INVESTMENT CLIMATE STATEMENT, 2008

UNCLAS BRIDGETOWN 000116

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAR
DEPARTMENT FOR EB/IFD/OIA

E.O. 12958: N/A
TAGS: EINV EFIN ETRD ELAB KTDB PGOV XL
SUBJECT: INVESTMENT CLIMATE STATEMENT, 2008

REF: 07 STATE 158802

OPENNESS TO FOREIGN INVESTMENT
--------------


1. (U) Barbados is open for business. The Government of Barbados,
through the Barbados Investment and Development Corporation (BIDC,
a.k.a. "Invest Barbados"),strongly encourages foreign direct
investment in Barbados, particularly in industries that create jobs
and earn foreign currency.


2. (U) 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 percent on income and
exemption from foreign exchange controls.


3. (U) The services sector holds the largest potential for growth,
especially in the areas of financial services, e-commerce, medical
transcription, tourism, educational, health, and cultural services.
In agriculture, the slow demise of the sugar industry has opened up
land for other agricultural uses, and investment opportunities exist
in the areas of Sea Island cotton, alternative and renewable energy,
and hydroponics. In the financial services sector, offshore banks
and insurance companies saw a temporary drop-off in activity as the
Government improved regulatory oversight, but the industry is
thriving again under better regulatory standards, designed to
prevent money laundering and tax evasion.


4. (U) Telecom liberalization is bringing an end to the longstanding
monopoly of Cable and Wireless, and has introduced competition,
lowered the cost of international telecommunications, and enhanced
the telecom infrastructure. Since 2000, the Government has
gradually allowed more companies to compete in the sector, and by
early 2005 there was full competition in wireless and long distance
service. The Government has established policy with respect to
Voice over Internet Protocol (VoIP) regulations, which was approved
on August 15, 2007. To prepare a workforce skilled in advanced IT
services, the Government and educational institutions such as the
Barbados Community College and the University of the West Indies
have undertaken educational and training initiatives.


5. (U) Foreign nationals receive the same legal protections as local
citizens. The police and court systems are efficient and unbiased
in commercial matters, and the government operates in an essentially
transparent manner.


6. (U) Local enterprises generally welcome joint ventures with
foreign investors in order to access technology, expertise, markets,
and capital. Barbados' economy is small, however, and new
enterprises that might compete with entrenched local establishments,
especially in the retail and restaurant sector, may face a de facto
veto of their license by local interests. In the past, the
government did not approve, or considerably delayed, licenses for
importers of U.S. ice cream and poultry products, and some U.S. fast
food franchises.

CONVERSION AND TRANSFER POLICIES
--------------


7. (U) Companies can freely repatriate profits and capital from
foreign direct investment if they registered with the Central Bank
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.


8. (U) The Ministry of Finance controls the flow of foreign
exchange, and the Exchange Control Division of the Central Bank of
Barbados executes fiscal policy under the Exchange Control Act.
Individuals may apply through a local bank to convert the equivalent
of USD 3,750 per year for personal travel and up to a maximum of USD
25,000 for business travel. To convert any amount over these
limits, one must apply to the Central Bank.

EXPROPRIATION AND COMPENSATION
--------------


9. (U) The Barbados Constitution and Companies Act 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.

DISPUTE SETTLEMENT
--------------


10. (U) 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 new Caribbean Court
of Justice (CCJ) replaced London's Privy Council as the highest
court of appeal for Barbados in 2005.


11. (U) 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 yet to ratify the convention.


12. (U) 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.

PERFORMANCE REQUIREMENTS AND INCENTIVES
--------------


13. (U) 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.


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


15. (U) 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.


16. (U) 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.


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


18. (U) In the manufacturing sector, the Barbados Investment and
Development Corporation (BIDC) has established ten well-equipped
industrial parks with subsidized rent. The BIDC may also supply
limited training grants and free technical assistance through two
programs with a focus on developing local businesses: the Export
Grant and Incentive Scheme and the Technical Assistance Program. The
former helps both locally and foreign-owned companies (butonly
those foreign companies with management or arketing branches in
Barbados) by defraying expot costs such as the preparation and
shipment of samples and the development of marketing materials. The
latter helps companies solve a range of operational problems.


19. (U) 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 further help 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.


20. (U) The Fiscal Incentives Act (1974) 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 Economic Development.


21. (U) Enterprises not obtaining benefits under the Fiscal
Incentives Act 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 percent) on those
profits. The maximum rebate of 93 percent applies if more than 81
percent of an enterprise's profits result from extra-regional
exports.


