2018 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 is currently in the process of developing a National Investment Policy to guide future foreign direct investment (FDI) friendly reforms. The GOJ has already made significant structural reforms to its economy over the past six years under International Monetary Fund (IMF) guidance, improving the investment environment. 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 GOJ 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 2018” report, Jamaica ranked 70 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 5 in starting a business and 20 in getting credit. Jamaica is ranked 70 out of 140 countries in the 2017/18 Global Competitiveness Index. 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 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 new IBC legislation is also 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. An update to the Companies Act in June 2017 now requires companies to disclose beneficial owners to the Companies Office of Jamaica. The law mandates that the company retains records of legal and beneficial owners for seven years.

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 recently concluded a third party trade policy review through the WTO in September 2017. The WTO Secretariat’s recommendations are listed at the following link: https://www.wto.org/english/tratop_e/tpr_e/tp459_e.htm .

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 Government of Jamaica’s previous WTO review took place in January 2011, and an OECD review took place in 2004.

Business Facilitation

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 is a member of the Caribbean Community (CARICOM) and benefits from preferential trading arrangements under the CARICOM Single Market and Economy (CSME). CARICOM countries also have preferential trading arrangements with the European Union, Canada, the United States, Colombia, the Dominican Republic, and Venezuela. Jamaica has not signed a free trade agreement with the United States, but in 2013 the United States and CARICOM signed a Trade and Investment Framework Agreement (TIFA).

Jamaica signed a bilateral Income Tax Treaty with the United States in 1980, 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. 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 regulatory systems are transparent and consistent with international norms. Proposed legislation is available for public review at japarliament.gov.jm , and submissions are generally invited from members of the public through public meetings or targeted outreach to stakeholders for when there is a distinct policy shift or for sensitive changes. There is no law that requires the rulemaking body to solicit comments on proposed regulation and no timeframe for the length of a consultation period when it happens. Furthermore, the law does not require reporting on public consultations, but the government presents the consultations directly to interested stakeholders in one unified report. Laws in effect are available at japarliament.gov.jm  or moj.gov.jm . Companies interested in doing business in a particular sector should seek guidance from the relevant regulator(s).

International Regulatory Considerations

The Jamaican government tends to adopt commonwealth standards for its regulatory system, especially from Canada and the United Kingdom. In 2001 CARICOM member states established the Regional Organization for Standards and Quality (CROSQ) under Article 67 of the Revised Treaty of Chaguaramas. CROSQ is intended to harmonize regional standards to facilitate the smooth movement of goods in the common market. Jamaica is also 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), in its original jurisdiction, is the court of the 15-member Caribbean Community (CARICOM), but Jamaica has not signed on to its appellate jurisdiction.

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.

Jamaica ranked 127 in the 2018 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. Since foreign companies are treated similar to Jamaican companies when investing, the relevant sections of the applicable laws are applied equally.

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 proscribes the following anti-competitive practices: resale price maintenance; tied selling; price fixing; collusion and cartels; and bid rigging. The act does not specifically prohibit mergers or acquisitions that could lead to the creation of a monopoly. The FTC is empowered to investigate breaches of the Act and businesses or individuals in breach can be taken to court if they fail to implement the corrective measures outlined by the FTC.

Expropriation and Compensation

Expropriation is generally not an issue in Jamaica, although land may be expropriated 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 current expropriation-related litigation 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. The country 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, Jamaican government, and private parties. Local courts recognize and enforce foreign arbitral awards. The Caribbean Court of Justice (CCJ) serves as the region’s international tribunal for disputes within the Caribbean Community (CARICOM) Single Market and Economy. The Dispute Resolution Foundation and the Caribbean Branch of the Chartered Institute of Arbitrators both facilitate arbitration and rules of the Bilateral Investment Treaty (BIT) with Jamaica apply to 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 State-Owned Enterprises (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 if 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 ranked 35 on Resolving Insolvency in the 2018 World Bank’s Doing Business Report. Bankruptcy proceedings take about a year to resolve; costing 18 percent of the estate value; with an average recovery rate of 65 percent.

The text of the Bankruptcy and Insolvency Act can be found at:

The Insolvency Act 2014 No.14 rotated .

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, special economic 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 General Consumption Tax (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:

• 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;
• 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;
• Revised Customs Tariff: Provides for the duty free importation of capital equipment and raw material for the productive sectors;
• Revised Stamp Duty Act: Provides exemption from additional stamp duty on raw materials and non-consumer goods for the manufacturing sector.

