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DE RUEHPO #0042/01 0351642
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P 041642Z FEB 08
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UNCLAS PARAMARIBO 000042 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/CAR JROSHOLT; EB/IFD/OIA FOR J. NATHANIEL HATCHER AND 
ANN KAMBARA; USDOC FOR MICHELLE BROOKS; 
DEPT PLEASE PASS TO USTR KENT SHIGETOMI 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB OPIC KTDB PGOV USTR NS
 
SUBJECT: SURINAME: INVESTMENT CLIMATE STATEMENT 2008 
 
REF: 07 STATE 158802 
 
¶1. (U) Post submits the 2008 Investment Climate Statement for 
Suriname. 
 
OPENNESS TO FOREIGN INVESTMENT 
------------------------------- 
 
¶2. The Government of Suriname (GOS) has identified Foreign Direct 
Investment (FDI) as a key element in achieving sustainable 
development.  In its 2006-2011 Multi-Year Development Plan, the 
government calculated that 50 percent of the financing of the plan 
should come from Foreign Direct Investment.  In 2007, the Ministry 
of Trade and Industry set out to make investing more attractive by 
shortening the time it takes to obtain licenses.  Other ministries 
have also made the attraction of foreign direct investment part of 
their policies. 
 
¶3. In order to improve Suriname's international ratings, the Central 
Bank of Suriname and the Ministry of Finance's Debt Management 
Office made tremendous improvements in the country's debt servicing. 
 The conservative and aggressive approach to reducing bilateral debt 
led to full repayment to all but two creditors, Brazil and the 
United States.  The country is currently at a stage where it is 
repaying more than it is borrowing. 
 
¶4. In its 2008 "Doing Business Report," the World Bank ranked 
Suriname 142 out of 178 economies.  This drop of 20 spots from 2006 
was not due to a decline in Suriname's performance, but because 
other economies showed improvement while Suriname did not.  Areas 
where Suriname once again rated poorly included:  the time necessary 
to start a business, the protection of investors, the enforcement of 
contracts, the ease of doing business, and procedures for closing a 
business.  The GOS disputed the results of this report. 
 
¶5. According to the GOS, and confirmed by outside sources, the time 
it takes to start a business in Suriname is approximately 60 days, 
not 694 days as stated in the World Bank report.  While it does take 
longer to establish a limited liability company (LLC) in Suriname, 
the GOS allows companies to operate while waiting for LLC status. 
While the World Bank report states that it takes 431 days to get a 
business license, the Ministry of Trade and Industry issues new 
licenses and extends previously-issued licenses within 30 days of 
their approval by the Ministry.  Long wait times for licenses are 
reportedly due to missing information during the application 
process. 
 
¶6. Both Fitch and Standard & Poor's reaffirmed their positive credit 
ratings for Suriname in 2007.  In its June 2007 rating report, Fitch 
cited Suriname's low level of indebtedness, manageable debt service 
requirement, and favorable medium-term economic prospects as the 
primary drivers supporting its long-term default outlook for the 
country.  Areas needing improvement include the weak, although 
improving, track record of public finance management, implementation 
of structural reforms, the country's continuing vulnerability to 
international commodity price shocks, constraints caused by the 
outstanding arrears with bilateral creditors, and weak economic and 
financial statistics. 
 
¶7. In December 2007, Standard & Poor's raised Suriname's credit 
rating from B to B+ based on the improved macroeconomic and monetary 
stability and efforts on the legislative and institutional fronts to 
preserve these gains.  Significant improvements in the public 
sector's balance sheet reflected higher commodity prices for the 
nation's primary export products:  bauxite, oil, and gold. Standard 
and Poor's cited ongoing gains in production capacity:  productivity 
in mining, oil, and bananas; and investments for bolstering future 
economic expansion and economic diversification.  The Central Bank 
was commended for its successful, conservative approach and 
aggressive debt reduction strategy.  The unduly large, often 
inefficient, and costly government involvement in the real economy 
was one major constraint identified.  The resulting weaknesses 
continued to cause economic distortions, create red tape, undermine 
policymaking transparency, and provide potential opportunities for 
corruption in 2007. 
 
¶8. In its 2007 Article IV Consultation Report, the International 
Monetary Fund Executive Board concluded that favorable external 
conditions and improved macroeconomic management aided the continued 
economic performance of Suriname.  Monetary policy focused on 
reducing inflation, while the Central Bank became more independent, 
all of which led to the stabilization of the exchange rate.  Real 
GDP was estimated to have grown by 6 percent, led by strong exports 
and private investments.  This growth trend was expected continue in 
the short term.  Growing mineral-related revenues led to a small 
overall surplus for the government in 2006, and as commodities 
prices rose sharply in 2007, the same was expected to be true in 
¶2007.  The non-mineral deficit was expected to decrease even further 
in 2008 with the expectation that revenues would continue to 
increase and expenditures would be kept under control. 
 
¶9. The IMF Executive Directors commended the improvement in economic 
policies and supported the authorities' policy stances.  A key 
challenge underscored was the need to enhance policy credibility by 
strengthening Suriname's medium-term policy framework.  The 
Directors suggested that a revenue stabilization fund would help 
manage budget expenditure pressures in times of volatile mineral 
prices.  Improvements in the banking sector were welcomed, while 
authorities were encouraged to continue steps to unify the exchange 
rate by increasing its flexibility in relation to market factors. 
The need to diversify the economy was underscored in order to 
sustain growth and mitigate vulnerability to shocks. 
 
