This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 15 KINGSTON 000090 
 
SIPDIS 
 
STATE FOR WHA/CAR/ (WBENT), WHA/EPSC (JSLATTERY) AND 
EB/IFD/OIA 
 
EXIMBANK - JCARRIGER 
 
TREASURY FOR L LAMONICA 
 
SANTO DOMINGO FOR FCS AND FAS 
 
SAN JOSE FOR ENVIRONMENTAL HUB - DALARID 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD EIND ELAB KTDB PGOV JM OPIC USTR
SUBJECT:  INVESTMENT CLIMATE SURVEY - JAMAICA 2006 
 
Provided below is Embassy Kingston's Investment Climate 
Report for 2006. 
 
A.1.  Openness to Foreign Investment 
 
The GOJ encourages foreign investment as a source of 
development and has no policies or regulations that 
reserve areas exclusively for Jamaicans.  According to the 
country's Trade Policy Review of September 1998 "....  a 
liberal foreign investment regime has been implemented 
representing great strides over the last twenty years when 
the climate for foreign investment was very restrictive. 
Numerous measures, which once inhibited foreign 
investment, such as the Foreign Exchange Control Act, and 
the list of areas reserved for local investment only, have 
been eliminated.  Consequently, Jamaica now has no legal 
impediment to direct foreign investment and applies the 
principle of national treatment to foreign investors." 
According to the January 2005 Trade Policy Review, 
"Jamaica has continued to make progress in simplifying 
regulations and procedures and creating a more investment- 
friendly environment.  In part as a result, investors' 
perception of Jamaica as a prime location for FDI has 
improved." 
 
With the investment landscape reformed, attention has 
turned to the reduction of processing and approval times 
for investment-related applications.  In particular, USAID 
has been providing assistance to the GOJ and the Private 
Sector Organization of Jamaica for a Regulation, 
Legislation and Process Improvement Project to remove some 
of the obstacles to doing business in Jamaica.  There is 
currently a revision of the existing Developer's Manual to 
provide updated information on the administration, 
legislation, regulations and requirements involved in the 
development approval process in Jamaica.  This process 
should be completed by the end of January 2006, after 
which the team will be simplifying or eliminating those 
processes that impede or frustrate investors.  The "LEGS 
and REGS" Project - spearheaded by the Jamaica Chamber of 
Commerce and aimed at identifying burdensome bureaucratic 
processes - is paying dividends, as a 2004 World Bank 
study listed Jamaica in the top ten countries in which it 
was easiest to do business.  Jamaica ranked well above its 
regional peers and compared favorably with OECD countries 
in areas such as starting a business and hiring and firing 
workers.  Although it should be noted that Jamaica's 
Redundancy Act makes it expensive to fire workers, the 
Jamaican system still ranks higher than its regional 
peers.  The 2005 report, which takes the procedures for 
registering property and protecting investors into 
account, does not place Jamaica in the top ten. 
 
The Companies Act and the Securities Act govern 
acquisitions, mergers and takeovers for publicly traded 
companies.  In 1996 the Securities Act was revised to 
bring it in line with international regulations.  The 
takeover code was redesigned to ensure the integrity of 
the securities market while protecting minority 
shareholders. 
 
Jamaica's legal system is based on English common law 
principles, and therefore rules covering the 
enforceability of contracts are based upon such 
principles.  Thus, the Jamaican judicial system recognizes 
and upholds the sanctity of contracts.  There are no 
limits on foreign ownership or control and the Embassy is 
not aware of any economic or industrial policy that has 
discriminatory effects on foreign investors. 
 
Foreign investors are generally granted national or Most 
Favored Nation treatment, subject to the rules of their 
Bilateral Investment Treaties (BITs).  There are no 
screening mechanisms for foreign investments, but if 
investors apply for government incentives, they could be 
required to meet some basic pre-requisites and due 
diligence may be done by the approving agency.  This 
process is not discriminatory and is not intended to 
impede investment.  Jamaica has also undertaken a 
comprehensive program of trade and financial 
liberalization, and no sector remains closed to foreign 
investment.  However, projects that affect national 
security, have a negative impact on the environment, or 
involve sectors such as life insurance, media or mining 
are subjected to some restrictions. 
 
Jamaica's privatization program is fully open to 
participation by foreign investors, except for those that 
are on the restricted list.  The National Investment Bank, 
which administers privatization, is mandated to ensure 
that the process is fair and transparent.  However, in 
some privatization transactions the participation of local 
investors may lead to added points in the scoring of 
proposals.  When large entities are being privatized, 
advertisements are generally placed in newspapers such as 
the Financial Times, the New York Times and the Wall 
Street Journal to attract foreign investors.  An 
information memorandum accompanies privatization proposals 
and includes the specific requirements under which bidders 
are allowed to participate and the criteria by which 
proposals will be evaluated.  Foreign investors have won 
most of the privatization bids in the last five years. 
 
The country is party to both multilateral and bilateral 
treaties, which provide for non-discrimination. Local laws 
do not distinguish between local and foreign investors. 
The Embassy is not aware of any discrimination against 
foreign investors at the time of initial investment or 
after the investment is made.  However, under the Jamaican 
Companies Act investors are required either to establish a 
local company or to 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.  The Companies Act, 
which came into effect in February 2005, allows foreign 
companies to hold lands without registering in Jamaica. 
There are no laws or regulations requiring firms to adopt 
articles of incorporation or association, which limit or 
prohibit foreign investment, participation or control. 
The Embassy is not aware of any other ways private firms 
could restrict foreign investment. 
 
