2011 Investment Climate Statement
Bureau of Economic, Energy and Business Affairs
March 2011
Report

Openness to Foreign Investment

The Government of Antigua and Barbuda, strongly encourages foreign direct investment, particularly in industries that create jobs, earn foreign currency, and have a positive impact on its citizens. The government has a number of incentive programs in place to attract foreign investment, and is a member of the Organization of Eastern Caribbean States including the Eastern Caribbean Central Bank, the Eastern Caribbean Securities Exchange and the Eastern Caribbean Regulatory Commission. Antigua and Barbuda is one of the more prosperous states in the Eastern Caribbean.

The service sector holds large potential for growth, especially in the areas of tourism, financial services and information technology. Additional sectors which have room for growth include health and wellness, business support services, education, manufacturing and logistics. Currently, tourism and the financial service sector are the largest sectors of the economy.

All potential investors must submit their proposals for review by the Antigua and Barbuda Investment Authority to ensure that the project is consistent with the national interests and provides economic benefits to the country. Antigua and Barbuda foreign direct investment policy is to attract FDI into priority sectors, and advise the Government on the formation and implementation of policies and programs to attract investment within Antigua and Barbuda.

The country has a strong judicial system which holds up the sanctity of contracts and prevents unwarranted discrimination towards foreign investors. More information regarding the structure of the judiciary system is below.

Trade Agreements

Antigua and Barbuda is a beneficiary of the Caribbean Basin Initiative, CARIBCAN, and Lome agreements qualifying it for trade concessions with the United States, Canada, and the European Union. It is also a member of the Caribbean Community and Common Market (CARICOM) along with the CARICOM Single Market and Economy (CSME). It is also a member of GATT and WTO.

The Government will treat foreign investors and local investors equally with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investment in its territory.

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.

Measure

Year

Index/Ranking

TI Corruption Index

N/A

N/A

Heritage Economic Freedom

N/A

N/A

World Bank Doing Business

2011

64

MCC Government Effectiveness

N/A

N/A

MCC Rule of Law

N/A

N/A

MCC Control of Corruption

N/A

N/A

MCC Fiscal Policy

N/A

N/A

MCC Trade Policy

N/A

N/A

MCC Regulatory Quality

N/A

N/A

MCC Business Start Up

N/A

N/A

MCC Land Rights Access

N/A

N/A

MCC Natural Resource Mgmt

N/A

N/A

Conversion and Transfer Policies

Companies registered in Antigua and Barbuda have the right to repatriate all capital royalties, dividends and profits free of all taxes or any other charges on foreign exchange transactions. As a member of the OECS, the Antigua and Barbuda foreign exchange system is fully liberalized. Therefore, as a member of the OECS, Antigua and Barbuda has made provisions to remove the exchange controls so as to facilitate the provision of service, movement and establishment.

Expropriation and Compensation

According to the Investment Authority Act of 2006, investments in Antigua and Barbuda will not be nationalized, expropriated or subject to indirect measures having an equivalent effect, except where any such measures are adopted for the public good and in accordance with due process of law, on a non-discriminatory basis and accompanied by prompt, adequate and effective compensation. Compensation in such cases will amount to the fair market value of the expropriated investment immediately before the expropriation or the impending expropriation became public knowledge, whichever is earlier. It shall include interest from the date of dispossession of the expropriated property until the date of payment. Compensation is required to be paid without delay, in convertible currency, and be effectively realizable and freely transferable. However, in at least one pending case, there has been delay of over six months and continuing in payment of compensation.

Dispute Settlement

Antigua and Barbuda bases its legal system on the British common law system. The Attorney General, the Chief Justice, Puisne Judges, and Magistrates administer justice in the country. An appeal may be taken to the organization of Eastern Caribbean States Court of Appeal, and the final court of appeal for Antigua and Barbuda is the Judicial Committee of the Privy Council in the United Kingdom.

The United States and Antigua and Barbuda 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 United States and Antigua and Barbuda recently brought a case before the WTO that was resolved in favor of Antigua.

Antigua and Barbuda is also a member of the International Center for the Settlement of Investment Disputes (ICSID), also known as the Washington Convention.

