2010 INVESTMENT CLIMATE STATEMENT FOR BARBADOS

UNCLAS BRIDGETOWN 000070

SIPDIS
STATE FOR EB/IFD/OIA
STATE ALSO FOR WHA/CAR - KAREN JO MCISAAC

E.O. 12958: N/A
TAGS: PGOV EINV EFIN ETRD ELAB KTDB OPIC USTR XL
SUBJECT: 2010 INVESTMENT CLIMATE STATEMENT FOR BARBADOS

REF: 09 STATE 124006

OPENNESS TO FOREIGN INVESTMENT

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1. (U) Barbados is open for business. The Government of Barbados,
through 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 agro-processing, alternative and renewable
energy, and hydroponics. In the financial services sector,
Government has improved its regulatory oversight, and the industry
is thriving 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 LIME formerly 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. Improvement has been made in this
area as Government seeks to open the economy to this type of US led
investment.



CONVERSION AND TRANSFER POLICIES

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


8. (U) The Ministry of Finance controls the flow of foreign
exchange, and the Exchange Control Division of the Central Bank
executes fiscal policy under the Exchange Control Act. Individuals
may apply through a local bank to convert the equivalent of 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

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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

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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 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

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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 (but only
those foreign companies with management or marketing branches in
Barbados) by defraying export 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 (Amendment) Act (2001) provides a
maximum 15-year tax holiday to any manufacturer of an approved
product, provided that it meets the definition of an enclave
enterprise: manufacturing exclusively for export outside of
CARICOM; manufacturing approved products containing a specified
percentage of local value added; or being highly capital intensive.
Under the Fiscal Incentives Act, such enterprises may import
duty-free equipment, spare parts, and raw materials from outside
CARICOM. Dividends and other distributions to shareholders during
the tax holiday are also exempt from the payment of income tax.
Non-resident shareholders liable to tax in their country of
residence are subject to Barbados withholding tax at a lower rate.
To qualify for these incentives, the enterprise must apply to the
Ministry of Economic Affairs, Empowerment, Innovation, Trade,
Industry and Commerce.




21. (U) Enterprises not obtaining benefits under the Fiscal
Incentives (Amendment Act (2007)and generating export profits
(other than from exports within CARICOM) may receive an export
allowance expressed as a rebate of corporation tax (between 35-93
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. The Export Development Allowance
permits a company to deduct from taxable income an additional 50%
of what the company spends in developing export markets outside
CARICOM.




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, Luxembourg, 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

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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 120 million of its commercial property to private investors
through the sale of shares in Barbados External Telecommunications
(to Cable & Wireless of the U.K.),Barbados Telephone Company (to
Cable & Wireless),Barbados Mills (to Archer Daniels Midland),the
Arawak Cement Company, Barbados Dairy Industries, Barbados National
Oil Company, and Heywoods resorts. In July 2003, the Government

sold its controlling stake in the Barbados National Bank to
Republic Bank of Trinidad.



PROTECTION OF PROPERTY RIGHTS

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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

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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, Empowerment,
Innovation, Trade, Industry and Commerce.. 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, Empowerment, Innovation,
Trade, Industry and Commerce 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 Economic Affairs, Empowerment, Innovation,
Trade, Industry and Commerce 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, Empowerment, Innovation,
Trade, Industry and Commerce 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

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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 in the past without any government intervention. There are a
variety of credit instruments in the commercial and public sectors
that local and foreign investors may access.




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. A
self-assessment undertaken by the Bank Supervision Department of
the Central Bank found their on-shore and offshore sectors in
general compliance with the Basel Core Principles of Effective
Banking Supervision, utilizing the Basel Committee's Core
Principles Methodology. The International Financial Services Act,
which replaced the Offshore Banking Act in June 2002, incorporates
the Basel standards, and provides for on-site examinations of

offshore banks. This allows the Central Bank to augment its
offsite surveillance system of reviewing anti-money laundering
policy documents and analyzing prudential returns.




