, the government reinstated the 51/49 ownership requirement for any company importing items into Algeria with an intent to resell. The government passed a new hydrocarbons law in 2019, improving fiscal terms and contract flexibility in order to attract new international investors. The new law encourages major international oil companies to sign memorandums of understanding with the national hydrocarbons company, Sonatrach.  Though the 43 regulatory texts enacting the legislation have not been formally finalized, the government is using the new law as the basis for negotiating new contracts with international oil companies. In recent years, the Algerian government took several steps, including establishing a standalone ministry dedicated to the pharmaceutical industry and issuing regulations to resolve several long-standing issues, to improve market access for U.S. pharmaceutical companies. The government is in the process of drafting and finalizing a new investment law. Algeria has established ambitious renewable energy adoption targets to reduce carbon emissions and reduce domestic consumption of natural gas.

Algeria’s economy is driven by hydrocarbons production, which historically accounts for 95 percent of export revenues and approximately 40 percent of government income. Following the significant drop in oil prices at the onset of the COVID-19 pandemic in March 2020, the government cut budgeted expenditures by 50 percent and significantly reduced investment in the energy sector. The implementation of broad-based import reductions coupled with a recovery in hydrocarbon prices in 2021 led to Algeria’s first trade surplus since 2014. Though successive government budgets have boosted state spending, Algeria continues to run a persistent budget deficit, which is projected to reach 20 percent of GDP in 2022. Despite a significant reduction in revenues, the historically debt-averse government continues to resist seeking foreign financing, preferring to attract foreign direct investment (FDI) to boost employment and replace imports with local production. Traditionally, Algeria has pursued protectionist policies to encourage the development of local industries. The import substitution policies it employs tend to generate regulatory uncertainty, supply shortages, increased prices, and a limited selection for consumer goods. The government depreciated the Algerian dinar approximately 5% in 2021 after a 10% depreciation in 2020 to conserve its foreign exchange reserves, contributing to significant food inflation.

The government has taken measures to minimize the economic impact of the COVID-19 pandemic, including delaying tax payments for small businesses, extending credit and restructuring loan payments, and decreasing banks’ reserve requirements.  Though the government has lifted domestic COVID_19 related confinement measures, continued restrictions on international flight volumes complicate travel to Algeria for international investors.

Economic operators deal with a range of challenges, including complicated customs procedures, cumbersome bureaucracy, difficulties in monetary transfers, and price competition from international rivals particularly the People’s Republic of China, France, and Turkey. International firms operating in Algeria complain that laws and regulations are constantly shifting and applied unevenly, raising commercial risk for foreign investors. An ongoing anti-corruption campaign has increased weariness regarding large-scale investment projects and put a chill on bureaucratic decision making. Business contracts are subject to changing interpretation and revision of regulations, which has proved challenging to U.S. and international firms. Other drawbacks include limited regional integration, which hampers opportunities to rely on international supply chains.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 117 of 175 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 120 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 20xx USD Amount https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $3,570 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Following nearly two months of massive protests, known as the hirak, former President Abdelaziz Bouteflika resigned on April 2, 2019, after 20 years in power. His resignation launched an eight-month transition, resulting in the election of Abdelmadjid Tebboune as president in December 2019. Voter turnout was approximately 40 percent and the new administration continues to focus on restoring government authority and legitimacy. Following historically low turnout of 24 percent in the November 2020 constitutional referendum and President Tebboune’s lengthy medical absences in late 2020 and early 2021, hirak protests resumed in February 2021 before government security services brought them to a halt in May 2021. Demonstrations have taken place in Algeria’s major wilayas (states) and have focused largely on political reform, as protestors continue to call for an overhaul of the Algerian government. President Tebboune dissolved parliament in February 2021 and Algeria held parliamentary elections in June 2021 and local elections in November 2021.

Prior to the hirak, which began in 2019, demonstrations in Algeria tended to concern housing and other social programs and were generally smaller than a few hundred participants. While most protests were peaceful, there were occasional outbreaks of violence that resulted in injuries, sometimes resulting from efforts of security forces to disperse the protests. Hirak protests were relatively peaceful, though security forces occasionally use heavy-handed tactics to suppress protesters. In 2021, the government adopted laws that give authorities more leeway to arrest political opponents.

In 2013, a terrorist group now known as al-Murabitoun claimed responsibility for the attack against the Tiguentourine gas facility near In Amenas, in southeastern Algeria.  More than 800 people were taken hostage during the four-day siege, resulting in the deaths of 39 civilians, including 3 U.S. citizens, and resulting in damage to the facilities.  Seven other U.S. citizens escaped.  Since the attack, the Algerian government has increased security personnel and preventative security procedures in Algeria’s oil and gas producing regions.

Government reactions to public unrest typically include tighter security control on movement between and within cities to prevent further clashes, significant security presence in anticipated protest zones, temporary detention of protestors, and promises of either greater public expenditures on local infrastructure or increased local hiring for state-owned companies. During the first few months of 2015, there were a series of protests in several cities in southern Algeria against the government’s program to drill test wells for shale gas. These protests were largely peaceful but sometimes resulted in clashes, injury, and rarely, property damage. Government pronouncements in 2017 that shale gas exploration would recommence did not generate protests.

On April 27, 2020, an Algerian court sentenced an expatriate manager and an Algerian employee of a large hotel to six months in prison on charges of “undermining the integrity of the national territory” for allegedly sharing publicly available security information with corporate headquarters outside of Algeria.

The Algerian government requires all foreign employees of foreign companies or organizations based in Algeria to contact the Foreigners Office of the Ministry of the Interior before traveling in the country’s interior so that the government can evaluate security conditions. The Algerian government also requires U.S. Embassy employees to coordinate travel with the government on any trip outside of the Algiers wilaya (state). The Algerian government continues to limit the weekly number of authorized international flights in response to the COVID-19 outbreak, and they remain at less than 40 percent of pre-COVID levels two years after the onset of the pandemic.

In February 2020, ISIS claimed responsibility for a suicide bomber who attacked a military barrack in southern Algeria, killing a soldier. This was met with a swift response by Algerian security services against the militants responsible for the attacks, and the Algerian army continues to carry out counterterrorism operations throughout the country.

According to official Defense Ministry announcements, Algerian security forces “neutralized” 37 terrorists (21 killed, 9 arrested, and 7 surrendered) and arrested an additional 108 “supporters” of terrorism in 2020.  Army detachments also destroyed 251 terrorist hideouts and seized a large quantity of ammunition and explosives during the year. In 2021, the government broadened the definition of terrorism to include any act – peaceful or otherwise – that undermines Algeria’s national unity, prompting a slew of terrorism arrests for acts not necessarily in line with the internationally recognized definition of terrorism.

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

Andorra

Executive Summary

Andorra is an independent principality with a population of about 79,000 and area of 181 square miles situated between France and Spain in the Pyrenees mountains. It uses the euro as its national currency. Andorra is a popular tourist destination visited by over 8 million people each year (pre-pandemic) who are drawn by outdoor activities like hiking and cycling in the summer and skiing and snowshoeing in the winter, as well as by its duty-free shopping of luxury products. Andorra’s economy is based on an interdependent network of trade, commerce, and tourism, which represent nearly 60% of the economy, followed by the financial sector. Andorra has also become a wealthy international commercial center because of its integrated banking sector and low taxes. As part of its effort to modernize its economy, Andorra has opened to foreign investment and engaged in other reforms, including advancing tax initiatives. Andorra is actively seeking to attract foreign investment and to become a center for entrepreneurs, talent, innovation, and knowledge.

The Andorran economy is undergoing a process of digitalization and diversification that accelerated due to the impact pandemic-related border closures had on its dominant tourist sector.  In 2006, the Government began sweeping economic reforms. The Parliament approved three main regulations to complement the first phase of economic openness:  the law of Companies (October 2007), the Law of Business Accounting (December 2007), and the Law of Foreign Investment (April 2008 and June 2012). From 2011 to 2017, the Parliament approved direct taxes in the form of a corporate tax, tax on economic activities, tax on income of non-residents, tax on capital gains, and personal income tax. Andorra joined the IMF in October 2020, providing it access to additional resources for managing its economy. Also, as part of the post-pandemic economic recovery plan, Andorra passed Horizon 23, a comprehensive roadmap backed by 80 million euros of public funds to accelerate economic diversification into sectors like fintech, sports tech, esports, and biotech. These regulations aim to establish a transparent, modern, and internationally comparable regulatory framework.

These reforms aim to attract investment and businesses that have the potential to boost Andorra’s economic development and diversification. Prior to 2008, Andorra limited foreign investment, worried that large foreign firms would have an oversized impact on its small economy.  For example, previous regulations allowed non-citizens with less than 20 years residence in Andorra to own no more than 33 percent of a company. While foreigners may now own 100 percent of a trading enterprise or a holding company, the Government must approve the establishment of any private enterprise. The approval can take up to one month, which can be rejected if the proposal is found to negatively impact the environment, the public order, or the general interests of the principality.

Andorra is a microstate that accounts for .001 percent of global emissions and has demonstrated its ambition to the fight against climate change by establishing a national strategy that commits to reducing greenhouse gas emissions (GHG) by a minimum of 37 percent by 2030 and pursuing carbon neutrality by 2050. In addition to implementing an energy transition law, Andorra approved the Green Fund and a hydrocarbon tax to promote climate change mitigation and adaptation initiatives.

Andorra’s per capita income is above the European average and above the level of its neighbors. The country has developed a sophisticated infrastructure including a one-of-a-kind micro-fiber-optic network for the entire country that provides universal access for all households and companies. Andorra’s retail tradition is well known around Europe, thanks to more than 1,400 shops, the quality of their products, and competitive prices. Products taken out of the Principality are tax-free up to certain limits; the purchaser must declare those that exceed the allowance.

Table 1: Key Metrics and Rankings

Data not available

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Andorra has not experienced any politically motivated damage to projects or installations, or destruction of private property. There are no nascent insurrections, belligerent neighbors, or other politically motivated activities. The likelihood of widespread civil disturbances is very low. Civil unrest is generally not a problem in Andorra. No anti-American sentiment is evident in the country.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Angola

Executive Summary

The Angolan economy emerged from five straight years of recession with slight GDP growth of 0.7 percent in 2021, thanks primarily to growth in the non-oil sector. The government forecasts more substantial growth of 2.4 percent in 2022. The oil and gas sector remains the key source of government revenue despite declining oil production and the government should benefit from higher than budgeted oil prices in 2022. The growth in non-oil sectors such as manufacturing, agriculture, transportation will be bolstered by increased demand from the lifting of COVID restrictions in late 2021 and early 2022.

The Angolan government has maintained a reform agenda since the 2017 election of President Joao Lourenço. His administration has adopted measures to improve the business environment and make Angola more attractive for investment. Angola completed the IMF’s Extended Fund Facility in December 2021, demonstrating an ability to commit to and carry out difficult fiscal and macroeconomic reforms, despite the COVID-19 pandemic. The government received three credit rating upgrades between September 2021 and early 2022.

In addition to the Privatization Program (PROPRIV), revision of the Private Investment Law, and updated Public Procurement law, the government has taken steps to recover misappropriated state assets – the Attorney General’s Office claims just under $13 billion since 2018 – and to uproot corruption. Through the Private Investment and Export Promotion Agency (AIPEX), Angola seeks to connect foreign investors with opportunities across the private sector, with PROPRIV, and a wide range of available state-owned enterprises and other assets. The public procurement process has also become more transparent. Angola plans to present its candidacy to join the Extractive Industries Transparency Initiative in 2022 to increase transparency in the oil, gas, and mineral resource sectors.

Despite the government’s efforts to address corruption, its prevalence remains a key issue of concern for investors. Angola’s infrastructure requires substantial improvement; which the government is seeking to address by attracting investment public-private partnerships to improve and manage of ports, railroads, and key energy infrastructure. The justice system and other administrative processes remains bureaucratic and time-consuming. Unemployment (32.9 percent in the fourth quarter of 2021) and inflation (which reached 27 percent in 2021) remain high. There is limited technical training, English-speaking skills are generally low. Skilled labor levels are also low, though the government has attempted to address the issue through training and apprenticeship programs.

Overall FDI increased by $2.59 billion in 2020, the last full year of reporting, from 2019.

The government has committed to reaching 70 percent installed renewable energy by 2025 and has recognized the risks of climate change for Angola. To reach its renewable energy goal, the government has signed deals with U.S. companies on the installation of solar and hydro capacity worth hundreds of millions of dollars.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 136 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 132 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $-578 million https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $2140 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Angola maintains a stable political environment, though demonstrations and workers strikes occur with regularity, particularly in the last two years due to increased socio-economic difficulty. Politically motivated violence is not a high risk, and incidents are rare. The Front for the Liberation of the Enclave of Cabinda—Military Position (FLEC MP) based in the northern province of Cabinda threatened Chinese workers in Cabinda in 2015 and claimed in 2016 that they would return to active armed struggle against the Angolan government forces. No attacks have since ensued and the FLEC has remained relatively inactive to date.

Local elections were anticipated to take place in 2020 but have not yet occurred due to the COVID-19 pandemic and the lack of key legislation governing the elections. General elections are scheduled to occur in August 2022. Young people take to the streets occasionally to protest economic hardship and what they view as unrealized political pledges. Large pockets of the population live in poverty without adequate access to basic services. Crimes of opportunity such as muggings, robberies and car-jackings occur across the country.

Antigua and Barbuda

Executive Summary

Antigua and Barbuda is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU). According to Eastern Caribbean Central Bank (ECCB) statistics, Antigua and Barbuda’s 2021 estimated gross domestic product (GDP) was $1.47 billion (3.97 billion Eastern Caribbean dollars). This represents an approximate 5.3 percent growth from 2020. The ECCB forecasts 2022 growth at 4.7 percent.

Unanticipated spending on pandemic response measures, coupled with sharp declines in government revenues, forced the government to increase borrowing in 2020. As of December 2021, Antigua and Barbuda reported total public sector debt of $1.3 billion representing 89 percent of GDP. Unlike other Eastern Caribbean (EC) countries, Antigua and Barbuda did not have the resources to significantly increase spending on social support payments to vulnerable populations. Following several years of operating losses, the government became the sole source of financing for regional airline Leeward Islands Air Transport (LIAT) in mid-2020. Based in Antigua and Barbuda, LIAT was heavily overstaffed and therefore a major employer, but is now under the supervision of a bankruptcy trustee.

Antigua and Barbuda ranks 113th out of 190 countries rated in the 2020 World Bank Doing Business Report. The scores remain relatively unchanged from the 2019 report, though some improvements in the ease of starting a business were highlighted.

Through the Antigua and Barbuda Investment Authority (ABIA), the government encourages foreign direct investment, particularly in industries that create jobs and earn foreign exchange. The ABIA facilitates and supports foreign direct investment in the country and maintains an open dialogue with current and potential investors. All potential investors are afforded the same level of business facilitation services.

While the government welcomes all foreign direct investment, tourism and related services, manufacturing, agriculture and fisheries, information and communication technologies, business process outsourcing, financial services, health and wellness services, creative industries, education, yachting and marine services, real estate, and renewable energy have been identified by the government as priority investment areas.

There are no limits on foreign control of investment and ownership in Antigua and Barbuda. Foreign investors may hold up to 100 percent of an investment.

Antigua and Barbuda’s legal system is based on British common law. There is currently an unresolved dispute regarding the alleged expropriation of an American-owned property. For this reason, the U.S. government recommends continued caution when investing in real estate in Antigua and Barbuda.

In 2017, the government signed an intergovernmental agreement in observance of the U.S. Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in Antigua and Barbuda to report the banking information of U.S. citizens.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index N/A N/A http://www.transparency.org/research/cpi/overview  
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/analysis-indicator  
U.S. FDI in partner country ($M USD, historical stock positions) 2020 7.0 https://apps.bea.gov/international/factsheet/  
World Bank GNI per capita 2019 16,420 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD  

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

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

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data
Host Country Statistical source* USG or international statistical source USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2019 $1,668 2019 1,687.5 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 7 BEA data available at
https://apps.bea.gov/
international/factsheet/ 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2019 5 BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP N/A N/A 2020 81.4 UNCTAD data available at
https://unctad.org/topic/investment/world-investment-report
* Source for Host Country Data: Eastern Caribbean Central Bank:  https://www.eccb-centralbank.org/statistics/gdp-datas/comparative-report/1

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

Argentina

Executive Summary

Argentina presents investment and trade opportunities, particularly in agriculture, energy, health, infrastructure, information technology, and mining. However, economic uncertainty, interventionist policies, high inflation, and persistent economic stagnation have prevented the country from maximizing its potential. The economy fell into recession in 2018, the same year then-President Mauricio Macri signed a three-year $57 billion Stand-By Arrangement (SBA) with the International Monetary Fund (IMF). President Alberto Fernandez and Vice President Cristina Fernandez de Kirchner’s (CFK) took office on December 10, 2019, and reversed fiscal austerity measures, suspended the IMF program, and declared public debt levels unsustainable.

In September 2020, Argentina restructured $100 billion in foreign and locally issued sovereign debt owed to international and local private creditors. Together, these transactions provide short-term financial relief by clearing principal payments until 2024. Unable to access international capital markets, the government relied on Central Bank money printing to finance the deficit, further fueling inflation. Although Argentina’s economy rebounded 10.3 percent in 2021, offsetting a 10 percent decline in 2020, the economy remains below pre-recession levels. In 2021, the Argentine peso (official rate) depreciated 17 percent, inflation reached 50.9 percent, and the poverty rate reached 37.3 percent.

Even as the pandemic receded and economic activity rebounded, the government cited increased poverty and high inflation as reasons to continue, and even expand, price controls, capital controls, and foreign trade controls. Agricultural and food exports such as beef, soy, and flour were frequent targets for government intervention. Beginning in May 2021, the government introduced bans and other limits on beef exports to address increasing domestic prices. However, the government also implemented incentives for exporters and investors in other industries. It eliminated export taxes for specific businesses and industries, including small and medium sized enterprises; auto and automotive parts exports over 2020 volumes; and information technology service exports from companies enrolled in the knowledge-based economy promotion regime. There were also investment promotion incentives in key export sectors such as agriculture, forestry, hydrocarbons, manufacturing, and mining.

The high cost of capital affected the level of investments in developing renewable energy projects, despite the potential for both wind and solar power. In an effort to expand production of oil and natural gas, the current administration provides benefits to the fossil fuel industry that impact the cost-competitiveness of renewable energy technologies. The government has encouraged the use of biofuels and electric vehicles. A proposed Law for the Promotion of Sustainable Mobility includes incentives and 20-year timelines to promote the use of technologies with less environmental impact in transportation.

After the first COVID-19 case was confirmed in Argentina in March 2020, the country imposed a strict nationwide quarantine that became one of the longest in the world. Argentina reopened its borders to tourists and non-residents on November 21, 2021. Hotel and lodging, travel and tourism, and entertainment activities have reopened, although many businesses went bankrupt during the shutdown. Most of the pandemic-related economic relief measures were phased out during 2021.

Both domestic and foreign companies frequently point to a high and unpredictable tax burden and rigid labor laws as obstacles to further investment in Argentina. In 2021, Argentina ranked 73 out of 132 countries evaluated in the Global Innovation Index, which is an indicator of a country’s ability to innovate, based on the premise that innovation is a driver of a nation’s economic growth and prosperity. In the latest Transparency International Corruption Perceptions Index (CPI), Argentina ranked 96 out of 180 countries in 2021, dropping 18 places compared to 2020.

As a Southern Common Market (MERCOSUR) member, Argentina signed a free trade and investment agreement with the European Union (EU) in June 2019. Argentina has not yet ratified the agreement. During 2021 there was little progress on trade negotiations with South Korea, Singapore, and Canada. Argentina ratified the WTO Trade Facilitation Agreement on January 22, 2018. Argentina and the United States continue to expand bilateral commercial and economic cooperation to improve and facilitate public-private ties and communication on trade, investment, energy, and infrastructure issues, including market access and intellectual property rights. More than 265 U.S. companies operate in Argentina, and the United States continues to be the top investor in Argentina with more than USD $8.7 billion (stock) of foreign direct investment as of 2020.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 96 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 73 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $8.7 billion https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $9,070 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Demonstrations are common in metropolitan Buenos Aires and in other major cities and rural areas. Nevertheless, political violence is not widely considered a hindrance to the investment climate in Argentina.

Protesters regularly block streets, highways, and major intersections, causing traffic jams and delaying travel. While demonstrations are usually non-violent, individuals sometimes seek confrontation with the police and vandalize private property. Groups occasionally protest in front of the U.S. Embassy or U.S.-affiliated businesses. In March 2022, thousands protested in front of Congress against a bill approving a new agreement with the IMF.

