2007 Speeches
American Chamber of Commerce Luncheon - October 24 , 2007
Las Vegas Casino
Corozal District, Belize
Thank you for your invitation to speak at this American Chamber of Commerce luncheon about conducting business and investing in Belize.
Before I begin my remarks, let me introduce Sue Kuester. Sue is the new political officer at the Embassy. She arrived in Belize in June. Sue most recently served in the embassy in Warsaw, Poland, and prior to joining the Foreign Service, she worked in the investment banking business.
As you all know, the United States is fortunate to enjoy strong political, economic, and social ties with Belize. In fact, the U.S. is also home to the largest Belizean community outside Belize, estimated to be 70,000 strong. Our two countries traditionally have had close and cordial relations and the U.S. Mission here is dedicated to building on that relationship. The United States is Belize's number one trading partner, providing 38% of Belizean imports and accounting for 55% of exports. Belize is a beneficiary of the Caribbean Basin Initiative (CBI) program, which forms part of the U.S.-Caribbean Basin Trade Partnership Act -- a comprehensive U.S. Government program designed to stimulate investment in Caribbean nations by providing duty-free access to the U.S. market for most Caribbean products. The United States is also the largest provider of economic assistance to Belize, contributing USD $2.5 million in various bilateral economic and military aid programs to Belize in FY 2006. As many of you know, we provide substantial military assistance and law enforcement training.
As Belize’s principal trading partner and a major source of investment funds Belize looks to the U.S. for potential investors. The U.S. Embassy is available to assist by providing information and reference guides, introductions to agents and partners. Over the years, the U.S. Embassy has enjoyed a close working relationship with the American Chamber of Commerce in Belize which comprises experienced, local businesspeople who have been dealing with issues specific to Belize for many years. Belize provides some business and investment incentives, and a judicial system for dispute resolution. Many people including Americans have managed to build successful business ventures in Belize, yet there are many challenges new and existing business owners face here.
But the question we might ask ourselves today is: What might a potential U.S. investor see as he or she looks at Belize and goes through the analysis of whether Belize is the right place for a business investment?
Political Climate
I will begin with one important element. As noted in my remarks at your annual convention in July in Belize City, good governance is essential to economic growth and development. In this respect, several recent reports indicate that Belize could do more to ensure continuation of a business climate that will be attractive to foreign investors. The most recent Country Data Report issued by the World Bank (1996-2006) indicated that five of six governance indicators (including Voice and Accountability, Political Stability, Government Effectiveness, Regulatory Quality, and Control of Corruption) were negative comparing 2005 to 2006. Belize fell to the 48th percentile in the Control of Corruption Index in 2006. Transparency International also recently reported their 2007 Corruption Perceptions Index (CPI) and revealed that Belize is one country in the Americas with an increase in how widespread corruption is perceived to be. The regional ranking of perceived corruption in Belize was 21 out of 32 countries.
The October 8 edition of the Wall Street Journal had an article by Mary Anastasia O’Grady examining the business climate in Latin America using the 2008 World Bank Study on Doing Business. The World Bank study is intended to be an objective measure of business regulation across 178 countries. The higher the ranking, the more conducive that country is to the operation of a business. The survey measures 10 factors: starting a business; dealing with licenses’ employing workers; getting credit; protecting investors; paying taxes; trading across borders; enforcing contract and closing a business. The World Bank’s “Doing Business” summary analyzes the 31 Latin American and Caribbean countries as a region. The study indicates that Belize ranks 59 out of 178 countries for ease of doing business - not a bad overall ranking if you are an entrepreneur seeking to start a new business here. Within the 31 countries in Latin America and Caribbean, Belize ranks 8th which is obviously good as well.
However, if an investor does his or her “due diligence” and examines the report more carefully, one sees that Belize benefits from a very high ranking in three areas. In dealing with licenses Belize is number 3 in the world. Its second highest ranking (24) is on closing a business and the third highest ranking is for employing workers (28). However, rankings in the other categories drag down these fine performances. For example, out of 178 countries, Belize ranks 170th in the category measuring “Enforcing Contracts”; 116th in “Starting a Business” and 107th in “Protecting Investors.” How are these rankings likely to encourage or discourage a potential investor?
Ms. O’Grady asserted that Latin America and the Caribbean was the “slowest reforming region this year and that it ‘is falling further behind other regions in the pace’ of reform.” She summarized by observing that, “The most important lesson for Latin America from the World Bank’s report is that its competitors around the world are working to unleash entrepreneurial spirits, and doing nothing is not an option.” Basically, even if you are simply staying in place, you are going to lose your competitive edge.
Economic Climate
Turning next to the economic picture, an investor would see that the economy offers potential opportunities but also presents some serious challenges. Fortunately, Belize has some strong private economic sectors – tourism easily comes to mind – that are attractive to investors. However, debt presently stands at approximately 100% of GDP. In October 2005, Moody’s downgraded Belize’s foreign currency bonds citing concerns about the country’s ability to service international debt. Of course, Belize's economic performance is highly susceptible to external market changes. Although the economy recorded a growth rate of 4.0% in 2006, this achievement is vulnerable to world commodity price fluctuations and continuation of preferential trading agreements, especially with the United States and the European Union for cane sugar; and the United Kingdom for bananas.
Embassy Role
Navigating the subtleties of a start-up or expanding business is always challenging, however it is especially challenging when considering the unique political and economic challenges of Belize I just outlined. However, the U.S. Embassy does have resources to assist. Our Commercial Section produces an annual Commercial Guide that aids new and existing business owners with current local analysis of the investment climate. The Guide includes topics ranging from dispute settlement to tariffs and incentives. The Embassy also maintains contacts with Beltraide and other local private, government and civil sector organizations. The Commercial Section may, in some cases, also be able to assist with finding contacts to resolve investment or other issues involving U.S. companies or citizens. For example, recently a local consumer goods producer had a shipment in route to Canada held up at a U.S. customs port by the Food and Drug Administration (FDA). The Embassy was able to connect the producer with an FDA contact who was able to process the shipment, saving thousands of dollars in lost income. The Embassy can additionally assist interested American companies find agents and distributors in the country through the International Partner Search service.
Many of the issues we often see are related to a lack of due diligence on the part of the investor and robust research is always recommended. These are one of the many ways the U.S. Embassy can be of assistance and we wish much success to interested companies pursuing business opportunities in Belize.
Conclusion
I would like to reiterate that the Embassy appreciates your invitation. I applaud the efforts of the past and present Chamber officers and directors to build an even stronger American Chamber of Commerce. We hope that events such as this will continue to foster even closer ties between the American Chamber of Commerce, the greater business community, and the U.S. Embassy in Belize.