¶10. The laws on the books affecting incoming foreign investment 
through acquisitions, mergers, takeovers, and Greenfield investments 
are the 2001 Investment Law and regular trade regulations.  The 
Investment Law, however, was put "under review" in 2005.  Revisions 
to the law have not been made, and drafting of them is currently on 
hold while the GOS turns its attention to amending tax legislation 
first.  In July 2007, provisions under the law for reinvestments 
were terminated.  Provisions for new investments remain in place, 
but are only applied on an ad hoc, case-by-case basis. The 
Investment Law was primarily criticized for its heavy dependence on 
tax incentives, instead of improving the investment climate through 
improvement of processes. 
 
¶11. In practice, the judicial system upholds the sanctity of 
contracts; however, the processing of cases is severely constrained 
by a shortage in judges in the country.  There are currently 11 
sitting judges in Suriname.  The Ministry of Justice and Police has 
made it a priority to improve the functioning of the judicial 
system.  Seven new judges are currently in training and will take 
their positions in 2008. 
 
¶12. There is no economic or industrial strategy that has a 
discriminatory effect on foreign-owned investments, with the 
exception of the oil sector, which law dictates is to be 
state-owned.  The State Oil Company is granted sole ownership of all 
the country's oil and related activities. Access to this sector is 
possible, however, through exploration and production-sharing 
agreements with the State Oil Company.  No other sector requires, 
under Suriname law, state or local ownership.  The only requirement 
is that the foreign company register itself as operating in 
Suriname. 
 
¶13. There are no limits on foreign ownership or control of a 
company.  Like local companies, foreign companies must register with 
the local Chamber of Commerce and Industry in Suriname (KKF).  When 
registered as a local company with foreign ownership, the local 
operation is considered a branch operation. 
 
¶14. Screening of investments occurs in all sectors and at all levels 
for both local and foreign investments. Screening does not serve to 
impede investments, limit competition, protect domestic interests, 
or discriminate against foreign investment. Smaller and medium-sized 
investments are screened through the Chamber of Commerce upon 
registration. Larger/major investments go through an additional 
screening by the ministry presiding over the sector the investor 
would want to invest in. That ministry will usually establish a 
commission to review the potential investment. In this process, 
investors must submit registration documents from the appropriate 
chamber of commerce in the country where their headquarters is 
located.  Limited liability companies must also submit their 
articles of incorporation.  Larger/major investors must go through 
additional steps and provide financial documentation to the ministry 
in charge of the sector of their investment. 
 
¶15. Companies from the CSME (Caribbean Single Market and Economy) 
have MFN status over other foreign investors; however, in light of 
the need for foreign investment in most Caribbean economies, it is 
highly unlikely that larger international firms would be denied 
investment opportunities in order to accommodate smaller regional 
companies. 
 
¶16. There are three parastatals identified for privatization: 
Stichting Machinale Landbouw(SML)(former rice producer), Bruynzeel 
(wood processing), and Stichting Behoud Bananen Sector 
(SBBS)(bananas).  Foreign investors are allowed to participate in 
these privatization programs from the bidding stage.  The bidding 
criteria for privatization are clear and were written with the 
assistance of international consultants.  The transparency of the 
selection process was questioned in the Bruynzeel case, where one 
bidder accused the government of changing the requirements and 
introducing obstacles after the initial memorandum of understanding 
had been signed. 
 
¶17. SML is the furthest along in the privatization process.  The 
third bidding round for the company's immovable assets was completed 
in 2007 but the results had not been announced by year's end. 
According to the GOS, three companies (one American, one Dutch and 
one local) bid on the company's rice fields. 
 
¶18. After a failed attempt to privatize the ailing wood processing 
company Bruynzeel, several companies, both local and foreign, 
presented proposals to the GOS to buy the company.  Among these 
companies are Emerald Capital Group Ltd. (England) and the State Oil 
Company (Suriname).  The government has indicated it will make a 
decision on what to do with Bruynzeel in 2008. 
 
¶19. SBBS, the banana producer and exporter, is likely to remain 
intact after receiving significant financial assistance from the 
European Union, which revitalized the company into a 
record-producing export company.  The government indicated it will 
commence the privatization process of SBBS in 2008.  Initially, the 
GOS also indicated it preferred the company be taken over by a 
foreign (European) company since the company did not have the needed 
licenses to export bananas to Europe; however, as a member of 
CARIFORUM, Suriname signed an Economic Partnership Agreement (EPA) 
with the European Union that will go into effect January 1, 2008. 
This will allow for European goods to be imported into Suriname 
duty-free, while Surinamese products such as rice and bananas will 
get preferential treatment in the European market.  The business 
community in Suriname has already identified this EPA as its gateway 
into the European market.  Given that the situation on exports to 
Europe has changed, it is unclear if preference for a European buyer 
would still exist. 
 
¶20. There is no discrimination specifically targeted at foreign 
investors at the time of the initial investment or after the 
investment is made, such as through special tax treatment, access to 
licenses, approvals or procurement.  The application of the 2001 
Investment Law is, however, random.  In practice, different 
investors (both foreign and local) are offered different deals at 
the discretion of the Minister of Finance.  Furthermore, in major 
investments, investment benefits are usually obtained through 
negotiations with the government and can change depending on sector 
and the company's negotiating strength. 
 
¶21. There are no laws or regulations specifically authorizing 
private firms to adopt articles of incorporation or association 
which limit or prohibit foreign investment, participation or 
control. 
 
¶22. There are no other practices by private firms to restrict 
foreign investment, participate in, or control domestic enterprises. 
 To the contrary, objections have been made that the government will 
give preference to foreign companies over local companies in the 
same sectors. These objections have been particularly vocal in cases 
involving Chinese companies. 
 