In December 2017, while Congress had called an extraordinary session to address the retirement system reforms, several demonstrations against the bill turned violent, causing structural damage to public and private property, injuries to 162 people (including 88 policemen), and arrests of 60 people. The demonstrations ultimately dissipated, and the government passed the bill.

Union disputes and politicized worker movements are common in CABA and the Provinces. In 2019 and early 2020, foreign-owned diamond mining companies in Neuquén were targeted by work stoppages and insider attacks in failed attempts to intimidate and force employers to increase salaries and benefits. These protesters were seemingly allowed to act without fear of response from local police forces, even after direct requests for assistance had been made. The companies believe the unions and protesters feel emboldened by the government’s stance towards Western companies and were forced to shut down operations for weeks in December 2019 and January 2020, in fear of the safety of their personnel at the local headquarters.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $389,064 2020 $383.10 www.worldbank.org/en/country

www.indec.gob.ar

Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 N/A 2020 $8.730 billion BEA data available at https://apps.bea.gov/international/
factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 N/A 2020 $627 million BEA data available at https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2020 N/A 2020 1.0% UNCTAD data available at

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

* Source for Host Country Data: Not available

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (through 2020)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 84,319 100% Total Outward 40,985 100%
United States 20,015 23.74% Uruguay 19,715 48.10%
Spain  4,013 13.58% United States 5,242 12.79%
Netherlands 9,997 11.86% Paraguay 2,439 5.95%
Brazil 4,614 5.47% Mexico 1,323 3.23%
Chile 4,237 5.02% Brazil 649 1.58%
“0” reflects amounts rounded to +/- USD 500,000.

 

Armenia

Executive Summary

Over the past several years, Armenia has received consistently respectable rankings in international indices that review country business environments and investment climates. Projects representing significant U.S. investment are present in Armenia, most notably ContourGlobal’s Vorotan Hydroelectric Cascade and Lydian’s efforts to develop a major gold mine. U.S. investors in the banking, energy, pharmaceutical, information technology, and mining sectors, among others, have entered or acquired assets in Armenia. Armenia presents a variety of opportunities for investors, and the country’s legal framework and government policy aim to attract investment, but the investment climate is not without challenges. Obstacles include Armenia’s small market size, relative geographic isolation due to closed borders with Turkey and Azerbaijan, weaknesses in the rule of law and judiciary, and a legacy of corruption. Net foreign direct investment inflows are low.  Armenia had commenced a robust recovery from a deep 2020 recession prior to the introduction of new sanctions against Russia.  GDP growth reached five percent in 2021 and had been expected to continue to grow in 2022 by at least five percent.  As a result of the war and sanctions imposed on Russia, Armenia’s 2022 GDP growth forecast is now just above one percent.

In May 2015, Armenia signed a Trade and Investment Framework Agreement with the United States. This agreement established a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues. Since 2015, Armenia has been a member of the Eurasian Economic Union, a customs union that brings Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia into a single integrated market. In November 2017, Armenia signed a Comprehensive and Enhanced Partnership Agreement with the European Union, which aimed in part to improve Armenia’s investment climate and business environment.

Armenia imposes few restrictions on foreign control and rights to private ownership and establishment. There are no restrictions on the rights of foreign nationals to acquire, establish, or dispose of business interests in Armenia. Business registration procedures are generally straightforward. According to foreign companies, otherwise sound regulations, policies, and laws are sometimes undermined by problems such as the lack of independence, capacity, or professionalism in key institutions, most critically the judiciary. Armenia does not limit the conversion and transfer of money or the repatriation of capital and earnings. The banking system in Armenia is sound and well-regulated, but investors note that the financial sector is not highly developed. The U.S.-Armenia Bilateral Investment Treaty provides U.S. investors with a variety of protections. Although Armenian legislation offers protection for intellectual property rights, enforcement efforts and recourse through the courts are in need of improvement.

Armenia experienced a dramatic change of government in 2018, when a democratically elected leader came to power on an anti-corruption platform after street protests toppled the old regime. Following the 2020 NK hostilities, in June 2021, the incumbent retained power in snap parliamentary election that met most international democracy standards.  The government continues to push forth with economic and anti-corruption reforms that have improved the business climate.  Overall, the competitive environment in Armenia is improving, but several businesses have reported that broader reforms across judicial, tax, customs, health, education, military, and law enforcement institutions will be necessary to shore up these gains.

Despite improvements in some areas that raise Armenia’s attractiveness as an investment destination, investors claim that numerous issues remain and must be addressed to ensure a transparent, fair, and predictable business climate. A number of investors have raised concerns about the quality of dialogue between the private sector and government. Investors have also flagged issues regarding government officials’ ability to resolve problems they face in an expeditious manner. An investment dispute in the country’s mining sector has attracted significant international attention and remains outstanding after several years.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 58 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 69 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 6 million https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 USD 4,220 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Armenia has a history of political demonstrations, most of which have remained peaceful. There have been some instances, however, of violent confrontations between police and protesters, or of attacks on government officials. The last major violent protest occurred in November 2020 following the release of a tripartite ceasefire statement by Armenia, Azerbaijan, and Russia, which brought an end to the fall 2020 intensive fighting in and around NK. Individuals and groups displeased with the announcement stormed government buildings and destroyed property. Protestors assaulted the speaker of parliament in the streets of Yerevan and broke into the prime minister’s residence. Since the release of the tripartite statement, groups opposed to the government have organized regular marches and rallies in Yerevan that have remained largely peaceful and caused minimal disruption to ordinary business. Pro-government groups have also organized peaceful rallies, although less frequently. Throughout Armenia, protestors use road blockades as a common tactic to register discontent, most often with the government over community-level issues. The disruption created by such road blockades is usually minimal. Protests have not resulted in any damage to projects of installations of international businesses. It is unlikely that civil disturbances, should they occur, would be directed against U.S. businesses or the U.S. community.

During 44 days of intensive fighting from September 27 to November 10 in 2020 involving Azerbaijan, Armenia, and Armenia-supported separatists, significant casualties and atrocities were reported by all sides. After Azerbaijan, with Turkish support, reestablished control over four surrounding territories controlled by separatists since 1994, a Russian-brokered ceasefire arrangement announced by Azerbaijan and Armenia on November 9 resulted in the peaceful transfer of control over three additional territories to Azerbaijan, as well as the introduction of Russian peacekeepers to the region. The ceasefire has largely held, with frequent but localized violations. Tensions remain high, particularly along the international border, which has not been fully demarcated.

Russian forces have played a role in controlling access along highways near the border and into the Nagorno-Karabakh region from Armenia and Azerbaijan. The Azerbaijani government has suspended or threatened to suspend the operations of U.S. companies in Azerbaijan whose products or services are provided in the area of Nagorno-Karabakh currently under the administration of the Russian peacekeepers and has banned the entry into Azerbaijan of some persons who have visited NK. The U.S. government is unable to provide emergency services to U.S. citizens in and around NK as access is restricted.

Australia

Executive Summary

Australia is generally welcoming to foreign investment, which is widely considered to be an essential contributor to Australia’s economic growth and productivity. The United States is by far the largest source of foreign direct investment (FDI) for Australia. According to the U.S. Bureau of Economic Analysis, the stock of U.S. FDI totaled USD 170 billion in January 2020. The Australia-United States Free Trade Agreement, which entered into force in 2005, establishes higher thresholds for screening U.S. investment for most classes of direct investment. While welcoming toward FDI, Australia does apply a “national interest” test to qualifying investment through its Foreign Investment Review Board screening process.

Various changes to Australia’s foreign investment rules, primarily aimed at strengthening national security, have been made in recent years. This continued in 2020 with the passage of the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020, which broadens the classes of foreign investments that require screening, with a particular focus on defense and national security supply chains. All foreign investments in these industries now require screening, regardless of their value or national origin. The Foreign Investment Reform legislation commenced in January 2021. Despite the increased focus on foreign investment screening, the rejection rate for proposed investments has remained low and there have been no cases of investment from the United States having been rejected in recent years, although some U.S. companies have reported greater scrutiny of their investments in Australia.

In response to a perceived lack of fairness, the Australian government has tightened anti-tax avoidance legislation targeting multi-national corporations with operations in multiple tax jurisdictions. While some laws have been complementary to international efforts to address tax avoidance schemes and the use of low-tax countries or tax havens, Australia has also gone further than the international community in some areas.

Australia has increased funding for clean technology projects and both local and international companies can apply for grants to implement emission-saving equipment to their operations. Australia adopted a net-zero emissions target at the national level in November 2021 although made no change to its short-term goal of a 26-28 percent emission reduction by 2030 on 2005 levels. Australia’s eight states and territories have adopted both net-zero targets and a range of interim emission reduction targets set above the federal target. Various state incentive schemes may also be available to U.S. investors.

The Australian government is strongly focused on economic recovery from the COVID-driven recession Australia experienced in 2020, the country’s first in three decades. In addition to direct stimulus and business investment incentives, it has announced investment attraction incentives across a range of priority industries, including food and beverage manufacturing, medical products, clean energy, defense, space, and critical minerals processing. U.S. involvement and investment in these fields is welcomed.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 18 of 179 http://www.transparency.org/
research/cpi/overview
Global Innovation Index 2021 25 of 132 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 170 billion https://www.bea.gov/data/
intl-trade-investment/direct-investment-
country-and-industry
 
World Bank GNI per capita 2020 USD 53,690 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Political protests (including rallies, demonstrations, marches, public conflicts between competing interests) form an integral, though generally minor, part of Australian cultural life. Such protests rarely degenerate into violence.

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) 2021 $1.33 trillion 2020 $1.50 trillion www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $170 billion 2019 $158 billion BEA data available at
https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $98 billion 2019 $112 billion BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-enterprises
-comprehensive-data
Total inbound stock of FDI as % host GDP 2020 59% 2019 53% UNCTAD data available at
https://stats.unctad.org/handbook/
EconomicTrends/Fdi.html   

* Source for Host Country Data: Australian Bureau of Statistics

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 790,655 100% Total Outward 627,680 100%
USA 151,171 19% USA 127,563 20%
Japan 101,508 13% UK 103,597 17%
UK 95,093 12% New Zealand 55,338 9%
Netherlands 40,660 5% Canada 26,500 4%
Canada 35,554 4% Singapore 13,934 2%
“0” reflects amounts rounded to +/- USD 500,000.

Austria

Executive Summary

Austria has a well-developed market economy that welcomes foreign direct investment, particularly in technology and R&D. The country benefits from a skilled labor force, and a high standard of living, with its capital, Vienna, consistently placing at the top of global quality-of-life rankings.

With more than 50 percent of its GDP derived from exports, Austria’s economy is closely tied to other EU economies, especially that of Germany, its largest trading partner. The United States is one of Austria’s top two-way trading partners, ranking fifth in overall trade according to provisional data from 2021. The economy features a large service sector and an advanced industrial sector specialized in high-quality component parts, especially for vehicles. The agricultural sector is small but highly developed.

The COVID-19 crisis deeply affected Austria’s economy, contributing to a GDP decrease of 6.7% in 2020 with the unemployment rate increasing to a peak of 5.4% at the end of 2020. Austria’s economy rebounded with 4.5% GDP growth in 2021 and unemployment lower than before the onset of the pandemic, but forecasters recently lowered expectations to 3.8% growth for 2022 due to instability stemming from Russia’s invasion of Ukraine. At the same time, Austria is experiencing a record number of vacancies, largely stemming from a shortage of skilled labor.

The country’s location between Western European industrialized nations and growth markets in Central, Eastern, and Southeastern Europe (CESEE) has led to a high degree of economic, social, and political integration with fellow European Union (EU) member states and the CESEE.

Some 220 U.S. companies have investments in Austria, represented by around 300 subsidiaries, and many have expanded their original investment over time. U.S. Foreign Direct Investment into Austria totaled approximately EUR 11.6 billion (USD 13.7 billion) in 2020, according to the Austrian National Bank, and U.S. companies support over 16,500 jobs in Austria. Austria offers a stable and attractive climate for foreign investors.

The most positive aspects of Austria’s investment climate include:

  • Relatively high political stability;
  • Harmonious labor-management relations and low incidence of labor unrest;
  • Highly skilled workforce;
  • High levels of productivity and international competitiveness;
  • Excellent quality of life for employees and high-quality health, telecommunications, and energy infrastructure.

Negative aspects of Austria’s investment climate include:

  • A high overall tax burden;
  • A large public sector and a complex regulatory system with extensive bureaucracy;
  • Low-to-moderate innovation dynamics;
  • Low levels of digitalization;
  • Low levels of private venture capital.

Key sectors that have historically attracted significant investment in Austria:

  • Automotive;
  • Pharmaceuticals;
  • ICT and Electronics;
  • Financial.

Key issues to watch:

  • Due to a strong reliance on Russian natural gas and the third-highest banking exposure to Russia among EU Member States, Austria could be one of the hardest countries hit by sanctions against Russia. Russia’s invasion of Ukraine and sanctions are expected to cause a 0.4-0.5% decrease in Austria’s GDP. However, the impact is likely to be greater if natural gas supplies are disrupted. Austria relies on Russian imports for approximately 80% of its natural gas demand.
  • At the same time, Austria’s export-oriented economy makes it particularly sensitive to events affecting trade, which could include potential setbacks in the pandemic, particularly during the winter months. The tourism sector, which, together with hotels and restaurants, accounts for 15 percent of the country’s GDP is still struggling, currently operating at two-thirds of its pre-crisis output levels. Many companies are also struggling to find skilled labor, which is hindering the economy from reaching its full output potential.
Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 13 of 175 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 18 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 4.95 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 48,350 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Generally, civil disturbances are rare and the overall security environment in the country is considered to be safe. There have been no incidents of politically motivated damage to foreign businesses. Austria suffered a terrorist attack on November 2, 2020, when a gunman shot and killed four civilians and injured 23 in the center of Vienna.

Azerbaijan

Executive Summary

The overall investment climate in Azerbaijan continues to improve, although significant challenges remain.  Azerbaijan’s government has sought to attract foreign investment, undertake reforms to diversify its economy, and stimulate private sector-led growth.  The Azerbaijani economy, however, remains heavily dependent on oil and gas output, which account for roughly 88 percent of export revenue and over half of the state budget.  The economy of Azerbaijan grew 5.6% year-on-year in 2021, compared to a 4.3% contraction in the previous year.  Both oil and gas (1.7%) and the non-oil and gas (7.2%) sectors of the economy expanded as the economy continued to recover from the pandemic.  While the oil and gas sector has historically attracted the largest share of foreign investment, the Azerbaijani government has targeted four non-oil sectors to diversify the economy: agriculture, tourism, information and communications technology (ICT), and transportation/logistics.  Measures taken in recent years to improve the business climate and reform the overall economy include eliminating redundant business license categories, empowering the popular “Azerbaijan Service and Assessment Network (ASAN)” government service centers with licensing authority, simplifying customs procedures, suspending certain business inspections, and reforming the tax regime.

Community spread of COVID-19 is occurring in Azerbaijan, and COVID-19 infections are present in all regions the country.  The special quarantine regime was extended until May 1, 2022, according to a February 2022 decision by Azerbaijan’s Cabinet of Ministers.  Masks are no longer required in outdoor spaces but remain obligatory indoors.  In 2021, Azerbaijan allocated AZN 800.8 million (USD 471 million) from the state budget to support COVID-19 mitigation measures, including vaccine purchases, bonus payments to healthcare workers, and the operation of modular hospitals.

Despite substantial efforts to open the business environment, progress remains slow on structural reforms required to create a diversified and competitive private sector, and corruption remains a major challenge for firms operating in Azerbaijan.  A small group of government-connected holding companies dominates the economy, intellectual property rights enforcement is improving but remains insufficient, and judicial transparency is lacking.

Under Azerbaijani law, foreign investments enjoy complete and unreserved legal protection and may not be nationalized or appropriated, except under specific circumstances.  Private entities may freely establish, acquire, and dispose of interests in business enterprises.  Foreign citizens, organizations, and enterprises may lease, but not own, land.  Azerbaijan’s government has not shown any pattern of discriminating against U.S. persons or entities through illegal expropriation.  The Bilateral Investment Treaty (BIT) between the United States and Azerbaijan provides U.S. investors with recourse to settle investment disputes using the International Center for the Settlement of Investment Disputes (ICSID).  The average time needed to resolve international business disputes through domestic courts or alternative dispute resolution varies widely.

Following the release in November of a tripartite ceasefire declaration by Armenia, Azerbaijan, and Russia, which brought an end to the fall 2020 intensive fighting in the Nagorno-Karabakh conflict, the Azerbaijani government is seeking new investments in the territories around Nagorno-Karabakh that were previously under the control of Armenian-backed separatists.  Azerbaijan’s 2022 budget includes an allocation of AZN 2.2 billion (USD 1.3 billion) for the restoration and reconstruction of these territories.  These funds will be reportedly used to restore road infrastructure, electricity, gas, water, communications infrastructure, and the education and healthcare sectors, along with the restoration of cultural and historical monuments.  The government is also pursuing green energy projects in this region. Reconstruction is expected to continue over the coming years, along with continued special budget allocations provided for rebuilding and resettling these territories.  Demining these territories as part of reconstruction efforts remains a priority of the Azerbaijani government.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 130 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 80 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2021 N/A http://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $4,480 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

On multiple occasions in 2019 and 2020, authorities selectively blocked mobile and fixed-line internet access, temporarily restricted access to foreign media and social networking sites and imposed blocks on virtual private network (VPN) services, apparently in response to political protests and as part of national restrictions during and after Azerbaijan’s armed conflict with Armenian forces in September-November 2020.  Radio Free Europe/Radio Liberty are among the sites permanently blocked in Azerbaijan.  The increase in frequency and lack of transparency regarding internet disruptions raise serious concerns about future Azerbaijani government efforts to control access to information in ways that impede foreign business interests.  

There have been no known acts of political violence against U.S. businesses or assets, nor against any foreign owned entity.  It is unlikely that civil disturbances, should they occur, would be directed against U.S. businesses or the U.S. community.

During 44 days of intensive fighting from September 27 to November 10, 2020, involving Azerbaijan, Armenia, and Armenia-supported separatists, significant casualties and atrocities were reported by all sides.  After Azerbaijan, with Turkish support, reestablished control over four surrounding territories controlled by separatists since 1994, a Russian-brokered ceasefire arrangement announced by Azerbaijan and Armenia on November 9 resulted in the peaceful transfer of control over three additional territories to Azerbaijan, as well as the introduction of Russian peacekeepers to the region.  The ceasefire has largely held, but tensions remain high, particularly along the international border, which has not been fully demarcated.  

Russian forces have played a role in controlling access along highways near the border and into the Nagorno-Karabakh region from Armenia and Azerbaijan.  The Azerbaijani government has suspended or threatened to suspend the operations of U.S. companies in Azerbaijan whose products or services are provided in the area of Nagorno-Karabakh in which Russian peacekeepers are currently deployed and has banned the entry into Azerbaijan of some persons who have visited Nagorno-Karabakh.  The U.S. government is unable to provide emergency services to U.S. citizens in and around Nagorno-Karabakh as access is restricted.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $42,607 2019 $48,048 .
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A 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

BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP  

No reliable data

2020 77% UNCTAD data available at

https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx  

* Source for Host Country Data:  Azerbaijan State Statistical Committee

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Thousands)
Inward Direct Investment Outward Direct Investment
Total Inward $4,795,271 100% Total Outward $825,793 100%
United Kingdom $1,586,614 33% Turkey $280,542 34%
Turkey $700,186 14.6% United Kingdom $122,306 15%
United States $507,391 5 10.6% United States $65,967 8%
Malaysia $416,620 9% Georgia $64,111 8%
Cyprus $317,602 6.6% Malta $48,503 6%
“0” reflects amounts rounded to +/- USD 500,000.

*Source: Central Bank of Azerbaijan

Bahrain

Executive Summary

The investment climate in the Kingdom of Bahrain is positive and relatively stable. Bahrain maintains a business-friendly attitude and liberal approach to attracting foreign investment and business.

In an economy dominated by state-owned enterprises (SOE), Bahrain aims to foster a greater role for the private sector to promote economic growth. Government of Bahrain (GOB) efforts focus on encouraging foreign direct investment (FDI) in the manufacturing, logistics, information and communications technology (ICT), financial services, tourism, health, and education sectors.

Bahrain’s total FDI stock reached BD 11.537 billion ($30.683 billion) in 2020. Annual FDI inflows dropped from BD 603 million ($1.6 billion) in 2018 to BD 355 million ($942 million) in 2019 and BD 333 million ($885 million) in 2020. The financial services, manufacturing, logistics, education, healthcare, real estate, tourism, and ICT sectors have attracted the majority of Bahrain’s FDI.

