HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements...Haiti

# 					2017 Investment Climate Statements: Haiti			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Haiti occupies the western third of the island of Hispaniola located in the Caribbean Basin. The Haitian economy, a private sector-led and free market system, is mainly driven by its traditional agricultural sector, construction, commerce, and the manufacturing industry. The Government of Haiti (GOH) initiated numerous measures to maintain macroeconomic stability and to establish a legal framework for long-term private sector led and market based economic growth. The ultimate objective is to transform Haiti into an emerging economy by 2030. The GOH also focused on reinforcing public financial management, strengthening the establishment of the Treasury Single Account, and improving the business environment for private sector development. The government is seeking to spur job creation and encourage economic development through foreign trade and investment. The Haitian Central Bank (BRH) continues to follow a contractionary monetary policy on containing inflation and tightening legal reserve requirements. Its main challenge, however, is to maintain monetary stability while public authorities urge it to uphold anti-inflationary measures in response to a chronic budget deficit, the economic implications of Hurricane Matthew, and increasing global commodity prices.

Foreign direct investment (FDI) inflow increased slightly to USD 104 million in 2016, making Haiti one of the smallest recipients of FDI in the region. Despite Haiti’s favorable policies toward FDI, Haiti’s rates of FDI inflow are indicative of a slow-growing economy and an unstable political environment. The GOH designated tourism, agriculture, construction, energy, and manufacturing as key investment sectors, and supports sector-focused investment promotion, public spending, and special economic zones. The GOH established the Center for Facilitation of Investment (CFI) to improve Haiti’s investment climate, and to assist investors interested in doing business in Haiti. The CFI introduced a series of measures, including pre-registered services, to expedite the processes involved in starting a business. To simplify the process even further, CFI also eliminated the step requiring the executive branch to review the incorporation draft before final publication. As a result of these measures, CFI reported an increase in foreign companies that expressed interest in exploring business opportunities in Haiti in 2016. According to CFI, most businesses that explored investment in Haiti in 2016 were interested in the garment sector and in business process outsourcing (BPO).

In 2016, Haiti’s economy grew by 1.4 percent, a deceleration compared to Fiscal Year (FY) 2015 when the economy grew at a rate of 1.8 percent. The 2016 growth rate is attributed to a volatile exchange rate, the continued reduction of external financial assistance, political instability, and severe drought conditions in FY 2015 that destabilized agricultural production. Annualized consumer price inflation moderated to 14.3 percent at the end of December 2016 because of weak domestic production, a chronic budget deficit, food price pressures and the depreciation of Haitian Gourde against the USD. As of March 2017, Haiti’s net international reserves stood at USD 845 million compared to USD 844 million in February 2017. The World Bank (WB) predicts that gross domestic product (GDP) will be between two and three percent in 2017, despite previous predictions, immediately following the hurricane, of a 0.6 percent contraction. Improving the investment outlook for Haiti in 2017 requires the GOH to enact reforms that improve Haiti’s business and political environment.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Toward Foreign Direct Investment**

Haiti’s legislation encourages foreign direct investment. Import and export policies are non-discriminatory and are not based on nationality. Haitian and foreign investors have the same rights, privileges and equal protection under the 1987 investment code. The GOH made some progress in recent years to improve the legal framework, create and strengthen core public institutions, and enhance economic governance. The Haitian Central Bank (BRH) continues to work with the International Monetary Fund (IMF) and the World Bank (WB) to implement measures aimed at creating a stable macroeconomic environment. Policies include reducing interest rates to facilitate access to credit and stabilizing the exchange rate. The 2015-2016 political instability and transitional government limited the GOH’s impact on initiatives and stalled efforts to modernize Haiti’s commercial, investment, and tax laws. As of December 2016, foreign debt reached over USD 2.07 billion, mainly in support of the country’s infrastructure and rebuilding efforts. Seventy-five percent of these debts are owed to Venezuela through the Petro Caribe program.

The Government of Haiti is working on new laws to improve the legal framework and incentives for investment in Haiti. Anti-money laundering and anti-corruption laws were passed by the government to ensure that Haiti’s legislation corresponds with international standards. In early 2017, the Parliament enacted legislation making electronic signatures and electronic transactions legally binding. Other pieces of legislation that may improve Haiti’s investment climate are pending parliamentary approval, including incorporation procedures, a new mining code, and an insurance code. The Government of Haiti also continues to improve Haiti’s infrastructure by rebuilding and rehabilitating its roads, hospitals, and ports.

CFI was established to promote investment opportunities in Haiti. CFI’s major activities include: streamlining the investment process by simplifying procedures related to trade and investment, providing updated economic and commercial information to local and foreign investors, and promoting investment in priority sectors. The Government of Haiti seeks investments that will spur job creation and boost national production in agriculture, textiles, business process outsourcing (BPO), and tourism. The GOH wants to redirect CFI’s focus towards legal reform, and the promotion of domestic and international investment with continued emphasis on public relations. CFI also offers personalized services for large investors interested in Haiti. In 2015, the World Bank recognized CFI as a regional leader in the online promotion of investment.

CFI offers a wide range of support and services to foreign investors. The Director General oversees the agency, including decisions to offer tax incentives to new businesses. The Director of Promotion works to attract new businesses to Haiti while the Director of Facilitation coordinates public sector agencies and administrative entities to ensure that CFI is following-up with businesses in a timely fashion.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

Investors in Haiti can create the following types of businesses: sole proprietorship, limited or general partnership, joint-stock company, public company (corporation), subsidiary of a foreign company, and co-operative society. The most commonly used business structures in Haiti are corporations. The Societes de Droits law, which would facilitate the creation of other types of businesses in Haiti, such as LLCs, has been drafted and submitted to Parliament for approval.