Performance Requirements and Incentives

Antigua and Barbuda has many incentives for investors. The legal basis for Antigua and Barbuda’s tax holidays for investors is codified on the Fiscal Incentives Act. The length of the ‘holiday’ depends on the amount of value added in Antigua and Barbuda. The definition of local value added is the amount realized from the sales of the product over a continuous 12 months with the exception of a number of items which include but are not limited to, wages and salaries paid to foreign nationals, profits and dividends distributed to foreign nationals, interest, management charges and other income payments to non-residents.

Incentives are also based on the size of capital investment and the number of persons who will be employed as a result of the project. The list of incentives is provided below:

  • Exemption from or reduction of payment of duty on the importation or purchase of raw materials, building materials, furniture, fixtures, fittings, appliances, machinery, plant and equipment for use in the construction and operation of the business
  • Exemption from or reduction of duty on the importation or purchase of vehicles for use in the operation of the business
  • Reduction of property tax in respect of land and buildings used in the operation of the business
  • Exemption from or reduction of payment of income tax under the Income Tax Act
  • Reduction of Stamp duty payable by the purchaser or transferee, and by the vendor or transferor of land
  • Reduction of stamp duty under the Non-Citizens Land Holdings Regulation Act
  • Exemption from or reduction of withholding tax on dividends, etc. under the Income Tax Act

While there are no formal performance requirements, government officials will more likely approve investments they believe will create jobs and increase exports and foreign exchange earnings. There are no requirements for participation either by nationals or by the Government in foreign investment projects.

There is no requirement that enterprises must purchase a fixed percentage of goods from local sources, but the Government encourages local sourcing.

Right to Private Ownership and Establishment

Foreign investors may hold up to 100% of an investment, and the entrepreneur needs 26 days from start to finish to transfer the title on a piece of property. In June 1995, the government introduced a permanent residence scheme to encourage a limited number of high net worth individuals to establish tax residency in Antigua and Barbuda. As residents all their income would be free of local tax.

To obtain a permanent residence certificate an applicant must: maintain a permanent place of abode in Antigua and Barbuda; obtain an alien landholding license costing five percent of the property value; pay a purchaser’s stamp duty of 2.5 percent; pay an annual levy of US $20,000 per year; reside in Antigua and Barbuda for not less than 30 days a year.

Protection of Property Rights

Antigua and Barbuda 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). Article 45 of the Protocol Amending the Treaty that established CARICOM commits all 15 members to implement stronger IP protection and enforcement.

Under current legislation, patent, trademark and industrial designs are protected in Antigua and Barbuda if they are registered in the United Kingdom. As regards the efficiency of contract enforcement, in Antigua and Barbuda it takes 297 days from the time a claim is submitted until a judgment is enforced. Antigua and Barbuda is among the global best performers in terms of cost of going through bankruptcy, where the cost of bankruptcy proceedings amounts to one percent of the value of the estate.

Transparency of Regulatory System

The laws, regulations, administrative practices and procedures of general application, and judicial decisions that affect or pertain to investments or investors in Antigua and Barbuda are published. Where the government establishes policies that affect or pertain to investments or investors which are not expressed in laws and regulations or by other means, the Government will make them publicly available.

There are several laws, regulations and governing bodies which regulate the investment climate in Antigua and Barbuda, and the government works to make them transparent. The Ministry of Finance and Economy has a critical role in monitoring investment. The Investment Authority Act of 2006 established the Antigua and Barbuda Investment Authority, which is responsible for monitoring and reviewing all investments in Antigua and Barbuda.

Financial Services

Antigua and Barbuda's international financial services sector began with the enactment of the International Business Corporations Act CAP 222 ("the IBC Act") in 1982. Initially, the IBC Act was administered by the Ministry of Finance. By 1990, the country's financial services industry had grown significantly and the government, encouraged by this growth, sought to position the country as a premier international financial centre. Part of the repositioning strategy was the enactment of anti-money laundering legislation enshrined in the Money Laundering Prevention Act 1996 ("the MLP").

While Antigua and Barbuda’s Financial Services industry has generally been regarded as transparent, in 2009 it was tested with the failure of a major bank. Among various allegations, currently the subject of litigation, it has been alleged that a former key regulatory official was not completely transparent while this bank was in operation. Such lack of transparency is believed to have contributed to the bank’s failure and a loss of millions of dollars for U.S. investors.

