2014 Investment Climate Statement - Barbados

2014 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2014
Report
   

Executive Summary

The Government of Barbados strongly encourages foreign direct investment. However, Barbados has a large government debt and deficit, saw its sovereign debt rating downgraded in 2013, and is expected to have a GDP contraction of 1.2% in 2014. Despite the recession, the services sector holds the largest potential for investment growth, while a new energy law will likely lead to increased production of renewable energy.

The government offers special incentive packages for foreign investments in the hotel industry, manufacturing, and offshore business services. Foreign nationals receive the same legal protections as local citizens. Local enterprises generally welcome joint ventures with foreign investors to access technology, expertise, markets, and capital. Barbados has a low level of corruption, a relatively high degree of economic freedom, and a moderate ranking on the World Bank’s Ease of Doing Business index.

Companies can freely repatriate profits and capital from foreign direct investment. The Embassy is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in Barbados. Barbados bases its legal system on the British common law system.

Barbados uses transparent policies and effective laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. These rules are in keeping with international standards. The regulatory system can be slow, and at times not forthcoming on information regarding the refusal of a license.

Barbados is a member of the Caribbean Basin Initiative, which permits duty free entry of many products manufactured or assembled in Barbados into markets of the United States. Barbados has no bilateral investment treaty with the United States, but has a double taxation treaty and tax information exchange agreement.

1. Openness To, and Restrictions Upon, Foreign Investment

The Government of Barbados, through Invest Barbados, encourages foreign direct investment, with stated goals to create jobs and earn foreign currency.

The government offers special incentive packages for foreign investments in the hotel industry, manufacturing, and offshore business services. For example, International Business Companies (IBCs) have a maximum tax rate of 2.5% on income and exemption from foreign exchange controls.

The services sector holds the largest potential for growth, especially in the areas of international financial services, tourism, information technology, educational, health, and cultural services. In agriculture, the gradual deterioration of the sugar industry has opened up land for other agricultural uses, and investment opportunities exist in the areas of agro-processing, alternative and renewable energy, and hydroponics. In the financial services sector, the government has improved its regulatory oversight, and the industry is thriving under better regulatory standards, designed to prevent money laundering and tax evasion.

Referencing “mounting external pressures due a persistent current account deficit and a high fiscal deficit,” Standard & Poor’s downgraded Barbados in November 2013. In December 2013, Moody’s downgraded Barbados’s rating from Ba1 to Ba3 with a negative outlook, citing poor economic growth prospects, increasing external vulnerability in face of a sharp decline in foreign reserves, increased government liquidity risk, and government deficit/debt levels. Fitch Ratings does not rate Barbados.

Foreign nationals receive the same legal protections as local citizens. The police and court systems are unbiased in commercial matters, and the government operates in a mostly transparent manner, although the lack of adequate government staff and bureaucratic procedures can slow certain processes and limit access to information. There are no requirements for participation either by nationals or by the government in foreign investment projects.

Local enterprises generally welcome joint ventures with foreign investors in order to access technology, expertise, markets, and capital. Barbados' economy is small, and in the past, new enterprises that might compete with entrenched local establishments, especially in the retail and restaurant sector, may face an objection to their license by local private interests. In the past, licenses for importers of U.S. ice cream and poultry products, and some U.S. fast food franchises were considerably delayed due to this objection process. Recently, there has been a relaxation on the use of this mechanism and there has been an increase in the entry of franchises on the island.

TABLE 1: The following chart summarizes several well-regarded indices and rankings.

Measure

Year

Rank or value

Website Address

TI Corruption Perceptions index

2013

(15 of 177)

http://cpi.transparency.org/cpi2013/results/

Heritage Foundation’s Economic Freedom index

2013

(45 of 177)

http://www.heritage.org/index/ranking

World Bank’s Doing Business Report “Ease of Doing Business”

2013

(91 of 189)

http//doingbusiness.org/rankings

Global Innovation Index

2013

(47 of 142)

http://www.globalinnovationindex.org/content.aspx?page=gii-full-report-2013#pdfopener

World Bank GNI per capita

2013

USD $15,080

http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

2. Conversion and Transfer Policies

Companies can freely repatriate profits and capital from foreign direct investment if they registered with the Central Bank of Barbados at the time of investment. The Central Bank may limit or delay conversions depending on the level of international reserves under the bank's control.

