Belize - Market ChallengesBelize - Market Challenges
Belize is one of the smallest consumer markets in the Central America and Caribbean regions and is not as competitive as its Central American neighbors. The relatively high cost of doing business is in large part due to the high cost of inputs like utilities, fuel and telecommunication services.
As of January 2018, prices per U.S. gallon of premium, regular, and diesel were $5.45, $5.10, and $5.15 respectively. The country has not been able to take advantage of electronic commerce, as many of its institutions lack the ability to conduct online operations or process online registrations.
Electricity rates are prohibitively high. In 2017, the Government increased General Sales Tax (12.5%) payable on residential electricity consumption exceeding $50, where previously only consumption exceeding $100 was payable. In December 2018, the Public Utilities Commission approved an increase of the Mean Electricity Rates (MER) to 21c per kilowatt-hour.
Imported products are subject to tariffs such as Import Duties; Cost, Insurance, plus Freight (CIF Value); Revenue Replacement Duties (if applicable); General Sales Tax; and Environmental Tax. Import duties generally range from zero to 45%. Luxury items like SUV vehicles, alcohol, cosmetics, or items that compete with domestic industries may range from 70 to 120%. Where applicable, Environmental Tax is 3% on imports, excluding some medicines and food items. Automobiles are charged the Environmental Tax at a rate of 5%. Most goods are subject to the 12.5% General Sales Tax . For more information visit http://www.customs.gov.bz.
The financial system continues to be categorized as stable but fragile in terms of maintainance of correspondent banking relationships, high borrowing rates, and lack of financing mechanisms available to business. While all banks have current correspondent banking relations, there is still uncertainty with regard to the longevity of those relationships, delay in transactions, and fewer services offered by the correspondent banks at higher costs.
Accessing credit remains constrained because of relatively high borrowing rates. The 12-month weighted average interest rates for 2018 were 9.1% on loans and 1.2% on deposits, respectively. Additionally, the country does not yet have an export-import bank able to facilitate transactions of exporters and importers, limiting the ability of domestic producers and businesses to access financing from potential U.S. suppliers.
Complaints of lengthy bureaucratic delays and corruption serve as disincentives to foreign investments. While local courts are empowered to recognize and enforce foreign arbitral awards against the government, judgements are generally challenged up to the Caribbean Court of Justice, the country’s final appelate court. Investors are advised to perform due diligence when planning investments as there have been highly publicized cases of land title fraud.
Belize Trade Development and Promotion