Foreign direct investment (FDI) has averaged USD 570 
million during the last five years, making it Jamaica's 
fourth largest source of foreign exchange inflow.  FDI 
peaked at USD 721 in 2003, despite the overall decline in 
world and regional FDI.  Jamaica outperformed countries 
such as Argentina, Costa Rica, Trinidad and Tobago and the 
Dominican Republic and was classified as an over 
performing investment location by the World Investment 
Report.  The country was also ranked 20th for global 
interest as an inward investment location.  The dynamism 
in FDI was most evident in the construction, 
telecommunications, tourism and mining sectors.  The 
introduction of competition in the telecommunications 
sector has attracted four mobile providers and over USD 
160 million in investments per year since 1999.  This 
could increase further as the GOJ is issuing two 
additional fiber-optic licenses to reduce the cost of 
internet rates.  Highway 2000, Jamaica's first toll road, 
is being constructed by French company Bouygues under a 
build, operate, and transfer model.  Phase one of the 
project was completed at a cost of USD 125 million.  Phase 
two started in December 2005 and some USD 62 million has 
already been expended. 
 
Foreign direct investment fell to USD 601.6 million in 
2004 due to the lull in mining and telecommunications 
investment activity.  However, with the new policies 
geared toward achieving further diversification and growth 
in the bauxite, tourism and energy sectors, investment is 
expected to recover in 2005 and 2006.  The GOJ'S 
dismantling of the old bauxite levy system on a company-by- 
company basis, has already led to a USD 13 million 
expansion by Alumina Partners (ALPART).  ALCOA (JAMALCO) 
has also announced a USD 800 million expansion plan, the 
single largest investment in the country's history. 
Tourist attractions have also been granted similar 
incentives (tax holidays) to those existing in the 
accommodation sub-sector, leading to increased local and 
foreign investment in tourist attractions, such as Dolphin 
Cove and Chukka Caribbean Adventures.  Over the next three 
years the accommodations sector is slated to receive over 
USD 2 billion in investment from three Spanish hotel 
chains as well as from foreigners investing in the 
proposed high-end Harmony Cove Tourism Development.  The 
GOJ has also entered into agreements with Trinidad and 
Tobago to set up a Liquid Natural Gas (LNG) plant at a 
cost of USD 250 million and a Brazilian company, Coimex, 
has rehabilitated an ethanol-producing plant at a cost of 
USD 8 million and is set to embark on an expansion plan in 
¶2006.  Another Brazilian company, Aracatu, with interests 
in sugar and ethanol, has expressed interest in acquiring 
Jamaica's sugar industry for USD 300 million. 
 
A.2.  Conversion and Transfer Policies 
 
Jamaica has no restrictions on holding funds or on 
transferring funds associated with an investment, as the 
country liberalized its foreign exchange market in 1991. 
However, foreign exchange transactions must be conducted 
through authorized foreign exchange dealers, cambios and 
bureaux de change at market-determined rates.  Foreign 
exchange is generally available, but companies tend to 
source large amounts of foreign exchange over a three to 
four day period.  There are currently no plans to change 
the policies affecting investment remittances and there is 
no delay period currently in effect for remitting 
investment returns.  There is no legal parallel market 
(tiered system) for foreign exchange following 
liberalization and there are no limitations on the inflow 
or outflow of funds for any transaction.  Recently 
surveyed U.S. companies indicated no problems or delays in 
accessing foreign exchange or remitting investment 
returns. 
 
A.3.  Expropriation and Compensation 
Property rights are protected under Section 18 of the 
Jamaican Constitution.  Expropriation of land may take 
place under the Land Acquisition Act, which provides for 
compensation on the basis of market value.  Expropriation 
can take place before compensation is paid, but in this 
case interest for the period between the expropriation and 
the compensation settlement must be paid.  According to 
the law, the purpose of any expropriation must be 
transparent and compensation for expropriated property 
must be adequate.  If informal negotiation on compensation 
fails, the investor has recourse to the courts.  Jamaica 
has signed bilateral agreements for the reciprocal 
promotion and protection of investments with a number of 
countries, including the United States.  The Embassy is 
not aware of any litigation between the Jamaican 
government and any private individual or company based on 
expropriation or on compensation for expropriation.  There 
are currently no laws that force local ownership. 
 
A.4.  Dispute Settlement 
 
Disputes between enterprises are handled in the local 
courts, but foreign investors can refer cases to the 
International Center for Settlement of Investment Disputes 
(ICSID).  There have been cases of trademark infringements 
in which U.S. firms took action and were granted 
restitution in the local courts.  The Jamaican 
Constitution provides for an independent judiciary with a 
three-tier court structure.  Claims may be brought before 
the 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 UK.  However, the Privy Council could be 
replaced by the Caribbean Court of Justice (CCJ), which 
will consider and determine appeals in civil and criminal 
matters from common law courts within CARICOM member 
states.  Jamaica has effective means for enforcing 
property and contractual rights through: (1) The Judgment 
and Awards (Reciprocal Enforcement) Act; (2) The Judgment 
(Foreign) (Reciprocal Enforcement) Act; (3) The 
Arbitration (Recognition and Enforcement of Foreign 
Awards) Act; and, (4) The Maintenance Orders (Facilities 
for Enforcement) Act.  Under these Acts, judgments of 
foreign courts are accepted and enforced in all cases 
where there is a reciprocal enforcement of judgment treaty 
with the relevant foreign state. 
 
A number of disputes involving foreign investors and the 
GOJ, as well as one between foreign investors and a local 
association, arose during 2005.  The first dispute, which 
has yet to be resolved, involves the implementation of a 
levy by the GOJ on in-coming telephone calls for a 
Universal Access Fund to finance computers and other 
information-related activities in Jamaican schools.  US 
long-distance telephone companies have been resisting the 
move and have requested that the Federal Communications 
Commission put pressure on Jamaica to desist from 
collecting the "cess," as it is known in Jamaica. 
 
