2017 Investment Climate Statements: Jamaica

Policies Towards Foreign Direct Investment

The Government of Jamaica (GOJ) is open to foreign investment in all sectors of its economy, and under International Monetary Fund (IMF) guidance, the GOJ made significant structural reforms to its economy over the past five years. In 2013, Jamaica’s Parliament passed 11 pieces of legislation to improve the business environment and support economic growth through a simplified tax system and broadened tax base. During 2014 the government passed an Insolvency Act to make bankruptcy proceedings more efficient. 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 government implemented an electronic platform for the payment of taxes and has established a 90 day window for development approvals. New Electricity and Procurement Acts were also passed and should positively impact the investment climate.

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 2017” report, Jamaica fell two places, from 65 to 67, after improving by seven places in 2016. That said, Jamaica still boasts the highest ranking in the Caribbean and sixth place in Latin America and the Caribbean. The country made significant improvement in resolving insolvency, following the passage of new bankruptcy legislation and now ranks in the top 20 in starting a business and getting credit. Jamaica improved 8 spots on the Global Competitiveness Index and is ranked 86 out of 144 countries for 2015/16. The country is ranked the third best country to do business in Latin America and the Caribbean according to the 2016 Forbes Best Countries for Business Report. Bureaucracy remains a major impediment, with the country continuing to underperform in the areas of getting electricity, registering property, paying taxes and enforcing contracts.

Jamaica trade and investment promotion agency JAMPRO is the government agency responsible for promoting business opportunities to local and foreign investors. While JAMPRO does not institute general criteria for investors, the institution targets specific sectors as well as export generating investment (see http://www.jamaicatradeandinvest.org/ ).

Micro, small and medium-sized enterprises (MSME) in Jamaica tend to employ less than ten employees and are assisted by JAMPRO and the Jamaica Business Development Corporation primarily through business facilitation and capacity building. Such fee-based services would be made available to foreign-owned MSMEs (see https://www.jbdc.net/ ).

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 and 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 discriminate against market access.

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 also 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.

Other Investment Policy Reviews

Jamaica has not undertaken any investment policy reviews within the last three years in conjunction with the World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD), or United Nations Conference on Trade and Development (UNCTAD). The government last conducted a WTO review in January 2011 and an OECD review in 2004. The country is set to conduct another WTO review in the second half of 2017. JAMPRO published a summary of Jamaica’s economic and political landscape for potential investors. It is available at: http://www.jamaicatradeandinvest.org/investment .

With Inter-American Development Bank (IDB) funding, a Tholons Report published in July 2012 evaluates opportunities in Jamaica’s Business Process Outsourcing (BPO) sector. http://jamaicacsi.org/wp-content/uploads/2012/05/IDB-Tholons-Jamaica-Carving-a-Niche-in-the-Global-Outsourcing-Market.pdf 

Business Registration

Businesses can register using the “Super Form,” a single Business Registration Form for New Companies and Business Names. The Companies Office of Jamaica (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/notary. The “Super Form” can be accessed under Forms at the Companies Office of Jamaica’s website, https://www.orcjamaica.com .

Outward Investment

While the Government of Jamaica does not actively promote an outward investment program, it does not restrict domestic investors from investing abroad.

Jamaica has bilateral investment treaties (BIT) in force with Argentina, China, France, Germany, Italy, Republic of Korea, Netherlands, Spain, Switzerland, United Kingdom, and the United States. Jamaica has signed, but not yet into force, BITs with Cuba, Egypt, Indonesia, Kuwait, Nigeria, and Zimbabwe.

Jamaica has preferential trading agreements with CARICOM members and through CARICOM, it has preferential trade agreements with the European Union, Canada, the United States, Colombia, the Dominican Republic, and Venezuela.

