BARBADOS: E-COMMERCE

On this Page:

- BARBADOS LEGISLATION
- BARBADOS TELECOMMUNICATIONS
- BARBADOS OFFSHORE ACTIVITIES
- BARBADOS CASE STUDIES

See below for specific information on e-commerce in Barbados, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background.

Government officials from Caricom member states met in Barbados in October, 2004, and agreed that members should commit to an “aggressive and focused” strategy to accelerate the development of information technology across the region. The strategy calls on Caricom to adopt a fresh approach to ICT policy and regulation, capacity building, research and innovation, and to ensure more support is forthcoming for publicly-funded ICT programmes.

The representatives also agreed to work towards the development of low-cost, high bandwidth internet access throughout the region. The strategy urges national and regional organisations in Caricom Member States to prepare "with the utmost emergency" projects relating to disaster preparedness, Caricom Single Market and Economy (CSME) trade facilitation, skill development and entrepreneurship, e-government projects and wireless access connectivity projects.

The members have approved an ICT action plan which will result in specific actions undertaken immediately with additional targets due to be met by the third quarter of 2005.

The Prime Minister emphasized the need for progress in his 2004 Budget speech, saying: "We need to accelerate our e-government programme with a view to streamlining of processes, increase employee productivity, and permit greater interaction with the public and the provision of services 24 hours a day. One such critical, new initiative will be the Barbados Integrated Portal Project, an initiative by the Data Processing Department to provide a new electronic gateway to the services, information and knowledge contained in the public sector. The Government portal, which is one of the key pillars of electronic government, will now be implemented in phases. A pilot phase has been implemented primarily to demonstrate the concept, to evaluate the benefits and functionality of a portal. On completion, the portal will enhance Government’s operations making it more effective and efficient while providing the public easier access to its services 24 hours a day.

"To drive the e-government programme, Government will establish a new entity entitled the Central Information Management Agency which will incorporate the Data Processing Department, and will be responsible for the development of ICT strategies, policies and programmes geared at delivering governmental services through the use of information and communication technology.
The new Programme will make possible:

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Barbados Legislation

Barbados has been developing an informatics industry over the last 15 years and sees e-commerce as one of its most important future development opportunities, based on the existing pool of skilled labour and advanced infrastructure.

The Information Society of Barbados has identified three opportunities for e-commerce in Barbados: local to local, local to international, and international to international through local facilities. The island currently has around 16,000 users and aims to dramatically expand upon this figure. Barbados' major objective in e-commerce is to establish the island in the hosting of e-commerce activities for corporations around the world. Internet gaming is also on Barbados' agenda. With these goals in mind the government will implement the necessary legislation to enable e-commerce to become a thriving industry.

In August, 2000, the Barbadian Government passed an Electronics Transactions Act. The main aim of the new policy was to prepare a legal framework for the recognition of digital transactions and to put them on a legal footing equivalent to that of paper-based transactions. Key areas addressed by the Act are record-keeping, security, and contracts. Amendments will be made to other laws that are affected by the new Bill, such as the Evidence Act and the Interpretation Act, which will incorporate digital documents as well as written.

The Act made Barbados the third Caribbean country (after Bermuda and the Cayman Islands) to possess digital signature legislation. It enables customers to securely enter into digital signature agreements and to accept electronic records and documents. However, notices such as evictions, electricity cut-offs and cessation of health insurances will continue to be paper-based communications.

Plans have also been announced to introduce legislation that would protect consumers' privacy.

In November, 2002, The Central Bank of Barbados unveiled new guidelines for electronic banking, designed - according to Governor, Dr Marion Williams - to provide guidance on the promotion of secure online banking activities, while at the same time maintaining the flexibility to accommodate future technologies. Dr Williams revealed that the Central Bank had been working with commercial banks in the jurisdiction over the previous year, in order to develop suitable ways in which to advance electronic banking in Barbados. "What we have done here is to provide general guidelines so that they can choose what kind of system they want," she explained, adding that: "The guidelines are general since the Central Bank of Barbados is of the view that setting too detailed requirements in the area of electronic banking could lead to their becoming rapidly outdated."

However the Bank's report revealed that the jurisdiction was not quite ready for the widespread introduction of internet banking services, suggesting that it may be a further two to three years before local commercial banks are ready for retail e-banking, arguing that: "A further education of both the private and public sector on the benefits of using some of these more 'sophisticated' banking services may be warranted before there can be a surge in the use of electronic banking, or before there is a general acceptance of electronic banking."

The Electronic Banking Guidelines also observed a certain lack of interest in the provision of e-commerce facilities by the Barbadian private sector: "Most commercial entities in Barbados have not effectively acknowledged the need for e-commerce and, in some cases, may have determined it is not cost-effective to offer such services," the Central Bank revealed.

