Jamaica: 2010 Investment Climate Statement

UNCLAS KINGSTON 000118

SIPDIS
STATE FOR WHA/CAR (VDEPIRRO) (WSMITH) (JMACK-WILSON)
WHA/EPSC (MROONEY) (FCORNEILLE)
EEB/IFD/ODF (MSIEMER)
EEB/ESC/IEC (GGRIFFIN)
EEB/IFD/OIA (TWALSH)
EEB/TRA (VLIMAYE-DAVIS)
INR/RES (RWARNER)
INR/I (SMCCORMICK)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
EXPORT IMPORT BANK FOR ANNETTE MARESH
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA
OPIC FOR ALISON GERMAK

E.O. 12958: N/A
TAGS: ECON EINT EINV ENRG PGOV KTDB KCOR OPIC USTR XL JM
SUBJECT: Jamaica: 2010 Investment Climate Statement

Jamaica: 2010 Investment Climate Statement


* Openness to Foreign Investment
* Conversion and Transfer Policies
* Expropriation and Compensation
* Dispute Settlement
* Performance Requirements and Incentives
* Right to Private Ownership and Establishment
* Protection of Property Rights
* Transparency of Regulatory System
* Efficient Capital Markets and Portfolio Investment
* Political Violence
* Corruption
* Bilateral Investment Agreements
* OPIC and Other Investment Insurance Programs
* Labor
* Foreign-Trade Zones/Free Ports
* Foreign Direct Investment Statistics
* Web Resources


Openness to Foreign Investment
Return to top


The Government of Jamaica (GOJ) seeks to attract foreign direct
investment and markets itself to companies in Europe, North America
and the Caribbean region. The GOJ encourages foreign investment as
a source of development and has no policies or regulations that
reserve certain sectors exclusively for Jamaicans. Prime Minister
Bruce Golding (Jamaica Labor Party),elected in September 2007,
after 18 years of rule by the People's National Party, publicly
warns of the negative consequences of red tape as a hindrance to
potential foreign investment.



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. Thus, Jamaica does
not have any 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 (LEGS and
REGS) to remove some of the obstacles to doing business in Jamaica.
The project staff is currently revising an existing Developer's
Manual to provide updated information on the administration,
legislation, regulation and requirements involved in the
development approval process in Jamaica. The manual has been
revised, but there is still much streamlining required in achieving
the Prime Minister's 90- day turnaround deadline for approvals.



The LEGS and REGS Project has been paying dividends, as a 2009
World Bank Doing Business Report listed Jamaica in the top ten
countries for the Latin America and Caribbean Region in which it
was easiest to do business. Jamaica ranked 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, while Jamaica's Redundancy Act makes it expensive
to cut staff due to the relatively high severance payments tied to
length of service (see Labor section below),the Jamaican system
still ranks higher than its regional peers in the 2009 World Bank
Ease of Doing Business Report for the category of Hiring Workers.
It only scores lower than its peers in the subcategory of Firing
Costs.





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. However, in the
2009 World Bank Doing Business Report, Jamaica slipped 25 rank
positions for Enforcing Contracts, falling from 102 in 2008 to 127
in 2009. 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 regulation and certain restrictions.




Jamaica's privatization program is open to participation by foreign
investors, except for those that are on the restricted list due to
national security concerns. 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 placed in international
newspapers such as the Financial Times, New York Times and 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 government is currently reviewing some of the
remaining parastatals with an eye to divestiture.



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) flow was USD 779 million in 2007,
down from 850 million in 2006 according to the United Nations'
World Investment Report. The dynamism in FDI was most evident in
the construction, telecommunications, tourism, and mining sectors.






Despite significant foreign investment over the years, Jamaica's
annual GDP growth has been an anemic 1 percent on average,
indicating that foreign investment does not directly translate into
GDP growth. Jamaica appears to lack the absorptive capacity to
benefit from investments requiring high skilled employment, and a
significant portion of inputs are not sourced locally.



The introduction of competition in the telecommunications sector
has attracted three mobile providers and multiple internet service
provides including three licenses that are being issued to wireless
service providers. The GOJ has issued 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 (BOT) model. Two
segments of the project, costing over USD 500 million, are
completed. A third leg connecting Kingston and the resort area of
Ocho Rios should be completed by end of 2010.



