Policies Towards Foreign Direct Investment

Haiti’s legislation encourages foreign direct investment. Import and export policies are non-discriminatory and are not based on nationality. Haitian and foreign investors have the same rights, privileges and protections under the 1987 investment code. The Haitian government has made some progress in recent years to improve the legal framework, create and strengthen core public institutions, and enhance economic governance. The Haitian Central Bank continues to work with the International Monetary Fund (IMF) and the World Bank to implement measures aimed at creating a stable macroeconomic environment. The IMF concluded its most recent Article IV economic consultation with Haiti in January 2020 (www.imf.org/en/countries/hti). In April 2020, the IMF loaned Haiti $112 million through its rapid credit facility mechanism to provide liquidity to Haiti for expenditures to address COVID-19.

While not discriminatory towards international investment specifically, the Haitian government’s economic policies fall short of providing a sound enabling environment for foreign direct investment. The Haitian Central Bank announced in August 2020 the intention to use up to $150 million of its international reserves to intervene in the foreign exchange market, resulting in a rapid appreciation of the country’s local currency, the Haitian gourde (HTG), relative to the U.S. dollar (USD). The gourde appreciated from about 121 HTG/USD to 62 HTG/USD over two months and began steadily depreciating in November 2020 to its rate of 80 HTG/USD as of April 2021. The gourde’s sudden and unexpected change in value has resulted in sustained increased costs for export-oriented businesses, including international investors.

Despite passing anti-money laundering and anti-corruption laws to ensure that Haiti’s legislation corresponds with international standards, the government has not strictly followed the legal framework of these laws, and has failed to incentivize investment in Haiti. In early 2017, the Parliament enacted legislation making electronic signatures and electronic transactions legally binding. Other pieces of legislation that may improve Haiti’s investment climate remain pending, including incorporation procedures, a new mining code, and an insurance code. Haiti’s Finance Ministry is implementing measures to improve revenue collection and control spending. The Ministry signed an agreement with Haiti’s Central Bank in November 2019 to strengthen fiscal discipline and limit government monetary financing. Despite these measures, the rate of monetary financing over fiscal year (FY) 2021 appears to be outpacing the annual budgeted amount of $462 million (3.6 percent of FY2021 IMF-projected GDP), standing at $377 million (3.0 percent of GDP) as of March 4, 2021, less than six months into the fiscal year. The Center for the Facilitation of Investments (CFI), which operates under Haitian Ministry of Commerce oversight, was established to promote domestic and international investment opportunities in Haiti. In concept, the CFI could streamline the investment process by: working with other government agencies to simplify procedures related to trade and investment; providing updated economic and commercial information to local and foreign investors; making proposals on investor incentives; and promoting investment in priority sectors. The CFI aims to offer tailored services to large international investors, but has been unable to operate at full capacity during the pandemic. In practice, the CFI has made limited progress to incentivize job creation and boost national production in agriculture, apparel assembly, and tourism. As an example, prior to the COVID-19 pandemic, Haiti’s Tourism Association reported a 60 percent loss of jobs in the sector in 2019.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Haitian government does not impose discriminatory requirements on foreign investors. Haitian laws related to residency status and employment are reciprocal. Foreigners who are legal residents in Haiti and wish to engage in trade have, within the framework of laws and regulations, the same rights granted to Haitian citizens. However, Article 5 of the Decree on the Profession of Merchants reserves the function of manufacturer’s agent for Haitian nationals.

Foreign firms are also encouraged to participate in government-financed development projects. Performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

Foreign investors are permitted to own 100 percent of a company or subsidiary. As a Haitian entity, such companies enjoy all rights and privileges provided under the law. Additionally, foreign investors are permitted to operate businesses without equity-to-debt ratio requirements. Accounting law allows foreigners to capitalize using tangible and intangible assets in lieu of cash investments.

Foreign investors are free to enter into joint ventures with Haitian citizens. The distribution of shares is a private matter between the two parties. However, the government regulates the sale and purchase of company shares. Investment in certain sectors, such as health and agriculture, requires special Haitian government authorization. Investment in “sensitive” sectors such as electricity, water, telecommunications, and mining require a Haitian government concession as well as authorization from the appropriate governmental agency. In general, natural resources are the property of the state, and the exploitation of mineral and energy resources requires concessions and permitting from the Ministry of Public Works’ Bureau of Mining and Energy. Mining, prospecting, and operating permits may only be granted to companies established and resident in Haiti, and the establishment of new industrial mines cannot take place until an elected parliament passes an updated mining law, along the lines of a draft law initially presented in 2017.

Entrepreneurs are free to dispose of their properties and assets, and to organize production and marketing activities in accordance with local laws.

Investors in Haiti can create the following types of businesses: sole proprietorship, limited or general partnership, joint-stock company, public company (corporation), subsidiary of a foreign company, and co-operative society. The most common business structures in Haiti are corporations. A draft law (Société de Droits law), which would facilitate the creation of other types of businesses in Haiti, such as LLCs, remains pending parliamentary approval when parliament is restored.