Jamaica has a Bilateral Investment Treaty with the United States. According to the OAS Foreign Trade Information System, Jamaica also signed bilateral investment treaties with Argentina, China, Egypt, France, Germany, Indonesia, Italy, Netherlands, Nigeria, Spain, Switzerland, United Kingston, and Zimbabwe. Jamaica signed a bilateral Income Tax Convention with the United States in 1981, which seeks to avoid double taxation while preventing income tax evasion. Jamaica also has double taxation agreements with Canada, CARICOM, China, Denmark, France, Germany, Norway, Sweden, Switzerland, and the United Kingdom. Jamaica has not signed a Free Trade Agreement (FTA) with the United States, but CARICOM signed a Trade and Investment Framework (TIFA) with the United States in 2013. In 2014 Jamaica and the United States signed an inter-government agreement for reciprocal information sharing as part of the implementation of the U.S. Foreign Account Tax Compliance Act (FATCA).

Transparency of the Regulatory System

Jamaica’s legal, regulatory and accounting systems are transparent and consistent with international norms, and Jamaica adopted the new International Financial Reporting System. Proposed legislation is available for public comment, and submissions are generally invited from members of the public for items considered to be controversial. A Fair Competition Act (FCA) was implemented in 1993, administered by the Fair Trading Commission (FTC). 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 (See section on Competition and Anti-Trust Laws). The U.S. government 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.

International Regulatory Considerations

Jamaica is a part of the Caribbean Community (CARICOM). CARICOM was established in 1973, with the main pillars of cooperation envisioned to be economic integration, foreign policy coordination, human and social development, and security. Despite the intent for CARICOM to harmonize regulatory systems regionally, they are not harmonized. The CARICOM members do, however, have a common external tariff.

The GOJ tends to adopt commonwealth standards for its regulatory system, especially from Canada and the United Kingdom. Jamaica is a full member of the WTO, and is required to notify all draft technical regulations to the WTO Committee of Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

Jamaica has a common law legal system and court decisions are generally based on past judicial declarations. The Jamaican Constitution provides for an independent judiciary with a three-tier court structure. A party seeking to enforce ownership or contractual rights can file a claim in the Resident 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. The Caribbean Court of Justice (CCJ) hears appeals in civil and criminal matters from common law courts within CARICOM member states such as Jamaica.

Jamaica does not have a single written commercial or contractual law, and case law is therefore supplemented by the following pieces of legislation: (1) Arbitration (Recognition and Enforcement of Foreign Awards) Act; (2) Companies Act; (3) Consumer Protection Act; (4) Fair Competition Act; (5) Investment Disputes Awards (Enforcement) Act; (6) Judgment (Foreign) (Reciprocal Enforcement) Act; (7) Law Reform (Frustrated Contracts) Act; (8) Loans (Equity Investment Bonds) Act; (9) Partnership (Limited) Act; (10) Registration of Business Names Act; (11) Sale of Goods Act; (12) Standards Act; and, (13) Trade Act. The commercial and civil divisions of the Supreme Court have jurisdiction to hear intellectual property claims.

Jamaica enforces the judgments of foreign courts through: (1) The Judgment and Awards (Reciprocal Enforcement) Act; (2) The Judgment (Foreign) (Reciprocal Enforcement) Act; and, (3) The Maintenance Orders (Facilities for Enforcement) Act. Under these acts, judgments of foreign courts are accepted where there is a reciprocal enforcement of judgment treaty with the relevant foreign state. International arbitration is also accepted as a means for settling investment disputes between private parties. Jamaica is a signatory to the New York Convention (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards) which governs the recognition and enforcement of foreign arbitration awards. The Jamaican Arbitration (Recognition and Enforcement of Foreign Awards) Act enables foreign arbitral awards under the New York Convention to be enforced in Jamaica.

The system has a long tradition of being fair, but court cases can take years or even decades to resolve. Challenges with dispute resolution usually reflect broader problems within the court system including long delays and resource constraints. Subsequent enforcement of court decisions or arbitration awards is usually adequate, and the local court will recognize the enforcement of an international arbitration award.

A specialized Commercial Court was established in 2001 to expedite the resolution of commercial cases. The rules do not make it mandatory for commercial cases to be filed in the Commercial Court and the Court is largely underutilized by litigants.

Subsequent enforcement of court decisions or arbitration awards is usually adequate, and the local courts will recognize the enforcement of an international arbitration award.

Jamaica ranked 117 in the 2016 Doing Business Report for the length of time taken for the enforcement of contracts in the courts.