Foreign investors are permitted to own 100 percent of a company or subsidiary. As a Haitian entity, such companies enjoy all rights and privileges provided under the law. Additionally, foreign investors are permitted to operate businesses without equity-to-debt ratio requirements. Accounting law allows foreigners to capitalize using tangible and intangible assets in lieu of cash investments.

Foreigners are free to enter into joint ventures with Haitian citizens. The distribution of shares is a private matter between the two parties. However, the State regulates the sale and purchase of company shares.

Entrepreneurs are free to dispose of their properties and assets, and to organize production and marketing activities in accordance with local laws.

The Haitian government does not impose discriminatory requirements on foreign investors. Haitian laws related to residency status and employments are reciprocal. Foreigners who are legal residents in Haiti and wish to engage in trade have, within the framework of laws and regulations, the same rights granted to Haitian citizens. However, Article 5 of the Decree on the Profession of Merchants reserves the function of manufacturer’s agent for Haitian nationals.

Foreign firms are also encouraged to participate in government-financed development projects. Performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

**Other Investment Policy Reviews**

The Organization for Economic Growth and Cooperation (OECD) assessed Haiti’s investment climate in 2001. Since then, there have not been any reviews of Haiti’s investment environment. The study stressed that political instability, weak institutions, and inconsistent economic policies impede the country’s ability to drive foreign direct investment. The International Finance Corporation and the WB’s Investment Climate Advisory Services are supporting the Haitian government’s plans to implement integrated economic zones (IEZ) throughout Haiti. Haiti is also working with the United Nations Conference on Trade and Development (UNCTAD) to implement an investment promotion strategy to foster the expansion of bilateral trade, and the development of border-zone industrial parks to make Haiti more competitive.

The World Trade Organization’s latest 2015 Trade Policy Review reveals that Haiti’s Investment Code and Law on Free Trade Zones is fully compliant with the Agreement on Trade-Related Investment Measures (TRIMs).

**Business Facilitation**

The Ministry of Commerce and Industry’s (MCI) internet registry allows investors to search for or verify the existence of a business in Haiti. The registry will eventually provide on-line registration of companies through an electronic single window. The single window is part of a project sponsored by the Inter-American Development Bank (IDB) that seeks to reduce the time needed to register a limited liability company in Haiti to 10 days. At present, it takes between 70 and 90 days to complete registration with the Commercial Registry at the Ministry of Commerce and Industry and obtain the authorization of operations (Droit de fonctionnement). CFI also offers a service providing pre-registered and fully authorized companies classified in seven different sectors, including manufacturing, agribusiness, and real estate.

Businesses, both foreign and domestic, can register at the CFI: http://cfihaiti.com/ . All businesses must register with the Ministry of Commerce, Haitian tax office, National bank, social security office, and retirement insurance office. According to the World Bank’s 2017 Ease of Doing Business Report, it can take 97 days to start a business in Haiti.

Haiti defines micro-enterprises as less than five employees, and medium sized enterprises as less than 20. The Ministry of Commerce offers some technical and financial assistance to small and medium sized businesses. The micro park program, supported by the IDB and the European Union (EU), also includes the use of business incubators by offering technical, administrative and financial support to enhance job creation and domestic production. The program calls for the creation of 42 micro parks in four priority sectors, including agribusiness, mechanical, bio-technology and manufacturing over the course of five years. However, this program stalled due to the political situation and the new government is considering continuing the previous administration’s efforts.

**Outward Investment**

Neither the law nor the Haitian government restricts domestic investors from investing abroad. Still, Haiti’s outward investment is limited to a few small enterprises with no significant investment. Most of the firms involve individuals who happen to have dual citizenship or people with Haitian background who reside in the country where the firms operate. The majority of these businesses are service providers. There is no current program or incentive in place to encourage Haitians entrepreneurs to invest abroad.

							2. Bilateral Investment Agreements and Taxation Treaties					

Haiti and the United States are party to the Caribbean Basin Trade Promotion Act (CBTPA), a trade preference program enacted in October 2000 that expires in 2020. CBTPA provides duty-free treatment for apparel wholly assembled, knit or knit-to-shape in certain beneficiary countries in the Caribbean, as long as the apparel uses U.S. fabrics and U.S. yarns.

In December 2006, the U.S. Congress enacted the Haitian Hemispheric Opportunity for Partnership Encouragement Act of 2006, commonly referred to as HOPE. HOPE amended the Caribbean Basin Economic Recovery Act (CBERA) and authorized the President to extend additional trade preferences to Haitian-manufactured apparel. HOPE preference programs do not replace those provided by CBTPA, but are separate programs that were added as part of CBERA.

In June 2008, the U.S. Congress enacted the Food, Conservation, and Energy Act of 2008 (Public Law 110-246). Title XV, Subtitle D, Part I of the Act contains amendments to the established special rules for imports of apparel and other textile articles from Haiti, which can be found in 19 U.S.C. §2703a. These amendments are cited as the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 which is commonly known as HOPE II. HOPE II expanded the preferences originally established in HOPE, and created four new preference programs for Haitian-manufactured apparel.

HOPE II enables the Haitian textile industry to benefit from tariff advantages on the condition that the Haitian government and eligible producers comply with internationally recognized labor standards. HOPE II allows for duty-free entry into the United States for a limited number of garments imported from Haiti, provided that 50 percent of the value when imported originates in Haiti, the United States, or another country that has a free trade agreement with the United States. This percentage increases to 55 percent through December 2017 and 60 percent through December 2018. Haiti Economic Lift Program (HELP), an act passed by the U.S. Congress in 2010 as a response to the apparel industry’s needs, extends HOPE II tariff advantages until 2025. The HOPE and HELP Acts are critical to Haiti’s economic recovery as they create sustainable economic opportunities; efforts are currently underway to renew and expand these acts.

Haiti, a CARIFORUM member, signed an economic partnership agreement (EPA) with the European Union (EU) in 2009. The EPA allows the export of products from Haiti to EU countries without tariffs or quotas.

