April 13, 2024

Jamaica: The country with a vantage point for the North and the South Americas

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Dubai is hosting the current Expo 2020, which commenced on October 1, 2021, to March 31, 2022. Postponed from its original date of October 20, 2020, Dubai got the opportunity to host this event when the Bureau International des Expositions (BIE) general assembly in Paris named the city in 2013.

The 438-hectare area houses various country pavilions under the three themes – Sustainability, Mobility and Opportunity. Under the Mobility theme, we discovered the Jamaican pavilion that was nothing short of an explosion of colours in the midst of all the shipping containers. With cafes, music studios and art displays, the Jamaican pavilion has really grabbed attention of the visitors.

International Business Magazine had an exclusive interaction with Ainsley Brown, the Senior Director of Regulations, Policy, Monitoring and Enforcement (RPME) for the Jamaica Special Economic Zone Authority (JSEZA). He was pivotal in creating the Regulatory Framework for Jamaica’s Special Economic Zones. 

The following is an excerpt of the interaction –

Tell us everything to look out for at the Jamaica Pavilion in Expo 2020, Dubai. What is the overall theme and the concept of the pavilion?

The theme of the Jamaica Pavilion is: Jamaica Makes It Move. 

The Jamaica Pavilion set in the scene of a spontaneous street party in shipping containers. The Pavilion is divided into 7 zones:

Zone 1 – an introductory space that focuses on connectivity and the map of the country. 

Zone 2 – displays Jamaica’s history, highlighting important dates and events and the big global impact the small Caribbean island has had, exemplifying common Jamaica saying: ‘We Likkle But We Tallawah’ or we maybe small but we are big.

Zone 3 – puts the spotlight on our sporting prowess featuring athletics, cricket, swimming, football & netball.

Zone 4 – is the business zone that introduces the Island’s investment and trade opportunities. The zone reflects Jamaica’s ongoing transformation into a logistics and trade hub at the center of the Americas.

Zone 5 – is the music zone. Jamaica is the home of Bob Marley, reggae and five other original forms of music, the zone showcases pulsating rhythms of the island in a studio setting where visitors can sample the music of the vibrant island.

Zone 6 –   showcases Jamaican cuisine the heart of which is our Jerk and our world-famous Blue Mountain coffee. 

Zone 7 – The Tourism zone highlights the natural beauty of the country and highlights the fun one could have in the sun, sand, sea and surf.

Give us a brief picture of the current economic situation of Jamaica. (GDP, exports, imports, forex reserves, per capita income, largest revenue generator, recent disruptions)

The following are the economic indicators of 

  • GDP USD $13.81 billion (2020)
  • The GDP per captia USD $4,528.92 (2020).
  • The economy of Jamaica surged 14.2 % over a year in the second quarter of 2021, following five consecutive quarters of contraction.
  • The Jamaican economy is heavily dependent on services, which accounts for more than 70% of GDP
  • Jamaica’s main industries are: agriculture, mining, manufacturing, construction, financial and insurance services, tourism, telecommunications.
  • The economy is now recovering for example tourism has rebounded to near 70% of pre-pandemic levels.
  • Tourism accounts for 31.1% of GDP and 32.8% of employment.
  • Tourism revenues make up 56.7% of total exports
  • The agricultural sector is 6.6% of GDP
  • The mining sector is 4.1% of GDP
  • Jamaica’s main trading partner is the United States (52 percent of total trade). Others include Trinidad & Tobago, Canada, China, the United Kingdom, Brazil and Japan.
  • Jamaica is a major exporter of bauxite used for aluminium production. Other exports include ethanol, cane sugar, alcoholic beverages, coffee, scrap metal, cyclic compounds and manioc. Jamaica’s main exports partner is the United States (42 percent of total exports). Other exports partners include Canada, the United Kingdom, the Netherlands, France, Russia, Germany, Iceland and Norway.
  • Jamaica mainly imports oil, ethanol, wheat, lye, electronic appliances, vehicles, metals and rice. Jamaica’s main imports partner is the United States (42 percent of total imports). Other imports partners include Venezuela, Trinidad & Tobago, China, Brazil, Japan, Canada, the United Kingdom and Mexico.

We would like to know about the business culture in Jamaica – the major trading commodities, services provided and some of the investor-friendly initiatives from the government. 

Jamaica’s business culture is based on respect and polite formalities. A suit, jacket and tie should be worn to meetings. Punctuality is valued and appointments and business cards are expected. A Jamaican meeting may be formal, but they typically have a friendly tone and usually start out with small talk. 