Laws and Regulations on Foreign Direct Investment

There are no specific laws or regulations specifically related to foreign investment.

Competition and Anti-Trust Laws

The Fair Trading Commission (FTC), an agency of the Ministry of Industry, Commerce, Agriculture and Fisheries (MICAF), administers Jamaica’s Fair Competition Act (FCA). The major objective of the FCA is to foster competitive behavior and provide consumer protection. The Act therefore forbids arrangements that substantially lessen competition or behavior that results in the abuse of a dominant position. The Act proscribes the following anti-competitive practices: resale price maintenance; tied selling; price fixing; collusion and cartels; and bid rigging. The act does not prohibit mergers or acquisitions that could lead to the creation of a monopoly. However, the government raised the possibility of enacting antitrust legislation. The FTC is empowered to investigate breaches of the Act. Businesses or individuals in breach can be taken to court if they fail to take corrective measures outlined by the FTC.

Expropriation and Compensation

Expropriation is generally not an issue in Jamaica, and there are no outstanding cases. However, expropriation of land may take place for national development under the Land Acquisition Act, which provides for compensation on the basis of market value. The U.S. government is not aware of any expropriation-related litigation ongoing between the Jamaican government and any private individual or company. However, the U.S. government assisted investors who had property expropriated during the 1970’s socialist regime, with a payment in one such case received as recently as 2010.

Dispute Settlement

ICSID Convention and New York Convention

Jamaica became a signatory to the International Center for Settlement of Disputes (ICSID) in 1965. Jamaica is a signatory to the New York Convention (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards), which governs the recognition and enforcement of foreign arbitration awards. The Jamaican Arbitration (Recognition and Enforcement of Foreign Awards) Act enables foreign arbitral awards under the New York Convention to be enforced in Jamaica.

Investor-State Dispute Settlement

International arbitration is also accepted as a means for settling investment disputes between private parties. Jamaica enforces the judgments of foreign courts through: (1) The Judgment and Awards (Reciprocal Enforcement) Act; (2) The Judgment (Foreign) (Reciprocal Enforcement) Act; and, (3) The Maintenance Orders (Facilities for Enforcement) Act. Under these acts, judgments of foreign courts are accepted where there is a reciprocal enforcement of judgment treaty with the relevant foreign state. Jamaica does not have a history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

Jamaica accepts international arbitration of investment disputes between foreign investors and the government as well as with private parties. Local courts recognize and enforce foreign arbitral awards. The Caribbean Court of Justice (CCJ) serves as the international tribunal for disputes within the CARICOM Single Market and Economy. The Dispute Resolution Foundation and the Caribbean Branch of the Chartered Institute of Arbitrators both facilitate arbitration. For countries such as the United States that have a Bilateral Investment Treaty (BIT) with Jamaica, the rules of this treaty apply for qualifying investors. Other foreign investors are given national treatment and civil procedures apply. Disputes between enterprises are handled in the local courts, but foreign investors can refer cases to ICSID. There were cases of trademark infringements in which U.S. firms took action and were granted restitution in the local courts. While restitution is slow, it tends to be fair and transparent. The U.S. government is not aware of any cases in which SOEs have bene involved in investment disputes.

Bankruptcy Regulations

Jamaica enacted new insolvency legislation in 2014 that replaced the Bankruptcy Act of 1880 and seeks to make the insolvency process more efficient. The act prescribes the circumstances under which bankruptcy is committed; the procedure for filing a bankruptcy petition; and the procedures to be followed in the administration of the estates of bankrupts. The reform addresses bankruptcy; insolvency, receiverships; provisional supervision; and winding up proceedings. The law addresses corporate and individual insolvency and facilitates the rehabilitation of insolvent debtors, while removing the stigma formerly associated with either form of insolvency. Both insolvents and “looming insolvents” (persons who will become insolvent within twelve months of the filing of the proposal if corrective or preventative action is not taken) are addressed in the reforms.

