Economy of Belize: Wikis

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Economy of Belize
Currency 1 Belize dollar (BZD)
Fiscal year 1 April – 31 March
Trade organisations CARICOM, WTO
Statistics
GDP $2.574 billion (2008 est.)
GDP growth 3% (2007 est.)
GDP per capita $8,500 (2008 est.)
GDP by sector Agriculture (21.3%), industry (13.7%), services (65%) (2007 est.)
Inflation (CPI) 2.8% (2007 est.)
Population
below poverty line
33.5% (2002 est.)
Labour force 113,000 (2006 est.)
Labour force
by occupation
Agriculture (22.5%), industry (15.2%), services (62.3%) (2005 est.)
Unemployment 9.4% (2006)
Main industries Garment production, food processing, tourism, construction, oil
External
Exports $496 million (2008 est.)
Export goods Sugar, bananas, citrus, clothing, fish products, molasses, wood, crude oil
Main export partners U.S. 28.7%, 16.3%, Thailand 5.8%, Cote d'Ivoire 5.4%, Finland 4.2%, Spain 4% (2007)
Imports $718 million (2008 est.)
Import goods Machinery and transport equipment, manufactured goods, fuels, chemicals, pharmaceuticals, food, beverages, tobacco
Main import partners U.S. 31.2%, Mexico 13.6%, Cuba 8.5%, Guatemala 8%, Russia 4.6% (2007)
Gross external debt $1.362 billion (2004)
Public finances
Public debt $1.2 billion (June 2005 est.)
Revenues $335.5 million (2008 est.)
Expenses $361.5 million (2008 est.)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

The economy of Belize depended on forestry until well into the 20th century. Logwood, used to make dye, was Belize's initial main export. However, the supply outstripped the demand, especially as Europeans developed man-made dyes which were less expensive. Loggers turned to mahogany, which grew in abundance in the country's forests. The wood was prized for use in cabinets, railroad carriers. While many merchants and traders became wealthy from the mahogany industry, ups and downs in the market had a large impact on the economy. In addition, new mahogany trees weren't being planted, because mahogany trees grow slowly; the rate of natural regrowth necessitated a large, long-term investment in tree farming, which was not made. As the 19th century progressed, loggers were forced to go deeper into the forests to find the trees, increasing labour costs.

Variations of mahogany exports over long periods of time were linked to the accessible supply of the resource. Thus, improvements in hauling methods helped the cutters satisfy increasing demands for mahogany by enabling them to extract timber from areas in the interior that had been previously inaccessible to them. Immediately after the introduction of cattle in the early 1800s, tractors in the 1920s, and lorries in the 1940s, production levels rose dramatically.

When the supply of accessible timber dwindled and logging became too unprofitable in the 20th century, the country's economy shifted to new sectors. Cane sugar became the principal export and recently has been augmented by expanded production of citrus, bananas, seafood, and apparel. The country has about 8,090 km² of arable land, only a small fraction of which is under cultivation. To curb land speculation, the government enacted legislation in 1973 that requires non-Belizeans to complete a development plan on land they purchase before obtaining title to plots of more than 10 acres (40,000 m²) of rural land or more than one-half acre (2,000 m²) of urban land.

Domestic industry is limited, constrained by relatively high-cost labour and energy and a small domestic market. The United States Embassy in Belmopan knows of some 185 United States companies that have operations in Belize, including MCI, Duke Energy International, Archer Daniels Midland, Texaco, and Esso. Tourism attracts the most foreign direct investment although significant U.S. investment also is found in the energy, telecommunications, and agricultural sectors.

A combination of natural factors—climate, the Belize Barrier Reef (longest in the Western Hemisphere), numerous islands, excellent fishing, safe waters for boating, jungle wildlife, and Maya ruins—support the thriving tourist industry. Development costs are high, but the Government of Belize has designated tourism as its second development priority after agriculture. In 2000, tourist arrivals totaled 189,634 (more than 110,000 from the U.S.) and tourist receipts amounted to $113.3 million.