Bahrain’s economy saw a major recovery in 2021, following the slowdown of the COVID-19 pandemic, and the rise in global oil prices. In addition, the continuity of some key provisions from the BD 4.3 billion ($11.4 billion) financial relief package, that was launched in 2020 to help support businesses and individuals, helped boost Bahrain’s revenues and economic growth.

In November 2021, the government announced a new economic recovery plan focused on five pillars: (1) creating quality jobs for citizens; (2) streamlining commercial procedures to attract $2.5 billion in yearly FDI by 2025; (3) launching $30 billion in major strategic projects; (4) developing strategic priority sectors; and (5) achieving fiscal sustainability and economic stability, including by extending Bahrain’s Fiscal Balance Program to 2024. Since then, the government has released detailed development strategies for the industrial, tourism, financial services, oil and gas, telecommunications and logistics sectors and identified 22 signature infrastructure projects, including the creation of five new island cities, that will stimulate post-pandemic growth and drive the economic recovery plan. The government has not identified funding sources to finance these projects or its sector modernization strategies.

Bahrain’s Vision 2030 outlines measures to protect the natural environment, reduce carbon emissions, minimize pollution, and promote sustainable energy. Bahrain’s Sustainable Energy Authority (SEA), within the Ministry of Electricity and Water Affairs, designs energy efficiency policies and promotes renewable energy technologies that support Bahrain’s long-term climate action and environmental protection ambitions. Endorsed by Bahrain’s Cabinet and monitored by SEA, the National Energy Efficiency Action Plan (NEEAP) and the National Renewable Energy Action Plan (NREAP) set national energy efficiency and national renewable energy 2025 targets of 6 and 5 percent, respectively, with the NREAP target increasing to 10 percent by 2035.

To strengthen Bahrain’s position as a regional startup hub and to enhance its investment ecosystem, the GOB launched Bahrain FinTech Bay in 2018; issued new pro-business laws; and established several funds to encourage start-up investments including the $100 million Al Waha Fund of Funds and the Hope Fund to support startup growth. Since 2017, the Central Bank of Bahrain (CBB) has operated a financial technology regulatory sandbox to enable startups in Bahrain, including cryptocurrency and blockchain technologies, and regulate conventional and Sharia-compliant businesses.

The U.S.-Bahrain Bilateral Investment Treaty (BIT) entered into force in 2001 and protects U.S. investors in Bahrain by providing most-favored nation treatment and national treatment, the right to make financial transfers freely and without delay, international law standards for expropriation and compensation cases, and access to international arbitration.

Bahrain permits 100 percent foreign ownership of new industrial entities and the establishment of representative offices or branches of foreign companies without Bahraini sponsors or local partners. In 2017, the GOB expanded the number of sectors in which foreigners are permitted to maintain 100 percent ownership in companies to include tourism services, sporting events production, mining and quarrying, real estate, water distribution, water transport operations, and crop cultivation and propagation.  In May 2019, the GOB loosened foreign ownership restrictions in the oil and gas sector, allowing 100 percent foreign ownership in oil and gas extraction projects under certain conditions.

The U.S.-Bahrain Free Trade Agreement (FTA) entered into force in 2006. Under the FTA, Bahrain committed to world-class Intellectual Property Rights (IPR) protection.

Despite the GOB’s transparent, rules-based government procurement system, U.S. companies sometimes report operating at a disadvantage compared with other firms. Many ministries require firms to maintain a local commercial registration or pre-qualify prior to bidding on a local tender, often rendering firms with little or no prior experience in Bahrain ineligible to bid on major tenders.

In February 2022, Bahrain’s Ministry of Industry, Commerce, and Tourism broke ground on the United States Trade Zone (USTZ) to incentivize U.S. companies to build out full turnkey industrial manufacturing, logistics, and distribution facilities in Bahrain to access the wider GCC market.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 78 of 175 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 78 of 129 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $571 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $19,900 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Bahrain is an open, liberal Gulf state that enjoys close diplomatic ties with the United States. Bahrain has experienced intermittent cycles of violence, with the most recent period of unrest taking place in 2011-2014. In 2017 and 2018, the GOB dissolved the country’s two largest opposition political societies and closed the country’s only opposition-leaning independent newspaper in 2017. On May 13, 2018, the Parliament passed a law banning members of political societies dissolved by the GOB from running in elections that took place later that year. Since 2017, protests centered on sociopolitical or economic demands have occurred in isolated neighborhoods but have largely been controlled by GOB authorities. Elections of the popularly elected lower house of the National Assembly, also known as the Council of Representatives, are scheduled for November 2022.

Neither demonstrators nor violent extremists have generally targeted Americans or other Western expatriates. American citizens visiting Bahrain and companies interested in investing in Bahrain should visit the Embassy’s website to receive the most up-to-date information about the security situation and register with the Embassy’s consular section.

Bangladesh

Executive Summary

Bangladesh is the most densely populated non-city-state country in the world, with the eighth largest population (over 165 million) within a territory the size of Iowa. Bangladesh is situated in the northeastern corner of the Indian subcontinent, sharing a 4,100 km border with India and a 247-kilometer border with Burma. With sustained economic growth over the past decade, a large, young, and hard-working workforce, strategic location between the large South and Southeast Asian markets, and vibrant private sector, Bangladesh will likely continue to attract increasing investment, despite severe economic headwinds created by the global outbreak of COVID-19.

Buoyed by a young workforce and a growing consumer base, Bangladesh has enjoyed consistent annual GDP growth of more than six percent over the past decade, with the exception of the COVID-induced economic slowdown in 2020. Much of this growth continues to be driven by the ready-made garment (RMG) industry, which exported $35.81 billion of apparel products in fiscal year (FY) 2021, second only to China, and continued remittance inflows, reaching a record $24.77 billion in FY 2021. (Note: The Bangladeshi fiscal year is from July 1 to June 30; fiscal year 2021 ended on June 30, 2021.) The country’s RMG exports increased more than 30 percent year-over-year in FY 2021 as the global demand for apparel products accelerated after the COVID shock.

The Government of Bangladesh (GOB) actively seeks foreign investment. Sectors with active investments from overseas include agribusiness, garment/textiles, leather/leather goods, light manufacturing, power and energy, electronics, light engineering, information and communications technology (ICT), plastic, healthcare, medical equipment, pharmaceutical, ship building, and infrastructure. The GOB offers a range of investment incentives under its industrial policy and export-oriented growth strategy with few formal distinctions between foreign and domestic private investors.

Bangladesh’s Foreign Direct Investment (FDI) stock was $20.87 billion through the end of September 2021, with the United States being the top investing country with $4.1 billion in accumulated investments. Bangladesh received $2.56 billion FDI in 2020, according to data from the United Nations Conference on Trade and Development (UNCTAD). The rate of FDI inflows was only 0.77 percent of GDP, one of the lowest of rates in Asia.

Bangladesh has made gradual progress in reducing some constraints on investment, including taking steps to better ensure reliable electricity, but inadequate infrastructure, limited financing instruments, bureaucratic delays, lax enforcement of labor laws, and corruption continue to hinder foreign investment. Government efforts to improve the business environment in recent years show promise but implementation has yet to materialize. Slow adoption of alternative dispute resolution mechanisms and sluggish judicial processes impede the enforcement of contracts and the resolution of business disputes.

As a traditionally moderate, secular, peaceful, and stable country, Bangladesh experienced a decrease in terrorist activity in recent years, accompanied by an increase in terrorism-related investigations and arrests following the Holey Artisan Bakery terrorist attack in 2016. A December 2018 national election marred by irregularities, violence, and intimidation consolidated the power of Prime Minister Sheikh Hasina and her ruling party, the Awami League. This allowed the government to adopt legislation and policies diminishing space for the political opposition, undermining judicial independence, and threatening freedom of the media and NGOs. Bangladesh continues to host one of the world’s largest refugee populations. According to UN High Commission for Refugees, more than 923,000 Rohingya from Burma were in Bangladesh as of February 2022. This humanitarian crisis will likely require notable financial and political support until a return to Burma in a voluntary and sustainable manner is possible. International retail brands selling Bangladesh-made products and the international community continue to press the Government of Bangladesh to meaningfully address worker rights and factory safety problems in Bangladesh. With unprecedented support from the international community and the private sector, the Bangladesh garment sector has made significant progress on fire and structural safety. Critical work remains on safeguarding workers’ rights to freely associate and bargain collectively, including in Export Processing Zones (EPZs).

The Bangladeshi government has limited resources devoted to intellectual property rights (IPR) protection and counterfeit goods are readily available in Bangladesh. Government policies in the ICT sector are still under development. Current policies grant the government broad powers to intervene in that sector.

Capital markets in Bangladesh are still developing, and the financial sector is still highly dependent on banks.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 147 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 116 of 129 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 723 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 2,030 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Prime Minister Hasina’s ruling Awami League party won 289 parliamentary seats out of 300 in a December 30, 2018 election marred by wide-spread vote-rigging, ballot-box stuffing and intimidation. Intimidation, harassment, and violence during the pre-election period made it difficult for many opposition candidates and their supporters to meet, hold rallies, and/or campaign freely. The clashes between rival political parties and general strikes that previously characterized the political environment in Bangladesh have become far less frequent in the wake of the Awami League’s increasing dominance and crackdown on dissent. Many civil society groups have expressed concern about the trend toward a one-party state and the marginalization of all political opposition groups.

Americans are advised to exercise increased caution due to crime and terrorism when traveling to Bangladesh. Travel in some areas have higher risks. For further information, see the State Department’s travel website for the  Worldwide Caution Travel Advisories, and  Bangladesh Country Specific Information.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical Source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020-21 $354,242 2020 $323,057 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical Source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020-21 $4055 2020 $723 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $2 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2020-21 5.71% 2020 6.01% UNCTAD data available at

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

*Host Country Source:  Bangladesh Bank, Bangladesh Bureau of Statistics

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (December 2020)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $18,439 100% Total Outward $314 100%
The United States $3,823 20.7% United Kingdom $88 28.0%
The United Kingdom $2,140 11.6% China, P.R. Mainland $49 15.6%
The Netherlands $1,608 8.7% India $47 15.0%
Singapore $1,504 8.2% Nepal $47 15.0%
China, P.R. Mainland $986 5.3% United Arab Emirates $39 12.4%
“0” reflects amounts rounded to +/- USD 500,000.

Barbados

Executive Summary

With a $4.4 billion economy, Barbados is the largest economy in the Eastern Caribbean. The shutdown of the tourism sector in 2020 due to the pandemic led to an 18 percent GDP contraction. The economy began to recover in 2021 with 1.4 percent growth, and the International Monetary Fund (IMF) forecasts 2022 growth at 8.5 percent. Unemployment was estimated at approximately 40 percent in the first quarter of 2021, representing a 30 percent increase from the same period last year.

The Government of Barbados entered a standby arrangement with the IMF in late 2018.  The $290 million ($580 million Barbados dollars) Barbados Economic Recovery and Transformation (BERT) program aims to decrease the debt-to-GDP ratio, strengthen the balance of payments, and stimulate growth.  While the government was on track to meet its IMF targets pre-pandemic, the program dampened income and spending power due to public sector layoffs, the introduction of new indirect taxes, and a decline in the construction sector.  The impact of the pandemic required the IMF to adjust the program targets downwards several times. The IMF also approved additional lending into the program twice in 2020.

The country’s services sector continues to hold the largest growth potential, especially in the areas of international financial services, information technology, global education services, health, and cultural services.  The gradual decline of the sugar industry has opened land for other agricultural uses.  Investment opportunities exist in the areas of agricultural processing and alternative and renewable energy.  Uncertainty about the trajectory of economic recovery of the tourism, commercial aviation, and cruise industries impacts the potential for projects in those sectors. The government has identified renewable energy and climate resilience projects as top priorities. In 2021, Barbados joined the Organization of Economic Cooperation and Development (OECD) framework seeking to harmonize global corporate minimum tax rates at 15 percent.

Barbados bases its legal system on the British common law system. It does not have a bilateral investment agreement with the United States, but it does have a double-taxation treaty and a tax information exchange agreement.

In 2015, Barbados signed an intergovernmental agreement in observance of the United States’ Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in Barbados to report the banking information of U.S. citizens.

Table 1
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 29 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) N/A N/A https://apps.bea.gov/international/factsheet/  
World Bank GNI per capita 2020 14,350 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD   

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Barbados does not have a recent history of politically motivated violence or civil unrest.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $4,690 2020 $4,418 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2019 $45,400 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $57,053 BEA data available at https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A 2020 186% UNCTAD data available at

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

* Source for Host Country Data: Central Bank of Barbados (CBB)  http://www.centralbank.org.bb  

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

Table 4: Sources of Portfolio Investment
Data not available.

Belarus

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

Belgium

Executive Summary

According to its most recent report, the Belgian central bank expects gross domestic product (GDP) to grow 2.6% in 2022 despite economic headwinds linked to global supply chain bottlenecks, spiking energy costs, and uncertainty related to COVID-19 and the Russian invasion of Ukraine. Experts project that Belgium’s growth rate will slow but remain above potential, dipping slightly to 2.4% in 2023 and further to 1.6% in 2024. The labor market remains strong as overall job numbers continue to increase, and analysts anticipate that the unemployment rate will decline steadily to 5.7% by 2024. The inflation rate will likely continue to increase, largely driven by rising energy prices. The Belgian central bank expects the rate to peak in 2022 at 4.9% and then decline as energy markets stabilize. Belgium’s budget deficit is projected to reach 6.3% of GDP for 2021 – down from a high of 9.1% in 2020 – and will likely remain above 4% of GDP through 2024. The level of government debt will hold steady, with most experts projecting 108.9% of GDP in 2021, 106.3% in 2022 and 107.5% in 2023.

Belgium is a major logistical hub and gateway to Europe, a position that helps drives its economic growth.  Since June 2015, the Belgian government has undertaken a series of measures to reduce the tax burden on labor and to increase Belgium’s economic competitiveness and attractiveness to foreign investment.  A July 2017 decision to lower the corporate tax rate from 35% to 25% further improved the investment climate. The current coalition government has not signaled any intention to revise this tax rate.

Belgium boasts an open market well connected to the major economies of the world. As a logistical gateway to Europe, host to major EU institutions, and a central location closely tied to the major European economies, Belgium is an attractive market and location for U.S. investors. Belgium is a highly developed, long-time economic partner of the United States that benefits from an extremely well-educated workforce, world-renowned research centers, and the infrastructure to support a broad range of economic activities

Belgium has a dynamic economy and attracts significant levels of investment in chemicals, petrochemicals, plastics and composites; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles, apparel and sporting goods, among other sectors.  In 2021, Belgian exports to the U.S. market totaled $27.7 billion, registering the United States as Belgium’s fourth largest export destination.  Key exports included chemicals (37.6%), machinery and equipment (10.9%), and precious metals and stones (5.9%).  In terms of imports, the United States ranked as Belgium’s fourth largest supplier of imports, with the value of imported goods totaling $27.6 billion in 2021.  Key imports from the United States included chemicals (38.8%), machinery and equipment (11%), and plastics (10.7%).

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 18 of 180 http://www.transparency.org/
research/cpi/overview
Global Innovation Index 2021 22 of 132 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) N/A USD Amount https://apps.bea.gov/
international/factsheet/
World Bank GNI per capita 2020 45,750USD https://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Belgium is a peaceful, democratic nation comprised of federal, regional, and municipal political units: the Belgian federal government, the regional governments of Flanders, Wallonia, the Brussels-Capital region, and communes (municipalities). Political divisions do exist between the Flemish and the Walloons, but they are addressed in democratic institutions and generally resolved through compromise. The Federal Council of Ministers, headed by the prime minister, remains in office as long as it retains the confidence of the lower house (Chamber of Representatives) of the bicameral parliament.

In 2021, a seven-year-long investigation into an attempted sabotage of the Doel nuclear power plant – perpetrated in 2014 – ended inconclusively in 2021. Investigators concluded that the incident was likely carried out by a plant employee or subcontractor who had a legitimate reason to be in the area where the sabotage occurred.

Belize

Executive Summary

Belize has the smallest economy in Central America, with a gross domestic product (GDP) of US $1.3 billion in 2021, a 12.5 percent expansion over the previous year. Due to mounting fiscal pressures and a need to diversify and expand its economy, the Government of Belize (GoB) is open to, and actively seeks, foreign direct investment (FDI).  However, the small population of the country (2021 estimate – 432,516 persons), high cost of doing business, high public debt, bureaucratic delays, often insufficient infrastructure, and corruption constitute investment challenges. The Central Bank of Belize projects the country’s GDP will likely expand 6.0 percent in 2022 while the IMF’s projects 6.5 percent growth, led by a rebound of activity in the construction, retail and wholesale trade, transport and communication, and tourism sectors.

Public debt declined from 133 percent of GDP in 2020 to 108 percent in 2021. This was in large part due to the Blue Bond Agreement, a successful marine protection and conservation-driven financial transaction. International reserves increased from US $348 million (3.8 months of imports) in 2020 to US $420 million (3.9 months of imports) in 2021, partly due to the IMF’s Special Drawing Rights (SDR) 25.6 million allocation, which the authorities are keeping as reserve. Belize’s government encourages FDI to relieve fiscal pressure and transform the economy. The Central Bank of Belize recorded increased inflows of FDI at US $152.25 million in 2021 and outflows at US $24.4 million in the same period.  FDI inflows were concentrated primarily in real estate, construction, financial intermediation, and the hotel and restaurant industries.

Generally, Belize has no restrictions on foreign ownership and control of companies; however, foreign investments must be registered with the Central Bank of Belize and adhere to the Exchange Control Act and related regulations. The Government of Belize (GoB) made progress on the ease of doing business through trade license, stamp duty, exchange control, and land reforms to streamline business applications and related processes.

The banking system remains stable but fragile. Since January 2020, a domestic bank and an international bank each lost a correspondent banking relationship, a significant portion of the sector. In March 2022, the GoB lowered the business tax on the net interest income charged to banks and financial institutions to encourage lending in strategic foreign exchange earning sectors such as tourism, agriculture, and the Business Process Outsourcing (BPO) sectors.

There were incidents of property destruction at two American companies involved in sugar cane industry in the last year. In response, a prominent agro-productive organization wrote to the Government in January 2022 expressing concerns that the Belizean government’s failure to protect and support private sector investors in these instances led to damaging the investment climate and the Belizean economy.

Belize is categorized as a small island developing state (SIDS) that is highly vulnerable to the effects of climate change and is a relatively minor contributor to global greenhouse gas emissions. Belize’s updated National Determined Contributions (NDC) is nonetheless committed to developing a long-term strategy aligned with achieving net zero global emissions by 2050.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 N/A http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 64 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 4,110 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Belize has traditionally enjoyed one of the most stable political environments in the region, having held peaceful and transparent democratic elections since gaining independence on September 21, 1981.  In general elections, the two major political parties usually trade leadership. The current People’s United Party gained an overwhelming majority in the November 2020 General Elections, winning twenty-six of the thirty-one electoral divisions. The few times political candidates have questioned the result of elections, these have been settled by the court.

There were incidents of property destruction at two American companies involved in sugar cane industry in the last year. In December 2021, cane farmers from Belize’s largest cane farmers association blockaded the access road to a major American investment in Orange Walk for three days, preventing other farmers from delivering cane to the factory. An impasse between the cane farmer association and the sugar mill for a contract to deliver cane sparked the incident. The American investment subsequently initiated two legal suits against the cane farmer’s association for destruction to property and economic losses incurred. The second company located in the Cayo District, suffered arson in January 2022, presumably related to a conflict associated with land rights. Over 1,200 acres of sugar cane was lost in the fire, an estimated loss of US $1.15 million. In response, a prominent agro-productive organization wrote to the Government in January 2022 expressing concerns that the Belizean government’s failure to protect and support private sector investors in these instances led to damaging the investment climate and Belizean economy still further.

Neighboring Guatemala’s long-standing territorial claim on Belize has persisted for almost two centuries.  The International Court of Justice (ICJ) is currently deliberating the territorial dispute.  In December 2020, Guatemala filed its claim to Belize’s continental land, islands, and seas, and Belize will file its counter claim in June 2022. Despite legal efforts to resolve the claim, the Friends for Conservation and Development (FCD), a local Belizean NGO, continues to document illegal encroachments and settlements in and beyond the adjacency zone in Belize. In July 2021, FCD rangers accompanied by Belize Defence Force (BDF) members were fired upon by Guatemalan civilians as the former attempted to destroy illegal plantations in the Chiquibul forest reserve in Belize. The BDF retaliated, which in turn instigated the response of the Guatemalan Armed Forces (GAF). The incident did not escalate further and there were no casualties.