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 four international commercial banks, two of which
operate merchant banks and one a trust company. There are also
35credit unions and one money remitter. The offshore sector
includes 3,361 international business companies, 221 exempt
insurance companies and 50 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 5.7 billion in
October 2009, and remained relatively consistent throughout the
year. The reserve requirement for commercial banks was 2 percent
of deposit liabilities, and the minimum deposit rate was 3.0
percent at the end of October 2009. The weighted average interest
rate was 4.06 percent on deposits and 10.25percent on loans for the
same period.




50. (U) Domestic deposits expanded by USD 131.4 million. Accounts
of private individuals, financial institutions and statutory
bodies, , recorded growth of USD 125 million, USD 6.95million, USD
14.2 million, , and USD 21.8 million, respectively. Deposits for
business firms declined by USD 60.7 million which was largely
attributed to the decline in the construction and manufacturing
sector while Government deposits declined by USD 11.2 million.




51. (U) Credit to the non-financial private sector expanded by USD
248.7 million well above the USD 110.3 million increase recorded
for 2007. Lending to the personal sector, professional and other
services, construction, tourism, transportation and distribution
industries, increased by USD 100.8 million, USD 60.4 million, USD
36.8 million, USD 13.9 million, USD 6.6 million and USD 6.25
million, respectively. Commercial bank lending for industrial and
commercial mortgages averaged USD 64.8 million at the end of
October 2009, whereas commercial bank lending to residents and
non-residents averaged USD 83.3 million and USD 8.2 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 its second
consecutive decrease in 2009.. This downturn was reflected in the
Composite Index, which decreased by 14.5% These declines were
reflected in market capitalization values that dropped by similar
percentages over the quarter, as the general slowdown in economic
activity during the year and the repurchase of 87,551 shares by
West Indies Rum Distillery Limited in June depressed market
capitalization values. In 2009, the BSE made significant strides
towards becoming the first CARICOM securities exchange to launch an
international trading facility, having received Board approval
earlier in the year. The BSE intends to attract international
business companies to list on the international securities market
in order to raise capital on the Barbados market. This move would
offer greater support to the international business community and
complement existing bilateral trade agreements. If approved by the
regulators, the international trading facility could attract four
types of listings: companies that would have their primary listing
in Barbados; companies that would use Barbados as a dual or
secondary listing; fixed income securities; and, mutual funds.



POLITICAL VIOLENCE

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




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



CORRUPTION

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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, Luxembourg,
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

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60. (U) In 2009, Barbados' labor force was approximately 142,000,
distributed in the following sectors: commerce, tourism,
government, manufacturing, construction, agriculture, and fishing.
The total average unemployment rate toward the end of 2009 was
approximately 10.1 percent.




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 Immigration 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 July 2009,the island's largest telecommunications
firm announced the closure of its Call Centre and the subsequent
lay-off of 115 workers. The Union intervened and the termination
notice was rescinded after an intervention by the Government. There
were long-running negotiations between the Union and the
telecommunications company regarding the reinstatement of the
workers. To date, this issue seems to be resolved as the workers
have been reincorporated in other departments. Early contact and
rapport with Labor 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);;;; Chevron Texaco;;; Citicorp Merchant Bank; JetBlue
Airways; C F Caribbean Flavors; Delta Airlines; Ecolab Barbados
Ltd. (joint venture); Ernst & Young; Exxon Mobil; Federal Express;
Lenstec Ltd.; Pricesmart Inc.; SC Johnson; TGI Fridays; Hilton

Worldwide Resorts; PriceWaterhouseCoopers; United Parcel Service
(UPS); U.S. Airways; and IBM World Trade Corp.



An American Chamber of Commerce (AmCham),Barbados, has made
attempts at formation, but has not met regularly.



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 M. 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

Trident Insurance Financial Centre
Hastings, Christ Church
BARBADOS, BB15156

Tel: 246-626-2000

Fax: 246-626-2099

Email: info@investbarbados.org

Website: http://www.investbarbados.org




Invest Barbados - New York Office

800 Second Avenue, 2nd Floor

New York, New York 10017-4709

Tel: 212-551-4375

Fax: 212-682-5496

newyork@investbarbados.org



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

HARDT