Petroleum marketing companies are also resisting moves by 
the GOJ to implement a Code of Conduct to address issues 
such as the management of service stations, contract 
periods, goodwill and pricing.  The GOJ is seeking 
consensus on the new rules, but petroleum companies argue 
that the rules impinge on the terms and conditions of 
commercial arrangements and run counter to the GOJ'S free- 
market philosophy.  Marketing company Esso Standard Oil, 
and its dealers (as represented by the JGRA) are also 
embroiled in a dispute over the multinational 
corporation's pricing policy.  The dispute led to a 
shutdown of the company's retail outlets throughout 
Jamaica for a week, followed by an island-wide shutdown of 
all the country's retail outlets.  The shutdown, 
masterminded by the JGRA, was halted following the 
intervention of the Ministry of Labor, which convened a 
meeting with the disputing parties and established a three- 
member Board of Inquiry to look into complaints by dealers 
of unfair pricing polices by Esso. 
 
The Mirant-owned Jamaica Public Service Company Limited 
(JPS) was also engaged in a dispute with the GOJ on the 
regulatory framework for the testing and inspection of 
electricity meters.  The issue of regulation arose after 
information surfaced that the utility company improperly 
billed a number of customers.  However, JPS initially 
resisted the move to test and inspect its meter by the 
Bureau of Standards under the Compulsory Standards Order 
of 2005, saying that the Bureau did not have the legal 
authority to carry out testing and inspection. The public 
service company filed an action to stay the implementation 
of the Order, under the Standards Act in the Supreme 
Court.  After extended negotiation the JPS and the GOJ 
agreed that an independent body would have responsibility 
for approving new meter types as well as for testing the 
quality of meters on importation for use in the domestic 
market.  As a consequence, the Minister of Commerce, 
Science and Technology revoked the Compulsory Standards 
Order and the JPS withdrew the legal action. 
 
There is a Bankruptcy Act dealing with personal 
insolvency, a Companies Act dealing with corporate 
insolvency, and other statutes such as the Bills of 
Exchange and the Sale of Goods Acts dealing with 
commercial matters.  There are also extensive common law 
principles, which are written and consistently applied. 
Under the bankruptcy laws, creditors can petition for an 
order against an individual or a winding up order against 
the company and will be entitled to share in the assets of 
the bankrupt party on a pro-rata basis, after certain 
specified preferential creditors are paid, for example 
redundant employees.  The claimant has the option of 
settling a claim in the currency in which the debt or 
obligation was incurred or in local currency. 
 
Jamaica, a signatory to the ICSID since 1965, accepts 
international arbitration of investment disputes between 
Jamaicans and foreign investors.  Local courts also 
recognize and enforce foreign arbitral awards. 
International arbitration is also accepted as a means for 
settling investment disputes between private parties. 
However, acting in its role as an international tribunal, 
the CCJ will interpret and apply the Revised Treaty of 
Chaguaramas, including the CARICOM Single Market and 
Economy.  There is no formal domestic arbitration body in 
Jamaica, but disputing parties can use arbitration 
proceedings to settle their disputes.  These proceedings 
are guided by the Arbitration Act which sets out the 
procedures disputing parties follow once they agree on 
arbitration and works in conjunction with the Arbitration 
Clauses Protocol Act, which in turn makes reference to how 
foreign arbitral awards will be addressed.  If a foreign 
investor's country has a BIT with Jamaica then the rules 
of this treaty would apply.  Other foreign investors are 
given national treatment and civil procedures would apply. 
 
A.5.  Performance Requirements and Incentives 
Jamaica is a signatory to the WTO Agreement and is in 
compliance with most Uruguay Round obligations, including 
the TRIMS obligations.  There are no performance 
requirements imposed as a condition for investing in 
Jamaica.  The GOJ offers a number of incentives to attract 
investments, particularly those that generate foreign 
exchange and expand employment.  Some incentives are non- 
compliant with the WTO Agreement on Subsidies and 
Countervailing Measures and should have been phased out by 
¶2003.  However, Jamaica was granted an extension by the 
WTO to revise its incentives.  Recommendations from 
reports from the World Bank-affiliated Foreign Investment 
Advisory Service and a local Tax Review Committee were 
submitted to the GOJ on the treatment of fiscal 
incentives.  However, the decision on the revision of the 
incentive regime awaits the completion of another study 
that would seek to determine the nature of the reform. 
Chief among the current incentives are: 
 
(a) The Export Industry Encouragement Act (EIEA) - 
entitles companies manufacturing products for export to 
non-CARICOM member countries benefits such as exemption 
from income and dividend taxes for up to ten years, and 
exemption from import duties on raw material and machinery 
during the incentive period.  Service industries were 
included in 1990 and in 1996 the EIEA was amended to 
include companies that do not export 100 percent of their 
output. 
 
(b) The Hotel Incentives Act - entitles hoteliers to 
income and dividend tax relief for up to ten years. 
Hoteliers may also receive an exemption from import duties 
for constructing or expanding hotels, but must have at 
least ten rooms and facilities for other activities. 
Income tax relief is granted for 15 years to hotels that 
meet certain qualifications including: having 10 to 350 
rooms, facilities for holding conferences and operation by 
a qualified general manager.  The Resort Cottages 
Incentives Act allows for income and dividend tax relief 
and duty-free importation of articles required to 
construct and equip resort cottages for up to seven years. 
 
(c) The Motion Picture Industry Encouragement Law - motion 
picture producers can receive duty relief on imported 
goods for use in motion picture production as well as 
income tax exemption from the date of release or 
exhibition of each motion picture produced in Jamaica for 
a period of nine years.  Producers are also granted a tax 
deduction of 70 percent of the capital expenditure 
incurred in acquiring facilities either in the year in 
which the cost is incurred or in any subsequent year at 
the option of the producer. 
 