Other Investment Policy Reviews

Haiti’s last investment policy review from the United Nations Conference on Trade and Development occurred in 2012. In general, Haiti’s political instability, weak institutions, and inconsistent economic policies impede the country’s ability to attract and direct foreign direct investment.

The World Trade Organization’s (WTO) 2015 Trade Policy Review stated that Haiti’s Investment Code and Law on Free Trade Zones is fully compliant with the Agreement on Trade-Related Investment Measures. The full report can be viewed at https://www.wto.org/english/tratop_e/tpr_e/tp427_e.htm .

Business Facilitation

While the Haitian government has made efforts to facilitate the launching and operating of businesses, the average time to start a business in Haiti is 189 days, according to the World Bank’s 2020 Ease of Doing Business Report. At present, it takes between 90 and 120 days to complete registration with the Commercial Registry at the Ministry of Commerce and obtain the authorization of operations (Droit de fonctionnement). The Center for Facilitation of Investments (CFI), a public-private organization, also offers a service providing pre-registered and fully authorized companies in manufacturing, agribusiness, and real estate the opportunity to reduce their registration time. Once the Inter-Ministerial Investment Commission validates these established companies, the shares are transferred to the new owners.

Both foreign and domestic businesses can register at Haiti’s CFI: http://cfihaiti.com . All businesses must register with the Ministry of Commerce, the Haitian tax office, the state-owned Banque Nationale de Crédit, the social security office, and the retirement insurance office.

The Ministry of Commerce and Industry’s internet registry allows investors to search for and verify the existence of a business in Haiti. The registry will eventually provide online registration of companies through an electronic one-stop shop. In October 2020, CFI launched Spotlight, an initiative with the aim of promoting visibility of companies already established in Haiti and registered in the CFI database.

Outward Investment

Neither the law nor the Haitian government restricts domestic investors from investing abroad. Still, Haiti’s outward investment is limited to a few enterprises with small investments. These investors are generally businesspersons with dual citizenship and others of Haitian origin who presently reside in the country in which their firms operate. The majority of these firms are service providers and not investment firms. There is no current program or incentive in place to encourage Haitian entrepreneurs to invest abroad.

Transparency of the Regulatory System

Haitian laws are written to allow for transparency and to be applied universally. However, Haitian officials do not uniformly enforce these laws and the bureaucratic “red tape” in the Haitian legal system is often excessive.

Tax, labor, health, and safety laws and policies are also loosely enforced. The private sector often provides services, such as healthcare, to employees that are not entitled to coverage under Haitian government agencies or institutions. All regulatory processes are managed exclusively by the government and do not involve the private sector and non-governmental organizations.

Draft bills or regulations are available to the public through “Le Moniteur,” the official journal of the Haitian government, and information is sometimes made available online. Le Moniteur contains public agency rules, decrees, and public notices that Les Presses Nationales d’Haiti publishes.

According to the World Bank, Haitian ministries and regulatory agencies do not develop forward regulatory plans, nor do they publish proposed regulations prior to their adoption. Haitian law does not require a timeframe for public comment or review of proposed regulations.

International Regulatory Considerations

Haiti is a member of the Caribbean Community (CARICOM), an organization of 15 states and dependencies established to promote regional economic integration. The CARICOM Single Market and Economy (CSME), created in 1989, aims to advance the region’s integration into the global economy by facilitating free trade in goods and services, and the free movement of labor and capital. CSME became operational in January 2006 in 12 of the 15 member states. Haiti, as a member of CARICOM, has expressed an interest in participating fully in CSME. However, to become eligible, Haiti must amend its customs code to align with CARICOM and WTO standards.

Haiti also adheres to the compulsory jurisdiction of the International Court of Justice on issues of international law, and of the Caribbean Court of Justice for the settlement of trade disputes within CARICOM.

Haiti is an original member of the WTO. As such, it has made several commitments to the WTO with regard to the financial services sector. These commitments include allowing foreign investment in financial services, such as retail, commercial, investment banking, and consulting. One foreign bank, Citibank, operates in Haiti. Haiti has committed to notifying the WTO Committee on Technical Barriers to Trade of all draft technical regulations. However, Haiti is not party to the Trade Facilitation Agreement.

Legal System and Judicial Independence

As a former French colony, Haiti adopted the French civil law system. The Supreme Court, also known as the Superior Magistrate Council, is the highest court of the nation, followed in descending order by the Court of Appeals and the Court of First Instance. Haiti’s commercial code dates back to 1826 and underwent significant revisions in 1944. There are few commercial laws in place and there are no commercial courts. Injunctive relief is based upon penal sanctions rather than securing desirable civil action. Similarly, contracts to comply with certain obligations, such as commodities futures contracts, are not enforced. Haitian judges do not have specializations, and their knowledge of commercial law is limited. Utilizing Haitian courts to settle disputes is a lengthy process and cases can remain unresolved for years. Bonds to release assets frozen through litigation are unavailable. Business litigants often pursue out-of-court settlements.