The Ministry of Finance and Economic Affairs controls the flow of foreign exchange, and the Exchange Control Division of the Central Bank executes fiscal policy under the Exchange Control Act. Individuals may apply through a local bank to convert the equivalent of US$3,750 per year for personal travel and up to a maximum of US$25,000 for business travel. To convert any amount over these limits, one must apply to the Central Bank. International businesses, including Exempt Insurance and Qualifying Insurance Companies, are exempt from these exchange regulations.

Barbados is a member of the Caribbean Financial Action Task Force and according to the 2013 International Narcotics Control Strategy Report (INSCR), Barbados is categorized as a jurisdiction of concern.

3. Expropriation and Compensation

The Barbados Constitution and Companies Act Cap 308 contain provisions that permit the government to acquire compulsorily property for public use upon prompt payment of compensation at fair market value. The Embassy is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in Barbados.

4. Dispute Settlement

Barbados bases its legal system on the British common law system. The Attorney General, the Chief Justice, Puisne Judges, and Magistrates administer justice in Barbados. The Caribbean Court of Justice (CCJ) is the highest court of appeal for Barbados.

The United States and Barbados are both parties to the World Trade Organization (WTO). The WTO Dispute Settlement Panel and Appellate Body resolve disputes over WTO agreements, while courts of appropriate jurisdiction in both countries resolve private disputes. The Barbados Arbitration Act (1976) and the Foreign Arbitral Awards Act (1980), which recognizes the 1958 New York Convention on the Negotiation and Enforcement of Foreign Arbitral Awards, contain provisions for arbitration of investment disputes. Parliament has written The New York Convention's provisions into domestic law, but has not ratified the convention. Barbados is also a member of the International Center for the Settlement of Investment Disputes (ICSID), also known as the Washington Convention. Additionally, individual agreements between Barbados and multilateral lending agencies have provisions calling on Barbados officials to accept recourse to binding international arbitration to resolve investment disputes between foreign investors and the state.

Barbados is ranked number 28 for ease of “resolving insolvency” in the World Bank’s Doing Business Report. The Companies Act makes provision for the insolvency and/or liquidation of a company incorporated or continued under the Act. The Bankruptcy and Insolvency Act 2002 gives the Company three options: receivership, Bankruptcy (voluntary and Involuntary), and reorganization of the company.

5. Performance Requirements and Investment Incentives

Most investment incentives in Barbados are tax incentives, although there are some special programs for manufacturers. Potential investors should contact Invest Barbados, a licensed accountant, and/or lawyer in Barbados to find out which incentives fit best with their goals.

In the manufacturing sector, the Barbados Investment and Development Corporation (BIDC) has established ten well-equipped industrial parks. The BIDC may also supply limited training grants and technical assistance through a program with a focus on developing local businesses.

Invest Barbados may provide a training grant to qualifying manufacturing and information and communication technology enterprises during the initial operating period.

Companies must meet export performance requirements to take advantage of certain tax incentives. For example, "enclave enterprises" must produce goods exclusively for export outside the CARICOM region. Foreign investors must finance their investments from external sources or from income that the investment generates. When a foreign investment generates significant employment or other tangible benefits for the country, the authorities may allow the company to borrow locally for working capital.

There is no requirement that locals own shares of a foreign investor's enterprise, but some restrictions may apply to share transfers. The Companies Act does not permit bearer shares. Foreign investors do not need to establish facilities in any specific location, although there are zoning restrictions. There is no requirement that enterprises must purchase a fixed percentage of goods from local sources, but the government encourages local sourcing.

The BIDC also offers local small businesses access to its Small Business Development Center, with conference room facilities, communications services, short-term office space, and a commercial library. To help further manufacturers, the Central Bank of Barbados has established an export credit guarantee scheme, covering pre-shipment financing requirements and post-shipment credit risks for manufacturing companies.

The Fiscal Incentives (Amendment) Act (2001) provides a maximum 15-year tax holiday to any manufacturer of an approved product, provided that it meets the definition of an enclave enterprise: manufacturing exclusively for export outside of CARICOM; manufacturing approved products containing a specified percentage of local value added; or being highly capital intensive. Under the Fiscal Incentives Act, such enterprises may import duty-free equipment, spare parts, and raw materials from outside CARICOM. Dividends and other distributions to shareholders during the tax holiday are also exempt from the payment of income tax. Non-resident shareholders liable to tax in their country of residence are subject to Barbados withholding tax at a lower rate. To qualify for these incentives, the enterprise must apply to the Ministry of Industry. It should be noted that the Fiscal Incentives may be discontinued in 2015 based on WTO rules.

