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DE RUEHPO #0032/01 0261208
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P 261208Z JAN 09
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UNCLAS PARAMARIBO 000032 
 
SIPDIS 
 
STATE FOR WHA/CAR JROSHOLT; EB/IFD/OIA FOR J. NATHANIEL HATCHER AND 
GREGORY N. HICKS 
PLEASE PASS TO USDOC FOR MICHELLE BROOKS AND USTR 
 
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TAGS: EINV EFIN ETRD ELAB OPIC KTDB PGOV USTR NS
 
SUBJECT: SURINAME: INVESTMENT CLIMATE STATEMENT 2009 
 
REF: 08 STATE 123907 
 
¶1. (U) Post submits the 2009 Investment Climate Statement for 
Suriname. 
 
OPENNESS TO FOREIGN INVESTMENT 
------------------------------- 
 
¶2. The Government of Suriname (GOS) welcomes Foreign Direct 
Investment (FDI) into the country and has on several occasions 
identified it as key in achieving sustainable development.  The 
country's 2006-2011 Multi-Year Development Plan assumes that 50% of 
its financing will come from FDI. In 2007, the Ministry of Trade and 
Industry sought to make foreign investment more attractive by 
shortening the time required to obtain licenses. In 2008, Suriname - 
as a member of the CARIFORUM - signed an Economic Partnership 
Agreement (EPA) with the European Union 
 
¶3. In 2005 Suriname's Central Bank and its Debt Management Office 
embarked on an aggressive program to repay the country's outstanding 
bilateral debt. In 2008 Suriname repaid all debts, except those owed 
to Brazil and the United States. In late 2008, the Government of 
Suriname reportedly entered into negotiations to repay their 
outstanding debt of US$ 115 to the Government of Brazil.  Pending 
approval, the two governments tentatively negotiated that the 
penalty interest will be remitted, Suriname will pay US$ 25 million 
in cash, and the remaining debt estimated at US$ 60 million will go 
into a debt-for-investment proQm. Should this deal materialize, 
Suriname's only outstanding debt will be with the UQed States. 
 
¶4. In its 2Q9 "Doing Business Report," the World Bank ranked 
Suriname 146th out of 181 economies - a decrease from their 2008 
ranking of 142.  The ranking decrease can be solely attributed due 
to the addition of three additional countries to the list rather 
than any significant change from 2008 to 2009. The report once again 
cites the lack of improvement in Suriname's efforts to make its 
market more attractive and accessible to foreign investors. The 
rating is primarily influenced by factors such as the time required 
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 continues to dispute these conclusions. 
 
¶5. According to the GOS and 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.  According to officials at the Ministry of Trade 
and Industry and members of the Chamber of Commerce, long wait times 
for licenses are reportedly due to missing information during the 
application process. 
 
¶6. In 2008, both Fitch and Standard & Poor's again reaffirmed their 
positive credit ratings for Suriname. In its July 2008 rating 
report, Fitch noted that the GOS' conservative bilateral debt 
repayment plan significantly improved the country's solvency and 
improved its capacity to borrow money abroad. Even though it rated 
the country as stable, Fitch did issue some stern warnings; 
according to the rating agency, the country remains too vulnerable 
to price shocks in the commodities market and weak macroeconomic 
policies and poor improvement in structural reforms also threaten 
Suriname's credit position. 
 
¶7. In its April 2008 rating summary on Suriname, Standard & Poor's 
identified, among Suriname's strengths, the progress the country has 
made in maintQing its macroeconomic stability, the concentrated 
effort to improve debt management aQemonstrated by the graQl 
clearance of bilateral arrears and an improving debt profile, and 
the favorable economic prospects stemming from strong interests by 
foreign investors in Suriname's main sectors.  The agency also 
identified areas for improvement: institutional weaknesses; an open, 
commodity-based economy exposed to adverse external developments; 
and policy reversal risks stemming from the government's inability 
to maintain macroeconomic discipline throughout vulnerable political 
and economic cycles. 
 
¶8. The outlook Standards & Poor's gives for Suriname is stable based 
on the expectation of continuous prudent fiscal and monetary 
stances. Future improvement in the country's creditworthiness will 
be based on the government's success in using the positive growth 
outlook to reform the economic structure, bring robustness and 
strategic planning into policymaking, improve the efficiency of the 
public sector, and put in place a regulatory framework to ensure 
policy continuity, therefore minimizing political risks. 
 