Belize's investment policy is codified in the Belize Investment Guide, which sets out the development priorities for the country.

Contents

Infrastructure

Belize has a population of about 300,000 people. The capital of Belize is Belmopan. A major constraint on a functioning market economy in Belize continues to be the scarcity of infrastructure investments. Although electricity, telephone, and water utilities are all relatively good, Belize has the most expensive electricity in the region. Large tracts of land which would be suitable for development are inaccessible due to lack of roads. Some roads, including sections of major highways, are subject to damage or closure during the rainy season. Ports in Belize City, Dangriga, and Big Creek handle regularly scheduled shipping from the U.S. and the United Kingdom although draft is limited to a maximum of 10 feet in Belize City and 15 feet in southern ports. International air service is provided by American Airlines, Continental Airlines, and TACA to gateways in Dallas, Texas, Houston, Texas, Miami, Florida, and San Salvador.

Several capital projects are either currently underway or are programmed to start in fiscal year 2001/2002. The largest of these is a $15 million rural electrification program to be jointly implemented by the government and Belize Electricity Limited (BEL). In addition, the government will continue to implement an Inter-American Development Bank Emergency Reconstruction Fund of $20 million aimed at restoring essential services such as health and education facilities and transportation networks to communities which were severely damaged by Hurricane Keith. The government will also invest close to $4.2 million in projects targeted at poverty alleviation across Belize. Initiated in 1999, the Ministry of Agriculture and Fisheries, through the Belize Agricultural Health Authority, will continue to implement the IDB-funded "Modernization of Agricultural Health Project." This $2.5 million project seeks to improve the competitiveness of Belize's agricultural products and thus enhance the ability of Belizean farmers and processors to maintain and expand the sale of their high-quality products to foreign markets. A $5 million soybean project, funded by the Brazilian Government, is scheduled to begin in 2001 and is intended to assist northern Belize farmers to diversify away from sugarcane cultivation.

The government also plans to invest $9.85 million to complete the rehabilitation of the Hummingbird Highway, as well as investing $9.5 million in its health-sector reform program. Another $9 million will be invested under the IDB-funded "Land Management Project" over the next 2 years. The Ministry of Tourism is confident that another IDB-funded project, the "Tourism Development Project", will make Belize the Mundo Maya centerpiece for travelers to Central America. The government will spend close to $1.4 million in improving access to the Maya archaeological sites in Belize, especially Caracol. Using a soft loan from the Republic of China, the government is funneling $50 million toward the construction of low-cost housing.

Agriculture is a key part of the economy.
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Trade

Belize's economic performance is highly susceptible to external market changes. Although moderate growth has been achieved in recent years, the achievements are vulnerable to world commodity price fluctuations and continuation of preferential trading agreements, especially with the U.S. (cane sugar) and UK (bananas).

Belize continues to rely heavily on foreign trade with the United States as its number one trading partner. Total imports in 2000 totaled $446 million while total exports were only $349.9 million. In 2000, the U.S. accounted for 48.5% of Belize's total exports and provided 49.7% of all Belizean imports. Other major trading partners include the UK, European Union, Canada, Mexico, and Caribbean Community (CARICOM) member states.

Belize aims to stimulate the growth of commercial agriculture through CARICOM. However, Belizean trade with the rest of the Caribbean is small compared to that with the United States and Europe. The country is a beneficiary of the Caribbean Basin Initiative (CBI), a U.S. Government program to stimulate investment in Caribbean nations by providing duty-free access to the U.S. market for most Caribbean products. Significant U.S. private investments in citrus and shrimp farms have been made in Belize under CBI. U.S. trade preferences allowing for duty-free re-import of finished apparel cut from U.S. textiles have significantly expanded the apparel industry. EU and UK preferences also have been vital for the expansion and prosperity of the sugar and banana industries.