(d) Approved farmer status under the Income Tax Act - 
certified persons or companies engaged in growing food or 
seed crops, horticulture, aquaculture, tobacco and animal 
husbandry are eligible for income tax relief for up to 10 
years, renewable as well as concessionary duty rates on 
farm vehicles. 
 
(e) The International Finance Company Act - available to 
finance companies conducting business solely with 
foreigners.  With regard to Jamaican operations, non- 
residents must hold at least 95 percent of the loan 
capital.  Profits of an approved corporate body are taxed 
at a rate of only 2.5 percent. 
(f) The Shipping Incentives Act - approved shipping 
corporations are granted import duty and income tax 
concessions for a period of ten years. 
 
(g) The Foreign Sales Corporation Act - provides exemption 
from 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. 
 
(h) The Industry Modernization Program (IMP) and 
Moratorium on Duties - under the IMP, companies are exempt 
from general consumption tax on capital goods acquired for 
modernization.  The Minister of Finance may award a 
moratorium on import duties on capital items for up to 
three years to companies, which do not qualify under 
existing incentive legislation and have the potential to 
contribute significantly to foreign exchange earnings. 
 
(i) Accelerated Depreciation - certified companies are 
allowed to deduct 50 percent of the full cost of new 
machinery in the year of purchase and a further 50 percent 
in the following year. 
 
(j) Other Incentives - a number of development banks 
provide concessionary financing for projects.  The 
Jamaican National EXIM Bank provides concessionary 
interest rate loans for trade financing, while the 
Development Bank of Jamaica offers reduced lending rates 
to the productive sectors.  The National Investment Bank 
of Jamaica also provides equity and quasi-equity financing 
for key economic sectors listed under the National 
Industrial Policy. 
 
Foreign investors and their investment are generally 
granted national treatment status, subject to the rules 
outlined in their BIT.  In essence, Jamaica has no 
performance requirements, except for companies with Free 
Zone status, which must export at least 85 percent of 
their output.  Foreign firms are allowed to participate in 
GOJ-financed or subsidized R&D programs on a national 
treatment basis.  Work permits are granted by the Ministry 
of Labor for a specified period, but are subject to the 
individual obtaining a working visa from the Jamaican 
Consulate available in or near their home state. 
Effective from 2005, foreign nationals from countries who 
would not require a tourist visa, and who are conducting 
business on short-term basis, do not require a business 
visa if they will be in Jamaica for a period not exceeding 
thirty days.  However, these foreign nationals will need a 
business visa to enter Jamaica if they are conducting 
business for periods exceeding thirty days.  Foreign 
nationals who would need visas for entry to Jamaica for 
other purposes will require a business visa to conduct 
business for any length of time. 
 
All importers are subject to the same procedures when 
trading in goods and services.  To qualify for entry 
certificates importers must obtain, inter alia, a supplier 
invoice, a certificate of value and origin, a declaration 
of value and a bill of lading and sight.  Products 
imported into Jamaica must also meet specific Acts 
administered by the Jamaica Bureau of Standards.  In 
December 2001, Jamaica imposed the ISO date representation 
(yy/mm/dd) as the official format for trade, but date 
labels are still accepted in the traditional European 
style (dd/mm/yy).  The Jamaican economy is relatively 
open, but some non-tariff barriers remain.  For instance, 
the Veterinary Division requires certification from a US 
Federal Agency for all products containing animal and 
animal by-products irrespective of quantity or form. 
Highly processed products such as cookies and chips 
therefore require certification from a government 
veterinarian.  The Coffee and Coconut Industry Boards also 
have to issue import certificates for coffee beans and 
cooking oils, respectively, but importers can experience 
lengthy delays in obtaining these permits.  Under intense 
pressure from farmers' cooperatives, the GOJ instituted a 
100 percent Common External Tariff (CET) plus an 80 
percent Additional Stamp Duty (ASD), compounded to 260 
percent, on whole chicken and leg quarters and a number of 
imported vegetables. 
 
A.6.  Right to Private Ownership and Establishment 
All private entities 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.  Private 
entities are also free to establish, acquire and dispose 
of interests in business enterprises.  Public and private 
enterprises have equal access to markets, credit and 
business operations, such as licenses and supplies. 
However, if the GOJ has to compete with the private sector 
it does not distort the market. 
 
A.7.  Protection of Property Rights 
The Jamaican Constitution guarantees property rights. 
Jamaica has a system of registered title set out in the 
Registration of Titles Act, which 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 cumbersome bureaucracy can 
result in significant delays. In particular, it sometimes 
takes a long time for landowners to secure titles. 
Squatting, especially on crown/government-owned lands has 
also become a challenge in the last ten years.  Jamaica is 
a member of the World Intellectual Property Organization 
and is a signatory of the Bern Convention.  Jamaica and 
the US have an Intellectual Property Rights Agreement and 
a BIT, which provide assurances to protect intellectual 
property.  However, Jamaica remains a special 301 "Watch 
List" country, largely because the patent law is not TRIPS- 
compliant.  A Geographical Indications Act (GI) was passed 
in 2004 to protect products that originate from localities 
where a particular quality or reputation is attributable 
to its geographical origin.  General law provides 
protection for Trade Secrets.  Protection against Unfair 
Competition is also provided by the general law and the 
Fair Competition Act. 
 