22. (U) Initial Allowances or Investment Allowances of up to 40
percent 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.


23. (U) Barbados' method of calculating export allowance is as
follows:

EXPORT PROFIT AS PERCENTAGE REBATE OF INCOME TAX AS
OF TOTAL PROFIT PERCENTAGE OF INCOME TAX
ON EXPORT PROFITS
-------------- --------------
Up to 20 percent 35 percent
21 percent, but under 41 percent 45 percent
41 percent, but under 61 percent 64 percent
61 percent, but under 81 percent 79 percent
81 percent and over 93 percent


24. (U) In the tourism sector, a Market Development Allowance allows
a company to deduct an additional 50 percent 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 percent
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
also encourages construction of properties in non-coastal areas. The
Minister of Tourism must approve all projects under this
legislation.


25. (U) Regarding taxation, Barbados has entered into double
taxation treaties with the United States, Canada, CARICOM, China,
Cuba, Finland, Norway, Sweden, Switzerland, the United Kingdom,
Botswana, Mauritius, Malta, and Venezuela. 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.


26. (U) Offshore businesses may operate either free of income tax
(e.g., captive insurance) or with a tax rate from 1 to 2.5 percent.
An International Business Company (IBC) must by the terms of its
incorporation export 100 percent 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 USD 5 million 2.5 percent
USD 5-10 million 2.0 percent
USD 10-15 million 1.5 percent
Over USD 15 million 1.0 percent


27. (U) An IBC may import machinery and equipment into Barbados free
from certain taxes and customs duties. IBCs also are exempt from
withholding tax and tax on the transfer of their assets and may also
make certain foreign exchange transactions free of exchange
controls. IBCs in the information services sector receive a special
tax rate of 2.5 percent on profits, 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.


28. (U) International financial service companies also enjoy several
tax incentives. Under the Exempt Insurance Act, a company
incorporating with a minimum capital of USD $125,000 and at least
one Barbadian director is eligible for taxation on profits at zero
percent for the first fifteen years, and 2.5 percent on the first
USD $250,000 of profits thereafter, 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 2.8 percent, after deducting
a foreign currency earnings allowance, and exemption from
withholding taxes and exchange controls.


29. (U) 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 40 percent 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.


30. (U) 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 ten-year exemption on tax and custom duties on
materials connected with the shipping activities.

RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
--------------


31. (U) There 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.


32. (U) No industries are officially closed 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.


33. (U) 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
USD 123.4 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, National Petroleum Corporation, Barbados Tourism
Investment Inc., and Heywoods resorts. In July 2003, the Government
sold its controlling stake in the Barbados National Bank to Republic
Bank of Trinidad.

PROTECTION OF PROPERTY RIGHTS
--------------


34. (U) The Barbados Government has improved the legal regime for
property rights. Civil law protects physical property and mortgage
claims. 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. The
Government also approved legislation in September 1998 for
Integrated Circuits Topography and Protection against Unfair
Competition and Geographical Indications. In addition, the
Government recently 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.


35. (U) 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.


TRANSPARENCY OF REGULATORY SYSTEM
--------------


36. (U) 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. The regulatory system can be slow at times, and some
companies have complained that the Ministry of Finance does not give
adequate justification for rejecting a license.


37. (U) In the past, obtaining a work permit could be a difficult
and time-consuming task. However, the International Business
Customer Charter launched on November 26, 2007, provides for the
processing of long and short term work permits in two to four weeks
(2-4) weeks provided that the application is completed in totality.
Work permits are of two types, short-term (for six months or less)
and long-term (usually for no more than three years). 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.


38. (U) The principal regulatory agencies are the Ministry of
Finance and the Ministry of Economic Affairs and Development. 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. Local on-shore companies must meet fairly stringent
exchange control requirements, but the Government welcomes
investment by non-residents with external sources of financing.


39. (U) The Ministry of Economic Affairs and Development 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.


40. (U) 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.


41. (U) The Ministry of Commerce, Consumer Affairs, and Business
Development on rare occasions imposes price controls, listed in the
Official Gazette. The Government controls gasoline prices.


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


43. (U) The Minister of Economic Affairs and Development or the
Minister of Finance must approve foreign investment. 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.