The second major security concern is the high level of crime countrywide. While Belize has a high murder rate per capita, it is primarily focused on the urban areas of Belize City. Corruption, human and drug trafficking, money laundering (institutional and trade-based), and local criminal gang activity remain significant problems exacerbated by the low conviction rate.

Benin

Executive Summary

Benin transitioned to a democracy in 1990, enjoying a reputation for regular, peaceful, and, until recently, inclusive elections. In 2019 and 2021, the government held legislative and presidential elections, respectively, which were not fully inclusive nor competitive. Elections-related unrest in 2019 and 2021 resulted in several deaths. In April 2021, President Patrice Talon was re-elected for a second, and pursuant to Benin’s constitution, final five-year term.

Benin’s overall macroeconomic conditions were positive in 2020, though growth declined compared to previous years. According to the World Bank, GDP growth slowed from 6.9 percent in 2019 to 3.8 percent in 2020. Most of the slowdown in 2019 and 2020 was driven by the COVID-19 pandemic and Nigeria’s partial closure of its borders that lasted from August 2019 to December 2020. In December 2021, Benin’s National Assembly unanimously passed the Government of Benin (GOB) 2022 budget, which projects economic growth to accelerate to seven percent in 2022, higher than estimates from multilateral institutions. The IMF projection for growth in 2022 is 6.5 percent, and the African Development Bank projects a growth rate recovery from 4.8 in 2021 to 6.5 percent in 2022 if Covid-19 is brought under control. Port activity and the cotton sector are the largest drivers of economic growth. Telecommunications, agriculture, energy, cement production, and construction are other significant components of the economy. Benin also has a large informal sector. The country’s GDP is roughly 51 percent services, 26 percent agriculture, and 23 percent manufacturing.

In January 2022, the Talon administration released its second government action plan (French acronym-PAG) estimated at $20.6 billion. The PAG lists 342 projects (half of which are carried forward from the Talon administration’s first PAG covering 2016-2021) across 23 sectors. With the goals of strengthening the administration of justice, fostering a structural transformation of the economy, and improving living conditions, the projects are concentrated in infrastructure, agriculture and agribusiness, tourism, health, energy, telecomuncation, and education.  The government estimates that full implementation of the PAG will result in the creation of 500,000 new jobs and a leap in national economic and social conditions. The government intended that 48 percent of the PAG be funded through public funds and the remainder through public-private partnerships (PPPs). Through the end of 2021 a limited number of public-private partnerships had been secured. Government critics allege that the Talon administration is using the PAG in part to channel resources and contracts to administration insiders.

Benin continues efforts to attract private investment in support of economic growth amidst reports of high-level corruption among government insiders and occasional failure to respect foreign investment contracts. The Investment and Exports Promotion Agency (APIEX) is a one-stop-shop for promoting new investments, business startups, and foreign trade. In 2020, APIEX worked with foreign companies to facilitate new investments, though some companies reported that the agency was under-resourced and hamstrung by bureaucratic red tape in other agencies and ministries. APIEX reported that business creation increased to 40,000 in 2020 from 13,000 in 2015. The construction of a Special Economic Zone, located at Glo-Djigbé, is also a major component of the second PAG. Located 30 miles north of Benin’s capital Cotonou, the Glo-Djigbé Industrial Zone (GDIZ) is currently in the works under the direction of Benin’s Industry Promotion and Investment Company (SIPI), a public private partnership. The GDIZ is structured such that the GOB owns a 35 percent stake in it with the the Mauritanian-Singaporean firm Arise Integrated International Platfoms (Arise-IIP) owning 65 percent. Glo-Djigbé seeks to transform numerous locally produced agricultural products and high-tech goods for export. Though no businesses have started operating in GDIZ yet, approximately 25 have signed contracts to begin operations there, including Oryx and JNP (both petroleum services); NKS (cashew processing), Groupe Aigle (cotton processing), and SIDDIH (pharmaceuticals). The GDIZ is expected to increase Benin’s GDP by $7 billion over the next decade and boost export revenues.  The primary target markets will be the United States, the European Union, and other African countries. The GDIZ covers 1,640 hectares with 400 hectares being developed currently.

Benin’s second MCC power compact, valued at $391million entered into force in June 2017. This compact aims to strengthen the national power utility, attract private sector investment into solar power generation, and fund infrastructure investments in electricity distribution as well as off-grid electrification for poor and unserved households. It is also advancing policy reforms to bolster financing for the electricity sector and strengthen regulation and utility management. Through the compact MCC is expanding the capacity and increasing the reliability of Benin’s power grid in southern and northern Benin. As two thirds of Benin’s population does not have access to electricity, the compact also includes a significant off-grid electrification project via a clean energy grant facility that supports private sector investment in off-grid power systems. Benin’s second MCC compact follows its first compact (2006-2011) which modernized the Port of Cotonou and improved land administration, the justice sector, and access to credit.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 78 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 96 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 2 million https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 USD 1,280 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Benin transitioned to a democracy in 1990, enjoying a reputation for regular, peaceful, and, until recently, inclusive elections. In 2018, the National Assembly adopted, and the government implemented stringent rules for political parties to qualify to participate in legislative elections. In 2019 and 2021 the government held legislative and presidential elections, respectively, neither of which was fully competitive. The National Assembly is currently made up exclusively by two pro-government parties. Elections-related unrest in 2019 and 2021 resulted in several deaths. In April 2021, President Patrice Talon was re-elected for a second and final five-year term, pursuant to Benin’s constitution. The largest security issues facing Benin are the threat of terrorism spilling across its porous northern borders and piracy offshore in the Gulf of Guinea.

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 $14,262 2020 $15,650 www.worldbank.org/en/country/benin
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 $2 BEA:   https://www.bea.gov/international/di1usdbal
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A BEAhttps://www.bea.gov/international/di1fdibal
Total inbound stock of FDI as % host GDP N/A N/A 2020 18.6% UNCTAD: 

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

* Source for Host Country Data: Recent GOB data not available

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 $3,429 100% Total Outward $541 100%
France $1,219 35.54% France $146 26.98%
India $420 12.24% Togo $81 14.97%
Nigeria $381 11.11% Niger $72 13.30%
 China PR: Mainland $342 9.97% Côte-d’Ivoire $65 12.01%
 Côte d’Ivoire $215 6.27% Gabon $45 8.31%
 “0” reflects amounts rounded to +/- USD 500,000.

Bolivia

Executive Summary

In general, Bolivia is open to foreign direct investment (FDI).  In 2021, gross FDI flows received reached USD 440 million, higher than in 2020 when Bolivia registered a significant divestment of USD 1,018 million. FDI flows were greatest in the sectors of hydrocarbons, manufacturing, industry, and commerce, together representing over 80 percent of the total. Additional sectors receiving some FDI included the transport sector, storage and communications, insurance companies, and real estate services.

The year 2021 was economically characterized as a rebound after the effects of the COVID-19 pandemic in 2020, in which Gross Domestic Product (GDP) fell by 8.9 percent, the largest contraction in over 50 years. The leading sectors were mining, construction, and transport, registering double digit growth rates. International financial institutions estimated GDP growth between 5-5.5 percent for 2021. Bolivia was the fastest growing economy in the continent from 2014-2016 and in the top three until the start of the pandemic.

Bolivia abrogated the Bilateral Investment Treaties (BIT) it had with the United States and several other countries in 2012.  The Bolivian government claimed the abrogation was necessary for Bolivia to comply with the 2009 Constitution.  Companies that invested under the U.S. – Bolivia BIT will be covered by its terms until June 10, 2022, but investments made after June 10, 2012, are not covered.

Notwithstanding the uncertain political situation, Bolivia’s investment climate has remained relatively steady over the past several years.  Lack of legal security, corruption allegations, and unclear investment incentives are all impediments to investment in Bolivia.  There is no significant FDI from the United States in Bolivia, and there are no initiatives designed to encourage U.S. investment specifically.  Bolivia’s current macroeconomic stability, abundant natural resources, and strategic location in the heart of South America make it a prospective country for investment.

During the COVID-19 pandemic, the Bolivian government took several economic measures to support families, such as authorizing postponement in the payment of basic services (water, electricity, natural gas, telecommunications) and credit payment deferral for the private sector. These measures ended in 2021.

Bolivia’s Mother Earth Law stipulates climate change mitigation and adaptation. Bolivia last updated its Nationally Determined Contributions (NDC) for implementing the Paris Agreement in 2015. Bolivia does not have any regulatory “green” incentives for investment.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 128/ 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2020 104/ 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2020 USD 432 https://www.bea.gov/data/economic-accounts/international
World Bank GNI per capita 2020 USD 3,180 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

In 2021, the investment rate as a percentage of GDP (18 percent) was in line with regional averages.  There has also been a shift from private to public investment.  In recent years, private investment was particularly low because of the deterioration of the business environment.  From 2006 to 2021, private investment, including local and foreign investment, averaged 7 percent of GDP.  During the same period, public investment grew significantly, reaching an annual average of 12 percent of GDP.

FDI is highly concentrated in natural resources, especially hydrocarbons and mining, which account for nearly two-thirds of FDI in Bolivia.  Since 2006, the net flow of FDI averaged 1.6 percent of GDP.  Before 2006, it averaged around 6.7 percent of GDP.

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

The government’s general attitude toward foreign portfolio investment is neutral.  Established Bolivian firms may issue short or medium-term debt in local capital markets, which act primarily as secondary markets for fixed-return securities.  Bolivian capital markets have sought to expand their handling of local corporate bond issues and equity instruments.  Over the last few years, several Bolivian companies and some foreign firms have been able to raise funds through local capital markets.  However, the stock exchange is small and is highly concentrated in bonds and debt instruments (more than 95 percent of transactions).  The number of total transactions in 2021 was around 28 percent of GDP.

From 2008-2019, the financial markets experienced high liquidity, which led to historically low interest rates.  However, liquidity has been more limited in recent years, and there are some pressures to increase interest rates.  The Bolivian financial system is not well integrated with the international system and there is only one foreign bank among the top ten banks of Bolivia.

In October 2012, Bolivia returned to global credit markets for the first time in nearly a century.  In 2017, Bolivia sold USD 1 billion at 4.5 percent for ten years, with U.S. financial institutions managing the deal.  The resources gained from the sales were largely used to finance infrastructure projects. A sovereign bond issuance of up to $2 billion was approved by the National Assembly for 2022 but had not yet occurred as of April 2022. The Bolivian government’s attempt to refinance $2 billion in sovereign debt in February 2022 fell short, with only $850 million sold. The government had also hoped the new issuance would be for a 10-year term but had to settle for eight years (a 2030 maturity) for all the resold bonds. The interest rate for the new bonds is 7.5%, compared to interest rates of approximately 5% for the original bonds.

The government and central bank respect their obligations under IMF Article VIII, as the exchange system is free of restrictions on payments and transfers for international transactions.

Foreign investors legally established in Bolivia can get credits on the local market.  However, due to the size of the market, large credits are rare and may require operations involving several banks.  Credit access through other financial instruments is limited to bond issuances in the capital market.  The 2013 Financial Services Law directs credit towards the productive sectors and caps interest rates.

10. Political and Security Environment

Bolivia is prone to social unrest, which can include violence.  Given the country’s reliance on a few key thoroughfares, conflict often disrupts transportation and distribution networks.  Most civil disturbances are related to domestic issues, usually workers pressuring the government for concessions by marching or closing major transportation arteries.  Bolivia held peaceful and transparent elections in 2020 that gave a victory to Movement Towards Socialism (MAS) presidential candidate Luis Arce with over 55 percent of the vote. During his administration, political tensions in Bolivia have remained high, but there have been relatively few multi-day protests. While Bolivia has low levels of personal crime, with a homicide rate well below the regional average, there is a growing concern about increased criminality, especially a recent increase in femicides. Production of coca leaf is legal in Bolivia, and the country is a known source and transit country for cocaine and other illicit drugs that are mostly destined for Brazil and Europe but may also find their way to the United States.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics 

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $37,898 2020 $36,572 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $432 2020 $432 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Host country’s FDI in the United States ($M USD, stock positions) 2020 30 2020 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 2020 27.6% 2020 27.6% UNCTAD data available at https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx

* Source for Host Country Data: BEA, UNCTAD, World 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 10,479 100% Total Outward 789 100%
Spain 2,527 24.1% Netherlands 339 43.0%
Sweden 1,318 12.6% Peru 77 9.7
Peru 1,247 11.9% Panama 67 8.5%
Netherlands 885 8.4% Brazil 40 5.1%
France 605 5.8% Canada 37 4.8%
“0” reflects amounts rounded to +/- USD 500,000.

Bosnia and Herzegovina

Executive Summary

Bosnia and Herzegovina (BiH) is open to foreign investment, but to succeed, investors must overcome endemic corruption, complex legal/regulatory frameworks and government structures, non-transparent business procedures, insufficient protection of property rights, and a weak judicial system under the indue influence of ethno-nationalist parties and their patronage networks. Economic reforms to complete the transition from a socialist past to a market-oriented future have proceeded slowly and the country has a low level of foreign direct investment (FDI). According to the BiH Central Bank preliminary data, in the first nine months of 2021 FDI in BiH was USD 617 million, a 65% increase from the same period in 2020. In the World Bank’s 2020 Ease of Doing Business Report, BiH was among the least attractive business environments in Southeast Europe, with a ranking of 90 out of 190 global economies. (Note: Beginning in 2021, the World Bank discontinued the worldwide assessment in the Doing Business Report.) The World Bank 2020 report ranked BiH particularly low for its lengthy and arduous processes to start a new business and obtain construction permits. According to the World Bank estimates, real GDP is expected to grow 4 percent in 2021 after contracting 3.2 percent in 2020. The European Bank for Reconstruction and Development (EBRD) expects BiH’s GDP to grow by 4.5% in 2021. EBRD announced that BiH’s economic recovery has been stronger than expected mostly due to the recovery in external markets and strong expansion of domestic private consumption, backed by higher exports of goods and services. BiH is tied closely to global value chains as it primarily exports goods rather than services.

U.S. investment in BiH is low due to its small market size, relatively low income levels, distance from the United States, challenging business climate, and the lack of investment opportunities. Most U.S. companies in BiH are represented by small sales offices that are concentrated on selling U.S. goods and services, with minimal longer-term investments. U.S. companies with offices in BiH include major multinational companies and market leaders in their respective sectors, such as Coca-Cola, Microsoft, Cisco, Oracle, Pfizer, McDonalds, Marriott, Caterpillar, Johnson & Johnson, FedEx, UPS, Philip Morris, KPMG, PwC and others. Nonetheless, BiH offers business opportunities to well-prepared and persistent exporters and investors. Companies that overcome the challenges of establishing a presence in BiH often make a return on their investment over time. A major U.S. investment fund was able to enter the market with a regional investment in the telecom/cable sector in 2014 and exit its majority position in 2019 with a good return. There is an active international community, but lack of political will has stalled the many reform efforts that would improve the business climate as BiH pursues eventual European Union membership. The country is open to foreign investment and offers a liberal trade regime and its simplified tax structure is one of the lowest in the region (17 percent VAT and 10 percent flat income tax).

The complex institutional and territorial structure of BiH complicates the economic landscape of the country and may lead to further disruptions in Foreign Direct Investment. In July 2021, the Republika Srpska (RS) entity began a blockade of state institutions and in October 2021 began to take unconstitutional steps to return competencies to the entity-level government. This near-virtual decision-making blockade and attempts to withdraw the RS from state institutions and agencies have created questionsfor many investors and businesses. The duplicative nature of the proposed RS-based parallel institutions and agencies will complicate the investment landscape and create regulatory and legal confusion. While no new parallel RS agencies are yet operational, the RS has taken concrete legislative and regulatory steps to lay the groundwork for their full implementation in the near to mid-term. Investors should exercise all due diligence and take into account ongoing and potential Constitutional Court challenges and the fact these RS moves violate the Dayton Peace Agreement when deciding whether to conduct business with these nascent agencies or operate under constitutionally questionable legal frameworks established by the RS. The Federation of Bosnia and Herzegovina entity also has functionality issues, with 2018 election results yet unimplemented, and a legislative body that struggles to pass basic economic reforms. Potential investors are urged to read the legal reviews and statements of the High Representative to BiH.

BiH is pursuing World Trade Organization membership and hopes to join in the future. It is also richly endowed with natural resources, providing potential opportunities in energy (hydro, wind, solar, along with traditional thermal), agriculture, timber, and tourism. The best business opportunities for U.S. exporters to BiH include energy generation and transmission equipment, telecommunication and IT equipment and services, transport infrastructure and equipment, engineering and construction services, medical equipment, agricultural products, and raw materials and chemicals for industrial processing. In 2021, U.S. exports to BiH totaled USD 322 million, a 37 percent increase from 2020, and held around 3 percent share of total BiH imports. BiH exports to the United States in 2021 totaled USD 94 million, an increase of 135 percent from 2020. U.S. exports to BiH are primarily in the areas of raw materials for industrial processing, food and agricultural products, machinery and transport equipment, and mineral fuels.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website
TI Corruption Perceptions Index 2021 110 of 180 www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 75 of 131 https://www.globalinnovationindex.org/home 
U.S. FDI in partner country 2021  $9 million https://apps.bea.gov/international/factsheet/factsheet.cfm 
World Bank GNI per capita 2020      $6,080 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Bosnia and Herzegovina has been at peace since the conclusion of the Dayton Peace Accords in November 1995. There have been no attacks targeting foreign investments. In mid-June 2013 and early 2014, large groups of citizens protested the country’s economic stagnation and the government’s apparent inability to improve the situation. The vast majority of protests were peaceful with relatively small numbers of participants, but some protests in Sarajevo, Mostar, and Tuzla resulted in attacks on government buildings, destruction of government property, and injuries. There were no reports of foreign investors being directly targeted in the protests. However, there are still risks from occasional, localized political and criminal violence.

The political environment in BiH has deteriorated since July 2021 when the RS entity began blockading the work of state level institutions and agencies and in October 2021 proceeded with unconstitutional steps to withdraw from state-level institutions and create parallel institutions and agencies. Since this blockade began, little progress has been made by state level institutions to enact necessary reforms strengthening the business environment. RS moves to pull out of state level institutions and form parallel entity level institutions, such as the Medicine and Medical Equipment Agency, threaten to create legal ambiguities that further complicate the business environment, disrupt the economy, and hinder investment. The Federation of Bosnia and Herzegovina entity also has functionality issues, including a government that has not yet implemented 2018 election results.

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) (USD) 2020 $19.9 billion*

 

2020 $19.9 billion www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI ($M USD, stock positions)     2021 $250 million (Post estimate) N/A N/A N/A
FDI in the United States ($M USD, stock positions)         N/A N/A N/A N/A N/A
Total inbound stock of FDI as %  GDP ($M USD, stock positions)       N/A N/A N/A N/A N/A

*Source: BiH Statistics Agency

Table 3: Sources of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations 1994-2022 (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $8,882 100% Total Outward 524 100%
Austria $1,635 18.4% Croatia 130 24.8%
Croatia $1,421 15.9% Germany 97 18.5%
Serbia $1,288 14.5% Montenegro 87 16.6%
Slovenia $692 7.7% Serbia 74 14.1%
Germany $501 5.6% Romania 37 7.0%
“0” reflects amounts rounded to +/- USD 500,000.

According to the BiH Central Bank preliminary data for 2021, FDI inflow in Bosnia and Herzegovina increased significantly by 65% comparing to the same period of 2020 and amounted to USD 617 million. The all-time high for FDI was USD 2.1 billion in 2007. Most investments in 2014-2021 came from Croatia, Austria, Russia, Serbia, Germany, The Netherlands, UAE, and the United Kingdom.

Botswana

Executive Summary 

Botswana is a small country with a population of about 2.35 million (World Bank, 2020) and nestled between South Africa, Namibia, Zimbabwe and Zambia.  Its central location in southern Africa enables it to serve as a gateway to the region.  Botswana has historically enjoyed high economic growth rates and its export-driven economy is highly correlated with global economic trends.  Development has been driven mainly by revenue from diamond mining, which has enabled Botswana to develop infrastructure and provide social welfare programs for vulnerable members of the population, and these programs will be maintained despite financial challenges in the current financial year, which runs from April 2022 to March 2023.  The economic impact of the COVID-19 pandemic was significant as evidenced by an economic growth of negative 8.5 percent in 2020; economic growth was estimated to reach 9.7 percent in 2021.  Unemployment also rose from 22.2 percent in the fourth quarter of 2019 (prior to the pandemic) to 26 percent in the fourth quarter of 2021.  The fiscal impact of the pandemic has also been significant, resulting in large budget deficits of $1.4 billion in 2020 and $0.87 billion in 2021 compared to the $0.68 billion surplus that the government had forecasted for 2021 in its National Development Plan (NDP).  In the first quarter of 2021, diamond revenues recovered, but international tourism revenues did not.  In recent years, inflation has remained at the bottom end of the central bank’s three to six percent acceptable range; however, since the COVID-19 pandemic, inflation rose to a 13-year high of 10.6 percent in January 2022 and stayed at that level in February 2022.  The World Bank classifies Botswana as an upper middle-income country based on its per capita income of $6,405 in 2020, although it declined from $7,203 in 2019.