¶9. In its 2008 Article IV Consultation Report, the International 
Monetary Fund (IMF) Executive Board welcomed the improvements in 
economic policies in recent years which -- supported by a favorable 
external environment -- have contributed to higher economic growth 
and lower inflation, a sizeable buildup of international reserves, a 
decline in public debt, and improved bank supervision. The IMF 
Directors have, however, stressed that the double digit inflation in 
2008 may have formed a risk. The directors also warned against the 
credit growth that emerged in recent years and advised the GOS to 
issue either treasury or central bank bills, or to raise the reserve 
requirement, in order to bring credit growth to more sustainable 
levels. The Directors also recommended strengthening the monitoring 
of public enterprise operations to lower fiscal risks, and 
broadening of the coverage of public debt statistics to include debt 
that is not contracted or guaranteed by the central government. 
They welcomed the efforts made by the government to reduce its 
external debt, ongoing efforts to reform customs administration, 
income tax, and investment legislation. 
 
¶10. In its 2008 Overview of the Economies of Latin America and the 
Caribbean, the Economic Council for Latin America and the Caribbean 
(ECLAC) predicts that, given the current world economic crisis, the 
economies of the region will see their growth rates decline. The 
Council predicts that Suriname's gross domestic product growth rate 
will decrease from an average of 5 percent between 2006 and 2008 to 
3 percent in 2009. Although this is a significant decrease caused 
primarily by the drop in world demand for Suriname's primary export 
commodities of oil and alumina, Suriname's GDP is still expected to 
grow above the approximate 1.4 percent average of the Caribbean 
Region. 
 
¶11. As of January 2009, all investments, both foreign and local, are 
covered by trade laws that govern daily trade in the country. The 
Ministry of Finance has repealed the 2001 Investment Law completely, 
terminating all available facilities under this law. A new 
investment law is being prepared. Larger, multi-million dollar 
investments are still able to get some incentives through 
negotiations with the ministries in their respective sectors. 
 
¶12. The judicial system upholds the sanctity of contracts; however, 
the processing of cases can be severely constrained by a shortage in 
judges in the country. The Ministry of Justice and Police has made 
it one of its priorities to improve the functioning of the Court 
System. As of January 2009, there are 14 sitting judges in Suriname. 
 In 2008, 4 new judges were installed, one retired but was later 
reinstalled, and the President of the Court of Justice retired. 
Recognizing the needs for judges, the Ministry has initiated an 
active system of training for judges.  In January 2009, 7 
participants completed the judges training course; two of them were 
installed as judges in 2008, while the Ministry of Justice and 
Police is currently preparing the paperwork to have the other 5 
installed as judges by the President of Suriname. 
 
¶13. There is no economic or industrial strategy that has a 
discriminatory effect on foreign-owned investments, with the 
exception of the oil sector. The law dictates that this sector must 
be state-owned and therefore the State Oil Company is granted sole 
ownership of all the country's oil-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 registers its 
operations in Suriname. 
 
¶14.  Political pressures, however, may impact proposed foreign 
investments.  After approximately five years of negotiations, a palm 
oil investment deal with the Chinese company China Zhong Heng Tai 
fell through. The GOS was unable to convince the local population to 
go along with the investment plan presented by the firm. The local 
population objected to the plan because it feared that the company 
would bring in Chinese employees to do the work, taking away job 
opportunities from the locals. Objections were also politically 
motivated since the local population held the current coalition 
member, A Combination, to its campaign message that the Chinese 
company's presence could negatively impact the area. 
 
¶15. 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. 
 
¶16. 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 (KKF) upon 
registration. Larger/major investments go through an additional 
screening by the ministry presiding over the sector in which the 
investor would want to invest. 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. In cases of very large 
investments, such as the mining sector, the respective ministry will 
establish a negotiation team that will negotiate the terms under 
which the investor can operate in Suriname. 
 
¶17. Caribbean Single Market and Economy (CSME) countries 
theoretically 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 practice. The EPA 
signing with the European Union has also given European companies 
better market access to the CARIFORUM countries. 
 
