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DE RUEHKG #1039/01 3451302
ZNR UUUUU ZZH
R 101302Z DEC 08
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 7043
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 14 KINGSTON 001039 
 
SIPDIS 
 
STATE FOR WHA/CAR (ACADIEUX) (VDEPIRRO) (WSMITH) 
STATE FOR EB/IFD/OIA 
WHA/EPSC (MROONEY)(FCORNEILLE) 
EEB/ESC/IEC/EPC (MMcMANUS) 
INR/RES (RWARNER) 
SANTO DOMINGO FOR FCS AND FAS 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958:  N/A 
TAGS: ECON EFIN ETRD EINV EAGR ELAB KTDB PGOV USTR OPIC
JM, XL 
 
SUBJECT:  JAMAICA: INVESTMENT CLIMATE STATEMENT 2009 
 
REF: STATE 123907 
 
¶1. Response to reftel request for the investment climate statement. 
 
Openness to Foreign Investment 
------------------------------ 
 
¶2. The Government of Jamaica (GOJ) seeks to attract foreign direct 
investment and markets itself to companies in Europe, North America 
and the Caribbean region.  The GOJ encourages foreign investment as 
a source of development and has no policies or regulations that 
reserve certain sectors exclusively for Jamaicans.  Prime Minister 
Bruce Golding (Jamaica Labor Party), elected in September 2007, 
after 18 years of rule by the People's National Party, publicly 
warns of the negative consequences of red tape as a hindrance to 
potential foreign investment. 
 
¶3. 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.  Thus, Jamaica does 
not have any legal impediment to direct foreign investment and 
applies the principle of national treatment to foreign investors. 
 
¶4. 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 (LEGS and REGS) to remove some of the obstacles to doing 
business in Jamaica.  The project staff is currently revising an 
existing Developer's Manual to provide updated information on the 
administration, legislation, regulation and requirements involved in 
the development approval process in Jamaica.  The manual has been 
revised, but there is still much streamlining required in achieving 
the Prime Minister's 90- day turnaround deadline for approvals. 
 
¶5. The LEGS and REGS Project has been paying dividends, as a 2009 
World Bank Doing Business Report listed Jamaica in the top ten 
countries for the Latin America and Caribbean Region in which it was 
easiest to do business. Jamaica ranked above its regional peers and 
compared favorably with OECD countries in areas such as starting a 
business and hiring and firing workers.  It should be mentioned 
that, while Jamaica's Redundancy Act makes it expensive to cut staff 
due to the relatively high severance payments tied to length of 
service (see Labor section below), the Jamaican system still ranks 
higher than its regional peers in the 2009 World Bank Ease of Doing 
Business Report for the category of Hiring Workers.  It only scores 
lower than its peers in the subcategory of Firing Costs. 
 
¶6. 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 rules covering the enforceability of contracts are 
based thereupon.  The Jamaican judicial system therefore recognizes 
and upholds the sanctity of contracts.  However, in the 2009 World 
Bank Doing Business Report, Jamaica slipped 25 rank positions for 
Enforcing Contracts, falling from 102 in 2008 to 127 in 2009. 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. 
 
¶7. 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 regulation and certain 
restrictions. 
 
¶8. Jamaica's privatization program is open to participation by 
foreign investors, except for those that are on the restricted list 
due to national security concerns. The National Investment Bank, 
 
KINGSTON 00001039  002 OF 014 
 
 
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 placed in international newspapers 
such as the Financial Times, New York Times and 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 government is 
currently reviewing some of the remaining parastatals with an eye to 
divestiture. 
 
¶9. 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. 
 
¶10. Foreign direct investment (FDI) flow was USD 779 million in 
2007, down from 850 million in 2006 according to the United Nations' 
World Investment Report.  The dynamism in FDI was most evident in 
the construction, telecommunications, tourism, and mining sectors. 
Despite significant foreign investment over the years, Jamaica's 
annual GDP growth has been an anemic 1 percent on average, 
indicating that foreign investment does not directly translate into 
GDP growth. Jamaica appears to lack the absorptive capacity to 
benefit from investments requiring high skilled employment, and a 
significant portion of inputs are not sourced locally. 
 