Botswana is a stable, democratic country with an independent judiciary system.  It maintains a sound macroeconomic environment, fiscal discipline, a well-capitalized banking system, and a crawling peg exchange rate system.  In March 2021, Standard & Poor’s (S&P) maintained Botswana’s sovereign credit rating for long and short-term foreign and domestic currency bonds at “BBB+/A-2” with a negative outlook, which reflects the risks COVID-19 will continue to pose on Botswana’s economic and fiscal performance over the next 12 months.  In November 2021, Moody’s revised its credit rating for Botswana from A2 to A3 with a stable outlook.  These agencies’ ratings are highly influenced by Botswana’s continued dependence on diamonds, which contribute to at least a quarter of Botswana’s GDP and are susceptible to external shocks which places the country at a much higher risk.  The diamond industry has however been experiencing a recovery, setting Botswana on a positive trajectory.

Botswana has minimal labor strife.  The country has been cited in the 2020 Global Competitiveness Report as one of 30 countries out of 141 in which hiring of foreign labor has become significantly harder than it was in 2008.  Botswana is a member state to both the International Centre for Settlement of Investment Disputes (ICSID) Convention and the 1958 New York Convention.  Corruption in Botswana remains less pervasive than in other parts of Africa; nevertheless, foreign and national companies have noted increasing tender-related corruption.  The Government of Botswana (GoB) created the Botswana Investment and Trade Centre (BITC) to assist foreign investors.  Botswana offers low tax rates and has no foreign exchange controls.  The BITC’s topline economic goals are to promote export-led growth, ensure efficient government spending and financing, build human capital, and to ensure the provision of appropriate infrastructure.  GoB entities, including BITC, use these criteria to determine the level of support to give foreign investors.  The GoB has committed to streamline business-related procedures, and remove bureaucratic impediments based on World Bank recommendations in a business reform roadmap.  Under this framework, the GoB introduced electronic tax and customs processes in 2016 and 2017.  The Companies and Intellectual Property Authority (CIPA) built and successfully integrated the Online Business Registration System (OBRS) with Botswana Unified Revenue Services (BURS) and the Immigration Office.  OBRS is designed to reduce the business registration process by more than 10 days.  On March 2022, Parliament passed the Intellectual Property Policy to leverage Botswana’s IP potential for inclusive and sustainable economic growth and development.  The Public Procurement and Asset Disposal Board (PPADB) will from April 1, 2022, be transitioned to Public Procurement and Regulatory Authority (PPRA) and no longer adjudicate on government tenders.  The GoB also established the Special Economic Zones Authority (SEZA) to streamline sector-targeted investment in Botswana’s different geographic areas.  The Ministry of Investment, Trade & Industry (MITI) is developing a Trading Service Strategy to facilitate economic diversification and is also working on the African Continental Free Trade Area (AfCFTA) Implementation Strategy.

Due to COVID-19-related economic shortfalls, Botswana drew down heavily on its foreign exchange reserves and government savings.  Sectors such as mining, tourism, trade, hotels and restaurants, construction, and manufacturing suffered significantly; however, rough diamond sales recovered somewhat in the second half of 2020.  In April 2021, the government put in place several interventions to raise revenues including a Value Added Tax (VAT) increase from 12 percent to 14 percent, an increase on Withholding Tax on dividend income from 7.5 percent to 10 percent and increases in several fees and levies charged for government services (source: 2021, Budget Speech).  The government moved swiftly to implement relevant statutory instruments to curb the likelihood of companies exploiting COVID-19 to collude to set exorbitant prices.  The 2020 statutory instrument 61 regulated the prices of essential supplies and basic food commodities for the duration of the 18-month COVID-19 related state of emergency.  Interventions like the Economic Recovery and Transformation Plan (ERTP) and the Reset Agenda augmented the short-term economic relief package that included wage subsidies, tax amnesties, waivers of certain levies due to government, loan guarantee schemes to support firms’ access to bank credit, and provision of food relief.  The president’s Reset Agenda seeks to adjust some priorities in light of new and unexpected challenges and to find smarter ways to implement projects in a timely manner and within stipulated budgets.  The ERTP aims to reinforce support already given to affected businesses and also to take advantage of opportunities that have emerged because of the pandemic such as digital services and e-commerce.

Botswana is committed to reducing greenhouse emissions to 15 percent by 2030 through renewable energy projects already underway and listed in the Integrated Resource Plan (IRP).  Botswana also adopted a Climate Change Policy in 2021 which seeks to promote access to carbon markets, climate finance, and clean technologies.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 45 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 57 of 173 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 21.0 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 6,640 USD https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment 

3. Legal Regime 

6. Financial Sector 

10. Political and Security Environment 

The threat of political violence is low in Botswana.  Public demonstrations are rare and seldom turn violent.  The last large-scale strikes, which involved public sector employees, occurred April-June 2011 and were not violent.  In September 2015, roughly 200 people participated in a peaceful march organized by an opposition political party to protest water shortages in the capital.  In August 2016, police forcefully dispersed a small demonstration protesting unemployment outside the National Assembly.  In February and March 2017, some student-led protests occurred at tertiary institutions necessitating police deployment but were not overtly political.  There were multiple reports of police brutality, including the use of rubber whips and rubber bullets.  Another peaceful march against corruption was held in March 2018.  This followed allegations of embezzlement of the National Petroleum Fund by a company charged with the management of the funds together with some GoB officials.  In late 2019, following general election, the Umbrella for Democratic Change (UDC) held a peaceful march of no more than 200 people protesting the election results.

Brazil

Executive Summary

Brazil is the second largest economy in the Western Hemisphere behind the United States, and the twelfth largest economy in the world (in nominal terms) according to the World Bank. The United Nations Conference on Trade and Development (UNCTAD) named Brazil the seventh largest destination for global foreign direct investment (FDI) flows in 2021 with inflows of $58 billion, an increase of 133percent in comparison to 2020 but still below pre-pandemic levels (in 2019, inflows totaled $65.8 billion). In recent years, Brazil has received more than half of South America’s total amount of incoming FDI, and the United States is a major foreign investor in Brazil. According to Brazilian Central Bank (BCB) measurements, U.S. stock was 24 percent ($123.9 billion) of all FDI in Brazil as of the end of 2020, the largest single-country stock by ultimate beneficial owner (UBO), while International Monetary Fund (IMF) measurements assessed the United States had the second largest single-country stock of FDI by UBO, representing 18.7 percent of all FDI in Brazil ($105 billion) and second only to the Netherlands’ 19.9 percent ($112.5 billion). The Government of Brazil (GoB) prioritized attracting private investment in its infrastructure and energy sectors during 2018 and 2019. The COVID-19 pandemic in 2020 delayed planned privatization efforts and despite government efforts to resume in 2021, economic and political conditions hampered the process.

The Brazilian economy resumed growth in 2017, ending the deepest and longest recession in Brazil’s modern history. However, after three years of modest recovery, Brazil entered a recession following the onset of the global coronavirus pandemic in 2020. The country’s Gross Domestic Product (GDP) increased 4.6 percent in 2021, in comparison to a 4.1 percent contraction in 2020. As of February 2022, analysts had forecasted 0.3 percent 2022 GDP growth. The unemployment rate was 11.1 percent at the end of 2021, with over one-quarter of the labor force unemployed or underutilized. The nominal budget deficit stood at 4.4 percent of GDP ($72.4 billion) in 2021, and is projected to rise to 6.8 percent by the end of 2022 according to Brazilian government estimates. Brazil’s debt-to-GDP ratio reached 89.4 percent in 2020 and fell to around 82 percent by the end of 2021. The National Treasury projections show the debt-to-GDP ratio rising to 86.7 percent by the end of 2022, while the Independent Financial Institution (IFI) of Brazil’s Senate projects an 84.8 percent debt-to-GDP ratio. The BCB increased its target for the benchmark Selic interest rate from 2 percent at the end of 2020 to 9.25 percent at the end of 2021, and 11.75 percent in March 2022. The BCB’s Monetary Committee (COPOM) anticipates raising the Selic rate to 12.25 percent before the end of 2022.

President Bolsonaro took office on January 1, 2019, and in that same year signed a much-needed pension system reform into law and made additional economic reforms a top priority. Bolsonaro and his economic team outlined an agenda of further reforms to simplify Brazil’s complex tax system and complicated code of labor laws in the country, but the legislative agenda in 2020 was largely consumed by the government’s response to the COVID-19 pandemic. In 2021, the Brazilian government passed a major forex regulatory framework and strengthened the Central Bank’s autonomy in executing its mandate. The government also passed a variety of new regulatory frameworks in transportation and energy sectors, including a major reform of the natural gas market. In addition, the government passed a law seeking to improve the ease of doing business as well as advance the privatization of its major state-owned enterprise Electrobras.

Brazil’s official investment promotion strategy prioritizes the automobile manufacturing, renewable energy, life sciences, oil and gas, and infrastructure sectors. Foreign investors in Brazil receive the same legal treatment as local investors in most economic sectors; however, there are foreign investment restrictions in the health, mass media, telecommunications, aerospace, rural property, and maritime sectors. The Brazilian congress is considering legislation to liberalize restrictions on foreign ownership of rural property.

Analysts contend that high transportation and labor costs, low domestic productivity, and ongoing political uncertainties hamper investment in Brazil. Foreign investors also cite concerns over poor existing infrastructure, rigid labor laws, and complex tax, local content, and regulatory requirements; all part of the extra costs of doing business in Brazil.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 96 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 57 of 129 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $70,742 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $7,850 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Strikes and demonstrations occasionally occur in urban areas and may cause temporary disruption to public transportation. Brazil has over 41,000 murders annually, with low rates of murder investigation case completions and convictions.

Non-violent pro- and anti-government demonstrations have occurred periodically in recent years.

Although U.S. citizens usually are not targeted during such events, U.S. citizens traveling or residing in Brazil are advised to take common-sense precautions and avoid any large gatherings or any other event where crowds have congregated to demonstrate or protest. For the latest U.S. State Department guidance on travel in Brazil, please consult www.travel.state.gov.

Brunei

Executive Summary

Brunei is a small, energy-rich sultanate on the northern coast of Borneo in Southeast Asia. Brunei boasts a well-educated, largely English-speaking population, excellent infrastructure, and a government intent on attracting foreign investment and projects. In parallel with Brunei’s efforts to attract foreign investment and create an open and transparent investment regime, the country has taken steps to streamline the process for entrepreneurs and investors to establish businesses and has improved its protections for Intellectual Property Rights (IPR).

Despite ambitions to diversify, Brunei’s economy remains dependent on the income derived from sales of oil and gas, contributing about 50 percent to the country’s GDP. Substantial revenue from overseas investment supplements income from domestic hydrocarbon production. These two revenue streams provide a comfortable quality of life for Bruneians by regional standards. Citizens are not required to pay taxes and have access to free education through the university level, free medical care, and subsidized housing and car fuel.

Brunei has a stable political climate and is generally sheltered from natural disasters. Its central location in Southeast Asia, with good telecommunications and airline connections, business tax credits in specified sectors, and no income, sales, or export taxes, offers a welcoming climate for potential investors. Sectors offering U.S. business opportunities in Brunei include aerospace and defense, agribusiness, construction, petrochemicals, energy and mining, environmental technologies, food processing and packaging, franchising, health technologies, information and communication, digital finance, and services. Brunei has ambitious climate change goals, aspiring to lower greenhouse gas emissions by more than 50 percent and increase its share of renewable energy to 30 percent of total capacity by 2035.

Brunei continues to take a cautious approach against the COVID-19 pandemic despite having fully immunized 95 percent of the population. As of March 2022, although the country is not under lockdown, Brunei has not fully opened its borders to non-essential travel. Travelers entering the country are required to obtain permission from the Prime Minister’s Office.

In 2014, Brunei began implementing sections of its Sharia Penal Code (SPC) that expanded preexisting restrictions on activities such as alcohol consumption, eating in public during the fasting hours in the month of Ramadan, and indecent behavior, with possible punishments including fines and imprisonment. The SPC functions in parallel with Brunei’s common law-based civil penal code. The government commenced full implementation of the SPC in 2019, introducing the possibility of corporal and capital punishments including, under certain evidentiary circumstances, amputation for theft and death by stoning for offenses including sodomy, adultery, and blasphemy. Government officials emphasize that sentencing to the most severe punishments is highly improbable due to the very high standard of proof required for conviction under the SPC. While the SPC does not specifically address business-related matters, potential investors should be aware that the SPC generated global controversy when it was implemented due to its draconian punishments and inherent discrimination toward LGBT communities. The sultan declared a moratorium on the death penalty for sharia crimes in response to the outcry and there have been no recorded incidents of U.S. citizens or U.S. investments directly affected by sharia law.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 35 of 175 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 82 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD $11.0 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD $31,510 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Brunei is an absolute monarchy and has no recent history of political violence. Sultan Hassanal Bolkiah is an experienced and popular monarch who rules the country as Prime Minister while also retaining the titles of Minister of Finance and Economy, Minister of Defense, and Minister of Foreign Affairs. The country experienced an uprising in 1962 when it was a British protectorate, which ended through the intervention of British troops. The country has been ruled peacefully under emergency law ever since. Brunei has managed to avoid demands for political reform by making use of its hydrocarbon revenues to provide its citizens with generous welfare benefits and subsidies.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $12.211 billion 2020 $12.006 billion www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $2.6 million 2020 $11.0 million BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A No data available
Total inbound stock of FDI as % host GDP 2020 $7.45 billion 2020 63.2% UNCTAD data available at

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

* Source for Host Country Data: Department of Economic Planning and Statistics, Ministry of Finance and Economy Brunei Darussalam 

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 (Not Available)
Total Inward 7,589 100% Total Outward Amount 100%
China 2,646 35% Country #1 Amount X%
United Kingdom 2,608 34% Country #2 Amount X%
The Netherlands 855 11% Country #3 Amount X%
Singapore 387 5% Country #4 Amount X%
Japan 259 3% Country #5 Amount X%
“0” reflects amounts rounded to +/- USD 500,000.

Source: IMF Coordinated Direct Investment Survey (2020)

Bulgaria

Executive Summary

Bulgaria is seen by many investors as an attractive low-cost investment destination, with government incentives for new investment. The country offers some of the least expensive labor in the European Union (EU) and low and flat corporate and income taxes. However, Bulgaria has the lowest labor productivity rate in the EU, and a rapidly shrinking population could exacerbate the trend.

In 2021 Bulgaria continued to suffer from the COVID-19 pandemic and related shutdowns, although the impact on the economy was less severe than in many other European countries. In 2021 the government updated the budget to include more public funding of COVID-related measures, such as increased pensions. Tourism, logistics, the service industries, and the automotive sector were particularly hard hit by the pandemic. The Bulgarian economy declined 4.4 percent in 2020, rebounded to 4.2 percent growth in 2021, and is projected to grow by 4.8 percent in 2022. This recovery is being driven by higher consumption and public investment funds. The war in Ukraine and rising energy and food prices, however, threaten these growth expectations.

Bulgaria is expected to receive EUR 6.2 billion over a six-year period (2021-2026) from the EU’s post-COVID recovery grant funds to improve its economy in areas such as green energy, digitalization, and private sector development.

The government expects to adopt the Euro in early 2024, after having joined the European Exchange Rate Mechanism (ERM II) in July 2020 and the EU’s Banking Union in October 2020. The adoption of the euro will eliminate currency risk and help reduce transaction costs with some of the country’s key European trading partners.

There are no legal limits on foreign ownership or control of firms. With some exceptions, foreign entities are given the same treatment as national firms and their investments are not screened or otherwise restricted. There is strong growth in software development, technical support, and business process outsourcing. The Information Technology (IT) and back-office outsourcing sectors have attracted a number of U.S. and European companies to Bulgaria, and many have established global and regional service centers in the country. The automotive sector has also attracted U.S. and foreign investors in recent years.

Foreign investors remain concerned about rule of law in Bulgaria. Along with endemic corruption, investors cite other problems impeding investment including difficulty obtaining needed permits, unpredictability due to frequent regulatory and legislative changes, sporadic attempts to negate long-term government contracts, and an inefficient judicial system. The new government coalition which came to power in December 2021 cited rule of law reform as its highest priority.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 78 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 35 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2021 USD 608 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 9,630 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment 

3. Legal Regime 

6. Financial Sector 

10. Political and Security Environment 

Daily anti-government protests that took place throughout the summer of 2020 in Sofia generated sporadic reports of excessive force by protestors and police, but otherwise there has been no significant political violence in recent years.

Burkina Faso

Executive Summary

On January 24, 2022, the Burkinabé military officers deposed the democratically-elected government of former President Roch Marc Christian Kabore, dissolved the government and national assembly, and suspended the constitution. The coup leader Lieutenant Colonel Paul-Henri Damiba assumed the role of president of Burkina Faso’s Transition Government. In February 2022, a transitional charter was signed by Transition President LTC Damiba laying out a three-year transition period before democratic elections could be held. Since then, a Transitional government and a Transition Legislative Assembly have been installed.

Burkina Faso is a landlocked country and the world’s seventh poorest country according to the 2020 UN Development Program (UNDP) Human Development Index, ranked at 182 out of 189 countries. Burkina Faso has an estimated population of 22 million inhabitants (as of June 2022) according to the United Nations, and the IMF estimates its growth domestic product (GDP) at US$ 19.62 billion. Burkina Faso’s economy rebounded in 2021 and grew at an estimated 8.5 percent, attributable to increases in gold exports and the services sector, according to the World Bank. The economy is forecasted to grow at 5.6 percent in 2022. The fiscal deficit stood at 5.5 percent of GDP in 2022, but could reach 6.6 percent of GDP in 2022 as a result of the multitude of challenges Burkina Faso faces, including security, humanitarian, food, and social, etc. Over 40 percent of the Burkinabe population live below the poverty line, and the country ranks 144th out of 157 countries in the World Bank’s Human Capital Index. Some 80 percent of the country’s population is engaged in agriculture—mostly subsistence—with only a small fraction directly involved in agribusiness. In 2020, as a response to the COVID-19 crisis, the Burkinabe government announced a series of socio-economic measures ranging from tax breaks to subsidies and food support to low-income families. The overall cost of the measures was estimated at US$656 million.

Overall, Burkina Faso welcomes foreign investment and actively seeks to attract foreign partners to aid in its development. It has partially put in place the legal and regulatory framework necessary to ensure that foreign investors are treated fairly, including setting up a venue for commercial disputes and streamlining the issuance of permits and company registration requirements. More progress is needed to diminish the dominance of state-owned firms in certain sectors and to enforce intellectual property protections.

Burkina Faso ranks 100th of 177 countries in the Heritage Foundation’s economic freedom report 2022 Economic Freedom Index. Among the 51 African countries in the report, Burkina Faso ranked 14th, improving its 21st position in the 2021 economic freedom report. Burkina Faso’s corruption perception score improved slightly from 40 in 2020 to 42 in 2021 and improved the country’s ranking from 86th to 78th of 180 countries.

