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From Coffee to Casinos, Belize Pushes Foreign Investment
The Washington Diplomat / March 2000

By Larry Luxner

Little-known Belize, the only English-speaking country in Central America, is pushing hard to lure both wealthy retirees and foreign investors to its shores, while strengthening the traditional pillars of its economy: tourism and agribusiness.

Larger than Israel but with only 260,000 inhabitants, Belize is one of the least densely populated countries in the Western Hemisphere. Wedged in between Guatemala, Mexico and the Caribbean Sea, Belize was known as British Honduras until 1973, when it was granted independence. For several decades afterward, Guatemala refused to recognize Belize as a separate country, claiming the territory as its own. But in recent years, that issue has been put to rest, and Guatemala and Belize now enjoy full diplomatic relations.

Despite its British heritage, most Belizeans speak both English and Spanish -- leading many to question where Belize qualifies as a Central American nation, a Caribbean nation or both.

"I keep saying over and over that we are in the Western Caribbean," notes James S. Murphy, Belize's ambassador to the United States. "Geographically, we're Central American, but our primary economic and political partnership is with the Caribbean. We're only an observer in SICA (the Spanish acronym for Central American Integration System), but we're full-fledged members of the Caribbean Community (CARICOM)."

Belize has a Gross Domestic Product of $1.06 billion, translating into per-capita income of around $2,600 a year. While that's higher than most of its Central American neighbors, it's not good enough for either Murphy or Belize's prime minister, Said Musa. Both say the only way to increase GDP is through foreign investment.

Asked why U.S. firms should consider Belize, Murphy didn't waste a moment.

"We have a 99% literacy rate, higher than any other country in Central America," he said. "We have an English-speaking workforce, and even though we have a tiny market, through our membership in Caricom, Canada's Caribcan and the U.S. Caribbean Basin Initiative we're able to access a large regional market, and conveniently because of our geographic location. We're one and a half hours to Miami, and two hours to Houston."

Growth areas include tourism, shrimp farming, telecommunications, papaya and other fruit exports, and information processing. Belize has even entered the coffee export market through its Gallon Jug organic coffee brand.

One area where it's not competing, however, is manufacturing.

"As we say in Belize, we're 10 minutes away from NAFTA," Murphy told The Washington Diplomat. "That's a plus and a minus. The plus is that you're right there, so there's a certain logistical advantage. You can truck your production to the U.S. from Belize. The minus is that NAFTA -- from the Mexican border to the North Pole -- is a huge sealed market in economic terms. It has had the effect of diverting investment out of the Caribbean and Central America into Mexico, for very good reasons. If you can produce inside the borders of NAFTA, you have a huge, free market. All of us in Central America are disadvantaged. That's why we're all pursuing free-trade agreements with Mexico. We all need bigger markets to attract investment and keep the economy going."

In the meantime, Belize is focusing on the service sector. To that end, it recently passed two laws aimed at generating foreign exchange: one legalizing casino gambling, the other encouraging wealthy retirees to settle in Belize.

Casino gambling is particularly welcome in the Central American nation, which has great scuba diving, rainforests and Mayan ruins -- but very little nightlife.

The 134-room Princess Hotel, inaugurated Jan. 22 in Belize City, is the country's largest hotel and the only one with legalized gambling.

During its first week of business, the hotel's flashy new casino attracted thousands of well-dressed Belizeans, who came not only to play the slot machines but also to see the live show: six also to enjoy a Brazilian-style cabaret performance by six half-naked dancing girls imported from Russia.

"The people who come here are actually very nice," said the new hotel's general manager, Martin Conway. "We're attracting the middle and upper classes. We don't get any garbage."

Conway, who ran the Princess Hotel in St. Maarten before being transferred to Belize a few months ago, concedes that the church in this overwhelmingly Roman Catholic country mounted "very strong opposition" to legalized gambling in Belize.

"They see casinos as evil, because everybody comes in with their last dollar," he said. "It's true there's a lot of poverty here. So we had to work out a system of street screening in order to keep out people who don't have two coins in their pocket. We want them to be well-dressed. Everywhere else in the Caribbean, the doors are open. Here, we have a controlled system."

Says Murphy: "The legislation was enacted to make the tourism industry more competitive. We have never had a casino in the entire country. Apparently, the tourism people felt they were thereby disadvantaged relative to the rest of the region."