With the onset of the global economic crisis, there has been
significant slowdown in some of Jamaica's critical foreign exchange
earners. Growth in the bauxite and tourism sectors has slowed.
The construction boom of the last three years, which brought in
over USD 1 billion in FDI in the accommodation sector, has weaned.
Future projects in the sector have been postponed until the global
economic climate improves. This includes investments from Spanish
hotel chains and the high-end Harmony Cove Tourism Development. A
Brazilian company, Infinity BioEnergy, is in negotiations to
acquire the assets of Jamaica's sugar industry.



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.



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 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 in 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.



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 United Kingdom. Plans were afoot for the
Privy Council to 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. However, the then-opposition Jamaica Labor Party (JLP)
opposed the process and took the case to the Privy Council which
supported their position. If Jamaica were to replace the Privy
Council with the CCJ it will likely require a national referendum,
although it is not likely in the near-term. 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 GOJ, on the
one hand, and foreign investors and a local association, on the
other, arose during 2005. The first dispute, which is yet to be
resolved as of early 2010, 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. However, U.S. 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 fees.



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 currency.



Jamaica, a signatory to the International Center for Settlement of
Disputes (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 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.



Performance Requirements and Incentives

--------------



Jamaica is a signatory to the World Trade Organization 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 current
incentives are non-compliant with the WTO Agreement on Subsidies
and Countervailing Measures and should have been phased out by
2003, but have not been. However, Jamaica was granted an extension
by the WTO to revise its incentives and 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 ten 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. Since 2005, foreign nationals who are conducting
business on short-term basis will not require a business visa once
they will be in Jamaica for a period not exceeding thirty days.
However, foreign nationals will need a business visa to enter
Jamaica if they are conducting business for periods exceeding
thirty days. Foreign nationals who need visas for entry to Jamaica
will require a business visa to conduct business.



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,





E

Jamaica imposed the International Organization for Standardization
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 U.S. 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.



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 will do so on a
competitive basis so as to not distort the market.



Protection of Property Rights

--------------



The Jamaican Constitution guarantees property rights. Jamaica has
a system of registered titles 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) lands has also become a challenge in the last
ten years. Jamaica is a member of the World Intellectual Property
Organization (WIPO) and is a signatory of the Bern Convention.
Jamaica and the U.S. 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 compliant with the
Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS). Work is advanced on a new Patent & Designs Bill,
including new rules and fee structures. It is anticipated that the
Bill which will be fully TRIPS compliant could be passed by the
next legislative year. 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. The Geographical Indications Act and
regulations is now fully in force and TRIPS compliant. 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 on Industrial Property Rights of which
Jamaica is a signatory. 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.



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, it 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. As stated
above, 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
project is currently addressing the reform process with regard to
the approval for development and building permits. It should be
noted that as a result of this work, Jamaica was the top reformer
globally this year on Dealing with Construction Permits, in the
World Bank Doing Business 2009 Report, improving its rank on that
indicator by 25 spots to 49th place.



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.



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. While some major financial
products are still lacking, the private sector still has access to
a variety of credit instruments.



Jamaica 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 2008, the country's four
largest commercial banks had total assets amounting to over USD 6
billion or 90 percent of the entire assets of commercial banks.
Five of the country's seven commercial banks, including the four
largest, are foreign-owned. During the mid-1990s there was a
meltdown in the financial sector often referred as "FINSAC", but
since 1998 there has been consolidation and increased output
performance in the sector. 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 September 2008.



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.



Political Violence

--------------




Jamaica has a few incidents involving politically motivated damage
to projects and/or installations. Although, crime poses a greater
threat to foreign investments than do politically motivated
activities. In April 2009 there were small sporadic disturbances






in response to a new gas tax, although they were nothing like the
three days of rioting in 1999 in response to a similar gas tax
hike. The resort city of Montego Bay 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. At the 2008
Jamaica Labour Party's annual conference there was a shooting that
resulted in a death. 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. In 2009 the GOJ also diverged from the past and has been
less cooperative with the USG in its response to requests for the
extradition of alleged leaders of high-profile criminal
organizations. This issue of concern will be closely monitored
during 2010.



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 some members of the private
sector perceive that the law is not 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, the perception of corruption in
Jamaica has worsened in the past three years. The island has slid
from a score of 3.7 out of 10 in 2006, to 3.3 in 2007, to 3.1 in
2008, down to 3.0 in 2009. This score places Jamaica in the same
category as Dominican Republic, Madagascar, and Senegal.



