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St Kitts Welcomes Free Trade Prospects With Brazil, by Phillip Morton, Investors Offshore St
Thursday, February 03, 2011
Saint Kitts and Nevis has welcomed negotiations with Brazil towards a ‘Partial Scope Agreement’ which will provide preferential tariffs to the twin-island federation for businesses engaged in manufacturing, in what Prime Minister Denzil Douglas described as a ‘win-win’ situation for both states.
“Several products made here in St. Kitts and Nevis find their way to Brazil already, but I believe they do enter the market with an applicable 30% tariff. From the perspective of St. Kitts and Nevis, the attainment of a duty-free trade agreement, similar to the Caribbean Basin Initiative, and what is operated between Brazil and Guyana, is vital in order to secure the opportunity for increased production in locally-based manufacturing facilities,” said Douglas.
In brief remarks at an event hosted by the Board of Directors of the local manufacturing company, PPC-Kajola Kristada, Douglas noted that Brazil, with a population of over 290 million people, “represents that chance for manufacturing facilities to at least double their production, given the fact that the traditional US market has experienced a downturn in housing, and has reached saturation point in some areas.”
Douglas said that businesses are operating today in very challenging environment and the current global economic and financial circumstances mean that the route to long-term sustainability in the business world calls for careful, yet progressive, approaches to achieve profitability and the chance to reinvest for future growth and prosperity.
He said positive progress is being made on the trade agreement, following the first round of discussions in April last year and preparation for another round of negotiations this month that would focus and advance much of the required technical work.
“I am pleased to tell you, also, that the Ministry of Trade received valuable support in the form of technical assistance from the CARICOM Secretariat, in preparation for this next round of negotiations. It is in this regard that I must extend appreciation to our Ambassador Miguel Chaves de Magalhaes, who has been of tremendous support. In like manner, high commendation must go to Kajola-Kristada, especially the local manager Mr Rosa, who has been a major driving force towards forging the trade agreement with Brazil, as well as consistent support from the St. Kitts-Nevis Chamber of Industry and Commerce. Our combined efforts, I am sure, will soon result in the signing of the Partial Scope Agreement with Brazil, as soon as the appropriate clearance is received.”
Upon the agreement’s entry into force, Douglas said he expected “manufacturing activity to increase, increased employment opportunities for local workers, greater diversity for the islands’ economy, a greater profile for the country in terms of international trade, and provide greater profitability and financial security for manufacturing facilities operating in the Federation.”
Eight industrial and commercial free-trade zones currently operate in St. Kitts and Nevis. They are located at Tacna, Ilo, Mollendo, Tumbes, Trujillo, Paita, Chimbote and Pisco. There are also four fully developed industrial sites where production facilities can be constructed to specification and leased at nominal rates. Projections are that factory space will increase annually by 15,000 sq. ft. in St. Kitts and 5,000 sq. ft. in Nevis. The sites are managed and serviced on behalf of the Government by the Development Bank of St. Kitts and Nevis.
Export processing free zones offer investors exemptions from customs duties for imports and exports, exemption from any St. Kitts and Nevisvian tax for 15 years, temporary labor agreements, and accounting in foreign currency. Special commercial treatment zones are generally located on the jungle frontier. They extend the following benefits to companies operating inside their borders: exemption from value-added taxes; a reduced 10 percent customs duty; and accounting is permitted in foreign currency.
The Hotel Aids Ordinance provides duty-free concessions (relief from customs duties and pier dues) on items for use in the construction, extension and equipping of a hotel of not less than 30 bedrooms. The Income Tax Ordinance provides special tax relief benefits for hotel proprietors granted licenses under the Hotel Aids Ordinance: the gains or profits of a hotel of more than 30 bedrooms are exempt from income tax for a period of 10 years, for hotels with less than 30 bedrooms, the gains and profits are exempt from income tax for a period of 5 years.
Companies which qualify for tax holidays are allowed to import into St. Kitts and Nevis duty-free all equipment, machinery, spare parts and raw materials used in production.
Under the Caribbean Basin Initiative, besides participating in the financial contribution allocated by Washington to the member countries, St. Kitts also qualifies for duty-free entry into the United States of more than 95% of its products, not including sugar. Under the Generalized System of Preferences (GSP), manufactured and semi-manufactured goods are also eligible for duty-free access to United States markets. Virtually all of St. Kitts-produced items and raw materials are eligible for GSP treatment under the list of some 2,800 products eligible for duty-free importation. However, to qualify, the product must have had 35% of its appraised value added in the beneficiary country. Again, this enhances St. Kitts’ status as a site for conversion of merchandise because of its skillful and well-trained labor force.