The act contains provision for debtors to make proposal to their creditors for the restructuring of debts, subject to acceptance by the creditor. Creditors can also invoke bankruptcy proceedings against the debtor if the amount owed is not less than the prescribed threshold, or the debtor has committed an act of bankruptcy. The filing of a proposal or notice of intention to file a proposal creates a temporary stay of proceedings. During this period, the creditor is precluded from enforcing claims against the debtor. The stay does not apply to secured creditors who take possession of secured assets before the proposal is filed; gives notice of intention to enforce against a security at least ten days before the notice of intention or actual proposal is filed; or, rejects the proposal. The 2014 legislation makes it a criminal offence if a bankrupt defaults on certain obligations set out in the legislation.

Jamaica moved up over 20 places to 38 on the Resolving Insolvency ranking of the 2016 Doing Business Report due to new legislation. Bankruptcy proceedings now take about a year to resolve; costing 18 percent of the estate value; with an average recovery rate of 64 percent.

The text of the Bankruptcy and Insolvency Act can be found at: http://www.japarliament.gov.jm/attachments/341_The%20Insolvency%20Act%202014%
20No.14%20rotated.pdf 

Investment Incentives

The Fiscal Incentives (Miscellaneous Provisions) Act 2013 repeals most of the legacy incentive legislation and provides flexibility for new tax incentives to only be granted in relation to the bauxite sector, export free zone activities, the relocation of corporate headquarters, and Junior Stock Exchange listings. The Act also outlines the arrangement for transitioning to the new regime. Continuing beneficiaries may elect to keep old incentives such as relief from income tax and customs duty as well as zero-rated GCT status for imports.

Below are short descriptions of notable, recently-enacted investment incentives.

Omnibus legislation – Provides tax relief on customs duties, additional stamp duties and corporate income tax. These benefits are granted under the following four areas:

(1) The Fiscal Incentives Act: Targets small and medium size businesses and reduces the effective corporate income tax rate by applying: (a) an Employment Tax Credit (ETC) at a maximum value of 30 percent; and (b) a capital allowance applicable to a broadened definition of industrial buildings.

(2) The Income Tax Relief (Large-Scale Projects and Pioneer Industries) Act: Targets large-scale projects and/or pioneering projects and provides for an improved and more attractive rate for the ETC. Projects will be designated either as large-scale or pioneer, based on a decision by Parliament and subject to an Economic Impact Assessment.

(3) Revised Customs Tariff: Provides for the duty free importation of capital equipment and raw material for the productive sectors.

(4) Revised Stamp Duty Act: Provides exemption from additional stamp duty on raw materials and non-consumer goods for the manufacturing sectors.

Urban Renewal Act: Companies that undertake development within Special Development Areas can benefit from Urban Renewal Bonds, a 33.3 percent investment tax credit, tax free rental income and the exemption from transfer tax and stamp duties on the ‘improved’ value of the property.

Bauxite and Alumina Act: Under this act, bauxite/alumina producers are allowed to import all productive inputs free of import duties, VAT and other port related taxes and charges.

The Foreign Sales Corporation Act: This act exempts 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.

The Jamaican EX-IM Bank provides concessionary interest rate loans for trade financing, while the Development Bank of Jamaica offers reduced lending rates to the productive sectors. Special tax incentives exist for companies that register on the junior stock market.

Income Tax Act (Junior Stock Exchange): As of January 1, 2014, companies listed on the Junior Stock Exchange are not required to pay income tax in the first five years.

Special Economic Zone Act: In 2015, Jamaica passed legislation for the setting up and operation of Special Economic Zones (SEZs). The SEZ Act repeals the Jamaica Free Zone Act, making way for; (1) the designation; promotion; development; operation; and, management of Special Economic Zones; (2) the establishment of a SEZ Authority; and, (3) the granting of benefits and other measures in order to attract domestic and foreign investments. The SEZ Act also ensured that Jamaica came into conformity with the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures.

Research and Development

Foreign firms are allowed to participate in GOJ-financed or subsidized research and development programs on the basis of national treatment. However, few opportunities exist for such programs.

Foreign Trade Zones/Free Ports/Trade Facilitation

Jamaica has about 130 free zone entities operating in areas such as business process outsourcing (BPO); warehousing and distribution; manufacturing; and, merchandising. However, following the passage of a new Special Economic Zone Act in 2015, existing free zone entities have a four year period to transition to the new regime. As of the writing of this report, no entities have transitioned to the new regime. The old legislation allowed investors to operate solely with foreign exchange in activities such as warehousing, refining, manufacturing, redistribution, processing, assembling, packaging, and services, including 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. Capital income tax is 12.5 percent, compared to 25 percent in the domestic economy.