The government has a number of investor-friendly initiatives, notably the Special Economic Zone Regime. Under this regime, the Jamaica Special Economic Zone Authority (JSEZA) is the Agency of the Government of Jamaica responsible for facilitating the development, promoting and regulation of investments in Special Economic Zones (SEZs) in Jamaica. The JSEZA was established in 2016 under the Special Economic Zones Act.

What are the favorable initiatives taken by the Jamaican government for the startups in the country?

The Government of Jamaica established Jamaica’s first-ever Micro, Small, Medium Enterprises (MSME) policy in 2013. The Policy has subsequently been revised in 2018 that set out a framework for creating a more enabling business environment, increasing access to financing, enhancing business development support, innovation, and more. The lead implementing agency for the policy is the Jamaica Business Development Corporation with support from the MSME Unit in the Ministry of Industry, Investment and Commerce (MIIC). Under the policy, several multi-sectoral public-private working groups have been established to implement the MSME Policy. One such group is the Business Enabling Environment Working Group (BEEWG) which was formed to facilitate MSME development as well as linkages through various government agencies. 

It is estimated that the Government of Jamaica spends 30% of GDP on procuring goods and services annually. According to STATIN, Jamaica’s GDP in 2018 stood at J$1,817,994,000,000  – about J$ 1.8 trillion – making public procurement at 30%, a sizable J$545,398,200,000.

The government in 2019 undertook two reforms aimed at giving greater access to Jamaican businesses to this pot of money. The two measures, the first, a 20% set aside for MSMEs and the second, a Domestic Margin of Preference are set to add much-needed opportunities to Jamaican businesses.

The 20% ‘MSME Set Aside’ is as suggested, a set aside of 20% of Government procurement for MSMEs. For MSMEs that is just over a billion-dollar (J$1,090,784,000) market exclusively for them.

The Domestic Margin of Preference gives a national bidder, who is participating in any international bidding, an opportunity to earn a government contract even if its bid price exceeds the bid price of a foreign bidder by up to 20%. The national bidder, however, must demonstrate that it will include at least 35% domestic content.

Additionally, the SEZ regime also has special provisions for MSME investors which lowers the investment requirements for up to 4 years for ease of entry. Moreover, the JSEZA works with other agencies like the JBDC to offer business development support to these SEZ MSME Occupants.

Similarly, what are the initiatives taken by the government for attracting foreign investments in Jamaica?

“Logistics services has become critical for competitiveness. Better logistics performance is strongly associated with trade expansion, export diversification, ability to attract foreign direct investment and economic growth.” – World Bank

The SEZ regime is one of the chief but not exclusive policy instruments of the Government of Jamaica for the implementation of the Logistics Hub Initiative.

A nation’s development and prosperity are increasingly joined to its connectedness to the rest of the world. In today’s world of globalization, it is not sufficient to simply have market access, the ability to turn that access into market presence is a necessity. Logistics is a critical link between market access and market presence. Logistics is the connector, ‘the glue;’ it is the service that runs through the entire manufacturing value chain that allows the whole global production system to function. The Government of Jamaica (GOJ) has embarked on a strategic initiative to transform the Jamaican economy into a logistics centred one and with it establish Jamaica as a Global Logistics Hub. The Jamaica Global Logistics Hub Initiative is a development model and growth strategy designed to re-position Jamaica as a platform to attract a variety of business along the global manufacturing and service delivery supply and value chain. The ultimate goal of the Initiative is to further integrate Jamaica into the global supply and value chains. What the logistics hub is intended to do is deepen and expand this participation. 

Jamaica has many positive elements which make us suitable for a hub:

  • The third-largest English-speaking country in the Americas, English being the language of international trade.
  • Just the right size to accommodate simultaneously the activities important to maritime, aviation, information communication technology and manufacturing interests.
  • The island sits between two large land masses (North/ South America) which represent an 800 million to a billion-person market.
  • Blessed with being located close to two strategic waterways in the form of the Panama Canal and the Windward Passage, which sits between Jamaica, Haiti and Cuba and is the preferred route in/ out of the region.
  •  A readily trainable workforce, naturally deep water harbours and existing port, airport and digital infrastructure while at the same time having great developmental potential.

What Jamaica represents is a centralized location in the Americas where logistics and related activities can all be clustered on one island. Jamaica will become a platform for the use of digital technology to plan the design, production, packaging and distribution of goods; financial services; a strategic depot for the storage of natural resources, ship and airplane repair, legal services, tourism and so on. Many of these activities will take place in Special Economic Zones (SEZs). 