The Copyright Act of 1993, as amended complies with the 
TRIPS Agreement and adheres to the principles of the Bern 
Convention, and covers works ranging from books and music 
to computer programs.  Amendments in June 1999 make 
explicit the provision of 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 having 
rights in encrypted transmissions or in broadcasting or 
cable program services a right of action against persons 
who infringe their rights.  The Act needs to be amended to 
give effect to the provisions of the World Intellectual 
Property Office WCT Copyright Treaty and WPPT Performances 
and Phonograms Treaties to which Jamaica acceded in 2002. 
The Trademark Act of 1999 is also compliant with the TRIPS 
Agreement and provides the owner of registered trademarks 
exclusive rights for up to ten years, renewable.  It 
provides for the protection of "well-known" marks under 
the Paris Convention.  A TRIPS-compliant Layout Designs 
Act has also been in effect since June 1999.  The Act 
provides protection for layout-designs for integrated 
circuits and gives the rights owner the exclusive right to 
reproduce, import, sell or otherwise commercially exploit 
the layout-design and to authorize other persons to do so. 
That right is in place for ten years and may be 
transferred by the rights owner. 
 
A.8.  Transparency of Regulatory System 
 
A Fair Competition Act (FCA) was implemented in 1993 and 
is administered by the Fair Trading Commission.  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.  The FCA deals with 
misleading advertisements, price-fixing, collusion, unfair 
trading practices and interlocking directorships.  To date 
the FTC has investigated over 5,000 cases, the majority of 
which are consumer protection related. 
 
There are laws and policies covering taxation, labor, 
health and other issues to avoid distortions or 
impediments to the efficient mobilization and allocation 
of investment.  However, investors argue that the 
Redundancy Act, which deals with severance payment, is a 
disincentive to investment funds.  In  2001, the mandate 
of the Anti-Dumping and Subsidies Commission was expanded 
through the implementation of a Safeguards Act, which 
protects producers from import surges.  The GOJ also 
established the Office of Utilities Regulation to act as 
regulator of the country's utilities. 
 
Although there has been improvement in the approval 
process for investment projects, the time can still take 
anywhere from three months for Free Zone projects to over 
a year for green-field projects.  Having recognized the 
problem, the GOJ has intensified its efforts to reduce 
bureaucracy as well as improve transparency and customer 
service levels within the public sector.  A Ministry of 
Development was established to deal with investment 
bottlenecks.  The private sector, GOJ and USAID have also 
joined forces to implement a project ("LEGS and REGS") to 
identify and deal with key legislation, regulations and 
processes that constrain business. 
 
The Embassy 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.  However, in December 2004, 
the Free Trade Commission (FTC) implemented a non- 
legislative code of conduct governing the petroleum 
industry.  The mandates of this code place restrictions on 
property sales and contracts between marketing companies 
and retailers, and are enforceable through fines levied by 
the FTC. Proposed legislation is available for public 
comment and submissions are generally invited from members 
of the public for items considered to be controversial. 
The legal, regulatory and accounting systems are 
transparent and consistent with international norms and 
Jamaica has adopted the new International Financial 
Reporting System. 
 
A.9.  Efficient Capital Markets and Portfolio Investment 
Since the 1980s, Jamaica has initiated reforms aimed at 
fostering private sector activity and increasing the role 
of market forces in resource allocation.  These reforms 
intensified in the 1990s, resulting in trade, financial 
and capital account liberalization.  This has led to the 
availability of credit on market terms and foreigners are 
allowed to borrow freely on the local market at market- 
determined rates of interest. 
 
Jamaica now has an effective regulatory system established 
to encourage and facilitate portfolio investment.  The 
Financial Services Commission and the Bank of Jamaica 
jointly regulate portfolio investment.  At the end June 
2005, the country's three largest commercial banks had 
total assets amounting to over USD 4.7 billion or 85 
percent of the entire assets of commercial banks.  Five of 
the country's six commercial banks, including the three 
largest, are foreign owned.  During the mid-1990s there 
was a meltdown in the financial sector, but since 1998 
there has been consolidation and increased output 
performance.  Significant strides have also been made in 
terms of the regulatory framework, which are now in line 
with international standards. The non-performing loans 
portfolio as a percentage of the total asset base has 
moved from seven percent in 2000 to 2.4 percent at the end 
of June 2005. 
 
Based on the Rule 404 of the Jamaica Stock Exchange (JSE), 
fully paid shares shall be free from any restriction on 
the right of transfer and from all liens.  Two listed 
companies have clauses within their memoranda and articles 
of association that restrict foreign investors, but these 
predate the JSE.  JSE listing arrangements allow for 20 
percent of issued share capital to be listed, but there is 
no requirement that stipulates that this threshold must be 
maintained after listing.  The rules of the JSE and the 
Security Acts also have specific provisions relating to 
the process of takeover and mergers, but these are general 
and given that there are no specific provisions (except in 
the cases mentioned above) regarding restrictions to 
foreign participation, it follows that there are no 
specific measures designed to protect against hostile 
foreign takeovers. 
 
A.10.  Political Violence 
Jamaica has had no incidents involving politically 
motivated damage to projects and/or installations.  Crime 
poses a greater threat to foreign investments than do 
politically motivated activities.  The country did, 
however, experience three days of island-wide rioting (gas 
riots) in April 1999 when the government raised taxes on 
petroleum products.  There was also sporadic violence for 
a few days in July 2001 in response to what was perceived 
as "heavy-handed" police incursions into two Kingston 
neighborhoods considered loyal to the opposition Jamaica 
Labor Party. The resort city of Montego Bay also 
experienced a day of social unrest in 2003, in response to 
alleged police excesses.  The street demonstration, which 
included the blocking of roads, affected the flow of 
tourists between hotels and the airport.  Violent crime, 
rooted in poverty, unemployment and drug trafficking, is a 
serious problem in Jamaica, particularly in Kingston. 
Sporadic gang violence and shootings are concentrated in 
certain inner city neighborhoods, but can occur in other 
areas.  Extortion is a serious problem in certain areas of 
the commercial district and on large construction projects 
- such as the highway project. 
 
