The Caribbean island of Jamaica is well known for many reasons. Over a million tourists travel there each year to get their fix of unlimited sunshine on acres of white sandy beaches. The fourteenth century site of Columbus’s landing, Discovery Bay, reveals the island’s great history, which is also a cultural icon through the music of the late, great Bob Marley and Jimmy Cliff, while lightning fast athlete Usain Bolt is widely predicted to win the sprinting medals in London 2012.
Less known, is the fact that the island is becoming a destination for trade and investment. Beyond the image of a tropical paradise, Jamaica is fast becoming a serious business destination in the region. As the largest English speaking island in the Caribbean with a relatively cheap but educated work force, Jamaica ticks all the boxes for the customer service end of business, such as call centres and logistics and is now starting to show strength in financial services.
Its geographical position makes the island an obvious hub between the US, Central and South America. Its close proximity to the Panama Canal (the Panama Canal extension is expected to be operational by 2014) favours the expansion of Jamaica’s three ports that will take advantage of the increasing volume of shipping predicted in the region.
The government has been quick to step in and solve the debt issues that blight many modern governments and have avoided any need for the kind of austerity measures seen across the world. Through the Jamaica Debt Exchange programme, over US$14.2 billion of debt has been restructured, lowering interest rates and extending maturity terms, generating savings of about 3 per cent of GDP and a 70 per cent reduction in debt maturing in the medium term. As a result, Jamaica’s debt has been upgraded to B- by Standard and Poor and Fitch Ratings. Nick Darrant from BNP’s Eurobond desk stated at the fourth annual Jamaica-UK Investment Forum, held at Drapers’ Hall in the City, that Jamaica’s perfect record of paying back debt meant that there is consistently great demand for its Eurobond issues. ‘Although there are African countries that have huge commodity reserves to back up any debt, we see more demand for Jamaica’s Eurobond issues because they have never defaulted and the government promises to keep this a priority. The last [Eurobond] issue was 140 per cent oversubscribed.’
This reveals a government who sees strength in the equity markets and so have been quick to instigate agreements between the Jamaica, Barbados and Trinidad Stock Exchanges, resulting in a technology driven platform that means a listing on any one exchange gives the company a listing in all three. The idea is to create regional strength, and a global exchange attracting investors from all over the world, and also has the same levels of compliance demanded in any global stock exchange.
Also speaking at the Jamaica-UK Investment Forum was Jamaica’s Industry, Investment and Commerce Minister Hon Anthony Hylton who underlined the strength in regional relationships as a key driver of the island’s prosperity. Minister Hylton stated: ‘My plan is to help create an economically vibrant Jamaica with a sustainable rate of growth of around 6 per cent that will improve the standard of living of the population.’ But he also stated that Jamaica understands the importance of relationships further afield and is embarking on a global marketing plan to attract investors from all over the world.
The Minister also highlighted the importance of turning Jamaica into a logistical hub. Projects such as the expansion of the Kingston Port Container Terminal require substantial investment but offer backers a key role in shipping in the region. While the government is happy for overseas companies to have whole ownership of projects, there will inevitably be some projects that are a public-private (government and company) partnership. The ports in particular will have security considerations that the government should have a hand in. Aside from shipping, the Minister spoke of many projects that offer exciting prospects for investors such as the proposed extension of the Sangster International Airport, another airport at Vernamfield and Information and Communication Technology (ICT) projects at Barnett Tech Park, Naggo Head Tech Park and the Caymanas Economic Zone.
Minister Hylton also outlined incentives for companies in manufacturing, such as the government’s Export Industry Encouragement Act which offers qualified firms 10 years of income tax relief, plus exemptions on duty for imported machinery and raw materials. Companies operating in one of Jamaica’s designated Free Zones or in a Single Entity Free Zone will also get a range of benefits including duty waivers and tax breaks. Jamaica’s government has also recognised that the current tax system needs reform. (A corporate tax rate of 33.3 per cent is undermining its ability to attract more business investors, and taxes on property transfers could potentially scare off entrepreneurs.)
Jamaica’s government is paving the way to improving ‘doing business’ on the island to create a competitive global investment environment. On-going efforts are improving the banking sector’s regulatory framework which avoided the systemic risks faced by the banks during the financial crisis. Launched in 2008, ‘Vision 2030’ is the Jamaican government’s strategy to transform the economy to one that can sustain its own development and is not completely reliant on tourism and basic agricultural commodities. With the focus on developing human skills and creating world class facilities for companies, this is an island-state being compared to Malta, Bahrain and Mauritius, and one that is well-placed on the path to growth.