¶23. While the economy is expected to remain heavily dependant on the 
export of commodities from the mining sectors, the GOS has 
recognized the need to further diversify the economy.  Specific 
areas identified for economic expansion are: tourism (particularly 
eco-tourism and small-ship cruise tourism), agriculture, and 
forestry. Seen as an important tool for investment, improved access 
to Suriname is also on the list of government priorities. Surinam 
Airways, the state-owned airline, has indicated its intention to 
offer direct flights between Suriname and the United States, with 
the intent to commence operations in the first half of 2008. 
 
¶24. Economic and monetary stability, along with relative political 
calm, have created a more attractive investment climate in Suriname. 
 There were advances in investment in the oil, telecommunications, 
mining and tourism sectors in 2007. 
 
¶25. In the oil sector, progress was made in exploration.  Repsol 
YPF, the Spanish counterpart of the State Oil Company, is expected 
to commence test drilling in February 2008.  The estimated cost for 
this operation is US$ 50 million.  The Danish oil company Mearsk 
(working in cooperation with the Japanese company Teikoku) and 
American Occidental Oil are continuing their exploration research 
for oil offshore.  Mearsk has completed the first phase of its 
operations, and phase 2, which is supposed to include test drilling, 
is expected to commence in May 2008.  Occidental and Noble Energy, 
from the United States, each purchased a portion of the Repsol YPF 
block in 2007.  In July 2007, the State Oil Company signed another 
exploration and production-sharing agreement with the American firm 
Murphy Oil.  The State Oil Company's subsidiary, Paradise Oil, is 
working closely with the British/Irish Tullow Oil on onshore 
exploration activities. 
 
¶26. The liberalization of the telecommunications sector became a 
reality in 2007 with the entry of two new providers in the market. 
Digicel, the first of the two, launched its network November 30th 
and registered approximately 30,000 customers within the first ten 
days of operations.  The costs associated in setting up this 
operation were estimated at US$ 60 million.  Uniqa, the second 
telecom provider and a joint venture between the local company 
Intelsur and the Antillean UTS, launched its network in mid-December 
and registered 15,000 customers within two weeks' time.  Uniqa's 
system cost approximately US$ 50 million.  Telesur, the state-owned 
telecom provider, invested US$ 20 million to upgrade its 
infrastructure in order to keep up with the new competition. 
 
¶27. In the mining sector, investment for exploration for new 
exploitable resources continued in 2007.  Surgold, the joint venture 
between Newmont Mining Corporation (United States) and the Alcoa 
(United States) subsidiary Suralco, completed the first phase of its 
gold exploration in the southeastern region of Suriname.  Results 
showed economically exploitable reserves.  The company started 
negotiations with the GOS for further development of the area and to 
set up a new mine and refinery.  The new mine is expected to cost 
US$ 334 million.  Reunion Gold Corporation (Canada) signed an 
agreement with the state-owned mining company Grasshopper Aluminum 
Company (Grassalco) to explore 96,000 hectares in eastern Suriname 
for gold.  Minimum exploration expenditures for this project are 
estimated at US$ 8 million over 5 years with US$ 500 thousand in the 
first year. 
 
¶28. The mining companies Suralco and BHP Billiton (Australia) 
continued their negotiations with the GOS for the exploitation 
rights to the bauxite reserves in the Bakhuys Region in western 
Suriname.  Suralco started the preparatory work in order to expand 
its refinery  once the companies have reached an agreement with the 
GOS. 
 
¶29. Infrastructure to support the tourism sector progressed in 2007. 
 Suriname's largest hotel company, Torarica Hotel and Resorts, 
opened its third hotel, the Royal Torarica, in December 2007.  This 
self-proclaimed 4-star facility cost US$ 8.6 million.  The Best 
Western Elegance Hotel, which was rated as a 4-star facility by its 
parent company, began operations in December 2007 as well, and was 
estimated to have cost US$ 3.2 million. Construction commenced on a 
locally owned franchise of the Marriot Hotel. Estimated cost for 
this investment is US$ 10.2 million. Kersten, a diversified 
Surinamese group of companies, also began construction of a 4-star 
eco-resort lodge "Berg en Dal."  This resort is located in the 
district Brokopondo and will include a non-profit foundation that 
will restore original buildings of the old Berg en Dal plantation. 
Costs associated with this investment are estimated at US$ 8.5 
million. Partial financing for this project was provided by the 
Inter-American Development Bank (IDB) and from the Multilateral 
Investment Fund, which is managed by the IDB. 
 
CONVERSION AND TRANSFER POLICIES 
-------------------------------- 
 
¶30. There are no restrictions on converting or transferring funds 
associated with an investment (including remittances of investment 
capital, earnings, loan repayments, lease payments) into a freely 
usable currency at a legal market clearing rate.  Permission is 
required from the Foreign Exchange Commission to transfer any funds 
associated with a business or investment out of Suriname. There have 
been no changes, nor are there plans to change remittance policies 
pertaining to the access to foreign exchange. 
 
¶31. A draft amendment of the Foreign Exchange Law of 1947 is 
currently being prepared. This amendment would bring in line with 
current international trends the country's legislation on issues 
such as foreign exchange transfers and property ownership for 
non-citizens.  When the law was initially drafted in 1947, in a post 
World War II era, it was supposed to protect the economy from being 
overburdened and basically prohibited everything unless special 
permission was granted. The new draft will be the complete opposite, 
allowing everything unless it is deemed to endanger the general 
interest. The draft is also expected to give the decision making and 
executing responsibility for the legislation to the Central Bank of 
Suriname, as the Foreign Exchange Commission will most likely cease 
to exist. The draft is expected to be passed into law in 2008. 
 
