The term Foreign Direct Investment (FDI) is used to describe net inflows of investment from one country that seeks to acquire a lasting management interest over entities that are resident in another country. In the United States, a direct investor must own over 10% of the shares of a direct investment enterprise for the investment to be considered Foreign Direct Investment. For subsidiary companies, The United States uses a method called the Participation Multiplication Method to calculate the level of participation in a company. On the other hand, the European Method uses the direct influence or indirect control method to determine FDI. This method includes all directly owned enterprises with a participation of 10% and all indirect links with an ownership of more than 50%.
According to the United Nations Conference on Trade and Development(UNCTAD), Global FDI flows rose moderately to $1.24 Trillion in 2010 but were still 15% below the pre crisis average. This was unlike the global industrial output and world trade which are already back to their pre-crisis levels. FDI flows in 2010 were nearly 37 per cent below their 2007 peak. However, for the first time, developing transition economies together attracted more than half of the global FDI flows. Some of the poorest areas continued to see decreases in the FDI flows however. That is, flows to Africa, least developed countries, landlocked developing countries and Small Island Developing States (SIDs) fell. This is considered a matter of grave concern because these countries are particularly vulnerable to the effects of climate change.
UNCTAD also found that state owned Trans National Companies (TNCs) are an important emerging source of FDI globally. These TNCs will contribute to Global FDI recovering its pre-crisis level in 2011. This trend will continue into 2013 when Global FDI will approach peak levels of 2007. As part of this phenomena, FDI flows to Latin America and the Caribbean increased particularly in South America. In fact, Latin America and the Caribbean are seeing a surge in the resource seeking FDI. The main recipient of this type of FDI was Brazil. Besides inflows, FDI outflows also increased by 67% to $76 Billion in 2010. The main leaders in this group were also Brazil and Mexico. Companies in these countries have been acquiring companies in developed countries such as Canada, Portugal, the United States and Norway
Data on FDI gathered in Belize shows that FDI inflows into Belize averaged close to $267 million per year between 2004 and 2010. Belize did not show a peak in FDI in 2007 as most countries did. In fact, Belize’s peak occurred one year later in 2008 when $360 million of FDI came into the country. The levels in 2009 and 2010 were slightly higher than $200 million.
The organization in Belize which is charged with the task of increasing the level of FDI in the country is called the Belize Trade & Investment Development Service (BELTRAIDE). BELTRAIDE’s vision is to enable a dynamic and competitive business environment for Belize’s Social and Economic development. The organization’s mission is to enhance Belize’s prosperity by fostering investor confidence, entrepreneurship, business growth and innovation. Organizationally, BELTRAIDE is divided into three main units designed to serve the business community in the country. These units are the: Administration and Projects Unit, the Business and Investment Facilitation and SME Unit and the Business Development Uni. There are 19 officers in the organization.
The Administration and Projects Unit administers a Government of Belize subvention to attract investment and develops project concepts to assist business to gain funding locally or internationally. Recent successes by the Administration and Projects Unit have included the successful grant seeking from Caribbean Development Fund (CDF), the Caribbean Development Bank (CDB) and the InterAmerican Development Bank (IDB).
Our Business and Investment Facilitation Unit manages the Government’s fiscal incentives program, provides business facilitation services and works toward investment attraction and aftercare. The Business and Investment Facilitation Unit also has a focus on small, micro and medium enterprise development through facilitation of capacity building and other services.
The Business Development Unit (BDU) maintains an active programme of attracting FDI into the country. The BDU has three industry specialists working towards this goal. These specialists include an Agri-business and Light Manufacturing specialist, an Information Technology and Financial Services specialist and a Tourism and Leisure specialist. Over the past six months, the BDU has been able to attract one Business Process Outsourcing (BPO) company into the country and two more are seriously considering coming to Belize.