Today, Jamaica is beginning to reap the success of its modernisation and rebuilding programmes. These successes have given the country a strong competitive advantage in its quest to attract investors. Some of the successes are seen in the fact that Jamaica is presently:

• Maintaining a stable and competitive exchange rate
• Developing strong foreign currency reserves. In 2000 the level of Net International Reserves (NIR) balances at the central bank was in excess of fifteen (15) weeks of imports
• Progressing towards a competitive level of interest rates as real interest rates are now positive and converging with international benchmarks
• Reforming and strengthening the financial sector with fewer but stronger banks, which possess higher reporting standards
• Sustaining a declining trend in average interest rates from 30% in 1993 to 9.86% in November 2000
• Liberalizing the international trade regime, while strengthening the consumer protection structures
• Reforming the public sector to achieve higher efficiency in the delivery of service, generate and sustain fiscal surplus, and reduce the level of bureaucracy involved in government's role to facilitate economic activity
• Gaining a vote of confidence on its macro economic program by the international capital market through support of Government of Jamaica's bond issues. The Government has raised over US$550 million on the international market since 1998.
• Further integrating its financial system with the world economy while providing investors with a credible basis for risk assessment. The financial rating institution, Standard and Poor, gave Jamaica a B+ for its long term sovereign currency rating and a B for its long term foreign currency credit rating in February 2001.
• Reassuring the equities and money markets, as well as the management teams of various investment projects through benefits to be acquired from the establishment of the Securities Commission in 1995. This Commission has set reporting and transactions standards, while monitoring practices within the securities industry.
• Putting in place programmes geared towards the development of institutional capability and transparency within the Jamaica Stock Exchange, making it even safer for local and foreign investors. Among the developments was the installation of the Central Securities Depository (CSD), which facilitates the settlement of transactions within a shorter time period. Interest from overseas in the stock market has been significant, with reports of US$15 to US$20 million, or 21% to 27% of the business done in 1997 originating from overseas investors.
• Implementing a deposit insurance scheme, which has been in force since August, 1998 to protect deposits of up to JA$200,000 in accounts held at institutions set up under the Banking Act, the Financial Institutions Act and the Building Societies Act. The scheme operated by the Jamaica Deposit Insurance Corporation (JDIC) provides coverage that will include over 90% of depositors.
• Reforming the central bank in an effort to separate the economic management functions of the central bank from the political influence of the Ministry of Finance and Planning. The Government of Jamaica is committed to introducing partial autonomy to the Bank of Jamaica in implementing programs to achieve price stability and also to protect the value of the local currency.

Jamaica has been relatively successful in attracting foreign direct investment (FDI) over the years. Jamaica's improved FDI performance can be attributed to the facilitation efforts of the relevant arms of government. The government has promoted the growth of FDI through three main avenues:

The government's policy towards foreign investors has changed to one of extreme tolerance, according them national treatment. Over the past two decades a number of foreign investment restrictions that were in place, such as the Foreign Exchange Control Act, have been phased out as government adopted transparent and non-discriminatory policies towards FDI. This has allowed investors today to be able to:

• Freely move capital in and out of the country
• Invest in sectors formerly known as 'prohibited sectors'
• Freely conduct foreign exchange transactions
• Freely import technology and other capital inputs
• Raise loans on the domestic markets
• Protect their property rights under the Jamaican constitution as well as a number of bilateral treaties
• Access incentives pertaining to tax holidays, duty exemptions and other benefits depending in the industry and its export potential

Government has adopted a policy towards privatisation of state-owned enterprises. Beginning in the early 1990s, the government has been on a path of divestment of its industries in sectors such as telecommunications, tourism, insurance, banking, manufacturing, minerals, transport, energy, media and so on.

The government has been aggressively promoting and encouraging the use of export-processing zones (EPZs, or freezones) in various industries. There are three (3) export free zones in operation:

• Kingston Free Zone - for break bulk and container cargo;
• Garmex Free Zone - for apparel, electronic and pharmaceutical companies
• Montego Bay Free Zone - which houses Jamaica Digiport International, offering investors sophisticated imaging, voice, facsimile and data transmission services.

Jamaica is currently encouraging the use of these 'freezones' in the promotion of Jamaica's information technology sector whether as an informatics park or as call centres.