Jamaica’s SEZs are a developmental tool used to enhance the efficiency, competitiveness and productivity in trade, manufacturing and service delivery, namely logistics.  These SEZs will be critical for us to deepen our participation in global value and supply chains and put our people to work.

In carrying out its functions as an economic development agency, JSEZA has decided to focus its attention on eight industries that it believes can make a real socio-economic impact on Jamaica in the short to medium term. It is important to note that while these industries are JSEZA’s priority, it is not to the exclusion of any other industry that is not on the negative list.

These industries are: 

1. Automotive

2. Pharmaceutical, Biotechnology and Beauty Care

3. Creative Industries and New Digital Media

4. Global Services Sector

5. Logistics and Supply Chain Management

6. Food Manufacturing and Agrotechnology

7. Electronics

8. Digital/ICT

Give us a brief about the investment process at JSEZA and the support received from the government over the years in the establishment of JSEZA.

In carrying out its duties, Jamaica’s Special Economic Zone Authority, Jamaica’s SEZ regulator, must at all times, while it seeks to grow the Jamaican economy, be mindful of the possibility for the erosion of the local tax base. The Authority should be especially mindful of attempts of existing businesses already established in the local economy trying to re-establish their business in whole or part in the SEZ.

It is in part of this basis that the Authority will determine whether an applicant has the legal and financial capacity to undertake a SEZ development or SEZ commercial activity. For a developer, the company charged with the responsibility of developing and managing a SEZ, at minimum that means having USD $1.5 million in issued and paid-up share capital and investing in the build-out of a space large enough to accommodate at least three occupants. On the other hand, for the occupant, the company that carries out commercial activity in an SEZ, it must have USD $50,000 in issued and paid-up share capital and invest USD $25,000 in SEZ-related machines, equipment, facilities, and more. 

After successfully becoming a part of the regime, there are a plethora of non-fiscal benefits which can be garnered even from the initial stage of application. There is the Consultation that may be received in order to apply, there is the business acceleration centre (one stop shop) which allows a SEZ to be able to get important documents such as permits with the assistance of the Authority which aids in a smooth business process. Aftercare of its clients is a very important activity for the JSEZA.

Benefits from JSEZA and an advisory message for enterprises looking to apply for the SEZ status. 

SEZ fiscal incentives summary

Benefits from investing in the Jamaica SEZ Regime come in many forms. Firstly, there are benefits of being in Jamaica itself, which is a centralized location in the middle of the 800 million to a billion person market in the Americas. Secondly, there are also the fiscal benefits that a company will receive while being a part of the regime. Just to list a few, Corporate Income Tax Headline Rate of 12.5% (possible effective rate of 7.5% with the approval of additional credits) with developers paying no taxes on rental income, Customs Duty Relief, GCT Relief – on all goods and services entering the zone, Promotional Tax Credit (R&D & Training). When our geographic advantages, and SEZ fiscal and non-fiscal incentives are combined with our trained workforce, infrastructure, and our stable government, Jamaica is a very attractive location to invest. 

Advice to enterprises looking to apply for the SEZ status. Visit our website, you will be able to read more about what we have to offer, get information on our priority industries, frequently asked questions, and how to apply for status. Also, if there is anything that is unclear, they can reach out to the Authority for an initial meeting and consultation.

What are the upcoming business opportunities to look out for at Jamaica?

There are many upcoming business opportunities to look out for. The JSEZA has a few investment project concepts, such as: 

  • Xanadu – this will be centred around the creative industries which is geared towards boosting innovation through creativity. 
  • Olympus – this is the major SEZ development that will be focusing on sports, leisure and healthcare management combined with sports and wellness-related apparel and wearables production, warehouse, and distribution.
  • Caymanas – this will have a major focus on logistics and manufacturing. It is very close to the port of Kingston which is the number one transshipment port in the region.
  • PANDORA – Pharmaceutical and Nutraceutical Development, Operation Research Area. PANDORA will be a phytopharmaceutical cluster focusing on herbal medicine to capitalize on their active ingredients. Jamaica has a vast amount of medicinal plants and minerals that have not been explored to capitalize its full potentials. Jamaica is home to over 300 medicinal herbs that have been identified and there is the possibility of other herbs not yet identified and PANDORA is designed to capitalize on this. 

Article by Ujal Nair

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