Haiti’s legal system often presents challenges for U.S. citizens seeking to resolve legal disputes. In Haiti, judges are appointed for a set number of years. Public prosecutors are direct employees of the Ministry of Justice and can be transferred or suspended by the executive branch at any time. There are numerous allegations of undue political interference. Additionally, there are persistent claims that some Haitian officials use their public office to influence commercial dispute outcomes for personal gain. The Haitian government receives international assistance to increase the capacity of its oversight institutions and the capacity of the national police.

Laws and Regulations on Foreign Direct Investment

The Investment Code prohibits fiscal and legal discrimination against foreign investors. The code explicitly recognizes the crucial role of foreign direct investment in promoting economic growth. It also aims to facilitate, liberalize, and stimulate private investment, and contains exemptions to promote investments that enhance competitiveness in sectors deemed priorities, especially export-oriented sectors. Tax incentives, such as reductions on taxable income and tax exemptions, are designed to promote private investment. Additionally, the code grants Haitian and foreign investors the same rights, privileges, and equal protection. Foreign investors must be legally registered and pay appropriate local taxes and fees.

The code also established an Inter-Ministerial Investment Commission (CII) to examine investor eligibility for license exemptions as well as customs and tariff advantages. The Center for Facilitation of Investments (CFI) is the Technical Secretariat of the CII. The Prime Minister, or his delegate, chairs the CII, which is composed of representatives of the Ministries of Economy and Finance, Commerce, and Tourism, as well as those ministries that oversee specific areas of investment. The CII must authorize all business sales, transfers, mergers, partnerships, and fiscal exemptions within the scope of the code. The CII also manages the process of fining and sanctioning enterprises that disregard the code.

The following areas are often noted by businesses as challenging aspects of Haitian law: operation of the judicial system; publication of laws, regulations, and official notices; establishment of companies; land tenure and real property law and procedures; bank and credit operations; insurance and pension regulation; accounting standards; civil status documentation; customs law and administration; international trade and investment promotion; foreign investment regulations; and regulation of market concentration and competition. Although these deficiencies hinder business activities, they are not specifically aimed at foreign firms; rather, they appear to affect both foreign and local companies.

Competition and Antitrust Laws

There is currently no law to regulate competition. Haiti is one of the most open economies in the region. The investment code provides the same rights, privileges and equal protection to local and foreign investors. Anti-corruption legislation also criminalizes nepotism and the dissemination of inside information on public procurement processes. Haiti does not, however, have anti-trust legislation.

Expropriation and Compensation

The 1987 Constitution allows expropriation or dispossession only for reasons of public interest or land reform and is subject to prior payment of fair compensation as determined by an expert. If the initial project for which the expropriation occurred is abandoned, the Constitution stipulates that the expropriation will be annulled, and the property returned to the original owner. The Constitution prohibits nationalization and confiscation of real and personal property for political purposes or reasons.

Title deeds are vague and often insecure. The Haitian government established the National Institute of Agrarian Reform to implement expropriations of private agricultural properties with appropriate compensation. The agrarian reform project, initiated under the Preval administration (1996-2001), was controversial among both Haitian and U.S. property owners. There have been complaints of non-compensation for the expropriation of property. Moreover, a revision of the land tenure code, intended to address issues related to the lack of access to land records, surveys, and property titles in Haiti, has been pending in parliament since 2014. A partnership between the private sector, Haitian government, and international organizations resulted in a guide on security land rights in Haiti, which was translated in 2016 and can be found here: https://www.land-links.org/wp-content/uploads/2019/09/Haiti-Land-Manual-2.pdf .

Dispute Settlement

ICSID Convention and New York Convention

In 2009, Haiti ratified the 1965 International Convention on the Settlement of Investment Disputes between states and nationals of other states (ICSID). Under the convention, foreign investors can call for ICSID arbitration for disputes with the state. The Haitian government appears to recognize that weak enforcement mechanisms and a lack of updated laws to handle modern commercial disputes severely compromises the protections and guarantees that Haitian law extends to investors.

Haiti is not a signatory to the Inter-American-U.S. Convention on International Commercial Arbitration of 1975 (Panama Convention).

Investor-State Dispute Settlement

Haiti is a signatory to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which provides for the enforcement of an agreement to arbitrate present and future investment disputes. Under the convention, Haitian courts can enforce such an agreement by referring the parties to arbitration. Disputes between foreign investors and the state can be settled in Haitian courts or through international arbitration, though claimants must select one to the exclusion of the other. A claimant dissatisfied with the ruling of the court cannot request international arbitration after the ruling is issued. The law provides mechanisms on the procedures a court should follow to enforce foreign arbitral awards issues.

While there is not a consistent history of extrajudicial action against foreign investors, a number of investment dispute cases have been reported by U.S. companies over the past 10 years, although the most recent expropriation claim occurred in 2013. Disputes most frequently related to disagreements between business owners and Haitian tax and licensing authorities, a lack of clarity as to land ownership and other disputed property claims, and disputes over the enforcement of government contracts and concessions. Although some businesses were able to resolve disputes through the court system or by otherwise settling with the Haitian government, business owners appear to have accepted their losses and abandoned other legacy cases.

