WHY INVEST IN GRENADA
QUALITY OF LIFE
Grenada has one of the most pristine physical environments in the Caribbean and offers investors, tourists, migrant workers and overseas students a high quality of life, low crime, and a relatively un-spoilt natural environment. The country has significantly fewer prisoners per capita than the United States and a range of countries in the Caribbean region. Energy consumption per capita and carbon emissions is relatively low and life expectancy is approximately 68.2 years.
The physical beauty of the country is complemented by its rich history, and vibrant living cultural heritage. The island’s easy rhythms and friendly openness of its residents evoke an atmosphere that has long since vanished elsewhere. Residents are famous for their friendly and hospitable nature.
POLITICAL & ECONOMIC STABILITY
Grenada is one of the most politically stable countries in the region. It is a democratic state with a Westminster Style Parliamentary form of government and constitutionally held elections every five years. It has a governor general (representing Queen Elizabeth II, head of state), a prime minister and a cabinet (executive branch), and a bicameral Parliament with an elected House of Representatives and an appointed Senate (legislative branch). The House of Representatives has 15 members, elected for a five year term in single-seat constituencies. The Senate has 13 appointed members (10 appointed by the government and three by the leader of the opposition).
It is a member of the eastern Caribbean court system. The Judiciary is independent of the executive and the legislature. Jurisprudence is based on English common law. The Privy Council of the United Kingdom serves as the highest appellate court.
There are two significant political parties, the New National Party and the National Democratic Congress. Minor parties include the Maurice Bishop Patriotic Movement (MBPM, and the GULP of former Prime Minister Gairy. Constitutional safeguards include freedom of speech, press, worship, movement, and association. Citizens enjoy a wide range of civil and political rights guaranteed by the constitution.
The country has grown, over the past 30 years – at an average annual rate of 3.4 percent. GDP growth in the 1975 to 2005 period (3.4 percent p.a.) was higher than in the more recent 1990 to 2005 periods (2.5 percent p.a.). Despite the global financial crisis the economy grew by 1.6% in 2008.
Labour productivity is relatively high. Grenada achieved an annual average productivity performance of 4.62 percent over the period 1981-2000, one of the highest productivity growth rates in the region. With a relatively young English speaking workforce and high levels of adult literacy (96%) the workforce is highly trainable. Approximately half of the workers of Grenada have a high school diploma and another 13 per cent have benefited from tertiary education. A narrow ‘tax wedge’ increases the incentives to work. While the workforce is highly unionized (80%), labor relations are relatively good.
With regard to prices and cost, generally, Grenada is cost competitiveness. Electricity prices compare favorably to the regional average. The cost of broadband services for businesses has been falling. Tax rates on labour are low by regional and world standards. Minimum wage is competitive with other countries in the region. The cost of credit is better than the regional average and the cost of a standardized consumer-shopping basket is the second lowest in the currency union.
Grenada also has relatively low inflation and a stable exchange rate. Since 2000, Grenada recorded one of the lowest rates of price increases in the region averaging 2% per annum. This has lead to more moderate wage increases and has promoted good industrial relations. In 2008, the country experienced a sharp increase, at an average of 8.2% in inflation, reflecting rising world food and fuel prices and U.S. dollar depreciation. The main factors driving higher inflation are increases in food (14.0%) and petroleum (24.7%) products prices. In 2009, inflation is projected at 4.5 percent reflecting lower oil prices and recession in the US economy.
Grenada has also improved in both the Institutional Investor Country Credit Rating and the World Bank Institute’s Control of Corruption Index over the last year. Also, Grenada was highlighted as one of the ten (10) economies improving the most in the ease of doing business in 2009/10. Grenada is ranked 49 out of 183 economies in starting a business.
Grenada’s basic infrastructure to support investment – sea and land transportation, electricity generation, telecommunications, and water – is quite well developed and is regarded as good and supportive of competitiveness by investors.
Access to electricity is very high and prices compares favorably to the regional average. With peak demand of 30.46MW of power, the company has excess installed capacity of 19MW of power.
As with most developing economies, activity in Grenada’s telecommunications sector has been fuel by robust competition in the mobile market and efforts at increasing penetration in the internet service market. New entrants and existing providers are in the process of deploying advanced telecommunication network and infrastructure to adapt to the new environment and the imminence of convergence.
The completion of a new fibre optic submarine cable linking Grenada and the rest of the Caribbean to the Internet backbone has allowed for increased international connectivity of up to 30 Gbps per fibre pair. There are at least four fibre pairs. The increased capacity has resulted in a reduction in the price of IP bandwidth and reduced retail rates for high speed internet access and international calling by up to 50%. It has also improved quality and security. Proposals to build a fibre network around the island, firstly to serve Government offices, and secondly to the home could have significant spin-offs to e-Government, business development, tourism, health and education services, police, national security and disaster recovery.
Investment in digital infrastructure has open up new opportunities and attracted data and telecommunications dependent businesses. Recent significant investments in the mobile sector have improved the quality of mobile services in the country which is now up to 100% penetration. With respect to the fixed line market, although five licenses have been granted, the incumbent Cable and Wireless is the only provider of fixed line services.
Six individual licenses have been granted for internet networks and services. Currently there are two providers of Internet services. In recent times there has been a marked shift from dial-up to high-speed Internet access.
Clean, safe, pipe borne water is provided from a series of catchments, rivers and deep wells.
Grenada has excellent port facilities. Grenada Port Authority has extensively developed since the mid 1900’s to include an expansion of the main Carenage port which is situated in the capital St. George’s and construction of an all-new cruise ship terminal separate from the cargo port. With berth capacity for commercial vessel of 335 metres long with 9.1 metres depth alongside for three vessels or two mega ships, dedicated warehouse (10,432 sq. ft) capacity, fork lift trucks, tractor trailers, stackers, toplifts, bond storage facilities, and a container park. All commercial ports are currently owned by the Government of Grenada and managed by the Grenada Port Authority. There are eight smaller ports, including one in Carriacou.