The tourism industry is an important part of the economy of Belize, in 2007 contributing to over 25% of all jobs, and making up over 18% of the GDP.[1] This constituted 590 million BZD (295 million USD), according to the Belize government, up 90 million BZD (45 million USD) from the year before.[1] Tourism is the domain of the Ministry of Tourism, within which the Belize Tourism Board works as a link between the private and public sector.[2]

Belize International Business Companies

In 1990, Belize enacted the International Business Companies Act based on the British Virgin Islands model. In a short space of ten years, Belize has registered more than 15,000 IBC's. Belize's IBC legislation is viewed internationally as one of the most modern and user-friendly. It is particularly designed with the offshore investor in mind. A Belizean IBC is an ideal corporate vehicle for international financial transactions and allows the investor to engage in a wide variety of activities ranging from asset protection to operating bank accounts, brokerage accounts, ship ownership, commission arrangements and various other commercial transactions.

The IBC legislation was supplemented in 1992 with the enactment of a Trusts Act which provides for both onshore and offshore trusts. Universally acknowledged as one of the best in the field, Belize's trust law contains provisions that are specialty designed to meet the needs of differing and diverse cultures and religions.[3]

Belize IBCs have the following Features and Advantages:

Progressive legislation

The IBC Act was introduced in 1990 to implement competitive offshore legislation for Belize IBC's which was subsequently amended to reflect the changes required to provide efficient Belize offshore services.

Efficient Incorporation / Registration

Belize incorporation is very efficient under normal circumstances, a Belize IBC can be incorporated in a couple of working days.

Flexibility in company structure

• There is no requirement for a secretary resident or otherwise
• Only one director or shareholder required for the company formation
• Shareholder(s) and director(s) may be the same person
• The shareholder(s) and director(s) can be a natural person or a corporate body
• There is no requirement for appointing local shareholder(s) and director(s)

Privacy of identity of principals

The documents for Belize offshore Incorporation do not carry the name or identity of any shareholder or director. The names or identities of these persons do not appear in any public record.

Taxation in Belize

On IBC Profits According to the IBC Act of 1990, offshore companies are exempted from all taxes. [4]

Tourism and Ecotourism

A combination of natural factors—climate, the Belize Barrier Reef (longest in the Western Hemisphere), 127 offshore Cayes (islands), excellent fishing, safe waters for boating, scuba diving, and snorkeling, various jungle fauna and flora, helicopter touring and Maya ruins—support the thriving tourism and ecotourism industry. Development costs are high, but the Government of Belize has designated tourism as its second development priority after agriculture. In 2007, tourist arrivals totaled 251,655 (more than 210,000 from the U.S.) and tourist receipts amounted to $183.3 million.

Overview

Belize has a small, essentially private enterprise economy is based primarily on agriculture, agro-based industry, and merchandising, with tourism and construction recently assuming greater importance. In 2006, the cultivation of newly discovered Crude Oil in the town of Spanish Lookout, has presented new prospects and problems for this developing nation.[5] Sugar, the chief crop, accounts for nearly half of exports, while the banana industry is the country's largest employer. The government's tough austerity program in 1997 resulted in an economic slowdown that continued in 1998. The trade deficit has been growing, mostly as a result of low export prices for sugar and bananas. The new government faces important challenges to economic stability. Rapid action to improve tax collection has been promised, but a lack of progress in reining in spending could bring the exchange rate under pressure. The tourist and construction sectors strengthened in early 1999, leading to a preliminary estimate of revived growth at 4%. The Belize Dollar is fixed to the U.S. dollar at a rate of 2:1.

A combination of natural factors—climate, the Belize Barrier Reef (longest in the Western Hemisphere), 127 offshore islands, excellent fishing, safe waters for boating, various jungle fauna and flora, and Maya ruins—support the thriving tourism and ecotourism industry. Development costs are high, but the Government of Belize has designated tourism as its second development priority after agriculture. In 2000, tourist arrivals totaled 189,634 (more than 110,000 from the U.S.) and tourist receipts amounted to $113.3 million.

See also

References


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