Corruption may well be the single greatest concern among Jamaicans,
most of whom believe it one of the root causes of the high crime
rate. In the past year, 16 police officers have been arrested for
alleged acts of corruption, but only one has been at senior level.
Despite numerous allegations of public corruption, the last
conviction of a politician on corruption charges was in 1981. In
recent times only one politician has been arrested on charges of
corruption; he is currently awaiting trial.





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. However, it is well known that a number of
public officials have been delinquent in complying with mandatory
filing. 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. In 2007, The GOJ passed into law the Proceeds of
Crime Act (POCA),a powerful legal tool that allows for both
criminal and civil forfeiture and criminalizes money laundering
related to narcotics offenses, fraud, firearms trafficking, human
trafficking, terrorist financing and corruption, and applies to all
property or assets associated with an individual convicted or
suspected of involvement with a crime.

More active enforcement of the POCA by the GOJ would certainly
strengthen anti-corruption efforts.



U.S. investors should be aware of the U.S. provisions of the
Foreign Corrupt Practices Act (FCPA) which, in general, prohibits
corrupt payments to foreign officials for the purpose of obtaining
or keeping business. See the U.S. Department of Justice website
for more information. http://www.usdoj.gov/criminal/fraud/fcpa/




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.



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 U.S., Canada, CARICOM, China,
Switzerland, Germany, Norway, Sweden, Denmark and the United
Kingdom.



OPIC and Other Investment Insurance Programs

--------------






The Overseas Private Investment Corporation has identified
infrastructure, telecommunications, construction, tourism and
renewable 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 has historically committed more than USD 750 million
in insurance and financing to support over 80 projects in Jamaica
in industries such as construction, energy, telecommunications, and
tourism. The country became a signatory to the Multilateral
Investment Guarantee Agency in 1986 and ratified the agreement in

1987.



The foreign exchange market remained relatively stable for the
first nine months of 2008, depreciating by 1.6 percent. However,
by October the effects of the global financial crisis became
evident, with the local currency slipping by over eight percent to
the first week of December. The sharp depreciation has been
underpinned by a confluence of demand and supply factors led by
increased margin calls from overseas creditors. Demand pressures
were also compounded by increasing Jamaican dollar liquidity as
local financial institutions converted maturing debt instruments
into hard currency. The increased demand for hard currency could
not have come at a worse time, as it coincided with the slow period
for inflows and the traditional demand spike for foreign currency
to purchase Christmas supplies. But one of the single greatest
shocks to the foreign exchange market came from the negative
ratings released by the three main ratings agencies. But a
currency adjustment was not unexpected given the 16.8 percent spike
in inflation to September, 2008, which represented an almost 15
percent real appreciation in the currency. And with confidence
waning and rising inflation rendering returns on local instruments
negative, investors were always going to switch to foreign assets
to hedge against any further erosion in real returns. High
commodities prices led by oil imports had also influenced a USD 793
million deterioration in the current account balance to June 2008.
With foreign investment inflows drying up and the capital market
shut, there would have been a shortfall in the supply of foreign
inflows required to finance the current account, thus forcing the
exchange rate to adjust.



To address the instability, the Central Bank drew on its arsenal of
monetary tools to temper demand pressures. On October 15, the Bank
introduced a temporary USD loan facility for institutions affected
by margin calls. Two days later the Bank complemented this
response by hiking interest rates by up to 1.2 percent. The bank
followed up by facilitating the flow of credit among financial
institutions to moderate the pressures in the foreign exchange
market, while assisting the continued functioning of the inter-bank
credit market. At the same time, the Bank sold over USD 400
million or 20 percent of its stock of Net International Reserves
(NIR) to the currency market to shore up supplies, thus, bringing
NIR down from USD 2.1B in 2007 to USD 1.7B in December 2008.
However, these policy responses were not sufficient to alleviate
the demand pressures in the currency market, due to a build up in
Jamaica dollar liquidity stemming from maturing debt instruments.
To remove this liquidity, the Bank embarked on an even more
aggressive monetary program, offering an attractive short term
instrument with interest payable at 20.5 percent as well increasing
the cash reserve requirement by two percentage points to 11
percent. Interest rates were further hiked to as high as 24
percent for one year instruments. These measures were accompanied
by an 18-month GOJ USD indexed bond with a coupon of 11.5 percent.




