The Government of Jamaica (GOJ) considers foreign direct investment (FDI) a key driver for economic growth and in recent years has undertaken macroeconomic reforms that have improved its investment climate. According to foreign investors, after suffering from a stagnant economy for more than two decades and accumulating one of the highest debt-to-GDP ratios in the world, the GOJ has successfully implemented International Monetary Fund (IMF) programs since 2013. Under consecutive IMF programs, the GOJ replaced its discretionary investment incentives with legislation that simplified the income tax regime and codified tax benefits for all investors. These efforts have contributed to Jamaica’s improvement in the World Bank’s Doing Business Report (DBR), from a ranking of 90 in 2013 to 75, out of 190 countries, in 2019. Jamaica recently reduced or removed a number of distortionary taxes across a wide range of economic sectors. Jamaica’s improved creditworthiness, record-setting stock market growth, and proposed financial sector reforms may stimulate local investments in productive sectors.
Jamaica received USD 888 million in FDI in 2017 (latest data available), a significant improvement from the USD 593 million registered in 2013. This made Jamaica a leading recipient of FDI in the Caribbean and among Small Island Developing States (SIDS). The United States, Canada, Spain, Mexico, and China continued to drive FDI in 2017. The tourism, mining, energy, and construction sectors led investment inflows in 2017. Tourism remained fast growing with consistent increases in room stock, stopover arrivals, and revenues. Business process outsourcing (BPO), including customer service and back office support, continued to attract local and overseas investment. Investments in improved air, sea, and land transportation have reduced time and costs for transporting goods and have created opportunities in logistics.
Companies have reported that Jamaica’s high crime rate, corruption, and comparatively high taxes inhibit its investment prospects. In 2018, the country’s corruption perception ranking, by Transparency International, worsened from 68 in 2017 to 70 out of 180 countries. Despite laws that provide for criminal penalties for corrupt acts by officials, there were numerous reports of government corruption during the year and officials appeared to engage in corrupt practices with impunity. Jamaica implemented critical initiatives to reduce crime in 2018, including the declaration of three States of Emergency in violence-ridden area of the island. These efforts contributed to a 20 percent decrease in the murder rate in 2018, though Jamaica still remains among the most violent countries in the hemisphere.
The high cost of energy – about three times higher than in the United States – primarily due to a dependence on allegedly inefficient petroleum-based power plants and outdated electricity infrastructure, has been identified as a significant impediment to Jamaica’s competitiveness. With that said, Jamaica’s ongoing energy sector transformation has become increasingly attractive to U.S. investors. Additional challenges that businesses complain of include an inefficient government bureaucracy, slow growth, a price-sensitive economy, and low labor productivity.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||70 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||75 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||84 of 126||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2018||$167||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||$4,760||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Government of Jamaica (GOJ) is open to foreign investment in all sectors of its economy, and is currently in the process of developing a National Investment Policy to guide future foreign direct investment (FDI) reform. The GOJ has also made significant structural changes to its economy, under International Monetary Fund (IMF) guidance over the past six years, resulting in an improved investment environment. Since 2013, Jamaica’s Parliament passed numerous pieces of legislation to improve the business environment and support economic growth through a simplified tax system and broadened tax base. The establishment of credit bureaus and a Collateral Registry under the Secured Interest in Personal Property (SIPP) legislation are improving access to credit. Jamaica made starting a business easier by consolidating forms and made electricity less expensive by reducing the cost of external connection works. The GOJ implemented an electronic platform for tax payments and established a 90-day window for development approvals.
The GOJ’s public procurement regime was amended, with effect from April 2019, to include provisions for domestic margins of preference, affording preferential treatment to Jamaican suppliers in public contracts in some circumstances, and setting aside a portion of the government’s procurement budget for local micro, small, and medium enterprises. Notwithstanding, U.S. businesses are encouraged to participate in GOJ open procurements, many of which are published in media and via the government’s electronic procurement website: .
With Jamaica’s debt to GDP ratio having decreased to approximately 96 percent, the government used the attendant fiscal space to reduce and/or abolish a number of distortionary taxes effective April 2019.
Jamaica’s commitment to regulatory reform is an intentional effort to become a more attractive destination for foreign investment. According to the World Bank’s “Doing Business 2019” report, Jamaica ranked 75 out of 190 economies, above average compared to Latin American and Caribbean countries. The country made significant improvement in resolving insolvency, following the passage of new bankruptcy legislation and now ranks 6th in starting a business and a much improved 12th in getting credit. Jamaica ranked 79 out of 140 countries in the World Economic Forum’s 2018 Global Competitiveness Index. Some report that bureaucracy remains a major impediment, with the country continuing to underperform in the areas of trading across borders, registering property, paying taxes, and enforcing contracts.
Jamaica’s trade and investment promotion agency (JAMPRO) is the GOJ agency responsible for promoting business opportunities to local and foreign investors. While JAMPRO does not institute general criteria for FDI, the institution targets specific sectors for investment and promotes Jamaican exports (see ).