Haiti is a party to other international agreements, such as the WTO which also includes the 2013 Bali Package that supports duty-free exports to developed countries.

Haiti does not have a double taxation treaty with the United States.

							3. Legal Regime					

**Transparency of the Regulatory System**

Haitian laws are transparent and theoretically universally applicable, but legal enforcement is not universally applied nor observed. The bureaucracy and “red tape” in the Haitian legal system is often excessive.

Tax, labor, health, and safety laws and policies are theoretically universally applicable. However, they are not universally applied, observed, or enforced. Many in the private sector provide services, such as health care, for employees that Haitian government agencies do not insure.

Draft bills or regulations are available to the public through Le Moniteur, which is the official journal of Haiti. Le Moniteur contains public agency rules, decrees, and public notices that the Les Presses Nationales d’Haiti (PNd’H) publishes.

**International Regulatory Considerations**

Haiti is a member of the Caribbean Community (CARICOM). The CARICOM Single Market and Economy (CSME), created in 1989, aims to advance the region’s integration into the global economy by facilitating free trade in goods and services, and the free movement of labor and capital. CSME became operational in January 2006 in twelve of the fifteen Member States. Haiti, as a member of CARICOM, expressed an interest in participating fully in CSME. However, to become eligible, Haiti is required to amend its customs code to align with the local tariffs to both CARICOM and World Trade Organization (WTO) standards. In March of 2017 Haiti notified the WTO of its intent to adjust its tariff rates to bring them in line with CARICOM CETs. The changes are under negotiation.

Haiti also adheres to the compulsory jurisdiction of the International Court of Justice on issues of international law, and of the Caribbean Court of Justice (CCJ) for the settlement of trade disputes within CARICOM.

Haiti is an original member of the WTO. As such, it has made several commitments to the WTO in regards to the financial services sector. These commitments include allowing foreign investment in financial services, such as retail, commercial, and investment banking, and consulting. Until recently, before the acquisition of Scotia Bank, there were two foreign banks operating in Haiti: Citibank of the United States and Scotia Bank of Canada. Haiti has also committed to notifying the WTO Committee on Technical Barriers to Trade (TBT) of all draft technical regulations.

**Legal System and Judicial Independence**

As a former French colony, Haiti adopted the French civil law system. The Supreme Court, also known as the Superior Magistrate Council, is the highest court of the nation, followed by the Court of Appeal and the Court of First Instance. Haiti’s commercial code dates back to 1826 and underwent significant revisions in 1944. There are few commercial legal remedies available. Inadequate law enforcement mechanisms, outdated laws to handle modern commercial practices, and a weak judicial system severely compromise the protection and guarantees that Haitian laws extend to investors. Injunctive relief is based upon penal sanctions rather than securing desirable civil action. Similarly, contracts to comply with certain obligations, such as commodities futures contracts are not enforced. Haitian judges do not have specializations, and their knowledge of commercial law is limited. Utilizing Haitian courts to settle disputes is a lengthy process and cases can remain unresolved for years, and bonds to release assets frozen through litigation are unavailable. Business litigants are often frustrated with the legal process and pursue out-of-court settlements.

The Haitian Chamber of Commerce and Industry (CCIH), in partnership with the Haitian government and with funding from the EU, has a commercial dispute settlement mechanism – the Arbitration and Conciliation Chamber – to provide mechanisms for conciliation and arbitration in cases of private commercial disputes.

Haiti’s inefficient legal system often hinders U.S. citizens trying to resolve legal disputes. There are persistent allegations that some Haitian officials use their public office to influence commercial dispute outcomes for personal gain. However, with international assistance, the GOH is actively working to increase the credibility of the judiciary and the effectiveness of the national police.

**Laws and Regulations on Foreign Direct Investment**

The Investment Code prohibits fiscal and legal discrimination against foreign investors. The code explicitly recognizes the crucial role of foreign direct investment in promoting economic growth. It also aims to facilitate, liberalize, and stimulate private investment, and contains exemptions to promote investment that will enhance competitiveness in sectors deemed priorities, especially export-oriented sectors. Tax incentives, such as reductions on taxable income and tax exemptions, are designed to promote private investment. Additionally, the code grants Haitian and foreign investors the same rights, privileges and equal protection. Foreign investors must be legally registered and pay appropriate local taxes and fees.

The code also established an Inter-Ministerial Investment Commission (CII) to examine investor eligibility for license exemptions as well as customs and tariff advantages. The Prime Minister, or his delegate, chairs the CII, which is composed of representatives of the Ministries of Economy and Finance, Commerce, and Tourism, as well as those ministries that oversee specific areas of investment. The CII must authorize all business sales, transfers, mergers, partnerships, and fiscal exemptions within the scope of the code. The CII also manages the process of fining and sanctioning enterprises that ignore the code.

Investment in certain sectors, such as health and agriculture, requires special Haitian government authorization. Investment in “sensitive” sectors, such as electricity, water, and telecommunications, requires a Haitian government concession as well as an authorization from the appropriate state agency. In general, the GOH considers natural resources as State property. Accordingly, exploring or exploiting mineral and energy resources requires concessions and permits from the Ministry of Public Works’ Bureau of Mining and Energy. Mining, and operating permits may only be granted to firms and companies established in Haiti.

Haitian law is deficient in a number of areas, including operation of the judicial system; publication of laws, regulations, and official notices; establishment of companies; land tenure and real property law and procedures; bank and credit operations; insurance and pension regulation; accounting standards; civil status documentation; customs law and administration; international trade and investment promotion; foreign investment regulations; and regulation of market concentration and competition. Although these deficiencies hinder business activities, they are not specifically aimed at foreign firms; they appear to affect both foreign and local companies equally.

