This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 14 KINGSTON 000188
STATE FOR WHA/CAR, WHA/EPSC, AND EB/IFD/OIA
STATE PASS USTR/CWILSON
STATE PASS TO OPIC
EXIMBANK - JCARRIGER
TREASURY FOR OASIA
USDOC FOR 4322/ITA/IEP/WH/OMCB
SANTO DOMINGO FOR FCS AND FAS
SAN JOSE FOR ENVIRONMENTAL HUB - DALARID
E.O. 12958: N/A
TAGS: EINV EFIN ETRD EIND EAGR EMIN KTDB JM
SUBJECT: INVESTMENT CLIMATE - JAMAICA 2005
Provided below is Embassy Kingston's Investment
Climate Report for 2005.
A.1. Openness to Foreign Investment
The GOJ encourages foreign investment as a source of
development and has no policies or regulations that
reserve areas exclusively for Jamaicans. According to
the country's Trade Policy Review of September 1998 "
. . . a liberal foreign investment regime has been
implemented representing great strides over the last
twenty years when the climate for foreign investment
was very restrictive. Numerous measures, which once
inhibited foreign investment such as the Foreign
Exchange Control Act, and the list of areas reserved
for local investment only have been eliminated.
Consequently, Jamaica now has no legal impediment to
direct foreign investment and applies the principle of
national treatment to foreign investors."
With the investment landscape reformed, attention has
turned to the reduction of processing and approval
times for investment-related applications. In
particular, USAID has been providing assistance to the
GOJ and the Private Sector Organization of Jamaica for
a Regulation, Legislation and Process Improvement
Project to remove some of the obstacles to doing
business in Jamaica. This process is paying
dividends, as a 2004 World Bank study listed Jamaica
in the top ten countries in which it was easiest to do
business. Jamaica ranked well above its regional
peers and compared favorably with OECD countries in
areas such as starting a business and hiring and
firing workers. It should be mentioned that Jamaica's
Redundancy Act does make it expensive to fire an 00A;employee, but the Jamaican system still ranks higher
than its regional peers. The 2005 report, which takes
the procedures for registering property and protecting
investors into account, does not place Jamaica in the
The Companies Act and the Securities Act govern
acquisitions, mergers and takeovers for publicly
traded companies. In 1996 the Securities Act was
revised to bring it in line with international
regulations. The takeover code was redesigned to
ensure the integrity of the securities market while
protecting minority shareholders.
Jamaica's legal system is based on English common law
principles and rules covering the enforceability of
contracts are based thereupon. The Jamaican judicial
system therefore recognizes and upholds the sanctity
of contracts. There are no limits on foreign
ownership or control and the Embassy is not aware of
any economic or industrial policy that has
discriminatory effects on foreign investors.
Foreign investors are generally granted national or
Most Favored Nation treatment, subject to the rules of
their Bilateral Investment Treaties (BITS). There are
no screening mechanisms for foreign investments, but
if investors apply for government incentives, they
could be required to meet some basic pre-requisites
and due diligence may be done by the approving agency.
This process is not discriminatory and is not intended
to impede investment. Jamaica has also undertaken a
comprehensive program of trade and financial
liberalization, and no sector remains closed to
foreign investment. However, projects that affect
national security, have a negative impact on the
environment, or involve sectors such as life
insurance, media or mining are subjected to some
Jamaica's privatization program is fully open to
participation by foreign investors, except for those
that are on the restricted list. The National
Investment Bank, which administers privatization, is
mandated to ensure that the process is fair and
transparent. However, in some privatization
transactions the participation of local investors may
lead to added points in the scoring of proposals.
When large entities are being privatized,
advertisements are generally placed in newspapers such
as the Financial Times, the New York Times and the
Wall Street Journal to attract foreign investors. An
information memorandum accompanies privatization
proposals and includes the specific requirements under
which bidders are allowed to participate and the
criteria by which proposals will be evaluated.
Foreign investors have won the major privatization
bids of the last five years.
Jamaica is party to both multilateral and bilateral
treaties, which provide for non-discrimination. Local
laws do not distinguish between local and foreign
investors. The Embassy is not aware of any
discrimination against foreign investors at the time
of initial investment or after the investment is made.
However, under the Jamaican Companies Act investors
are required either to establish a local company or to
register a branch office of a foreign-owned
enterprise. Branches of companies incorporated abroad
must also register with the Registrar of Companies if
they intend to operate in Jamaica. The Companies Act,
set to come into effect in February 2005, allows
foreign companies to hold lands without registering in
Jamaica. There are no laws or regulations requiring
firms to adopt articles of incorporation or
association, which limit or prohibit foreign
investment, participation or control. The Embassy is
not aware of any other ways private firms could
restrict foreign investment.