In January, 2005, FirstCaribbean International Bank claimed to be the first bank to launch internet and telephone banking services to its customers across all the countries in its network. The services give all FirstCaribbean customers the ability to view their balances across all types of accounts, including chequing, savings, loans and time deposits, in any location across the bank’s regional network.

Part-owned by Barclays Bank PLC, the bank has an asset base worth some US$9 billion, and operates in 26 Caribbean islands including Anguilla, Antigua, The Bahamas, Barbados, Belize, The British Virgin Islands, The Cayman Islands, Dominica, Grenada, Jamaica, St Kitts & Nevis, St Lucia, St Maarten, St Vincent and the Grenadines and The Turks & Caicos Islands.

The bank has invested $50 million in a state-of-the-art technology platform and was planning to be able to offer internet and telephone service wire transfers and bill payments later in 2005.

In August 2007, the Barbados Telecommunications Unit published the country's new Voice over Internet Protocol (VoIP) Policy, which described the terms and outlines the techniques involved in VoIP technologies, as well as defining the conditions for use in the country, as set out by the Telecommunications Unit in the Ministry of Economic Affairs and Development.

Setting out the regulatory framework for the operation of VoIP in Barbados, the Telecommunications Unit said that "it is incumbent on regulators and policy makers to ensure that there is a market place which provides the greatest consumer choice, quality and protection, while at the same time ensuring the opportunity for operators, small or large, to work in a fair competitive environment and have the opportunity to achieve a reasonable rate of return on investments, innovations and efficiencies".

The regulatory framework takes a "technology neutral" position, encouraging service and equipment providers to innovate, using the best technologies available as they evolve. The framework also aims to be “light-handed”, and will be reviewed as required as VoIP technologies and services, and the marketplace, evolve over time.

In 2008, it was announced that the Government of Barbados, through the Telecommunications Unit and with agreement of Cable & Wireless (Barbados) Ltd, would take over the Administration of the country code Top Level Domain (ccTLD) .bb from 18 February 2008.

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Barbados Telecommunications

In October 2001 the Barbados government commenced the liberalisation of the telecoms market. Barbados' telecoms service provider, Cable & Wireless, agreed to a memorandum of understanding under which the government replaced C&W's license with a non-exclusive one thus paving the way for new competitors to develop in the industry.

The first phase of liberalisation, ending on November 30, 2002, focused initially on the introduction of VSAT-based bi-directional call centre operators and new mobile operators. The second phase - from December 1, 2002 to July 30, 2003 - dealt with domestic services, and private international long distance service providers were able to begin operations after August 1, 2003.

The issuance of licenses is under the joint remit of Barbados' Telecoms Regulating body and the Fair Trading Commission operating within the Trade and Industry Ministry.

Cable and Wireless came in for criticism, however, in October, 2002, when Sunbeach, Barbados' largest ISP, accused C & W of supporting its own internet subsidiary to such an extent that unfair pricing practices are able to take place. As the jurisdiction's telecommunications sector has not yet been fully liberalised, C&W currently enjoys a monopoly position, which means that ISPs such as Sunbeach must purchase services from the company, whilst competing with its local internet arm, Caribsurf. Sunbeach CEO, Chris Alleyne, accused C&W's local operation of deliberately undercutting offers made by Sunbeach with bids that bear little resemblance to the true cost of providing the services in question.

"Through some strange mechanism, their pricing structure is now so flexible there is virtually no limit to how low they can go with their offers," Sunbeach's CEO explained. An un-named government telecommunications adviser told the local newspaper that although Caribsurf's actions are not illegal, it would appear that Cable & Wireless are "deliberately pricing so low as to drive the competition into retreat or out of the market ahead of liberalisation."

The government's timetable was not achieved, and Phase III of liberalisation was not in place until 2005.

Some progress had been made in terms of the issue of mobile licences when requests for proposals for cellular licences were issued in November 2002. Applications were received from one local company, Sunbeach Communications Inc., and international players AT&T, trading as Wireless Ventures Barbados Ltd, Digicel Barbados Ltd., TWT Barbados SRL and Third Generation Wireless Barbados Ltd. Ultimately, three participants were chosen to compete: Sunbeach, AT&T and Digicel. Each of these was granted a licence, based on their unique strengths. A key determinant was the percentage of local ownership of each entity. Sunbeach was a particularly strong runner, due to its local majority ownership and the fact that it is publicly traded on the Barbados Stock Exchange, which allows for current ownership by the public at large.