44. (U) The Central Bank must approve 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 approve the
transaction. When they sell the property, non-residents need to pay
the 2.5 percent Property Transfer Tax in addition to brokerage and
legal fees. The Commissioner of Land Tax charges an annual fee based
on the assessed property value. The Government taxes hotels on 50
percent of the improved value at 0.65 percent, and residential
properties are taxed as follows:

Up to USD 62,500 0 percent
USD 62,500 up to 112,500 0.1 percent
USD 112,500 up to 250,000 0.45 percent
USD 250,000 up to 425,000 0.75 percent


EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
-------------- --------------


45. (U) 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, in the past,
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 five times in the past 18 months without any government
intervention. There are a variety of credit instruments in the
commercial and public sectors that local and foreign investors may
access.


46. (U) 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. The Bank Supervision
Department of the Central Bank undertook a self-assessment in 2000,
and 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.


47. (U) 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.


48. (U) The Barbados domestic financial sector consists of two
indigenous and three international commercial banks, two of which
operate merchant banks and one a trust company. There are also 38
credit unions and one money remitter. The offshore sector includes
4,932 international business companies, 426 exempt insurance
companies and 54 offshore banks (December 2006 figures). Starting
in 2001, the Government required Barbados institutions and legal
entities to reveal the identity of beneficiaries receiving dividends
and/or interest.


49. (U) Assets of commercial banks totaled USD 5.4 billion in
October 2007, and remained relatively consistent throughout the
year. The reserve requirement for commercial banks was 15 percent
of deposit liabilities, and the minimum deposit rate was 4.75
percent at the end of October 2007. The weighted average interest
rate was 5.13 percent on deposits and 10.79 percent on loans for the
same period.


50. (U) Domestic deposits expanded by USD 477.75 million by October
2007 following growth of USD 215.95 million in the previous year.
Accounts of private individuals, financial institutions, statutory
bodies, business firms, and Government recorded growth of USD 213.5
million, USD 80.75 million, USD 72.85 million, USD 21.5 million, and
USD 16.1 million, respectively.


51. (U) Credit to the non-financial private sector expanded by USD
108.6 million by the end of October 2007, following growth of USD
169.7 million for the comparable period in 2006. Lending to the
personal sector, professional and other services, public utility
companies, and entertainment and catering, increased by USD 106.55
million, USD 30.2 million, USD 12.4 million, and USD 6.1 million,
respectively. Commercial bank lending for industrial and commercial
mortgages averaged USD 52.6 million at the end of September 2007,
whereas commercial bank lending to residents and non-residents
averaged USD 665.4 million and USD 8.7 million respectively.


52. (U) 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.


53. (U) 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 USD 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
evidence competent management and be incorporated under the laws of
Barbados or other regulated jurisdiction approved by the Securities
Commission. Applications for listing on the Junior Market are less
onerous, requiring minimum equity of one million shares at a stated
minimum value of USD 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.


54. (U) The Barbados Stock Exchange (BSE) is moving to full
immobilization of traditional share certificates where clearance and
settlement is fully computerized through a Central Securities
Depository. However, investors requiring a traditional certificate
can be accommodated for a small fee and the transfer is adjudicated
by the Securities Commission under the Property Transfer Tax Act.
Mutual Funds are also regulated by the Securities Commission in
accordance with the Mutual Funds Act, Cap 320B.


55. (U) The Barbados Stock Exchange (BSE) recorded an overall
improvement in its performance during the third quarter of 2007,
compared with the previous two quarters. This outturn was reflected
in the Compsoite Index, which moved from 949.14 to 982.00,
representing an increase of 3.5 percent. Movement was led by
thirteen local companies, which advanced, while five declined, four
remained firm and four did not trade during the quarter. Barbados
Shipping and Trading Company, Limited (BS&T) recorded the largest
share price increase for the review period, with growth of
approximately 63 percent. Barbados Farms Limited and BICO Limited
followed with share price increases of 10.5 percent and 8.3 percent,
respectively. Conversely, ANSA McAl (Barbados) Limited, suffered
the largest decline in share price of 9.9 percent, followed by the
West Indies Rum Distilleries Limited, with a 5.6 percent decrease.
The volume leader in the regular market was BS&T with 5.6 billion
shares traded, accounting for 45 percent of the total shares traded
and making its stock the most liquid security for the period. The
increase in share price and trading activity was partly due to the
intense take-over battle for the company. As both volume and price
leader, BS&T was also the value leader for the quarter, with the
total value of its shares traded recorded at USD 24.35 million.

POLITICAL VIOLENCE
--------------


56. (U) Barbados has not experienced political violence since riots
in the 1930s.