Foreign investment averaged USD 530 million per annum
between 1998 and 2003. In 2003 Jamaica attracted USD
720.4 million in FDI, the highest amount in any given
year. The telecommunications, construction, tourism
and financial sectors accounted for most of these
inflows. The introduction of competition in the
telecoms sector has attracted four mobile providers
and over USD 160 million in investments per year since
Â¶1999. This could increase by a further USD 100
million as the GOJ is issuing two additional fiber-
optic licenses to reduce the cost of Internet rates.
Highway 2000, Jamaica's first toll road, is being
constructed by French company Bouygues under a build,
operate, and transfer model. Phase one of the
project, which is expected to cost over USD 400
million is already underway.
Policies have been geared toward achieving further
diversification and growth in the bauxite, tourism and
energy sectors. The GOJ has dismantled the old
bauxite levy system on a company-by-company basis,
leading to a USD 13 million expansion by one company.
Another company has announced a USD 690 million
expansion plan, slated to begin in 2005. Tourist
attractions have also been granted similar benefits to
accommodations, leading to increased investment. Over
the next three years the accommodations sector is
slated to receive over USD 2 billion in investment
from three Spanish hotel chains as well as from
foreigners investing in the proposed high-end Harmony
Cove Development. The GOJ has also entered into
agreements with Trinidad and Tobago to set up a LNG
plant at a cost of USD 240 million and with a
Brazilian company to rehabilitate an ethanol-producing
plant at a cost of USD 8 million.
A.2. Conversion and Transfer Policies
Jamaica has no restrictions on holding funds or on
transferring funds associated with an investment, as
the country liberalized its foreign exchange market in
Â¶1991. However, foreign exchange transactions must be
conducted through authorized foreign exchange dealers,
cambios and bureaux de change at market- determined
rates. Foreign exchange is generally available, but
companies tend to source large amounts of foreign
exchange over a three to four day period. There are
currently no plans to change the policies affecting
investment remittances and there is no delay period
currently in effect for remitting investment returns.
There is no legal parallel market (tiered system) for
foreign exchange following liberalization and there
are no limitations on the inflow or outflow of funds
for any transaction. Recently surveyed U.S. companies
indicated no problems or delays in accessing foreign
exchange or remitting investment returns.
A.3. Expropriation and Compensation
Property rights are protected under Section 18 of the
Jamaican Constitution. Expropriation of land may take
place under the Land Acquisition Act, which provides
for compensation on the basis of market value.
Expropriation can take place before compensation is
paid, but in this case interest for the period between
the expropriation and the compensation settlement must
be paid. According to the law, the purpose of any
expropriation must be transparent and compensation for
expropriated property must be adequate. If informal
negotiation on compensation fails, the investor has
recourse to the courts. Jamaica has signed bilateral
agreements for the reciprocal promotion and protection
of investments with a number of countries, including
the United States. The Embassy is not aware of any
litigation between the Jamaican government and any
private individual or company based on expropriation
or on compensation for expropriation. There are
currently no laws that force local ownership.
A.4. Dispute Settlement
Disputes between enterprises are handled in the local
courts, but foreign investors can refer cases to the
International Center for Settlement of Investment
Disputes (ICSID). There have been cases of trademark
infringements in which U.S. firms took action and were
granted restitution in the local courts. The Jamaican
Constitution provides for an independent judiciary
with a three-tier court structure. Claims may be
brought before the Magistrate or Supreme Court.
Appeals on decisions made in these courts can be taken
before the Court of Appeal and then to the Judicial
Committee of the Privy Council in the UK. However,
the Privy Council could be replaced by the Caribbean
Court of Justice (CCJ), which will consider and
determine appeals in civil and criminal matters from
common law courts within CARICOM member states.
Jamaica has effective means for enforcing property and
contractual rights through: (1) The Judgment and
Awards (Reciprocal Enforcement) Act; (2) The Judgment
(Foreign) (Reciprocal Enforcement) Act; (3) The
Arbitration (Recognition and Enforcement of Foreign
Awards) Act; and, (4) The Maintenance Orders
(Facilities for Enforcement) Act. Under these Acts,
judgments of foreign courts are accepted and enforced
in all cases where there is a reciprocal enforcement
of judgment treaty with the relevant foreign state.