**Competition and Anti-Trust Laws**

There is currently no law to regulate competition. Haiti is one of the most open economies in the region. The investment code provides the same rights, privileges and equal protection to local and foreign investors. Anti-corruption legislation also criminalizes nepotism and the dissemination of inside information on public procurement processes. Haiti does not have an Anti-Trust law.

**Expropriation and Compensation**

The 1987 Constitution allows expropriation or dispossession only for reasons of public interest or land reform and is subject to prior payment of fair compensation as determined by an expert. If the initial project for which the expropriation occurred is abandoned, the Constitution stipulates that the expropriation will be annulled and the property returned to the original owner. The Constitution prohibits nationalization and confiscation of real and personal property for political purposes or reasons.

Title deeds are vague and often insecure. The Haitian government has an office National Institute of Agrarian Reform (INARA) to implement expropriations of private agricultural properties with appropriate compensation. The agrarian reform project, initiated under the Preval administration (1996-2001), was controversial among both Haitian and U.S. property owners. There are complaints of non-compensation for the expropriation of property. A revision of the land tenure code is expected to address current issues related to the lack of access to land records, surveys, and property titles in Haiti. A recent partnership between the private sector, the GOH, and international organizations developed a useful guide formalizing land tenure.

**Dispute Settlement**

*ICSID Convention and New York Convention*

In 2009, Haiti ratified the 1965 International Convention on the Settlement of Investment Disputes between states and nationals of other states (ICSID). Under the convention, foreign investors can call for ICSID arbitration in case of dispute with the state. The Haitian government appears to recognize that weak enforcement mechanisms and a lack of updated laws to handle modern commercial disputes severely compromises the protections and guarantees that Haitian law extends to investors.

Haiti is not a signatory to the Inter-American-U.S. convention on International Commercial Arbitration of 1975 (Panama Convention).

*Investor-State Dispute Settlement*

Haiti is a signatory to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards, which provides for the enforcement of an agreement to arbitrate present and future investment disputes. Under the convention, Haitian courts can enforce such an agreement by referring the parties to arbitration. Disputes between foreign investors and the state can be settled in Haitian courts or through international arbitration, though claimants must select one to the exclusion of the other. A claimant dissatisfied with the ruling of the court cannot request international arbitration after the ruling is issued.

The law provides mechanisms on the procedures a court should follow to enforce foreign arbitral awards issues. In recent years, there have not been any investment dispute cases involving the Haitian government and foreign investors.

*International Commercial Arbitration and Foreign Courts*

International arbitration is strongly encouraged as a means of avoiding lengthy domestic court procedures. The Haitian Arbitration and Conciliation Chamber created in October 2007 provides mechanisms for conciliation and arbitration in private commercial disputes.

Haiti is actively working with the international community to create a domestic culture that accepts international arbitration as an effective means for dispute resolution. In 2005, The Haitian Chamber of Commerce and Industry (CCIH) and the IDB jointly worked to develop the Conciliation and Arbitration Court of Haiti (CCAH). The Arbitration and Conciliation Chamber provides mechanisms for conciliation and arbitration in cases of private commercial disputes. Foreign judgments are enforceable under local courts.

**Bankruptcy Regulations**

Haiti’s bankruptcy law was enacted in 1826 and modified in 1944. There are three phases of bankruptcy under Haitian law. In the first stage, payments cease and bankruptcy is declared. In the second stage, a judgment of bankruptcy is rendered, which transfers the rights to administer assets from the debtor to the Director of the Haitian Tax Authority (Direction Generale des Impots, or DGI). In this phase, assets are sealed and the debtor is confined to debtor’s prison. In the last stage, the debtor’s assets are liquefied and the debtor’s verified debts are paid. In practice, the above measures are seldom applied. Since 1955, most bankruptcy cases have been settled between the parties.

Although the concepts of real property mortgages and chattel mortgages – pledging of personal property, such as machinery, furniture, automobiles, or livestock to secure a mortgage – exist, real estate mortgages involve antiquated procedures and may fail to be recorded against the debtor or other creditors. Property is seldom purchased through a mortgage and secured debt is difficult to arrange or collect. Liens are virtually impossible to impose, and using the judicial process for foreclosure is time consuming and often futile. In order to make progress in this area, Haiti needs to enact a credit bureau law and create an electronic collateral registry. Banks frequently require that loans be secured in U.S. dollars.

Debts are normally paid in Haitian gourdes (HTG).

							4. Industrial Policies					

**Investment Incentives**

In order to attract investment to certain industries, the Investment Code created a privileged status for some manufacturers. Under the Code, eligible firms can benefit from customs, tax, and other advantages. Investments that provide added value of at least 35 percent in the processing of local or imported raw materials are eligible for preferential status.

The statute allows for a five to ten-year income tax exemption. Industrial or crafts-related enterprises must meet one of the following criteria in order to benefit from this exemption:

- Make intensive and efficient use of available local resources (i.e., advanced processing of existing goods, recycling of recoverable materials).
- Increase national income.
- Create new jobs and/or upgrade the level of professional qualifications.
- Reinforce the balance of payments position and/or reduce the level of dependency of the national economy on imports.
- Introduce or extend new technology more appropriate to local conditions (i.e., utilize non-conventional sources of energy, use labor-intensive production).
- Create and/or intensify backward or forward linkages in the industrial sector.
- Export-oriented production.
- Substitute a new product for an imported product, provided that the new product presents a quality/price ratio deemed acceptable by the appropriate entity and comprises a total production cost of at least 60 percent of the value added in Haiti, including the cost of local inputs used in its production.
- Prepare, modify, assemble, or process imported raw materials or components for finished goods that will be re-exported.
- Utilize local inputs at a rate equal or superior to 35 percent of the production cost.

For investment that matches one or more of the criteria described above, the Haitian government provides customs duty and tax incentives. Companies that enjoy tax exemption status are required to submit annual financial statements. Fines or withdrawal of tax advantages may be assessed to firms failing to meet the Code’s provisions.

