GRENADA 2008 INVESTMENT CLIMATE STATEMENT

UNCLAS SECTION 01 OF 04 GRENADA 000091

SIPDIS

DEPARTMENT FOR EB/IFD/OIA

E.O. 12958: N/A
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC GJ
SUBJECT: GRENADA 2008 INVESTMENT CLIMATE STATEMENT

REF: 07 STATE 158802


1. The Investment Climate Statement is contained in paragraph 2
below.


2. (U) Begin text:

The Government of Grenada (GOG) seeks to attract foreign direct
investment and encourages investors to enter in and operate
enterprises in all fields of lawful economic activity. There is
no minimum entry requirement, no restriction on foreign
ownership, repatriation of capital, dividends, interest, or
other distributions and gains. Foreign and local investors are
given equal treatment. The main sources of information and data
are Grenada Industrial Development Corporation (GIDC) and
Ministry of Foreign Affairs.

A.1. Openness to 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 Investment Act,
Income Tax Act and Common External Tariff (SRO 37/99). The
judicial system upholds the sanctity of contracts. There is no
economic or industrial strategy that has discriminatory effects
on foreign investors. There are no limits on foreign ownership
or control. Screening of foreign investors is mandatory.
However, because of the lengthy and cumbersome process,
investors are required to sign a 'shareholders declaration form'
to vouchsafe their bona fides. The process of investing begins
while screening is conducted. Screening is done to protect
domestic interests, primarily to ensure against fraud and or
gross violation of constitutional rights, e.g., beach access,
etc. Grenada has a generally liberal investment regime.
Investors may not invest in or operate investment enterprises
which are prejudicial to national security or detrimental to
natural environment, public health or the national culture or
which contravene the laws of Grenada. There are no sectors in
which foreign investors are not treated the same as a national
investor.

A.2. Conversion and Transfer Policies: The Reciprocal
Encouragement and Protection of Investment agreement with the
USA 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.

A.3. Expropriation and Compensation: The Government shall not
compulsorily acquire or take possession of any investment
enterprise, or any asset of an investor except: a. for a purpose
which is in accordance with the laws of Grenada; b. on a
non-discriminatory basis; c. in accordance with the procedures
provided by law; d. there is 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. there is a right of access
to the Supreme 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 in recent times. There
are no special sectors which may be more at risk of
expropriation than another. There are no laws forcing local
ownership.

A.4. 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.

There are three local levels of judiciary courts, and the
Eastern Caribbean Court of Appeal. Magistrates Court deals with
minor civil and criminal cases, the High Courts deal with cases
falling under the different Act of Parliament.

The Privy Council in London is the final court of appeal.

Grenada is a member of the International Centre for Settlement
of Disputes.

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

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Government in respect of 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 submit their
dispute to arbitration under the Arbitration Act No 2 of 1989;
invoke the jurisdiction of the courts of Grenada or the
Caribbean Court of Justice; or adopt such other procedures as
provided for in the Articles of Association of the Investment
enterprise. There is no government interference in the court
system.

A.5. Performance Requirements/Incentives: The legislation of
Grenada provides a package of benefits and concessions for
specific activities. Incentives available include investment
allowances, 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. 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 Investment Act,
Income Tax Act and Common External Tariff (SRO 37/99).
Incentives: Investment allowance - Capital investment is
written off against taxable income for a period of ten (10)
years ; Carry forward of losses for 10 years; 100% relief from
customs duties and taxes on plant, equipment & raw materials;
Deductible expenditure incurred for marketing, training,
research and development: no restrictions on foreign ownership;
no restrictions on foreign currency transactions; no
restrictions on the repatriation of profits; capital and
dividends; double taxation relief. There is no performance
requirement linked to investments. Reciprocal Encouragement and
Protection of Investment agreement with the USA protects U.S.
investors against performance requirements. An investment
enterprise may be wholly owned by either foreign or domestic
investors. There is no requirement that a domestic investor
shall own any shares in any investment enterprise.

A.6. 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.

A.7. Protection of Property Rights: The Government shall protect
investments and the property of investors in accordance with the
laws of Grenada. 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 Trademarks
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 TRIP
Agreement.