The gold mining industry has boomed in the last decade, and the bulk of foreign investment is in the mining sector, mostly from Canadian firms. Moroccan, French and UAE companies control local subsidiaries in the telecommunications industry, while foreign investors are also active in sectors such as agriculture, transport and logistics, energy, and financial technology. There is a growing foreign investment interest in the security sector. In June 2015, a new mining code was approved to standardize contract terms and better regulate the sector. In 2018, the parliament adopted a new investment code that offers many advantages to foreign investors. This code offers a range of tax breaks and incentives to lure foreign investors, including exemptions from value-added tax (VAT) on certain equipment. Effective tax rates as a result are lower than the regional average, though the tax system is complex, and compliance can be burdensome. Opportunities for U.S. firms exist in many sectors, but including in agriculture and manufacturing

Burkina Faso remains committed to a market-based economy without barriers to trade. Over the last 15 years, the national power utility’s Société Nationale de l’Eléctricité du Burkina (SONABEL) customer base and energy demand ballooned. Between 2015 and 2021, SONABEL customer base grew by 64%. However, supply can only meet the demand in non-peak periods. Burkina Faso imports nearly 70 percent of its electricity from neighboring Ghana and Cote d’Ivoire and faces electricity reliability and affordability challenges. It also imports other energy products such as gasoline and gas through a network of foreign companies to meet local demand. the Millennium Challenge Corporation (MCC) suspended the US$ 500 million compact with the Government of Burkina Faso. The Compact aimed to unlock economic growth by strengthening electricity sector effectiveness, energy reliability cost-effectiveness, and grid development and access, creating a more favorable investment environment for firms in the energy sector and the wider economy and spurring further foreign direct investment in Burkina Faso.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 78 of 180 2021 Corruption Perceptions Index – Explore the… – Transparency.org
Global Innovation Index 2020 115 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 NA https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $770 GNI per capita, Atlas method (current US$) | Data (worldbank.org)

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Rampant insecurity and the government’s inability to stem violent extremism contributed to the military overthrow of the democratically elected government of President Roch Marc Christian Kaboré on January 24, 2022. In 2021, Burkina Faso recorded the highest number of attacks during its five-plus year battle with violent extremism. The result has led to a crisis resulting in the closure of schools and the massive displacement of people from their homes and communities. President Roch Marc Christian Kabore had been reelected to a second and final term in November 2020. This was the first time a democratic handover of power occurred in Burkina Faso’s history since it gained independence in 1960. During the same period legislative elections were organized and results were accepted by all political parties.

However, Violent extremists remain very active in Burkina Faso. Both the Islamic State for the Greater Sahara and the Jama’ at Nasr Al Islam wal Muslimin (JNIM) coalition have expanded their operation footprints in recent years. Security incidents include violence using tactics such as, improvised explosive devices, kidnapping, attacks, and targeted killings in an expanding part of the country in the north, east, and south. Targets appeared to shift from military and gendarmerie units to civilians and volunteer defense groups. In May 2022, VEOs carried out 61 attacks against civilians and security forces, killing a total of 173 people and injuring 40 others, The number of terrorist incidents in Burkina Faso’s southwestern Boucle du Mouhoun region rose significantly in May compared to the numbers reported for the three previous months. Since October 2021, over 799 people died in terrorist incidents, and an additional 600 individuals sustained injuries during the same period. On June 4, 2021, VEOs killed 160 civilians in Solhan in the Sahel region near the border with Niger. This was the second deadliest terrorist attack globally in 2021, according to the 2022 Global Terrorism Index. The report also indicates that 732 people died from terrorist incidents in Burkina Faso in 2021. The African Center for Strategic Studies noted in its July 2021 report that most violent attacks in the Sahel in 2020 were carried out in Burkina Faso (516 versus 361 in Mali and 118 in Niger).

In April 2022, a U.S. citizen was reportedly abducted in Burkina’s Centre-Nord,. In 2018, an American citizen was abducted but was later discovered by French operatives during an unrelated mission to recover French nationals abducted by extremists. Three Europeans – two Spanish and one Irish – were killed in an attack on an anti-poaching patrol in eastern Burkina Faso on April 27, 2021. In 2021, attacks spiked in the southern part of Burkina Faso, contiguous to the north of Cote d’Ivoire. The Cascades region border area, which has suffered several attacks in the past, is seen by experts as a hide-out for armed terrorist groups and a threat for coastal countries. As of April 2022, terrorist attacks have generated around 1.9 million Internally Displaced Persons (IDPs) mostly in Burkina Faso’s Sahel, Centre-Nord, Nord, and Est regions. Since 2018, the Government of Burkina Faso has maintained a state of emergency due to insecurity in many parts of the country

As of May 2022, the U.S. State Department’s travel advisory to Burkina Faso is at Level 4: Do Not Travel due to terrorism, crime, and kidnapping.

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 2021 $19.2 Billion https://www.imf.org/en/Countries/BFA#countrydata
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($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 2021 0.03% 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.

Burma

Executive Summary

On February 1, 2021, the Burmese military seized power in a coup d’état that reversed much of the economic progress of recent years. The military’s brutal crackdown on peaceful protests destabilized the country, prompted widespread opposition, and created a sharp deterioration in the investment climate. Burma’s economy shrank by 18 percent in 2021, with a forecast for one percent growth in 2022, according to the World Bank. The regime’s ongoing violence, repression, and economic mismanagement have significantly reduced Burma’s commercial activity, compounded by the pro-democracy Civil Disobedience Movement that emerged in response to the coup. Many routine business services like customs, ports, and banks are not fully operational as of April 2022. Immediately after the coup, the military detained the civilian leadership of economic and other ministries as well as the Central Bank of Myanmar (CBM) and replaced them with appointees who are beholden to the regime. The CBM has imposed severe foreign exchange restrictions that limit commercial activity, and the regime severely limits access to U.S. dollars. Frequent power outages and reliance on generators have dramatically raised costs for business. The regime’s suspensions of internet and other telecommunications have restricted access to information and seriously hindered business operations. Due to COVID-19 concerns, commercial international flights resumed only on April 17, 2022. Many foreign companies have suspended operations, invoked force majeure to exit investments, and evacuated foreign national staff. The rule of law is absent, regime security forces engage in random violence, there are attacks in response by pro-democracy People’s Defense Forces, and arbitrary detentions of perceived regime opponents including labor organizers and journalists. Companies invested in the market face a heightened reputational risk. There is also the potential for the regime to expropriate property or nationalize private companies. In response to the coup, the U.S. government has imposed targeted sanctions, including on members of the regime’s so-called State Administration Council (SAC), ministers, and other authorities. The U.S. has also suspended our Trade and Investment Framework Agreement and instituted more stringent export controls. In the 2022 Business Advisory for Burma, the United States reaffirmed that it does not seek to curtail legitimate business and responsible investment in Burma. Nevertheless, investors should exercise extreme caution, avoid joint ventures with regime-affiliated businesses, and conduct heightened due diligence when considering new investments in this market.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 140 of 180 https://www.transparency.org/en/cpi/2021/index/mmr
Global Innovation Index 2021 127 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 -6.0 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $1,350 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Burma has a long history of civil wars and military coups marked by violence. In the aftermath of the February coup, Burmese security forces launched a brutal crackdown against the people of Burma, who peacefully protested the coup and the military’s upending of their democratic transition. In the face of brutal force by the regime, the people of Burma have disrupted the military’s ability to govern by launching a nationwide Civil Disobedience Movement, including general strikes and protests. Burma is also home to multiple long-running insurgencies in border regions, where the military competes for control with various ethnic armed organizations (EAOs). Shortly after the February 2021 coup, the military launched brutal and unprovoked attacks against EAOs, perceived opponents, and peaceful demonstrators across the country seeking to terrorize the public into submission. On September 7, 2021, the National United Government (NUG) announced a “People’s Defensive War against the military regime.” Violence is widespread and could continue to escalate.

There have been several reported fires and explosion targeting foreign businesses since the coup, including at Chinese-owned factories, an agricultural storage facility, and military related companies. Attacks resulting in destruction of property and injuries have also been reported at banks and ATMs as well. Foreign businesses are concerned about the potential for violence and destruction of property to escalate, although principally the targets have been companies or infrastructure associated with the military or companies that are perceived to be supportive of the military. The Chinese government has reportedly sought increased regime protection for an oil and gas pipeline that runs through Burma to China because of the deteriorating security situation.

The military regime has also declared martial law in several industrial townships in Yangon, suspending even the veneer of civil liberties and allowing security forces to be more aggressive in response to protests.

Protestors and military opponents have organized boycotts of businesses that have ties to the military regime with great success.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $76.19 billion 2021 N/A www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 N/A 2021 N/A BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2019 -$1 million 2020 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 2020 44.3% 2021 N/A UNCTAD data available at

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

* Source for Host Country Data

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

Burundi

Executive Summary

Located in Central Africa, Burundi is one of the seven member states of the East African Community (EAC).  Burundi is one of the world’s most impoverished countries, with 87 percent of the population living below the World Bank’s poverty measure of $1.90 per day, 80-90 percent of the population reliant on agriculture (mostly subsistence farming) and a youth unemployment rate of about 65 percent. Economic growth is insufficient to create employment for Burundi’s rapidly growing population and President Ndayishimiye, in power since June 2020, has actively promoted good political and economic governance to improve the business environment by fighting corruption and promoting fiscal transparency.  His administration is actively seeking to increase existing value chains to find new sources of employment and revenue and to find new revenue streams.

The Government of Burundi (GoB) is also seeking to attract more foreign direct investment (FDI). Since taking office President Ndayishimiye has made or hosted multiple state visits with potential trade and development partners.  Given the importance of agriculture, the GoB is promoting initiatives to modernize and diversify agricultural production, seeking to increase production of crops beyond coffee and tea.  To attract FDI, the GoB must address an array of longstanding challenges, including: poor governance and weak institutional capacity; pervasive corruption; an exchange rate gap between the official and parallel market rates that fluctuates between 50-70 percent; financial restrictions and capital controls that limit access to and expatriation of foreign exchange; a low-skilled workforce; only 12 percent electrification nationwide; poor internet connectivity; and limited availability of reliable economic statistics.

The GoB is working to develop infrastructure, including photovoltaic and hydroelectric power plants, roads construction, rehabilitation of Bujumbura Port and the construction of a railway joining Burundi, DRC and Tanzania to improve access to the country, reduce transportation costs and boost regional trade.  The demand for electricity and water significantly exceeds capacity, and the transmission system is old and poorly maintained, leading to rolling blackouts and outages.  In the mining sector, the GoB is introducing a new mining code and industry-wide regulations it says will promote greater transparency.  As of March 2022, all foreign mining companies’ operations remain pending revision and renegotiation of new contracts/agreements based on a “win-win” principle and implementation of the new mining code.

The COVID-19 pandemic and associated border closures resulted in a sharp economic slowdown in 2020, and the IMF estimates GDP shrank by around 1 percent, before rebounding by 3.6 percent in 2021.  Testing capacity is low and vaccination rates remain among the lowest in the world. Burundian authorities have prepared a COVID-19 response plan to limit the disease spread and cushion its macroeconomic and social impacts; however, its implementation has been constrained by limited financing and domestic resistance, including from some at high levels of government.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 169 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 230 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Burundi has experienced cycles of ethnic and political violence since its independence in 1962.  Periods before and after national elections have often been marked by political violence and civil disturbance.  The May 2020 elections were largely peaceful, and the GoB has since consolidated power and security gains.  Political tensions between the ruling party and opposition remain.  The new administration has made efforts to reduce tensions with neighboring countries, including Rwanda, and to increase participation in regional security cooperation.

Cabo Verde

Executive Summary

The Government of Cabo Verde welcomes international investment, provides prospective investors “one-stop shop” assistance through its investment promotion agency Cabo Verde TradeInvest, and offers incentives and tax breaks for investments in multiple sectors, most notably tourism and information and communication technology. Growth is projected to slowly accelerate in 2022 as tourism inflows from Europe increase and the COVID-19 pandemic recedes, helped by an efficient vaccination rollout throughout the country. However, increases in food and energy costs stemming from the Ukraine crisis could hinder economic recovery. Cabo Verde’s political stability, democratic institutions, and economic freedom lend predictability to its business environment. Free and fair elections, good governance, prudent macroeconomic management, openness to trade, increasing integration into the global economy, and the adoption of effective social development policies all contribute to a favorable climate for investment. Cabo Verde receives high marks on international indicators for transparency and lack of corruption. There are few regulatory barriers to foreign investment in Cabo Verde, and foreign investors receive the same treatment as Cabo Verdean nationals regarding taxes, licenses and registration, and access to foreign exchange. The country’s strategic location and growing connectivity with other West African nations make it a potential gateway for investors interested in a foothold from which to expand to the continent.

As Cabo Verde’s low proportion of arable land, scant rainfall, lack of natural resources, territorial discontinuity, and small population make it a high-cost economy with few economies of scale, the country relies on foreign investment, imports, development aid, and remittances. Despite the challenges, in 2007 the country became one of the first to graduate from least developed country status, and it met most of its Millennium Development Goals by 2015. As the COVID-19 pandemic has demonstrated, the economy’s dependence on tourism, which accounted directly for 25 percent of GDP and more than 40 percent indirectly pre-pandemic, makes it vulnerable to external shocks. In addition, the pandemic caused the government to put plans to privatize state-owned enterprises on hold, though privatization of ports and airports management and water and electricity could move forward later. While the business and investment climates continue to improve, there remain bureaucratic, linguistic (relatively few English or French speakers), and cultural challenges to overcome.

The government’s new Cabo Verde Ambition 2030 plan builds on its Strategic Plan for Sustainable Development and promises to open opportunities in sustainable tourism, renewable energy, blue and digital economies, and the transformation of Cabo Verde into a transportation and logistics platform. Cabo Verde aims to generate 50 percent of its electricity from renewable sources by 2030 and 100 percent by 2040. Diversification of the economy remains a priority, but high public debt levels, which reached a record estimated 158.4 percent of GDP in 2021, limit government funding capacity.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 39 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 89 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) N/A N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $3,060 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Cabo Verde is a model of political stability with a tradition of peaceful transitions of power. There have been no political, social, or religious conflicts resulting in violence in recent years. Civil liberties are generally protected, but access to justice is impaired by an overburdened court system, and crime remains a concern.

Cambodia

Executive Summary

The COVID-19 pandemic has had a significant adverse impact on Cambodia’s economy. Despite a surge of cases in 2021, Cambodia’s economy demonstrated resilience in some sectors (agriculture, manufacturing) and showed signs of gradual recovery from the previous year’s economic disruptions, achieving 2.2  percent gross domestic product (GDP) growth. This follows a 3.1 percent contraction of its GDP in 2020. Having adopted a “living with COVID” stance to reopen its economy and attract international tourists, the Royal Government of Cambodia (RGC) in March 2022 dropped all quarantine and testing requirements for fully vaccinated travelers. The World Bank predicts Cambodia’s GDP growth to rebound to 4.5  percent in 2022.

The RGC has made attracting investment from abroad a top priority, and in October 2021 passed a new Law on Investment.  Foreign direct investment (FDI) incentives available to investors include 100 percent foreign ownership of companies, corporate tax holidays, reduced corporate tax rates, duty-free import of capital goods, and no restrictions on capital repatriation.  In response to the COVID-19 pandemic, the government enacted economic recovery measures to boost competitiveness and support the economy, including a long-awaited Competition Law, a Public-Private Partnership Law, and provided tax breaks to the hardest hit businesses, such as those in the tourism and restaurant sectors. The government also delayed the implementation of a capital gains tax to 2024 and established an SME Bank of Cambodia to support small- and medium-sized enterprises.

Despite these incentives, Cambodia has not attracted significant U.S. investment. Apart from the country’s relatively small market size, other factors dissuading U.S. investors include: systemic corruption, a limited supply of skilled labor, inadequate infrastructure (including high energy costs), a lack of transparency in some government approval processes, and preferential treatment given to local or other foreign companies that engage in acts of corruption or tax evasion or take advantage of Cambodia’s weak regulatory environment. Foreign and local investors alike lament the government’s failure to adequately consult the business community on new economic policies and regulations. In light of these concerns, on November 10, 2021, the U.S. Departments of State, Treasury, and Commerce issued a business advisory to caution U.S. businesses currently operating in, or considering operating, in Cambodia to be mindful of interactions with entities involved in corrupt business practices, criminal activities, and human rights abuses. Notwithstanding these challenges, several large American companies maintain investments in the country, for example, Coca-Cola’s $100 million bottling plant and a $21 million Ford vehicle assembly plant slated to open in 2022.

In recent years, Chinese FDI — largely from state-run or associated firms — has surged and has become a significant driver of growth in Cambodia.  Chinese businesses, many of which are state-owned enterprises, may not assess the challenges in Cambodia’s business environment in the same manner as U.S. businesses.  In 2021, Cambodia recorded FDI inflows of $655 million, with approximately 52 percent reportedly coming from the PRC.

Physical infrastructure projects, including commercial and residential real estate developments, continue to attract the bulk of FDI. However, there has been some increased investments in manufacturing, including garment and travel goods factories, as well as agro-processing.

In 2022, both the Cambodia-China Free Trade Agreement (CCFTA) and the Regional Comprehensive Economic Partnership (RCEP) agreement entered into force.

Climate change remains a critical issue in Cambodia due to its vulnerability to extreme weather occurrences, high rates of deforestation, and low environmental accountability.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 157 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 109 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 1994-2021 $1.58 billion https://apps.bea.gov/international/factsheet/

http://www.cambodiainvestment.gov.kh

World Bank GNI per capita 2020 $1,500 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Incidents of violence directed at businesses are rare. The Embassy is unaware of any incidents of political violence directed at U.S. or other non-regional interests. In the past, authorities have used force to disperse protestors.

Nevertheless, political tensions remain. After relatively competitive communal elections in June 2017, where Cambodia’s opposition party won 43 percent of available seats, the government banned the opposition party and imprisoned its leader on charges of treason. With no meaningful opposition, the Cambodian People’s Party (CPP) swept the 2018 national elections, winning all 125 parliamentary seats. The government has also taken steps to limit free speech and stifle independent media, including forcing independent news outlets and radio stations to cease operations. While there are few overt signs the country is growing less secure today, the possibility for insecurity exists going forward, particularly if COVID-driven economic problems persist and if a large percentage of the population remains disenfranchised.

Cameroon

Executive Summary

Cameroon, the largest economy in the Central African Economic and Monetary Union (CEMAC), continues to face the repercussions of the COVID-19 pandemic; however, growth has started to recover from a 2020 recession. The International Monetary Fund (IMF) projects Cameroon’s gross domestic product (GDP) to increase by 4.6 percent in 2022. Cameroon’s current account balance also improved in 2021 and early 2022. The government continues to implement its 2020-2030 National Development Strategy and development projects, especially in road infrastructure, transport, energy, and health, albeit with delays. Cameroon utilized its hosting of the Africa Cup of Nations soccer tournament in early 2022 to hasten the completion of some long-awaited projects and promote Cameroon to investors.

Cameroon maintains strong competitive advantages because of a bilingual population, a relatively diversified economy, and its location as a gateway to the Central African region. It offers immense investment potential in infrastructure, extractive industries, consumer markets, and modern communication technology (for example, internet broadband, fiber optic cable, and data centers). However, Cameroon’s telecommunication infrastructure is overutilized and in need of upgrades, which often results in network outages. Agricultural processing and transport infrastructure, such as seaports, airports, and rail, need investments, especially for modernization and maintenance. More investment opportunities exist in the financial sector as only 15 percent of Cameroonians have access to formal banking services.

Corruption and weak governance structures continue to hamper Cameroon’s business climate.

The IMF approved a three-year, $689.5 million hybrid Extended Credit Facility-Extended Fund Facility arrangement in July 2021 to advance structural fiscal reforms, improve governance, and continue mitigating the health, economic, and social consequences of the pandemic while ensuring domestic and external sustainability. Cameroon’s 2022 budget aligns with its National Development Strategy and IMF program and sets a target to reduce the budget deficit from -3.2 percent in 2021 to -2 percent in 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 144 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 123 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $-19 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $1,520 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Cameroon faces several security challenges. Violence by non-state armed groups against security forces and the local population is in its sixth year in the primarily English-speaking Southwest and Northwest Regions.  Boko Haram and ISIS-West Africa continue to attack civilians and security forces in the Far North Region. In the Adamoua and East Regions, a wave of kidnappings and the presence of refugees from the Central African Republic has led to increased military presence. Terrorists and separatists alike have targeted economic assets and public infrastructure to effect political change.

In the Northwest and Southwest regions, leaders of non-state armed groups have claimed responsibility on social media for the killing of government officials, arsons that destroyed hospitals, schools, bridges, roads, and the seizure of state-run utilities. Non-state armed groups have also posted videos on social media of executions and beheadings of security officers while also claiming responsibility for multiple kidnappings for ransom of persons perceived to be against their cause. Human rights organizations and local citizens have accused soldiers and separatists of grave human rights abuses. In the Far North of Cameroon, Boko Haram and ISIS-West Africa fighters have looted villages and cattle, kidnapped, and abused women. Consequently, several infrastructures projects have ground to a halt.

Canada

Executive Summary

Canada and the United States have one of the largest and most comprehensive investment relationships in the world. U.S. investors are attracted to Canada’s strong economic fundamentals, proximity to the U.S. market, highly skilled work force, and abundant resources.  Canada encourages foreign direct investment (FDI) by promoting stability, global market access, and infrastructure. The United States is Canada’s largest investor, accounting for 44 percent of total FDI. As of 2020, the amount of U.S. FDI totaled USD 422 billion, a 5 percent increase from the previous year. Canada’s FDI stock in the United States totaled USD 570 billion, a 15 percent increase from the previous year.