A progressive tax system applies to income, profits, and capital gains earned by individuals.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

A law on Free Trade Zones (FTZ) entered into force in 2002. It sets out the conditions for operating and managing economic FTZs, together with exemption and incentive regimes granted for investment in such zones. The law is not specific to a particular activity. The law defines FTZs as geographical areas to which a special regime on customs duties and controls, taxation, immigration, capital investment, and foreign trade applies and where domestic and foreign investors can provide services, import, store, produce, export, and re-export goods.

FTZs may be private or joint venture. The law provides the following incentives and benefits for enterprises located in FTZs:

- Full exemption from income tax for a maximum period of 15 years, followed by a period of partial exemption that gradually decreases
- Customs and fiscal exemptions for the import of capital goods and equipment needed to develop the area, with the exception of tourism vehicles
- Exemption from all communal taxes (with the exception of fixed occupancy tax) for a period not exceeding 15 years
- Registration and transfer of the balance due for all deeds relating to purchase, mortgages, and collateral

A FTZ was established in the northeastern city of Ouanaminthe, where a Dominican company, Grupo M, manufactures clothing for a variety of U.S. companies – Sarah Lee, Nautica, Dockers, Fruit of the Loom and Levi Strauss – at its CODEVI facility.

In October 2012, the Government of Haiti, with the support of the IDB and the U.S. Government, opened the 617-acre Caracol Industrial Park (PIC) mixed industrial zone located near the town of Caracol in Haiti’s northeastern region. In 2012, two companies began operating in PIC: the Korean garment company S&H Global and a Haitian paint manufacturer, Peintures Caraibes. A jean manufacturer and Haitian paint producer began operations in 2013 in CODEVI and Caracol, respectively. Several other companies, including a fragrance and cosmetics manufacturer, and a Haitian garment manufacturer, started up in 2014 at PIC.

In 2015, two major FTZ’s were added to the list: Agritrans, the first agricultural free trade zone in Haiti, which launched in 2015 and shipped their first container of bananas to Germany in late 2015, and Port Lafito, a USD 150 million Panamax port and industrial park. The Lafito port is part of a comprehensive development project that includes an industrial free zone, hospital, residential-commercial area, and leisure amenities to include a boutique hotel, a beach club and a marina. Lafito is located 12 miles from the Port-au-Prince main port, and the owners, the GB Group, expect that the industrial park will generate over 3,000 jobs in the apparel sector alone. The Panamax port was completed in 2015 and began operations. A dispute involving GB Group and the state owned port authority has slowed port traffic.

In 2016, various Asian-based firms, including MAS Holdings, a USD 1.6 billion conglomerate with 48 manufacturing facilities across 15 countries, and Reliable Source Industrial International (RSI), one of the leading manufacturers of sportswear and swimwear apparel in Asian, expressed concrete interest in establishing operations in Haiti.

The GOH’s Ministry of Commerce and Industry is currently discussing the potential to add several FTZs in Port-au-Prince. FTZ 1 (Digneron in Croix-des-Bouquets) is expected to provide between 12,000 and 15,000 jobs and open in June 2017, FTZ 2 (Santo du Jour) is expected to provide 10,000 jobs and FTZ 3 (Lafito), with RSI International as its anchor client, is expected to provide between 10,000 and 15,000 jobs.

**Performance and Data Localization Requirements**

Foreign firms are encouraged to participate in government-financed development projects. However, performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

Under Haitian laws, foreign investors operate their businesses and use their assets to organize production freely. Companies are not forced to localize or to use local raw materials for the production of goods. Foreign IT providers are not required to turn over source code or keys for encryption to any public agencies.

							5. Protection of Property Rights					

**Real Property**

Real property interests are affected by the absence of a comprehensive civil registry. Legitimate property titles are often non-existent. If they do exist, they often conflict with other titles for the same property. Verification of property titles can take several months or longer. The U.S. Embassy regularly receives reports of fraudulent or fraudulently recorded land titles. Mortgages exist, but real estate mortgages are expensive and involve cumbersome procedures. Additionally, mortgages are not always properly recorded under the debtor or creditor’s name.

**Intellectual Property Rights**

Haitian law protects copyrights, patent rights, and inventions, as well as industrial designs and models, special manufacturers’ marks, trademarks, and business names. The law penalizes individuals or enterprises involved in infringement, fraud, or unfair competition; however, enforcement is weak. Haiti is a signatory to the Buenos Aires Convention of 1910, the Paris Convention of 1883 regarding patents, and the Madrid Agreement regarding trademarks. Haiti has ratified the Bern Copyright Convention.

The current draft trademark law appears to reflect the Haitian government’s determination to revise its intellectual property legislation in accordance with its international agreements. As noted, weak enforcement mechanisms, inefficient courts, and judges’ inadequate knowledge of commercial law may impede the effectiveness of statutory protections.

*Resources for Rights Holders*

For more information concerning intellectual property rights, please contact the U.S. Embassy’s Economic and Commercial Specialist at PAPECON@state.gov

Haitian Copyright Office (BHDA)Ministry of Culture and Communicationhttp://bhdahaiti.com/ 31, Rue CheriezCanape-VertPort-au-PrinceHAITI (West Indies)(509) 2811 0535(509)2811 5626bhda.gouv@gmail.com

Director General/Directrice Generale: Mrs. Emmelie Phrophete MilceIndustrial Property OfficesIntellectual Property Service, Department of Legal AffairsMinistry of Trade and Industryhttp://www.mci.gouv.ht/ 

Parc Industriel Metropolitain (SONAPI),Route de l’aeroportPort-au-Prince(509) 2943 1868(509) 2940-0726rodrigue.josaphat@mci.gouv.htmcihaiti@yahoo.fr

Director of Legal Affairs/Directeur des Affaires Juridiques: Mr. Rodrigue Josaphat

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

The scale of financial services remains modest in Haiti. The banking sector is well-capitalized, profitable, and gross international reserves are able to cover three months of imports. As of March 2017, Haiti’s stock of net international reserves is approximately USD 845 million. In principle, there are no limitations on foreigners’ access to the Haitian credit market and credit is available through commercial banks. The free and efficient flow of capital is hindered by Haitian accounting practices, which often fall below international standards, and financial difficulties. While there are no restrictions on foreign investment through mergers or acquisitions, there is no Haitian stock market, so there is no way for investors to purchase shares in a company outside of direct transactions.