There is a Bankruptcy Act dealing with personal
insolvency, a Companies Act dealing with corporate
insolvency, and other statutes such as the Bills of
Exchange and the Sale of Goods Acts dealing with
commercial matters. There are also extensive common
law principles, which are written and consistently
applied. Under the bankruptcy laws, creditors can
petition for an order against an individual or a
winding up order against the company and will be
entitled to share in the assets of the bankrupt on a
pro-rata basis, after certain specified preferential
creditors such as redundant employees. The claimant
has the option of settling a claim in the currency in
which the debt or obligation was incurred or in local
Jamaica, a signatory to the ICSID since 1965, accepts
international arbitration of investment disputes
between Jamaicans and foreign investors. Local courts
also recognize and enforce foreign arbitral awards.
International arbitration is also accepted as a means
for settling investment disputes between private
parties. However, acting in its role as an
international tribunal, the soon to be implemented CCJ
will interpret and apply the Revised Treaty of
Chaguaramas, including the CARICOM Single Market and
Economy. There is no formal domestic arbitration body
in Jamaica, but disputing parties can use arbitration
proceedings to settle their disputes. These
proceedings would be guided by the Arbitration Act
which sets out the procedures disputing parties would
follow once they agree on arbitration and is read in
conjunction with the Arbitration Clauses Protocol Act,
which in turn makes reference to how foreign arbitral
awards will be addressed. If a foreign investor's
country has a BIT with Jamaica then the rules of this
treaty would apply. Other foreign investors are given
national treatment and civil procedures would apply.
A.5. Performance Requirements/Incentives
Jamaica is a signatory to the WTO Agreement and is in
compliance with most Uruguay Round obligations,
including the TRIMS Obligations. There are no
performance requirements imposed as a condition for
investing in Jamaica. The GOJ offers a number of
incentives to attract investments, particularly those
that generate foreign exchange and expand employment.
Some incentives are non-compliant with the WTO
Agreement on Subsidies and Countervailing Measures and
should have been phased out by 2003. However, Jamaica
was granted an extension by the WTO to revise its
incentives and the GOJ is awaiting reports from the
World Bank-affiliated Foreign Investment Advisory
Service and a local Tax Review Committee to complete
the process. Chief among the current incentives are:
(a) The Export Industry Encouragement Act (EIEA) -
entitles companies manufacturing products for export
to non-CARICOM member countries benefits such as
exemption from income and dividend taxes for up to ten
years, and exemption from import duties on raw
material and machinery during the incentive period.
Service industries were included in 1990 and in 1996
the EIEA was amended to include companies that do not
export 100 percent of their output.
(b) The Hotel Incentives Act - entitles hoteliers to
income and dividend tax relief for up to ten years.
Hoteliers may also receive an exemption from import
duties for constructing or expanding hotels, but must
have at least ten rooms and facilities for other
activities. Income tax relief is granted for 15 years
to hotels that meet certain qualifications including:
having 10 to 350 rooms, facilities for holding
conferences and operation by a qualified general
manager. The Resort Cottages Incentives Act allows
for income and dividend tax relief and duty-free
importation of articles required to construct and
equip resort cottages for up to seven years.
(c) The Motion Picture Industry Encouragement Law -
motion picture producers can receive duty relief on
imported goods for use in motion picture production as
well as income tax exemption from the date of release
or exhibition of each motion picture produced in
Jamaica for a period of nine years. Producers are
also granted a tax deduction of 70 percent of the
capital expenditure incurred in acquiring facilities
either in the year in which the cost is incurred or in
any subsequent year at the option of the producer.
(d) Approved farmer status under the Income Tax Act -
certified persons or companies engaged in growing food
or seed crops, horticulture, aquaculture, tobacco and
animal husbandry are eligible for income tax relief
for up to 10 years, renewable as well as concessionary
duty rates on farm vehicles.
(e) The International Finance Company Act - available
to finance companies conducting business solely with
foreigners. With regard to Jamaican operations, non-
residents must hold at least 95 percent of the loan
capital. Profits of an approved corporate body are
taxed at a rate of only 2.5 percent.
(f) The Shipping Incentives Act - approved shipping
corporations are granted import duty and income tax
concessions for a period of ten years.
(g) The Foreign Sales Corporation Act - provides
exemption from income tax for five years for qualified
income arising from foreign trade. U.S. law through
the Tax Information Exchange Agreement (TIEA)
reinforces this incentive.
(h) The Industry Modernization Program (IMP) and
Moratorium on Duties - under the IMP, companies are
exempt from general consumption tax on capital goods
acquired for modernization. The Minister of Finance
may award a moratorium on import duties on capital
items for up to three years to companies, which do not
qualify under existing incentive legislation and have
the potential to contribute significantly to foreign
(i) Accelerated Depreciation - certified companies are
allowed to deduct 50 percent of the full cost of new
machinery in the year of purchase and a further 50
percent in the following year.
