2009 Investment Climate Statement - Trinidad and Tobago
Openness to Foreign Investment
The Government of Trinidad and Tobago (GOTT) actively encourages foreign direct investment in almost all sectors. Generally speaking, there are no restrictions or disincentives to investment. As one indicator of a favorable investment climate, the Heritage Foundation Index of Economic Freedom for 2008 ranks Trinidad and Tobago sixth in the Western Hemisphere and #29 worldwide out of 162 countries. However, Trinidad and Tobago dropped 8 places on the World Economic Forum's Global Competitiveness Index ranking, falling from 84 out of 131 countries evaluated in 2007 to 92 out of 134 countries in 2007. The Global Competitiveness Report 2008/2009 highlighted weaknesses in institutions, goods market efficiency, and market size, which offset strong scores for macroeconomic stability and financial market sophistication. GOTT policies and relevant legislation affecting foreign investment are outlined in a green paper issued by the Ministry of Trade and Industry in June 2007.
Foreign ownership of companies is permitted and welcomed under the Foreign Investment Act (1990). Among U.S. companies operating in Trinidad and Tobago are a commercial bank, several air-courier services, three airlines, and one insurance company. U.S. companies have interests in one electric power company, a number of oil and gas operations, petrochemical plants, and a desalination plant. Other U.S. businesses are presently building an ethanol dehydration plant and a gas-to-liquids plant, while another company is in negotiations with the GOTT to build an ethane/ethylene/polyethylene plant in Trinidad.
The GOTT has targeted the following seven industries for development: yachting, fish and fish processing, merchant marine, music and entertainment, film, food and beverage, and printing and packaging. Other inward investment promotion efforts are focused on tourism, energy services, agriculture and agro processing. The GOTT is actively seeking foreign investors to establish large (100+ acres) commercial farms that would use modern techniques and management for large-scale production of food on state-owned land. As of December 2008 one 200-acre state-owned farm in Tucker Valley, Chaguaramas is in production. The Tucker Valley farm was set up with support from Cuban advisors under a government-to-government arrangement. In January 2009 the GOTT issued licenses for four of eleven planned commercial farms.
Trinidad and Tobago has attracted substantial foreign investment in methanol and ammonia production over the last two decades; currently there are ten ammonia plants and seven methanol plants located at the Pt. Lisas Industrial Estate in Trinidad. The GOTT has said it is no longer interested in any new ammonia and methanol plants and will focus instead on industries such as steel, aluminum, ethylene, and polypropylene that can provide inputs for prospective downstream manufacturing, in order to diversify Trinidad and Tobago's economy.
The availability and reliability of natural gas supply has attracted much of the investment in heavy industry to date. However, independent audits of natural gas have provoked questions about the sustainability of gas-based industrial expansion. Released in August 2008, the audit estimated Trinidad and Tobago's reserves as equivalent to 13 years consumption at the current rate. In response to the audit, the GOTT announced plans to sign nine production sharing contracts between 2008 and 2009 for offshore exploration; as of end-2008 only one has been signed. GOTT has also proposed lowering gasoline subsidies to encourage the use of compressed natural gas in automobiles, cutting the import fee on CNG conversion kits and raising the cost of premium gasoline to discourage its consumption.
The Trinidad and Tobago judicial system upholds the sanctity of contracts and generally provides a level playing field for foreign investors involved in court matters. However, due to the backlog of cases, there can be major delays in the process. As a result, it is imperative for those investing here to sign enforceable contracts and use Trinidad and Tobago attorneys. In the wake of concern over possible improprieties in the award of some contracts by the state-owned Urban Development Company of Trinidad and Tobago (UDECOTT), the GOTT requested investigations into the conditions surrounding these contract awards. As of end-2008 a probe by an independent panel is underway.
Bilateral Investment Treaty
The Bilateral Investment Treaty (BIT) between the United States and Trinidad and Tobago came into force in 1996. The BIT covers the following areas, with all provisions applying reciprocally to the United States and Trinidad and Tobago:
Treatment of Investment
- Requires that the treatment of foreign investments is no less favorable than that accorded to domestic investments ("national treatment") or to third-country investments in its territory ("most favored nation treatment"), subject to exceptions listed in an annex to the BIT.
- Expropriation: Prohibits expropriation or nationalization of an investment without just compensation.
