Attracting more foreign investments
BARBADOS IS ONCE MORE a magnet for foreign direct investment (FDI), according to a new report released by the Economic Commission for Latin America and the Caribbean (ECLAC).
The United Nations body said that after gaining just $10 million in FDI inflows in 2013, Barbados attracted $550 million last year alone. It attributed the large increase to a resurgence in real estate sales.
In its 135-page report titled Foreign Direct Investment In Latin America And The Caribbean 2015, ECLAC said: “The Central Bank of Barbados provides fairly disaggregated data which shows that in the long run more than 60 per cent of FDI is invested in real estate.
“This is higher than elsewhere in the region, and is associated with the country’s attraction as a second residence.”
It added: “Where other tourist accommodation is concerned, the island is at the mercy of international tourism flows. One of the largest resorts on the island, Almond Beach Village, ended up in the hands of Massy of Trinidad and Tobago when it purchases Barbados Shipping & Trading between 2008 and 2012. The property was close to bankruptcy and was finally taken over by a government agency in 2013, for US$53 million.”
The report also noted that since Barbados was a financial centre, “it can be difficult to differentiate transactions by enterprises that are truly based there from those that are only nominally Barbadian”.
“There was a good example of this in 2014 with the purchase of Columbus International, an international telecommunications operator based in Barbados, by Cable & Wireless Communications of the United Kingdom for more than US$3 billion.
At the same time, the slippage of Barbados sovereign debt rating may put its role as a financial centre at risk.
“Barbadian behemoth Sagicor announced in early 2015 that it planned to move its headquarters because of the downgrading of Barbados sovereign debt by Standard & Poor’s,” the report said.
“In 2010, on the other hand, Canada’s RBC Wealth Management announced the construction of a new wealth management office at an estimated cost of US$31 million.
“Many firms have made plans for Barbados, although with varying degrees of certainty. For example, Guernsey-based Cahill Energy has announced the construction of a US$240 million waste to energy plant that aims to meet about 25 per cent of Barbados electricity demand.
“Furthermore, a range of hotels are scheduled to break ground in 2015, but while the investments involved total several hundred million dollars, it is not clear how certain they are to materialise.”
In terms of the Caribbean, ECLAC said “the flows of [FDI] into Caribbean . . . shrank 4.7 per cent in 2014 to total $12 billion dollars. (SC)