Standards

The Antigua and Barbuda Bureau of Standards is a statutory body established under the Standards Act of 1987 to prepare and promulgate standards in relation to goods, services, processes and practices. The Bureau is currently preparing standards which are relevant to the economy of Antigua and Barbuda. In so doing, it will provide a broad base of technical, advisory and monitoring services for retailers, manufactures and service providers.

Additionally, the 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. No legislation is yet in operation to regulate competition generally. However, sectoral regulation of competition in the telecommunications field is provided for under the Telecommunications Act.

Efficient Capital Markets and Portfolio Investment

Antigua and Barbuda is a member of the OECS, and as such, it is also a member of the Eastern Caribbean Securities Exchange (ECSE). The ECSE is a regional securities market established by the Eastern Caribbean Central Bank and licensed under the Securities Act of 2001- a uniform regional body of legislation governing securities market activities to facilitate the buying and selling of financial products for the eight member territories. Antigua and Barbuda is a member of this stock exchange, and is open to portfolio investment.

Competition from State-Owned Enterprises

The state owned enterprises in Antigua and Barbuda include the State Insurance Corporation and the Medical Benefits Schemes. These companies do not generally pose a threat to investors, and are sectors where the government encourages investment.

Corporate Social Responsibility

Investors in Antigua and Barbuda are required to recognize the economic and social objectives and the policies and priorities of the Government as well as the goals of the CARICOM Single Market and Economy (CSME). Some of these goals include, observing workers’ rights relating to collective bargaining and safeguard the environment. They are not permitted to engage in unethical practices or corrupt activities. It should particularly be noted that the Government will not waive or otherwise derogate from its domestic environment laws, nor will it waive or otherwise derogate from its domestic labor laws in order to encourage the establishment, acquisition, expansion or retention of an investment in its territory.

Political Violence

Antigua and Barbuda does not have a history of political violence.

Corruption

Allegations of corruption against government officials in Antigua and Barbuda are fairly common; however, none of the investigations of these allegations has resulted in confirmed findings. The law provides criminal penalties for official corruption, and the government generally implements these laws effectively. Antigua and Barbuda also has a Special Task Force on Crime and Corruption, which was established after the 2004 elections.

The Integrity in Public Life Act requires public officials to disclose all income, assets (including those of spouses and children), and personal gifts while in public office. The law established an Integrity Commission, appointed by the governor general, to receive and investigate complaints regarding noncompliance with or contravention of any provisions of this law or the Prevention of Corruption Act.

The Freedom of Information Act gives citizens the statutory right to access official documents from public authorities and agencies, and it created a commissioner to oversee the process. In practice citizens have found it difficult to obtain documents, possibly due to government funding constraints rather than obstruction.

Antigua and Barbuda is party to the Inter-American Convention Against Corruption, and recently signed the follow-up mechanism.

Bilateral Investment Agreements

Antigua and Barbuda has no bilateral investment treaty with the United States; although, the country has bilateral investment treaties with Germany and the United Kingdom. Antigua and Barbuda has also signed free trade agreements with Costa Rica and the Dominican Republic, but they have not entered into force. It has double taxation agreements with Denmark, Norway, Sweden, and the United Kingdom. Antigua and Barbuda is also party to the following:

Caribbean Community (CARICOM)

The Treaty of Chaguaramas established CARICOM in 1973. Its purpose is to promote economic integration among its fifteen (15) Member States. Investors operating in St. Vincent & the Grenadines 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.

Organisation of Eastern Caribbean States (OECS)

The Treaty of Basseterre establishes the Organisation of Eastern Caribbean States (OECS). The OECS consists of nine Member States of Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines with associate members being Anguilla and the British Virgin Islands. The purpose of the Treaty is to promote harmonization among Member States in areas concerning foreign policy, defense and security, and economic affairs.

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, and 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 Antigua and Barbuda into markets of the USA.

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.

OPIC and other Investment Insurance Programs

In 1999, the U.S. Government's Overseas Private Investment Corporation (OPIC) signed with Citibank to establish a USD $200 million Investment Facility for the Caribbean and Central America, as one means of encouraging investment and stimulating economic development. The Caribbean Development Bank, which is based in Barbados, administers this program. 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.

Additionally, in 2004, OPIC approved an additional investment guaranty of up to $100 million to Citibank to establish a lending facility that will enable Citibank to expand its activity in Central America and the Caribbean, including lending to small businesses. Under this facility, Citibank and OPIC share credit risk in loans, and OPIC provides clearances on workers’ rights and environmental issues for each downstream loan.