A.11.a.  Corruption 
 
Jamaica has a Corruption Prevention Act (CPA), which 
established a Corruption Prevention Commission in 2003 to, 
among other things: (1) receive, examine and document the 
statutory declarations of public sector workers; (2) 
receive and investigate any complaint regarding an act of 
corruption; and, (3) conduct investigation into acts of 
corruption, if satisfied there are reasonable grounds to 
do so.  To date there has been no enforcement, as the 
Commission lacks the capacity to enforce the filing of 
declarations.  Recent reports suggest that non-compliance 
is running at over 30 percent.  However, the Commission 
will be working with the Director of Public Prosecution to 
have enforcement measures implemented.  The Embassy is not 
aware of any disproportionate application of corruption 
measures against foreign investors, but members of the 
public perceive the law to be applied impartially among 
locals. During a recent panel discussion on governance a 
GOJ senator also stated that Jamaica had not done well in 
eliminating corruption from the public sector. 
 
Jamaica is a signatory of the OECD Anti-Bribery Convention 
and has ratified the Inter-American Convention Against 
Corruption.  Anti-corruption initiatives have been taken 
within the Jamaica Constabulary Force as well as some 
private sector organizations.  Prosecutors also continue 
to take part in regional anti-corruption conferences, with 
one such conference developed by the United States 
Department of Justice (USDOJ).  However, Jamaica is not a 
signatory to the UN Anticorruption Convention.  The 
Embassy is not aware of any U.S. firm identifying 
corruption as an obstacle to foreign investment. 
Transparency International (TI) performed a formal study 
of corruption in 2003.  The TI report identifies 
widespread political, petty, and narcotics-related 
corruption as being prevalent in Jamaica.  According to 
Transparency International's Perception Index, Jamaica 
scored 3.6 out of 10 in 2005, up from 3.3 last year, 
suggesting that the country has made only marginal 
improvements in transparency. 
Under the Corruption Prevention Act (CPA) it is an offense 
to solicit or accept a bribe.  Public servants can be 
imprisoned for up to ten years and fined as much as JMD 
ten million if found guilty of engaging in acts of 
bribery.  Individuals and companies are also criminally 
liable if they bribe foreign public officials and can be 
prosecuted and face the same penalties.  The legislation 
covers public officials who meet the JMD two million 
salary threshold and those working in sensitive positions 
such as police and military officers.  The creation of the 
CPA could be viewed as evidence that GOJ officials are 
taking anti-corruption efforts seriously.  However, 
financial constraints have crippled the Commission's 
ability to fully execute its mandate of enforcing asset 
declarations.  There is no indication that bribes can be 
deducted from taxes. 
 
The CPA also contains provisions for the extradition of 
Jamaican citizens for crimes of corruption.  In April 
2002, Prime Minister Patterson tabled a code of conduct in 
Parliament for government ministers.  The 49-point code 
covers such issues as conflict of interest and integrity 
in the conduct of public and private business.  The agency 
responsible for combating corruption is the Commission for 
the Prevention of Corruption.  Other "watchdog" 
organizations operating in Jamaica include Transparency 
International, Jamaicans for Justice, Families Against 
State Terrorism and the Farquharson Institute of Public 
Affairs. 
 
The Commissioner of Police has embarked on a bold program 
to rid the Jamaica Constabulary Force of corrupt police, 
which has plagued the image of the force for a number of 
years.  The Commissioner has already made recommendations 
for 11 members of the force, suspected of corruption, to 
be retired in the public interest.  However, the affected 
members have already sought legal counsel to halt the 
recommendation. 
 
b.  Bilateral Investment Agreements 
Jamaica has investment treaties with: the United States 
(Feb. 1994, which came into force in March 1997), 
Argentina (Feb. 1994), France (Jan. 1993), Italy (Sept. 
1993), Germany (Sept. 1992), Netherlands (Apr. 1991), 
Switzerland (Dec. 1990), the United Kingdom (Jan. 1987), 
China (1998), Cuba (May 1997), Egypt (Feb. 1999), 
Indonesia (Feb. 1999) and Zimbabwe (Feb. 1999) and is 
presently negotiating bilateral investment agreements 
with: South Korea, Costa Rica, Belgium, Russia and Canada. 
Jamaica has also signed and ratified double taxation 
agreements with: the US, Canada, CARICOM, China, 
Switzerland, Germany, Norway, Sweden, Denmark and the 
United Kingdom. 
 
c.  OPIC and Other Investment Insurance Programs 
 
The Overseas Private Investment Corporation has identified 
infrastructure, telecommunications, construction, tourism 
and energy as areas where its programs can have an impact 
in Jamaica.  OPIC political risk insurance can insure up 
to USD 40 million per project.  OPIC also provides medium 
to long-term financing to ventures with significant U.S. 
participation.  OPIC can normally guarantee or lend from 
USD 0.1 to 250 million per project.  OPIC is currently 
providing USD 190 million in insurance and financing 
support for five projects in Jamaica in the construction, 
energy, telecommunications and tourism sectors.  The 
country became a signatory to the Multilateral Investment 
Guarantee Agency in 1986 and ratified the agreement in 
¶1987. 
 
