Roseau, Dominica

COMMONWEALTH OF DOMINICA,

West Indies

Land Area: 750 sq. km (289.5 sq. miles)

Exchange Rate: US$1. = EC$2.71

The economy of the Commonwealth of Dominica has always been based on the utilization of its land resources and on the productive initiatives of its people. Historically these resources have combined to place on the world market, such products as vanilla, limes, grapefruits, coconuts and bananas. Today, the structure of the economy is shifting towards an increase in the provision of services as well as goods. Its future growth sectors include nature tourism, agribusiness and agro-processing industries and service industries.

Dominica's economic growth is currently averaging 2.3% over the last four (4) years. It is driven by a low level of inflation, increasing growth in the services sectors and a shift in the major foreign exchange earner. In the period between 1987-1997, per capita GDP has increased by 80%, imports by 96%, total private consumption by 114% and visitors arrivals by 145%.

Economic Indicators

The current transition in the economy is providing a new economic frontier for investments in:

The beauty and serenity of the natural environment of Dominica is attracting over 68,000 stayover visitors and 193,000 cruise ship arrivals annually. The gross receipts generated by visitors in 1996 is estimated at EC$97.4 million.' There continues to be an economic demand for the provision of services within the Eco-tourism sector. These include adventure excursions, habitat research, hiking, river bathing, sight seeing, whale watching and scuba diving.

The 22,000 ha. arable land and the experience of 10,000 small farmers produced crops to the value of EC$69 million in 1996, with a potential to increase in excess of EC$100 million by the turn of the century. Citrus (grapefruits, oranges and limes), root crops, tropical fruits, herbs and spices are some examples of the commodities produced in sufficient volumes to provide the basis for agro-processing endeavours. The growing trend towards organic farming practices opens up new prospects for niche marketing. The policy of crop diversification and promoting competitive enterprises in agriculture is creating the environment for the successful replacement of bananas as the dominant export crop.

The general growth in -Tourism, Distribution and Communication sectors, averaging 11%, 5.5% and 8.3% respectively for this decade, is providing the correct signals for the expansion of service industries targeting both the domestic and export markets. The domestic market is supported by total private consumption of EC$491 million in 1996.

Dominica is a country of 750 square kilometres, with a population of 74,700 (1996) and a workforce of approximately 40,000. In 1996 the economy generated gross domestic product of EC$541 million (US$200 million)

"An Economy oriented towards services is emerging while the substantive agro-based productive sector is being maintained."

In real terms, the economy has been growing at an average rate of 2.31% over the last six (6) years (1 991 -1 996). This growth rate is in sharp contrast to its previous 6-year performance. Between 1985 - 1990, the economy grew at approximately 4.7% annually.

The different growth rates of these two periods reflects two fundamental changes. The first is the decline of 42% in the production of bananas. Banana production fell from 76,872 tons (1988) to 44,634 tons (1996). The second is the transition from a product output economy to a service output economy.

Beginning in 1988, the total contribution of the product-output sectors, comprising Agriculture, Manufacturing, Mining and Construction, declined from 38% to 30% in 1996.

On the other hand, the services-output sectors, comprising Electricity & Water, Wholesale & Retail. Trade, Hotels & Restaurants, Transport, Communications, Banks & Insurance and Real Estate & Housing, but excluding Government services, increased in contribution to GDP from 41% in 1986 to 53% in 1996

Today, the Dominican economy could be more correctly described as a service economy with a substantive product-output sector. Investment opportunities in the Dominican economy are currently emerging from both the transition to a service-oriented economy and the need to restructure the substantive agro-based economy.

Dominica's Tourism sector has been the focus of intense interest and economic activity in the most recent 5 years. Growth in this sector reflects the choice of this country as a desired destination for ecotourism, adventure/excursion tourism and a Cruise ship port of call.

Total visitor (stayover) arrivals have increased from 46,959 (1992) to 63,259 (1996) and is expected to grow at an annual rate of 11% to the year 2001 That would put the total stayover visitors at 96,000 by 2000.

Over 50% of visitors (1996) came from the Caribbean, reflecting the growing attraction of Dominica as an ecotourism destination, quite apart from the other Caribbean islands.

Excursion tourism is the area that has experienced significant growth. Over 90% of the excursion tourists are currently from the French Caribbean islands and reflect an increase of 46% from this market over the last five (5) years.

The tourism investment potential is being enhanced by public sector support in market development and promotion of the country as a tourist destination and investment in its infrastructure. Promotional activities are enhance by two Overseas Promotion Offices in New York and Paris.