¶32. There is usually no difficulty in obtaining foreign exchange. 
Due to the recent stability in the exchange rate with the U.S. 
dollar, dollars have been readily available. The volatility of the 
Euro has led to some artificial shortages, but these were mostly 
speculative shortages created to maximize exchange rate gains. 
 
¶33. The delay period varies for remitting investment returns such as 
dividends, return of capital, interest and principal on private 
foreign debt, lease payments, royalties and management fees. 
Permission must first be obtained from the Foreign Exchange 
Commission, and the time needed to process the request depends on 
the sector and the amount to be transferred.  Transfers through the 
banking system can take anywhere ranging from same-day transfers to 
one week.  Investors can remit through the legal parallel market.  A 
source of origin must be declared, however, in cases where the 
incoming or outgoing amount exceeds US$ 5,000 or 5,000 Euros.  No 
limitation exists on the inflow or outflow of funds. 
 
¶34. As of December 2007, inflation was 8.4 percent, up from 5.6 
percent compared to December 2006.  Inflation for the first 6 months 
of 2007 was 9.6 percent compared to the same period in 2006. 
Indications are strong that the overall inflation rate for 2007 will 
exceed inflation in 2006.  Within the basket of goods used to 
calculate inflation, transportation and consumable goods showed the 
greatest movement.  Transportation was primarily influenced by the 
increasing world market price for fuel and by a bus driver strike 
that led to an average increase in bus tariffs of 15 percent. 
Consumable goods were heavily influenced by the increasing world 
prices for dairy products and wheat, which led to an increase in the 
price of bread.  The increase in the value of the Euro has also had 
a negative impact on the prices of consumable goods as most are 
imported from European Union countries. 
 
EXPROPRIATION AND COMPENSATION 
------------------------------ 
 
¶35. The GOS is granted authority for expropriation under Article 34 
of the Constitution.  According to the article: 
 
"property, of the community as well as of private persons, shall 
fulfill a social function.  Expropriation shall take place only for 
reasons of public utility according to the rules to be laid down by 
law and against previously assured compensation.  Compensation need 
not be previously assured if, in case of emergency, immediate 
expropriation is required.  In cases determined by or in virtue of 
the law, the right to compensation shall exist if, in case of public 
interest, the competent authority destroys or renders property 
unserviceable or restricts the exercise of property rights." 
 
No one sector is at a greater risk for expropriation; however, 
Article 41 of the Constitution does specifically refer to all 
natural riches and resources being the property of the nation and 
states that the nation has inalienable rights to take complete 
possession of all natural resources in order to utilize them for the 
needs of the economic, social and cultural development of Suriname. 
There have been no expropriation actions in the recent past, 
however, and no policy shifts that would lead one to believe that 
expropriation might take place.  There are no examples of "creeping 
expropriation" or government action tantamount to expropriation. 
 
¶36. The crude oil sector is entirely state-owned. The Petroleum Law 
of 1990 allows state enterprises to enter into contracts with third 
parties for the prospecting, exploration and exploitation of 
petroleum, subject to approval by the government.  Under the Mining 
Decree of 1996, the mining rights for radioactive minerals and 
hydrocarbons can only be obtained by state-owned enterprises. 
 
DISPUTE SETTLEMENT 
------------------ 
 
¶37. Suriname's legal system is based on the Dutch Civil System. Laws 
are laid down in criminal, civil, and commercial codes and verdicts 
are based on the judge's interpretation of these codes.  There is no 
government or political interference in the judicial system, and 
judges are generally considered to be impartial. 
 
¶38. Every effort is made to settle investment disputes outside the 
court system.  Due to a shortage in judges, it can often take up to 
a year to have a case heard once it is entered on the docket. 
Numerous continuances often lead to a cumbersome process which takes 
several years to reach a resolution.  There have been no publicly 
known investment disputes over the past few years involving U.S. or 
other foreign investors or contractors in Suriname. 
 
¶39. Judgments of foreign courts are accepted and enforced by the 
local courts only if Suriname has a legal treaty of jurisprudence 
with the foreign country involved.  If not, the foreign judgment can 
be brought before the Surinamese court for consideration as long as 
the court determines it has jurisdiction and doing so does not 
otherwise violate any Surinamese laws.  With Suriname's 
participation and membership in the Caribbean Court of Justice, 
judgments from this court are also binding for local courts.  Cases 
have been successfully filed against Suriname before the 
Inter-American Court of Justice and the Organization of American 
States.  Judgments from these courts have been upheld by the 
Surinamese legal system. 
 
¶40. Suriname has consistently applied its commercial and bankruptcy 
laws.  Companies have a right to file for bankruptcy with the 
courts.  All debts are subsequently filed with a trustee as 
appointed by the court.  The judge may declare bankruptcy in cases 
where there are a minimum of two creditors.  In cases where there is 
a loan from a commercial bank, payment on this loan takes 
precedence.   Monetary judgments are made in local currency, unless 
the contract or agreement stipulates otherwise. 
 
¶41. The government accepts binding international arbitration only if 
it is stipulated in the contract or agreement and if it does not 
contradict any local laws.  International arbitration is accepted as 
a means for settling disputes between private parties, but only if 
local alternatives have been exhausted.  Most agreements involving 
foreign companies have clauses that clearly stipulate the laws 
applicable to the agreement. 
 
¶42. Suriname has been a member of the 1958 New York Convention on 
the Recognition and Enforcement of Foreign Arbitral Awards since 
1964 when the country was still a Dutch territory.  At independence 
in 1975, Suriname automatically continued its membership in 
international conventions and treaties. 
 