¶18. The GOS has a number of parastatals.  Three parastatals were 
initially identified for privatization. These were:  Stichting 
Machinale Landbouw(SML)(former rice producer), Bruynzeel (wood 
processing), and Stichting Behoud Bananen Sector (SBBS)(bananas). 
The Stichting Machinale Landbouw(SML)(former rice producer) was 
divided up and sold.  Bruynzeel (wood processing) later decided not 
to privatize.  The banana company, SBBS, has not yet been privatized 
but has the call for bids out; the GOS has shown a strong preference 
for a foreign investor to take over this company.  The government is 
currently negotiating with several foreign companies on the future 
of SBBS. Foreign investors are not just allowed to participate in 
these privatization programs from the bidding stage, but are 
strongly encouraged to participate in the bidding process.  Written 
with the assistance of international consultants, the bidding 
criteria for privatization are clear. 
 
¶19. 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.  In practice, different 
investors (both foreign and local) are offered different deals at 
the discretion of the GOS represented by the ministry negotiating 
the deal.  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. 
 
¶20. 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. 
 
¶21. 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. 
 
¶22. While the economy is expected to remain heavily dependent 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, small-ship cruise tourism, and hotels), agriculture, 
forestry, and Information and Communication Technology (ICT). 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, recently started offering flights to the United 
States with a stop in Aruba. The company intends to start the 
process of obtaining all necessary certifications to fly directly to 
the United States. The airline recently leased two new planes that 
will be flying the regional routes, which it intends to expand. Its 
primary competitor on the regional routes, Caribbean Airlines, now 
also offers daily flights to and from Suriname. 
 
¶23. Suriname's ability to maintain economic and monetary stability, 
along with relative political calm has kept the investment climate 
in Suriname relatively attractive.  But events in the world economy 
have forced the two major players in the bauxite sector, SURALCO, a 
fully owned subsidiary of the alumina giant ALCOA, and BHPBilliton, 
to halt any further expansion investments. BHPBilliton announced in 
2008 that it will be exiting Suriname's bauxite sector as of 2010. 
In January 2009, SURALCO's preliminary layoff discussions with union 
leaders were reported in the media; these layoffs are alleged to 
threaten the future of up to 400 employees.  Meanwhile, there were 
advances in investment in the oil, gold, telecommunications, and 
tourism sectors in 2008. 
 
¶24. In 2008 the oil sector encountered several highs and a low. In 
the State Oil Company's quest for oil offshore, its Spanish 
counterpart, Repsol YPF, commenced the drilling of the first test 
well. Results of this drill were inconclusive for the occurrence of 
oil. Repsol YPF stated that it would not exclude the occurrence of 
oil, but that the soil had proven to have a very difficult 
configuration making it harder to find the oil. On the positive 
side, the Danish and Japanese counterparts, Maersk Oil and Teikoku, 
respectively, commenced 3D seismic research in their offshore 
blocks. The research will be conducted by the largest purpose built 
seismic vessel in the world, the Geo Celtic, owned by Fugro Norway. 
The State oil Company also opened up a new bidding round for 2 new 
blocks that have become available offshore. Onshore, the State Oil 
Company commenced a US$ 25 million 2D seismic study to expand its 
onshore reserves. The State Oil Company also entered the final 
drawing phase for the expansion of its refinery. The estimated US$ 
400 million expansion will not only expand the company's refined 
production, but will also expand the company's product line.  Also 
active in the offshore sector are the U.S. companies Murphy Oil and 
Occidental Oil. These companies are still conducting their 2D 
exploratory research. 
 
¶25. The 2007 liberalization of the telecommunications sector brought 
two new players to the market, Digicel and Uniqa. In 2008 the 
domination of the market by the state-owned Telesur came under 
serious pressure from rival Digicel. Telesur did, however, manage to 
hold on to its market leader position. Instant messaging between the 
three companies remains impossible as Telesur has refused to provide 
the necessary assistance to establish these services. Telesur is 
also the monopoly internet provider in Suriname. 
 
