Identifier
Created
Classification
Origin
06KINGSTON90
2006-01-12 19:32:00
UNCLASSIFIED
Embassy Kingston
Cable title:  

INVESTMENT CLIMATE SURVEY - JAMAICA 2006

Tags:  EINV EFIN ETRD EIND ELAB KTDB PGOV JM OPIC USTR 
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UNCLAS SECTION 01 OF 15 KINGSTON 000090

SIPDIS

STATE FOR WHA/CAR/ (WBENT),WHA/EPSC (JSLATTERY) AND
EB/IFD/OIA

EXIMBANK - JCARRIGER

TREASURY FOR L LAMONICA

SANTO DOMINGO FOR FCS AND FAS

SAN JOSE FOR ENVIRONMENTAL HUB - DALARID

E.O. 12958: N/A
TAGS: EINV EFIN ETRD EIND ELAB KTDB PGOV JM OPIC USTR
SUBJECT: INVESTMENT CLIMATE SURVEY - JAMAICA 2006

Provided below is Embassy Kingston's Investment Climate
Report for 2006.

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."
According to the January 2005 Trade Policy Review,
"Jamaica has continued to make progress in simplifying
regulations and procedures and creating a more investment-
friendly environment. In part as a result, investors'
perception of Jamaica as a prime location for FDI has
improved."

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. There is
currently a revision of the existing Developer's Manual to
provide updated information on the administration,
legislation, regulations and requirements involved in the

development approval process in Jamaica. This process
should be completed by the end of January 2006, after
which the team will be simplifying or eliminating those
processes that impede or frustrate investors. The "LEGS
and REGS" Project - spearheaded by the Jamaica Chamber of
Commerce and aimed at identifying burdensome bureaucratic
processes - 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. Although it should be noted that Jamaica's
Redundancy Act makes it expensive to fire workers, 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 top ten.

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 therefore rules covering the
enforceability of contracts are based upon such
principles. Thus, the Jamaican judicial system 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 restrictions.

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
most of the privatization bids in the last five years.

The country 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,
which came 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 direct investment (FDI) has averaged USD 570
million during the last five years, making it Jamaica's
fourth largest source of foreign exchange inflow. FDI
peaked at USD 721 in 2003, despite the overall decline in
world and regional FDI. Jamaica outperformed countries
such as Argentina, Costa Rica, Trinidad and Tobago and the
Dominican Republic and was classified as an over
performing investment location by the World Investment
Report. The country was also ranked 20th for global
interest as an inward investment location. The dynamism
in FDI was most evident in the construction,
telecommunications, tourism and mining sectors. The
introduction of competition in the telecommunications
sector has attracted four mobile providers and over USD
160 million in investments per year since 1999. This
could increase further 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 was completed at a cost of USD 125 million. Phase
two started in December 2005 and some USD 62 million has
already been expended.

Foreign direct investment fell to USD 601.6 million in
2004 due to the lull in mining and telecommunications
investment activity. However, with the new policies
geared toward achieving further diversification and growth
in the bauxite, tourism and energy sectors, investment is
expected to recover in 2005 and 2006. The GOJ'S
dismantling of the old bauxite levy system on a company-by-
company basis, has already led to a USD 13 million
expansion by Alumina Partners (ALPART). ALCOA (JAMALCO)
has also announced a USD 800 million expansion plan, the
single largest investment in the country's history.
Tourist attractions have also been granted similar
incentives (tax holidays) to those existing in the
accommodation sub-sector, leading to increased local and
foreign investment in tourist attractions, such as Dolphin
Cove and Chukka Caribbean Adventures. 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 Tourism Development. The
GOJ has also entered into agreements with Trinidad and
Tobago to set up a Liquid Natural Gas (LNG) plant at a
cost of USD 250 million and a Brazilian company, Coimex,
has rehabilitated an ethanol-producing plant at a cost of
USD 8 million and is set to embark on an expansion plan in

2006. Another Brazilian company, Aracatu, with interests
in sugar and ethanol, has expressed interest in acquiring
Jamaica's sugar industry for USD 300 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 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.

A number of disputes involving foreign investors and the
GOJ, as well as one between foreign investors and a local
association, arose during 2005. The first dispute, which
has yet to be resolved, involves the implementation of a
levy by the GOJ on in-coming telephone calls for a
Universal Access Fund to finance computers and other
information-related activities in Jamaican schools. US
long-distance telephone companies have been resisting the
move and have requested that the Federal Communications
Commission put pressure on Jamaica to desist from
collecting the "cess," as it is known in Jamaica.