The standards that govern the Haitian legal, regulatory, and accounting systems often fall below international norms. Haitian laws do not require external audits of domestic companies. Local firms calculate taxes, obtain credit or insurance, prepare for regulatory review, and assess real profit and loss. Accountants use basic accounting standards set by the Organization of Certified Professional Accountants in Haiti (OCPAH).

Administrative oversight in the banking sector is superior to oversight in other sectors. However, under Haitian law, banks are not required to comply with internationally recognized accounting standards, and internationally recognized accounting firms do not audit them. Nevertheless, Haiti’s Central Bank (BRH) requires that banks undergo internal audit procedures. As part of their corporate governance all private banks also have in-house audit functions. Most private banks follow international accounting norms and use consolidated reporting principles. The BRH is generally viewed as one of the well-functioning GOH institutions in Haiti.

**Money and Banking System**

The banking sector has concentrated credit in trade financing and in the proliferation of branches to capture deposits and remittances. Telebanking now provides access to banking services for Haitians that are first-time account holders. Foreign banks are free to establish operations in Haiti. Three major banking institutions (Unibank, Sogebank and BNC) hold 80 percent of total banking sector assets. As of December 2016, Haiti’s largest banking company, Unibank, acquired the operations of the Canadian Bank-Scotiabank, which upon closing will increase its deposit market share to 34 percent. Scotiabank will remain one of Unibank’s international correspondent banks.

The three major commercial banks hold 75 percent of the total loan portfolio, while 70 percent of total loans are monopolized by ten percent of borrowers. This increases the Haitian banking system’s vulnerability to systemic credit risk and restricts the availability of capital. The gross loan portfolio of the banking system in September 2016 was USD 1.6 billion. The quality of the loan portfolios in the banking system, measured by the ratio of nonperforming loans over total loans, has improved over the years due to the recent modernization of the regulatory and supervisory framework of the financial sector. The measure requires that BRH conduct regular inspections to ensure that financial institutions are in compliance with the minimum capital requirements, asset quality, currency, and credit risk management.

The Central Bank’s main challenge is to maintain sound monetary policy in the context of a larger-than-expected government deficit and a depreciating local currency. As of December 2016, BRH’s reference rate was approximately 67 Gourdes for one U.S. dollar. Inflation, at 14.3 percent in December 2016, has been rising. The exchange rate suffered from continued pressure on the foreign exchange market resulting in the printing of local currency to pay arrears. To ease the pressure on the local currency, the Central Bank proceeded with the sale of USD 94 million in foreign exchange reserves during FY 2015-2016, while maintaining the reserve requirement ratios of commercial banks at 46 percent for deposits held on U.S. currency, and 42 percent for deposits on local currency, respectively. The BRH announced a six month, USD 120 million stabilization Gourde stabilization initiative in March of 2017.

There are no legal limitations on foreigners’ access to the domestic credit market. Credit is available on market terms through commercial banks. However, banks demand a pledge of real property to grant loans. Given the lack of effective cadastral and civil registries, loan applicants face daunting challenges in obtaining credit. The banking sector is extremely conservative in its lending practices. Banks typically lend exclusively to their most trusted and credit-worthy clients. In addition, the high concentration of assets does not allow for product innovation at major banks.

To provide greater access to financial services for individuals and prospective investors, the Haitian government’s chattel and banking laws both recognize tangible movable property (ex. portable machinery, furniture, tangible personal property) as collateral for loans. These laws allow individuals to buy condominiums, and banks to accept personal property, such as cars, bank accounts, etc., as a pledge for loans. The U.S. Agency for International Development (USAID) has a loan portfolio guarantee program with a diversified group of financial institutions in order to encourage them to expand credit to productive small and medium enterprises, and rural micro-enterprises. The Haitian government seeks to establish a credit rating bureau to disseminate data on the total indebtedness and concentration of credit risks of businesses and individuals in the financial sector, but to date there has been little progress in setting up the bureau.

**Foreign Exchange and Remittances**

*Foreign Exchange*

The Haitian Gourde (HTG) is convertible for commercial and capital transactions. Banks and currency exchange companies set their rates at the market-clearing rate. The Haitian Central Bank (BRH) publishes a daily reference rate, which is a weighted average of exchange rates offered in the formal and informal exchange markets. The market determines the exchange rate for the Gourde. Banks and currency exchange companies set their rates at the market-clearing rate. The spread between buying and selling rates is generally less than five percent. As of March 2017, the exchange rate is approximately 70 HTG/USD. Declining aid inflows and low domestic production led to a significant depreciation of the Haitian Gourde.

*Remittance Policies*

The Haitian government does not impose restrictions on the inflow or outflow of capital. The Law of 1989 governs international transfer operations and remittances. Remittances are Haiti’s primary source of foreign currency and account for an estimated one quarter of GDP. There are no restrictions or controls on foreign payments or other fund transfer transactions, and foreign exchange is readily available. While restrictions apply on the amount of money that may be withdrawn per transaction, there is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad.

The GOH is now putting in place stricter measures to monitor money transfers in accordance with Haiti’s efforts to deter illicit cash flows, as mandated by the 2013 Anti-Money Laundering Act and the forthcoming implementation of the United States Foreign Account Tax Compliance Act (FATCA).

