The Pros And Cons Of Investing In The Caribbean

By Felicia J. Persaud

Today we will focus on the pros and cons of investing in the Caribbean as we have experienced from a hands-on perspective since the launch of Invest Caribbean in 2011.

FIRST THE PROS

STABILITY & DIVERSITY

The Caribbean is a very stable and diverse region with tremendous potential and one that is very stable. There are 30 markets with 44 million people of varied ethnicities, cultures and linguistic skills and  a 45% U.S. import market share.

In terms of political stability, the Caribbean region continues to be one of the more stable globally and that is very important when it comes to investment as many of my fellow entrepreneurs on this call will agree.

Growth momentum continues in the Caribbean despite the economic downturn with Guyana forecast to grow the fastest for the region with over 47 percent based largely on its newfound oil wealth and increased oil and gas production.

2: Ease of Access

The Caribbean is America’s backyard. We can get on a plane from any US city and be in the Caribbean in a few hours, not 24 hours later.  This includes the reality we often take for granted until we are up in the middle of the night trying to take a call from Asia or Europe. The Caribbean is not "time-zone" challenged and that is another big plus.

3: English Is Spoken In Most Of The Region.

As simple as this may sound, the fact that most of our region is English speaking is a huge plus. Of course there is the French, Spanish and Dutch Caribbean as well but the reality is English is still the main language for business.

4: Telecommunications Works!

Simply put, our telecom system works by and large. It may be slow at times, but most of the Caribbean has a good internet and phone system, allowing them to easily communicate with the world or allowing investors to be there and still conduct business anywhere in the world.

5: The Caribbean Has A Great Literate Population

Adult literacy rates in the Caribbean is at 94.4 percent. The Workforce in most islands speak English and also multiple other languages including French, Spanish and Kreyol. 

6: Investment Opportunities Are Rife

The Caribbean is wide open for investment in most every sector – that includes not just real estate and tourism, but energy, including renewable energy, solar, wind and geothermal; as well as agriculture and manufacturing, IT including, call centers, infrastructure, finance, health care, logistics, and medical marijuana.

U.S. exporters supply roughly half of all agricultural products to the Caribbean with exports of agricultural products totaling US$4.4 billion in 2021. 

The region also imported over US$1.5 billion in processed food products in 2021, which is an increase of 10%.  Top U.S. processed food products exported to the Caribbean in 2021 included:

· Food Preparations & Ingredients

· Non-Alcoholic Beverages

· Processed/Prepared Dairy Products

· Alcoholic Beverages

· Fats & Oils

· Snack Foods

· Prepared/Preserved Meats

· Condiments & Sauces, Jams & Jellies  

7: You Can Get A Second Passport.

 You can get a second passport and invest in the Caribbean from a minimum of 100,000 US dollars under the Citizenship by Investment Programs run by the governments of Grenada, Antigua & Barbuda, St. Lucia, St Kitts and Nevis and Dominica. These programs allow you to own a share of a real estate project in these countries and get citizenship there.

8: Trade Incentives

Several free trade agreements are in place to make trading easier including The CAFTA -DR agreement that makes it easy to get most manufactured U.S.  products duty free into the Dominican Republic.

So What Of The CONS?

1: No One Size Fits All Strategy

One of the major difficulties to doing business in the Caribbean is there is no one size fits all investment strategy - meaning the rules, regulations and ways of doing business and reaching the population is different in each country and island. So, throw out the one region play book.

2: Interregional Travel Is A Nightmare

And its costly so if you are travelling from one island to another to do business get ready for lengthy waits, connections and costs.

3: Things Move A Lot Slower

Be ready to be as patient as Job! Everything moves slower in the Caribbean and that includes doing business. A response to an email can take two weeks sometimes and this applies to getting a business registered, setting up a bank account, getting governmental approvals and documentation, receiving a wire transfer and sending one.

There is also the issue of red tape and bureaucracy that can hold things up as well as too much governmental control and not enough independence between investment agencies in country and the head honcho of that country.

4: The Caribbean Is Considered A Very Risky Investment Destination

That means you will face higher costs to access capital for growth and expansion in this region and a tremendous hassle to get capital as there is limited access to capital to do business in the Caribbean.

Most investors are focused on real estate investment or companies with a major footprint and already grossing significant revenue over at least three years.

This means investors are looking to hard assets to protect their investment as they are also very wary of impacts on investment that can stem from changes in governments.

The overall lack of access to capital especially impacts ground up and small companies.

5: Banking And Money Transfer Issues

The Caribbean is impacted by the issue of De-Risking which is also what is making it so hard to get capital investment in this region. Of course, this goes back to the US’ Anti-Money Laundering, (AML), and Combating the Financing of Terrorism, (CFT), rules that global banks are obliged to follow coupled with the nightmare that the Caribbean is slapped with a money laundering label by some of the major countries in the world and face blacklisting.

As such many global banks have pulled out of the region and local banks have few corresponding relationships so it’s become an economic nightmare and of course led to less access to capital.

To bend to the US will,  some countries like Barbados and Trinidad and Tobago that put have in place governmental rules that make it hard for investors to get their money out if you’d like to pull out as an investor after a five year stretch. This means you need approval from the Central Bank to even send a small wire transfer and that can take days. So that means investors avoid those destinations as well.

6: Logistics

Getting goods to the Caribbean can be very costly and a nightmare at customs in country. This is a reality in many countries so be prepared to deal with this as it can mean time delays on exports or imports.

7: Trade Mark And Copyright

The issue of infringing on trademarks and copyrights in this region is real. So, this is something you must be on the lookout for as entities can steal your brand’s name without blinking and think there is nothing wrong because they are using the name in the Caribbean and you are a US company.

And finally…

8: The Caribbean keeps being grouped with Latin America and then dismissed as too small. This leaves investors flocking more to Latin America and ignoring the Caribbean, seeing it more as a party destination than a serious investment option.

So now you know the pros and the cons, the question is how do you invest Caribbean easily?

One of the main ways we recommend is partnering with an established company in the region possibly via a JV.

That gives you a leg up on entering this market allowing for easier access to capital as well.

You also want to work with agencies that have a regional footprint like Invest Caribbean that can help you navigate the issues in each country and provide solutions.

Or contact The U.S. Commercial Service -   the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration or the Economic Counselors at US embassies in the country you wish to do business in.

At the end of the day, while there are challenges to investing in the Caribbean, like with any developing region globally, the possibilities are endless – like in Latin America. And just like Latin America, the Caribbean remains muy caliente too.