¶26. In 2008 Surgold, the joint venture between Newmont Mining 
Corporation (United States) and the ALCOA subsidiary SURALCO started 
its official negotiations with the GOS for the establishment of a 
gold refinery in southeastern Suriname.  The reserves in the area 
are estimated at 3 million troy ounces. The GOS has shown an 
interest in becoming an active partner in this operation. Rosebel 
Goldmines, the subsidiary of the Canadian Iamgold, far exceeded its 
own expectations for the first half of 2008 by producing 154,000 
troy ounces at gross income of US$ 138 million. The company also 
invested US$ 46.2 million in the expansion and optimization of its 
production capacity. This project is expected to be completed by 
April 2009. In 2008 Rosebel Goldmines invested approximately US$ 9.9 
million in exploration. Current reserves are estimated at 8.7 troy 
ounces. At current world market prices, gross income of these 
reserves is estimated at US$ 7.8 billion. 
 
¶27. 2008 brought some major changes for the bauxite sector. Alcoa 
subsidiary SURALCO pulled out of the 3-way negotiations with the GOS 
and BHPBilliton in early 2008 for the concession rights to 
Suriname's last major reserves in West Suriname's Bakhuys Region. 
The GOS set up its own mining company Alumsur in mid-2008 that is 
supposed to serve as an active partner to any further developments 
within the bauxite sector of Suriname. Negotiations between the GOS 
and BHPBilliton broke down in October 2008 on the concession rights 
for the Bakhuys Reserves. Three weeks following this breakdown in 
talks, BHPBilliton announced that it would shut down all its 
operations in Suriname in 2010 once it has completed its mining 
activities in the Kaaimangrasie and Klaverblad mines. The company 
cited various reasons, including developments in the world market 
for this major decision. The move by BHPBilliton leaves the 45 
percent share of the bauxite refinery co-owned with SURALCO, one of 
the most productive in the world, available. Based on the joint 
venture agreement between SURALCO and BHPBilliton, SURALCO has first 
option to purchase these shares in 2010. The GOS has started 
negotiations with Alcoa to obtain part of these shares. These 
negotiations are ongoing. An announcement by Alcoa that it would cut 
13,500 employees worldwide is also expected to have far reaching 
effects on Suriname. Up to 400 employees may lose their jobs in 2009 
based on January 2009 media reports of preliminary layoff 
discussions with union leaders. 
 
CONVERSION AND TRANSFER POLICIES 
-------------------------------- 
 
¶28. 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. 
 
¶29. In 2008 the Foreign Exchange Commission repealed the General 
Decrees 106 of 1960 and 153 of 1977.  General Decrees are the laws 
that govern Foreign Exchange in Suriname.  Under the new General 
Decree 217 of 2008, the Foreign Commission decided that it is now 
permissible for banking institutions to open accounts for 
non-residents, and conduct transactions, on behalf of these 
non-residents, in all foreign currencies for which the Central Bank 
of Suriname has an official exchange rate vis-a-vis the Surinamese 
Dollar. The documents of accounts, however, should clearly indicate 
the country of residency and the place in country of residency of 
the headquarters of the non-resident. The general license does not 
apply to transactions of foreign currencies originating from the 
exports of minerals and/or transactions that are the result of such 
an export, unless a special license is granted or another law 
permits so. 
The banking institutions are required to provide the Central Bank of 
Suriname all necessary information regarding any transactions in 
order to assist in the Central Bank's oversight responsibilities of 
foreign exchange transfers to and from Suriname as well as ease the 
balance of payments with other countries. The non-residents should 
have access to their funds by any means, even through transfer, at 
all times. 
 
¶30. There is usually no difficulty in obtaining foreign exchange. 
There are some periods of the year when there is a shortage that the 
Central Bank labels as being primarily speculative. These are 
usually periods of higher than normal demand when local foreign 
exchange companies hold on to the foreign currency in order to drive 
up the price. 
 
¶31. 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. 
 
¶32. Average inflation for 2008 was 15 percent, up from 8.4 percent 
in 2007, and 5.6 percent 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 automotive parts. 
Consumable goods were heavily influenced by the increasing world 
prices and increases in the cost of transport of goods. 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 
------------------------------ 
 
¶33. 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. 
However, there have been no expropriation actions in the recent past 
nor 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. 
 
