2013 Investment Climate Statement
Bureau of Economic and Business Affairs
February 2013
Report

Openness to, and Restrictions Upon, Foreign investment

The GOG encourages the establishment and development of new businesses and offers a wide range of incentives to potential investors. All of these incentives and concessions are designed to make investments more profitable. Concessions are available under the Income Tax Act, the Common External Tariff (SRO 42/09), the Property Transfer Act, the Petrol Tax Act and the Customer Service Charge Act. To receive fiscal incentives, applicants are required to submit a complete application form for incentives to the Grenada Industrial Development Corporation accompanied with a business plan and detailed information of the owner(s) and directors of the enterprise to include percentage of interest owned, name, nationality, profession/occupation, business history, criminal history, and other business interest.

Applicants are also required to sign a “shareholders declaration form” to vouch for their bona fides in order to proceed with the investment. Within six weeks of submission of an application for incentives an applicant is advised of the decision declaring the incentives granted. An investor may decide to carry out the project absent the investment incentives.

The judicial system upholds the sanctity of contracts.

Grenada has a generally liberal investment regime. The Investment Promotion Act of 2009, provide incentives for priority industries/sectors as well as priority projects. Priority industries are industries which the Government considers will make substantial contribution to the socio‑economic development of Grenada. These are Tourism, Manufacturing, Agriculture & Agri-Business, Education & Training, ICT Services, Financial Services, Health & Wellness Services, Creative Industries, Energy, and Research & Development. Priority projects are projects which the Government considers will make a significant contribution to national socio‑economic development such as accelerating technology transfer and/or acquisition; enabling technology based capital formation; enhancing foreign exchange savings/earnings; reducing dependence on imported energy; enhancing skills development and skill‑based employment; increasing the sustainable use of local resources; providing incremental economic diversification with significant value‑added; and creating positive linkage between emerging & traditional economic sectors.

There is no economic or industrial strategy that has discriminatory effects on foreign investors, or sectors in which foreign investors are not treated the same as national investors.

However, non-Grenadian investors may be subject to obtaining an Alien Landholding License, and a property transfer tax which levies a 10 percent fee on the purchase of shares in a Grenadian registered company or real estate. In addition the sale of such shares or real estate to non-nationals will attract a property transfer tax of 15 percent payable by the seller. Foreign investors employed in Grenada are subject to annual renewal of a Work Permit. There are no limits on foreign ownership or control. Investors may not invest in or operate Investment Enterprises which are prejudicial to national security or detrimental to the natural environment, public health or the national culture or which contravene the Laws of Grenada. Grenada accepted but has not yet implemented regional obligations on anti-competition concerns.

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

Measure

Year

Index/Rank

TI Corruption Index

2010

70% Percentile

World Bank’s Doing Business Report

2013

100 (down from 97 in 2012)

Standard & Poor’s Sovereign

CCC+/C “negative”

Conversion and Transfer Policies

The Reciprocal Encouragement and Protection of Investment Agreement with the United States protects U.S. investors against performance requirements, restrictions on transfers, and arbitrary expropriation and sets forth procedures for the settlement of disputes. By providing a more open and secure environment for investment, it also promotes private sector development. There have been no recent changes in the Agreement. There is no difficulty in obtaining foreign exchange. There are no restrictions or delays regarding remittances.

Expropriation and Compensation

Under the Constitution, the Government shall not compulsorily acquire or take possession of any investment enterprise, or any asset of an Investor except for a purpose which (a) is in accordance with the laws of Grenada; (b) is on a non-discriminatory basis; (c) is in accordance with the procedures provided by law; (d) provides for prompt payment of adequate and effective compensation together with interest from the date of acquisition or taking possession of the investment enterprise or asset to the date of payment at the commercial bank rate on loans to the corporate sector; and (e) provides for the right of access to the High Court by any person claiming such compensation for the determination of any interest in or right over the investment enterprise or asset and the amount of compensation. There have been no expropriation actions against foreign investors in recent times, although local Grenadians have had their lands expropriated to permit foreign investment. There are no special sectors which may be more at risk of expropriation than another. There are no laws forcing local ownership.