Rising inflation combined with declining supplies of 
foreign exchange, due largely to the slump in tourism, 
fuelled frequent bouts of instability in the foreign 
exchange market during July to September 2005.  By the end 
of the September the local currency had depreciated by 1.7 
percent.  This compares with an appreciation of 0.02 
percent in the previous three quarters.  The inflationary 
expectations prompted investors to realign their 
portfolios, resulting in a strong demand for U.S. dollar 
and USD-denominated instruments.  To ease the demand 
pressures, the Bank of Jamaica sold foreign currency to 
the market.  The foreign exchange market continued to face 
increased demand pressures in to December, prompting the 
Bank of Jamaica to intensify its intervention program. 
However, with Net International Reserves amounting to USD 
2.1 billion at the end of October and with tourism and FDI 
inflows expected to pick up in December the market should 
stabilize by the end of 2005 and barring shocks the market 
should remain relatively stable during 2006. 
 
d.  Labor 
 
Jamaica had an estimated labor force of 1.2 million at the 
end of 2004, of which 11.4 percent was unemployed.  Since 
1999 there has been a steady supply of people trained in 
information technology particularly for call centers, and 
most of these workers have been absorbed by the growing 
call center industry.  There has also been a jump in the 
number of university graduates, but the numbers have been 
depleted by migration to North America and the UK.  This 
has apparently led to a shortage of highly educated and 
experienced labor as evidenced by the number of 
advertisements for these workers in the newspapers weekly. 
On the other hand, there has been a slight increase in the 
number of work permits issued to expatriates, particularly 
in the services sectors.  In 2004, a total of 3,863 
permits were issued, up 0.5 percent. 
 
Jamaica has an active and strong trade union movement with 
membership equal to an estimated 20 percent of the labor 
force, although the movement is considerably weaker now 
than has traditionally been the case in Jamaica.  Labor 
relations have traditionally been adversarial due to the 
level of distrust between workers and management. However, 
both parties have attempted to enhance the relationship 
between them by enacting a program for the management of 
labor cooperation (PROMALCO) launched in April 2002. 
There is also a memorandum of understanding on labor 
arrangements between unions and employers in the bauxite 
industry and the GOJ and unions for public sector workers. 
As a consequence, industrial disputes declined from 164 to 
129 and the number of work stoppages declined from 29 to 
¶16. 
 
Jamaica has ratified the following ILO Conventions: Right 
of Association (Agriculture) Convention 1921 - ratified 
July 8, 1963; Freedom of Association and Protection of the 
Right to Organize Convention, 1948 - ratified December 26, 
1962; and, Right to Organize and Collective Bargaining 
Convention, 1949 - ratified December 26, 1962.  The GOJ 
will be adopting the ILO policy on HIV/AIDS in the 
workplace.  The GOJ working in conjunction with the ILO 
and local stakeholders has also developed a national plan 
of action on flexibility in working time to guide flexible 
working arrangements in Jamaica.  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. 
 
e.  Foreign-Trade Zones/Free Ports 
 
Jamaica's Free Zones Act allows investors to operate 
solely with foreign exchange in activities such as 
warehousing, redistribution, manufacturing, refining, 
processing, assembling, packaging and services such as 
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.  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 Jamaica Export Free 
Zone Act to allow for the establishment of Single Entity 
Free Zones, with individual companies now designated as 
free zones.  The Kingston Free Zone has recently developed 
an Informatics Park.  There is ongoing revision of the 
appropriate pieces of legislation to determine the 
benefits to afforded to service providers operating in a 
free zone areas. 
 
For foreign trade zone information investors can contact: 
 
Mr. Robert Stephens, Acting General Manager, Kingston and 
Montego Bay Free Zones, 27 Shannon Drive, Kingston 15, 
Tel: (876) 922-0290-8; 923-5274-5/6021; Fax: (876) 923- 
¶6023. 1 Mangrove Way, Montego Bay Free Port, P.O. Box 
1377, Montego Bay, Tel:(876) 979-8696; Fax (876) 979 8088; 
Email: rstephens@portjam.com 
 
Ms. Marsha Davidson, Deputy General Manager, Factories 
Corporation, 1 King St. Kingston, Tel: (876) 924-9600 -1; 
Fax: (876) 924-9630; Email: factories@cwjamaica.com 
Foreign Direct Investment Statistics 
 
f.  Foreign Direct Investment Statistics 
 
Table 1:  FDI Stock in Jamaica (USD Million) 
              1995     2000     2001    2002    2004 
Inward       1,568    3,318    4,040   4,409   5,783 
Outward         42      709      798     872   1,079 
Source:  World Investment Report, 2005 
 
Table 2:  FDI Stock as a Percent of GDP 
 
           1995     2000    2001    2002    2004 
Inward     32.3     43.0    50.5    56.7    66.4 
Outward     6.3      9.2    10.3    11.2    12.4 
Source:  World Investment Report, 2005 
 
Table 3:  Inward FDI (USD Million) 
 
                    2000   2001   2002   2003   2004 
Direct Investment    469    614    479    721    602 
Bauxite Sector        98     84    108    150     57 
JAMPRO               136    110     79    201     83 
Ret. Earnings        116    116    162    158    178 
Divestment            41    234     84      0      0 
Other                 79     71     46    212    284 
Source:  Bank of Jamaica 
 
Table 4: Inward FDI as a percentage of GDP 
 
                    2000   2001   2002   2003   2004 
Direct Investment    6.9    8.7    6.6    9.5    6.7 
Bauxite Sector       1.4    1.2    1.5    2.0    0.7 
JAMPRO               2.0    1.6    1.1    2.6    0.9 
Ret. Earnings        1.7    1.6    2.2    2.1    2.0 
Divestment           0.6    3.3    1.1    0.0    0.0 
Other                1.2    1.0    0.6    2.8    3.2 
Source:  Bank of Jamaica 
 
Table 5:  FDI Projects Facilitated by Jamaica Promotions 
by Sector (USD Million) 
 
                   99/00  00/01  01/02  02/03  03/04 
TOTAL              116.8  457.7  289.2  462.7  105.8 
Agriculture          0.6    0.0    0.0    5.6    2.9 
Film                 4.3    8.7    9.8    9.4   14.2 
Information Tech.   10.8  206.1  186.0  277.0   45.9 
Manufacturing       38.6   31.1   56.5   85.6   31.1 
Mining & Chemicals  12.9   33.1    0.4   30.4    0.4 
Music                0.0    0.0    0.0    0.0    0.0 
Tourism             49.5  178.7   36.5   54.6   11.1 
Source:  Jamaica Promotions Agency (JAMPRO) 
 