PERFORMANCE REQUIREMENTS AND INCENTIVES 
--------------------------------------- 
 
¶43. Suriname is a member of the World Trade Organization.  Suriname 
does not impose any performance requirements, nor does it provide 
any performance incentives, that would be inconsistent with Trade 
Related Investment Measures (TRIMS) requirements. 
 
¶44. The 2001 Investment Law authorizes the Minister of Finance to 
grant both tax and non-tax incentives for new investments and for 
the expansion of existing investments.   In July 2007, the Ministry 
of Finance officially terminated the availability of incentives for 
re-investments.  Incentives for new investments are still being 
granted on a case-by-case, ad hoc basis at the discretion of the 
Minister of Finance while the 2001 Investment Law is under review. 
Incentives are equally available to local and foreign investors, but 
investors must apply for these incentives before the initial 
investment has been made.  Tax incentives may include: exemptions, 
tax holidays, exemptions from import duties for company assets, 
sales tax exemptions, and payroll deductions.  Special incentives 
exist for investments that focus on exports and generate U.S. 
dollars.  Investment in excess of US$ 50 million in the mining 
sector may also benefit from additional incentives. 
 
¶45. No performance requirements are imposed as a condition for 
establishing, maintaining or expanding the investment, or for access 
to tax and investment incentives.  There are no requirements that 
investors purchase from local sources or export a certain percentage 
of output.  Both local and foreign investors, however, have found it 
useful to purchase from local sources and import only those goods 
unavailable on the local market.  Larger companies (e.g., the mining 
companies) have signed contracts for the delivery of products that 
are not readily available on the market.  In the case of foreign 
investments, no requirements exist that nationals own shares or that 
the share of foreign equity be reduced over time, or that technology 
be transferred.  Suriname does not impose any "offset" requirements, 
which would force foreign suppliers to invest in manufacturing, R&D, 
or service facilities in order to receive procurement approvals. 
With regard to the telecommunications sector, the government did 
require newcomers Digicel and Uniqa to deposit US$ 1 million each in 
a performance bond as a guarantee that the companies would provide 
the services for which they had requested licenses. 
 
¶46. In order to operate a company, investors must obtain a special 
industry license.  There are no special requirements on percentage 
of local content or equity.  No requirements exist for substitution 
for imports, nor for export targets.  Investors are not required to 
use specific employment agencies, nor to transfer technology or use 
local sources of finance.  In order for an investor to receive 
permission to hire a foreign national, the investor needs to prove 
to the Ministry of Labor that every effort was made to hire a host 
country national first.  The rule does not, however, apply to 
specialists; in that case the company is free to use whomever it 
deems necessary for the operation of the company.  The specialists 
must have work permits. 
 
¶47. Exceptions have been made to the requirement that Surinamers be 
hired first.  The GOS has signed contracts with Chinese companies 
for construction and infrastructural projects which, through 
negotiations, included in the contracts the stipulation that Chinese 
nationals be allowed to enter Suriname to work in jobs host country 
nationals could have performed. 
 
¶48. As part of the regulatory approval process, investors are 
required to disclose their source of funds to the government. 
 
¶49. U.S. and other foreign firms are welcome to participate in 
research and development.  Larger foreign investors, such as the 
Alcoa subsidiary, Suralco, have played a major role in the 
establishment and maintenance of research facilities at the Anton de 
Kom University. 
 
¶50. There are no excessively onerous visa, residence or work permit 
requirements inhibiting foreign investors' mobility.   Foreigners 
who want to work in Suriname need to apply for a residency permit 
first at the Ministry of Justice and Police, after which they can 
apply for a work permit at the Ministry of Labor.  The free movement 
of artists, university graduates, media workers, musicians, and 
sports persons of CARICOM origin is arranged through the CSME 
regulations.  Also arranged under CSME regulations is the free 
movement for those wanting to establish or conduct business within 
the community. 
 
¶51. Non-tariff barriers on both imports and exports include: proof 
of residency, registration with the Chamber of Commerce, 
registration numbers from the Inspectorate of Customs, and tax 
identification numbers from the Tax Office of the Ministry of 
Finance.  Under the 2003 Law on the Movement of Goods, "negative 
lists" were created by the Ministry of Trade and Industry for both 
imports and exports.  In theory, anything can be imported or 
exported without a license unless it is included on the lists. 
Items included on the "negative lists" may only be imported with 
special permission from the government. 
 
¶52. Tariff barriers include consent and statistical fees charged in 
addition to regulatory import duties.  Imports from countries 
outside CARICOM, except the European Union, are subject to increased 
import duties due to the Common External Tariff (CET) adopted by 
CARICOM members.  Imports are subject to a 7 percent turnover tax as 
stipulated under the 1997 Law on Turnover Tax.  Exports are subject 
to consent and statistical fees.  Companies in the bauxite sector 
pay a 2 percent statistical fee on both imports and exports.  In the 
gold sector the royalties are 2.25 percent with an additional 6.25 
percent if the price of gold exceeds US$ 425 per troy ounce.  A 
statistical fee of 0.5 percent is also applied on the export of 
timber (except to CARICOM countries). 
 
¶53. CSME regulations also prevent its members from importing 
products from outside the Community if the same quality goods can be 
produced or delivered by fellow member states by a pre-set deadline, 
not taking price into account.  Violation could lead to a case being 
filed at the CARICOM Secretariat. 
 