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 Export Free Zones Act to allow for the establishment of Single Entity Free Zones, with individual companies now designated as free zones. The Kingston Free Zone has an Informatics Park. Free trade zone contact information is available to potential investors upon request.

The government’s transition of free zone operations to special economic zones (SEZs) to comply with WTO rules for middle-income countries under the WTO Agreement on Export Subsidies and Countervailing Measures is underway.

Performance and Data Localization Requirements

No performance requirements are generally imposed as a condition for investing in Jamaica, and government-imposed conditions to invest are not overly burdensome. The government does not mandate local employment, although the use of foreign workers to fill semi-skilled and unskilled jobs is generally frowned upon, especially by trade unions. When requesting work permits for foreign workers, both local and foreign employers must describe efforts to recruit locally.

The Government of Jamaica does not follow “forced localization,” requiring domestic content in goods or technology. There are no requirements to provide the government access to surveillance of data, and there are no restrictions on maintaining certain amounts of data storage within the country.

Private entities, whether foreign or domestic, generally have the right to freely establish, own, acquire, and dispose of business enterprises and may engage in all forms of remunerative activity.

Real Property

Property rights are guaranteed by the Constitution. Jamaica’s Registration of Titles Act 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 bureaucracy can result in significant delays. In particular, it sometimes takes a long time for landowners to secure titles.

Approximately 55 percent of the land in Jamaica is registered, although a large percentage of those properties do not have current title, as many families who pass land ownership from parent to child often do not go through the proper legal channels due to the cost and time involved. The government has made an effort to improve the percentage of land with clear title, but much work is left to be done.

Squatting is also a major challenge in Jamaica, where nearly 20 percent of the population lives as squatters. Three-quarters of squatters reside on government lands. Under the Registration of Titles Act, a squatter can claim a property by adverse possession (without compensating the owner for the land) if a person can demonstrate that he has lived on government land for more than 60 years, or on private property for more than 12 years undisturbed (including without any payment to the land owner). There are no specific regulations regarding land lease or acquisition by foreign and/or non-resident investors.

The country’s Doing Business Report ranking for ease of “registering property” was 123 in 2016 due largely to the number of procedures and high costs involved. Jamaica continues to outperform other Latin America and Caribbean countries in the time required to close a property transaction.

Registration of Titles Act: http://moj.gov.jm/sites/default/files/laws/Registration%20of%20Titles.pdf 

Intellectual Property Rights

Jamaica has one of the stronger IP protection regimes in the Caribbean, although legislative and enforcement gaps still exist. Jamaica is a member of the World Intellectual Property Organization (WIPO) and is a signatory of the Berne Convention. Jamaica and the U.S. have an Intellectual Property Rights Agreement and a BIT, which provide assurances to protect intellectual property. It is relatively easy to register IP, and The Jamaica Intellectual Property Office (JIPO) provides good assistance to parties interested in registering IP, and supports investors’ efforts to enforce their rights. Overall, protections across all types of IP are improving.

Law enforcement efforts to combat counterfeit and pirated goods are adequate on the ground, but border enforcement remains a challenge. IP violations tend to be more in relation to physical goods, while electronic IP theft is less common.

The country’s trademark and copyright regimes already satisfy the WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), although the patent and design law is not yet TRIPS compliant. A new Patent & Designs Bill, including new rules and fee structures, has been drafted and has been under review by the Chief Parliamentary Council of Jamaica for many years. The Geographical Indications Act (GI) of 2004 is now fully in force and TRIPS compliant, protecting products whose particular quality or reputation is attributable to its geographical origin. General law provides protection for trade secrets, and protection against unfair competition is guaranteed under the Fair Competition Act.

