ST. VINCENT AND THE GRENADINES: COUNTRY AND FOREIGN INVESTMENT REGIME

St. Vincent and the Grenadines Population, Language and Culture

St Vincent was first settled around 5000 BC by the peace-loving Ciboney, then by the Arawaks and the war-like Caribs.

A Dutch slave ship, wrecked off Bequia in 1675, brought the first Africans who inter-married to create the Black Caribs whose descendants live on the island today. Fought over for nearly a century by the French and British, sovereignty was settled on the British in 1783.

Independence was granted on 27 October 1979, and today St Vincent and The Grenadines is an independent democracy and part of the British Commonwealth.

The population was estimated at 105,000 in 2009; it is divided as follows: black 66%, mixed 19%, East Indian 6%, Carib Amerindian 2%, other 7%. The religion is primarily Protestant.

The official language of Saint Vincent and the Grenadines is English, and it is the language for doing business. However, French and Spanish are widely taught on the Island and there are many bi-lingual inhabitants.

An interesting blend of African, Indian, Asian and European influences are expressed in the lifestyle of the people. The annual carnival ('Vincy Mas') is a showcase for the best in calypso singing, steelpan orchestras, soca music and masquerade costumes.

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St. Vincent and the Grenadines Government

The islands gained independence from Britain in 1979 but the Queen remains as Head of State and is represented by a Governor General. SVG is a member of the British Commonwealth, the United Nations, the Organization of American States, the International Labor Organization, Caricom, and the Organization of Eastern Caribbean States.

SVG is a parliamentary democracy, and elections are held every five years. There is a unicameral House of Assembly (21 seats, 15 elected representatives and 6 appointed senators; representatives are elected by popular vote from single-member constituencies). Elections were last held on 12th December, 2005 (next to be held 2010).

The leader of the majority party is usually appointed prime minister by the governor general; the deputy prime minister is appointed by the governor general on the advice of the prime minister, and the Cabinet is appointed by the governor general on the advice of the prime minister. Currently the Prime Minister is Ralph E Gonsalves.

The basic law of SVG is the English common law but the country has developed its own set of statutory provisions especially in the area of trusts, banking and international finance. The court of appeal is the Eastern Caribbean Supreme Court (based on Saint Lucia; one judge of the Supreme Court resides in Saint Vincent and the Grenadines).

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St. Vincent and the Grenadines Economy and Currency

At one time SVG was a major sugar producer, but now bananas are the staple of the economy, although tourism has become increasingly important, and the government has been trying hard to build a financial services centre. Tropical storms such as 2004's Hurricane Ivan sometimes cause damage to crops and houses, and tourism in the Eastern Caribbean suffered following 11 September 2001.

The rate of economic growth, which had averaged 4% percent a year during 1997-99, declined to zero in 2001 and 2002, then picking up until it was a strong 7% in 2007, although it moderated to 5% in 2008. Inflation rose sharply in the first three quarters of 2008, reflecting higher world fuel and food prices, but declined to 8.7% at the end of the year.

The Unity Labour Party (ULP) government which took office in April 2001 and was re-elected in 2005 implemented an ambitious framework of policy reforms designed to strengthen the public finances, achieve higher growth, lower unemployment and reduction in poverty. The central government’s fiscal position has been strengthening since 2005. In 2008 the fiscal deficit was lowered to 1.7% of GDP and a primary surplus achieved. Unemployment is high; GDP per head is $10,500 (2008) at purchasing power parity.

The Offshore Finance Authority was created by Parliament to institute a new system to manage, direct, control and supervise the Offshore Financial Services Industry in St. Vincent and the Grenadines. However, its role was subsequently assumed by the International Financial Services Authority (IFSA).

The offshore sector grew rapidly in the late 1990s, but action taken by the Government in 2001 and 2002 to improve the regulatory and supervisory framework led to a number of closures of financial institutions.

The local currency is the Eastern Caribbean Dollar (EC$) which is linked to the US$ at an exchange rate of 2.7 EC$ to 1 US$. This rate has remained unchanged since 1976.