(j) Other Incentives - a number of development banks
provide concessionary financing for projects. The
Jamaican National EXIM Bank provides concessionary
interest rate loans for trade financing, while the
Development Bank of Jamaica offers reduced lending
rates to the productive sectors. The National
Investment Bank of Jamaica also provides equity and
quasi-equity financing for key economic sectors listed
under the National Industrial Policy.
Foreign investors and their investment are generally
granted national treatment status, subject to the
rules outlined in their BIT. In essence, Jamaica has
no performance requirements, except for companies with
Free Zone status, which must export at least 85
percent of their output. Foreign firms are allowed to
participate in GOJ financed or subsidized R&D programs
on a national treatment basis. Work permits are
granted by the Ministry of Labor for a specified
period, but are subject to the individual obtaining a
working visa from the Jamaican Consulate available in
or near their home state. Under existing regulations
business visas are required by persons entering the
island to conduct business. However, this regulation
is being revised to remove this requirement.
All importers are subject to the same procedures when
trading in goods and services. To qualify for entry
certificates importers must obtain, inter alia, a
supplier invoice, a certificate of value and origin, a
declaration of value and a bill of lading and sight.
Products imported into Jamaica must also meet specific
Acts administered by the Jamaica Bureau of Standards.
In December 2001, Jamaica imposed the ISO date
representation (yy/mm/dd) as the official format for
trade, but date labels are still accepted in the
traditional European style (dd/mm/yy).
The Jamaican economy is generally characterized as
relatively open, but some non-tariff barriers remain.
For instance, the Veterinary Division requires
certification from a US Federal Agency for all
products containing animal and animal by-products
irrespective of quantity or form. Highly processed
products such as cookies and chips therefore require
certification from a government veterinarian. The
Coffee and Coconut Industry Boards also have to issue
import certificates for coffee beans and cooking oils,
respectively, but importers tend to experience lengthy
delays in obtaining these permits.
A.6. Right to Private Ownership and Establishment
All private entities are entitled to establish and own
business enterprises and engage in all forms of
remunerative activity, subject to, inter alia, labor,
registration and environmental requirements. Private
entities are also free to establish, acquire and
dispose of interests in business enterprises. Public
and private enterprises have equal access to markets,
credit and business operations, such as licenses and
supplies. However, if the GOJ has to compete with the
private sector it does not distort the market.
A.7. Protection of Property Rights
The Jamaican Constitution guarantees property rights.
Jamaica has a system of registered title set out in
the Registration of Titles Act, which recognizes and
provides for the enforcement of secured interests in
property by way of mortgage. It also facilitates and
protects the acquisition and disposition of all
property rights, though working through Jamaica's
cumbersome bureaucracy can result in significant
delays. Jamaica is a member of the World Intellectual
Property Organization and is a signatory of the Bern
Convention. Jamaica and the US have an Intellectual
Property Rights Agreement and a BIT, which provide
assurances to protect intellectual property. However,
Jamaica remains a special 301 "Watch List" country,
largely because the patent law is not TRIPS compliant.
A Geographical Indications Act (GI) was passed in 2004
to protect products that originate from localities
where a particular quality or reputation is
attributable to its geographical origin. General law
provides protection for Trade Secrets. Protection
against Unfair Competition is also provided by the
general law and the Fair Competition Act.
The Copyright Act of 1993, as amended complies with
the TRIPS Agreement and adheres to the principles of
the Bern Convention, and covers works ranging from
books and music to computer programs. Amendments in
June 1999 make explicit the provision of copyright
protection on compilations of works such as databases
and make it an offense for a person to manufacture or
trade in decoders of encrypted transmissions. It also
gives persons having rights in encrypted transmissions
or in broadcasting or cable program services a right
of action against persons who infringe their rights.
The Act needs to be amended to give effect to the
provisions of the WIPO WCT and WPPT (Internet)
Treaties to which Jamaica acceded in 2002. The
Trademark Act of 1999 is also compliant with the TRIPS
Agreement and provides the owner of registered
trademarks exclusive rights for up to ten years,
renewable. It provides for the protection of "well-
known" marks under the Paris Convention. A TRIPS
compliant Layout Designs Act has also been in effect
since June 1999. The Act provides protection for
layout-designs for integrated circuits and gives the
rights owner the exclusive right to reproduce, import,
sell or otherwise commercially exploit the layout-
design and to authorize other persons to do so. That
right is in place for ten years and may be transferred
by the rights owner.
A.8. Transparency of the Regulatory System
A Fair Competition Act (FCA) was implemented in 1993
and is administered by the Fair Trading Commission.