¶54. As of January 2008, most of the earlier mentioned tariffs will 
be terminated on goods imported from the European Union due to the 
Economic Partnership Agreement (EPA) signed between the E.U. and the 
CARIFORUM countries. Under this EPA, CARIFORUM countries will remove 
tariffs from eighty percent of EU imports into the region over a 
period of 15 years, with sensitive goods receiving protection for up 
to 25 years or indefinitely.  For the implementation, CARIFORUM has 
a 3-year moratorium during which it will continue to charge customs 
duties on all items, other than vehicles and gasoline for which a 
different phase-in period was agreed.  CARIFORUM retained the right 
to maintain other duties and charges that make up an important part 
of government revenues for up to 10 years. 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
-------------------------------------------- 
 
¶55. Foreign and domestic private entities have the right to 
establish and own business enterprises and engage in all forms of 
remunerative activity.  Once private entities have registered their 
business with the Chamber of Commerce they have the right to freely 
acquire and dispose of interests as they see fit.  Competitive 
equality is the standard applied in competition between private 
enterprises and public enterprises with respect to access to 
markets, credit, and other business operations, such as licenses and 
supplies.  In practice, private enterprises even have better access 
to markets and credit since they are more flexible and have a less 
bureaucratic decision-making hierarchy. 
PROTECTION OF PROPERTY RIGHTS 
----------------------------- 
 
¶56. Secured interest in property, both movable and real, are 
recognized and enforced.  The concept of mortgages does exist and 
they are registered by the Mortgage Office.  Acquisition and 
disposition of all property rights is protected and facilitated by 
law. 
 
¶57. Even though Suriname is a member of the World Trade Organization 
(WTO) and, since 1975, a member of the World Intellectual Property 
Organization (WIPO), it has not ratified the Trade Related Aspects 
of Intellectual Property Rights (TRIPS) agreement.  While Suriname 
is officially party to the following international agreements on 
intellectual property rights, which came into force when it was 
still a colony of the Netherlands, there is little or no adherence 
to these agreements since they are not incorporated into the 
country's legislation: 
 
-- the Paris Convention for the Protection of Industrial Property 
(1883) 
-- the Berne Convention for the Protection of Literary and Artistic 
Work (1886) 
-- the Hague Convention concerning the International Deposit of 
Industrial Designs (1925) 
-- the Nice Agreement concerning the International Classification of 
Goods and Services for the Purpose of Registration of Marks (1957) 
-- the Strasbourg Agreement concerning the International Patent 
Classification (1971) 
 
¶58. The Ministry of Justice and Police presides over the Bureau for 
Intellectual Property Rights and has on several occasions mentioned 
its intent to improve the country's legislation on this issue. So 
far, however, intellectual property rights have not received the 
same level of importance/attention from legislators. A basic 
Intellectual Property Rights law was prepared in 2004 and presented 
to the National Assembly. This law, however, never made it on the 
legislative agenda for discussion and approval. Subsequently, the 
law was retracted for revisions and has not yet been resubmitted. 
More advanced and specialized legislation (e.g., brand and music 
piracy, industrial property and associated rights) was supposed to 
be added to the basic legislation once it was approved. 
 
¶59. A non-governmental organization, Stichting Auteursrechten 
Suriname (SASUR), was given the authority by the Ministry of Justice 
and Police to oversee copyright infringements in the music industry 
but spent the better part of its time defending its actions about 
charging royalty fees.  Serious discontent existed among media 
houses, event organizers, and artists over the lack of transparency 
in the processes used by the organization, which eventually resulted 
in the organization's operations being suspended in late 2007. 
 
¶60. The current legal framework for discussing copyrights, patents, 
and trademarks dates back to 1912 and 1913, and is an amendment to a 
previously written law.  Neighboring rights (related rights) in 
copyrights, geographical indications, industrial designs, utility 
models, layout designs of integrated circuits, undisclosed 
information, or new plant varieties remain unprotected. 
 
¶61. The WTO TRIPS agreement has been neither implemented nor 
enforced even though the Ministry of Justice and Police has 
indicated its intention to do so. Suriname has signed the WIPO 
Internet Treaties, but has not ratified them. 
 
TRANSPARENCY OF THE REGULATORY SYSTEM 
------------------------------------- 
 
¶62. Suriname has no policies or laws specifically geared towards 
fostering competition. Under CARICOM regulations, Suriname needs to 
establish a national competition authority that would establish 
"clear rules of the game," but this has not been done.  On January 
18, 2008, Suriname became the headquarters location for the CARICOM 
Competition Commission, which some argued was ironic given that the 
country itself has no laws to foster competition. 
 
¶63. No tax, labor, environment, health and safety, or other laws or 
policies, are purposely used to impede investments.  This does not, 
however, mean that they do not form obstacles for investment.  Labor 
laws, for instance, prohibit employers from firing an employee 
without the permission of the Ministry of Labor, once the employee 
has fulfilled his or her probationary period.  Tax laws have also 
been criticized for overburdening the formal business sector while 
there is an entire informal sector, estimated to be roughly twice 
the size of the formal economy, that goes untaxed. 
 
¶64. Bureaucratic procedures, including those for licenses and 
permits, are neither sufficiently streamlined nor transparent.  The 
large number of civil servants involved in the process of granting 
licenses not only makes it a lengthy process, but also invites 
corruption.  Both the World Bank, through its "Doing Business 
Report," and Standard & Poor's have identified the government's 
involvement in the real economy as an undue burden that not only 
undermines policymaking transparency but gives rise to corruption. 
In 2007, the Ministry of Trade and Industry set out to cut through 
the red tape process by working to have all approved licenses issued 
within 3 to 4 weeks. The quick issuance of approved licenses has 
been guaranteed by the Minister himself.  Delays in issuing licenses 
continue to arise during the pre-approval processing, however, due 
to application and documentation requirements. 
 