- Compensation for Damages: Requires national treatment for investments suffering losses from war and similar events.
- Transfers: Permits financial transfers relating to investments to be made freely and without delay into and out of each country's territory.
- Performance Requirements: Prohibits performance requirements as a condition for investment.
- Alien Entry: Liberalizes certain visa regimes relating to entry, sojourn and employment of aliens for establishment and operation of investments of substantial capital amounts.
- Dispute Settlement: Provides for dispute resolution alternatives, including binding arbitration.
Currently, the applicable "CARICOM and Foreign Investment Act of 1990" extends national treatment to CARICOM citizens but does not guarantee the same rights to other foreigners. In the absence of a government-granted waiver, the law limits foreign equity participation in local companies to the extent that a foreign investor is permitted to own 100 percent of the share capital in a private company, but a license is required to own more than 30 percent of the share capital of a public company. The Foreign Investment Act also limits foreign ownership of land to one acre for residential purposes and five acres for trade purposes without a license. In the past, waivers on corporate equity and land ownership restrictions have been freely granted.
In February 2007, the Finance Minister signed an order under the Foreign Investment Act which requires a foreign investor to obtain a license before acquiring any land in Tobago (see www.finance.gov.tt). This act may also affect land purchased prior to the enactment of the Foreign Investment Act. Procedures to apply for a license were established in 2008, but the requirement reportedly continues to have a chilling effect on foreign investment in Tobago's tourism sector.
Government Involvement in Foreign Investment
The GOTT generally only gets involved in foreign investments when the investor is seeking government incentives or concessions such as tax holidays, duty-free imports of equipment and materials, or exemption from VAT on inputs. The government also becomes involved when an investor wishes to lease land in one of the government-owned industrial parks, and when a planned activity requires a license, such as mining or drilling. Nationals and non-nationals are generally treated equally with respect to obtaining licenses. Bureaucratic delays in approval of investment packages can be frustrating for investors. These generally are the result of negotiations for a memorandum of understanding or framework agreement and incentives or, in the case of petrochemical investors, negotiations for favorable natural gas prices. Environmental approval for large industrial projects is governed by the Environmental Management Authority through the issuance of a Certificate of Environmental Clearance. This process can be extremely time-consuming, and many projects begin with only outline approval.
The Telecommunications Act 2001, as amended, came into force in 2004, setting the stage for full liberalization of the sector. The Act places full responsibility for the regulation of the sector with the Telecommunications Authority of Trinidad and Tobago (TATT), which was officially launched on July 1, 2004. Currently, bMobile and Digicel, offer the only cellular service in Trinidad and Tobago. Although TATT recognizes the Trinidad and Tobago cell phone market is saturated, they are actively seeking a third company to offer cellular services. The RFP is expected to open until mid-February 2009 with a selection expected to occur by May 2009.
Concessions were also awarded to seven applicants for international fixed communications, which has facilitated the establishment of offshore call centers and medical transcription services. Further, in October 2007, the TATT selected companies Telestar Cable system Limited and Green Dot Limited, for radio spectrum to provide public broadband wireless access (BWA) services. To date, no further mobile carrier concessions have been awarded.
The government has encouraged foreign investment in several state enterprises. In nearly every case, foreign investors have purchased large minority holdings in privatized firms through various arrangements with the government.
In general, Trinidad and Tobago has seen a trend towards privatization of key sectors since the 1990s. Sectors that have undergone privatization include electrical power generation and the postal service. Some others have been transformed. Caroni (1975) Ltd., a sugar producer, was closed in 2003 and replaced by Sugar Manufacturing Company Ltd (SMCL). Following sugar shortages in food and confectionary manufacturing in 2005, the government put SMCL and its facilities up for sale in September 2006. The GOTT has now devoted the majority of the Caroni land to agricultural projects and the remainder to housing developments and strategic business development. Under the EU-CARIFORUM Economic Partnership Agreement the GOTT is to receive $189 million from the European Union between 2008-2013 to support farming projects.