Dispute Settlement

Grenada is a constitutional monarchy within a Parliamentary System based on the British model. The executive power is vested in the Prime Minister and his Cabinet, who have responsibility for concluding and signing trade treaties and trade-related agreements with foreign countries.

The Judicial System is based on English Common Law.

The judiciary has four levels. Magistrates Court deals with minor civil and criminal cases, while the High Court deals with cases falling under the different Acts of Parliament. Appeals from the Magistrates Court are heard by the High Court, while appeals from the High Court are heard by the Eastern Caribbean Court of Appeal. The Privy Council in London is the final Court of Appeal once all appeals have been exhausted at the local and regional levels.

Grenada is a member of the International Centre for Settlement of Investment Disputes (ICSID). In 2009 and again in 2010, ICSID ruled in Grenada’s favor in a 2005 dispute involving oil exploration licenses provided to an American investor, RSM Production. The 2009 ruling is at present the object of a stayed annulment proceeding.

In the event of disputes between foreign parties within an investment, or between foreign investors and Grenadian parties, or between Grenadian partners, or between the investors and the GOG with respect to an enterprise, the disputants shall first seek to settle their differences through consultation or mediation to reach an amicable settlement. In the event that the disputants fail to resolve the matter, they may then: (a) submit their dispute to arbitration under the Arbitration Act No 2 of 1989; (b) invoke the jurisdiction of the courts of Grenada; (c) invoke the jurisdiction of the Caribbean Court of Justice; or (d) adopt such other procedures as provided for in the Articles of Association of the investment enterprise. There is generally no government interference in the court system. While occasionally such government interference has been alleged, it has not been proven to date. A more common problem in Grenada’s judicial system is lengthy and/or incomplete trials. These are dragged out by the non-appearance of required witnesses or attorneys resulting in multiple continuances. It is exceedingly rare that a judge holds anyone in contempt for ignoring a summons and many trials are eventually dropped because of the no-shows.

Performance Requirements/Incentives

The Government does not maintain any measures alleged to violate the WTO’s TRIMs text.

The legislation of Grenada provides a package of benefits and concessions for specific activities. Incentives available include tax waiver, import duty exemptions, repatriation of profits and withholding tax exemptions. Incentives that are trade-related are notified under Article 25 and Article 27 of the Agreement on Subsidies and Countervailing Measures. Concessions are available under the Income Tax Act, the Common External Tariff (SRO 42/09), the Property Transfer Act, the Petrol Tax Act and the Customer Service Charge Act. Incentives include accelerated depreciation (10% on plant & machinery; 2% on industrial building); investment allowance (100% write off on total investment); carry forward of losses for 3 years, reductions in the property transfer tax, 100% relief from customs duties on plant, equipment & raw materials; and deductible expenditure incurred for training, research and development. Other incentives include no restrictions on foreign ownership; no restrictions on foreign currency transactions; no restrictions on the repatriation of profits, capital, and dividends. Certain incentives may be linked to the site of investment, the number of persons employed, or other factors. There has been no instance in which the GOG has had to review an approved investor for non-compliance with incentive requirements.

There are no performance requirements linked to investments. The Reciprocal Encouragement and Protection of Investment Agreement with the United States protects U.S. investors against performance requirements. An investment enterprise may be wholly owned by either foreign or domestic investors. There are no requirements that foreign investors purchase from local sources; that Grenadian nationals own shares in a foreign investment; that foreign equity in a project be reduced over time; or that technology be transferred.

Right to Private Ownership and Establishment

Investors may purchase or lease privately owned land and dispose of or transfer their interests in the land under the Alien Land Holding Licence Act and the Property Transfer Tax Act, No 37 of 1998. Investors may hold State lands by grant or lease from the State.

Foreign and domestic private entities may freely establish, acquire, own and dispose of interests in business enterprises.

Protection of Property Rights

The Constitution and Investment Code Incentives Act protect personal property including investments and the property of investors. Grenada recognizes and enforces secured interests in moveable and real property. The legal system protects the acquisition and disposition of all property rights.