¶11. The introduction of competition in the telecommunications sector 
has attracted three mobile providers and multiple internet service 
provides including three licenses that are being issued to wireless 
service providers.  The GOJ has issued 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 (BOT) model.  Two 
segments of the project, costing over USD 500 million, are 
completed.  A third leg connecting Kingston and the resort area of 
Ocho Rios should be completed by end of 2010. 
 
¶12. With the onset of the global economic crisis, there has been 
significant slowdown in some of Jamaica's critical foreign exchange 
earners.  Growth in the bauxite and tourism sectors has slowed.  The 
construction boom of the last three years, which brought in over USD 
1 billion in FDI in the accommodation sector, has weaned.  Future 
projects in the sector have been postponed until the global economic 
climate improves.   This includes investments from Spanish hotel 
chains and the high-end Harmony Cove Tourism Development.  A 
Brazilian company, Infinity BioEnergy, is in negotiations to acquire 
the assets of Jamaica's sugar industry. 
 
Conversion and Transfer Policies 
-------------------------------- 
 
¶13. 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 
 
KINGSTON 00001039  003 OF 014 
 
 
remitting investment returns. 
 
Expropriation and Compensation 
------------------------------ 
 
¶14. 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 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 in 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. 
 
Dispute Settlement 
------------------ 
 
¶15. 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 United Kingdom.  Plans were afoot for 
the Privy Council to 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.  However, the then-opposition Jamaica Labor Party (JLP) 
opposed the process and took the case to the Privy Council which 
supported their position.  If Jamaica were to replace the Privy 
Council with the CCJ it will likely require a national referendum, 
although it is not likely in the near-term.  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. 
 
¶16. A number of disputes, involving foreign investors and GOJ, on 
the one hand, and foreign investors and a local association, on the 
other, arose during 2005.  The first dispute, which is yet to be 
resolved as of early 2008, 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.  However, U.S. 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 fees. 
 
¶17. 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 on a pro-rata basis, 
after certain specified preferential creditors such as 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. 
 
¶18. Jamaica, a signatory to the International Center for Settlement 
of Disputes (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 
 
KINGSTON 00001039  004 OF 014 
 
 
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 would be guided by the 
Arbitration Act which sets out the procedures disputing parties 
would follow once they agree on arbitration and is read 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. 
 
 
Performance Requirements and Incentives 
--------------------------------------- 
 
¶19. Jamaica is a signatory to the World Trade Organization 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 current 
incentives are non-compliant with the WTO Agreement on Subsidies and 
Countervailing Measures and should have been phased out by 2003, but 
have not been.  However, Jamaica was granted an extension by the WTO 
to revise its incentives and is awaiting reports from the World 
Bank-affiliated Foreign Investment Advisory Service and a local Tax 
Review Committee to complete the process.  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 ten 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. 
 
KINGSTON 00001039  005 OF 014 
 
 
 
(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. 
 
¶20. 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.  Since 2005, foreign nationals who are conducting 
business on short-term basis will not require a business visa once 
they will be in Jamaica for a period not exceeding thirty days. 
However, foreign nationals will need a business visa to enter 
Jamaica if they are conducting business for periods exceeding thirty 
days.  Foreign nationals who need visas for entry to Jamaica will 
require a business visa to conduct business. 
 
¶21. 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 International Organization for Standardization 
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 U.S. 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. 
 
Right to Private Ownership and Establishment 
------------------------------------------- 
 
¶22. 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 will do so on a 
competitive basis so as to not distort the market. 
 
Protection of Property Rights 
----------------------------- 
 
¶23. The Jamaican Constitution guarantees property rights.  Jamaica 
has a system of registered titles 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 
 
KINGSTON 00001039  006 OF 014 
 
 
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) lands has also become a 
challenge in the last ten years.  Jamaica is a member of the World 
Intellectual Property Organization (WIPO) and is a signatory of the 
Bern Convention.  Jamaica and the U.S. 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 
compliant with the Agreement on Trade Related Aspects of 
Intellectual Property Rights (TRIPS).  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. 
 
¶24. 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 WIPO 
WCT and WPPT (Internet) 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. 
 
Transparency of Regulatory System 
--------------------------------- 
 
¶25. 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. 
 
¶26. 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. 
 