**Sovereign Wealth Funds**

To date Haiti does not have a Sovereign Wealth Fund (SWF). However, several entities are currently persuading the Haitian diaspora to fund a SWF, which could be used to modernize the country’s public education and/or sanitation system. The SWF would be funded with remittances received from Haitian who are living overseas. Some analyst also suggests that revenue could also come from taxing the amount of remittances the diaspora sends. Haitians send approximately USD 2 billion in remittances annually to support their families.

							7. State-Owned Enterprises					

Before the privatization efforts that began in the mid-1990s, the Haitian government fully owned and operated State-Owned Enterprises (SOE). The Haitian commercial code governs the operations of the SOEs. The law defines SOE as autonomous enterprises that are legally authorized to be involved in commercial, financial and industrial activities. All SOEs operate under the supervision of a sectorial ministry, and are expected to create economic and social return. Today, some SOEs are fully owned by the state, while others are mixed-enterprises. The Haitian Parliament has strict authority to liquidate state enterprises that are underperforming.

Today, the non-financial SOEs that remain in the public portfolio include the electrical company (EDH), the national airport authority (AAN), the sugar factory, the port authority (APN), the social security office (ONA), the postal office, and the vehicle insurance company (OAVCT). The majority of SOEs are financially sound, with the exception of EDH. EDH is receiving substantial annual subsidies from the Haitian government to stay in business.

Multiple reports in the Haitian press indicated that financial SOE Banque Populaire Haitienne (BPH) was close to failure in 2016. The Central Bank intervened at the time but BPH’s current standing is unclear.

**Privatization Program**

With the economic difficulties of the late 1990’s and mismanagement of the SOEs, the government was forced to liberalize the market and allow foreign firms to invest in the management and/or ownership of Haitian SOEs. To accompany the initiative, the government established the Commission for the Modernization of Public Enterprises (CMEP) in 1996 to facilitate the privatization process, while creating strategies to privatize all SOEs.

In 1998, two U.S. companies, Seaboard and Continental Grain, purchased 70 percent of the state-owned flourmill. Currently, each partner owns 23 percent of the new company known today as Les Moulins d’Haiti. In 1999, a consortium of Colombian, Swiss, and Haitian investors purchased a majority stake in the national cement factory. In 2010, a Vietnamese corporation, Viettel, officially acquired 60 percent of the state telecommunications company Teleco (now operating as Natcom), with the Haitian government retaining 40 percent ownership. Competition is not distorted in favor of state-owned enterprises to the detriment of private companies.

To further liberalize the economy, the government provided fiscal incentives to the GB Group to build Haiti’s first Panamax container port. This project received its first ship in late 2015.

The Haitian government allowed private sector investment in electricity generation to compensate for EDH’s inability to supply sufficient power. Three private power producers generate electricity for EDH, the most recent being the Haitian firm E-Power, which opened a 32 megawatt, USD 56 million, IFC-financed heavy fuel-oil power plant in Port-au-Prince in 2011. The government allowed limited private sector investment in selected seaports, and has also expressed interest in the USAID-backed Cap-Haitian Port rehabilitation project, and in privatizing the Port-au-Prince and Cap-Haitian airports. Despite initial enthusiasm in both the public and private sectors for privatization, progress is slow. To date, out of nine SOEs, three enterprises were privatized, and two other privatizations are under consideration.

							8. Responsible Business Conduct					

Awareness of Responsible Business Conduct (RBC) among producers and consumers is limited but growing. A limited number of Haitian firms have a Corporate Social Responsibility (CSR) component to their business plan, even if it is not well advertised or formalized. Irish-owned telecoms company Digicel, for example, sponsors an Entrepreneur of the Year program and has built 120 schools in Haiti. Natcom provides free internet service to several public schools throughout the country. Les Moulins d’Haiti, partially owned by U.S. firm Seaboard Marine, provides some services including electrical power to surrounding communities. In the aftermath of the 2010 earthquake, many firms provided logistical or financial support to humanitarian initiatives, and many continue to contribute to reconstruction efforts. Haiti’s various chambers of commerce have become more supportive of social responsibility programs as well.

The Government of Haiti has not put in place any promotion or incentives to encourage adherence to RBC.

							9. Corruption					

Haiti’s 2014 anti-corruption legislation criminalizes nepotism, the sharing of inside information on public procurements initiatives and public contracts, bribery and money laundering. The Government of Haiti made incremental efforts to eliminate corruption in the private and public sector, including establishment of the Specialized Unit to Combat Corruption (ULCC) in the public sector. In 2015, the National Commission for Public Procurement was created to promote fairness and to ensure that government contracts are awarded through effective procurement procedures. The measure requires that government contracts be awarded through a competitive bidding, and that the ULCC publishes the list of awarded contracts in the public register. Additionally, the ULCC issued a code of ethics that set professional standards for public servants. Private companies are also encouraged to promote the same code of conduct in their workplace and build on the principles the code outlines.

Haitian law, applicable to individuals and financial institutions, criminalizes corruption and money laundering. The Government of Haiti criminalizes bribes or attempted bribes toward a government employee and these acts are punishable by the criminal code (Article 173) for one to three years of imprisonment. The law also contains provisions for the forfeiture and seizure of assets. The government openly affirms a firm commitment to combat corruption. However, weak enforcement mechanisms often impede their efforts. There are serious allegations that some government officials are accustomed to bribes, and often use their authority to influence commercial and business decisions. A small number of U.S. firms also alleged that corruption is a major impediment to doing business in Haiti, especially in clearing shipments through customs. The Government of Haiti has made incremental progress in enforcing public accountability and transparency, but substantive institutional reforms are still needed.

Haiti is party to the Inter-American Convention against Corruption (OAS Convention), and the United Nations Convention against Corruption (UN Convention).