The St. Kitts Investment Promotion Agency (SKIPA) officially launched its long anticipated website on February 2, 2009. SKIPA, created in December 2007, proactively promotes St Kitts as an international finance centre and arranges local and foreign investment projects.
“This new website will be an important tool in promoting St. Kitts as a preferred investment destination by offering a wealth of information to potential investors worldwide,” said a SKIPA statement.
“The website features investment related news, information about SKIPA and St. Kitts and an Investor’s Guide that draws information from the various institutions that play a role in the establishment of sound businesses. The website also highlights the Priority Sectors that are crucial for the continued development of the nation, as well as investment opportunities that exist on the island,” said SKIPS’s Market Research Officer, Darien Belle.
He explained that visitors to the website will be provided with a unique opportunity to interact with the agency and other visitors through an interactive discussion forum.
“We are particularly excited about this medium of communication which is intended to foster discussions geared towards improving the business conditions in St. Kitts for existing firms and potential investors,” he said.
Shawna Lake, CEO, SKIPA, underlined the agency’s role in St Kitts.
“SKIPA is not only charged with the responsibility of promoting investment opportunities available in St. Kitts but one of our most important functions is to facilitate inward investment by working with persons who have made the decision to establish a business in St. Kitts. We assist these investors by providing them with general information on application requirements and procedures and we also facilitate the submission of their applications to the various government departments for review and approval.”
“Another important service offered by SKIPA is aftercare. This service has evolved from our belief that businesses in St. Kitts should have access to a capable support system. As part of our aftercare services, we follow up with investors who have already established their businesses in St. Kitts in an effort to understand the issues facing their business or industry and to assist them in developing viable solutions. SKIPA also provides support to businesses that are interested in expansion,” concluded the statement.
Cable & Wireless (St. Kitts-Nevis) Ltd is a joint venture between Cable & Wireless and the St. Kitts-Nevis Government, providing all domestic and international telecommunications services to the islands, with digitalization using fiber optic cables. Services offered include Direct Dialing, Leased Circuits, Internet, CLASS Services and Voice Mail. ISDN is available on request. Cable and Wireless Caribbean Cellular (St. Kitts) Ltd. provides cellular phone service.
Inter island links to Antigua and Barbuda and Saint Martin (Guadeloupe and Netherlands Antilles) are handled by VHF/UHF/SHF radiotelephone international: international calls are carried by radiotelephone to Antigua and Barbuda and switched there to submarine cable or to Intelsat; or carried to Saint Martin (Guadeloupe and Netherlands Antilles) by radiotelephone and switched to Intelsat.
The Government runs a 39-channel cable television service that broadcasts daily news programs from North America and England via satellite. Three local newspapers are published: the weekly “Democrat” and “Observer” and the twice-weekly “Labor Spokesman”. Tap water is rated as being of high quality and is considered safe to drink. St. Kitts can also provide excellent and luxurious conference facilities at the Fort Thomas Hotel, Horizon Villa Resort, and Ocean Terrace Inn, all offering modern electronic equipment for meetings.
The Eastern Caribbean Central Bank and The Eastern Home Mortgage Bank are headquartered in St. Kitts. There are several accounting firms and law firms of international standing. A full range of legal, accounting, management and trust company services are available.
There are no exchange controls in Nevis and the invoicing of foreign trade transactions may be made in any currency. Importers are not required to make prior deposits in local funds and export proceeds do not have to be surrendered to Government authorities or to authorised banks. There are no controls on transfers of funds. The Government of Nevis guarantees the free transfers of profits and repatriation of capital.
Work permits are granted on application by employers, provided that no local worker is available, and involve the production of a number of documents, including health certificates.
Tourist visas are granted readily, but visas for longer stays involve demonstration of adequate financial resources.
It is possible to acquire citizenship by making an investment into the Federation under sub-section (5) of Section 3 of the Citizenship Act 1984. This stipulates that a person is entitled, upon making application to the Minister, to be registered as a citizen of the Federation without voting rights, if the Cabinet is satisfied that the person has invested substantially in the Federation.
The minimum investment requirement may be satisfied with a substantial investment of at least $350,000 United States dollars or its equivalent in East Caribbean currency in an “approved investment project”
The registration fees currently in force are USD35,000 for head of household (male or female), USD15,000 for spouse, and USD35,000 for each adult family member or other adult.
Each citizenship certificate of registration is USD47 and the cost for each passport is USD13.
Every citizenship application must be made on the prescribed form which must be submitted together with various documents relating to the applicant’s identity, civil status, criminal record, financial resources, and health. All documents must be in English or translated into English, and all photocopies of any document submitted must be notarized and properly certified.
A passport is valid for ten years, unless otherwise stated. It remains the property of the Government of the Federation and may be withdrawn at any time.