Petroleum marketing companies are also resisting moves by
the GOJ to implement a Code of Conduct to address issues
such as the management of service stations, contract
periods, goodwill and pricing. The GOJ is seeking
consensus on the new rules, but petroleum companies argue
that the rules impinge on the terms and conditions of
commercial arrangements and run counter to the GOJ'S free-
market philosophy. Marketing company Esso Standard Oil,
and its dealers (as represented by the JGRA) are also
embroiled in a dispute over the multinational
corporation's pricing policy. The dispute led to a
shutdown of the company's retail outlets throughout
Jamaica for a week, followed by an island-wide shutdown of
all the country's retail outlets. The shutdown,
masterminded by the JGRA, was halted following the
intervention of the Ministry of Labor, which convened a
meeting with the disputing parties and established a three-
member Board of Inquiry to look into complaints by dealers
of unfair pricing polices by Esso.

The Mirant-owned Jamaica Public Service Company Limited
(JPS) was also engaged in a dispute with the GOJ on the
regulatory framework for the testing and inspection of
electricity meters. The issue of regulation arose after
information surfaced that the utility company improperly
billed a number of customers. However, JPS initially
resisted the move to test and inspect its meter by the
Bureau of Standards under the Compulsory Standards Order
of 2005, saying that the Bureau did not have the legal
authority to carry out testing and inspection. The public
service company filed an action to stay the implementation
of the Order, under the Standards Act in the Supreme
Court. After extended negotiation the JPS and the GOJ
agreed that an independent body would have responsibility
for approving new meter types as well as for testing the
quality of meters on importation for use in the domestic
market. As a consequence, the Minister of Commerce,
Science and Technology revoked the Compulsory Standards
Order and the JPS withdrew the legal action.

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 party on a pro-rata basis, after certain
specified preferential creditors are paid, for example
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 currency.

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 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
are guided by the Arbitration Act which sets out the
procedures disputing parties follow once they agree on
arbitration and works 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 and 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. Recommendations from
reports from the World Bank-affiliated Foreign Investment
Advisory Service and a local Tax Review Committee were
submitted to the GOJ on the treatment of fiscal
incentives. However, the decision on the revision of the
incentive regime awaits the completion of another study
that would seek to determine the nature of the reform.
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 exchange earnings.

(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.
Effective from 2005, foreign nationals from countries who
would not require a tourist visa, and who are conducting
business on short-term basis, do not require a business
visa if they will be in Jamaica for a period not exceeding
thirty days. However, these foreign nationals will need a
business visa to enter Jamaica if they are conducting
business for periods exceeding thirty days. Foreign
nationals who would need visas for entry to Jamaica for
other purposes will require a business visa to conduct
business for any length of time.

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 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 can experience
lengthy delays in obtaining these permits. Under intense
pressure from farmers' cooperatives, the GOJ instituted a
100 percent Common External Tariff (CET) plus an 80
percent Additional Stamp Duty (ASD),compounded to 260
percent, on whole chicken and leg quarters and a number of
imported vegetables.

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. In particular, it sometimes
takes a long time for landowners to secure titles.
Squatting, especially on crown/government-owned lands has
also become a challenge in the last ten years. 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 World Intellectual
Property Office WCT Copyright Treaty and WPPT Performances
and Phonograms 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 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 laws and policies covering taxation, labor,
health and other issues 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 funds. 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 ("LEGS and REGS") to
identify and deal with key legislation, regulations and
processes that constrain business.

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 legislation is available for public
comment and submissions are generally invited from members
of the public for items 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 Investment
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.

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 June
2005, the country's three largest commercial banks had
total assets amounting to over USD 4.7 billion or 85
percent of the entire assets of commercial banks. Five of
the country's six commercial banks, including the three
largest, are foreign owned. During the mid-1990s there
was a meltdown in the financial sector, but since 1998
there has been consolidation and increased output
performance. Significant strides have also been made in
terms of the regulatory framework, which are now in line
with international standards. The non-performing loans
portfolio as a percentage of the total asset base has
moved from seven percent in 2000 to 2.4 percent at the end
of June 2005.

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. Two listed
companies have clauses within their memoranda and articles
of association that 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 hostile
foreign takeovers.

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. The resort city of Montego Bay also
experienced a day of social unrest in 2003, in response to
alleged police excesses. The street demonstration, which
included the blocking of roads, affected the flow of
tourists between hotels and the airport. 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 serious problem in certain areas of
the commercial district and on large construction projects
- such as the highway project.