The GOTT remains involved in the energy sector through several state-owned companies that operate Trinidad's sole refinery, natural gas distribution network, and the marketing of refined products. The largest of these companies, Petrotrin, also has interests in oil and gas exploration and production, and it manages a leasehold program for small-scale on-shore production, including by foreign companies. In late 2008, the outlook for Petrotrin was downgraded from 'stable' to 'negative' by the international credit-ranking agency, Moody's, over profit concerns driven by a sharp decline in oil prices. In 2007, the GOTT indicated that it was considering merging the state owned energy companies to create a stronger, globally competitive entity; however, to date, the activities of state-owned companies have not prevented private and foreign participation in the upstream energy sector.
The GOTT is seeking a private sector investor for the assets of the Trinidad and Tobago Forest Products Limited (Tanteak).
Traffic congestion is a major concern in Trinidad and Tobago, particularly to and from Port of Spain. To alleviate the problem, GOTT has proposed the construction of a national rail system and a new national network of highways, in addition to a water taxi service. The GOTT has awarded a design contract for the rail project, targeting construction to begin at the end of 2009 and service on the first section of track beginning as early as 2011. The initial run of the water taxi service took place in December 2008. The taxis, if maintained, are expected to transport 3,500 people each day and take 1,000 cars off of the roads.
Conversion and Transfer Policies
There are no exchange controls on foreign currency and securities. The repatriation of capital, dividends, interest and other distributions and gains on investment may be freely transacted without limits. The average period for remitting all kinds of investment returns is 24 hours.
In late 2006, Trinidad and Tobago businesses reported delays in obtaining foreign exchange through the banking system; these problems subsided by the end of the year, following reassurances from government officials. The problem has not reemerged in 2007 or 2008.
Tax on Interest earned by an Individual in Trinidad and Tobago
There is no requirement for withholding on interest paid to resident individuals in respect of loans secured by bonds or other similar investment instruments. Where the individual is a Trinidad and Tobago nonresident, withholding tax will be applicable at the rate of 20 percent, except in cases where treaty relief is available. The double taxation treaty between the U.S. and Trinidad and Tobago does not provide for such relief.
Remittance of Dividends to a Nonresident
Where the remittance is in respect of dividends paid to a U.S. individual, the rate of tax is 15 percent of the gross dividend. In the case of a U.S. company owning more than 10 percent of the voting control of a Trinidad and Tobago company, the rate is 10 percent of the gross dividend. For dividends paid to a company with less than 10 percent ownership, the rate of tax is 15 percent. In the case of a US resident company having a branch or permanent establishment in Trinidad and Tobago, branch profit tax would be applicable on a deemed remittance made by the branch. The rate of branch profit tax is 10 percent, and this is levied on the after tax profits of the branch less any reinvestment of such profits (other than in the replacement of fixed assets).
Expropriation and Compensation
No expropriation actions have been taken since the 1980s. All prior expropriations were compensated to the satisfaction of the parties involved. There is no indication of policy shifts that might lead to expropriation in the future.
In Trinidad and Tobago the High Court of Justice has jurisdiction over all matters involving sums in excess of TT$15,000 (approx. US$2,400), and can grant equitable relief such as acclamation injunctions and public law remedies. New Rules of Civil Procedure with case management provisions and docketing of matters came into effect in September 2005. At present there is no reciprocal enforcement of judgments obtained in the United States. These judgments do, however, form the basis of a debt on which the court can rule summarily. The only grounds on which a foreign judgment can be impeached are when: (a) it was obtained by fraud, (b) its recognition or enforcement would be contrary to public policy, or (c) it was obtained in proceedings contrary to natural justice.
Trinidad and Tobago is a member of the International Center for the Settlement of Investment Disputes (ICSID), which facilitates conciliation and arbitration of investment disputes between contracting states and nationals of contracting states. Trinidad and Tobago has also ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which facilitates the registration and enforcement of foreign arbitral awards between contracting states. The Trinidad and Tobago courts can refer parties to mediation, and there is now a Mediation Board with responsibility for certifying mediators and accrediting training programs.
The Bilateral Investment Treaty between the United States and Trinidad and Tobago allows for alternative dispute resolution measures, including binding arbitration. In 1996, the Trinidad and Tobago Chamber of Industry and Commerce launched a Dispute Resolution Center to foster mediation training and hear commercial disputes. To date, the Chamber has trained over 1,000 persons in areas of dispute resolution such as conflict management resolution, mediation, negotiations and arbitration. More than a dozen disputes have been mediated.