International Commercial Arbitration and Foreign Courts

International arbitration is strongly encouraged as a means of avoiding lengthy domestic court procedures. In principle, foreign judgments are enforceable under local courts. In 2005, the Haitian Chamber of Commerce and Industry and the Inter-American Development Bank jointly developed the Haitian Arbitration and Conciliation Chamber, which provides mechanisms for conciliation and arbitration in private commercial disputes.

Bankruptcy Regulations

Haiti’s bankruptcy law was enacted in 1826 and modified in 1944. There are three phases of bankruptcy under Haitian law. In the first stage, payments cease to be made and bankruptcy is declared. In the second stage, a judgment of bankruptcy is rendered, which transfers the rights to administer assets from the debtor to the Director of the Haitian Tax Authority (Direction Generale des Impots). In this phase, assets are sealed, and the debtor is confined to debtor’s prison. In the last stage, the debtor’s assets are liquidated, and the debtor’s verified debts are paid prorated according to their right. The debtor is released from prison once the debtor’s verified debts are paid. In practice, the above measures are seldom applied. Since 1955, most bankruptcy cases have been settled between the parties.

Although the concepts of real property mortgages and chattel mortgages – based on collateral of movable property, such as machinery, furniture, automobiles, or livestock to secure a mortgage – exist, real estate mortgages involve antiquated procedures and may fail to be recorded against the debtor or other creditors. Property is seldom purchased through a mortgage and secured debt is difficult to arrange or collect. Liens are virtually impossible to impose and using the judicial process for foreclosure is time consuming and often futile. Banks frequently require that loans be secured in U.S. dollars.

Investment Incentives

In order to attract investment to certain industries, the Investment Code privileges eligible firms with customs, tax, and other advantages. Investments that provide added value of at least 35 percent in the processing of local or imported raw materials are eligible for preferential status.

The statute, as modified by the FY2021 budget decree in October 2020, allows for a five-year income tax exemption. Industrial or crafts-related enterprises must meet one of the following criteria in order to benefit from this exemption:

• Make intensive and efficient use of available local resources (i.e., advanced processing of existing goods, recycling of recoverable materials);
• Increase national income;
• Create new jobs and/or upgrade the level of professional qualifications;
• Reinforce the balance of payments position and/or reduce the level of dependency of the national economy on imports;
• Introduce or extend new technology more appropriate to local conditions (i.e., utilize non-conventional sources of energy, use labor-intensive production);
• Create and/or intensify backward or forward linkages in the industrial sector;
• Promote export-oriented production;
• Substitute a new product for an imported product, if the new product presents a quality/price ratio deemed acceptable by the appropriate entity and comprises a total production cost of at least 60 percent of the value added in Haiti, including the cost of local inputs used in its production;
• Prepare, modify, assemble, or process imported raw materials or components for finished goods that will be re-exported;
• Utilize local inputs at a rate equal or superior to 35 percent of the production cost.

Companies that enjoy tax-exempt status are required to submit annual financial statements. Fines or withdrawal of tax advantages may be assessed to firms failing to meet the Code’s provisions.

A progressive tax system applies to income, profits, and capital gains earned by individuals.

Foreign Trade Zones/Free Ports/Trade Facilitation

A law on Free Trade Zones (FTZ) was established in 2002. The law defines the conditions for operating and managing economic FTZs, with exemption and incentive regimes granted to investment in such zones. The law is not specific to a particular activity. Instead, it defines FTZs as geographical areas to which a special regime on customs duties and controls, taxation, immigration, capital investment, and foreign trade applies, and where domestic and foreign investors can provide services, import, store, produce, export, and re-export goods.

FTZs may be private or joint venture. The law provides the following incentives and benefits for enterprises located in FTZs:

• Full exemption from income tax for a maximum period of 15 years, followed by full taxation, per the FY2021 budget issued by decree in October 2020;
• Customs and tax exemptions for the import of capital goods and equipment needed to develop the area, with the exception of tourism vehicles;
• Exemption from all communal taxes (with the exception of proportional duties) for a period not exceeding 15 years;
• Registration and transfer of the balance due for all deeds relating to purchase, mortgages, and collateral.

Examples of functioning FTZs include one in the northeastern city of Ouanaminthe, where a Dominican company, Grupo M, manufactures clothing for a variety of U.S. companies at its CODEVI facility. Additionally, several U.S. apparel companies lease factory space in this free zone. All the factories at CODEVI combined employ over 15,000 workers as of January 2021.

In October 2012, the Haitian government, with the support of the Inter-American Development Bank and the United States government, opened the 617-acre Caracol Industrial Park in Haiti’s northeastern region. As of 2021, five companies are operating in the park: S&H Global, a South Korean company and the largest single private sector employer in Haiti; MAS Holdings, a Sri Lankan company; Everest, a Taiwanese factory; and two Haitian companies, Peintures Caraibes and Sisalco.

In 2015, three major FTZs were established: Agritrans, the first agricultural free trade zone in Haiti in Trou du Nord; Digneron, an entity of the Palm Apparel Group; and Lafito, a $150 million Panamax port and industrial park. Port Lafito, located 12 miles north of Port au Prince, includes port facility business services that cater to bulk and loose cargo imports, as well as terminal services to worldwide container service shipping lines.