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 duties, Value Added Tax (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.

Jamaica’s 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 Exchange.

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 during the first five years.

Special Economic Zone Act: In 2015, Jamaica passed legislation establishing 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.

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 had approximately 200 companies in 190 free zone locations involved in business process outsourcing (BPO); warehousing and distribution; manufacturing; logistics; and merchandising. However, following the passage of a new Special Economic Zone Act in 2015, existing free zone entities had until December 31, 2019 to transition to the new regime. The Government of Jamaica (GOJ) transitioned from free zone operations to special economic zones (SEZs) to comply with World Trade Organization (WTO) rules for middle-income countries under the WTO Agreement on Export Subsidies and Countervailing Measures. The Jamaica Special Economic Zone Authority (www.jseza.com ) regulates, supervises, and promotes the Special Economic Zone (SEZ).

SEZ operators benefit from a 12.5 percent corporate income tax rate (effective rate may be as low as 7.5 percent with the approval of additional tax credits); customs duty relief, General Consumption Tax (GCT) relief; employment tax credit; promotional tax credit on research and development; capital allowance; and a stamp duty payable of 50 percent. Developers receive these benefits plus relief from income tax on rental income and relief from transfer tax. There is a non-refundable one time registration fee and renewable annual fee to enter the regime.

Duty-free zones are primarily found in airports, hotels, and tourist centers and, as with special economic zone activities, do not discriminate on the basis of nationality. 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.

Performance and Data Localization Requirements

No performance requirements are generally imposed as a condition for investing in Jamaica, and government of Jamaica (GOJ) imposed conditions are not overly burdensome. The GOJ 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 GOJ requires a description of efforts to recruit locally. The U.S. government has heard of delays in obtaining work permits for foreign workers as the GOJ does not readily have data available to determine if the requisite skills exist in Jamaica.

The GOJ does not follow “forced localization,” requiring domestic content in goods or technology. There are no requirements to provide the GOJ 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.

Squatting is also a major challenge in Jamaica, with nearly 20 percent of the population living 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 or she 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 World Bank Doing Business Report ranking for ease of “registering property” was 128 in 2018 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 intellectual property (IP) protection regimes in Latin America and the Caribbean, according to the International Property Rights Index, 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 Bilateral Investment Treaty, which provide assurances to protect intellectual property. It is relatively easy to register IP, and the Jamaica Intellectual Property Office (JIPO) provides 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 satisfy the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), although the patent and design law is not TRIPS compliant. A new Patent & Designs Bill, including new rules and fee structures, has been in drafting for a number of years, but not yet passed in Parliament. However, JIPO instituted administrative procedures to register U.S. patents for a nominal fee. 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 in encrypted transmissions or in broadcasting or cable program services a right of action against persons who infringe upon their rights.

Jamaica, along with some 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 broadcasting of copyrighted television programming.

Enforcement

The Jamaica Constabulary Force (JCF) and Jamaica Customs Agency (JCA) reported seizures of over USD 3 million of counterfeit goods between April 2017 and March 2018. The most commonly counterfeited goods include 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 and actual brands, and provide an authorization to seize the merchandise. The JCF established a specialized intellectual property unit 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 of Customs 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. Jamaica has had its own stock exchange, Jamaica Stock Exchange (JSE), since 1969. The JSE was one of the top ten performing capital market indices in 2017. 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 2017 (latest data available), 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 28 at the end of 2017. At the end of2017, commercial banks held assets of almost USD 11 billion. Non-performing loans were USD 121 million, or 1.1 percent of total assets. 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. The regulatory framework is now in line with international standards and legislation, and legislative amendments between 2014 and 2017 have enhanced the Bank of Jamaica’s (BOJ) regulatory powers.

Foreign Exchange and Remittances

Foreign Exchange Policies

There are no restrictions on holding funds or on converting, transferring, or repatriating funds associated with an investment. In 2017, the central bank, Bank of Jamaica (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 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 (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 almost 190 public bodies, 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 and are 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 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 International Monetary Fund (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 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 notoriously slow, is respected for being fair and balanced and in many cases has ruled against the GOJ and its agents.