The Environmental Commission, a Superior Court of record, was established by and under the Environmental Management Act 2000, which mandates the Commission to encourage and promote alternative dispute resolution, defined as any mechanism for resolving disputes other than by way of litigation. New legislation increasingly provides for mediation as an alternative to litigation in other areas as well.
Performance Requirements and Incentives
There are no performance requirements for investors written into law, but the Government of Trinidad and Tobago (GOTT) strongly encourages, through negotiable incentives, projects that generate employment and foreign exchange; provide training and/or technology transfer; boost exports or reduce imports; have local content; and generally contribute to the welfare of the country. The GOTT issued a white paper in August 2005 that included recommendations for local content policies in public procurement, but no legislation has been introduced to mandate such policies. Foreign investors are subject to the same Certificate of Environment Clearance (CEC) rules as domestic businesses.
Foreign investors are eligible for tax holidays and concessions in the manufacturing and hotel industries. Under the Fiscal Incentives Act of 1979 and the Hotel Development Act, both tax and non-tax incentives may be negotiated with the government for investments in the manufacturing, tourism and energy sectors. The government encourages joint ventures between foreign and local corporations. Corporate partners in a joint venture are governed by a joint-venture partnership agreement.
The GOTT has sought to streamline the investment registration system and now permits investors to submit a single application for all the licenses, approvals, concessions and tax benefits necessary to implement a proposed investment project. In practice, however, business people have reported delays in establishing businesses in Trinidad and Tobago. The World Bank's Doing Business 2008 Report ranks Trinidad and Tobago #67 out of 178 countries in terms of the ease of doing business. Although an improvement over 2007, when Trinidad and Tobago was ranked #74, the report indicates that there are nine steps involved in launching a business, which on average takes 43 days.
Foreigners entering Trinidad and Tobago to engage in legitimate trade or occupation may do so without a work permit for a single period not exceeding 30 days in every 12 consecutive months. To engage in legitimate work for any period in excess of 30 days, a work permit must be obtained from the Ministry of National Security through the proposed employer. This system has created a hardship for companies involved in large industrial and energy projects, which frequently need technicians for periods longer than 30 days. Due to labor shortages in construction and other areas, Cabinet approved amendments to the Immigration Act regulations in 2007 in order to make it easier for non-nationals to work in Trinidad and Tobago. These amendments, which have yet to be approved by Parliament, aim to simplify the process and issuance of visas and work permits to non-nationals by providing the following: electronic work permit applications through the e-government portal, group work permit applications; multiple entry visas; fee increases from US$8 to US$63 for visa waivers to foreign nationals entering Trinidad and Tobago without visas; and visa issuance upon arrival to work permit holders.
There are no formal restrictions on the numbers and duration of employment of foreign managers brought in to supervise foreign investment projects, an issue that is specifically addressed in the Bilateral Investment Treaty between the United States and Trinidad and Tobago. However, several foreign firms have alleged that there are inconsistencies in the granting of long-term work permits. These generally fall into two categories: a permit is not granted to an official of a company that is competing with a local firm, or the authorities threaten not to renew a permit because a foreign firm has not done enough to train and promote a Trinidad and Tobago national into the position. Some executives of smaller companies have found that their work permits are only approved if they form joint ventures with local firms or set up formal training programs.
Right to Private Ownership and Establishment
Private foreign and domestic entities have the right to establish and own business enterprises and engage in remunerative activity. Under the Companies Ordinance and the Foreign Investment Act, a foreign investor may purchase shares in a local corporation, incorporate or set up a branch office in Trinidad and Tobago, or form a joint venture or partnership with a local entity. Businesses may be freely purchased or disposed of. Private enterprises and public enterprises are treated equally with respect to access to markets, credit, and other business operations. A Companies Act, based on the Canadian Corporations Act, came into force in 1997, and was updated in the Companies (Amendment) Act, 1999.
Protection of Property Rights
Property rights are protected under the constitution and common-law practice. Secured interests in property are recognized and enforced.
Trinidad and Tobago concluded negotiations with the United States on an Intellectual Property Rights (IPR) agreement in 1994. Trinidad and Tobago's IPR legislation is WTO consistent and considered to be TRIPS-plus, generally providing for intellectual property protection comparable to that in the U.S. Trinidad and Tobago passed the Copyright Amendment Act in April 2008, and acceded to the World Intellectual Property Organization's (WIPO) Performances, the Phonograms Treaty and the Copyright Treaty in November 2008. The Copyright Act amendment, among other things, facilitates police enforcement by simplifying the process of filing charges. Trinidad and Tobago's intellectual property laws may be viewed online at: www.wipo.int/clea.