In February 2021, the Government of Haiti authorized a new agro-industrial export free zone in the town of Savane-Diane (ZFAISD) in Artibonite Department, per the application of Haitian company Stevia Agro Industries S.A.

Performance and Data Localization Requirements

Foreign firms are encouraged to participate in government-financed development projects. However, performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

Under Haitian laws, foreign investors operate their businesses and use their assets to organize production freely. Companies are not forced to localize or to use local raw materials for the production of goods. Foreign information technology providers are not required to turn over source code or keys for encryption to any public agencies.

Real Property

Foreign investors have noted that real property interests are affected by the absence of a comprehensive civil registry (cadastre). Lease agreement regulations are the same for locals and foreign investors. Many companies report that legitimate property titles are often non-existent and, if they do exist, they often conflict with other titles for the same property. Verification of property titles can take several months, and often much longer. Mortgages exist, but real estate mortgages are expensive and involve allegedly cumbersome procedures. Additionally, mortgages are not always properly recorded under the debtor or creditor’s name. Banks are also risk-averse to issue loans or mortgages. Squatting is not a common practice but was popular in the aftermath of the 2010 earthquake. As a factor in its overall Ease of Doing Business ranking, the World Bank ranks Haiti 182 out of 187 among countries globally on ease of registering property.

Intellectual Property Rights

Haitian law protects copyrights, patent rights, and inventions, as well as industrial designs and models, special manufacturers’ marks, trademarks, and business names. The law penalizes individuals or enterprises involved in infringement, fraud, or unfair competition; however, enforcement is weak. Some report that weak enforcement mechanisms, inefficient courts, and judges’ inadequate knowledge of commercial law may impede the effectiveness of statutory protections.

Haiti is a member of the World Intellectual Property Organization (WIPO). Haiti has completed accession to the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Property. Haiti is a signatory to the Buenos Aires Convention of 1910, the Patent Law Treaty, and the Beijing Treaty on Audiovisual Performances.

Haiti is not mentioned in the United States Trade Representative (USTR) 2021 Special 301 Report or the USTR 2020 Review of Notorious Markets for Counterfeiting and Piracy. For additional information about the national laws and points of contact at local intellectual property offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The scale of financial services remains modest in Haiti. The banking sector is well capitalized and profitable. In principle, there are no limitations to foreigners’ access to the Haitian credit market, but limited credit is available through commercial banks. The free and efficient flow of capital, however, is hindered by Haitian accounting practices, which are below international standards. While there are no restrictions on foreign investment through mergers or acquisitions, there is no Haitian stock market, so there is no way for investors to purchase shares in a company outside of direct transactions. As summarized in the most recent (2020) IMF Article IV consultation for Haiti, however, the country has accepted the obligations of Article VIII and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions.

The standards that govern the Haitian legal, regulatory, and accounting systems do not comply with international norms. Haitian laws do not require external audits of domestic companies. Local firms calculate taxes, obtain credit or insurance, prepare for regulatory review, and assess real profit and loss. Accountants use basic accounting standards set by the Organization of Certified Professional Accountants in Haiti.

Administrative oversight in the banking sector is superior to oversight in other sectors. Under Haitian law, however, banks are not required to comply with internationally recognized accounting standards, and they are often not audited by internationally recognized accounting firms. Nevertheless, Haiti’s Central Bank requires that banks apply internal audit procedures. As part of their corporate governance all private banks also have in-house audit functions. Most private banks follow international accounting norms and use consolidated reporting principles. The Central Bank is generally viewed as one of the well-functioning Haitian government institutions.

Money and Banking System

The banking sector has concentrated on credit for trade financing and in the proliferation of bank branches to capture deposits and remittances. Telebanking has expanded access to banking services for Haitians. Foreign banks are free to establish operations in Haiti. Three major banking institutions (Unibank, Sogebank and Banque Nationale de Credit) hold roughly 80 percent, or HTG 325 billion (approximately $4 billion), of total banking sector assets. With its acquisition of the Haitian operations of Scotiabank in 2017, Unibank became Haiti’s largest banking company, with a deposit market share of 35 percent. As part of the deal, Scotiabank remains one of Unibank’s international correspondent banks. U.S.-based Citibank also has a correspondent banking relationship with Unibank.

The three major commercial banks also hold 76 percent of the country’s total loan portfolio, while 70 percent of total loans are monopolized by 10 percent of borrowers. The concentration of holdings and limited number of borrowers increases the Haitian banking system’s vulnerability to systemic credit risk and restricts the availability of capital. The quality of loan portfolios in the banking system has slightly improved. Per the Haitian Central Bank, the ratio of nonperforming loans over total loans was 5.37 percent in December 2020, compared to 6.89 percent in December 2019. The Central Bank conducts regular inspections to ensure that financial institutions are in compliance with minimum capital requirements, asset quality, currency, and credit risk management.