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

The registration of patents, trade marks and copyright is done
at the Registry of the Supreme Court.

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.
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.

Grenada operates a re-registration system based on registration
in the United Kingdom.

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

A.8. Transparency of the Regulatory System: The GOG recognizes
that for investors, transparent information on rules and
regulations dealing with investment, on how they are formulated
and implemented is critical. The GOG therefore promotes
investments by consulting with interested parties; simplifying

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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. Tax, labor, environment, health and safety, and other
laws and policies do not distort or impede investment.
Bureaucratic procedures, including those for licenses and
permits are sufficiently streamlined and transparent. There are
no informal regulatory processes managed by non-governmental
organizations or private sector associations. Enforcement of
laws remains inconsistent, with court cases often dragging on
for long periods of time due to lack of magistrates.

A.9. Efficient Capital Markets and Portfolio Investment: There
are policies to facilitate free flow of financial resources.
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. GOG policy is that
foreign investors are not permitted to borrow domestically in
Grenada from chartered banks in Grenada, or to access
low-interest rate loans or government grants.

A.10. Political Violence: Grenada is a politically stable
country with little or no political violence. Investors in
Grenada can benefit from a stable democratic style of
government; stable economy; developed infrastructure, reliable
investment support services, low crime rate and good quality of
life.

A.11. Corruption: In March 2007 Parliament passed the country's
first anticorruption bill, but there was not yet any record of
successful prosecutions under these new laws. According to the
World Bank's worldwide governance indicators, government
corruption was a problem. New anticorruption laws require all
public servants to report their income and assets and set up a
commission to enforce the rules. Implementation was delayed by
an internal government dispute over setting up the commission,
but in November 2007 the government announced that all
outstanding issues had been resolved. The commission had been
expected to be in place by the end of 2007, but implementation
was delayed by technical problems.

A.12. Bilateral Investment Agreements: Bilateral Investment
Agreements established between Grenada the United States and the
United Kingdom 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 USA: The
agreement protects U.S. investors against performance
requirements, restrictions on transfers, 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.

A.13. OPIC and other investment insurance programs: Grenada on
June 27, 1968, signed a sovereign guarantee agreement with the
Overseas Private Investment Corporation (OPIC),which entered
into force on the same day. Grenada is a member of the
Multilateral Investment Guarantee Agency (MIGA).

A.14. Labour: Grenada has signed and ratified all International
Labour Organizations undertakings and has enshrined these rights
in its labour laws namely; 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
there labor relations in the country are stable. 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.
Investment enterprises shall contribute to the social insurance
and welfare programs for their workers in accordance with the
National Insurance Act.

A.15. Foreign Trade Zones/Free Ports: There are no Free Zones.

A.16. Foreign Direct Investment Statistics
FDI Inflows, 2001-2006 (US $mil dollars)
2001 2002 2003 2004 2005 2006 2007

GRENADA 00000091 004 OF 004


Inflows 52.59 55.83 59.00 60.5 0 79.2 97.0
97.8
Source: Grenada's Central Statistics Office

FDI Inflows by Country of Origin 2001-2006 (US $mil dollars)
Source: Grenada Industrial Development Corporation

2001 2002 2003 2004 2005 2006
United States 0.55 4.0 3.5 12.1 1.6 2.3
Europe (including the UK) 1.64 11.9 6.3 24.9 64.4
Caribbean 11.2 6.80 6.6 3.8 13.1 1.6
China (PRC) 0.22 0.15
Other 0.27
Total 13.7 10.8 22.1 22.4 39.6 68.4

FDI Inflows by Sector 2001-2006 (US $mil dollars)
Source: Grenada Industrial Development Corporation

SECTOR 2001 2002 2003 2004 2005 2006
Tourism 8.6 10.8 14.0 22.1 38.2 66.1
Manufacturing 5.0 - 0.1 - 1.2 0.2
Services 0.1 - 8.0 0.2 0.2 2.1
TOTAL 13.7 10.8 22.1 22.4 39.6 68.4

End text.
MCISAAC