Enforcement of intellectual property rights has somewhat improved with the arrests of individuals and seizure and destruction of pirated copies of CDs, DVDs, and copying equipment. Music and video piracy continue to be the most visible examples of copyright infringement. To address this infringement, GOTT formed a Cabinet level committee to make recommendations for regulating the home video club industry in 2008.
In 2007, most cable TV signal piracy in Trinidad and Tobago ended when Trinidad's main cable TV company, Flow, signed a licensing agreement with HBO-LA to legally distribute HBO-LA programming in Trinidad. While some outstanding issues remain, Flow continues to make efforts to legitimize all of its broadcasts. In late 2008, Flow signed a licensing agreement with a major US broadcast network to allow the cable company to show all of its news, sports, and dramatic productions on local stations.
Transparency of Regulatory System
The Companies Ordinance and the Foreign Investment Act, in general, govern foreign investments. Except as noted elsewhere in this report, these acts carry few restrictive clauses. The U.S. Embassy in Port of Spain is not aware of any investment proposal being denied outright. Under the Act, a proposal can only be denied if it is illegal, contrary to public morals or environmentally unsound. However, Government inaction on a proposal may have the same effect as outright denial.
Foreign investors have complained about a lack of transparency and delays in the investment approval process. Complaints focus on a perceived lack of delineation of authority for final investment approvals among the various ministries and agencies that may be involved in a project. Some projects have been delayed for several years and some prospective investors have abandoned Trinidad and Tobago as a result. Plans to revamp the public procurement system on the basis of an August 2005 white paper have been postponed.
Certificate of Environmental Clearance (CEC) Rules that came into effect in 2001 have helped to clear up uncertainty over environmental impact assessments by placing the environmental approval authority for most projects under the jurisdiction of the Environmental Management Authority (EMA). The following categories of projects require environmental clearance:
- Electricity generation, transmission and distribution;
- Engineering operations;
- Food and beverage industry;
- Heavy manufacturing industries;
- Light manufacturing industries;
- Metal smelting and reforming;
- Mineral mining and processing;
- Oil and gas exploitation;
- Tourism and recreational development;
- Transport systems infrastructure;
- Waste management;
- Water and sewage systems;
- Storage and warehousing;
- Other service-oriented activities;
- Hillside development.
A 2007 amendment to the CEC rules exempted quarry operations smaller than 150 hectares from obtaining a Certificate of Environmental Clearance, but still required oversight during the land clearing process. With a subsequent amendment in late 2008, no oversight is required for land clearing or quarry operations on less than 150 hectares of land. New Water Pollution Rules came into effect in 2007. Air Pollution Rules are to be implemented in the near future. See EMA's website for details: http://www.ema.co.tt.
Efficient Capital Markets and Portfolio Investment
Trinidad and Tobago has well-developed capital markets. A full range of credit instruments is available to the private sector, including a small stock market. There are no restrictions on borrowing by foreign investors. However, local credit is expensive by U.S. standards due to high commercial bank reserve requirements. Loans in foreign currency are much cheaper, and businesses can sometimes negotiate even lower rates.
The legal, regulatory and accounting systems governing credit markets are, on the whole, effective and transparent, although there has been some public discussion of the need to tighten regulations in the insurance industry. The Insurance Act of 1980 (amended in 1996) and Securities Industry Act of 1995 are geared towards improving the market's transparency. International accounting firms are represented in Trinidad and Tobago.
Both chambers of Trinidad and Tobago's Parliament passed the Financial Institutions Act, 2008, meant to replace the Financial Institutions Act, 1993. The new Act modernizes regulation of banks, insurance companies and other financial institutions, and provides penalties up to US$800,000 and five years in jail for operating without a license from the Central Bank. Directors and officers of a company violating the act are subject to joint and several liability. The Act is a key element in the GOTT effort to improve the regulatory framework for launching an international financial center in Port of Spain. In 2007, Trinidad and Tobago's financial sector grew by 8.8%. The GOTT hopes the financial center will be a catalyst for further growth.