Dominica is currently being promoted as an eco-tourism destination and the first Green Globe destination in the Caribbean. Its attractions are broad-based including cultural heritage, sight seeing, whale watching, scuba diving and hiking.

Over EC$20 million is expected to be spent in public sector investments over the next 5 years, in order to develop and improve accessibility to eco-tourism sites and for market promotion

A major project has been initiated by the Government of Dominica to improve the airport facility at Melville Hall. This includes the realignment of the existing runway and its eventual extension to approximately 10,000 feet so as to permit landing of B-767 class aircrafts. This project not only envisages the increase in tourist arrivals but is also expected to impact positively on other high value-added sectors of the economy where air transport is a key success factor.

Cruise ship calls to the ports in Roseau and Portsmouth have increase to 290 in 1996, bring with them 193,484 visitors. Some of the international cruise lines calling are:

• Carnival
• Cunard
• Princess Cruises
• Holland America
• Royal Caribbean International
• Club Med.

Dominica's Eco-Tourism Advantage

• Nature Sites
• National Parks
• Marine Parks
• Protected Habitat
• Scuba Diving
• Whale Watching
• Hiking Trails
• Carib Heritage
• Culture, Creole Music & Entertainment
• Visitor Accommodations
• Ports
• Airports
• Physical Infrastructure

Prospects for establishments in duty-free items and handi6raft are viewed as real opportunities to increase the level of expenditures by visitors from this segment of the market.

The majority of accommodation properties in Dominica are owned locally. There were 764 rooms in 66 establishments in 1996. The larger properties are in the vicinity of 40 rooms. Dominica continues to seek to provide accommodation to satisfy a variety of lodging needs. These facilities could include up-scale quality hotel rooms, small establishments and rural based facilities.

Their potential locations are evenly dispersed throughout the island to facilitate visitors easy access to a variety of attractions.

The economic dynamism being experienced in tourism is opening up investment opportunities in the provision of an expanding range of visitor activities. These are based on the variety of available attractions. In addition, there is a growing demand, arising from the chain of expenditures which support the industry. These include potential investments in support of the expansion of the industry in terms of training of staff and computerization of service units and investments in parallel productive activities such as:

In 1996 the gross receipts from the tourism sector was estimated at EC$97.4 million.

Marine Attractions Soufriere

Nature/Adventure Sites Roseau Valley

Historical Sites Portsmouth

Cultural Heritage Castle Bruce

The new investment prospects in the economy are to be found primarily in:

• eco-tourism
• on-shore and off-shore services
• agro-industry

As a consequence, over 50% of the proposed public sector investments (for FY97-98 - FY99/2000) will be in infrastructural support to these activities.

Over the next three (3) years the Government would be seeking a total of EC$411 million to invest in public sector projects. Forty-five percent (45%) of this total is being sought in this current period (FY97/98).

The major expenditures in tourism infrastructure are aimed at:

• improving airport access to Dominica
• improving access to eco-tourism sites

Arrangements are already in place to support an increased flow of visitors to Dominica. The realignment of the Melville Hall Airport ranks first in terms of proposed expenditures, 22% of the total proposed public sector investments for 1997-2000. This project will upgrade the airport facilities to accommodate larger aircrafts (B-767 class) and could accommodate throughput traffic of 147,000 travelers by 1999

Other tourism infrastructural expenditures in the current fiscal year (FY97/98) include EC$6.0 million for the completion of the Ecotourism Sites Development Programme and EC$4.5 million to start up the northern tourism link road.

Communication facilities are provided by Cable & Wireless (West Indies) Ltd. The modern communications network- provides fully automated intra-island and international services. Electronic access, Fax, telephone and satellite/digital microwave data transmission services are also available.

IDD rates to the US and Canada are US$2.08/minute with reduced rates of US$1.78/minute. Internet access is available through two local servers.

Dominica has four (4) international banks and one indigenous bank and one development bank. The commercial banks are-.

The financial system is very well developed and efficient, using up to date technology and having corresponding relations with financial institutions within the major metropolitan and regional centers.

The Agricultural, Industrial and Development Bank (AID) supports investments in Tourism, Agro-processing, Agriculture, Fisheries, Manufacturing and services. Among its services is a Venture Capital fund aimed at private sector entrepreneurs seeking to establish new enterprises and those wishing to expand their activities.

Dominica has continued to develop its capacity to render services to the business community in solid waste disposal, water and sewage and electricity. These are targeted for major project expenditures and are further detailed below.