JAMPRO and the Jamaica Business Development Corporation assist micro, small, and medium-sized enterprises (MSME) primarily through business facilitation and capacity building. MSMEs tend to consist of less than 10 employees. Such fee-based services are made available to foreign-owned MSMEs (see ).
Limits on Foreign Control and Right to Private Ownership and Establishment
All private entities, foreign and domestic, are entitled to establish and own business enterprises, as well as to engage in all forms of remunerative activity subject to inter alia, labor, registration, and environmental requirements. Jamaica does not impose limits on foreign ownership or control and local laws do not distinguish between local and foreign investors. There are no sector-specific restrictions that impede market access. An amendment to the Companies Act, passed in 2017, requires companies to disclose beneficial owners to the Companies Office of Jamaica (ORC). The law mandates that the company retain records of legal and beneficial owners for seven years. The GOJ has proposed new legislation on the incorporation and operation of International Business Companies (IBC), which is designed to attract and facilitate a wide variety of international business activities to include: (1) holding companies providing asset protection for intellectual property rights, real property, and the shares of other companies; (2) serving as vehicles for licensing and franchising; (3) conducting international trade, and investment activities; (4) acting as special purpose vehicles in international financial transactions; and, (5) serving as the international headquarters for global companies.
The U.S. government is not aware of any discrimination against foreign investors at the time of initial investment or after the investment is made. However, under the Companies Act, investors are required to either establish a local company or register a branch office of a foreign-owned enterprise. Branches of companies incorporated abroad must register with the Registrar of Companies if they intend to operate in Jamaica. There are no laws or regulations requiring firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control. Incentives are available to local and foreign investors alike, including various levels of tax relief.
Other Investment Policy Reviews
Jamaica has not undertaken any investment policy reviews within the last three years in conjunction with the Organization for Economic Cooperation and Development (OECD) or United Nations Conference on Trade and Development (UNCTAD). The GOJ’s previous WTO review took place in 2011 and an OECD review took place in 2004.
Businesses can register using the “Super Form,” a single Business Registration Form for New Companies and Business Names. The ORC acts as a “one-stop-shop,” effectively reducing the registration time to between one and three days. Foreign companies can register using these forms, with or without the assistance of an attorney or notary. The “Super Form” is available under Forms at the ORC’s website ( ).
While the GOJ does not actively promote an outward investment program, it does not restrict domestic investors from investing abroad.
6. Financial Sector
Capital Markets and Portfolio Investment
Credit is available on market terms, and foreigners are allowed to borrow freely on the local market at market-determined rates of interest. A relatively effective regulatory system was established to encourage and facilitate portfolio investment. Jamaica has had its own stock exchange, the Jamaica Stock Exchange (JSE), since 1969. The JSE was rated the best performing stock exchange in the world, by Bloomberg, in 2015 and again in 2018. The Financial Services Commission and the Bank of Jamaica (BOJ), the central bank, regulate these activities. Jamaica respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.
Money and Banking System
At the end of 2018 there were 11 supervised deposit-taking institutions consisting of eight commercial banks, one merchant bank (Licensed under the Financial Institutions Act) and two building societies. The number of credit unions shrank from 47 at the end of 2009 to 26 at the end of 2018. In the BOJ’s January 2019 report, commercial banks held assets of almost USD 11 billion at the end of September 2018. Non-performing loans (NPL) of USD 155 million at end December 2018, were 2.5 percent of total loans. Three of the country’s eight commercial banks are foreign-owned. After a financial sector crisis in the mid-1990s led to consolidations, the sector has remained largely stable.
In October 2018, the GOJ took legislative steps to modernize and make the central bank operationally independent through the tabling of amendments to the Bank of Jamaica (BOJ) Act. The modernization program includes, inter alia, the institutionalization of the central bank independence, improved governance, and the transitioning of monetary policy towards inflation targeting. These developments follow previous strengthening of the BOJ, in 2015, when it undertook independent responsibility for banking supervision. Jamaica’s financial governance framework is in line with international standards and legislative amendments continue to enhance the BOJ’s regulatory powers.
Foreign Exchange and Remittances
There are no restrictions on holding funds or on converting, transferring, or repatriating funds associated with an investment. In 2017, the BOJ implemented a new system called the BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT) for the sale and purchase of foreign exchange (FX) to market players. The new system is a more efficient and transparent way of intervening in the FX market to smooth out demand and supply conditions.
Investment-related funds are freely convertible to regularly traded currencies, particularly into United States and Canadian dollars and British pounds. However, foreign exchange transactions must be conducted through authorized foreign exchange dealers, “cambios,” and bureau de change. Foreign exchange is generally available and investors are free to remit their investment returns.
The country’s financial system is fully liberalized and subject to market conditions. There is no required waiting period for the remittance of investment returns. Any person or company can purchase instruments denominated in foreign currency. There are no restrictions or limitations on the inflow or outflow of funds for the remittance of profits or revenue. The country does not possess the financial muscle to engage in currency manipulation.
