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DE RUEHWN #0116/01 0561432
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R 251432Z FEB 08
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC 6117
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHDG/AMEMBASSY SANTO DOMINGO 5899

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