With the Fair Trading Act of 2006, Trinidad and Tobago adopted antitrust legislation that regulates mergers, anti-competitive agreements, and monopolies and provides for the establishment of a Fair Trade Commission. Under the Act, merging enterprises are required to apply to the Commission for permission to merge if their assets exceed TT$50 million. The Act requires the Commission to make a determination within one month. However, as of December 2008 the Commission had not yet been launched and implementing regulations were not yet promulgated.
The Trinidad and Tobago stock exchange operates a takeover and merger code for companies listed on the local stock exchange. The government has established a securities and exchange commission for the purpose of supervising and regulating the securities market and market actors. Foreign investors currently must obtain a license from the Ministry of Finance before they can legally acquire more than 30 percent of a publicly held company. Cross-shareholding arrangements that would inhibit foreign investment through mergers and acquisitions are uncommon outside the financial services sector. The banking system is considered sound.
A temporary amendment of trading rules for the Trinidad and Tobago Stock Exchange establishes a minimum trading volume required to change the closing price of any security listed on the Exchange. The new rule took effect on December 31, 2008.
There are no laws authorizing firms to adopt articles of incorporation that limit or prohibit foreign investment, participation or control. The government and private sector do not seek to restrict foreign participation in industry standards-setting organizations.
There has been no serious case of political violence since an unsuccessful coup attempt in 1990.
Corruption has traditionally appeared to be moderate and has not seriously undermined government or business operations. Trinidad and Tobago has a number of laws, regulations and penalties designed to combat corruption and fraud. International drug trafficking, with its concomitant corruption, could pose a threat to the investment climate, but the Government is active in its efforts to combat both illegal narcotics and the influence of money laundering.
With robust government spending in recent years, Trinidad and Tobago's active press, trade associations, and business community have increasingly reported allegations of corruption involving government contracts. As elsewhere, competing businesspersons seek to influence decisions in their favor through personal connections. The government has established a number of commissions of inquiry and initiated a number of investigations that have so far resulted in the indictment of several private individuals and both former and current public officials, including two cabinet ministers.
Public perceptions of corruption have increased each of the last four years. The Transparency International 2008 Corruption Perceptions Index again ranked Trinidad and Tobago#72 out of 180 countries, dropping from #59 out of 159 countries evaluated in 2005. Consequently, there is ongoing public pressure on the government to review tender procedures, improve the legal framework, and implement a sustained fight against corruption. The government has responded by pointing out that its success in unearthing corruption has fueled the perception of corruption.
Bilateral Investment Agreements
The Bilateral Investment Treaty between the United States and Trinidad and Tobago came into force in 1996. A double-taxation agreement between the United States and Trinidad and Tobago has existed since the early 1970's. Trinidad and Tobago also has bilateral investment agreements with the United Kingdom, Canada, France, Germany, Korea, Spain, and China among others and is negotiating a BIT with India.
OPIC and Other Investment Insurance Programs
The Overseas Private Investment Corporation (OPIC), the Export-Import Bank of the U.S. and the Multilateral Investment Guarantee Agency (MIGA) are open for business in Trinidad and Tobago. Trinidad and Tobago is one of three target markets for the AIC Caribbean Fund, established in 2006 with OPIC financing up to US$80 million and a target capitalization of US$250 million. Trinidad and Tobago is also among 22 countries in the Caribbean and Central America eligible for a US$200 million OPIC loan facility administered through Citigroup.
Labor relations are governed by the Industrial Relations Act (IRA), which provides for dispute resolution through an industrial court in instances where the issue cannot be resolved at the collective bargaining table or through conciliation efforts by the Ministry of Labor.
Approximately 22-24 percent of Trinidad and Tobago's workforce is unionized. The IRA provides for the mandatory recognition of trade unions when a union satisfies the Registration Recognition and Certification Board that it represents more than 50 percent of the workers in a specified bargaining unit.
Wages and salaries vary considerably between industries. The national minimum wage is presently TT$9.00 per hour (approximately US$1.44) and associated overtime rates. However, the Prime Minister announced a new minimum wage of TT$10.00 (approximately US$1.59) during his August 2007 budget presentation to Parliament, and the Minimum wage board is expected to approve it in early 2009. The Maternity Protection Act of 1998 provides for maternity benefits. The Occupational Safety and Health Act is now in force.