There are additionally some features of the Jamaican economy that are particularly conducive to investments and investors. Some of these include the fact that Jamaica has been on a consistent path geared towards:

• Liberalising the trade regime, which will also act as a plus for investors. Opportunities exist for exporters and importers to benefit from the facilitatory approach being taken towards trade with minimal tariff or non-tariff barriers. Exporters in particular benefit from protection against trade discrimination and entitlements from Jamaica's Most Favoured Nation status gained from Jamaica's membership in WTO, as well as many other access privileges from subscription to Generalised System of Preferences and other bilateral trade agreements.
• Favourable income tax treatment for foreign investors operating in Jamaica, through the Double Taxation Treaties that Jamaica has with twenty two (22) countries. These treaties generally have provisions, which allow the tax burden on the foreign national to be no greater than in their home country.
• Reassurance of the investor with respect to dispute resolution mechanisms that exist in Jamaica. Jamaica is signatory to the Convention on the Settlements of Investment Disputes between States and Nationals of Other States that is administered by the World Bank. Furthermore, the reliable system of law in the country is based on English jurisprudence.
• The promotion of the quality of the labour force to be gained by investors in Jamaica. In 2000, a UNESCO report ranked Jamaica primary education system as number one in functional literacy in a survey that had included 89 developing countries. The Jamaican labour force is available in large quantities at very competitive wage rates.
  

SOURCE: JAMPRO

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Investment is protected under common law and by legislation related to investment schemes. The fair trading Act of 1993 is aimed at ensuring competition and the observance of fair business practices. In general, provisions contained in different multilateral and bilateral agreements signed by Jamaica regulate foreign investment.

The principle of non-discrimination among investors (local and foreign) is generally applied; specific regulations contained in Bilateral Investment Treaties (BITs) may, however, provide for exceptions. The Jamaica Promotions Corporation (JAMPRO) is in charge of handling foreign investment. Since the exchange control act was abolished in 1992, there are no specific restrictions regarding foreign exchange, or the importation of capital goods or technology.

There are no restrictions for the obtention of loans from the domestic financial system, in local or foreign currency, by foreign investors. However, investment projects that are engaged in exports may enjoy tax and import duty concessions under the Export Incentives Encouragement act. JAMPRO does not apply any screening process for foreign investors.
Following the repeal of the Exchange Controls Act in 1992, investment restrictions were abandoned. Foreign companies may invest via the following means:

• through the establishment of a branch office;
• incorporating a local subsidiary;
• establishing a joint venture or a partnership;
• ·acquisition of a local company.
  

The most common practice is incorporation, which is ruled by the Jamaica companies act. Companies are required to be incorporated with a share capital. A minimum of two shareholders is required for private companies; for public companies the minimum is seven . Companies to be listed on the Jamaica Stock Exchange (JSE) must have at least 100 shareholders. A stamp duty of 1% of the value of the authorised share capital is levied.

Branches of companies incorporated abroad may be opened in accordance with the companies' act; they must register with the registrar of companies within a month of their establishment in Jamaica. The acquisition of shares of existing Jamaican companies is freely allowed to foreign investors, who pay a transfer tax and stamp duty in the same fashion as domestic investors. The transfer of shares of companies listed on the JSE is exempt from transfer tax and stamp duty. There is no law governing joint ventures and as such these are subject to ad hoc arrangements.

The right of property is upheld by the constitution, subject to some limitations . Expropriation of land may take place under the land acquisition act, which provides for compensation on the basis of market value . Expropriation may take place before compensation is paid, but in that case interest for the period between the expropriation and the compensation settlement must be paid. Jamaica has signed bilateral agreements for the reciprocal promotion and protection of investments with:

• Argentina
• China
• France
• Germany
• Italy
• The Netherlands
• Switzerland
• the United Kingdom and
• the United states
  

Foreign investment profits receive normal national treatment and (except in the free zones) are subject to a 25% tax rate for individuals and 331/3 % for companies under the Income Tax act. Dividends are subject to the applicable rate of 25% of 33 1/3 % withholding tax. Tax breaks for reinvestment exist in relation to the bonus issue of shares. Companies are granted a tax credit equivalent to 25% of the nominal value of the shares issued.

Investment in equipment is also generally subject to taxation unless exemption is obtained under the Income tax act or other legislation granting incentives. There is no capital gains tax; there is however, a 7.5% tax on transfers of land, shares, stock and debentures. Stamp duty must be paid on transfers of shares and land, the rates are between 1% and 5 1/2 %.
Jamaica has signed and ratified double taxation agreements (DTAs) with:

• Canada;
• CARICOM;
• China;
• Denmark;
• Germany;
• Norway;
• Sweden;
• Switzerland;
• the UK; and
• the US

Source: JAMPRO

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• Jamaica Promotion Corporation (JAMPRO)
• Bank of Jamaica
• Urban Development Corporation
• Office of the Contractor General
• Ministry of Finance and Planning
• Ministry of Industry, Commerce, and Technology
• Ministry of Labour
• Financial Sector Adjustment Company, Ltd. (FINSAC)
• Registrar of Companies
• Statistical Institute of Jamaica (STATIN)
• Planning Institute of Jamaica
• Jamaica Bureau of Standards
• Jamaican Stock Exchange
• Jamaica Exporters Association

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