Jamaica was listed among the Major Money Laundering Jurisdictions in the U.S. Department of State’s 2018 International Narcotics Control Strategy Report (INCSR).
The Caribbean Financial Action Task Force made public Jamaica’s fourth round Mutual Evaluation Report (MER) in January 2017 ( ). Jamaica entered into an Observation Period until October 2019 to address deficiencies addressed in the MER. Should Jamaica not address deficiencies listed in the MER, it will enter a formal monitoring period by the Financial Action Task Force.
Sovereign Wealth Funds
Jamaica does not have a sovereign wealth fund or an asset management bureau.
7. State-Owned Enterprises
As a condition of Jamaica’s Stand-By Agreement with the IMF, the GOJ is reforming the public sector to include State-Owned Enterprises (SOEs). Jamaican SOEs are most active in the agriculture, mining, energy, and transport sectors of the economy. Of 162 public bodies, 56 are self-financing and are therefore considered SOEs as either limited liability entities established under the Companies Act of Jamaica or statutory bodies created by individual enabling legislation. SOEs generally do not receive preferential access to government contracts. SOEs must adhere to the provisions of the GOJ (Revised) Handbook of Public Sector Procurement Procedures and are expected to participate in a bidding process to provide goods and services to the government. SOEs also provide services to private sector firms. SOEs must report quarterly on all contracts above a prescribed limit to the Integrity Commission. Since 2002, SOEs have been subject to the same tax requirements as private enterprises and are required to purchase government-owned land and raw material and execute these transactions on similar terms as private entities.
Jamaica’s Public Bodies Management and Accountability Act (PBMA) requires SOEs to prepare annual corporate plans and budgets, which must be debated and approved by Parliament. As part of the GOJ’s economic reform agenda, SOE performance is monitored against agreed targets and goals, with oversight provided by stakeholders including representatives of civil society. The GOJ prioritized divestment of SOEs, particularly the most inefficient, as part of its IMF reform commitments. Private firms compete with SOEs on fair terms and SOEs generally lack the same profitability motives as private enterprises, leading to the GOJ’s absorbing the debt of loss-making public sector enterprises.
In 2012, the GOJ approved a Corporate Governance Framework (CGF) to promote improved performance by SOEs. While Jamaican SOEs are not required to adhere to Organization of Economic Co-operation and Development (OECD) Guidelines on Corporate Governance, the CGF is based on international best practices and principles of corporate governance.
Jamaica’s public bodies report to their respective Board of Directors appointed by the responsible portfolio minister and while no general rules guide the allocation of SOE board positions, some entities allocate seats to specific stakeholders. Under the CGF, persons appointed to boards should possess the skills and competencies required for the effective functioning of the entity. However, some board members are selected on the basis of their political affiliation. The Jamaican court system, while allegedly slow, is respected for being fair and balanced and in many cases has ruled against the GOJ and its agents.
As a condition of Jamaica’s Stand-By Agreement with the IMF, the GOJ identified a number of public assets to be privatized from various sectors. Jamaica actively courts foreign investors as part of its divestment strategy. In certain instances, the government encourages local participation. Restrictions may be placed on certain assets due to national security considerations. Privatization can occur through sale, lease, or concession. Transactions are generally executed through public tenders but the GOJ reserves the right to accept unsolicited proposals for projects deemed to be strategic. The Development Bank of Jamaica, which oversees the privatization program, is mandated to ensure that the process is fair and transparent. When some entities are being privatized, advertisements are placed locally and through international publications, such as the Financial Times, New York Times, and Wall Street Journal, to attract foreign investors. Foreign investors won most of the privatization bids in the last decade.
While the time taken to divest assets depends on state of readiness and complexity, on average transactions take between 18 and 24 months. The process involves pre-feasibility and due diligence assessments; feasibility studies; pre-qualification of bidders; and a public tender. In 2018, the GOJ signed a 25-year concession for the management and development of the Norman Manley International Airport in Kingston. Other large privatizations include the 2003 privatization of Sangster International Airport in Montego Bay and the 2015 privatization of the Kingston Container Terminal port facility. The GOJ is in process of privatizing the Wigton Wind Farm, a 62-megawatt wind farm, through a public offering, and is developing a pipeline of additional privatization projects. The GOJ also seeks to divest stagnant assets owned by large government entities such as the Urban Development Corporation and Factories Corporation of Jamaica.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
**Jamaica Promotions Corporation (JAMPRO)
Table 3: Sources and Destination of FDI
|Direct Investment from/in Counterpart Economy Data (2017)|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||Amount||100%||Total Outward||Amount||100%|
Source: Jamaica Promotions Corporation (JAMPRO)
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
Economic and Commercial Section
142 Old Hope Road
Kingston 6, Jamaica
Telephone: +1 876-702-6000