¶27. Although there has been improvement in the approval process for 
investment projects, it 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.  As stated 
above, 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 
project is currently addressing the reform process with regard to 
the approval for development and building permits.  It should be 
noted that as a result of this work, Jamaica was the top reformer 
globally this year on Dealing with Construction Permits, in the 
World Bank Doing Business 2009 Report, improving its rank on that 
indicator by 25 spots to 49th place. 
 
¶28. The Embassy is not aware of any informal regulatory processes 
 
KINGSTON 00001039  007 OF 014 
 
 
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. 
 
Efficient Capital Markets and Portfolio Investment 
------------------------------------------- 
 
¶29. 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.  While some 
major financial products are still lacking, the private sector still 
has access to a variety of credit instruments. 
 
¶30. Jamaica 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 of September 2008, the country's 
four largest commercial banks had total assets amounting to over USD 
6 billion or 90 percent of the entire assets of commercial banks. 
Five of the country's seven commercial banks, including the four 
largest, are foreign-owned.  During the mid-1990s there was a 
meltdown in the financial sector often referred as "FINSAC", but 
since 1998 there has been consolidation and increased output 
performance in the sector.  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 September 2008. 
 
¶31. 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. 
 
Political Violence 
------------------ 
 
¶32. 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 resort city of Montego Bay 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 2000 project. 
 
Corruption 
---------- 
 
¶33. 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 
 
KINGSTON 00001039  008 OF 014 
 
 
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 some members of the private 
sector perceive that the law is not 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. 
 
¶34. 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, the perception of corruption in Jamaica has 
worsened in the past three years.  The island has slid from a score 
of 3.7 out of 10 in 2006, to 3.3 in 2007, down to 3.1 in 2008.  This 
score places Jamaica in the same category as Benin, Gabon, 
Guatemala, and Mali. 
 
¶35. Corruption may well be the single greatest concern among 
Jamaicans, most of whom believe it one of the root causes of the 
high crime rate. In the past year, 16 police officers have been 
arrested for alleged acts of corruption, but only one has been at 
senior level.  Despite numerous allegations of public corruption, 
the last conviction of a politician on corruption charges was in 
¶1981.  In recent times only one politician has been arrested on 
charges of corruption; he is currently awaiting trial. 
 
¶36. 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.  However, it is well known that a number of public 
officials have been delinquent in complying with mandatory filing. 
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.  In 2007, 
The GOJ passed into law the Proceeds of Crime Act (POCA), a powerful 
legal tool that allows for both criminal and civil forfeiture and 
criminalizes money laundering related to narcotics offenses, fraud, 
firearms trafficking, human trafficking, terrorist financing and 
corruption, and applies to all property or assets associated with an 
individual convicted or suspected of involvement with a crime. 
More active enforcement of the POCA by the GOJ would certainly 
strengthen anti-corruption efforts. 
 
¶37. U.S. investors should be aware of the U.S. provisions of the 
Foreign Corrupt Practices Act (FCPA) which, in general, prohibits 
corrupt payments to foreign officials for the purpose of obtaining 
or keeping business.  See the U.S. Department of Justice website for 
more information.  http://www.usdoj.gov/criminal/fraud/fcpa/ 
 
¶38. 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 
 
KINGSTON 00001039  009 OF 014 
 
 
Terrorism and the Farquharson Institute of Public Affairs. 
 
Bilateral Investment Agreements 
------------------------------- 
 
¶39. 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 U.S., Canada, CARICOM, 
China, Switzerland, Germany, Norway, Sweden, Denmark and the United 
Kingdom. 
 
OPIC and Other Investment Insurance Programs 
------------------------------------------- 
 
¶40. The Overseas Private Investment Corporation has identified 
infrastructure, telecommunications, construction, tourism and 
renewable 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 has historically committed more than USD 750 million in 
insurance and financing to support over 80 projects in Jamaica in 
industries such as construction, energy, telecommunications, and 
tourism.  The country became a signatory to the Multilateral 
Investment Guarantee Agency in 1986 and ratified the agreement in 
¶1987. 
 
