Since independence, the government has sought to attract foreign investment for industrial development, especially the processing of local agricultural commodities for export. Grenada offers incentives competitive with other Caribbean nations and gives high priority to foreign investment that is either 100% foreign owned or joint venture with nationals.
There are no free trade zones in the country, but generous investment incentive packages are available, including a tax holiday of up to 15 years. There has been a considerable amount of foreign investment in the country's hotel sector. The government planned to issue 10 additional licenses for the telephone industry by year-end 1997. In addition, a $75 million hotel was being built by the famous Ritz chain. Most foreign investment during the 1990s came in the form of infrastructure construction projects related to the tourism industry.
In September 2001, Grenada was placed on the list of noncooperative countries in preventing money laundering by the OECD's Financial Action Task Force (FATF). After strengthening its anti-money laundering legislation and closing a number of banks, Grenada was removed from the list in February 2003.
In 1998, the foreign direct investment (FDI) inflow into Grenada rose to $48.7 million, up from $33.5 million in 1996. Yearly FDI inflows stayed within this range from 1998 to 2001. FDI inflow in 2001 was $34.2 million.