Foreign Direct Investment in Latin America and the Caribbean - 2013
The following is a condensed summary from the paper's section on FDI activity in the Caribbean:
During 2013, flows of FDI to the Caribbean decreased from US$ 8.413 billion USD to US$ 6.052 billion, mainly reflecting the decline in flows to the Dominican Republic. For those economies with data, nine saw a reduction in inflows during 2013 and five saw increases.
The most important feature of FDI in the Caribbean is that there are two partially opposing forces at work. On the one hand, there are those economies that are primarily specialized in natural resources, such as Trinidad and Tobago, Suriname and Guyana. Those resource-intensive economies have seen an increase in FDI in recent years, a trend that largely continued into 2013. Most economies in the Caribbean, however, rely on the tourism sector. While these are less capital-intensive and the investment projects thus do not affect the overall regional figures as strongly, they can have a major impact on some of the smaller economies. FDI inflows in tourism-related activities have been decreasing since the financial crisis of 2008, but 2013 saw a resurgence of activity in many economies. This may be good news for those economies, particularly since investment in tourism tends to have a large impact in, for example, employment creation.
In addition to natural resources and tourism, the Caribbean has also seen a flurry of activity in the field of electricity generation. Several economies are exploring alternative sources of electricity to reduce their dependence on fossil fuels and different electricity grids have significantly consolidated operations. If successful, this market consolidation could prove a boon for the region, which is plagued by extreme energy dependency, consistently high electricity prices and ongoing current account deficits, partially owing to the need to import energy.
The Dominican Republic is the subregion’s largest economy and receives correspondingly high inflows of FDI. Inflows in 2013 amounted to US$ 1.991 billion, somewhat below the average for recent years and a significant drop from the 2012 figure of US$ 3.142 billion.
Trinidad and Tobago received inflows of US$ 1.922 billion during the first three quarters of 2013, compared to a 2012 figure of US$ 2.453 billion, which is among the highest inflows ever recorded in the country. Most activity took place in the oil exploration sector.
In Suriname and Guyana, the most important developments took place in mining and oil and gas exploration. FDI inflows to Suriname increased from US$ 62 million to US$ 112 million, while those to Guyana shrank from US$ 294 million to US$ 214 million.
Barbados has not published data for 2013. While the Barbadian economy has taken a hit in recent years, with a 0.2% contraction of GDP during 2013, some positive signs can be found in the tourism sector. Sandals Resorts of Jamaica announced an investment of US$ 250 million, purchasing one resort and constructing another. In electricity generation, Guernsey-based Cahill Energy announced a US$ 240 million waste-to-energy plant.
Jamaica’s FDI inflows increased from US$ 490 million in 2012 to US$ 567 million in 2013, a five-year high. China Harbour Engineering announced a US$ 1.350 billion project to build a new port on Goats Island, to tap the opportunity afforded by the expansion in the Panama Canal. Jamaica also benefited from a revival of tourism-related investment in 2013.
In the Bahamas, FDI inflows decreased from US$ 575 million to US$ 410 million in 2013. An investor group that includes Cipriani (Luxembourg) and Chinese investors announced the intention to invest upward of US$ 1 billion in a new development: the Blackwood Point Resort & Marina, which should include a 1,500 room resort, casinos and even its own power plant. Meanwhile, Yacht Management (United States) announced a US$ 17 million investment in yachting services and Emera Incorporated of Canada has opened a biofuel demonstration project through its Grand Bahama Power Company subsidiary
Belize saw investment activity mainly in the tourism sector in 2013, with a focus on the cruise segment. FDI inflows fell from US$ 194 million to US$ 112 million.
Haiti saw investment increase from US$ 179 million in 2012 to US$ 186 million in 2013. Haiti’s territory is currently being prospected for mining opportunities, by Eurasian Mining and Newmont Ventures Ltd. of Canada, for example, so mining could see significant FDI inflows in the future. Currently, most investment goes into manufacturing.
The members of the Organization of Eastern Caribbean States (OECS) saw an 18% increase in FDI inflows from US$ 514 million in 2012 to US$ 607 million in 2013. The tourism sector received much attention, but some economies saw significant announcements in energy generation, as well. The biggest recipient in 2013 was Antigua and Barbuda with US$ 138 million (up from US$ 134 million in 2012), which may have partly reflected its new Citizenship by Investment (CbI) programme.
Saint Vincent and the Grenadines received US$ 127 million in 2013 (up from US$ 115 million). Its new airport, to be opened in 2014, is leading to an increase in tourism investment, while a major storm around Christmas caused substantial damage to several properties, which will require investment to recover. Finally, Reykjavik Geothermal started a US$ 50 million project in geothermal energy during 2013.
Saint Kitts and Nevis saw a 20% increase in FDI inflows to US$ 112 million, with a strong focus on tourism. During 2013, some 1,000 rooms were added on the island.
Saint Lucia’s FDI inflows increased from US$ 80 million to US$ 88 million in 2013, with much of it in tourism. Additionally, French-Singaporean Caribbean Grains Ltd started producing animal feed in the free trade zone (FTZ) and Canada Plastics has opened a factory as well. Lastly, El Salvador’s Unicomer Group announced a new distribution centre in early 2014.
Grenada more than doubled its FDI inflow in 2013, from US$ 34 million to US$ 78 million. It also introduced a new CbI initiative and saw several large announcements in tourism. Two individual real estate developers have unfolded plans for a US$ 700 million investment to position Grenada on the global luxury travel map, while an Egyptian billionaire businessman is planning to build three new five-star hotels on the island.
Dominica’s investment fell from US$ 23 million in 2012 to US$ 18 million in 2013, but there are some major plans under way on the island. Although EDF of France has withdrawn from the construction of an export-focused geothermal plant, the government aims to complete the project with other investors. Chinese investment company ASCG announced in December that it will invest US$ 300 million in the country, in an airport, an international tourism hotel and a hospital.