In early August 2003, the cellular licences that were granted in March 2003 were finally issued. This lag time provided the three new cellular telecom providers with the much-needed breathing space to build their networks prior to launch. Initial estimates indicate that between the three providers BDS154 million (US$77 million) was invested in the race to launch. This includes the purchase of the required telecommunications hardware for the installation of networks, acquisition and construction of cell sites and operating centres, staffing the operations with an estimated 300 persons over time, interconnection agreement with the incumbent and fellow competitors and intense marketing and promotion efforts.

A new high-speed telecommunications service was launched in mid-2006 by TeleBarbados Inc. which promised to bring more competition to the island's telecoms sector and the wider Caribbean region. TeleBarbados's $70 million investment aimed to provide long distance service, international private line and data service, fixed wireless internet and local exchange telephone services.

"We have invested in building a submarine cable system; this ensures our complete independence from Cable & Wireless and ensures us longevity in the market here," Mike DeGraw, TeleBarbados' director of sales and marketing, explained at the launch ceremony. Mr DeGraw said that consequently, the investment would help to bring "true competition" to the sector.

TeleBarbados is serviced by a 940-kilometre, 20-gigabit submarine fibre-optic cable.The service was initially offered only to corporate customers, but the company planned to start offering residential high-speed Internet access and VoIP for international calling by the end of 2006, and to the entire island by the end of 2007.

In January 2007, Fidelity Wireless revealed plans to offer Internet, phone and IPTV/Video on demand services (so called 'triple play') over a new state of the art wireless broadband network to the residential and business community in Barbados. Fidelity has commenced the construction of a new nationwide ‘WIMAX’ wireless broadband network, and the service was due to commence in Barbados in the second quarter 2007. The company has based its regional operational headquarters in Barbados, where it is locating its back office support and network operations centre.

WIMAX is the new worldwide standard for wireless broadband Internet technology. Fidelity, together with its technology partners, said that it has developed an advanced solution for the delivery of multimedia services over Wimax, and the Barbados network will be the first deployment of its kind in the Caribbean.

In February 2007, Global Crossing, the global IP solutions provider, announced that it was working with Global Caribbean Network (GCN), a subsea cable operator headquartered in Guadeloupe, in the French West Indies, to enhance global IP connectivity to the Caribbean region. Under the terms of several agreements, GCN is connecting its voice and data traffic services arriving from the Caribbean to Global Crossing's IP network in St. Croix, via 10-Gigabit wavelengths, enabling GCN to extend its services to North America, Europe and Asia. Primarily based in the Caribbean, GCN's customers would give access to Global Crossing's state-of-the-art global network, so that they can connect to any of the 600 cities in 60 countries where Global Crossing delivers services.

According to a 2006 Telecommunications Industry Review study, the Caribbean is one of the fastest growing broadband markets in the world.

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Barbados Offshore Activities

In October, 2003, all taxes on computer hardware and software were eliminated as the government attempted to encourage development in hi-tech business and information technology. According to Senator Phillip C. Goddard the measure is just one of a series of initiatives being used to spur investment in the IT sector in the jurisdiction, including an updated consumer protection law and a new electronic communications bill. He also revealed the government was working on online privacy legislation and an anti-computer crime law.

KPMG's Information Security Survey 2002 had revealed serious concerns regarding Barbados' e-commerce development, particularly in terms of security measures. According to KPMG Technology Parter, Brenda Pope, online security risks were not being adequately managed by the 56 Barbadian firms which participated in the survey, despite the fact that the issue is becoming increasingly crucial as more and more international businesses seek to conduct transactions over the internet. Ms Pope revealed that of the companies surveyed, only 16% were engaged in actual e-commerce transactions, with the majority (56%) using the internet to promote corporate image, or for information exchange.

The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while business that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

As an expanding offshore jurisdiction with many thousands of offshore enterprises already installed, including many trading companies, it is only a matter of time before Barbados becomes a centre of e-commerce activity. The island's geographical location, its good telecommunications links and its sophisticated business infrastructure add to the inevitability of an e-future for Barbados.

By locating websites in Barbados to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

A company operating an e-commerce facility in Barbados will be able to use International Business Company or Foreign Sales Corporation status. Unlike most of its island competitors, Barbados has been building up a well-trained, specialised pool of computer workers, who will give it a head start in developing e-commerce applications.

For information about the impact of e-commerce on some of the offshore activities which take place in Barbados, click on a link below to go to our specialist E-commerce site Offshore-e-com.com

Sales and Distribution of Physical Products
Sales and Distribution of Digital Products
Banking and Financial Services (including Investment Funds)
Corporate Support Functions

To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.

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Barbados Case Studies

This section will contain case studies of e-commerce solutions applied to offshore business activities carried out from Barbados. To be kept updated as to our progress click here.

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