VZCZCXRO4775
RR RUEHGR
DE RUEHGR #0151/01 3471305
ZNR UUUUU ZZH
R 121305Z DEC 08
FM AMEMBASSY GRENADA
TO RUEHC/SECSTATE WASHDC 0508
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHGR/AMEMBASSY GRENADA 0589

UNCLAS SECTION 01 OF 04 GRENADA 000151 
 
SIPDIS 
 
STATE FOR WHA/CAR (JMITCHELL) (VDEPIRRO) (WSMITH) 
STATE FOR EB/IFD/OIA 
WHA/EPSC (MROONEY) (FCORNEILLE) 
EEB/ESC/IEC/EPC (MMCMANUS) 
INR/RES (RWARNER) 
SANTO DOMINGO FOR FCS AND FAS 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV GJ
SUBJECT: GRENADA: INVESTMENT CLIMATE STATEMENT 2009 
 
REF: SECSTATE 123907 
 
¶1. Embassy Grenada response to reftel request for the investment 
climate statement. 
 
¶2. Begin text: 
 
The Government of Grenada (GOG) seeks to attract foreign direct 
investment and, with limited exceptions, encourages investors to 
enter in and operate enterprises in all fields of lawful 
economic activity.  There is no minimum entry requirement and 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: Grenada Industrial Development 
Corporation and Ministry for 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 vouch for their bona fides.  The process of investing begins 
while screening is conducted.  Screening is done to protect 
domestic interests.  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 the 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 investors. 
A.2. 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. 
A.3. 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 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 on 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 Acts of Parliament. 
 
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 Disputes. 
 
In the event of disputes between foreign parties within an 
investment, or between Foreign Investors and Grenadian parties, 
 
GRENADA 00000151  002 OF 004 
 
 
or between Grenadian partners, or between the Investors and the 
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 then: (a) submit 
their dispute to arbitration under the Arbitration Act No 2 of 
1989; (b) invoke the jurisdiction of the courts of Grenada; or 
c. the Caribbean Court of Justice; (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 although there occasionally 
such government interference has been alleged, though never 
proven.  A more common problem in Grenada's judicial system is 
lengthy and/or incomplete trials.  They 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 summonses and many trials 
are eventually dropped because of the no-shows. 
 
A.5. Performance Requirements/Incentives:  The legislation of 
Grenada provides a package of benefits and concessions for 
specific activities.  Incentives available include tax holidays, 
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 Government 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: Accelerated depreciation - 50% on plant & machinery; 
10% on building; Investment allowance - 100% write off on total 
investment; carry forward of losses for 5 years; 100% relief 
from customs duties and taxes on plant, equipment & raw 
materials; deductible expenditure incurred for marketing, 
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; double taxation relief.  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 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 Constitution and 
Investment Code Incentives Act protect personal property 
including investments and the property of investors.  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 and 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 TRIPs 
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.'s Patents and Design Act of 1907, any patent holder in the 
 
GRENADA 00000151  003 OF 004 
 
 
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 as the 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 Government of 
Grenada recognizes that for investors, transparent information 
on rules and regulations dealing with investment, how they are 
formulated and implemented are critical.  The Government 
therefore 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.  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 
and 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. 
 
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 financial institutions chartered 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.  Political 
infighting can negatively impact investment immediately 
preceding or following a change in government.  On the whole, 
investors in Grenada can 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. 
A.11. Corruption:  In March 2007, Parliament passed the 
country's first anticorruption bill.  According to the World 
Bank's worldwide governance indicators, government corruption 
was a problem.  A new anticorruption law requires all public 
servants to report their income and assets for review by an 
Integrity Commission the law requires to be set up.  The 
Commission has yet to be organized as internal disputes within 
the Government over its makeup continue. 
A.12. 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. 
A.13. OPIC and other investment insurance programs:  Grenada's 
accession to the Overseas Private Investment Corporation (OPIC) 
entered into force on June 27, 1968. Grenada is a member of the 
Multilateral Investment Guarantee Agency (MIGA). 
A.14. Labor:  Grenada has signed and ratified all of the 
International Labor Organization's undertakings and has 
 
GRENADA 00000151  004 OF 004 
 
 
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 recent sharp increase in prices 
of food and other basic items as a result of higher oil prices 
coupled with the global economic downturn will impact expected 
2009 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. 
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 
Inflows:  52.59   55.83   59.00   60.50    79.2     97.0 
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 
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