Enterprises not obtaining benefits under the Fiscal Incentives (Amendment Act 2007) and generating export profits (other than from exports within CARICOM) may receive an export allowance expressed as a rebate of corporation tax (between 35-93%) on those profits. The maximum rebate of 93% applies if more than 81% of an enterprise's profits result from extra-regional exports. The Export Development Allowance permits a company to deduct from taxable income an additional 50% of what the company spends in developing export markets outside CARICOM.

Initial Allowances or Investment Allowances of up to 40% on capital expenditure are available for businesses making capital expenditures on machinery and plants, or on an industrial building or structure. Annual depreciation allowances on such expenditures are also available.

Barbados' method of calculating export allowance is as follows:

Export Profit as Percentage of Total Profit

Rebate of Income Tax as Percentage of Income Tax on Export Profits

Up to 20%

35%

21%, but under 41%

45%

41%, but under 61%

64%

61%, but under 81%

79%

81% and over

93%

In the tourism sector, a Market Development Allowance allows a company to deduct an additional 50% of what it spends encouraging tourists to visit Barbados. Under the Tourism Development Act of 2002, businesses and individuals that invest in the tourism sector can write off capital expenditure and 150% of interest. They are also exempt from import duties, the value added tax, and environmental levies on furniture, fixtures and equipment, building materials, supplies, and equity financing. The Act expands the definition of tourist sector to include not just accommodation, but restaurants, recreational facilities, and services. The Act encourages the development of attractions that emphasize the island's natural, historic, and cultural heritage, and encourages construction of properties in non-coastal areas. The Ministry of Tourism must first be engaged on projects under this legislation.

Regarding taxation, Barbados has entered into double taxation treaties with the United States, Canada, CARICOM, China, Austria, Cuba, Finland, Iceland, the Czech Republic, Luxembourg, Norway, Sweden, Switzerland, the United Kingdom, Botswana, and Kingdom of the Netherlands, Mauritius, Malta, Spain, Panama, Mexico, Seychelles, and Venezuela. Barbados has signed Tax Information Exchange Agreements with Denmark, the Faroe Islands, and Greenland. Accords awaiting ratification include treaties with Qatar, Bahrain, San Marino, Ghana, and Portugal. A revised treaty with the United Kingdom is also awaiting ratification. A new amendment to the tax treaty between the U.S. and Barbados went into effect on January 1, 2005. The revised tax treaty strengthens measures to prevent U.S. companies from using Barbados as a tax shelter on income earned in the United States.

Offshore businesses may operate either free of income tax (e.g., captive insurance) or with a tax rate from 0.25% to 2.5%. An International Business Company (IBC) must by the terms of its license export 100% of its services or products in order to enjoy the following tax rates on gains and profits:

Gains and Net Profits

Corporate Tax Rate

Up to US$5 million

2.5%

US$5-10 million

2.0%

US$10-15 million

1.5%

Over US$15 million

0.25%

The rate for income over US $15 million was reduced to 0.25% effective income year 2013. In addition, there are no withholding taxes on dividends, interest, royalties or management fees paid to non-residents.

An IBC may import machinery and equipment into Barbados free from certain taxes and customs duties. IBCs in the information services sector have the same maximum tax rate of 2.5% on profits mentioned above, full exemption from import duties on production-related equipment, including computers, full and unrestricted repatriation of capital, profits, dividends, rental of subsidized office space, and training grants to subsidize worker training.

International financial service companies also enjoy several tax incentives. Under the Exempt Insurance Act, a company incorporating with a minimum capital of US$125,000 and at least one Barbadian director is eligible for taxation on profits at 0% for the first 15 years, and thereafter at 8% on the first US$125,000 of taxable income, as well as an exemption from a withholding tax on royalties and exchange control restrictions. Its beneficial shareholders also must not be persons resident in CARICOM. In 1998, legislation allowed companies involved in the international insurance business to register as Qualifying Insurance Companies, entitled to: a tax rate of 1.75%, after deducting a foreign currency earnings allowance, and exemption from withholding taxes and exchange controls.

The International Trust Act allows non-residents to create trusts for the benefit of non-residents, with no minimum capital requirements and no withholding taxes, but subject to 35% tax on profits earned in or remitted to Barbados. Exempt Societies of Restricted Liability, which may not acquire land in Barbados or transact business with CARICOM residents, enjoy certain concessions for up to 30 years, including exemption from exchange controls and withholding tax on dividends, royalties, interest, or other interest paid to non-residents. The European Union's 2001 WTO challenge to the U.S. Foreign Sales Corporations (FSC) has eliminated the exemption to U.S. taxes previously enjoyed on profits derived from FSC export sales.