The Central Bank’s main challenge is maintaining sound monetary policy in the context of a larger-than-expected government deficit and a depreciating local currency. The exchange rate suffers from continued pressure on the foreign exchange market. The Central Bank has made a series of interventions with a prior objective to support the value of the gourde by increasing the dollar supply in the foreign exchange market. Selling U.S. dollars in the foreign exchange market has also allowed the Central Bank to dry up the excess liquidity of the gourde in the market with the potential effect of tempering the inflation rate. Annual inflation decelerated to 18.7 percent as of January 2021, remaining on a gradual downward trend since September 2020. As of the beginning of March 2021, Haiti’s stock of net international reserves was approximately $501 million.

There are no legal limitations on foreigners’ access to the domestic credit market. However, banks demand collateral of real property to grant loans. Given the lack of effective cadastral and civil registries, loan applicants face numerous challenges in obtaining credit. The banking sector is extremely conservative in its lending practices. Banks typically lend exclusively to their most trusted and credit-worthy clients. Based on a 2018 study by FinScope Haiti, only one percent of the adult population has access to a bank loan. The high concentration of assets does not allow for product innovation at major banks.

To provide greater access to financial services for individuals and prospective investors, the Haitian government’s banking laws recognize tangible movable property (such as portable machinery, furniture, and tangible personal property) as collateral for loans. These laws allow individuals to buy condominiums, and banks to accept personal property, such as cars, bank accounts, etc., as collateral for loans. USAID has a loan portfolio guarantee program with a diversified group of financial institutions to encourage them to expand credit to productive small and medium enterprises, and rural micro-enterprises. Haiti has a credit rating registry in effect for users of the banking sector but does not have the relevant legislation in place to establish a credit rating bureau.

Haiti’s Central Bank issued a series of monetary policy measures to alleviate the potential impact of COVID-19 on the financial system and the economy in March 2020. These measures included: a reduction in the Central Bank’s policy rate to help lower interest rates on loans; the decrease of reserve requirement ratios to reduce the cost for banks to capture resources and grant loans; a reduction in the Central Bank’s refinancing rate to lower the cost of access to liquidity; the alleviation of loan repayment conditions for customers over a three-month period; the waiver of the Central Bank’s fees on interbank transfers to reduce transaction costs for customers; and the increase of limits on transactions through mobile payment services.

Foreign Exchange and Remittances

Foreign Exchange

The Haitian gourde (HTG) is convertible for commercial and capital transactions. The Central Bank publishes a daily reference rate, which is a weighted average of exchange rates offered in the formal and informal exchange markets. The difference between buying and selling rates is generally less than five percent. Funds can be freely converted into specific currencies such as the U.S. dollar, Canadian dollar, the Euro, the Dominican Republic peso, and the Panamanian peso. The U.S. dollar is usually the most widely available currency, and may be available at times when conversion into another currency is not an option. Starting in the fall of 2020, however, a shortage of U.S. dollars in the formal foreign exchange market in Haiti has been a persistent issue for businesses engaging in international trade.

Remittance Policies

The Haitian government does not impose restrictions on the inflow or outflow of capital. The Law of 1989 governs international transfer operations and remittances. Remittances are Haiti’s primary source of foreign currency and are equivalent to approximately one-third of GDP. In 2020, Haiti received about $3.2 billion in remittances. There are no restrictions or controls on foreign payments or other fund transfer transactions. While restrictions apply on the amount of money that may be withdrawn per transaction, there is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad.

The Haitian government has expressed an intention to put in place stricter measures to monitor money transfers in accordance with Haiti’s efforts to deter illicit cash flows, as mandated by the 2013 Anti-Money Laundering Act. The Haitian Central Bank (BRH) issued a circular in June 2020 applicable to commercial banks and transfer houses. The circular, which went into force as of October 2020, specifies that international transfers must be paid in foreign currency if the beneficiary receives the funds in their U.S. dollar-denominated bank account, while transfers must be paid in gourdes if the beneficiary requests payment at any point of service (branch, agency, office, kiosk) on Haitian national territory. According to the circular, payments in gourdes are made at the daily reference exchange rate published by the Central Bank.

Sovereign Wealth Funds

To date Haiti does not have a Sovereign Wealth Fund.

Per information released by the Central Bank in September 2018, since 2011 Haiti has levied a tax of $1.50 on all transfers into and out of the country, with the proceeds designated for the National Fund for Education. According to a Central Bank report in September 2018, more than $120 million has been collected since July 2011 on taxes from remittances from the diaspora.

The Haitian government owns and operates, either wholly or in part, several State-Owned Enterprises (SOE). The Haitian commercial code governs the operations of the SOEs. The sectors include: food processing and packaging (a flourmill), construction and heavy equipment (a cement factory); information and communications (a telecommunications company); energy (the state electricity company, EDH); finance (two commercial banks, Banque Nationale de Crédit and Banque Populaire Haïtienne); and the national port authority and the airport authority. The law defines SOEs as autonomous enterprises that are legally authorized to be involved in commercial, financial, and industrial activities. All SOEs operate under the supervision of their respective sectorial ministry and are expected to create economic and social return. Today, some SOEs are fully owned by the state, while others are jointly owned commercial enterprises. The Haitian parliament, when it is functioning, has full authority to liquidate state enterprises that are underperforming. The majority of SOEs are financially sound. However, EDH receives substantial annual subsidies from the Haitian government to stay in business.