Labor

Antigua and Barbuda has a labor force of about 30,000 persons with a literacy rate of approximately 90%. The law stipulates a minimum working age of 16 years, which corresponds with the provisions of the Education Act. In addition persons under 18 years of age must have a medical clearance to work and may not work later than 10 p.m. The Ministry of Labor, which is required by law to conduct periodic inspections of workplaces, effectively enforces this law. The labor commissioner's office also has an inspectorate that investigates exploitive child labor matters.

Workers have the right to associate freely and to form labor unions. Approximately 60 percent of workers in the formal sector belong to a union. Unions are free to conduct their activities without government interference. Labor unions form an important part of the base of both political parties.

The labor code provides for the right to strike, but the Industrial Relations Court may limit this right in a given dispute. Workers who provide essential services (including bus, telephone, port, petroleum, health, and safety workers) must give 21 days' notice of intent to strike. Once either party to a dispute requests that the court mediate, strikes are prohibited under penalty of imprisonment. Because of the delays associated with this process, unions often resolve labor disputes before a strike is called. In addition an injunction may be issued against a legal strike when the national interest is threatened or affected. Labor law prohibits retaliation against strikers, and the government effectively enforces those laws. The labor code provides that the minister of labor may issue orders, which have the force of law, to establish a minimum wage. Tripartite consultations were held when the minimum wage was set. The minimum wage was EC$7.00 ($2.59) an hour for all categories of labor, which provided a barely adequate standard of living for a worker and family. In practice the great majority of workers earned substantially more than the minimum wage.

The law provides that workers are not required to work more than a 48-hour, six-day workweek, but in practice the standard workweek was 40 hours in five days. Laws provide for overtime work in excess of the standard workweek; excessive or compulsory overtime is not specifically prohibited.

Foreign Trade Zones/Free Ports

The Antigua and Barbuda Free Trade and Processing Zone was established by an Act of Parliament in 1994, and is based on the legal foundation enacted twelve years earlier, which set guidelines for the establishment of International Business Corporations in Antigua and Barbuda. The Free Zone is administered by a Commission, empowered by the Free Trade and Processing Zone Act No. 12 of 1994, to function as a private enterprise.

The Free Trade and Processing Zone is part of an initiative undertaken by the Government of Antigua and Barbuda to diversify the economy of the State. The organization is mandated to attract investment in the areas deemed to be of priority by the Government for the economic development of Antigua and Barbuda.

Foreign Direct Investment Statistics

According to the 2009 World Investment Report published by the World Bank, Antigua and Barbuda had US $139 Million in FDI inflows.

Major US Investors

American Airlines/American Eagle, Chevron, Texaco, Federal Express, MetLife, Western Union. Some of the franchises from major U.S. companies include, Ace Hardware and Kentucky Fried Chicken.

An American Chamber of Commerce does not operate in Antigua and Barbuda.

For further information, please contact the Economic/Commercial Section at the U.S. Embassy.

Gregory Floyd
Commercial Officer
US Embassy, Bridgetown, Barbados
Tel: 246-277-4274
floydga@state.gov

Jonelle M. Watson
Commercial Assistant
US Embassy Bridgetown, Barbados
Tel: 246-277-4052
watsonjm@state.gov

Contacts for Investment Related Inquires

The following are contacts for investment related inquiries:

Antigua and Barbuda Investment Authority
P.O. Box 80, Sagicor Financial, Center
#9 Factory Road, St John’s, Antigua, W.I.
Telephone: 1 268 481 1000/1/2/3
Fax: 1-268-481 1020
Website: http://www.investantiguabarbuda.org/abia/default.aspx

Antigua and Barbuda Financial Services Regulatory Commission
Website: http://www.fsrc.gov.ag/index.asp

Ministry of Finance And Economy
Website: http://www.ab.gov.ag/gov_v2/government/shared/dep_mfinance.html

Web Resources

United States

Foreign Commercial Service, U.S. Department of Commerce:
http://www.buyusa.gov/caribbean/en/; and http://www.export.gov/index.asp

Foreign Agricultural Service, U.S. Department of Agriculture:
http://www.fas.usda.gov/; and http://www.export.gov/fas/fas.asp?pName=mr

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