The Shipping Incentives Act of 1982 provides concessions to shipping companies engaged in the operation of passenger ships, leasing of ships, shipbuilding, maintenance or repair. The concessions include a 15 year exemption on tax and custom duties on materials connected with the shipping activities.

6. Right to Private Ownership and Establishment

It is a constitutional right for nationals and non-nationals to establish and own private enterprises and private property in Barbados. These rights also pertain to the acquisition and disposition of interests in private enterprises.

No industries are closed officially to private enterprise, although the government reserves the right not to allow certain investments. Some activities, such as telecommunications, utilities, broadcasting, banking, and insurance, require a license from the government. There is no percentage, or other restrictions, on foreign ownership of a local enterprise or participation in a joint venture.

The Government of Barbados has been engaged for the past several years in efforts to strengthen the private sector by divesting itself of a number of costly and often unprofitable state-owned enterprises. Since 1992, the government has sold over US$120 million of its commercial property to private investors through the sale of shares in Barbados External Telecommunications (to Cable & Wireless of the U.K.), Barbados Telephone Company (to Cable & Wireless), Barbados Mills (to Archer Daniels Midland), the Arawak Cement Company, Barbados Dairy Industries, Barbados National Oil Company, and Heywoods resorts. After selling its controlling stake in the Barbados National Bank to Republic Bank of Trinidad in 2003, the Government sold its remaining shares in December 2012, giving Republic Bank 100% ownership.

7. Protection of Property Rights

The Barbados Government has improved the legal regime for property rights. Civil law protects physical property and mortgage claims. Barbados is ranked 142 in the Doing Business report for ease of “registering property.” The report noted that the Barbados had not introduced reform measures to improve this process during the last five years.

Intellectual Property

While the legal structures governing intellectual property could be considered strong, enforcement has been weak. Barbados signed the Paris Convention on Intellectual Property Rights (IPR), the Madrid accords, and is a member of the United Nations World Intellectual Property Organization (WIPO). The Government of Barbados adopted a new Copyright Act in August 1998, and amended it in 2004 to provide for tougher penalties. In the early 2000s, the government also approved legislation for Integrated Circuits Topography, Geographical Indications, and Protection against Unfair Competition. In addition, the government revised The Trademark and Industrial Designs Acts to meet world standards. Article 45 of the Protocol Amending the Treaty that established CARICOM commits all 15 members to implement stronger IP protection and enforcement. In spite of this, the Office of the United States Trade Representative added Barbados to the Special 301 Report Watch List in 2013 for concerns over the interception and retransmission of programming by local cable operators without the consent of, and without adequately compensating, U.S. rights holders. Barbados’ slow legal system, inert state of enforcement, and lack of reform contribute to their inclusion.

IPR infringement in most areas is small-scale, although video stores sell and rent pirated DVDs and videos, and other stores sell illegal copies of computer software, designer items, and music. For additional information about treaty obligations and points at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

Contact at Mission:

  • U.S. Embassy Barbados and the Eastern Caribbean
  • Name: Michael Carver
  • Title: Economic/Commercial Officer
  • Telephone Number: (246) 227-4274
  • Email address: CarverMJ@state.gov

Country/Economy Resources:

  • American Chamber of Commerce for Barbados and the Eastern Caribbean
  • Name: Dustin Delany
  • Title: Chairman
  • Telephone: (246) 228-2260
  • Email: dd@amchambec.com

Local attorneys list: http://barbados.usembassy.gov/dominica_attorneys.html

8. Transparency of the Regulatory System

Barbados uses transparent policies and effective laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. These rules are in keeping with international standards. The regulatory system can be slow at times; and at times, not forthcoming on information regarding the refusal of a license.

The International Business Customer Charter provides for the processing of long (usually for no more than five years) and short-term (for six months or less) work permits in two to four weeks if the application is completed in totality. To receive a work permit for senior management, the company must show that a Barbadian national or resident does not possess the skill set to fill the position.