Table 6:  FDI Projects Facilitated by JAMPRO by Selected 
Country of Origin, FY 99-04 
 
Country and Sector           JDOLS Millions 
BELGIUM 
   Agriculture                          1.0 
   Film                                 2.3 
   Tourism                            100.0 
CANADA 
   Film                               126.7 
   Information Technology              35.0 
   Manufacturing                      546.3 
   Mining and Chemical                213.5 
   Music                                0.1 
CAYMAN ISLAND 
   Film                                 0.2 
   Tourism                             78.2 
DOMINICAN REPUBLIC 
   Information Technology             276.0 
GERMANY 
   Film                               131.3 
ITALY 
   Film                                 1.2 
   Tourism                             46.5 
JAPAN 
   Film                                14.2 
RUSSIA 
   Film                               228.5 
SOUTH AFRICA 
   Film                                 0.8 
   Manufacturing                       27.2 
SPAIN 
   Tourism                          2,040.0 
ST. LUCIA 
   Manufacturing                       88.6 
TRINIDAD AND TOBAGO 
   Film                                 0.2 
   Mineral and Chemical               751.8 
U.S.A. 
   Agriculture                        171.5 
   Film                             1,414.9 
   Information Technology          12,107.2 
   Manufacturing                    2,288.1 
   Mining and Chemicals               306.0 
   Textiles                           102.5 
   Tourism                          4,476.9 
UNITED KINGDOM 
   Film                               277.9 
   Information Technology           9,277.1 
   Manufacturing                      971.0 
   Music                                1.5 
   Tourism                            103.8 
MULTIPLE OWNERS 
   Film                                19.8 
   Tourism                          1,629.1 
Source: JAMPRO (does not capture all new investments) 
 
Jamaica has a long history of attracting foreign direct 
investment.  Among the major US investors operating in 
Jamaica are: 
 
---------- 
Accounting 
---------- 
KPMG 
Price Waterhouse-Coopers 
 
----------- 
Advertising 
----------- 
Lindo Foote, Cone & Belding (FCB) 
McCann Erickson (Ja.) Ltd. 
 
-------------------------- 
Agribusiness and Beverages 
-------------------------- 
ADM Milling Company 
Coca Cola Puerto Rico (Jamaica) Ltd. 
Nabisco Brands, Inc. 
Pepsi-Cola Jamaica Bottling Co. Ltd. 
Kraft 
 
----------------- 
Banking & Finance 
----------------- 
Citibank N.A. 
 
------------------------- 
Chemicals/Pharmaceuticals 
------------------------- 
Alumina Partners of Jamaica 
Antilles Chemical Co. 
Cetco Water Laboratories 
Diversey-Lever Jamaica Ltd. 
Fabcon (Caribbean) Ltd. 
Gillette Caribbean 
Glaxosmithkline Beechan International 
Industrial Gases Ltd. (IGL) 
Sherwin Williams W.I. Ltd. 
Smithkline Beecham International 
 
----------------------------- 
Computers and Data Processing 
----------------------------- 
Data Key Processors Jamaica Ltd. 
Fargo Electronics 
IBM World Trade Corp. 
Jamaica Digiport Int'l Ltd. 
Media Track Inc. 
Microsoft 
New Horizons Learning Centre 
Oceanic Digital Jamaica Ltd. 
Productive Business Solutions Ltd. 
Standard Data Systems 
 
----------------- 
Consumer Products 
----------------- 
Colgate Palmolive 
¶F. W. Woolworth & Co. (Ja.) Ltd. 
Gillette Caribbean 
Johnson & Johnson 
KIWI Brands Caribbean Ltd. 
Mead Johnson (Ja.) Ltd. 
PriceSmart 
 
--------------- 
Courier Service 
--------------- 
DHL 
Federal Express 
UPS 
International Bonded Couriers/Go Global 
 
--------- 
Insurance 
--------- 
American Home Assurance Co. 
Blue Cross of Jamaica 
 
-------------------------- 
Manufacturing and Assembly 
-------------------------- 
3-M Interamerica Inc. 
Colgate Palmolive (Ja.) Ltd. 
Custom Marble & Design Jamaica Ltd. 
Econ Industries Inc. 
Goodyear Jamaica Ltd. (Distributor) 
Hofmann and Leavy Jamaica Ltd. 
IGL Limited 
Jockey International (Ja.) Ltd. 
Johnson & Johnson (Ja.) Ltd. 
Kraft Foods Jamaica 
Sealy Mattress Company 
Sherwin Williams W.I. Ltd. 
Singer Sewing Machine Co. Ltd. 
 
 
--------------- 
Mining & Energy 
--------------- 
Alcoa Minerals of Jamaica, Inc. 
Alumina Partners of Jamaica (ALPART) 
Esso Standard Oils S.A. Ltd. 
Jamaica Energy Partners 
Jamaica Private Power Company Ltd. 
Kaiser Bauxite Company 
Mirant Corp. 
Texaco Caribbean Inc. 
 
-------------------------------- 
Tourism and Hospitality Industry 
-------------------------------- 
American Airlines 
American Express Int'l Inc. 
Avis Rent A Car 
Baskin Robbins 
Budget Rent-A-Car 
Burger King 
Delta Airlines 
Domino's Pizza 
Hertz (Liberty) Car Rental 
Hilton (Kingston) Hotel 
Holiday Inn Sunspree Resort 
KFC 
Northwest Airlines 
Pizza Hut 
Popeye's Chicken and Seafood 
Ritz Carlton Hotel 
Spirit Airlines 
Subway (Ja.) Ltd. 
TGI Friday's 
Wendy's 
Wyndham Rose Hall Hotel 
 
END TEXT. 
 
TIGHE