The climate is right in the Caribbean for Foreign Direct Investment (FDI) in four key sectors including Alternative Energies, Business Processing Office (BPO), Communications and Technology (ICT), and Tourism. This was the theme at the recently held Caribbean Investment Summit in London hosted by the Caribbean Export Development Agency (Caribbean Export) in collaboration with the Caribbean Association of Investment Promotion Agencies (CAIPA).
These four sectors were initially identified as areas for increased focus via research conducted and published in strategy report titled: “Effective Promotion of Investment Opportunities Within CARIFORUM.” This document is now the driving force behind the Caribbean’s Regional Investment Promotion Strategy (RIPS) funded in part by the European Development Fund (EDF)/Regional Private Sector Development Programme (RPSDP). The focus as with the Caribbean Investment Summit is on proactive promotion and improving the regional investment climate.
Discussion of the four sectors was weaved throughout the day-long conference starting with the opening remarks by the Right Hon. Perry Christie, Prime Minister of the Bahamas and by Pamela Coke Hamilton, Executive Director, Caribbean Export to the 100+ delegates including many investors from across the UK and Europe. They were also discussed during the break-out sessions were specific opportunities were highlighted.
So how much FDI has actually flowed into the Caribbean region in the last few years? Well according to 2015 report from the United Nations titled Foreign Direct Investment in Latin America and the Caribbean, “the Caribbean’s inflow of FDI shrank from US$ 6.322 billion to US$ 6.027 billion between 2013 and 2014, a decrease of 4.7%, compared with a decrease of 16% in Latin America.” On the list of 15 Caribbean destinations profiled, only Antigua & Barbuda, Barbados, Belize, Dominica, Dominican Republic, Guyana and Jamaica had positive FDI growth from 2013 to 2014.
Compare the FDI figures to the overall gross domestic product (GDP) and one begins to understand the importance of FDI to the Caribbean region. In fact, the report explains “the ratio of inward FDI to gross domestic product (GDP) last year was 4.2% for the whole subregion and over 10% in several economies. By way of comparison, the ratio is 2.6% in Latin America and lower, if anything, in other developing regions. Even compared with other small economies such as Pacific Island States, Caribbean economies receive particularly high levels of FDI in relation to their economic size.”
With the importance of FDI to the Caribbean region, the pressure is on to reverse the declining trend. And on this go around, the emphasis is on promoting investments that are more inclusive and encourage sustainable economic development. There also appears to be a willingness by more governments to actively encourage different types of investment opportunities, whether they be private, joint-ventures or public-private partnerships. This was evident in the break-out presentations where investment representatives from about 7 Caribbean destinations pitched to the audience. In discussing the respective countries and the investment opportunities, there was also much talk of incentives and initiatives to further improve the business climate for investors. For example, the Dominican Republic launched the One-Stop-Shop for Investment office which allows investors to get all the permits, licenses and certifications they need through one centralized and unitary process which ultimately saves both time and costs.
The Caribbean Investment Summit was one of promise and potential. It didn’t overlook the challenges in the region, but acted as a timely reminder to the marketplace that there are a range of positives (warm weather, accessibility to major markets, economic and political stability, educated/skilled labor force, modern infrastructure, incentive programs, etc.) and members of the Caribbean Association of Investment Promotion Agencies (CAIPA) are open for business and ready to engage with serious investors across a wide range of sectors.