Canada attracted USD 61 billion inward FDI flows in 2021 (the highest since 2007), a rebound from COVID-19-related decreases in 2020 according to Canada’s national statistical office.

The United States-Mexico-Canada Agreement (USMCA) came into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA). The USMCA supports a strong investment framework beneficial to U.S. investors. Foreign investment in Canada is regulated by the Investment Canada Act (ICA). The purpose of the ICA is to review significant foreign investments to ensure they provide an economic net benefit and do not harm national security. In March 2021, the Canadian government announced revised ICA foreign investment screening guidelines that include additional national security considerations such as sensitive technology areas, critical minerals, and sensitive personal data. The guidelines followed an April 2020 ICA update, which provides for greater scrutiny of foreign investments by state-owned investors, as well as investments involving the supply of critical goods and services.

Despite a generally welcoming foreign investment environment, Canada maintains investment stifling prohibitions in the telecommunication, airline, banking, and cultural sectors. The 2022 budget proposal included language that could limit foreign ownership of real estate for a two-year period (to cool an overheated market and lack of housing for Canadians). Ownership and corporate board restrictions prevent significant foreign telecommunication and aviation investment, and there are deposit acceptance limitations for foreign banks. Investments in cultural industries such as book publishing are required to be compatible with national cultural policies and be of net benefit to Canada. In addition, non-tariff barriers to trade across provinces and territories contribute to structural issues that have held back the productivity and competitiveness of Canada’s business sector.

Canada has taken steps to address the climate crisis by establishing the Canadian Net-Zero Emissions Accountability Act that enshrines in law the Government of Canada’s commitment to achieve net-zero greenhouse gas emissions by 2050 and issuing the 2030 Emissions Reduction Plan that describes the measures Canada is undertaking to reduce emissions to 40 to 45 percent below 2005 levels by 2030 and achieve net-zero emissions by 2050.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 13 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2020 16 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 402,255 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 43,580 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Canada is politically stable with rare instances of civil disturbance. In January and February 2022, however, various groups of protestors occupied large parts of the downtown core of Ottawa and blocked commercial trade at several U.S.-Canada ports of entry. The initial protest movement of several hundred individuals claimed to be focused on the reversal of cross-border vaccine mandates. The movement attracted thousands of additional followers with a spectrum of political philosophies and grievances including far right extremist and anti-government groups. The protestors hindered hundreds of millions of dollars in daily two-way trade causing production slowdowns at several factories on both sides of the border. Many Ottawa residents complained of acts of harassment, desecration, and destruction by the protestors including deafening horn honking. The federal government invoked the never-before-used Emergencies Act to provide additional police powers to end the protests. Some commentators characterized the protests as a demonstration of growing politization within Canada.

Chad

Executive Summary

Chad is Africa’s fifth largest country by surface area, encompassing three bioclimatic zones. Chad is landlocked, bordering Libya to the north, Sudan to the east, Central African Republic (CAR) to the south, and Cameroon, Nigeria, and Niger to the west (with which it shares Lake Chad). The nearest port — Douala, Cameroon — is 1,700 km from the capital, N’Djamena. Chad is one of six countries that constitute the Central African Economic and Monetary Community (CEMAC), a common market. Chad’s human development is one of the lowest in the world according to the UN Human Development Index (HDI). Poverty afflicts a large proportion of the population.

The Government of Chad (GOC) actively solicits foreign investment, especially from North America. Opportunities for foreign investment exist in Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Information Technology; Industrial Equipment & Supplies; Information & Communication; and Services. Since oil production began in 2003, the petroleum sector has dominated economic activity and been the largest target of foreign investment, including from U.S. companies. Agriculture and livestock breeding are also important economic activities, employing most of the population. In recent years, the GOC has prioritized agriculture, solar energy production, gold mining, livestock breeding and processing, and information technology to diversify the economy and lessen fiscal dependence on volatile global energy markets.

Chad’s investment climate is challenging. Private sector development suffers from a lack of transport infrastructure, GDP growth, skilled labor, reliable electricity, adequate contract enforcement, good governance, and attractive tax rates. Frequent border closures with neighboring countries complicate trade. The COVID-19 pandemic, and associated restrictions, halted Chad’s modest 2019 economic recovery following several years of recession caused by low global oil prices and disruptive debt payments to Glencore. Overall vaccination rates remain low. Existing IMF and World Bank programs aim to improve governance, increase transparency, and reduce internal arrears. Private sector financing is limited, and low GDP growth constrains government investment. Corruption and historically frequent replacement of senior level government figures present further roadblocks, as does cumbersome French-based labor law. The GOC’s interest in maintaining a stake in investment projects, while facilitating access to key decision makers, also introduces financial and operational risks.

Despite these challenges, the success of several foreign investments into Chad illustrates opportunities for experienced, dedicated, and patient investors. Successful investors typically operate with trusted local partners. The oil sector will mark 20 years of operations in 2023. Singapore-based Olam International entered Chad’s cotton market in 2018. Mindful of the imperative to enact reforms, the GOC operationalized a Presidential Council to Improve the Business Climate in January 2021. With rich natural resources, minimally developed agriculture and meat processing sectors, ample sunshine, increasing telecommunications coverage, and a rapidly growing population, Chad presents an opportunity for targeted investment in key sectors.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2022 164 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) N/A N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $630 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Chad enjoyed relative political stability from 2010 to April 2021, when armed groups entered from Libya and engaged in armed hostilities with Chadian government forces following the government’s announcement of former President Idriss Déby having won a sixth term. During this incursion, Deby, who had ruled the country since 1990, was killed. A group of 15 generals called the Transitional Military Council, with former President Deby’s son Mahamat Deby at the head, dissolved Chad’s constitution and legislative National Assembly in favor of a constitutional charter and interim legislature (Transitional National Council, CNT) based on an 18-month mandate. During these 18 months, set to end in October 2022, the government plans to hold a National Dialogue in May on a range of social, economic, political, and security issues pertinent to the country to inform the drafting of a new constitution to be adopted by referendum a possible pre-election census, and parliamentary and presidential elections to return to civilian-led government. Following the creation of the transitional government, Chad has entered a period of tenuous peace as the government engages in negotiations with armed political groups over their possible terms for participation in the May National Dialogue as well as disarmament, demobilization, and reintegration (DDR) into Chadian society. Cross-border intercommunal violence near neighboring Darfur threatens to hamstring the prospect of a lasting peace, as do widespread frustrations over poor socio-economic conditions and impunity for excessive use of force by government security forces.

Prior to July 2021, the government typically denied permits for demonstrations or suppressed them using tear gas while arresting participants and organizers. Since then, the transitional government has allowed limited protests in N’Djamena while insisting on rigid adherence to pre-approved routes with occasional use of tear gas to disperse protestors. On the other hand, state security forces outside N’Djamena repressed public demonstrations, including live ammunition that resulted in fatalities, to quell political dissent. In December 2021, in northern Chad’s city of Faya, government forces used live ammunition to disperse protestors frustrated with changes in customs procedures, reportedly resulting in one fatality. In January, in the eastern city of Abeche, government security forces violently confronted protestors frustrated with appointment of traditional official, leaving a reported 14 dead and 64 wounded. There were no reports of politically motivated damage to investment projects and/or installations in recent years, including during incursions by armed groups into Chad in 2008 and 2021.

While Chad, which depends on oil for nearly 80 percent of its export revenues, has faced the stresses of an extended period of reduced oil revenues, recent increases in oil prices have begun to alleviate this issue. The COVID-19 pandemic, despite a low estimated incidence rate in Chad, strains Chad’s limited medical infrastructure, disrupts trade routes with neighboring countries, and complicates international air travel.

Regional violent extremist organizations threaten regional stability and foreign investments along the Lake Chad Basin and. Armed non-governmental groups operate along the Libyan border in northern Chad. Violent attacks by Boko Haram have choked off vital trade routes with Nigeria and the road between N’Djamena and Douala, Cameroon, the principal port serving Chad. This has increased costs for imports and decreased exports.

U.S. businesses and organizations in Chad are welcome to inquire at the Embassy about joining the Overseas Security Advisory Committee (OSAC).

For up-to-date information on political and security conditions in Chad, please refer to the Consular Affairs Bureau’s Travel Warning and Country Specific Information at http://www.travel.state.gov. The Embassy encourages all U.S. Citizens in Chad to enroll online with the Smart Traveler Enrollment (STEP) program or with the Embassy upon arrival to receive the latest safety and security updates via email.

Chile

Executive Summary

With the second highest GDP per capita in Latin America (behind Uruguay), Chile has historically enjoyed among the highest levels of stability and prosperity in the region. However, widespread civil unrest broke out throughout the country in 2019 in protest of the government’s handling of the economy and perceived systemic inequality. Pursuant to a political accord, Chile held a plebiscite in October 2020 in which citizens chose to redraft the constitution. Uncertainty about the outcome of the redrafting process may impact investment. Due to Chile’s solid macroeconomic policy framework, the country boasts one of the strongest sovereign bond ratings in Latin America, which has provided fiscal space for the Chilean government to respond to the economic contraction resulting from the COVID-19 pandemic through stimulus packages and other measures. As a result, Chile’s economic growth in 2021 was, according to the Central Bank’s latest estimation, between 11.5 percent and 12 percent. The same institution forecasts Chile’s economic growth in 2022 will be in the range of 1 to 2 percent due largely to the gradual elimination of COVID-19 economic stimulus programs.

Chile has successfully attracted large amounts of Foreign Direct Investment (FDI) despite its relatively small domestic market. The country’s market-oriented policies have created significant opportunities for foreign investors to participate in the country’s economic growth. Chile has a sound legal framework and there is general respect for private property rights. Sectors that attract significant FDI include mining, finance/insurance, energy, telecommunications, chemical manufacturing, and wholesale trade. Mineral, hydrocarbon, and fossil fuel deposits within Chilean territory are restricted from foreign ownership, but companies may enter into contracts with the government to extract these resources. Corruption exists in Chile but on a much smaller scale than in most Latin American countries, ranking 27 – along with the United States – out of 180 countries worldwide and second in Latin America in Transparency International’s 2021 Corruption Perceptions Index.

Although Chile is an attractive destination for foreign investment, challenges remain. Legislative and constitutional reforms proposed in response to the social unrest and the pandemic have generated concerns about the future government policies on property rights, rule of law, tax structure, the role of government in the economy, and many other issues. Importantly, the legislation enabling the constitutional reform process requires that the new constitution must respect Chile’s character as a democratic republic, its judicial sentences, and its international treaties (including the U.S.-Chile Free Trade Agreement). Despite a general respect for intellectual property (IP) rights, Chile has not fully complied with its IP obligations set forth in the U.S.-Chile FTA and remains on the U.S. Trade Representative (USTR) Special 301 Report for not adequately enforcing IP rights. Environmental permitting processes, indigenous consultation requirements, and cumbersome court proceedings have made large project approvals increasingly time consuming and unpredictable, especially in cases with political sensitivities. The current administration has stated its willingness to continue attracting foreign investment.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 27 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 53 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country (US$ billion, historical stock positions) 2020 23.0 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita (US$) 2020 13,470 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Pursuant to a political accord in response to the 2019 civil unrest, Chile held a plebiscite in October 2020 in which citizens voted to draft a new constitution. The process to create and ratify the new constitution launched on July 4, 2021 and will continue to mid-2022. Uncertainty over what changes could be made to Chile’s political and regulatory environment could negatively impact investor confidence. Importantly, the legislation enabling the constitutional reform process requires that the new constitution must respect Chile’s character as a democratic republic, its judicial sentences, and its international treaties (including the U.S.-Chile Free Trade Agreement).

Prior to 2019, there were generally few incidents of politically motivated attacks on investment projects or installations with the exception of the southern Araucania region and its neighboring Arauco province in the southwest of Bio-Bio region. This area, home to nearly half a million indigenous inhabitants, has seen an ongoing trend of politically motivated violence and organized criminal activity. Land claims and conflicts with forestry companies are the main grievances underneath the radicalization of a relatively small number of indigenous Mapuche communities, which has led to the rise of organized groups that pursue their demands by violent means. Incidents include arson attacks on churches, farms, forestry plantations, forestry contractors’ machinery and vehicles, and private vehicles, as well as occupation of private lands, resulting in over a half-dozen deaths (including some by police forces), injuries, and damage to property. The indigenous issue has been further politicized due to anger among landowners, forestry transport contractors, and farmers affected by violence, as well as the illegal killing of a young Mapuche activist by special police forces in 2018 and the controversy over accusations of fraud by the police during the investigation of indigenous organized groups. In March 2020, a truck driver died in an arson attack on his vehicle.

Since 2007, Chile has experienced a number of small-scale attacks with explosive and incendiary devices, targeting mostly banks, police stations, and public spaces throughout Santiago, including metro stations, universities, and churches. ATMs have been blown up in the late evenings or early mornings. Anarchist groups often claim responsibility for these acts, as well as violent incidents during student and labor protests. In January 2017, an eco-terrorist group claimed responsibility for a parcel bomb that detonated at the home of the chairman of the board of Chilean state-owned mining giant CODELCO. The same group detonated a bomb of similar characteristics in 2019 at a bus stop in downtown Santiago, causing five injuries, and sent a letter bomb to the office of the president of the Metro system, which was defused by police. One suspect was arrested in 2019 and the investigation of the crimes is ongoing. Another group sent package bombs to a police station in the Santiago metro area, wounding 8 police officers, and to a former Interior Minister, which was defused by police. Two suspects were arrested in 2020, and the investigation remains ongoing at the time of this report. Then-President Piñera announced a 15-day State of Emergency in October 2021 in four southern provinces in the Araucania and Biobio regions.  Piñera emphasized the State of Emergency was intended to combat drug trafficking, terrorism, and organized crime.  The enactment of the State of Emergency placed the respective zones under a military authority designated by the president and empowered the armed forces to support law enforcement functions, prohibit public gatherings, and control the entry and exit of people in the four provinces, which have large populations of indigenous Mapuche among its 1.6 million residents.  Congress authorized multiple extensions to the State of Emergency until March 26. On March 15, the Minister of Interior traveled to the Araucania region to initiate dialogue on the conflict between indigenous Mapuche communities and the Chilean government, however, armed gunmen prevented the minister from entering the community of Temucuicui. The State of Emergency lapsed on March 26 after the Boric government decided not to seek an extension from Congress.

While the security environment is generally safe, street crime, carjackings, telephone scams, and residential break-ins are common, especially in larger cities. Vehicle thefts are a serious problem in Valparaiso and northern Chile (from Iquique to Arica). On occasion, illegal activity by striking workers resulted in damage to corporate property or a disruption of operations. Some firms have publicly expressed concern that during a contentious strike, law enforcement has appeared to be reluctant to protect private property.

After a truck driver died in Antofagasta February 10 following an altercation with irregular immigrants from Venezuela, federations of northern truck drivers created road blockages and supply-chain disruptions to demand the Piñera administration implement increased safety measures.  On February 14, the government initiated a State of Emergency in provinces along Chile’s northern border with Bolivia and Peru, sending soldiers to support law enforcement efforts.  The State of Emergency is set to expire on April 15.

Chilean civil society is active and demonstrations occur frequently. Although the vast majority of demonstrations are peaceful, criminal elements have taken advantage of civil society protests to loot stores along the protest route and clash with the police. Annual demonstrations to mark March 29, the Day of the Young Combatant; September 11, the anniversary of the 1973 coup against the government of President Salvador Allende; and October 18, the anniversary of the outbreak of the 2019 civil unrest, have resulted in damage to property, looting, and scuffles between police and protesters.

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) ($M US$) 2020 $252.9 2020 $252.940 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country (US$ billion, stock positions) 2020 $31.84 2020 23.01 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States (US$ billion, stock positions) 2020 $12.9 2019 3.0 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2019 109.9% 2020 41.4% OECD data available at
https://data.oecd.org/

* Source for Host Country Data: Central Bank of Chile.

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 188,885 100% Total Outward 71,705 100%
Canada 30,592 13.6% Brazil 13,102 16.5%
United States 28,994 13.5% United States 10,095 9.9%
Spain 21,451 13.5% Peru 10,043 9.2%
The Netherlands 19,526 8.1% Colombia 6,734 7.1%
United Kingdom 15,740 7.4% Argentina 5,291 7.0%
“0” reflects amounts rounded to +/- US$ 500,000.

According to the IMF’s Coordinated Direct Investment Survey (CDIS), total stock of FDI in Chile in 2020 amounted to US$ 188.9 billion, compared to US$ 254.3 billion in 2019. Canada, the United States and Spain are the main sources of FDI to Chile with US$ 30.6 billion, US$ 29.0 billion and US$ 21.5 billion, respectively, concentrating 42.9 percent of the total.

Chile’s outward direct investment stock in 2020 amounted to US$ 188.9 billion, compared to US$ 71.7 billion in 2020, a significant decrease compared to US$ 130.2 billion in 2019. It remains concentrated in South America, where Brazil, Peru, Colombia and Argentina together represented 49 percent of total Chilean outward FDI. The United States accounted for 14.1 percent of the total, an increase compared to 2019 when it represented 9.2 percent of the total.

The data below is consistent with host country statistics. Although not included in the table below, tax havens are relevant destinations of outward FDI to Chile, with the British Virgin Islands, Panama, Luxembourg, and Cayman Islands ranking sixth, seventh, ninth and tenth in inbound sources of FDI, respectively, according to the Central Bank of Chile. The Cayman Islands and Bermuda rank sixth and seventh and tenth, respectively, among Chile´s main inward FDI source.

Table 4: Sources of Portfolio Investment

According to the IMF’s Coordinated Portfolio Investment Survey (CPIS), total stock of portfolio investment in Chile as of June 2021 amounted to US$ 200.4 billion, of which US$ 164.6 billion were equity and investment funds shares, and the rest were debt securities. The United States and Luxembourg (a tax haven) were the main sources of portfolio investment to Chile with US $71.3 billion and $54.9 billion, representing 35.6 percent and 27.4 percent of the total, respectively. Both countries also represent 65 percent of the total of equity investment. Ireland, the United Kingdom and Germany are the following top sources of equity portfolio investment to Chile, while the United States, Mexico and Japan are the top sources of debt securities investment.

China

Executive Summary

In 2021, the People’s Republic of China (PRC) was the number two global Foreign Direct Investment (FDI) destination, behind the United States. As the world’s second-largest economy, with a large consumer base and integrated supply chains, China’s economic recovery following COVID-19 reassured investors and contributed to high FDI and portfolio investments. The PRC implemented major legislation in 2021, including the Data Security Law in September and the Personal Information Protection Law in November.

China remains a relatively restrictive investment environment for foreign investors due to restrictions in key sectors and regulatory uncertainties. Obstacles include ownership caps and requirements to form joint venture (JV) partnerships with local firms, industrial policies to develop indigenous capacity or technological self-sufficiency, and pressures to transfer technology as a prerequisite to gaining market access. New data and financial rules announced in 2021 also created significant uncertainty surrounding the financial regulatory environment. The PRC’s pandemic-related visa and travel restrictions significantly affected foreign businesses operations, increasing labor and input costs. An assertive Chinese Communist Party (CCP) and emphasis on national companies and self-reliance has heightened foreign investors’ concerns about the pace of economic reforms.

Key developments in 2021 included:

  • The Rules for Security Reviews on Foreign Investments came into effect January 18, expanding PRC vetting of foreign investment that may affect national security.
  • The National People’s Congress (NPC) adopted the Anti-Foreign Sanctions Law on June 10.
  • The Cyberspace Administration of China (CAC) issued draft revisions to its Cybersecurity Review Measures to broaden PRC approval authority over PRC companies’ overseas listings on July 10.
  • China formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on September 16.
  • On November 1, the Personal Information Protection Law (PIPL) went into effect and China formally applied to join the Digital Economy Partnership Agreement (DEPA).
  • On December 23, President Biden signed the Uyghur Forced Labor Prevention Act. The law prohibits importing goods into the United States that are mined, produced, or manufactured wholly or in part with forced labor in the PRC, especially from Xinjiang.
  • On December 27, the National Reform and Development Commission (NDRC) and the Ministry of Commerce (MOFCOM) updated its foreign FDI investment “negative lists.”