Monetary matters are regulated by the Eastern Caribbean Central Bank with headquarters in St. Kitts. The ECCB promotes and maintains the monetary stability of the single common currency (the Eastern Caribbean dollar) of the group of eight small island economies, including Anguilla, Antigua and Barbuda, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

All domestic commercial banks in St. Vincent and the Grenadines are regulated by the ECCB.

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St. Vincent and the Grenadines Entry and Residence

All visitors must have valid passports and a return or ongoing ticket. However, nationals of Canada, UK and the USA need only proof of citizenship (a valid or expired passport, certified birth certificate or Certificate of Naturalization and photo identification) along with an onward/return ticket and/or proof of sufficient funds. Travelers must pay a departure tax.

The ownership of land by foreigners is governed by the Aliens Holding Ordinance. All foreign nationals wishing to acquire land in the state must obtain a license from the Government. License applications fall into two categories: those involving an acre of land or less; and those involving more than one acre of land. For an acre of land, the application must contain an approved plan for development and an execution of conveyance; conveyancing must be completed within 6 months. For more than one acre of land, you must provide a development plan for the entire area; physical and architectural aspects; details of financing; and the labour force to be employed.

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St. Vincent and the Grenadines Business Enviroment

The British telecommunications giant, Cable and Wireless has traditionally dominated the telecommunications services market in St. Vincent and the Grenadines.

In July 2007, Digicel Group Ltd, a fast growing wireless telecommunications operator in the Caribbean and Central America, issued a claim in the English High Court against Cable and Wireless plc and various of its subsidiaries, seeking multi-million pound damages.

Digicel claimed that C&W had engaged in illegal behaviour by impeding and delaying Digicel’s entry into various telecommunications markets in the English-speaking Caribbean.

Digicel alleged that it had been the victim of a co-ordinated effort on C&W’s part to prevent and delay Digicel launching competing mobile telephone networks in St Lucia, St Vincent & the Grenadines, Grenada, Barbados, the Cayman Islands, Trinidad & Tobago and the Turks and Caicos Islands.

Telephone, facsimile, telex and cable services are in wide use, together with e-mail (internet services). Cellular phone services are also available. The Government has liberalized the telecommunications market.

Kingstown has a natural deepwater harbour with a wharf to accommodate ocean-going ships. There are regular services between St Vincent and the major ports in North America, Europe and the Caribbean. A container park at Kingstown and a container port at Campden Park have been completed, and cruise ship facilities in Kingstown are being updated. The E.T. Joshua Airport located on St. Vincent’s south coast has a modern terminal building, night landing facilities and accommodates small aircraft such as BAE 748 Avro.

There are more than 580 km of all-weather surfaced roads to handle heavy traffic which allow for the free flow of goods and services between the various centers of economic activity and also facilitate the movement of workers to the industrial
estates.

In addition to the US dollar, the British pound sterling and the Canadian dollar are widely accepted. All major credit cards are accepted at restaurants and Hotels, and American Express, Visa, and MasterCard have representative agents in the State.

The St. Vincent Electricity Services Limited (VINLEC) is responsible for the supply of electricity. The installed power capacity is 94 megawatts and the voltage is 440v 3-phase (50 cycles) for industrial purposes and 220v single phase (50 cycles) for domestic purposes. The standard industrial tariff is EC$ 12.00 per kwh plus variable surcharge.

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St. Vincent and the Grenadines Investment Incentive Schemes

St. Vincent & The Grenadines provides investment incentives in the areas of light manufacturing, agroprocessing, information technology, film, international financial services, tourism and other services. Benefits include tax holidays, repatriation of profits, duty free concessions and consumption tax exemptions. Tax holidays vary between 10 years and 15 years (the nominal corporation tax rate in SVG is 40%, although this is set to be reduced to 30% over the coming years, starting with a drop to 37.5% in 2007).

The Fiscal Incentive Act No.5 of 1982, specifies five groups of enterprises; the length of the tax holiday depends on the amount of the value added to a product in SVG, the level of employment, inter-industry and sectoral linkages, the opportunity to earn foreign exchange, and the level of investment.

The main investment promotional agency is the National Investment Promotions Incorporated (NIPI) agency, which launched on August 16, 2004, and reports to the Office of the Prime Minister, Dr Ralph Gonsalves.

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