The intellectual property rights of investors and investment enterprises, such as, but not limited to, patents, trademarks, brand names, and copyrighted materials in printed, recorded, or electronic format are guaranteed by the Patents Act (Cap 227 of the Consolidated Laws of Grenada) or the Trade Marks Act (Cap 284 of the Consolidated Laws of Grenada), or the Copyright Act Cap No 32 of 1988 (Cap 67 of the Consolidated Laws of Grenada). Grenada is a member of the World Intellectual Property Organization (WIPO), the Paris Convention, the Berne Convention and the Patent Cooperation Treaty.

Domestic legislation regarding intellectual property protection has not yet been amended to bring it in line with the TRIPs Agreement.

Administration of intellectual property laws in Grenada is under the responsibility of the Ministry of Legal Affairs.

The registration of patents, trademarks and copyright is done at the Corporate and Intellectual Property Office. Grenada operates a re-registration system based on registration in the United Kingdom.

Grenada’s system for registering patents is governed by the Registration of the United Kingdom Patents Act, Cap. 283. In accordance with the legislation, based on Section 91 of the U.K.’s Patents and Design Act of 1907, any patent holder in the United Kingdom may apply within three years from the date of issue of the patent to have it registered in Grenada.

Under the Registration of the United Kingdom Trade Marks Act, Cap 284, any person being registered as the proprietor of a trademark in the United Kingdom may apply at any time during the existence of the registration to have it registered in Grenada.

Transparency of the Regulatory System

The Government of Grenada recognizes that, for investors, transparent information on rules and regulations dealing with investment, their formulation and their implementation are critical. The Investment Act promotes transparency by authorizing key sectors for which the government may (but need not) offer investment incentives, streamlining processes, standardizing treatment of investors, defining investment rights, providing procedural guarantees and reducing the scope for political influence in business negotiation. The Government also promotes investments by consulting with interested parties; simplifying and codifying legislation; using plain language drafting; developing registers of existing and proposed regulation; expanding the use of electronic dissemination of regulatory material; and by publishing and reviewing administrative decisions. While these steps help deliver clarity to investors, there are occasions where consultations are not broad enough to generate public awareness of particular proposals or where draft legislation does not receive a public hearing.

Tax, labor, environment, health and safety, and other laws and policies do not distort nor impede investment, though the laws are not always applied in a consistent manner. In theory, bureaucratic procedures, including those for licenses and permits are sufficiently streamlined and transparent. In practice, local authorities recognize that the implementation of procedures is inconsistent, that much red tape remains to be cut, and that greater emphasis on service with training to increase the work force’s capabilities is needed. There are no informal regulatory processes managed by non-governmental organizations or private sector associations.

Legal, regulatory and accounting systems are generally transparent and consistent with international norms.

Efficient Capital Markets and Portfolio Investment

Grenada has policies to facilitate free flow of financial resources. Its currency, the Eastern Caribbean dollar, has a fixed exchange rate established by the regional Eastern Caribbean Central Bank. Foreign personnel of investment enterprises and their families may also repatriate their earnings, after paying of Grenadian personal income tax and all other taxes due. The GOG encourages foreign investors to seek investment capital from financial institutions chartered outside Grenada due to the short supply of capital within the country rather than tap the local financial market or access low-interest rate loans or government grants directed towards local borrowers. However, exceptions occur. Foreign investors are more likely to tap local financial markets for working capital.

The private sector has access to the limited number of credit instruments available. Grenadian stocks are traded on the Eastern Caribbean Securities Exchange (ECSE), whose limited liquidity may pose difficulties in conducting transactions. The Grenada Authority for the Regulation of Financial Institutions (GARFIN) establishes a regulatory system for encouraging and facilitating portfolio investment. While the estimated total assets of the largest banks are US 1.03 billion, information is not available on the percentage of the asset base deemed to be non-performing. Grenada has not experienced cross-shareholding or hostile takeovers.

Competition from State-Owned Enterprises (SOEs)

Grenadian state-owned enterprises are established by Acts of Parliament, feature a Board of Directors named by the Government, and are answerable to particular ministries. Twenty five of 28 authorized SOEs are operational. They secure credit on commercial terms from commercial banks. SOEs submit annual reports to the Government Audit Department and are subject to audits shared with their parent ministries. SOEs manage transportation infrastructure (ports and airports), housing, schools, hospitals, and cement production, investment promotion and small business development among other functions.