Labor


--------------







Jamaica had an estimated labor force of 1.3 million at the end of
January 2008, of which 10.2 percent was unemployed. Since 1999
there has been a steady increase in the numbers 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 marked increase in the number of work
permits issued to expatriates, particularly in the services
sectors. In 2007, a total of 5,927 permits were issued, down 6.3
percent, suggesting a falloff in the demand for permits as some
tourism projects are completed.



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 historically
has been the case. 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).



Jamaica has a number of labor friendly laws including the
Employment (Termination and Redundancy Payments) Act, 1974 (as
amended) (ETRPA). Under the Act, subject to some exclusions,
employees with not less than two years continuous employment, who
are dismissed on the grounds of "redundancy" are entitled to
redundancy payment. As a general rule, workers with up to ten
years continuous employment are entitled to two weeks payment for
every year as well the requisite notice pay, while workers with
over ten years continuous employment are entitled to three weeks
payment plus notice pay (notice pay is the period in which the
employee must give notice to their employer before leaving their
position except in certain cases such as firing for cause).



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 is 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.



Foreign-Trade Zones/Free Ports

--------------



Jamaica's Free Zones Act allows investors to operate solely with
foreign exchange in activities such as warehousing, refining,
manufacturing, redistribution, 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:



Ms. Beverly Williamson, Senior Vice-President, Business Management
and Special Projects, 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:bwillaimson@portjam.com



Mr. Horace Sutherland, 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)



2002 2004 2005 2006 2007
2008

Inward 4409 5783 6335 7264 8580 9456

Outward 872 1079 1174 1257 817 1452

Source: World Investment Report, 2005



Table 2: FDI Stock as a Percent of GDP



2002 2004 2005 2006 2007 2008

Inward 56.7 66.4 65.1 68.8 77 65.7


Outward 11.2 12.4 12.1 11.9 12 10.1

Source: World Investment Report, 2005



Table 3: Inward FDI (USD Million)



2003 2004 2005
2006 2007 2008





Agriculture/Manufacturing 88.2 43.5 118.9 40.8 46.7
75.2

& Distribution

Information Technology 105.7 17.9 55 58.2 164.5
257

& Communication

Minerals and Chemicals 30.9 9.8 12.8 11.6
5.2 2.3

Insurance 10.7 10.2 0.0
0.0 0.0 0.0

Tourism 114.3 114.6 106.7 185.7
196.9 196.0

Mining 149.7 57.3 111.6 335.8
216.6 74.2

Other 63.0 170.2 75.9
118.1 59.3 714.3*

Sub-Total 562.6 423.6 480.9 750.1
689.2 1319.0

Retained Earnings 158.1 178.0 201.6 132.1 177.3
177.5

Divestment 0.0 0.0 0.0
0.0 0.0 0.0

TOTAL 720.7 601.6 682.5 882.2
866.5 1436.6



*Includes inflows arising from the acquisition of majority
shareholdings in a local conglomerate by a Trinidad & Tobago firm.

2008 figures are preliminary

Source: Bank of Jamaica



Table 4: Inward FDI as a percentage of GDP (%)



2004 2005
2006 2007 2008



Agriculture/Manufacturing 0.87 0.39 1.00 0.36
0.05

& Distribution

Information Technology 1.05 0.16 0.46 1.27
1.84

& Communication

Minerals and Chemicals 0.31 0.09 0.11 0.04
0.02

Insurance 0.11 0.09 0.00
0.00 0.00

Tourism 1.13 1.03 1.56
1.52 1.40






Mining 1.48 0.52 2.81
1.68 0.53

Other 1.68 0.68 0.99
0.46 5.12*

Sub-Total 5.56 3.81 6.29
5.33 9.45

Retained Earnings 1.56 1.60 1.11 1.37
0.84

Divestment 0.00 0.00 0.00
0.00 0.00

TOTAL 7.13 5.41 5.72
6.70 10.29

See notes in Table 3

Source: Computed from BOJ and Statistical Institute of Jamaica data






Table 5: FDI Projects Facilitated by Jamaica Promotions by Sector
(USD Million)