*Resources to Report Corruption*

Any corruption-related activity can be reported to the Haitian Anti-Corruption Unit, responsible for combatting corruption, or Transparency International’s branch in Haiti, Haiti Heritage Foundation, which monitors corruption:

Rodiny Jean BaptisteDirector GeneralUnite de Lutte Contre la Corruption13, rue Capotille, Pacot, Port-au-Prince, HaitiTelephone: (509) 2811-0661 / (509) 4890-3647Email address: info@ulcc.gouv.ht

Marilyn B. AllienPresidentFondation Heritage pour HaitiPetion-Ville, HaitiTelephone: (509) 3701-7089Email address: admlfhh@yahoo.com/heritagehaiti@yahoo.com

Some useful resources for individuals and companies regarding combating corruption in global markets include the following:

							10. Political and Security Environment					

Despite have a newly installed government in 2017, Haiti’s political situation remains unstable. Frequent cabinet changes, and poor relations between Parliament and the Executive Branch have hindered both reconstruction efforts and passage of important legislation. Political violence has been limited in scope, but is still a common occurrence, particularly during elections. The GOH needs to improve the capacity of Haitian law enforcement to deter and prosecute violent crime.

There are no cases of political groups targeting foreign projects and/or installations. Historically, and continuing into early 2017, politically and socio-economically motivated civil disorder, such as periodic demonstrations triggered by government proposals to increase fuel prices and labor strikes, sometimes interrupted normal business operations. Establishing and safeguarding real property rights in Haiti remains a very significant problem, given extremely weak registry and judicial capacity in country.

							11. Labor Policies and Practices					

The special legislation of the Labor Code of 1984 establishes and governs labor regulations. Under the Code, the Minister of Social Affairs (Mast) enforces the law and maintains good relationships with employers and workers. The Haitian constitution guarantees the right to labor union, including collective bargaining, fair wages and social security. Normal working hours consist of eight-hour shifts and 48 hour work weeks. However, the Government of Haiti is considering reforming the current labor code to include three eight-hour shifts rather than a one eight-hour shift. Workers are entitled to a minimum wage of 300 HTG or USD. The remuneration for night shift hours (6PM – 6AM) is 50 percent higher than the amount paid during day time hours. Workers’ social protection and benefits include annual leave, sick leave, health insurance, maternity insurance, insurance in case of accident at work, and other benefits for unfair dismissal.

Labor unions are generally receptive to investment that creates new jobs, and support from the international labor movement, including the American Federation of Labor and Congress of Industrial Organizations and the International Trade Union Confederation (AFL-CIO and ITUC), is building the capacity of unions to represent workers and engage in social dialogue. The Ministry of Labor and Social Affairs is revising a new labor code that will better comply with international labor standards. Preparations for the 2015 and 2016 elections, as well as multiple changes in the Minister of Labor during the same period stalled the revision of the labor code.

Relations between labor and management in Haiti are at times strained. In some cases, however, industries have autonomously implemented good labor practices. For example, the apparel assembly sector established its own voluntary code of ethics to encourage its members to adopt good labor practices. In addition to local entities, the International Labor Organization (ILO) has an office in Haiti and operates an ongoing project with the assembly industry to improve productivity through improvement in working conditions. The initiative prompted ILO to officially launch Better Work Haiti, a program that designed to ensure compliance with international labor standards and spur jobs creation in the garment sector over the next ten years.

Since the inception of Better Work Haiti, the garment sector saw a 50 percent improvement in occupational safety and health across the factories. Employers have doubled their efforts to improve chemical safety, and over 95 percent of local factories initiated proper policies to strengthen a safer work environment as well as providing good working conditions to garment workers. Wages vary depending on the economic sector. As of May 2015, the minimum wage for the garment sector is 300 HTG for eight hours of work or (approximately USD 4) in the textile industry. However, approximately two-thirds of those employed in the textile sector earn 350 HTG per day given production incentive bonuses. Better Work Haiti’s annual report found the majority of factories in compliance with the labor law. The report is available at: http://betterwork.org/global/?p=7201 .

Haiti’s apparel industry expanded in recent years, and now counts several local and foreign manufacturers, including U.S., Dominican, and Korean investors, which produce a wide range of clothing articles. The sector has notable strengths and advantages, such as an abundant workforce, duty-free access to the U.S. market, and the Better Work Haiti program. Measures are currently underway to enhance the technical skills of the Haitian workforce. The South Korean International Cooperation Agency (KOICA), for example, funded the construction of an apparel training center in the Caracol Industrial Park in Northern Haiti.

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation (OPIC) offers insurance against political risks and financing programs for U.S. investments in Haiti. OPIC financing includes two programs: direct lending and investment guarantees. Direct loans are available to investment projects sponsored by or significantly involving U.S. small businesses. Investment guarantees are available to U.S. eligible investors of any size. OPIC has invested more than USD 223 million in 78 projects in Haiti over 40 years, in infrastructure, renewable resources, and other sectors.

OPIC has an on-lending facility with Citibank available to several Caribbean countries, including Haiti. OPIC guarantees loans totaling USD 100 million, with up to 20 percent of this amount available for Haiti. The OPIC risk share for the facility ranges from 25 to 75 percent for each loan.

Haiti is a member of the WB’s Multilateral Investment Guarantee Agency (MIGA). MIGA guarantees investments against non-commercial risks and facilitate access to funding sources including banks and equity partners for investors.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

* Sources: http://data.worldbank.org/country/haiti http://www.brh.net/balance_des_paiements.html 

*Table 3: Sources and Destination of FDI*

Data not available.

*Table 4: Sources of Portfolio Investment*

Data not available.

							14. Contact for More Information					

Melissa SandovalCommercial AttacheEmbassy of the United States of AmericaBoulevard du 15 Octobre, Tabarre 41Port-au-Prince, HaitiPlease address email correspondence to PAPECON@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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#### The Lessons of 1989: Freedom and Our Future