The Revised Treaty of Chaguaramas provides the competition policy applicable to CARICOM States. Member States are required to establish and maintain a national competition authority for facilitating the implementation of the rules of competition. At the CARICOM level, a regional Competition Commission is established to apply the rules of competition in respect of anti-competitive cross-border business conduct. The CARICOM competition policy addresses anti-competitive business conduct, such as agreements between enterprises, decisions by associations of enterprises, and concerted practices by enterprises that have as their object or effect the prevention, restriction or distortion of competition within the Community; and actions by which an enterprise abuses its dominant position within the Community. The Fair Competition Act codified the establishment of the Fair Trading Commission which is responsible for the promotion and maintenance of fair competition and participates in the Caribbean Competition Commission. Sectoral regulation of competition in the telecommunications field is provided for under the Telecommunications Act.

One of the principal regulatory agencies is the Ministry of Finance and Economic Affairs. The Ministry of Finance regulates the Exchange Control Authority of the Central Bank of Barbados, including inward investment, registration of foreign capital, currency accounts, and repatriation of capital and earnings. While local on-shore companies must meet stringent exchange control requirements, government also welcomes investment by non-residents with external sources of financing.

The Financial Services Commission commenced operations in April 2011, under the provisions of the Financial Services Commission Act, and supervises the non-banking financial sector. It is responsible for the examination, supervision and regulation of non-bank financial institutions such as the domestic and offshore insurance industries, the securities industry, credit unions, and pension plan funds.

The Corporate Affairs and Intellectual Property Office (CAIPO) is a department of the Ministry of Industry, International Business, Commerce and Small Business Development and is primarily responsible for keeping and maintaining a wide variety of business and commercial records. In particular, CAIPO administers the Companies Act and other statutes dealing with company affairs. The Companies Act is modeled on the Canada Business Corporations Act, and creates flexibility and simplicity for the incorporation and operation of companies in Barbados.

Companies using or manufacturing chemicals must obtain approval of their environmental and health practices from the Barbados National Standards Institution and the Ministry of Health's Environmental Division.

The Ministry of Commerce on rare occasions institutes price controls, listed in the Official Gazette. The government controls gasoline prices.

Barbados enacted legislation in 2000 to create the Fair Trading Commission (FTC) to provide consumer protection in telecommunication and utility services among other issues. There is no specific antitrust legislation in Barbados.

The Chief Town Planner must approve new construction or changes in land use. Zoning restrictions protect agricultural land, and the government pursues policies to ensure environmental integrity.

The Central Bank must verify real property purchases for non-residents. If a non-resident uses foreign funds and pays for the property in Barbados, the Central Bank will normally endorse the transaction. The sale of property is subject to a 2.5% Property Transfer Tax in addition to a 1% stamp duty. Brokerage and legal fees are additional. The Commissioner of Land Tax charges an annual fee based on the assessed property value. The government taxes hotels on 50% of the improved value at 0.65%, and residential properties are taxed as follows:

  • 0% on the first US$95,000
  • 0.10% on next US$155,000
  • 0.45 % on next US$375,000
  • 0.75 % on excess of US$625,000
  • 0.6% on vacant land

9. Efficient Capital Markets and Portfolio Investment

Barbados has a small stock exchange, an active banking sector, and opportunities for portfolio investment. Local policies seek to facilitate the free flow of financial resources, unless there is a shortage of funds. The government has intervened in the local credit market to control interest rates, limit the volumes of funds available for borrowing, and borrow on the local market. However, the Central Bank has raised interest rates in the past without any government intervention. There are a variety of credit instruments in the commercial and public sectors that local and foreign investors may access.

The government has implemented a continuous review process for legislation in the financial sector in an effort to strengthen and improve the regulatory regime in order to attract and facilitate retention of foreign portfolio investments. A self-assessment undertaken by the Bank Supervision Department of the Central Bank found their on-shore and offshore sectors in general compliance with the Basel Core Principles of Effective Banking Supervision, utilizing the Basel Committee's Core Principles Methodology. The International Financial Services Act, which replaced the Offshore Banking Act in June 2002, incorporates the Basel standards, and provides for on-site examinations of offshore banks. This allows the Central Bank to augment its offsite surveillance system of reviewing anti-money laundering policy documents and analyzing prudential returns.

Under the authority of the Money Laundering and Financing of Terrorism Prevention and Control Act, Cap 129, the government established the Anti-Money Laundering Authority and its operating arm, the Financial Intelligence Unit, in 2000. The Bank Supervision Department of the Central Bank of Barbados, in conjunction with the Anti-Money Laundering Authority in 2001, issued in 2001 the Anti-Money Laundering Guidelines for Licensed Financial Institutions, which were revised in 2006.