The main objective of the FCA is to prevent business
interests and government policies from hindering the
efficiencies to be gained from a competitive system.
The FCA deals with misleading advertisements, price-
fixing, collusion, unfair trading practices and
interlocking directorships. To date the FTC has
investigated over 5,000 cases, the majority of which
are consumer protection related.
There are tax, labor, health, and other laws and
policies to avoid distortions or impediments to the
efficient mobilization and allocation of investment.
However, investors argue that the Redundancy Act,
which deals with severance payment, is a disincentive
to investment. In 2001, the mandate of the Anti-
Dumping and Subsidies Commission was expanded through
the implementation of a Safeguards Act, which protects
producers from import surges. The GOJ also
established the Office of Utilities Regulation to act
as regulator of the country's utilities.
Although there has been improvement in the approval
process for investment projects, the time can still
take anywhere from three months for Free Zone projects
to over a year for green-field projects. Having
recognized the problem, the GOJ has intensified its
efforts to reduce bureaucracy as well as improve
transparency and customer service levels within the
public sector. A Ministry of Development was
established to deal with investment bottlenecks. The
private sector, GOJ and USAID have also joined forces
to implement a project to identify and deal with key
legislation, regulations and processes that constrain
The Embassy is not aware of any informal regulatory
processes managed by NGOs or private sector
associations or of any private sector and/or GOJ
effort to restrict foreign participation in industry
standards-setting consortia or organizations.
However, in December 2004, the Free Trade Commission
(FTC) implemented a non-legislative code of conduct
governing the petroleum industry. The mandates of
this code place restrictions on property sales and
contracts between marketing companies and retailers,
and are enforceable through fines levied by the FTC.
Proposed legislations are available for public comment
and submissions are generally invited from members of
the public for proposed legislation considered to be
controversial. The legal, regulatory and accounting
systems are transparent and consistent with
international norms and Jamaica has adopted the new
International Financial Reporting System.
A.9. Efficient Capital Markets and Portfolio
Since the 1980s, Jamaica has initiated reforms aimed
at fostering private sector activity and increasing
the role of market forces in resource allocation.
These reforms intensified in the 1990s, resulting in
trade, financial and capital account liberalization.
This has led to the availability of credit on market
terms and foreigners are allowed to borrow freely on
the local market at market-determined rates of
interest. While some major financial products are
still lacking, the private sector still has access to
a variety of credit instruments.
Jamaica now has an effective regulatory system
established to encourage and facilitate portfolio
investment. The Financial Services Commission and the
Bank of Jamaica jointly regulate portfolio investment.
At the end of September 2004, the country's three
largest banks had total assets amounting to over USD
4.9 billion or 85 percent of the entire assets of
commercial banks. During the mid-1990s there was a
meltdown in the financial sector, but since 1998 there
has been consolidation and increased output
performance in the sector. The non-performing loans
portfolio as a percentage of the total asset base has
moved from seven percent in 2000 to 1 percent at the
end of September 2004. Since the financial sector
crisis, significant strides have also been made in
terms of the regulatory framework, which are now in
line with international standards.
Based on the Rule 404 of the Jamaica Stock Exchange
(JSE), fully paid shares shall be free from any
restriction on the right of transfer and from all
liens. However, two listed companies have clauses
within their memoranda and articles of association,
which restrict foreign investors, but these predate
the JSE. JSE listing arrangements allow for 20
percent of issued share capital to be listed, but
there is no requirement that stipulates that this
threshold must be maintained after listing. The rules
of the JSE and the Security Acts also have specific
provisions relating to the process of takeover and
mergers, but these are general and given that there
are no specific provisions (except in the cases
mentioned above) regarding restrictions to foreign
participation, it follows that there are no specific
measures designed to protect against foreign
A.10. Political Violence
Jamaica has had no incidents involving politically
motivated damage to projects and/or installations.
Crime poses a greater threat to foreign investments
than do politically motivated activities. The country
did, however, experience three days of island-wide
rioting (gas riots) in April 1999 when the government
raised taxes on petroleum products. There was also
sporadic violence for a few days in July 2001 in
response to what was perceived as "heavy-handed"
police incursions into two Kingston neighborhoods
considered loyal to the opposition Jamaica Labor
Party. Violent crime, rooted in poverty, unemployment
and drug trafficking, is a serious problem in Jamaica,
particularly in Kingston. Sporadic gang violence and
shootings are concentrated in certain inner city
neighborhoods, but can occur in other areas.
Extortion is a problem in certain areas of the
commercial district and on large construction projects
- such as the highway project.
