Montserrat A. Definitions and sources of data Foreign direct investment (FDI) data are compiled by the Eastern Caribbean Central Bank. The FDI definition as recommended in the Balance of Payments Manual: Fifth Edition of the International Monetary Fund is applicable to this economy. A foreign-owned enterprise requires the government s approval to trade in Montserrat. This also holds true for joint ventures. Subject to approval, 100 per cent foreign ownership of enterprises is also permitted. A partnership needs to be registered under the Registration of Business Names Ordinance. Although the policy of the Montserrat Government is towards free trade and the promotion of FDI for some products, import licences are required. Export-oriented manufacturing, agricultural projects, tourism and e-commerce are the main focus of the Government. There are normally no restrictions on the purchase of property in designated areas. However, before land is purchased an Alien Land Holding License must be obtained from the Ministry of Agriculture, Trade and Environment. To promote foreign investment into Montserrat, the Government has set up investment incentives for foreign investors that, in the case of fiscal incentives, need to be approved by the executive council. The incentives provided include tax holidays of 5 to 10 years and periods of up to 15 years maximum under certain circumstances and duty-free imports. Export-oriented businesses are eligible for tax rebates, and the right to repatriate investment and profits. Manufacturing enterprises are offered incentives under the Fiscal Incentives Ordinance 1975. One of the tax holidays offered is specified for the enclave industry, which produces exclusively for export outside the Caribbean Community Common Market (CARICOM) region. A second tax holiday offered is for capital-intensive industries where capital investment is not less than $9.25 million. Hotel construction and extensions are given incentives under the Income Tax Act and the Hotels Aid Ordinance 1975. The Hotels Aid Ordinance grants exemption from customs duties on all imports of building materials, machinery, equipment and furniture for the construction or extension of hotels. Montserrat is a member of CARICOM. A company exporting to countries other than the East Caribbean Common Market (Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines) is entitled to a tax rebate depending on the percentage of profits attributable to exports.
B. Statistics on FDI and the operations of TNCs
Table 1. Summary of FDI (Millions of dollars) Variable Inward Outward 1. FDI flows, 2000-2003 (annual average) 2.2.. 2. FDI flows as a percentage of GFCF, 1998-2001 (annual average) 17.8.. 3. FDI stock, 2003 89.3.. 4. FDI stock as a percentage of GDP, 2003 359.4.. Sources : Based on tables 3 and 4 and UNCTAD, FDI/TNC database.
Table 3. FDI flows, by type of investment, 1986-2003 (Millions of dollars) Year Inward investment Outward investment 1986.. 0.4 4.3 4.7........ 1987.. 0.7 10.5 11.2........ 1988.. 0.5 9.0 9.5........ 1989.. 0.9 4.1 4.9........ 1990.. 0.4 9.2 9.6........ 1991 7.8 0.2 0.0 8.0........ 1992 4.4 0.1 0.0 4.6........ 1993 3.0 1.8 0.0 4.9........ 1994 5.9 1.5-0.2 7.2........ 1995 2.5 0.7-0.2 3.0........ 1996 -.. - 0.3-0.3........ 1997 0.6 1.9.. 2.6........ 1998 0.6 1.9.. 2.6........ 1999 2.2 6.1-0.1 8.2........ 2000 1.4 2.1-0.1 3.5........ 2001 0.5 0.6-0.1 1.0........ 2002...... 2.1........ 2003...... 2.1........ Sources: UNCTAD, FDI/TNC database, based on information from the Bank of Montserrat for 1990-2003 and the International Monetary Fund, Balance of Payments CD ROM, January 2004, for 1986-1989.
Table 4. FDI stock, by type of investment, 1986-2003 (Millions of dollars) Year Inward investment Outward investment 1986...... 4.7........ 1987...... 15.9........ 1988...... 25.4........ 1989...... 30.3........ 1990...... 39.9........ 1991...... 47.9........ 1992...... 52.5........ 1993...... 57.4........ 1994...... 64.6........ 1995...... 67.6........ 1996...... 67.3........ 1997...... 69.9........ 1998...... 72.5........ 1999...... 80.7........ 2000...... 84.2........ 2001...... 85.1........ 2002...... 87.2........ 2003...... 89.3........ Sources: UNCTAD, FDI/TNC database. Note: S tock is an accumulation of flows since 1986.
C. Legal framework for FDI I. National framework The International Business Companies Ordinance (IBCs) No. 19 of 1985 Source: http://www.offshore-manual.com/taxhavens/montserrat.html, 4 March 2004 Fiscal Incentives Ordinance 1975 Income Tax Ordinance 1967 Exchange Control Ordinance, Cap. 115 Foreign Currency Levy Ordinance 1980 Montserrat s Trustee Ordinance of 1961 New Offshore Banking Regulations II. International framework 1. Montserrat is a party to the following multilateral and regional instruments: The Caribbean Community and Common Market (CARICOM ) established by the Treaty of Chaguaramas 1973 2. Bilateral treaties Bilateral treaties for the avoidance of double taxation with: United Kingdom 1947 Income and Capital, Denmark 1954 Income and Capital, Norway 1955 Income and Capital, Switzerland 1963 Income and Capital, Japan 1970 Income and Capital, Sweden 1972 Income and Capital Source: UNCTAD database on BITs and DTTs
D. Sources of information Official 1. Eastern Caribbean Central Bank: http://www.eccb-centralbank.org/. Secondary 1. Montserrat Economic Development Unit, Investment Guide, undated, http://www.devunit.gov.ms/mni_inv_guide.pdf. 2. Dixon, Mark, An overheated economy, Accountancy, December 1997, vol. 120, No. 1252, pp. 34-35. 3. Tuitt, Kathleen, Small tigers of the Caribbean, Bobbin, November 1991, vol. 33, No. 3, pp. 52-55.