Corporate Social Responsibility (CSR)

Producers and consumers are familiar with the concept of CSR. Businesses frequently sponsor public entertainment events, cultural showings, and charitable causes. The economic downturn and the Haitian earthquake both spurred the private sector to new initiatives linked to CSR. Firms that promote CSR are more favourably viewed by the community. There is little familiarity with international CSR standards.

Political Violence

Grenada is a politically stable country with little or no political violence. Political infighting can negatively impact investment immediately preceding or following a change in government. On the whole, investors in Grenada benefit from a stable economy; developed infrastructure, relatively low crime rate, and generally good quality of life. Several sectors, including agriculture, health, and tourism, remain underdeveloped.

Corruption

Grenada is party to the Inter-American Convention against Corruption. According to the World Bank's worldwide governance indicators through 2008, government corruption was a problem. In March 2007, Parliament passed the Integrity in Public Life Act, the country's first anticorruption bill. It requires all public servants to report their income and assets for review by an Integrity Commission. The Commission became operational in February 2010. The Office of Ombudsman was established by the Ombudsman Act of 2007, and the country’s first Ombudsman since independence was named in September, 2009. As of December 2010, the Ombudsman received approximately 69 complaints, six of which have been solved, twenty six investigations are ongoing, and the rest either discontinued, beyond judication or referred.

Bribery is illegal in Grenada. Grenadian officials take allegations seriously. Corruption allegations may be handled by a variety of institutions, including the Ombudsman, the Financial Intelligence Unit of the Ministry of National Security, the Attorney General and the Department of the Public Prosecutor. The Financial Intelligence Unit housed within the Ministry of National Security investigated anonymous allegations of corruption against the Minister of Finance, concluding that they were based on forged documents.

Corruption was also alleged in the 2010 RMS trade complaint against Grenada made before, and rejected by, ICSID, as noted above. Allegations of corruption were aired in the course of the 2007and 2013 election campaigns. Grassroots organizations are vocal in serving as whistle-blowers for possible instances of corruption.

Bilateral Investment Agreements

Bilateral Investment Agreements established between Grenada and the following countries are designed to encourage and protect international investments and to ensure that investors receive fair, equitable, and nondiscriminatory treatment.

Reciprocal Encouragement and Protection of Investment with the United States – The agreement protects U.S. investors against performance requirements, restrictions on transfers, and arbitrary expropriation and sets forth procedures for the settlement of disputes. By providing a more open and secure environment for investment, it also promotes private sector development.

Investment Protection and Promotion Agreement with the United Kingdom – The agreement encourages British investor confidence by setting high standards of investor protection applicable in international law. Key elements include provisions for equal and non-discriminatory treatment of investors and their investments, compensation for expropriation, transfer of capital and returns and access to independent settlement of disputes.

OPIC and Other Investment Insurance Programs

Grenada’s accession to the Overseas Private Investment Corporation (OPIC) entered into force on June 27, 1968. A current OPIC project provided insurance in 1994 to a USD 7.5 million transaction between the Grenada Electricity Services Ltd (GRENLEC) and WRB Enterprises. Grenada is a member of the Multilateral Investment Guarantee Agency (MIGA).

Labor

Grenada has signed and ratified all of the International Labor Organization’s undertakings and has enshrined these rights in its labor laws, including the Labour Relations Act No.1 of 1999 and the Employment Act No. 1 of 1999. Grenadian law upholds the right of workers to be represented by a trade union of their choice. There are no restrictions on the activities of trade unions as long as they operate within the parameters set out by the local law. The majority of the workforce is unionized and the labor relations atmosphere on the island is generally stable. The increase in prices of food and other basic items as a result of higher oil prices coupled with the global economic downturn will impact wage and salary negotiations, increasing the potential for strikes. In accordance with the Trade Union Recognition Act No 29 of 1979 (Cap 325 of the Consolidated Laws of Grenada), investors shall grant union representation at any site of employment if the majority of their employees indicate the desire for union representation and investment enterprises shall contribute to the social insurance and welfare programs for their workers in accordance with the National Insurance Act.