The National Development Corporation (NDC) was established in 1988 to stimulate and facilitate the development of industry and tourism in Dominica. The Corporation administers the incentives programme with respect to investment activities in the industry, agriculture and tourism sectors.

Within the period 1988-1996, the investment incentive programme of the Government has attracted in excess of EC$170 million in investments. The experience is that more investments have been proposed in tourism than in manufacturing. However, the actual performance is the reverse.

EC$60 million was proposed in investment in industry but the actual amount invested was EC$97.4 million. On the other hand only EC$65.8 million of the EC$110.8 million proposed in Tourism investment has been realized.

The Hotels Aids Act supported by the Consumption Tax Order and the Income Tax Act, is directed at providing incentives for investments in Hotel Plant.

The Fiscal Incentives Act supported by the Consumption Tax Order and the Income Tax Act is directed at encouraging investments in industry. The Acts and the Order, which are administered by the National Development Corporation (NDC), provide for tax holidays, import duty and consumption tax waivers and exemption of withholding taxes.

The Customs (Control and Management) Act is administered by the Ministry of Finance and gives the Cabinet the latitude to attend to matters that are not captured by the Hotels Aids Act or the Fiscal Incentives Act.

Dominica currently has in place the legislation to offer to the international investment community, the following financial services:

• Off-shore Banking and Trust
• Corporate Domicile
• Ship Registration & other Shipping Activities
• Economic Citizenship
• Mutual Funds or Unit Trust
• Captive Insurance,

The Off-shore Banking Act makes provision for regulating off-shore banking and trust business in Dominica'. It promotes competitiveness of these institutions by exempting the licencee from all taxes and duties in respect of off-shore banking business carried on in Dominica. This Act is administered by the International Business Unit within the Ministry of Finance, which exercises due diligence in respect to the legitimacy of such operations.

Hotel Investment Incentives

• The importation of building materials free of import duties.

• Exemption from payment of import duties on all articles of hotel equipment, furnishings, fixtures and fittings.

• Ten (10) years tax holiday on the payment of taxes on profits.

• Exemption from payment of withholding taxes.

• Permission to repatriate profits.

• Residence/work permits for non-national staff.

Off-shore US$ 8,000 US$ 8,000

Joint-on-shore/Off-shore US$20,000 US$20,000

General Trust US$ 4,000 US$ 4,000

Restricted Trust US$ 90 US$ 150

During the fiscal year 1996/97 new measures were implemented to provide the legislative framework for other international business services.

These included

• Regulations to the Companies Act of 1995
• International Business Corporations Act
• Marriage Licence Amendment Act of 1996

Under the Companies Domicile programme, a total of 708 companies have been registered by June 30th 1997. Six internet gaming companies have been granted licences to do business in Dominica.

In the current fiscal year (FY97/98) the Government intends to provide further legislation including provisions for the registration of international shipping, an Off-shore Trust Companies Act and the Exempt Insurance Act.

The Government also envisions modernising its administration systems so as to facilitate electronic registration of international business companies.

• Tax Holidays
• Import duty exemptions (plant, machinery, equipment, building materials, raw materials, packaging materials, others as appropriate)
• Repatriation of profits
• Withholding tax exemptions
• Alien landholding licence fee exemption
• Factory buildings/industrial estates
• Residence/work permits
• Economic citizenship

The economy of Dominica is undergoing a successful transition in structure and orientation. In the 1980s, Dominica's economic success was largely due to preferential access in the UK market for its major export (banana) and generous inflows of concessional aid. These conditions no longer exist. Today, the economy is being managed for self-sustaining growth, based on both services and agricultural productive sectors and on inflows of investment capital.

Economic management in Dominica includes the drive to link more nontraditional agricultural commodities and manufacturing activities to the mainstream of domestic exports. It also includes concentrating public expenditures on the infrastructural needs of eco-tourism, improving the efficiency of the public service and producing a workforce capable of serving information and technology-based industries. It further extends to promotional activities in Tourism in all major metropolitan areas, with the objective of increasing the coverage of Dominica as a Green Globe tourism destination.

Dominica also offers to international investors a series of financial services including off-shore banking, corporate domicile, ship registration and economic citizenship within a legislative framework which is supportive of confidentiality and privacy.

With current economic growth averaging 2.3%, and with a commitment of EC$411 million in proposed public sector investments within the next three (3) years, Dominica is confidently establishing itself on a future growth path. This path will continue to attract investments in nature tourism, agribusiness and agro-processing industries and technology-based service industries.