Privatization Program

In response to the economic difficulties of the late 1990s and mismanagement of the SOEs, the government liberalized the market and allows foreign firms to invest in the management and/or ownership of some Haitian state-owned enterprises. To accompany the initiative, the government established the Commission for the Modernization of Public Enterprises in 1996 to facilitate the privatization process.

In 1998, two U.S. companies, Seaboard and Continental Grain, purchased shares of the state-owned flourmill. Each partner currently owns a third of the company, known today as Les Moulins d’Haiti. In 1999, a consortium of Colombian, Swiss, and Haitian investors purchased a majority stake in the national cement factory. In 2010, a state-owned Vietnamese corporation, Viettel, officially acquired 60 percent of the state telecommunications company Teleco (now operating as Natcom), with the Haitian government retaining 40 percent ownership. The government has allowed limited private sector investment in selected seaports. Competition is generally not distorted in favor of state-owned enterprises to the detriment of private companies.

The Haitian government has allowed private sector investment in electricity generation to compensate for EDH’s inability to supply sufficient power, though it has had contractual disputes with multiple independent power producers. Only one independent power producer, partially U.S.-owned E-Power, generates electricity for EDH in Port au Prince as of 2021. In 2019, the Haitian energy sector regulatory authority, ANARSE, issued a series of prequalification rounds for concessionaires to take over and expand electricity production, transmission, and distribution for several of the country’s regional grids, including the grid serving the Caracol Industrial Park. ANARSE is expected to select concessionaires for the initial three grids and issue further tenders for additional regional grids in 2021.

The Government of Haiti created the National Commission for Public Procurement (CNMP) to ensure that Haitian government contracts are awarded through competitive bidding and to establish effective procurement controls in public administration. The CNMP publishes lists of awarded government of Haiti contracts. The procurement law of 2009 requires contracts to be routed through CNMP. In 2012, however, a presidential decree substantially raised the threshold at which public procurements must be managed by the CNMP, resulting in what companies have identified as a decrease in transparency for many smaller government contracts. Moreover, the government frequently enters into no-bid contracts, sometimes issued using “emergency” authority derived from natural disasters, even when there is no apparent connection between the alleged emergency and the government contract, according to foreign investors.

Awareness of responsible business conduct among producers and consumers is limited but growing, including corporate social responsibility (CSR) activities. Irish-owned telecommunications company Digicel, for example, sponsors an Entrepreneur of the Year program and has built 120 schools in Haiti. Natcom provides free internet service to several public schools throughout the country. Les Moulins d’Haiti, partially owned by U.S. firm Seaboard Marine, provides some services, including electrical power, to surrounding communities. In the aftermath of the 2010 earthquake, many firms provided logistical or financial support to humanitarian initiatives, and many continue to contribute to reconstruction efforts. Haiti’s various chambers of commerce have also become more supportive of business ethics and social responsibility programs. During the COVID-19 pandemic, many Haitian, U.S., and other foreign-owned firms donated to prevention and treatment measures.

The Haitian government has not established any incentives to encourage to responsible business conduct.

Additional Resources

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
• North Korea Sanctions & Enforcement Actions Advisory

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor.
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Corruption, including bribery, raises the costs and risks of doing business in Haiti. U.S. firms have complained that corruption is a major obstacle to effective business operation in Haiti. They frequently point to requests for payment by customs officials in order to clear import shipments as examples of solicitation for bribes.

Haitian law, applicable to individuals and financial institutions, criminalizes corruption and money laundering. Bribes or attempted bribes toward a public official are a criminal act and are punishable by the criminal code (Article 173) for one to three years of imprisonment. The law also contains provisions for the forfeiture and seizure of assets. In practice, however, the law is unevenly and rarely applied.

Transparency International’s Corruption Perception Index for 2020 ranked Haiti in the second lowest spot in the Americas region and 170 out of 180 countries worldwide, with a score of 18 out of 100 in perceived levels of public corruption.

The Haitian government has made some progress in enforcing public accountability and transparency, but substantive institutional reforms are still needed. In 2004, the Government of Haiti established the Anti-Corruption Commission (ULCC), but the organization lacks the necessary resources and political independence to be effective. In 2008, parliament approved the law on disclosure of assets by civil servants and high public officials prepared by ULCC, but to date, compliance has been almost nonexistent.

Haiti’s Superior Court of Auditors and Administrative Disputes (CSCCA) is currently one of Haiti’s few independent government institutions, responsible for reviewing draft government contracts; conducting audits of government expenditures; and clearing all government officials, including those at the political level, to manage public funds. In November 2020, however, the Haitian government published a decree limiting the authority of the Audit Court. The CSCCA had issued three reports in January 2019, May 2019, and August 2020 citing improper management practices by the Haitian government and the alleged wastage of nearly $2 billion of the Petrocaribe funds. Public anger over the Petrocaribe scandal has since burgeoned into a grassroots movement against widespread corruption in Haiti.