The Barbados domestic financial sector consists of six commercial banks and forty-one offshore banks. There are also 35 credit unions and one money remitter. The offshore sector includes 3,945 international business companies, 347 international societies with restricted liability, 261 exempt insurance companies and 45 offshore banks. Starting in 2001, the government required Barbados institutions and legal entities to reveal the identity of beneficiaries receiving dividends and/or interest.

The Securities Exchange Act of 1982 established the Securities Exchange of Barbados (SEB), which was re-incorporated as the Barbados Stock Exchange (BSE) in 2001. The 1982 Act was replaced by the Securities Act, Cap 318A, which removed regulatory responsibility for the securities market activity from the BSE. This Act helped to strengthen the regulatory framework and development of the capital market. In 1997, the BSE began trading corporate stocks and fixed income securities, including government bonds (not commercial paper). Activities on the BSE include regional cross-border trading arrangements for shares listed on the Trinidad and Jamaica stock exchanges.

The BSE operates a two-tier electronic trading system comprised of a Regular Market and a Junior Market. Companies applying for listing on the Regular Market must observe and comply with certain requirements. Specifically they must inter alia have assets of not less than US$500,000 and adequate working capital based on the last three years of their financial performance, as well as three-year projected performance. Companies must also demonstrate competent management and be incorporated under the laws of Barbados or other regulated jurisdiction approved by the Financial Services Commission. Applications for listing on the Junior Market are less onerous, requiring minimum equity of one million shares at a stated minimum value of US$100,000. Reporting and disclosure requirements for all listed companies include interim financial statements, and an annual report and questionnaire. Non-nationals must obtain exchange control approval from the Central Bank of Barbados to trade securities on the BSE.

The BSE has stated its intent to fully immobilize traditional share certificates where clearance and settlement is computerized through the Barbados Central Securities Depository Inc., which is a wholly owned subsidiary of the Barbados Stock Exchange Inc. The Financial Services Commission under the Property Transfer Tax Act can accommodate investors requiring a traditional certificate for a small fee. The Financial Services Commission also regulates Mutual Funds in accordance with the Mutual Funds Act, Cap 320B.

The BSE recorded a downturn in 2013, as reflected in the Composite Index. In January 2014, the BSE introduced new rules in accordance with International Organization of Securities Commission designed to protect investors, ensure a fair, efficient, and transparent market, and reduce systemic risk. Public companies now have only 90 days from the close of their financial year to file audited financial statements with the BSE, 30 days fewer than before. Companies have 60 days to file quarterly statements. Additionally, a fine not exceeding $5,000 has been added to the list of possible penalties for any person under the jurisdiction of the BSE who contravenes or is not in compliance with any of the requirements.

The BSE continued to press on with the establishment of the international securities market in order to raise capital on the Barbados market. This move would offer greater support to the international business community and complement existing bilateral trade agreements. The BSE has already submitted the rules for review by the Financial Services Commission. If approved by regulators, the international trading facility could attract four types of listings: companies that would have their primary listing in Barbados; companies that would use Barbados as a dual or secondary listing; fixed income securities; and mutual funds.

10. Competition from State-Owned Enterprises

Statutory corporations or state owned enterprises in Barbados include National Insurance Scheme and the recently established National Revenue Authority. These companies do not generally pose a threat to investors, as they are not designed for competition. They support government programs such as the national pension plan and the collection of government revenue.

11. Corporate Social Responsibility

In Barbados, producers and consumers alike demonstrate awareness of corporate social responsibility (CSR) principles. The private sector remains heavily involved in public service projects, including environmental, social, and cultural causes. Individuals benefit from business sponsored initiatives when local and foreign owned enterprises pursue volunteer opportunities and make monetary or in kind donations to local causes.

The NGO community, while comparatively small, is involved in fundraising and volunteerism in gender, health, environmental and community projects. The government at times partners with non-governmental organizations (NGO) in activities. The government encourages philanthropy.

12. Political Violence

Barbados has not experienced political violence since riots in the 1930s.

13. Corruption

Corruption is not a major problem in Barbados, but some U.S. companies have reported unfair treatment by Barbados' Customs and Excise Department. Other U.S. companies have reported efforts by political actors to trade political support for payment or partial project ownership.