Type of Project : Tourism

Location of Development : Soufriere (south of the island)

Business Plan Available : No

Business Name : National Development Corporation

Contact person : Mr. Sheridan Gregoire

Telephone : 767 448 2045

Fax : 767 448 5840

Projection (US$) : Room : 2,900,000.00

"The Last Left Eden for the best in Eco-Tourism"

Dubbed "the Nature Island of the Caribbean", Dominica can be considered the most naturally beautiful of all Caribbean destinations, and nature lovers are increasingly discovering that it is the ultimate nature experience for them, of all of the Caribbean islands.

Generously endowed by Nature with towering mountains clothed in primordial rainforests from which spring waterfalls, fresh waterlakes and rivers, Dominica offers an opportunity to experience one of the last spots on earth, where nature, so unspoiled and unchanged, flourishes in abundance.

Numerous hot springs, small geysers, fumeroles and a boiling lake populate the rainforests, along with island flora, fauna and about 130 species of birds including the Sisserou Parrot, (Amazona Imperialis), which is endemic to Dominica and on the endangered list.

Dominica also ranks among the top five best dive spots in the Caribbean with drop offs, healthy marine life, caves and wrecks all in their pristine state.

Investment Opportunities exist in tourist accommodation and recreational facilities. Cruise ship and tourist arrivals have increased steadily every year at an average of 12% for the past ten years. The Government of Dominica, encourages the development of small to medium sized hotels, cottage-resorts and guesthouses, the architecture of which should reflect the general ambience of the country.

In addition to lodging facilities, opportunities exist in restaurants, tour and recreational equipment rental operations, natural hot and cold mineral spring spas, river and ocean marinas..

• Tax holiday on profits.

• Exemption from payment of import duties on all articles of hotel furniture, fittings and equipment.

• Exemption from payment of import duties on building materials necessary for the construction of the hotel.

• Alien Landholding Licence to procure land.
• Repatriation of profits.

• Residence/Work Permits.

• contain at least five bedrooms.

• contain bathroom facilities in each bedroom.

• have bedrooms with a minimum size of a 100 sq. ft.

• provide adequate operational and guest facilities (e.g. reception, food and beverage, laundry, parking, recreation).

visit the N.D.C. offices to obtain application forms for incentives and other pertinent documents.

identify and procure suitable lands.

obtain Alien Landholding Licence, (non-nationals only), from the Ministry of Agriculture.

prepare building plans in consultation with an architect or the National Development Corporation.

submit completed application form for incentives to the N.D.C.

obtain Licence from the N.D.C. to establish hotel operation.

register hotel operation with the Inland Revenue Department and the Dominica . Social Security.

CAPITAL : Roseau

POPULATION : 72,000

LITERACY : 95%

LANGUAGE : English (French Creole is also widely spoken)

TOTAL VISITOR

ARRIVALS : 1991 - 111,282

1992 - 136,794

1993 - 142,558

PARTICIPATING

TRADE SHOWS : TOP RESA - FRANCE

TTW - SWITZERLAND

WTM - LONDON

BTF - BRUSSELS

ITB - BERLIN

DEMA - U.S.A.

CTO ROAD

SHOWS - U.S.A./EUROPE

TRAVEL &

LEISURE - CANADA

CURRENCY : Eastern Caribbean Dollar,

fixed to the U.S. dollar at

US $1 = EC $2.70

For more information contact.

Division of Industry

Valley Road

P.O. Box 293

Roseau

COMMONWEALTH OF DOMMCA

Tel: (809) 448-2045 · Fax: (809) 448-5840

Every licensee shall be entitled upon the production of his licence to the proper customs officer to import into the State in accordance with the terms thereof, free of all customs duties, such building materials or articles of hotel equipment as may be therein specified.

(1) Every Licensee who satisfies the Collector of Customs that any building materials or articles of hotel equipment were purchased by him in the State, and satisfies him further-

shall be entitled to be paid an amount equivalent to the amount of drawback which would have been payable under any Regulations for the time being in force in relation to the granting of drawback of customs duties, if the building materials or articles of hotel equipment had been exported from the State; but no provision of any regulation relating to the grant of drawback, restricting the payment of drawback to cases where the goods in respect of which the payment is made are exported within a specified period, shall apply to any payment under this section.

(2) Every licensee who satisfies the Collector of Customs that any building materials or articles of hotel equipment were purchased by him in the State and that -

shall be entitled to be paid such sums as the Collector of Customs may @ fit, so however, that no payment under this subsection shall exceed the least amount of duty payable on that description of goods under any law in force at any time during the two years next preceding the date of purchase by the Licensee.