¶34. 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 
------------------ 
 
¶35. 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. 
 
¶36. Every effort is made to settle investment disputes outside the 
court system.  Due to a shortage of 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. 
 
¶37. 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. Suriname has no legal treaty 
of jurisprudence with the United States. 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. 
 
¶38. 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. 
 
¶39. 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. 
 
¶40. 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 
--------------------------------------- 
 
¶41. 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. 
 
¶42. 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. 
 
¶43. 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. 
 
¶44. 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. 
 
¶45. As part of the regulatory approval process, investors are 
required to disclose their source of funds to the government. 
 
¶46. 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 (Suriname's only university). 
 
¶47. 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. 
CSME regulations also provide for the free movement of those wanting 
to establish or conduct business within the community. 
 
¶48. 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 "negative lists." 
Items included on the "negative lists" may only be imported with 
special permission from the government. 
 
¶49. Tariff barriers include consent and statistical fees charged in 
addition to regulatory import duties. An amendment was made on the 
issue of consent fees in 2008 as the Foreign Exchange Commission, 
through General Decree 216, waived all consent fees in all cases 
where the Ministry of Finance has already exempted or suspended 
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). 
 
¶50. 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. 
 
¶51. In October 2008 Suriname as a member of the CARIFORUM signed an 
Economic Partnership Agreement (EPA) with the European Union. Under 
this agreement the CARIFORUM countries have agreed to have all goods 
from CARIFORUM states, except rice and sugar, enter the European 
market duty and quota free. Parties have also agreed on a three year 
moratorium before reducing import duties on goods imported from the 
European Union. CARIFORUM states will therefore not start reducing 
import duties on European goods until 2011. In 2011, they will 
introduce a gradual scheme of reduction where duties will be reduced 
over a period of 25 years. Parties have also agreed that in order to 
protect the fragile economies of the CARIFORUM states 13.1 percent 
of goods imported from the EU will be placed on an exclusions list, 
meaning that duties will never be reduced/ eliminated on these 
products. Parties have further agreed to extend to each other any 
treatment or benefit that is provided to a third party through a 
Free Trade Agreement (FTA) signed after this EPA. 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
-------------------------------------------- 
 
¶52. 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 (KKF) 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 
----------------------------- 
 
¶53. Secured interest in property, both movable and real, are 
recognized and enforced.  The concept of mortgages exists and 
mortgages are registered by the Mortgage Office.  Acquisition and 
disposition of all property rights are protected and facilitated by 
law. 
 
¶54. 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) 
 
¶55. 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 a 
high-level of 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. 
 
¶56. 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. 
 
¶57. 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 
------------------------------------- 
 
¶58. In 2008 Suriname became the headquarters of the CARICOM 
Competition Commission. The Ministry of Trade and Industry is 
currently preparing the necessary legislation to set up its own 
Competition Authority. Once this legislation has passed, the 
Ministry of Trade and Industry will establish the Competition 
Authority. 
¶59. 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, which goes untaxed. 
 
¶60. 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. 
Even though the Ministry of Trade and Industry has made an effort to 
cut through the red tape and work have licenses signed within 3 
weeks of the approval date, delays continue to occur and it 
continues to be a tedious process. 
 
¶61. Laws and regulations are drafted in consultation with the 
relevant stakeQlders 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. 
 
¶62. 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. 
 
¶63. In 2007 a Standards Bureau was officially established. In its 
first year of operation the Standards Bureau primarily focused on 
hiring qualified personnel and organizing seminars on the topic. 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
--------------------------------------------- ----- 
 
¶64. 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. 
 
¶65. Lending rates have remained relatively stable over the past 
year. The corporate lending rate for the local currency has floated 
between 10.5 percent and 14 percent, depending on the project and 
client. The lending rate for US dollars and Euro loans is 9.5 
percent. 
 
¶66. The local stock market has eleven companies and meets only once 
a month, with very few shares being traded. Trade in shares of these 
companies dropped by 90 percent in 2008 with only 11,000 shares 
changing hands. This compared to the 140,000 shares traded in 2007. 
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. 
 