In 2012, Barbados enacted the Prevention of Corruption Act (2010) which repealed an archaic law from the 1920s. Barbados has not signed and ratified the Inter-American Convention on Mutual Assistance in Criminal Matters and has signed but not ratified the UN Convention on Corruption and the Inter-American Convention against Corruption. Barbados has also signed the CARICOM Mutual Legal Assistance Treaty on Serious Criminal Matters.

14. Bilateral Investment Agreements

Barbados has no bilateral investment treaty with the United States, but has a double taxation treaty and tax information exchange agreement. Barbados has bilateral investment treaties with Canada, China, Cuba, Germany, Italy, Mauritius, Switzerland, the U.K., and Venezuela. Bilateral investment treaties with Luxembourg and Ghana are awaiting ratification.

Caribbean Community (CARICOM)

The Treaty of Chaguaramas established CARICOM in 1973 to promote economic integration among its fifteen Member States. Investors operating in Barbados are given preferential access to the entire CARICOM market. The Revised Treaty of Chaguaramas goes further to establish the CARICOM Single Market and Economy (CSME), by permitting the free movement of goods, capital and labor within CARICOM States.

Economic Partnership Agreement (EPA)

The Economic Partnership Agreement (EPA) was concluded between the CARIFORUM States and the European Community and its Member States. The EPA is designed to replace the now expired transitional trade regime of the Cotonou Agreement. The overarching objectives of the EPA are to alleviate poverty in CARIFORUM, to promote regional integration and economic cooperation and to foster the gradual integration of the CARIFORUM states into the world economy by improving their trade capacity and creating an investment-conducive environment. The Agreement promotes trade related developments in areas such as competition, intellectual property, public procurement, the environment, and protection of personal data.

Caribbean Basin Initiative (CBI)

The objective of the Caribbean Basin Initiative is to promote economic development through private sector initiative in Central America and the Caribbean islands by expanding foreign and domestic investment in non-traditional sectors, diversifying CBI country economies and expanding their exports. It permits duty free entry of products manufactured or assembled in Barbados into markets of the United States.

Caribbean / Canada Trade Agreement (CARIBCAN)

CARIBCAN is an economic and trade development assistance program for Commonwealth Caribbean countries in which Canada provides duty free access to its national market for the majority of products which originate in Commonwealth Caribbean countries.

15. OPIC and Other Investment Insurance Programs

OPIC provides financing and political risk insurance to viable private sector projects, helps U.S. businesses invest overseas, and fosters economic development in new and emerging markets.

16. Labor

At the end of 2013, Barbados' labor force was approximately 142,900 distributed in the following sectors: commerce, tourism, government, manufacturing, construction, agriculture, and fishing. This is expected to rise with the ongoing public sector retrenchments and consequent private sector layoffs. The total average unemployment rate toward the end of 2013 was approximately 11.6%.

Wages in Barbados are among the highest in the Caribbean. Minimum wages for only a few categories of workers are administratively established and enforced by law. The minimum wage for shop assistants, US$3.13 per hour, is only marginally sufficient to meet minimum living standards. The Ministry of Labor recommended that companies use this as the de facto minimum wage, and most employees earned more than the minimum wage. The Labor Department within that ministry was charged with enforcing the minimum wage. The standard legal workweek is 40 hours in five days, and the law requires overtime payment for hours worked in excess. The law prescribes that all overtime must be voluntary. Workers are guaranteed a minimum of fourteen days of annual leave and are covered by unemployment benefits legislation and National Insurance (social security) legislation.

Trade unions, and the leaders of the trade union movement, enjoy a strong voice in the labor and economic affairs of the country through their participation in Barbados' Social Partnership, a tri-partite consultative mechanism. Approximately 25 to 30% of the labor force belongs to trade unions, but this small percentage belies the power and importance of unions in Barbados; all key sectors are unionized, with all private and public employees in agriculture, tourism, and at the airport and seaport belonging to a single union confederation.

The major unions recognize the advantages accruing to Barbados from foreign investment and foreign expertise, and they are generally flexible and accommodating in their dealings with employers. However, local labor leadership is sensitive when it perceives a lack of respect for Barbadian laws and customs by large, visible foreign employers. It is generally cooperative with management in unionized shops.

Barbados does not have labor legislation that mandates a legal process necessary for unions to achieve status as bargaining agents, and employers have no legal obligation to recognize unions under the Trade Act of 1954, but most employers do so when a majority (usually 50% plus one) of their employees desire representation. While there is no specific law that prohibits discrimination against union activity, the courts provide a method of redress for employees who allege wrongful dismissal. The courts commonly awarded monetary compensation but rarely ordered reemployment.