Jamaica has a Corruption Prevention Act (CPA), which
established a Corruption Prevention Commission in 2003
to, among other things: (1) receive, examine and
document the statutory declarations of public sector
workers; (2) receive and investigate any complaint
regarding an act of corruption; and, (3) conduct
investigation into acts of corruption, if satisfied
there are reasonable grounds to do so. To date there
has been no enforcement, as the Commission lacks the
capacity to enforce the filing of declarations.
However, the Commission will be working with the
Director of Public Prosecution to have enforcement
measures implemented. The Embassy is not aware of any
disproportionate application of corruption measures
against foreign investors, but members of the public
perceive the law to be applied impartially among
Jamaica is a signatory of the OECD Anti-Bribery
Convention and has ratified the Inter-American
Convention Against Corruption. Anti-corruption
initiatives have been taken within the Jamaica
Constabulary Force as well as some private sector
organizations. Prosecutors also continue to take part
in regional anti-corruption conferences, with one such
conference developed by the United States Department
of Justice (USDOJ). However, Jamaica is not a
signatory to the UN Anticorruption Convention. The
Embassy is not aware of any U.S. firm identifying
corruption as an obstacle to foreign investment.
Transparency International (TI) performed a formal
study of corruption in 2003, working with Dr. Trevor
Munroe of the University of the West Indies. TI's
report identifies widespread political, petty, and
narcotics-related corruption as being prevalent in
Under the Corruption Prevention Act (CPA) it is an
offence either to give or accept a bribe. Public
servants can be imprisoned for up to ten years and
fined as much as JMD ten million if found guilty of
engaging in acts of bribery. Individuals and
companies are also criminally liable if they bribe
foreign public officials and can be prosecuted and
face the same penalties. The legislation covers
public officials who meet the JMD two million salary
threshold and those working in sensitive positions
such as police and military officers. The creation of
the CPA could be viewed as evidence that GOJ officials
are taking anti-corruption efforts seriously.
However, financial constraints have crippled the
Commission's ability to execute fully its mandate of
enforcing asset declarations.
There is no indication that bribes can be deducted
from taxes. The Act also contains provisions for the
extradition of Jamaican citizens for crimes of
corruption. In April 2002, Prime Minister Patterson
tabled a code of conduct in Parliament for government
ministers. The 49-point code covers such issues as
conflict of interest and integrity in the conduct of
public and private business.
The agency responsible for combating corruption is the
Commission for the Prevention of Corruption. Other
"watchdog" organizations operating in Jamaica include
Transparency International, Jamaicans for Justice,
Families Against State Terrorism and the Farquharson
Institute of Public Affairs.
b. Bilateral Investment Agreements
Jamaica has investment treaties with: the United
States (Feb. 1994, which came into force in March
1997), Argentina (Feb. 1994), France (Jan. 1993),
Italy (Sept. 1993), Germany (Sept. 1992), Netherlands
(Apr. 1991), Switzerland (Dec. 1990), the United
Kingdom (Jan. 1987), China (1998), Cuba (May 1997),
Egypt (Feb. 1999), Indonesia (Feb. 1999) and Zimbabwe
(Feb. 1999) and is presently negotiating bilateral
investment agreements with: South Korea, Costa Rica,
Belgium, Russia and Canada. Jamaica has also signed
and ratified double taxation agreements with: the US,
Canada, CARICOM, China, Switzerland, Germany, Norway,
Sweden, Denmark and the United Kingdom.
c. OPIC and Other Investment Insurance Programs
The Overseas Private Investment Corporation has
identified infrastructure, telecommunications,
construction, tourism and energy as areas where its
programs can have an impact in Jamaica. OPIC
political risk insurance can insure up to USD 40
million per project. OPIC also provides medium to
long-term financing to ventures with significant U.S.
participation. OPIC can normally guarantee or lend
from USD 0.1 to 250 million per project. OPIC is
currently providing USD 190 million in insurance and
financing support for five projects in Jamaica in the
construction, energy, telecommunications and tourism
sectors. The country became a signatory to the
Multilateral Investment Guarantee Agency in 1986 and
ratified the agreement in 1987.