A.11.a. Corruption

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. Recent reports suggest that non-compliance
is running at over 30 percent. 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
locals. During a recent panel discussion on governance a
GOJ senator also stated that Jamaica had not done well in
eliminating corruption from the public sector.

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. The TI report identifies
widespread political, petty, and narcotics-related
corruption as being prevalent in Jamaica. According to
Transparency International's Perception Index, Jamaica
scored 3.6 out of 10 in 2005, up from 3.3 last year,
suggesting that the country has made only marginal
improvements in transparency.
Under the Corruption Prevention Act (CPA) it is an offense
to solicit 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 fully execute its mandate of enforcing asset
declarations. There is no indication that bribes can be
deducted from taxes.

The CPA 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.

The Commissioner of Police has embarked on a bold program
to rid the Jamaica Constabulary Force of corrupt police,
which has plagued the image of the force for a number of
years. The Commissioner has already made recommendations
for 11 members of the force, suspected of corruption, to
be retired in the public interest. However, the affected
members have already sought legal counsel to halt the
recommendation.

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.

Rising inflation combined with declining supplies of
foreign exchange, due largely to the slump in tourism,
fuelled frequent bouts of instability in the foreign
exchange market during July to September 2005. By the end
of the September the local currency had depreciated by 1.7
percent. This compares with an appreciation of 0.02
percent in the previous three quarters. The inflationary
expectations prompted investors to realign their
portfolios, resulting in a strong demand for U.S. dollar
and USD-denominated instruments. To ease the demand
pressures, the Bank of Jamaica sold foreign currency to
the market. The foreign exchange market continued to face
increased demand pressures in to December, prompting the
Bank of Jamaica to intensify its intervention program.
However, with Net International Reserves amounting to USD
2.1 billion at the end of October and with tourism and FDI
inflows expected to pick up in December the market should
stabilize by the end of 2005 and barring shocks the market
should remain relatively stable during 2006.

d. Labor

Jamaica had an estimated labor force of 1.2 million at the
end of 2004, of which 11.4 percent was unemployed. Since
1999 there has been a steady supply of people trained in
information technology particularly for call centers, and
most of these workers have been absorbed by the growing
call center industry. 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 slight increase in the
number of work permits issued to expatriates, particularly
in the services sectors. In 2004, a total of 3,863
permits were issued, up 0.5 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.
As a consequence, industrial disputes declined from 164 to
129 and the number of work stoppages declined from 29 to

16.

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. There is ongoing revision of the
appropriate pieces of legislation to determine the
benefits to afforded to service providers operating in a
free zone areas.

For foreign trade zone information investors can contact:

Mr. Robert Stephens, Acting General Manager, Kingston and
Montego Bay Free Zones, 27 Shannon Drive, Kingston 15,
Tel: (876) 922-0290-8; 923-5274-5/6021; Fax: (876) 923-

6023. 1 Mangrove Way, Montego Bay Free Port, P.O. Box
1377, Montego Bay, Tel:(876) 979-8696; Fax (876) 979 8088;
Email: rstephens@portjam.com

Ms. Marsha Davidson, Deputy General Manager, Factories
Corporation, 1 King St. Kingston, Tel: (876) 924-9600 -1;
Fax: (876) 924-9630; Email: factories@cwjamaica.com
Foreign Direct Investment Statistics

f. Foreign Direct Investment Statistics

Table 1: FDI Stock in Jamaica (USD Million)
1995 2000 2001 2002 2004
Inward 1,568 3,318 4,040 4,409 5,783
Outward 42 709 798 872 1,079
Source: World Investment Report, 2005

Table 2: FDI Stock as a Percent of GDP

1995 2000 2001 2002 2004
Inward 32.3 43.0 50.5 56.7 66.4
Outward 6.3 9.2 10.3 11.2 12.4
Source: World Investment Report, 2005

Table 3: Inward FDI (USD Million)

2000 2001 2002 2003 2004
Direct Investment 469 614 479 721 602
Bauxite Sector 98 84 108 150 57
JAMPRO 136 110 79 201 83
Ret. Earnings 116 116 162 158 178
Divestment 41 234 84 0 0
Other 79 71 46 212 284
Source: Bank of Jamaica

Table 4: Inward FDI as a percentage of GDP

2000 2001 2002 2003 2004
Direct Investment 6.9 8.7 6.6 9.5 6.7
Bauxite Sector 1.4 1.2 1.5 2.0 0.7
JAMPRO 2.0 1.6 1.1 2.6 0.9
Ret. Earnings 1.7 1.6 2.2 2.1 2.0
Divestment 0.6 3.3 1.1 0.0 0.0
Other 1.2 1.0 0.6 2.8 3.2
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 99-04