CORRUPTION
--------------


57. (U) Corruption is not a major problem in Barbados, but some U.S.
companies have reported unfair treatment by Barbados' Customs and
Excise Department.

BILATERAL INVESTMENT AGREEMENTS
--------------


58. (U) 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 (CARIBCAN),China, Cuba, Germany, Italy, Switzerland, the
U.K., and Venezuela.

OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
--------------


59. (U) 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.

LABOR
--------------


60. (U) In 2007, Barbados' labor force was approximately 133,000,
distributed in the following sectors: commerce, tourism, government,
manufacturing, construction, agriculture, and fishing. The total
average unemployment rate toward the end of 2007 was approximately
8.1 percent; 9.1 percent for females and 7.1 percent for males.


61. (U) 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, USD 2.50 per hour, is only marginally
sufficient to meet minimum living standards. The Ministry of Labor
and Social Security Labor Ministry 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.


62. (U) 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 percent
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.


63. (U) 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.


64. (U) 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 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.


65. (U) 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. In February 2008, a shop worker accused her Indian
employers of wrongful termination, which resulted in the Barbados
Workers Union's decision to call for a large-scale industrial action
strike. In the same month, employees at an exclusive hotel
illegally walked off the job to protest one of their colleagues'
termination. Early contact and rapport with Labour Ministry
officials and union leaders by foreign investors may be helpful in
terms of fostering labor harmony.


66. (U) 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.


67. (U) Parliament passed core regulations to implement the 2005
Occupational Safety and Health at Work Act, but the government had
not implemented them by year's end. The Labor Department enforced
other health and safety standards and followed up to ensure that
management corrected problems cited. 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. 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.


FOREIGN TRADE ZONES/FREE PORTS

--------------


68. (U) There are no foreign trade zones or free ports in Barbados.

FOREIGN DIRECT INVESTMENT STATISTICS
--------------


69. (U) The Government of Barbados compiles statistics on Foreign
Direct Investment (FDI) in the areas of branches, subsidiaries,
undistributed earnings, and other investments. The Barbados
Investment and Development Corporation (BIDC) reported that since
1995, FDI has increase on average by USD 1.6 million, but in 2003
alone shot significantly upward by more than USD 80 million from the
previous year. FDI in 2006 totaled approximately USD 91.5 million,
up from USD 62 million in 2005.

MAJOR U.S. INVESTORS
--------------


70. (U) American Airlines; Barbados Mills (Archer Daniels Midland);
Bondhus Corp.; Carib Supply (B'dos) Ltd.; Charles T. Gamble
Industries; Chevron Texaco; Cingular Wireless; Cirrus Logic;
Citicorp Merchant Bank; Continental Airlines; C F Caribbean Flavors;
Delta Airlines; Ecolab Barbados Ltd. (joint venture); Ernst & Young;
Exxon Mobil; Federal Express; Lenstec Ltd.; MSI International Ltd.;
Pricesmart Inc.; PriceWaterhouseCoopers; United Parcel Service
(UPS); U.S. Airways; and Waggoner Barbados Ltd.

An American Chamber of Commerce (AmCham) has recently been formed
and will be sponsoring monthly meetings and seminars to help promote
American investment and business in Barbados. For further
information, please contact the Economic/Commercial section at the
U.S. Embassy.

Jake Aller
Commercial Officer
US Embassy, Bridgetown, Barbados
Tel: 246-277-4274
Allerjc2@state.gov

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


CONTACTS FOR INVESTMENT RELATED INQUIRIES
--------------


71. (U) The following are contacts for investment related
inquiries:

Invest Barbados
Alico Building
P.O. Box 1009
Bridgetown,
Barbados, BB11142
Tel: 246-626-2000
Fax: 246-626-2099
Email: contact@investbarbados.org
Website: http://www.investbarbados.org

Invest Barbados - Miami Office
150 Alhambra Circle, Suite 1000
Coral Gables, Florida 33134
Tel: 305-442-2269
Fax: 305-567-2844

Invest Barbados - New York Office
800 Second Avenue, 2nd Floor
New York, New York 10017-4709
Tel: 212-867-6420
Fax: 212-682-7496

WEB RESOURCES
--------------


72. (U) Additional web resources include:

BARBADOS

Invest Barbados website: http://www.investbarbados.org; and The
Industry and International Business Unit of the Ministry of Economic
Affairs and Development Website: http://www.barbadosbusiness.gov.bb

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

OURISMAN