Haiti is not a party to the OECD Anti-Bribery Convention.

Resources to Report Corruption

Any corruption-related activity can be reported to the Haitian Anti-Corruption Unit, responsible for combatting corruption:

Hans Jacques Ludwig Joseph
Director General
Unite de Lutte Contre la Corruption
13, rue Capotille, Pacot, Port-au-Prince, Haiti
Telephone: (509) 2811-0661 / (509) 2816-7071
Email: info@ulcc.gouv.ht 

Marilyn B. Allien
President
Fondation Heritage pour Haiti
Petion-Ville, Haiti
Telephone: (509) 3452-1570
Email: admlfhh@yahoo.com  / heritagehaiti@yahoo.com  

The U.S. government partners with Haiti in its efforts to strengthen the rule of law and enhance public security; pursue economic growth through increased domestic resource mobilization and support for private investment; and strengthen good governance and anti-corruption efforts. President Jovenel Moise was inaugurated in February 2017 for a five-year term, and his administration has faced repeated challenges due to frequently changing executive branch leadership, an ineffective parliament followed by a parliamentary lapse beginning in January 2020, legislative elections not being held as scheduled in October 2019, allegations of widespread corruption, weak rule of law, and a deteriorating economy. These factors have hindered both reconstruction efforts and the passage of important legislation. Sporadic protests since mid-2018 have stemmed from a number of factors, including a lack of progress in the fight against corruption and a lack of viable economic options. Haiti’s political situation remains fragile.

Political and civil disorder, such as periodic demonstrations triggered by government proposals to increase fuel prices and mismanagement of public funds, at times interrupt normal business operations. During such periods, as well as for three months of 2020 as a result of the COVID-19 pandemic, many Haitian businesses limited operations or closed completely. Due to the pandemic, schools, regular passenger flights, border crossings, and government offices were also suspended or closed for several months. Operations gradually resumed by mid-2020 for most business sectors, although sporadic protests continued to interrupt daily life as of early 2021.

Damage to businesses and other installations frequently occurs as a result of political and civil disorder. Over the past ten years, multiple incidents of property damage to offices, stores, hotels, hospitals, fuel stations, and car rental companies and dealerships have been reported in the media and to the U.S. Embassy in Port au Prince. Property destruction and vandalism ranges from broken windows to arson and looting. Employees and tourists have also been victims of violence. Kidnapping for ransom is a frequent occurrence in Port au Prince. While improvements in the Haitian National Police force’s technical and operational capabilities have maintained some semblance of order, violent crime, including looting of businesses, remains a serious problem, along with criminal gang control of a number of Port au Prince’s marginalized areas.

More information is available at:

• https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/Haiti.html
• https://www.state.gov/u-s-relations-with-haiti/

The special legislation of the Labor Code of 1984 establishes and governs labor regulations. Under the Code, the Minister of Social Affairs and Labor enforces the law and maintains good relationships with employers and workers. Normal working hours consist of 8-hour shifts and 48-hour workweeks. In September 2017, the Haitian government passed a labor law to permit three eight-hour shifts in a working day, although this has not been fully implemented for all sectors in Haiti. Workers’ social protection and benefits include annual leave, sick leave, health insurance, maternity insurance, insurance in case of accident at work, and other benefits for unfair dismissal.

Labor unions are generally receptive to investment that creates new jobs, and support from the international labor movement, including the AFL-CIO, is building the capacity of unions to represent workers and engage in social dialogue. The Ministry of Labor and Social Affairs is in the process of revising a new labor code that will better comply with international labor standards.

According to U.S. and other companies, relations between labor and management in Haiti have at times been strained. In some cases, however, industries have autonomously implemented good labor practices. In addition to local entities, the International Labor Organization (ILO) has an office in Haiti and operates an ongoing project with the apparel assembly industry to improve productivity through improvement in working conditions. The ILO, with the support of the U.S. Department of Labor, launched Better Work Haiti, a program that was designed to verify compliance with international labor standards and spur job creation in the garment sector.

Since the inception of Better Work Haiti, the garment sector has seen improvement in occupational safety and health across the factories. Employers have increased their efforts to improve chemical safety, and over 95 percent of local factories have initiated policies to create a safer work environment as well as provide good working conditions to garment workers. Wages vary depending on the economic sector. As of November 2019, the minimum wage for the garment sector was HTG 500 for eight hours of work or (approximately $6.25 as of April 2021) in the export-oriented apparel industry. Better Work Haiti’s biannual report found most factories in compliance with the labor law. The most recent report is available at: https://betterwork.org/portfolio/better-work-haiti-21st-biannual-compliance-synthesis-report/ .

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

Table 4: Sources of Portfolio Investment
Data not available.

Merah Baird
Commercial Officer
Embassy of the United States of America
Boulevard du 15 Octobre, Tabarre 41
Port-au-Prince, Haiti
Please address email correspondence to PAPECON@state.gov .