¶65. Laws and regulations are drafted in consultation with the 
relevant stakeholders in both the public and private sectors. After 
this, they are presented to the Council of Ministers for discussion 
and approval. Once approved, they are sent to the President's 
advisory body, the State Council, for approval before being 
presented to the National Assembly for discussion, amendment, and 
approval. 
 
¶66. All regulatory processes go through the government. 
Nongovernmental organizations have an advisory role in some 
instances.  Legal, regulatory and accounting systems are transparent 
and consistent with international norms. 
 
¶67. There are no industry standard-setting consortia or 
organizations in Suriname.  After adopting the Standards Law in 2004 
and installing the oversight committee in 2006, the Standards Bureau 
was officially established in 2007.  The Standards Bureau is, 
however, not operational yet pending the identification of qualified 
personnel.  Once this has been done, Suriname will also need to 
establish the standards.  There is reason to expect that foreign 
participation would be welcome once the Standards Bureau is 
functioning. 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
--------------------------------------------- ----- 
 
¶68. Sufficient policies exist to support the free flow of financial 
resources in the product and factor markets.  Credit is allocated on 
market terms and at market rates.  Once established as a business in 
Suriname, foreign investors are able to get credit on the local 
market, usually with a payment guarantee from the parent company. 
The private sector has access to a variety of credit instruments. 
Larger companies can obtain customized credit products. 
 
¶69. The lowering to 25 percent of the reserve requirement for 
commercial banks by the Central Bank of Suriname has led to a 
significant increase in the availability of local currency in the 
market.  This in turn has led to multiple decreases in interest 
rates for local currency loans.  At present the average corporate 
lending rate for local currency is 10.5 percent, down from 15 
percent last year.  In an effort to discourage lending in foreign 
currencies the average corporate lending rates for US$ and EURO 
loans has increased to 9.5 percent, up from 8 percent last year. 
Corporate banking specialists expect the local lending rates to 
decrease even further in 2008. 
 
¶70. The local stock market has eleven companies and meets only once 
a month, with very few shares being traded. A number of companies in 
the stock market are interrelated through ownership by one major 
holding company. This is not to prevent hostile takeovers, as there 
has never been one in Suriname.  The stock market regulates itself 
through an investment fund established by one of the insurance 
companies. International portfolio investment is possible through 
another insurance company and this falls under the regulations of 
the Central Bank.  The regulatory system is effective but there is 
little incentive in such a small stock market to have portfolio 
investment. 
 
¶71. The banking system in Suriname is considered sound.  According 
to the IMF, some risks still exist, however, since nonperforming 
loans are at 12 percent of total loans.  The majority of these 
nonperforming loans are at the smaller government-owned banks.  The 
three larger commercial banks have kept their nonperforming loans to 
a minimum at international standards. 
 
¶72. The estimated total assets for the three major commercial banks 
were: 
-- DSB Bank (per December 31, 2006): US$ 373.9 million 
-- Hakrinbank (per June 30, 2007): US$ 255.4 million 
-- RBTT Financial Group Limited (per March 31, 2007): US$ 7.8 
billion. 
(Figures for RBTT Bank Suriname are only recorded in the 
consolidated figures of the holding company and are not individually 
available.) 
 
POLITICAL VIOLENCE 
------------------ 
 
¶73. There have been no incidents over the past few years involving 
politically motivated damage to projects and/or installations.  In 
November 2007, 25 defendants went on trial for the "December 1982" 
murders of 15 prominent citizens.  The main defendant is former 
military dictator and current Chairman of the largest opposition 
political party, the National Democratic Party (NDP), Desi Bouterse. 
 Bouterse had vowed to destabilize the government if the trial 
proceeded; however, as of January 2008, no political violence had 
occurred. 
 
¶74. In their 2007 rating reports on Suriname, both Standard & Poor's 
and Fitch expressed concern that a change in the make-up of the 
government, in which the current opposition would come to power, 
might negatively influence macroeconomic policies and stability. 
National elections are scheduled in 2010, but the NDP has called for 
a change of government in reaction to the trial of its Chairman. 
 
CORRUPTION 
---------- 
 
¶75. No U.S. firms have reported corruption as a major obstacle to 
foreign direct investments.  Suriname has signed and ratified the 
Inter-American Convention Against Corruption.  Suriname has not yet 
signed or ratified the UN Anti-Corruption Convention. The country is 
not a signatory to the OECD Convention on Combating Bribery. 
 
¶76. The Ministry of Justice and Police is responsible for combating 
corruption.  The Fraud Department of the National Police Korps is in 
charge of investigating corruption cases.  The government has also 
established an Anti-Corruption Working Group at the ministerial and 
technical levels to assist the police in combating corruption.  No 
international, regional, or local nongovernmental anti-corruption 
"watchdog" organization operates in Suriname. 
 
¶77. Suriname does not have special anti-corruption legislation in 
place, but the penal code does refer to anti-corruption.  The 
Ministry of Justice and Police has drafted anti-corruption 
legislation which has been placed on the National Assembly's agenda 
for discussion.  The anti-corruption measures in the penal code are 
being enforced, with the bulk of those prosecuted for corruption to 
date being civil servants.  Corruption is most pervasive in the 
areas of government procurement, land policy, and taxation. 
 
¶78. Accepting or giving a bribe is a criminal act, which is 
punishable by a fine or a prison sentence of three months to five 
years, depending on the severity and/or amount of the bribe. A bribe 
to a foreign official is considered a criminal act and cannot be 
deducted from taxes. 
 