Privatization Program

As a condition of Jamaica’s Stand-By Agreement with the IMF, the Government of Jamaica (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, and 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. Some of the relatively recent large privatizations that took place were 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 Norman Manley International Airport in Kingston. The GOJ also seeks to divest stagnant assets owned by large government entities such as the Urban Development Corporation and Factories Corporation of Jamaica.

List of current privatization transactions can be found at http://dbankjm.com/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. Some large publicly listed companies and multinational corporations in Jamaica maintain their own foundations that carry out social and community projects to support education, youth employment, and entrepreneurship.

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.

The law provides criminal penalties for corruption by officials, but there have been gaps between reports of corruption and action taken by the GOJ, and officials reportedly engaged in corrupt practices with impunity. The Ministry of Justice and the Attorney General’s Chambers have overall responsibility to combat official corruption.

Because of the GOJ’s shortfall in efforts to prosecute officials’ alleged corrupt practices, corruption remained a significant systemic problem of public concern. Media and civil society organizations continued to criticize the director of public prosecutions for being slow and at times reluctant to prosecute corruption cases. The Major Organized Crime and Anti-Corruption Agency (MOCA), which is part of the Jamaica Constabulary Force (JCF), conducted raids on and uncovered corruption in several parish councils.

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 MOCA independently investigates official corruption and organized crime.

In 2017 Jamaica passed an Integrity Commission Act to consolidate three agencies with anti-corruption mandates into a single entity that now has limited prosecutorial powers. The three agencies include the Integrity Commission, which oversees statutory declarations from parliamentarians; the Office of the Contractor General (OCG), which reviews government contracts; and the Commission for the Prevention of Corruption, which oversees the financial filings of specified public servants. 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 public entity financial reports is around 50 percent.

Many Jamaicans believe that corruption is one of the root causes of Jamaica’s high crime rate and economic stagnation. In 2017, Transparency International gave Jamaica a score of 44 out of a possible 100 on the Corruption Perception Index (CPI), improving slightly from the average score of 39 from 2012-2016. While U.S. firms operating in Jamaica express concern about corruption generally, they have not raised specific instances 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

Crime poses a greater threat to foreign investment in Jamaica than political violence, as the country has not experienced political violence since the early 1980s. Violent crime, rooted in poverty, unemployment, and transnational criminal organizations, is a serious problem in Jamaica. Sporadic gang violence and shootings are concentrated in specific inner city neighborhoods, but can occur elsewhere. Jamaica had the third highest homicide rate in Latin America and the Caribbean in 2017, with 55.7 homicides per 100,000, according to InSight Crime. Extortion is a serious problem in certain urban commercial areas, and has also been known to occur on large construction project sites. The security challenges increase the cost of doing business as companies spend on additional security measures.

Jamaica had an estimated labor force of 1.3 million as of January 2018 with 9.6 percent unemployment. Women make up 41 percent of the labor force and have an unemployment rate of 12.1 percent. Unemployment is highest within the 14-24 age cohort. Most Jamaicans are employed in services including the 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 26,000 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. 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 the Program for Advancement though Health and Education (PATH).

The law provides for the rights of workers to form or join unions, to bargain collectively, and the freedom to strike. Trade union membership accounts for about 20 percent of the labor force, although the movement weakened in recent years. The law prohibits anti-union 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. Jamaica has ratified all key international conventions concerning child labor and established laws and regulations related to child labor, including in its worst forms. However, gaps still exist in Jamaica’s legal framework to adequately protect children from child labor. The Government of Jamaica (GOJ) is under-resourced for investigations on worker abuse as well as on occupational safety and health checks.

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 GOJ 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 and Social Security. 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 U.S. government’s Overseas Private Investment Corporation (OPIC) targeted infrastructure, telecommunications, construction, tourism, and energy as priority sectors in Jamaica. OPIC has financed many projects in Jamaica and recently provided financing and political risk insurance for two large clean energy projects. Jamaica is a member of the Multilateral Investment Guarantee Agency (MIGA).

*Host Country Statistical Source is the Statistical Institute of Jamaica (statinja.gov.jm ) and World Investment Report.
**”0″ reflects non-zero amounts that are +/- USD 500,000.
Table 3: Sources and Destination of FDI

Data not available.

Table 4: Sources of Portfolio Investment

Data not available.

Aamir Alavi
Economic/Commercial Officer
kingstoncommercial@state.gov
142 Old Hope Road
Kingston 6, Jamaica
+1 876-702-6000