Foreign Trade Zones/Free Ports

There are no Foreign Trade Zones or Free Ports.

Foreign Direct Investment Statistics and Foreign Portfolio Investment Statistics

FDI Inflows, 2006-2011 (Historical)

(USD mil dollars)

Source: Grenada’s Central Statistics Office

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Indicators

2006

2007

2008

2009

2010

2011

Foreign Capital Inflow

95.6

172.35

148.1

104.03

63.42

40.8

GDP in constant prices (2006) USD mil dollars

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2006

2007

2008

2009

2010

2011

600.63

638.38

649.15

612.28

604.51

611.24

Ratio of FDI Inflows to GDP (historical):

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2006

2007

2008

2009

2010

2011

0.16

0.26

0.22

0.17

0.10

0.07

Gross Domestic Product, 2006-2011

Current Prices (USD mil dollars)

Source: Grenada’s Central Statistics Office

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2006

2007

2008

2009

2010

2011

600.63

653.18

716.32

674.07

672.74

701.56

Priority Sector FDI Inflows 2006-2010 (Historical) (USD mil dollars)

Source: Grenada Industrial Development Corporation

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2006

2007

2008

2009

2010

2011

PRIORITY SECTOR

Tourism

6.1

210.2

207.7

91.1

52.0

9.4

Manufacturing

0.2

10.2

2

8.3

5.0

.80

Services

2.1

9

69.9

44.2

6.3

0.22

Percentage of FDI Inflow to Priority Investment Sectors by Country of Origin 2005-2011

Source: Grenada Industrial Development Corporation

North America

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2006

2007

2008

2009

2010

2011

3.4%

1.86%

1%

2.58%

12.82%

0.02%

Europe (including UK)

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2006

2007

2008

2009

2010

2011

94.1%

87.9%

98.1%

83.91

77.04

99.92

Caribbean

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2006

2007

2008

2009

2010

2011

2.3%

3.64%

.25%

13.51%

10.14%

0.06%

China (PRC)

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2006

2007

2008

2009

2010

2011

.2%

6.6%

.65%

0%

0%

0%

Number of Jobs Generated by FDI Inflow, 2006-2011

Source: Grenada Industrial Development Corporation

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Indicators

2006

2007

2008

2009

2010

2011

Jobs Created

171

223

132

174

333

214

Foreign Direct Investment – Stock: Pending or Not Available

Grenadian Foreign Direct Investment Abroad – Stock: Pending or Not Available

Examples of Foreign Direct Investments:

  • St. George’s University
  • KM2 Solutions
  • Clear Harbor Inc
  • Superfund Group
  • Amerijet
  • Republic Bank of Trinidad and Tobago
  • LIME
  • Digicel
  • Sandals La Source Grenada

For further information, please contact the United States Embassy.

Louis Crishock
Chargé d’Affaires
U.S. Embassy, St. George’s, Grenada
Tel: (473) 444-1173 ext. 225
Email: crishocklj@state.gov

Lesley Ann Hardy
Commercial Assistant
U.S. Embassy, St. George’s, Grenada
Tel: (473) 444-1173 ext 225
Email: hardyla@state.gov

Contacts for Investment-Related Inquiries

Grenada Chamber of Industry & Commerce
Building #11
Frequente Industrial Park
P.O. Box 129, St. George’s Grenada
Tel: (473) 440-2937
Fax: (473) 440-4485
Email: gcic@spiceisle.com
Website
: www.grenadachamber.org

Grenada Industrial Development Corporation (GIDC)
Frequente Industrial Park
Frequente, St. George’s, Grenada
Tel: (473) 444-1035
Fax: (473) 444-4828
Email: Invest@grenadaidc.com
Website
: www.grenadaidc.com

Ministry of Finance
Financial Complex
The Carenage, St. George’s, Grenada
Tel: (473) 440-2928/440-2731-6
Fax: (473) 440-4115
Email: finance@gov.gd
Website
: www.gov.gd

Web Resources

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

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

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