Following an 18.9 percent nominal depreciation in the
local currency during 2003, the market returned to
relative stability in 2004. This stability was
underpinned by increased foreign exchange stemming
from, among other things, higher loan receipts,
improved tourism and remittances flow, higher foreign
investment and an improvement in the current account,
which contributed to a build up in the stock of Net
International Reserves (NIR). This allowed the Bank
of Jamaica to intervene in the market to shore up
supply. The stability has continued into 2005 and
provided the GOJ meets it fiscal deficit target and
there are no major domestic or international shocks
the exchange rate should remain relatively stable in
Jamaica had an estimated labor force of 1.1 million in 2003
of which 13.1 percent was unemployed. Since 1999 there has
been a steady supply of people trained in information
technology particularly for call centers but most of these
workers have been absorbed by the growing call center
business. There has also been a jump in the number of
university graduates but the numbers have been depleted by
migration to North America and the UK. This has apparently
led to a shortage of highly educated and experienced labor as
evidenced by the number of advertisements for these workers
in the newspapers weekly. On the other hand, there has been
a marked increase in the number of work permits issued to
expatriates particularly in the services sectors. In 2003, a
total of 3,843 permits were issued, up 23.1 percent.
Jamaica has an active and strong trade union movement with
membership equal to an estimated 20 percent of the labor
force, although the movement is considerably weaker now than
has traditionally been the case in Jamaica. Labor relations
have traditionally been adversarial due to the level of
distrust between workers and management. However, both
parties have attempted to enhance the relationship between
them by enacting a program for the management of labor
cooperation (PROMALCO) launched in April 2002. There is also
a memorandum of understanding on labor arrangements between
unions and employers in the bauxite industry and the GOJ and
unions for public sector workers. Notwithstanding, there
were 130 disputes, up 15 percent, reported to the Ministry of
Labor in 2003, 29 of which resulted in work stoppages.
Jamaica has ratified the following ILO Conventions: Right of
Association (Agriculture) Convention 1921 - ratified July 8,
1963; Freedom of Association and Protection of the Right to
Organize Convention, 1948 - ratified December 26, 1962; and,
Right to Organize and Collective Bargaining Convention, 1949
- ratified December 26, 1962. The GOJ will be adopting the
ILO policy on HIV/AIDS in the workplace. The GOJ working in
conjunction with the ILO and local stakeholders has also
developed a national plan of action on flexibility in working
time to guide flexible working arrangements in Jamaica.
Under the Work Permit Act, a foreign national who wishes to
work in Jamaica must first apply for a permit issued by the
Ministry of Labor. The law which, seeks to give first
preference to Jamaicans, requires organizations planning to
employ foreign nationals to prove that attempts were made to
employ a Jamaican national.
e. Foreign Trade Zones/Free Ports
Jamaica's Free Zones Act allows investors to operate
solely with foreign exchange in activities such as
warehousing, redistribution, manufacturing, refining,
processing, assembling, packaging and services such as
insurance and banking. Incentives offered include a
100-percent tax holiday in perpetuity, no import
licensing requirements and exemption from customs
duties on construction and raw materials, capital
goods and office equipment. Manufacturing companies
operating in the free zones are allowed to sell 15
percent of their production on the local market with
the approval of the responsible Minister. Duty-free
zones are primarily found in airports, hotels and
tourist centers and as with free zone activities do
not discriminate on the basis of nationality. The
Kingston and Montego Bay Free Zones provide factory
space for the above listed activities. Amendments
have also been made to the Jamaica Export Free Zone
Act to allow for the establishment of Single Entity
Free Zones, with individual companies now designated
as free zones. The Kingston Free Zone has recently
developed an Informatics Park.
For foreign trade zone information investors can contact:
Mr. Claude Fletcher, General Manager, Kingston and Montego
Bay Free Zones, 65 Caracas Avenue, Kingston 15, Tel: (876)
923-5274/6021; Fax: (876) 923-6023. 1 Mango Way, Montego Free
Port, P.O. Box 1377, Montego Bay, Tel:(876) 979 8092; Fax
(876) 979 8088; Email: email@example.com
Mr. Glenroy W. Mellish, Managing Director, Garmex, 1 King St.