Unemployment reached an historic low of 5.0 percent in the fourth quarter of 2006, and then rose to 6.0 percent in June 2007. It was down to 4.2 percent as at the end of the 2nd Qtr. 2008.
The labor market offers a high proportion of skilled and experienced workers, and the educational level of the population is among the highest in the developing world, though there is a gap between official literacy statistics and functional literacy.
Foreign-Trade Zones/Free Ports
The Free Zones Act of 1988 (last amended in 1997) established the Trinidad and Tobago Free Zones Company to promote export development and foreign investment projects in a relatively bureaucracy-free, duty-free and tax-free environment. The Program is administered by the Trinidad and Tobago Free Zones Company Ltd (TTFZ). There are currently 28 approved enterprises located in Free Zones. The majority are located within a multiple-user site in D'Abadie. Other companies had their current locations designated as Free Zones.
Free Zone enterprises may be established in any part of the country.
They are 100 percent exempt from:
- Customs duties on capital goods, parts and raw materials for use in the construction and equipping of premises and in connection with the approved activity;
- Import and export licensing requirements;
- Land and building taxes;
- Work permit fees;
- Foreign currency and property ownership restrictions;
- Capital gains and taxes
- Withholding taxes on distribution of profits and corporation taxes or levies on sales or profits;
- VAT on goods supplied to a Free Zone;
- Duties on vehicles for use only within the Free Zone.
A corporation tax exemption for entities that qualify for free zone status is also in force. Amendments to the Act to remove the corporation tax exemption for new free zone projects were proposed in 2005 and 2007 but have not been pursued. Currently, companies locating in a Free Zone may accept or decline the tax holiday with the understanding that, if enacted, the proposal to abolish the corporation tax holiday may be retroactive back to 2007. Indirect tax privileges, such as the import duty exemptions and VAT exemptions listed above will be retained.
Application to carry out an approved activity in an existing free zone area is made on specified forms to the Trinidad and Tobago Free Zones Company. Approval is granted by order of the Free Zones Company.
If the project requires designation of a new free zone area, a separate application form for designation is made to the Free Zones Company which recommends designation to the Minister of Trade & Industry. Designation is effected by order of the Minister.
Applications for work permit waivers are recommended by the Free Zones Company through the work permit secretariat of the Ministry of National Security.
Free Zone activities that qualify for approval include manufacturing for export, international trading in products, services for export, and development and management of free zones. Production activity involving petroleum, natural gas or petrochemicals and activities involving investment in excess of US$50 million do not qualify for the program.
Foreign Direct Investment Statistics
Economic reform and trade and investment liberalization have led to substantial foreign investment inflows. The U.S. continues to be the single largest source of foreign investment in Trinidad and Tobago. Other large foreign investors include the United Kingdom (petroleum and financial services), Canada (petroleum, petrochemicals and financial services), Germany (petrochemicals), India (iron/steel, petroleum), Norway (petrochemicals), Australia (petroleum) and Spain (petroleum).
The bulk of foreign investment is in the country's lucrative energy-based sectors. However, there is evidence of growing interest among investors in the non-oil sectors of the economy, in areas such as information technology, wood and wood products, and the entertainment industry.
|TOTAL FDI STOCK|
|- As % of GDP||42.5%||68.5%||65.1%|
|- As % of GDP||5.2%||7.8%||8.2%|
|TOTAL FDI FLOWS|
|Inward Stock from U.S.||2,219||3,041||3,829|
|Inward Flow from U.S.||-34||822||421|
Sources: UNCTAD World Investment Report, US Department of Commerce
Survey of Current Business
The energy sector is the leading destination for foreign direct investment in Trinidad and Tobago. Reliable energy supply at low cost has helped the country attract investment into heavy industry, manufacturing, and other sectors as well. U.S. energy companies Chevron and EOG Resources have significant investments in oil and gas exploration and production. Other U.S. companies in the upstream energy sector include Anadarko/Kerr-McGee and Fluor. Among non-American oil companies are BP (which acquired Amoco's Trinidad investments in a 1998 merger), Repsol YPF, Talisman, Petro-Canada, BHPBilliton and BG Group (formerly British Gas).