03/04 04/05 05/06
06/07 07/08 08/09



TOTAL 105.8 153.8 233.2 265.7 328.3 431.1

Agriculture 2.9 6.4 3.0 0.0
0.0 0.0

Creative Industries 14.2 12.3 15.0 0.0 10.1
18.1

Info Tech. 45.9 11.4 64.3 55.7
50.9 160.1

Manufacturing 31.1 0.0 11.1 38.9
53.2 65.9

Mining/Chemicals 0.4 4.6 16.0 1.3 5.6
5.0

Tourism 11.1 119.2 123.9 169.8
208.5 160.1

Source: Jamaica Promotions Agency (JAMPRO)



Table 6: FDI Projects Facilitated by JAMPRO by Selected Country of
Origin, FY 99-07



Country and Sector JDOLS Millions

BELGIUM

Tourism 100.0

CANADA

Film 126.7






Information Technology 7,068.2

Manufacturing 546.3

Mining and Chemical 213.5

CAYMAN ISLAND

Tourism 78.2

DOMINICAN REPUBLIC

Information Technology 276.0

Manufacturing 284.9

GERMANY

Film 131.3

ITALY

Tourism 58.3

JAPAN

Film 14.2

RUSSIA

Film 228.5

SOUTH AFRICA

Manufacturing 27.2

SPAIN

Tourism 26,536.0

ST. LUCIA

Manufacturing 88.6

TAIWAN

Agriculture 570.4

TRINIDAD AND TOBAGO

Mineral and Chemical 1,466.8

Manufacturing 2,327.0

U.S.A.

Agriculture 182.0

Film 1,414.9

Information Technology 13,508.7

Manufacturing 2,367.0

Mining and Chemicals 674.2

Textiles 102.5

Tourism 6,378.3

UNITED KINGDOM

Film 277.9

Information Technology 9,277.1

Manufacturing 1,842.3





Tourism 124.1

MULTIPLE OWNERS

Film 784.6

Tourism 1,629.1

Source: JAMPRO (does not capture all new investments)



Jamaica has a long history of attracting foreign direct investment
from the United States. Among the major U.S. investors operating
in Jamaica are:



--------------

Accounting

--------------

KPMG Peat Marwick

Price Waterhouse-Coopers



--------------

Advertising

--------------

Lindo Foote, Cone & Belding (FCB)

McCann Erickson (Ja.) Ltd.



--------------

Agribusiness and Beverages

--------------

ADM Milling Company

Coca Cola Jamaica

Nabisco Brands, Inc.

Pepsi-Cola Jamaica Bottling Plant

Kraft



--------------

Banking & Finance

--------------

Citibank N.A.



--------------

Chemicals/Pharmaceuticals

--------------





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

--------------

ACS

Data Key Processors Jamaica Ltd.

Fargo Electronics

IBM World Trade Corp.

Jamaica Digiport Int'l Ltd.

Media Track Inc.

Microsoft

New Horizons Learning Centre

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

Meineke

PriceSmart



--------------

Courier Service

--------------


EB/IFD/OIA (TWALSH)
EEB/TRA (VLIMAYE-DAVIS)
INR/RES (RWARNER)
INR/I (SMCCORMICK)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
EXPORT IMPORT BANK FOR ANNETTE MARESH
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA
OPIC FOR

FedEx

UPS

International Bonded Couriers



--------------

Insurance

--------------

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 (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.

Jamaica Energy Partners

Jamaica Private Power Company Ltd.

Kaiser Bauxite Company

Texaco Caribbean Inc.



--------------

Project Management





--------------

Boyken-Mortimer International LLC



--------------

Tourism and Hospitality Industry

--------------

Air Tran

American Airlines

American Express Int'l Inc.

Atlantic Southeast Airlines

Baskin Robbins

Chester' Chicken

Church's Fried Chicken

Continental Airlines

Delta Airlines

Hertz (Liberty) Car Rental

Hilton (Kingston) Hotel

Holiday Inn Sunspree Resort

Jet Blue

Pizza Hut

Popeye's Chicken and Seafood

Renaissance Jamaica Grande Hotel

Restaurants Associates Ltd. - Burger King

Restaurants of Jamaica Ltd. - Kentucky Fried Chicken

Ritz Carlton Hotel

Spirit Airlines

Subway (Ja.) Ltd.

TCBY Frozen Yogurt

Wendy's

Wyndham Rose Hall Hotel
Parnell