In the area of copyright protection, amendments to the Copyright Act passed in June 2015 fulfilled Jamaica’s obligations under the WIPO Internet Treaties and extended copyright protection term from 50 to 95 years. The Copyright Act complies with the TRIPS Agreement and adheres to the principles of the Berne Convention, and covers works ranging from books and music to computer programs. Amendments in June 1999 explicitly provide 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 rights in encrypted transmissions or in broadcasting or cable program services a right of action against persons who infringe upon their rights.

Jamaica, along with several other Caribbean countries, have been cited in the last several years’ Special 301 Report for the absence of compensation to performance rights organizations as well as due to concerns regarding unlicensed cable and satellite broadcasting of copyrighted network programming.

Enforcement

A special unit of the police with support from Customs tracks and reports seizures of counterfeit goods, valued at USD15 million between April 2013 and April 2014. The most commonly counterfeited goods include CDs/DVDs, alcohol, cigarettes, clothing, handbags, pharmaceuticals, and lotions/creams. However, border enforcement remains a challenge, as customs officers do not exercise ex officio authority to seize and destroy counterfeit goods and rights holders must first be provided with visual samples of the suspect merchandise to verify the item as counterfeit, submit a declaration indicating the differences between the fake from the actual product, and provide an authorization to seize the merchandise. The Jamaica Constabulary Force (JCF) established a specialized anti-trafficking in persons-intellectual property (A-TIP-IP) vice-squad within its counter terrorism and organized crime branch (C-TOC) in 2015 to boost IP enforcement.

Rights holders are responsible for paying the costs associated with storage and destruction of counterfeit goods. Presently the Commissioner may grant up to ten days for a right holder to produce the required evidence and commitments before releasing suspected counterfeit goods that are in transit.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

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. The Financial Services Commission and the Bank of Jamaica (BOJ), the central bank, regulate these activities.

Money and Banking System

At the end of 2016, there were 11 supervised deposit-taking institutions consisting of seven commercial banks, two merchant banks (Licensed under the Financial Institutions Act) and two building societies. The number of credit unions shrank from 47 at the end of 2009 to 34 at the end of 2015. At the end of 2016, commercial banks held assets of USD 8.5 billion. Non-performing loans were just over USD 108 million, or 1.3 percent of total assets. Two of the country’s seven commercial banks are foreign-owned. After a financial sector crisis in the mid-1990s led to consolidations, the sector has remained largely stable. The regulatory framework is now in line with international standards and legislation passed in 2013 has enhanced the BOJ’s regulatory powers.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions on holding funds or on converting, transferring, or repatriating funds associated with an investment. The central bank, Bank of Jamaica (BOJ), manages a floating exchange rate of the Jamaican Dollar with no pre-determined path. The BOJ may intervene with the sales and purchases of foreign currency to smooth out demand and supply. Investment-related funds are freely convertible to regularly traded currencies, particularly into United States and Canadian Dollars and the Great Britain Pound. 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.

Remittance Policies

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.

According to the 2016 International Narcotics Control Strategy Report (INCSR), Jamaica is a country “of concern” for Money Laundering and Financial Crimes. The Financial Action Task Force commended the country for making significant progress in addressing deficiencies identified in their 2005 Mutual Evaluation Report and exited the follow up process in 2014. Jamaica’s fourth round Mutual Evaluation Report was made available in January 2017 (https://www.cfatf-gafic.org/index.php/documents/4th-round-meval-reports ).

Sovereign Wealth Funds

Jamaica does not have a sovereign wealth fund or an asset management bureau.

As a condition of Jamaica’s Stand-By Agreement with the IMF, the Government of Jamaica is reviewing the possibility of significant reform of Jamaican State-Owned Enterprises (SOEs). Jamaican SOEs are most active in the agriculture, mining, energy and transport sectors of the economy. Of 190 public bodies listed, 80 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 Office of the Contractor General. Since 2002, SOEs have been subject to the same tax requirements as private enterprises. SOEs are also required to purchase government-owned land and raw material and execute these transactions on similar terms as private entities would.

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 government’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. Private firms compete with SOEs on fair terms and SOEs generally lack the same profitability motives as private enterprises, leading to the GOJ absorbing the debt of loss-making public sector enterprises.

In 2012, the government approved a Corporate Governance Framework (CGF) to promote improved performance by SOEs. While Jamaican SOEs are not required to adhere to OECD Guidelines on Corporate Governance, the CGF is based on international best practices and principles of corporate governance.