Country and Sector JDOLS Millions
BELGIUM
Agriculture 1.0
Film 2.3
Tourism 100.0
CANADA
Film 126.7
Information Technology 35.0
Manufacturing 546.3
Mining and Chemical 213.5
Music 0.1
CAYMAN ISLAND
Film 0.2
Tourism 78.2
DOMINICAN REPUBLIC
Information Technology 276.0
GERMANY
Film 131.3
ITALY
Film 1.2
Tourism 46.5
JAPAN
Film 14.2
RUSSIA
Film 228.5
SOUTH AFRICA
Film 0.8
Manufacturing 27.2
SPAIN
Tourism 2,040.0
ST. LUCIA
Manufacturing 88.6
TRINIDAD AND TOBAGO
Film 0.2
Mineral and Chemical 751.8
U.S.A.
Agriculture 171.5
Film 1,414.9
Information Technology 12,107.2
Manufacturing 2,288.1
Mining and Chemicals 306.0
Textiles 102.5
Tourism 4,476.9
UNITED KINGDOM
Film 277.9
Information Technology 9,277.1
Manufacturing 971.0
Music 1.5
Tourism 103.8
MULTIPLE OWNERS
Film 19.8
Tourism 1,629.1
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:

--------------
Accounting
--------------
KPMG
Price Waterhouse-Coopers

--------------
Advertising
--------------
Lindo Foote, Cone & Belding (FCB)
McCann Erickson (Ja.) Ltd.

--------------
Agribusiness and Beverages
--------------
ADM Milling Company
Coca Cola Puerto Rico (Jamaica) Ltd.
Nabisco Brands, Inc.
Pepsi-Cola Jamaica Bottling Co. Ltd.
Kraft

--------------
Banking & Finance
--------------
Citibank N.A.

--------------
Chemicals/Pharmaceuticals
--------------
Alumina Partners of Jamaica
Antilles Chemical Co.
Cetco Water Laboratories
Diversey-Lever Jamaica Ltd.
Fabcon (Caribbean) Ltd.
Gillette Caribbean
Glaxosmithkline Beechan International
Industrial Gases Ltd. (IGL)
Sherwin Williams W.I. Ltd.
Smithkline Beecham International

--------------
Computers and Data Processing
--------------
Data Key Processors Jamaica Ltd.
Fargo Electronics
IBM World Trade Corp.
Jamaica Digiport Int'l Ltd.
Media Track Inc.
Microsoft
New Horizons Learning Centre
Oceanic Digital Jamaica Ltd.
Productive Business Solutions Ltd.
Standard Data Systems

--------------
Consumer Products
--------------
Colgate Palmolive

F. W. Woolworth & Co. (Ja.) Ltd.
Gillette Caribbean
Johnson & Johnson
KIWI Brands Caribbean Ltd.
Mead Johnson (Ja.) Ltd.
PriceSmart

--------------
Courier Service
--------------
DHL
Federal Express
UPS
International Bonded Couriers/Go Global

--------------
Insurance
--------------
American Home Assurance Co.
Blue Cross of Jamaica

--------------
Manufacturing and Assembly
--------------
3-M Interamerica Inc.
Colgate Palmolive (Ja.) Ltd.
Custom Marble & Design Jamaica Ltd.
Econ Industries Inc.
Goodyear Jamaica Ltd. (Distributor)
Hofmann and Leavy Jamaica Ltd.
IGL Limited
Jockey International (Ja.) Ltd.
Johnson & Johnson (Ja.) Ltd.
Kraft Foods Jamaica
Sealy Mattress Company
Sherwin Williams W.I. Ltd.
Singer Sewing Machine Co. 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
Mirant Corp.
Texaco Caribbean Inc.

--------------
Tourism and Hospitality Industry
--------------
American Airlines
American Express Int'l Inc.
Avis Rent A Car
Baskin Robbins
Budget Rent-A-Car
Burger King
Delta Airlines
Domino's Pizza
Hertz (Liberty) Car Rental
Hilton (Kingston) Hotel
Holiday Inn Sunspree Resort
KFC
Northwest Airlines
Pizza Hut
Popeye's Chicken and Seafood
Ritz Carlton Hotel
Spirit Airlines
Subway (Ja.) Ltd.
TGI Friday's
Wendy's
Wyndham Rose Hall Hotel

END TEXT.

TIGHE