While PRC pronouncements of greater market access and fair treatment of foreign investment are welcome, details and effective implementation are needed to ensure equitable treatment.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 66 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 12 of 131 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 123.8 https://apps.bea.gov/international/factsheet/  
World Bank GNI per capita 2020 USD 10,550 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Foreign companies operating in China face a growing risk of political violence, most recently due to U.S.-China political tensions. PRC authorities have broad authority to prohibit travelers from leaving China and have imposed “exit bans” to compel U.S. citizens to resolve business disputes, force settlement of court orders, or facilitate PRC investigations. U.S. citizens, including children, not directly involved in legal proceedings or wrongdoing have also been subject to lengthy exit bans to compel family members or colleagues to cooperate with Chinese courts or investigations. Exit bans are often issued without notification to the foreign citizen or without clear legal recourse to appeal the exit ban decision. A 2020 independent report presented evidence that since 2018, more than 570,000 Uyghurs were implicated in forced labor picking cotton. There was also reporting that Xinjiang’s polysilicon and solar panel industries are connected to forced labor. In 2021, PRC citizens, with the encouragement of the PRC government, boycotted companies that put out statements on social media affirming they do not use Xinjiang cotton in their supply chain. Some landlords forced companies to close retail outlets during this boycott due to fears of being associated with boycotted companies. The ongoing PRC crackdown on virtually all opposition voices in Hong Kong and continued attempts by PRC organs to intimidate Hong Kong’s judges threatens the judicial independence of Hong Kong’s courts – a fundamental pillar for Hong Kong’s status as an international hub for investment into and out of China.  Apart from Hong Kong, the PRC government has also previously encouraged protests or boycotts of products from countries like the United States, the Republic of Korea (ROK), Japan, Norway, Canada, and the Philippines, in retaliation for unrelated policy decisions such as the boycott campaigns against Korean retailer Lotte in 2016 and 2017 in response to the ROK government’s decision to deploy the Terminal High Altitude Area Defense (THAAD); and the PRC’s retaliation against Canadian companies and citizens for Canada’s arrest of Huawei’s Chief Financial Officer Meng Wanzhou.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $14,724,435 2021 $14,343,000 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $90,190 2020 $123,875 BEA data available at https://apps.bea.gov/international/factsheet/ https://apps.bea.gov/international/
factsheet/factsheet.html#650
Host country’s FDI in the United States ($M USD, stock positions) 2020 $80,048 2020 $37,995 BEA data available at
https://www.bea.gov/international/direct-investment
-and-multinational-enterprises-comprehensive-data
https://apps.bea.gov/international/
factsheet/factsheet.html#650
Total inbound stock of FDI as % host GDP 2020 $16.6% 2020 13% UNCTAD data available at
https://unctad.org/statistics 

* Source for Host Country Data: National Bureau of Statistics 

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 $3,214,115 100% Total Outward $2,580,658 100%
China, P.R., Hong Kong  $1,726,212 53.7% China, P.C., Hong Kong $1,438,531 55.7%
British Virgin Islands $403,903 12.5% Cayman Islands $457,027 17.7%
Japan $193,338 6.0% British Virgin Islands $155,645 6%
Singapore $148,721 4.6% United States $80,048 3.1%
United States $86,907 2.7% Singapore $59,858 2.3%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment
Data not available.

Colombia

Executive Summary

With improving security conditions in metropolitan areas, a market of 50 million people, an abundance of natural resources, and an educated and growing middle-class, Colombia continues to be an attractive destination for foreign investment in Latin America. Colombia ranked 67 out of 190 countries in the “Ease of Doing Business” index of the World Bank’s 2020 Doing Business Report (most recent report).

The Colombian economy grew by 10.6 percent in 2021, the largest increase in gross domestic product (GDP) since the statistical authority started keeping records in 1975. This followed a 6.8 percent collapse in 2020 due to the negative effects of the pandemic and lower oil prices, the first economic contraction in more than two decades. In July 2021, rating agencies Fitch and Standard & Poor’s (S&P) downgraded Colombia below investment grade status, citing the increasing fiscal deficit (7.1 percent of GDP for 2021) as the main reason for the downgrade. The Colombian Government passed a tax reform that entered into effect in January 2022, the Social Investment Law, that seeks to reactivate the economy, generate employment, and contribute to the fiscal stability of the country.

Colombia’s legal and regulatory systems are generally transparent and consistent with international norms. The country has a comprehensive legal framework for business and foreign direct investment (FDI). The 2012 U.S.-Colombia Trade Promotion Agreement (CTPA) has strengthened bilateral trade and investment. Colombia’s dispute settlement mechanisms have improved through the CTPA and several international conventions and treaties. Weaknesses include protection of intellectual property rights (IPR), as Colombia has yet to implement certain IPR-related provisions of the CTPA. Colombia became the 37th member of the Organization for Economic Cooperation and Development (OECD) in 2020, bringing the obligation to adhere to OECD norms and standards in economic operations.

The Colombian government has made a concerted effort to develop efficient capital markets, attract investment, and create jobs. Restrictions on foreign ownership in specific sectors still exist. FDI inflows increased 4.8 percent from 2020 to 2021, with 67 percent of the 2021 inflow dedicated to the extractives sector. Roughly half of the Colombian workforce in metropolitan areas is employed in the informal economy, a share that increases to four-fifths in rural areas. In 2021, the unemployment rate was 13.7 percent with 3.4 million people unemployed. The employed population reached 21.6 million, an increase of 0.9 percent compared to 2020.

Since the 2016 peace agreement between the government and the Revolutionary Armed Forces of Colombia (FARC), Colombia has experienced a significant decrease in terrorist activity. Several powerful narco-criminal operations still pose threats to commercial activity and investment, especially in rural zones outside of government control.

Corruption remains a significant challenge. The Colombian government continues to work on improving its business climate, but U.S. and other foreign investors continue to voice complaints about non-tariff, regulatory, and bureaucratic barriers to trade, investment, and market access at the national, regional, and municipal levels. Stakeholders express concern that some regulatory rulings in Colombia target specific companies, resulting in an uneven playing field. Investors generally have access at all levels of the Colombian government, but cite a lack of effective and timely consultation with regulatory agencies in decisions that affect them. Investors also note concern regarding the national competition and regulatory authority’s (Superintendencia de Industria y Comercio, SIC) differing rulings for different companies on similar issues, and slow processing at some regulatory agencies, such as at food and drug regulator INVIMA.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 87 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 67 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $7,767 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $5,790 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Security in Colombia has improved significantly over recent years, most notably in large urban centers. Terrorist attacks and powerful narco-criminal group operations pose a threat to commercial activity and investment in some rural zones where government control is weak. In 2016, Colombia signed a peace agreement with the FARC to end half a century of confrontation. Congressional approval of that peace accord put in motion a disarmament, demobilization, and reintegration process, which granted the FARC status as a legal political organization and took over 13,000 combatants off the battlefield. Currently the peace negotiations with the National Liberation Army (ELN), which began in 2017, are suspended. This terrorist group continues a low-cost, high-impact asymmetric insurgency, including an attack on the Colombian police academy in 2019 that killed 22 cadets. The ELN often focuses attacks on oil pipelines, mines, roads, and electricity towers to disrupt economic activity and pressure the government. The ELN also extorts businesses in their areas of operation, kidnaps personnel, and destroys property of entities that refuse to pay for protection.

Costa Rica

Executive Summary

Costa Rica is the oldest continuous democracy in Latin America and the newest member of the Organization for Economic Cooperation and Development (OECD), with an established government institutional framework, stable society, and a diversified upper-middle-income economy. The country’s well-educated labor force, relatively low levels of corruption, geographic location, living conditions, dynamic investment promotion board, and attractive free trade zone incentives all appeal to investors. Foreign direct investment inflow in 2020 was USD 1.76 billion, or 2.8 percent of GDP, with the United States accounting for USD 1.2 billion. Costa Rica recorded 7.6 percent GDP growth in 2021 (the highest level since 2008) as it recovered from a 4.5 percent contraction in 2020 largely due to the effects of the Covid-19 pandemic.

Costa Rica has had remarkable success in the last two decades in establishing and promoting an ecosystem of export-oriented technology companies, suppliers of input goods and services, associated public institutions and universities, and a trained and experienced workforce. A similar transformation took place in the tourism sector, with a plethora of smaller enterprises handling a steadily increasing flow of tourists eager to visit despite Costa Rica’s relatively high prices. Costa Rica is doubly fortunate in that these two sectors positively reinforce each other as they both require and encourage English language fluency, openness to the global community, and Costa Rican government efficiency and effectiveness. A 2019 study of the free trade zone (FTZ) economy commissioned by the Costa Rican Investment and Development Board (CINDE) shows an annual 9 percent growth from 2014 to 2018, with the net benefit of that sector reaching 7.9 percent of GDP in 2018. This sector continued to expand during the pandemic. The value of exports increased by 24 percent in 2021, representing the highest growth in 15 years.

The Costa Rican investment climate is threatened by a high and persistent government fiscal deficit, underperformance in some key areas of government service provision, including health care and education, high energy costs, and deterioration of basic infrastructure. The Covid-19 world recession damaged the Costa Rican tourism industry, although it is recovering. Furthermore, the government has very little budget flexibility to address the economic fallout and is struggling to find ways to achieve debt relief, unemployment response, and the longer-term policy solutions necessary to continue compliance under the current stabilizing agreement with the International Monetary Fund (IMF). On the plus side, the Costa Rican government has competently managed the crisis despite its tight budget and Costa Rican exports are proving resilient; the portion of the export sector that manufactures medical devices, for example, is facing relatively good economic prospects and companies providing services exports are specialized in virtual support for their clients in a world that is forced to move in that direction. Moreover, Costa Rica’s accession in 2021 to the Organization for Co-operation and Development (OECD) has exerted a positive influence by pushing the country to address its economic weaknesses through executive decrees and legislative reforms in a process that began in 2015. Also in the plus column, the export and investment promotion agencies CINDE and the Costa Rican Foreign Trade Promoter (PROCOMER) have done an excellent job of protecting the Free Trade Zones (FTZs) from new taxes by highlighting the benefits of the regime, promoting local supply chains, and using the FTZs as examples for other sectors of the economy. Nevertheless, Costa Rica’s political and economic leadership faces a difficult balancing act over the coming years as the country must simultaneously exercise budget discipline and respond to demands for improved government-provided infrastructure and services.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 39 of 180 https://www.transparency.org/en/cpi/2021/
index/cri
Global Innovation Index 2021 56 of 132 https://www.globalinnovationindex.org/analysis-
indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 2.0bill https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD 11,530 http://data.worldbank.org/indicator/NY.GNP.
PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Since 1948, Costa Rica has not experienced significant domestic political violence. There are no indigenous or external movements likely to produce political or social instability. However, Costa Ricans occasionally follow a long tradition of blocking public roads for a few hours as a way of pressuring the government to address grievances; the traditional government response has been to react slowly, thus giving the grievances time to air. This practice on the part of peaceful protesters can cause logistical problems.

Crime increased in Costa Rica in recent decades and U.S. citizen visitors and residents are frequent victims.  While petty theft is the main problem, criminals show an increased tendency to use violence. Some crime in Costa Rica is associated with the illegal drug trade.  Please see the State Department’s Travel Advisory page for Costa Rica for the latest information- https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/costa-rica-travel-advisory.html

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $62,158 2020 $61,847 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $26,306 2020 $2,000 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $124 2020 $-86 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2020 1.2% 2020 2.9% UNCTAD data available at

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

* Source for Host Country Data: Costa Rican Central Bank. The “FDI Stock” positions detailed here are an accounting expression of the accumulation of FDI through 2020, while the “FDI inflow” statistic given in the first paragraph of the executive summary is the sum of foreign direct investment made in Costa Rica during calendar year 2020, as reported by the Costa Rican 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 46,115 100% Total Outward 3,578 100
United States 26,306 57% Nicaragua 1,065 30%
Spain 2,810 6% Guatemala 1,023 29%
Mexico 2,173 5% Panama 867 24%
The Netherlands 1,777 4% United States 124 4%
Colombia 1,681 4% Luxembourg 90 3%
“0” reflects amounts rounded to +/- USD 500,000.

Côte d’Ivoire

Executive Summary

Côte d’Ivoire (CDI) offers a welcoming environment for U.S. investment.  The Ivoirian government wants to deepen commercial cooperation with the U.S. The Ivoirian and foreign business community in CDI considers the 2018 investment code generous with welcome incentives and few restrictions on foreign investors.  Côte d’Ivoire’s resiliency to the COVID-19 crisis led to quick economic recovery.  Gross Domestic Product (GDP) growth stayed positive at two percent in 2020 and rebounded to 6.5 percent in 2021, with government of CDI projecting average growth at 7.65 percent during the period 2021-2025.  International credit rating agency Fitch upgraded the country’s political risk rating in July 2021 from B+ to BB-, while the International Monetary Fund’s (IMF) assessment confirms CDI’s economic resilience, despite the Omicron variant of COVID.  However, possible repetition of 2021 energy shortages, poor transparency, and delays in reforms could dampen confidence.

U.S. businesses operate successfully in several Ivoirian sectors including oil and gas exploration and production; agriculture and value-added agribusiness processing; power generation and renewable energy; IT services; the digital economy; banking; insurance; and infrastructure.  The competitiveness of U.S. companies in IT services is exemplified by one company that altered the local payment system by introducing a digital payment system that rapidly increased its market share, forcing competitors to lower prices.

Côte d’Ivoire is well poised to attract increased Foreign Direct Investments (FDI) based on the government’s strong response to the pandemic, the buoyancy of the economy, high-level support for private sector investment, and clear priorities set forth in the new 2021-2025 National Development Plan (PND – Plan National de Développement).  An important factor is Côte d’Ivoire’s resurgence as a regional economic and transportation hub.  Government authorities are continuing to implement structural reforms to improve the business environment, modernize public administration, increase human capital, and boost productivity and private sector development.  However, this will not come without challenges and uncertainties in the medium term, particularly regarding the evolution of the pandemic and global recovery as well as regulatory and transparency concerns.  Government authorities underscore their commitment to strengthening peace and security systems in the northern zone of the country, while striving for inclusive growth in the context of post-pandemic recovery.  Finally, recent political instability in northern and western neighboring countries Burkina Faso, Mali, and Guinea, could impede investor confidence in the region, especially when it comes to security.

Doing business with the Ivoirian government remains a significant challenge in some areas such as procurement, taxation, and regulatory processes.  Some new public procurement procedures adopted in 2019 were only implemented in 2021, including implementation of an e-procurement module, and improved evaluation, prioritization, selection, and monitoring procedures.  This is a work in process, and concerns remain that these procedures are not consistently and transparently applied.  Similar concerns circulate about tax procedures, especially retroactive assessments based on changes in tax formulas.  An overly complicated tax system and slow, opaque government decision-making processes hinder investment.  Government has identified VAT (Value Added Tax), mining, digitalization, and property taxes as key areas for broadening the tax base and improving state revenues.  Other challenges include low levels of literacy and income, weak access to credit for small businesses, corruption, and the need to broaden the tax base to relieve some of the tax-paying burden on businesses.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 105 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 110 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2021 114 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 -$495 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $2,280 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

Following peaceful and inclusive legislative elections in March 2021, CDI entered a period of stability.  Major opposition parties participated and won a meaningful number of seats in elections internationally deemed credible.  The political leadership clearly recognizes that internal and regional security are prerequisites for sustained economic growth and longer-term stability.  All political parties participated in a structured Political Dialogue aimed at fostering reconciliation and strengthening democratic institutions, including dispute resolution mechanisms.  The fifth round of the Political Dialogue concluded in March 2022 and produced a consensus list of tangible recommendations to the President of the Republic.  The next presidential election is not due until 2025, so there is now a window of opportunity for the country’s political leaders to focus on difficult reforms.

The Ivoirian government has demonstrated a strong commitment to addressing insecurity in the region by strengthening its capacity to counter terrorism, strengthen social resilience, professionalize law enforcement, strengthen its justice system, and improve border security.  In June 2021, CDI and France inaugurated the International Academy for the Fight Against Terrorism (AILCT) near Jacqueville, west of Abidjan. The aim of this academy is to train relevant cadres (e.g., prosecutors, forensic investigators) and security forces from the African continent to strengthen capacity to prevail against self-styled jihadists within respect for law and human rights, thereby reinforcing ties between the population and the state.  This comes at a time of increased security challenges emanating from the Sahel and spilling over into CDI’s northern region.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) N/A N/A 2020 $61,349 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A N/A N/A BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 -$1 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-
enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A 2020 2.1% UNCTAD data available at

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

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 $11,997 Total Outward $2,520
France $2,532 21.1% Burkina Faso $426 16.9%
Canada $1,217 10.1% Mali $246 9.8%
United Kingdom $986 8.2% Liberia $227 9%
Morocco $801 6.7% Ghana $180 7.1%
Mauritius $664 5.5% Benin $177 7%
“0” reflects amounts rounded to +/- USD 500,000.

Croatia

Executive Summary

Croatia’s EU membership has enhanced its economic stability and provided new opportunities for trade and investment. Characteristics that make Croatia an attractive destination for foreign investment include a geostrategic location with diverse topography and temperate climate, well-developed infrastructure, and a well-educated multilingual workforce. The Croatian government settled a longstanding investment dispute with a U.S. investor in December 2021.  Historically, the most promising sectors for investment in Croatia have been tourism, telecommunications, pharmaceuticals and healthcare, and banking. Investment opportunities are growing in Croatia’s robust IT sector, and the coming years will offer new opportunities related to the energy transition. Croatia also offers visas for so-called “digital nomads” to work in Croatia for up to one year without having to pay local taxes.

Despite the ongoing effects of the COVID-19 pandemic, the economy experienced a robust rebound of 10.4 percent growth in 2021.  Tourism in 2021 exceeded all expectations, and the sector, which accounts for as much as 20 percent of GDP, achieved 88 percent of record-breaking 2019 revenues. Throughout the pandemic, the government distributed more than $1.5 billion in job-retention and economic stabilization measures that significantly helped maintain employment. Unemployment in January 2022 was at 7.8 percent. In early 2022, the government announced nearly $800 million worth of measures to help citizens and businesses cope with rising energy costs. The European Commission estimates the Croatian economy will grow 4.8 percent in 2022 and 3.0 percent in 2023.

Croatia will receive more than $30 billion in EU funding through 2030, including approximately $7 billion through the EU’s Recovery and Resilience Facility (RRF), which has the potential to provide a significant boost to the economy if the government directs the funds to productive activities that stimulate job creation and economic growth. The government intends to spend approximately 40 percent of RRF funds in support of climate-related and clean energy objectives, including initiatives to improve energy efficiency in public and private buildings, accelerate development of renewable sources of energy, modernize the electricity distribution and transmission grid to facilitate the integration of renewable energy sources, and promote greater investments in geothermal energy. Croatia joined the European Exchange Rate Mechanism (ERM II) in July 2020, and the government expects to enter the eurozone on January 1, 2023. Croatia also received an invitation from the OECD in early 2022 to begin the accession process.

The Croatian government has taken some positive steps to improve the business climate, but it has been slow to reform the judiciary, which is most often mentioned as one of the greatest barriers to investment. In addition, the economy is burdened by a large government bureaucracy, underperforming state-owned enterprises, and low regulatory transparency. The COVID-19 pandemic accelerated digitalization efforts, which has helped decrease excessive bureaucratic procedures for both citizens and companies. Government reforms also seek to liberalize the services market, diversify capital markets and improve access to alternative financing, and reform tax incentives for research and development. Croatia’s labor laws provide strong protections to workers and there are no risks to doing business responsibly in terms of labor laws and human rights. The government is willing to meet at senior levels with interested investors and to assist in resolving problems.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 63 of 180 https://www.transparency.org/en/cpi/2021/index/hrv 
Global Innovation Index 2021 48 of 128 https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2021.pdf 
U.S. FDI in partner country ($M USD, historical stock positions) 2021 $295 million https://www.hnb.hr/en/statistics/statistical-data/rest-of-the-world/foreign-direct-investments 
World Bank GNI per capita 2020 $27,185 https://data.worldbank.org/indicator/NY.GNP.PCAP.PP.KD 

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

6. Financial Sector

10. Political and Security Environment

The risk of political violence in Croatia is low.  Following the breakup of Yugoslavia and the subsequent wars in the region, Croatia has emerged as a stable, democratic country and is a member of NATO and the EU.  Relations with neighboring countries are generally fair and improving, although some disagreements regarding border demarcation and residual war-related issues persist.

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) 2021 $65,675 2020 $56.8 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2021 $295 million 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) 2021 $85.84 million 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 2021 57.7% N/A N/A UNCTAD data available at

https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx 

* GDP for 2021 estimate and FDI   for Q1-Q3 2021 at www.hnb.hr Note:  U.S. Bureau of Economic Analysis do not have GDP or FDI data available for 2020 at time of publishing.

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (through 2020)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $37,922 100% Total Outward $5,983 100%
The Netherlands $6,615 17.4% Slovenia $1,646 27.5%
Aus