Jamaica’s public bodies report to a Board of Directors appointed by the responsible portfolio minister. No general rules guide the allocation of SOE board positions, but some entities may 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 due to political considerations. The Jamaican court system, while notoriously slow, is respected for being fair and balanced and in many cases has ruled against the Government of Jamaica and its agents.

Privatization Program

Jamaica actively courted foreign investors as part of its divestment strategy. In certain instances the government encourages local participation, and restrictions may be placed on certain assets due to national security concerns. Privatization can occur through sale, lease, or concession. Transactions are generally executed through public tenders, but the government reserves the right to accept unsolicited proposals for project 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. Requests for proposals normally include the specific requirements under which bidders are allowed to participate and the criteria by which proposals will be evaluated. Foreign investors won most of the privatization bids in the last decade.

As a condition of Jamaica’s Stand-By Agreement with the IMF, the government identified dozens of public assets to be privatized, drawing from various sectors. 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 April 2015, the government signed a 30-year concession agreement for operation of the Kingston Container Terminal port facility. The Urban Development Corporation manages many assets available for privatization. Other assets to be privatized include Norman Manley International Airport and Petroleum Company of Jamaica.

List of current privatization transactions can be found at http://www.dbankjm.com/privatisation/current-transactions .

Responsible Business Conduct (RBC) among many Jamaican companies remains a nascent concept. In 2013, the government provided additional financial incentives for corporations to support charity work through the Charities Act, under which corporations and individuals can claim a tax deduction on contributions made to registered charitable organizations. Quite a few large publicly listed companies and multinational corporations in Jamaica maintain their own foundations that carry out social and community projects to support youth employment, reduce crime and fight corruption.

OECD Guidelines for Multinational Enterprises

Jamaica is not an adhering government to the OECD Guidelines for Multinational Enterprises. However, the GOJ is in general agreement with such concepts.

Under the Corruption Prevention Act, public servants can be imprisoned for up to ten years and fined as much as USD 100,000 if found guilty of engaging in acts of bribery, including bribes to foreign public officials. The Major Organized Crime and Anticorruption Agency (MOCA) independently investigates official corruption and organized crime. The Corruption Prevention Commission (CPC) oversees statutory financial declarations of public sector workers and investigates alleged acts of corruption. The Integrity Commission investigates corruption allegations for members of Parliament, and the Office of the Contractor General (OCG) seeks to ensure transparency and efficiency in government procurement. A key area of concern for corruption is in government procurement, on which the OCG serves as a watchdog. However, successful prosecutions – particularly for high-level corruption – are rare, and the compliance rate for mandatory financial reports is around 52 percent.

The Jamaican Parliament is currently reviewing the Integrity Commission Act, which would establish an independent Commission with prosecutorial powers.

Many Jamaicans believe that corruption is one of the root causes of Jamaica’s high crime rate and economic stagnation. In 2016, Transparency International gave Jamaica a score of 39 out of a possible 100 on the Corruption Perception Index (CPI), falling 14 positions from 2015, but more or less in line with the score from 2012-2014. According to the CPI, 85 percent of respondents in Jamaica felt that political parties were corrupt/extremely corrupt. That figure was 74 percent for parliament and 86 percent for the police force. While U.S. firms operating in Jamaica express concern about corruption generally, the U.S. Government does no see evidence of disproportionate application of corruption measures against foreign investors.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Jamaica ratified major international corruption instruments, including the Inter-American Convention Against Corruption and the United Nations Convention Against Corruption. Jamaica is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Major Organised Crime and Anti-Corruption Agency (MOCA)
24hr Hotline: 1-800-CORRUPT (1-800-267-7878)
Email: info@moca.gov.jm

National Integrity Action
Phone: +1 876 906 4371/ Fax: 876-754-7951
Email: info@nationalintegrityaction.org
Website: http://niajamaica.org 

Crime poses a greater threat to foreign investments in Jamaica than political violence. Violent crime, rooted in poverty, unemployment, and drug trafficking, is a serious problem in Jamaica, particularly in urban areas. Sporadic gang violence and shootings are concentrated in specific inner city neighborhoods, but can occur elsewhere. Extortion is a serious problem in certain urban commercial areas, and although rare, has also been known to occur on large construction project sites. In 2014, four employees of China Harbor Engineering Company (CHEC) were killed while transporting a USD 20,000 payroll for workers. Tax increases in 2016 and 2017 affecting a number of industries, however, have not spurred any disturbances or violence.