¶79. Although senior government officials take anti-corruption 
efforts seriously, there is a widespread perception of corruption in 
the Executive Branch of the government. In 2007, members of the 
opposition party made allegations that the Minister of Physical 
Planning, Land and Forest Management and the Speaker of the National 
Assembly were involved in the illegal issuance of government land 
titles.  In March 2007, the Minister of Transport, Communications 
and Tourism handed in her resignation after she was allegedly caught 
using government funds to finance her birthday celebration.  In 
2007, judges have handed down guilty verdicts on officials in trials 
regarding corruption scandals at the Ministry of Public Works and at 
the Ministry of Agriculture, Animal Husbandry and Fisheries.  Six 
people were charged in 2007 and are expected to go on trial in 
January 2008 on charges that civil servants from the Ministry of 
Finance cooperated with contractors at the Ministry of Education to 
alter amounts on payment receipts, with the total amount embezzled 
standing at US$ 1.96 million (5.5 million SRD). 
 
BILATERAL INVESTMENT AGREEMENTS 
------------------------------- 
 
¶80. Suriname has bilateral investment treaties with Indonesia and 
the Czech Republic.  In 1993, Suriname signed an Agreement on 
Bilateral Trade Relations with the United States.  This agreement 
has not been ratified by the National Assembly. 
 
¶81. Other international agreements into which Suriname has entered 
are as follows: 
 
-- a double taxation treaty was signed with the Netherlands and the 
Netherlands Antilles. 
-- a trade agreement with the People's Republic of China (1998) 
-- the Treaty of Chaguaramas, which established the CARICOM and 
subsequently led to the creation of the CARICOM Single Market and 
Economy. 
-- (through CARICOM) trade agreements with Venezuela, Costa Rica, 
Brazil, Cuba, the Dominican Republic, and Colombia. 
-- trade promotion treaties with Indonesia, India, and China. 
-- CARIFORUM - E.U. Economic Partnership Agreement  (This EPA also 
has some provisions for investment between the 2 regions.) 
 
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
-------------------------------------------- 
 
¶82. Suriname is one of the signatories establishing the Multilateral 
Investment Guarantee Agency (MIGA).  Currently there are no Overseas 
Private Investment Corporation (OPIC) programs in operation in 
Suriname.  In the event OPIC should pay an inconvertibility claim, 
the official currency exchange rate for the U.S. Dollar is SRD 2.80 
for US$ 1.  This is the same rate used by the Embassy. The estimated 
annual U.S. dollar value of local currency that will be used by the 
Embassy is US$ 1.6 million.  The exchange rate has remained stable 
for the past few years and is not expected to devalue or depreciate 
in 2008. 
 
LABOR 
----- 
 
¶83. Labor unions in Suriname are independent of the government, but 
play an active role in politics. Most labor agreements are signed 
without any problems, but teachers, bus drivers, and air traffic 
controllers all went on strike independent of each other in 2007. 
Suriname's labor laws adhere to the ILO conventions protecting 
workers' rights.  The law on work permits states that foreign 
companies should give priority to local nationals, but in some 
cases, the government and the companies can agree on certain ratios 
of local/foreign staff.  Officially, companies can hire foreigners 
to work only if there are no qualified local workers available, and 
foreign workers must obtain a work permit.  The exception to this is 
CARICOM companies, who since January 2006, can operate in the 
Surinamese market without having to apply for work permits for their 
management.  The GOS has also signed contracts with Chinese 
companies which included in the contracts the stipulation that 
Chinese nationals be allowed to enter Suriname to work in jobs host 
country nationals could have performed. 
 
FOREIGN TRADE ZONES/FREE PORTS 
------------------------------ 
 
¶84. There are no duty free trade zones, duty free import zones, or 
duty free ports in Suriname. 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
------------------------------------ 
 
¶85. Recent data on the value of foreign direct investment -- Source 
for the data is the 2007 World Investment Report 
 
FDI Inflow in millions of US$ 
2004    2005    2006 
 286     399     323 
 
According to the same report, Suriname had no Direct Investment 
Abroad between 2004 and 2006. 
 
FDI Flows as a percentage of Gross Fixed Capital Formation 
        2004    2005    2006 
Inward  76.7    79.8    61.3 
Outward   --      --      -- 
 
FDI Stock as percentage of GDP 
        1990    2000    2006 
Inward    --      --    28.8 
Outward   --      --      -- 
 
¶86. A list of major foreign direct investments in Suriname follows: 
 
Repsol YPF, Spain, is commencing its test drilling phase to 
determine the potential for oil off the coast of Suriname. 
Estimated investment: US$ 50 million. 
 
Maersk Oil, Denmark, working in cooperation with Teikoku Oil of 
Japan, will commence phase 2 of its exploratory research off 
Suriname's coast in May 2008. Estimated investment figures not 
available. 
 
McDonald's, United States, has announced its intention to open a 
second fast food restaurant in Suriname. Its current facility will 
also be upgraded. Estimated investment not available. 
 
Alcoa subsidiary, Suralco, has started the preliminary work to 
expand its bauxite refinery in preparation for a new mine in west 
Suriname that Suralco and partner BHP Billiton are currently 
negotiating with the Government.  Estimated investment not 
available. 
 
Newmont Mining Co. and Alcoa, both U.S. companies, are working 
together in a joint venture company, Surgold N.V., on exploration 
and exploitation of gold in southeastern Suriname. An estimated US$ 
118 million will be invested in further exploration, development and 
expansion, while approximately US$ 334 million will be invested in 
setting up a new refinery. 
 
SCHREIBER HUGHES