¶67. Even though Suriname's banking sector is considered sound, the 
IMF has given some stern warnings on the level of non-performing 
loans in the system. According to the IMF Executive Board, the 
increase in world prices for food and fuel prices have certainly 
contributed to inflation, as has the growth in domestic demand. This 
demand growth has also spawned an increased demand for loans. The 
Executive Directors have even called on the Government to tighten 
macroeconomic policies. They have recommended the issuance of 
treasury or central bank bills, or the raising of the reserve 
requirement. 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. 
 
¶68. The estimated total assets for the three major commercial banks 
were: 
-- DSB Bank (per June 30, 2008): US$ 544.5 million 
-- Hakrinbank (per June 30, 2008): US$ 308.4 million 
-- RBTT Financial Group Limited (per March 31, 2008): US$ 8.921 
billion. 
(Figures for RBTT Bank Suriname are only recorded in the 
consolidated figures of the holding company and are not individually 
available. In 2008 this bank officially merged with the Royal Bank 
of Canada.) 
 
POLITICAL VIOLENCE 
------------------ 
 
¶69. 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. Throughout 2008 Bouterse was the instigator of numerous 
allegations towards several members of government, particularly the 
Minister of Justice and Police. Although these episodes may have 
created media flurries, they did not lead to political violence. 
 
CORRUPTION 
---------- 
 
¶70. 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 Organization for Economic Co-operation and 
Development (OECD) Convention on Combating Bribery. 
 
¶71. The Ministry of Justice and Police is responsible for combating 
corruption.  The Fraud Department of the National Police 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. 
 
¶72. 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. 
 
¶73. 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. 
 
¶74. Although senior government officials take anti-corruption 
efforts seriously, there is a widespread perception of corruption in 
the executive branch of the government. In 2008, members of both the 
governing coalition and the opposition continued their 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 2008, the former 
Minister of Public Works was convicted and sentenced to two years 
imprisonment for corruption. Six civil servants of the Ministry of 
Finance were convicted of fraud. The two lead suspects were 
sentenced to three and a half years each, a fine of SRD 100,000 (US$ 
35,714) and repayment of profits from their transactions, estimated 
at SRD 300,000 (US$ 107,143) each. The four other suspects were 
sentenced to nine months, fines of SRD 50,000 (US$ 17,857) each and 
repayment of profits from transactions. 
 
BILATERAL INVESTMENT AGREEMENTS 
------------------------------- 
 
¶75. 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. 
 
¶76. Other international agreements into which Suriname has entered 
are as follows: 
 
-- a double taxation treaty 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. 
-- trade agreements by virtue of CARICOM membership 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 
-------------------------------------------- 
 
¶77. 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 based on precedent and 
market watchers to devalue or depreciate in 2009. 
 
LABOR 
----- 
 
¶78. Labor unions in Suriname are independent of the government, but 
play an active role in politics. Most labor agreements are signed 
without any problems. In 2008 various unions such as teachers, bus 
drivers, and air traffic controllers, airport fire fighters, and 
judiciary staff all went on strike independent of each other. 
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 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, which 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 
------------------------------ 
 
¶79. There are no duty free trade zones, duty free import zones, or 
duty free ports in Suriname. 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
------------------------------------ 
 
¶80. Recent data on the value of foreign direct investment -- Source 
for the data is the 2008 World Investment Report 
 
FDI Inflow in millions of US$ 
2005    2006 2007 
 399     323  316 
 
According to the same report, Suriname had no Direct Investment 
Abroad between 2004 and 2007. 
 
FDI Flows as a percentage of Gross Fixed Capital Formation 
        2005    2006 2007 
Inward  30.8  21.0 18.3 
Outward   --      --      -- 
 
FDI Stock as percentage of GDP 
        1990  2000    2007 
Inward    --      --      -- 
Outward   --      --      -- 
 
¶81. A list of major foreign direct investments in Suriname follows: 
 
Maersk Oil, Denmark, has commenced its 3D seismic study of its 
offshore block. This phase is expected to cost US$ 50 million. 
 
Teikoku, Japan, works in cooperation with Maersk Oil and will also 
being commencing its 3D seismic study. Teikoku will be investing US$ 
15 million. 
 
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. 
 
Iamgold (Canada) through its subsidiary Rosebel Goldmines is 
investing US$ 56.1 million in enhancing its production system and 
exploration.