Jamaica had an estimated labor force of 1.35 million as of October 2016 with 12.9 percent unemployment. Women make up less than half of the labor force and have an unemployment rate of 17.5 percent. The unemployment level for 14-24 year olds is 32.4 percent. Most Jamaicans are employed in services including retail and tourism sectors, followed by construction, transport and communications. Since 1999 more Jamaicans have become trained in information technology, and the business process outsourcing (BPO) industry currently employs about 22,000 people. No law requires hiring locals, but foreign investors are expected to hire locals, especially for unskilled and lower skilled jobs. The security guard industry adopted the practice of employing workers on extended contracts to avoid some of the cost, including severance, associated with direct employment. Jamaica does not have a history of waiving labor laws to retain or attract investment and these laws tend to be uniform across the economy.

There are no restrictions on employers adjusting employment to respond to market conditions, but there will be severance payment requirements if a position is made redundant. Under the law, there is a distinction between a layoff and a redundancy. A layoff allows a temporary period without employment for up to four months. In the latter, the Employment (Termination and Redundancy Payments) Act provides redundancy pay to employees who are let go with at least two years of continuous employment. Workers with up to ten years of employment are entitled to two weeks payment for every year worked, while workers with over ten years employment are entitled to three weeks payment except in cases such as firing for cause. There are no unemployment benefits in Jamaica, but low income Jamaicans have the option of applying for social benefits under a conditional cash transfer program referred to as PATH.

The law provides for the rights of workers to form or join unions and to bargain collectively, but it does not protect the right to strike. Trade union membership accounts for 20 percent of the labor force, although the movement weakened in recent years. The law prohibits antiunion discrimination, although it is not uncommon for private sector employers to lay off union workers and rehire them as contractors. Labor law entitles protections to all persons categorized as workers, although it denies contract workers coverage under certain statutory provisions, such as redundancy benefits.

Jamaica has an Industrial Disputes Tribunal (IDT) to which the Minister of Labor may refer disputes that cannot otherwise be settled, and arbitrators’ decisions are final. The law denies collective bargaining if no single union represents at least 40 percent of the workers in the unit. Little unionized labor exists in Jamaica’s free zones.

Jamaica ratified most International Labor Organization (ILO) Conventions and international labor rights are recognized within domestic law. The government is committed to enforcing its child labor laws, although a lack of resources remains a challenge. Work is ongoing with ILO support to collect data on incidents of child labor, the majority of which occur in the informal sector. The government is under-resourced for investigations on worker abuse as well as on occupational safety and health checks. Still, incidents of these labor-related issues are not considered to be at alarming levels.

Jamaica’s workplace policy incorporates all of the recommended practices of the ILO code of practice on HIV/AIDS, but the legislation to regulate enforcement is not yet ratified. In conjunction with the ILO and local stakeholders, the government passed legislation guiding flexible working arrangements. 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.

The Overseas Private Investment Corporation (OPIC) targeted infrastructure, telecommunications, construction, tourism, and energy as priority sectors to support in Jamaica. OPIC provides medium to long-term financing to ventures with significant U.S. participation with guarantees or loans between USD 100,000 and USD 250 million per project. OPIC political risk insurance can insure projects up to USD 40 million. Historically, OPIC financed many projects in Jamaica. OPIC recently provided financing and political risk insurance for two large clean energy projects. Jamaica is a member of the Multilateral Investment Guarantee Agency (MIGA).

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Table 3: Sources and Destination of FDI

Data is unavailable for Jamaica.

Table 4: Sources of Portfolio Investment

Data is unavailable for Jamaica.

Aamir Alavi
Economic/Commercial Officer
kingstoncommercial@state.gov
142 Old Hope Road
Kingston 6, Jamaica
+876-702-6000