Major U.S. Investors:
- Consumer products/Retail: Johnson & Johnson, Nabisco, 3M, PepsiCo, Coca Cola, Subway Sandwiches, Honeywell, IBM, Pan American Standard Brands, PriceSmart, Payless Shoe Source, Microsoft, The Myerson Company
- Energy Exploration/Production: Anadarko/Kerr-McGee, Chevron, EOG Resources, EthylChem (ethanol), World GTL (gas-to-liquids)
- Energy Services/Engineering: Anderson Smith Drilling, Atlantic Maritime Drilling, Baker Hughes, Baroid Services, ChetMorrison Contractors, Fluor Daniel, Global Marine Drilling, Halliburton, Schlumberger, Tidewater Marine, Worley Parsons
- Financial Services/Accounting: Citigroup, Ernst & Young, American International Group (AIG)
- Heavy Industry/Manufacturing: ALCOA (alumina transshipment), Bechtel (construction), ConocoPhillips (natural gas processing), General Electric (desalination plant, maintenance facility for LNG plant), Koch Industries (methanol), Nucor (steel), Trincast (manufacturing)
- Power Generation: Centennial Energy Services
- Services: Amerijet (air cargo), American Airlines, Continental Airlines, Delta Airlines, Federal Express, United Parcel Service, Crowne Plaza, Hilton Hotel, Courtyard by Marriott, Hyatt Hotel, McCann Erickson (advertising), Western Union, General Electric (water desalination), General Aviation Service (shipping), Medical Air Services (medical transport).
Major third country investors:
- Communications: Cable and Wireless (UK - telecommunications), Cisneros Group (Venezuela - media/telecommunications), Digicel (Ireland - telecommunications)
- Financial Services/Accounting: Scotiabank (Canada), RBC (Canada), Commercial Union (Guyana), Guardian Life Insurance (Jamaica), PriceWaterhouseCoopers (UK), Bank of Baroda (India)
- Hydrocarbons: BG Group (UK), BHP Billiton (Australia), BP (UK), Canadian Superior, ONGC (India), PetroCanada, Repsol YPF (Spain)
- Industry/construction: Norsk Hydro (Norway - ammonia), Ferrostaal, Helm (Germany - methanol), Methanex (Canada - methanol), Mittal Steel, Essar (India - steel), George Wimpey (UK - construction), Cemex (Mexico - cement), Metalurgica Chirica (Venezuela - metal products), Sural (Venezuela - aluminum), VINCI Construction (France), Bouygues Construction (France)
- Manufacturing/Consumer Products: British-American Tobacco Co. (UK - tobacco products), Courts Furnishings Ltd (UK - furniture, appliances), Berger Paints (India - paints), Corimon (Venezuela - paints), Nestle SA (Switzerland - food products), Unilever PLC (UK - household/personal care products), Fujitsu (Japan - computers/office machines), Kuojeng Trading (Taiwan - fish processing), Grace Kennedy (Jamaica - food products)
- Power Generation: Marubeni (Japan)
- Services: DHL, TNT Express (courier)
eTeck investment promotion: http://www.investtnt.com/
Investment Policy Green Paper 2007-2012: http://www.investtnt.com/1content/articlefiles/38-Green_paper_Investment.pdf
Ministry of Trade and Investment: http://www.tradeind.gov.tt/
Ministry of Energy and Energy Industries: http://www.energy.gov.tt
Ministry of Finance: http://www.finance.gov.tt
Central Bank of Trinidad and Tobago: http://www.central-bank.org.tt
Central Statistical Office: http://www.cso.gov.tt
The Intellectual Property Office (Trinidad and Tobago): http://www.ipo.gov.tt
Trinidad and Tobago Environmental Management Authority: http://www.ema.co.tt
Trinidad and Tobago Investment Opportunities and Incentives: http://www.investtnt.com
Trinidad and Tobago Stock Exchange: http://www.stockex.co.tt
Trinidad and Tobago Government on line: http://www.ttconnect.gov.tt
Doing Business in Trinidad and Tobago (Taxes): http://www.trinidadlaw.com
The American Chamber of Commerce of Trinidad and Tobago (AmCham): http://www.amchamtt.com
U.S. Overseas Private Investment Corporation (OPIC): http://www.opic.go
U.S. Department of Commerce Trade Compliance Center: http://www.tcc.mac.doc.gov
United Nations Conference on Trade and Development: http:www.unctad.org