The country has regular shipping links with major ports in the United States, Canada, Europe, and Asia, and is served by six international shipping lines. Notwithstanding broader transport services that build on basic infrastructure are critical.
The Maurice Bishop International Airport (MBIA) is served with two runways (10, 28) on one strip with both using LCN 86 asphalt surface. The runways have a length of 2745 meters and 45 meters wide, with an elevation of 12 meters situated within reference point.. A small airport Lauriston Airport is located in Carriacou the largest island in the Grenadines; both are owned by the Government. Carriers operating flights in and out of Grenada are predominantly from the region, but also from the United States, United Kingdom, and Canada. Air access from Europe is particularly strong.
Generally, only high value and urgent cargo is flown into Grenada; within the region, the bulk of goods are carried by maritime transport. In 2006, a total of 1.5 million kg of freight was transported in and out of Grenada. Most goods transported to the United States and the United Kingdom, such as shipments of fish and vegetables, are via regular airlines.
Public transportation is available from 6:00 am to 8:00 pm. Taxi services and vehicle rental agencies are also available. The country has a 1,040-kilometre road web. Approximately 60 per cent are paved.
Grenada’s knowledge infrastructure is also relatively good. Public expenditure on education as a percentage of total government expenditure is higher than a number of other countries in the Caribbean region.
There are two post-secondary schools in the country, including the T.A. Marryshow Community College, affiliated to The University of the West Indies, and St. George’s University founded over a quarter century ago (1977) as a medical school. St. George’s University has added Schools of Veterinary Medicine (1999), Arts and Sciences (1996) and programmes in graduate studies to its original charter.
TRADE & INVESTMENT OPPORTUNITIES
Grenada is one of the most open economies in the world. The regulatory environment that governs trade and investment is relatively free. The country’s economic structure is highly diversified, based on the contribution of agriculture, manufacturing, tourism, construction, communications, transportation and government.
The manufacturing sector has grown significantly in recent years largely due to Government encouragement in the form of attractive incentives. In 2009 manufacturing exports equaled EC$36,535.6.Exports are dominated by flour, wheat bran, clothing, paper products, animal feed, roofing sheets, paint and varnishes and nutmeg products. The main export destination for goods from Grenada is the United States, followed by OECS countries and the Netherlands. Given the small size of the local economy, companies need to export from an early stage of their development and a wide range of goods and services have to be imported.
The tourism and hospitality sector is the fastest growing sectors in the Grenadian economy, measuring a 35.2 percentage of GDP). Grenada currently has 1.7 percent of the cruise passenger ship markets and 1.9 percent of the stay-over market. Due to a lack of tourism product and new attractions, visitor expenditure is lower than many other destinations in the Caribbean. Grenada welcomes investments in these areas.
Grenada has become increasingly active in the area of international services. Overseas education, offshore financial services and ICT related business services offer great potential for development and growth. The government also welcomes proposals that could further develop hydro and geothermal energy resources that could reduce dependence on imported fuel.
Public and private sector investment in the economy is relatively high. Sustained public sector investment over the years has enhanced physical infrastructure (e.g., airport, roads, educational facilities, etc.) and provides a good base for productive capacity to expand in the coming years. Some of this investment has been required to recover from recent natural disasters, but it has left Grenada with a very modern economic and social infrastructure.
FDI stock relative to the size of the economy is relatively high (195 percent of GDP). Foreign direct investment accounted for 60 percent of gross fixed capital formation in Grenada in 2007. FDI inflow increased from EC$262.9 million in 2007 to EC$340.9 million in 2008. Overseas investment has been predominately in the tourism sector (e.g. hotels) and the provision of infrastructure (e.g. mobile telecommunications). At present, there are several hotel developments planned or in the early stages of construction, though delays are being experienced due to the international recession.
The country has made significant progress in re-orientating its economy from agriculture towards a broad services based economy. While agriculture and manufacturing still plays a key role in the economy, services sector activities as a percentage of GDP and exports have grown rapidly in the past decade. Service activities now accounts for some 70% of GDP in Grenada
The country’s relative underdevelopment offers a wide range of opportunities that are not available in competitor countries. A vast range of sites is still available for the development of hotels and tourist facilities. In addition, Grenada can provide one of the most diversified tourism offerings in the Caribbean with its untapped natural resources: rain forests, crater lakes, waterfalls, white sand beaches, exotic underwater life, diversified flora and fauna.
SUPPORTIVE GOVERNMENT POLICIES
Without prejudice to Grenada’s obligations under international treaties the Government grants most favorable nation treatment to all foreign investors and seeks to facilitate persons, either natural persons or legal entities, to invest in Grenada on the basis of mutual benefit and observance of the Laws of Grenada and the International Treaties to which Grenada is a party.
Investors are encouraged to freely invest and operate business enterprises in all fields of lawful economic activity. Few restrictions are placed on foreign investors. Investors may purchase or lease privately owned land and dispose of or transfer their assets in the land, open bank account, access foreign currency, import skilled workers, freely distribute their profits or dividends, benefit from fiscal incentives and the GIDC facilitation services to establish their operation.
Doing business in Grenada is relatively easy. Grenada is ranked 84th in the world on the ease of doing business. Grenada score is enhanced in areas such as the ease of dealing with construction permits (16th), protecting investors (24th), starting a business (40th), employing workers (51st), trading across borders (63rd), getting credit (68th) and paying taxes (74th).