The Princess Hotel, formerly a Ramada, was purchased by Turkish businessman Sudi Ozkan specifically so a casino could be established. When completed, the casino will have 500 slot machines and 20 gaming tables; it'll also boast a conference center able to accommodate 400 people -- the largest meeting hall of its kind in Belize. Total investment in the project, he said, is $20 million.

According to Anthony Mahler, director of product development at the Belize Tourist Board, Belize has around 4,000 hotel rooms in nearly 400 properties. In 1999, some 157,000 tourists visited the country, generating $198 million in foreign exchange -- or about 18% of Belize's total GDP.

Most of those tourists came from the United States and Western Europe. But that's not necessarily the clientele Conway is trying to reach.

"Our main market is southern Mexico," he said. "Mexicans are big gamblers, and so are South Americans. They're all going to be attracted to this place."

The other new law, the Belize Retired Persons Incentive Program -- approved last October -- is aimed specifically "for those people who wish to live in Belize and can prove a permanent and consistent income from investment, pension or other retirement benefits."

At present, only U.S., Canadian and British citizens aged 45 years or older can qualify, though the law will soon be amended to include many more countries in Europe and South America, says Mahler. "Since we began this program two months ago, we've had at least 500 inquiries, and we haven't done any marketing yet," he said.

In order to qualify, applicants must submit an official bank statement proving they receive a pension or annuity of at least $1,000 a month. Also required is a financial statement from a Belizean bank, credit union or building society certifying that the applicant's investment or deposit will generate at least $2,000 a month, or the equivalent of $24,000 a year. Upon approval, the applicant becomes a Qualified Retired Person (QRP).

"These people don't get citizenship, or even residency," says Mahler. "They get retirement status, which allows them to come and go as they please. And they'll be able to own land and invest, but not to do business or hire people."

Belize's new retirement law has already earned high marks from international attorney Joel Nagel, who calls it "arguably the most attractive incentive program anywhere for foreign retirees."

Nagel, managing partner of Pittsburgh law firm Nagel & Goldstein, writes in International Living magazine that the new law is a "win-win situation" for both retirees and the Belizean government.

"If you’re looking for tax-free living, put Belize at the top of your list," he says. "Similar to Costa Rica’s now-defunct pensionado program, the new Belize law targets North American and U.K. nationals who would spend part or all of the year in Belize, maintain a residence there, and bring their hard-earned dollars to spend in the local economy. Unlike other immigration programs, this one falls squarely under the authority of the Ministry of Tourism, which is working in conjunction with the Belize Tourist Board to make the program simple and user-friendly."

Under the new law, QRPs are exempt from the Income and Business Tax Act and from "the payment of all taxes and levies on all income or receipts which accrue to him from a source outside of Belize, whether that income is generated from work performed or from an investment."

All applications are subject to a background check by Belize's Ministry of National Security; they must also undergo a complete medical exam and be AIDS-free. In addition, applicants must submit a non-refundable application fee of $100, and various government fees totaling $605 once they're accepted into the program.

"We're using Costa Rica as a bigger model," says Mahler, though he warns that with 20,000 American retirees in that country, it's beginning to backfire. "In Costa Rica, they're taking some of those benefits back. Maybe it's starting to strain the health system. We don't want to get such big numbers -- maybe 10,000 or 12,000."

Even those who aren't ready to establish residence in Belize can still take advantage of the new law immediately. Two Belizean entities, the Georgetown Trust Co. and Exotic Caye Beach Resort Ltd., have formed a turnkey package that, for as low as $100 a month, gives U.S. and British nationals a permanent “virtual” presence and address in Belize. The service includes an address, a phone, fax and e-mail services, mail forwarding and discounts at a Caribbean resort for both short and extended stays on Ambergris Cay. Additional services include bill- paying services, assistance with driver’s licenses, and financial investment services. Georgetown can also help process QRP applications.

Says Ambassador Murphy: "We are making a conscious effort to attract retirees from all over the world to settle in Belize." He adds that he's not worried anybody will use Belize as an illegal tax haven or a place to launder drug money.

"We have all the proper protections and firewalls in place," he said. "We've never had any indication or concern about improprieties. We're a small country and we know everybody's business. If anybody did anything illegal, in about five minutes the whole bloody country would know."

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