Building Competitive Advantage
In a July 2014 speech in Jamaica, Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), said the Caribbean states have a legacy of stagnation – low growth, high debt, low competitiveness, high unemployment. As a result, they were hit hard by the financial crisis, and even now output has not returned to pre-crisis levels.
She noted that the business climate is less hospitable in the Caribbean than in other dynamic small economies because there is too much red tape, and the labor markets are not effective in creating jobs. She suggested that the public sector needs to play an enabling role in providing full disclosure of fiscal measures offered to investors. A regional approach to transportation infrastructure and the marketing of tourism might work better than each country taking its own initiatives. Finally, she called upon states to resist competing with each other on taxes to attract business.
“Belize has the opportunity to distinquish itself from its Carribean neighbors based on how it addresses structural issues,” says Filippo Alario, Executive Director at Belize Bank International (BBIL). “While we still have work to do, the measures we’ve taken to address these issues in the past few years are showing positive results.”
For starters, according to the CIA World Fact Book, the economy is growing. Belize’s real GDP growth rate was about 2.5% in 2013. In 2012 and 2011, it rose by 5.3% and 1.9% respectively, and it averaged nearly 4% in the period 1999-2007. Tourism is the top foreign exchange earner in Belize, followed by exports of marine products, citrus, cane sugar, bananas and garments. The decrease in Belize’s public debt is another positive indicator. In 2013 represented about 75.1% of GDP, down from 84.6% of GDP in 2012.
Investors considering Belize as an offshore jurisdiction can take advantage of various corporate structures. They can set up as an International Business Company (IBC), a Foundation, a Trust, a Limited Liability Partnership, a Limited Duration Company or an LLC, among others. Moreover, IBC’s offer the flexibility of requiring only one director and one shareholder.
In October 2013, the Government of Belize enacted several legislative amendments to strengthen its offshore financial services industry and its domestic corporate base. The move will enhance the country’s status with international regulatory bodies and ensure that Belize maintains its position as a premier offshore jurisdiction in the Caribbean. The amendments also streamlined and reinforced recordkeeping for companies and trusts.
“Our recent legislative amendments have eliminated some of the bureaucracy for companies while bringing regulations and laws into line with international standards,” says Abner Peralta, Company Secretary of Belize Bank International Limited.
Belize has expanded access to post-secondary education. Several community colleges and junior colleges offer two-year degrees in several subjects. In 2000, provisions were made for the development of the University of Belize, which combines several existing Belize educational facilities. A new private college, Galen University, competes with the government run University of Belize. The University of the West Indies offers courses at its campus in Belize City. In addition, several small offshore medical schools have been established.
“The expansion of higher education is enabling Belize’s people to acquire the knowledge and skills needed to build a strong labor force,” says Filippo Alario. “We believe that this is key to reducing Belize’s unemployment rate and to increasing productivity for further economic growth.”
Fiscal incentives have become more transparent through agreements within the Caribbean region and other countries. In addition to having double tax agreements, Tax Information Exchange Agreements are in place with multiple jurisdictions.
The transportation infrastructure has been built out to support business expansion. Belize has six airports with paved runways and 2870 km of roadways.[i] As a reflection of economic growth, traffic has increased through the Port of Belize City. In 1999 its annual container traffic amounted to 19,677 20-foot equivalent units (Teus). This increased to 40,978 20-foot equivalent units (Teus) in 2013. [ii]
Finally, Belize’s offshore financial institutions can support individuals and companies alike. They provide easy access to a range of services including corporate/investment accounts, merchant accounts, certificates of deposit, financing, multi-currency accounts while ensuring privacy and security.
The global economy is starting to rebound after several years of lackluster growth. Belize is positioning itself so it is ready to compete in the years ahead.
The information contained in this document is for information purposes only and not for the purposes of providing legal advice. You must not rely on the information in this document as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.