Kingston, Tel: 876 924 9600 -1; Fax: 876 924 9630; Email:
f. Foreign Direct Investment Statistics
Table 1: FDI Stock in Jamaica (USD Million)
1990 1995 2000 2001 2002
Inward 791 1,568 3,318 4,040 4,409
Outward 5 42 709 798 872
Source: World Investment Report, 2003
Table 2: FDI Stock as a Percent of GDP
1990 1995 2000 2001 2002
Inward 18.7 32.3 44.8 50.5 56.7
Outward 1.0 6.3 9.6 10.3 11.2
Source: World Investment Report, 2003
Table 3: Inward FDI (USD Million)
1999 2000 2001 2002 2003
Direct Investment 524 469 614 479 721
Bauxite Sector 68 98 84 108 150
JAMPRO 102 136 110 79 201
Ret. Earnings 87 116 116 162 158
Divestment 177 41 234 84 0
Other 90 79 71 46 212
Source: Bank of Jamaica
Table 4: Inward FDI as a percentage of GDP
1999 2000 2001 2002 2003
Direct Investment 7.9 6.9 8.7 6.6 9.5
Bauxite Sector 1.0 1.4 1.2 1.5 2.0
JAMPRO 1.5 2.0 1.6 1.1 2.6
Ret. Earnings 1.3 1.7 1.6 2.2 2.1
Divestment 2.7 0.6 3.3 1.1 0.0
Other 1.3 1.2 1.0 0.6 2.8
Source: Bank of Jamaica
Table 5: FDI Projects Facilitated by Jamaica
Promotions by Sector (USD Million)
99/00 00/01 01/02 02/03 03/04
TOTAL 116.8 457.7 289.2 462.7 105.8
Agriculture 0.6 0.0 0.0 5.6 2.9
Film 4.3 8.7 9.8 9.4 14.2
Information Tech. 10.8 206.1 186.0 277.0 45.9
Manufacturing 38.6 31.1 56.5 85.6 31.1
Mining & Chemicals 12.9 33.1 0.4 30.4 0.4
Music 0.0 0.0 0.0 0.0 0.0
Tourism 49.5 178.7 36.5 54.6 11.1
Source: Jamaica Promotions Agency (JAMPRO)
Table 6: FDI Projects Facilitated by JAMPRO by Selected
Country of Origin, FY 1999 - 2004 (USD Million)
Country and Sector JDOLS Millions
Information Technology 35.0
Mining and Chemical 213.5
Information Technology 276.0
TRINIDAD AND TOBAGO
Mineral and Chemical 751.8
Information Technology 12107.2
Mining and Chemicals 306.0
Information Technology 9277.1
Source: JAMPRO (does not capture all new investments)
Jamaica has a long history of attracting foreign
direct investment. Among the major US investors
operating in Jamaica are:
KPMG Peat Marwick
Lindo Foote, Cone & Belding (FCB)
McCann Erickson (Ja.) Ltd.
Agribusiness and Beverages
ADM Milling Company
Cifuentes y Cia
Coca Cola Jamaica
Nabisco Brands, Inc.
Pepsi-Cola Jamaica Bottling Plant
Banking & Finance
Alkali Group of Companies
Antilles Chemical Co.
Cetco Water Laboratories
Diversey-Lever Jamaica Ltd.
Fabcon (Caribbean) Ltd.
Industrial Gases Ltd. (IGL)
Sherwin Williams W.I. Ltd.
Smithkline Beecham International
Computers and Data Processing
Data Key Processors Jamaica Ltd.
IBM World Trade Corp.
Jamaica Digiport Int'l Ltd.
Media Track Inc.
New Horizons Learning Centre
Oceanic Digital Jamaica Ltd.
Productive Business Solutions Ltd.
Standard Data Systems
Â¶F. W. Woolworth & Co. (Ja.) Ltd.
Johnson & Johnson
KIWI Brands Caribbean Ltd.
International Bonded Couriers
American Home Assurance Co.
Blue Cross Shield of Jamaica
Manufacturing and Assembly
Baywind Manufacturing Ltd.
3-M Interamerica Inc.
Custom Marble & Design Jamaica Ltd.
Econ Industries Inc.
Goodyear Jamaica Ltd. (Distributor)
Hofmann and Leavy Jamaica Ltd.
Jamaica Bow Co. Ltd.
Jockey International Jamaica Ltd.
Johnson & Johnson
Sealy Mattress Company
Singer Sewing Machine Co. Ltd.
Sportswear Producers Ltd.
West Indies Nutritional Corporation Ltd.
Williamson Dickie Jamaica Ltd.
Mining & Energy
Alcoa Minerals of Jamaica, Inc.
Alumina Partners of Jamaica (ALPART)
Esso Standard Oils S.A. Ltd.
Jamaica Energy Partners
Jamaica Private Power Company Ltd.
Kaiser Bauxite Company
Texaco Caribbean Inc.
Boyken-Mortimer International LLC
Tourism and Hospitality Industry
American Express Int'l Inc.
Churches Fried Chicken
Hertz (Liberty) Car Rental
Hilton (Kingston) Hotel
Holiday Inn Sunspree Resort
Kenny Rogers Roasters Chicken
McDonalds of Jamaica
Northwest Airlines, Inc.
Popeye's Chicken and Seafood
Renaissance Jamaica Grande Hotel
Restaurants Associates Ltd. - Burger King
Restaurants of Jamaica Ltd. - Kentucky Fried Chicken
Ritz Carlton Hotel
Subway (Ja.) Ltd.
TCBY Frozen Yogurt
Wyndham Rose Hall Hotel