To: President Michel Martelly From: CCT Consulting Date: 23 October 2011 Subject: Foreign Direct Investment in Haiti Purpose: To provide a strategic plan to attract foreign direct investment to Haiti that will help alleviate the countryâ€™s poverty. Problem: After decades of corruption, failed leadership, and a devastating earthquake, the country of Haiti is struggling to combat a reputation of political and economic instability. The earthquake caused damage equal to their entire GDP in 2009, so Haiti is plagued with extreme poverty, weak infrastructure, and an unsustainable economy.1 To rejuvenate the failing economy Haiti needs FDI, but their lack of transparency, flawed credibility within the government and private sector, and dependence on foreign aid turn investors away. Strategic Advice: 1. Pass FDI-friendly legislation to increase transparency Investors are afraid to put their money in Haiti because the financial system is not transparent and they fear low return on investment. If laws and regulations are passed regarding concessions, contracting, and providing investment protections, capital investments from foreign companies will be more attracted to Haiti and help create a more stable private sector.2 These measures can be passed in under a year, and should be in place by the end of the fiscal year 2012. The government and National Assembly of Haiti will need to be the driving force behind action. Haitian officials must learn the skills to assess project feasibility, to market projects, to negotiate risks, and to appropriately manage infrastructure projects.3 This training will be time-intensive, but will ultimately attract significant foreign capital and make investment less risky. 2. Reestablish governmental and private sector credibility with Haitian citizens Only 16% of Haitians have trust in the private sector, paralleling the fear that foreign investors have in the country.4 This pervasive mistrust must be addressed in order to stabilize the sociopolitical economic system. Credibility can be reestablished if both the government and private sector demonstrate commitment to change and austerity measures. As such, a strong bilateral relationship with the United States for the expansion of the Haitian Hemispheric Opportunity through Partnership Act [HOPE], a tariff free economic program, should be sought by 2012. With the expansion of HOPE into industry and manufacturing by 2016, an estimated 120,000 jobs will be created with an investment of $357 million USD5. In doing so, the government will illustrate its commitment to curtail public corruption by placing emphasis on the people and private industry. 3. Diversify the Haitian economy Foreign aid and debt forgiveness account for the greatest amount of capital inflow into Haiti, but diversifying the economy will lessen dependence on foreign aid and increase economic sustainability. Developing diverse industry will stimulate financial independence and provide opportunities for aid to be converted into investment. The four industries that should be prioritized are agriculture, tourism, urban development, and apparel. This should be stimulated through actions such as creating tourist destinations and manufacturing hubs near the nationâ€™s largest cities, and will create up to 1,000,000 jobs in five years.6 It is important to note that legislation must be passed first.
Works Cited 1
“Haiti earthquake pdna.” (2010). Retrieved from http://www.refondation.ht/resources/PDNA_Working_Document.pdf 2 “Haiti Economic Recovery & Roadmap”. Presidential Commission on Competitiveness (GC). August 2010 3 “Haiti Economic Recovery & Roadmap”. Presidential Commission on Competitiveness (GC). August 2010. 4 “Haiti National Competitiveness Survey”. GC and OTF Group. May 2009, n=712. 5 “Haiti Economic Recovery & Roadmap”. Presidential Commission on Competitiveness (GC). August 2010. 6 “Haiti National Competitiveness Survey”. GC and OTF Group. May 2009, n=712.
"On my honor, as a University of Colorado at Boulder student, I have neither given nor received unauthorized assistance on this work." Carolyn Evans, Caleb Law, Tu Phan