The law provides for the right to strike, and workers exercised this right in practice. All private and public sector employees are permitted to strike, but essential workers may strike only under certain circumstances and after following prescribed procedures. Early contact and rapport with Labor Ministry officials and union leaders by foreign investors may be helpful in terms of fostering labor harmony.

The law provides for a minimum working age of 16, and this provision generally was observed in practice. Compulsory primary and secondary education policies reinforced minimum age requirements. The Labor Department had a small cadre of labor inspectors who conducted spot investigations of enterprises and checked records to verify compliance with the law. These inspectors may take legal action against an employer who is found to have underage workers. Additionally, legislation to address termination of employment and benefits and to prohibit sexual harassment is pending. In April 2013, the Employment Rights Act came into force which regulates the relationship between the employer and the employee particularly in such areas as a written statement of particulars of payment, the right to a written statement of employment particulars, hiring and dismissal. The Act also establishes an Employment Rights Tribunal to adjudicate on disputes over the new rights, though complaints must first be referred to the Chief Labor Officer (CLO) for an opportunity for a settlement to be reached by conciliation. The Chief Labor Officer is also given more power under the new Act.

Implementing regulations for the 2005 Occupation Health at Work Act became effective in January 2013. The law requires that in certain sectors firms employing more than 50 workers create a safety committee that could challenge the decisions of management concerning the occupational safety and health environment. The Labor Department also enforced health and safety standards and followed up to ensure that management corrected problems cited. Trade union monitors identified safety problems for government factory inspectors to ensure the enforcement of safety and health regulations and effective correction by management. The Labor Department's Inspections Unit conducted several routine annual inspections of government-operated corporations and manufacturing plants. Workers had the right to remove themselves from dangerous or hazardous job situations without jeopardizing their continued employment.

17. Foreign Trade Zones/Free Ports

There are no foreign trade zones or free ports in Barbados.

18. Foreign Direct Investment and Foreign Portfolio Investment Statistics

TABLE 2: Key Macroeconomic data, U.S. FDI in host country/economy

 

Host Country Statistical source*

USG or international statistical source

USG or international

Source of data

(Source of Data: BEA; IMF; Eurostat; UNCTAD, Other)

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) (Millions U.S. Dollars)

Insert (2012)

Amount

4.267

Insert (2012)

Amount

4.225

http://data.worldbank.org/country/barbados

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international

Source of data: BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country (Millions U.S. Dollars, stock positions)

Insert

N/A

Amount

N/A

Insert (2012)

Amount

13, 082

U.S. Bureau of Economic Analysis

Host country’s FDI in the United States (Millions U.S. Dollars, stock positions)

Insert

N/A

Amount

N/A

Insert (2012)

Amount

705

U.S. Bureau of Economic Analysis

Total inbound stock of FDI as % host GDP (calculate)

Insert

(N/A)

Amount

N/A

Insert (2012)

Amount

8.4

 

* Provide sources of host country statistical data used.

TABLE 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

4,292

100%

Total Outward

930

100%

United Kingdom

1,975

46%

Canada

313

34%

Canada

544

13%

United States

219

24%

Luxembourg

539

13%

Trinidad and Tobago

173

19%

Trinidad and Tobago

274

6%

St. Lucia

87

9%

St. Lucia

252

6%

Jamaica

56

6%

"0" reflects amounts rounded to +/- USD 500,000.

TABLE 4: Sources of Portfolio Investment

Portfolio Investment Assets

Top Five Partners (Millions, US Dollars)

Total

Equity Securities

Total Debt Securities

World

18,816

100%

World

4,426

100%

World

14,390

100%

United States

9,635

51%

Cayman Islands

1,110

25%

United States

9,036

63%

Canada

1,593

8%

Canada

974

22%

Australia

1,376

10%

Australia

1,379

7%

Jamaica

762

17%

Canada

619

4%

Cayman Islands

1,131

6%

United States

599

14%

Netherlands

446

3%

Jamaica

765

4%

Bahamas, The

400

9%

Sweden

442

3%

19. Contact Point at Post for Public Inquiries

  • NAME: Jonelle Watson
  • TITLE: Economic and Commercial Affairs
  • ADDRESS OF MISSION/AIT: U.S. Embassy Barbados and the Eastern Caribbean
  • TELEPHONE NUMBER: 246-227-4052
  • EMAIL ADDRESS: WatsonJM@state.gov