¶41. The foreign exchange market remained relatively stable for the 
first nine months of 2008, depreciating by 1.6 percent.  However, by 
October the effects of the global financial crisis became evident, 
with the local currency slipping by over eight percent to the first 
week of December. The sharp depreciation has been underpinned by a 
confluence of demand and supply factors led by increased margin 
calls from overseas creditors.  Demand pressures were also 
compounded by increasing Jamaican dollar liquidity as local 
financial institutions converted maturing debt instruments into hard 
currency.  The increased demand for hard currency could not have 
come at a worse time, as it coincided with the slow period for 
inflows and the traditional demand spike for foreign currency to 
purchase Christmas supplies.  But one of the single greatest shocks 
to the foreign exchange market came from the negative ratings 
released by the three main ratings agencies.  But a currency 
adjustment was not unexpected given the 16.8 percent spike in 
inflation to September, 2008, which represented an almost 15 percent 
real appreciation in the currency.  And with confidence waning and 
rising inflation rendering returns on local instruments negative, 
investors were always going to switch to foreign assets to hedge 
against any further erosion in real returns.  High commodities 
prices led by oil imports had also influenced a USD 793 million 
deterioration in the current account balance to June 2008.  With 
foreign investment inflows drying up and the capital market shut, 
there would have been a shortfall in the supply of foreign inflows 
required to finance the current account, thus forcing the exchange 
rate to adjust. 
 
¶42. To address the instability, the Central Bank drew on its arsenal 
of monetary tools to temper demand pressures.  On October 15, the 
Bank introduced a temporary USD loan facility for institutions 
affected by margin calls.  Two days later the Bank complemented this 
response by hiking interest rates by up to 1.2 percent.  The Bank 
followed up by facilitating the flow of credit among financial 
institutions to moderate the pressures in the foreign exchange 
market, while assisting the continued functioning of the inter-bank 
credit market.  At the same time, the bank sold over USD 400 million 
or 20 percent of its stock of Net International Reserves (NIR) to 
the currency market to shore up supplies, thus, bringing NIR down 
from USD 2.1B in 2007 to USD 1.7B in December 2008.  However, these 
policy responses were not sufficient to alleviate the demand 
pressures in the currency market, due to a build up in Jamaica 
dollar liquidity stemming from maturing debt instruments.  To remove 
this liquidity, the Bank embarked on an even more aggressive 
monetary program, offering an attractive short term instrument with 
interest payable at 20.5 percent as well increasing the cash reserve 
requirement by two percentage points to 11 percent.  Interest rates 
 
KINGSTON 00001039  010 OF 014 
 
 
were further hiked to as high as 24 percent for one year 
instruments.  These measures were accompanied by an 18-month GOJ USD 
indexed bond with a coupon of 11.5 percent. 
 
Labor 
----- 
 
¶43. Jamaica had an estimated labor force of 1.3 million at the end 
of January 2008, of which 10.2 percent was unemployed.  Since 1999 
there has been a steady increase in the numbers 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 marked increase in the number of work 
permits issued to expatriates, particularly in the services sectors. 
 In 2007, a total of 5,927 permits were issued, down 6.3 percent, 
suggesting a falloff in the demand for permits as some tourism 
projects are completed. 
 
¶44. 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 historically 
has been the case.  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). 
 
¶45. Jamaica has a number of labor friendly laws including the 
Employment (Termination and Redundancy Payments) Act, 1974 (as 
amended) (ETRPA). Under the Act, subject to some exclusions, 
employees with not less than two years continuous employment, who 
are dismissed on the grounds of "redundancy" are entitled to 
redundancy payment.  As a general rule, workers with up to ten years 
continuous employment are entitled to two weeks payment for every 
year as well the requisite notice pay, while workers with over ten 
years continuous employment are entitled to three weeks payment plus 
notice pay (notice pay is the period in which the employee must give 
notice to their employer before leaving their position except in 
certain cases such as firing for cause). 
 
¶46. 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 is 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. 
 
Foreign-Trade Zones/Free Ports 
------------------------------ 
 
¶47. Jamaica's Free Zones Act allows investors to operate solely with 
foreign exchange in activities such as warehousing, refining, 
manufacturing, redistribution, 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 
 
KINGSTON 00001039  011 OF 014 
 
 
Informatics Park. 
 
For foreign trade zone information investors can contact: 
 
Ms. Beverly Williamson, Senior Vice-President, Business Management 
and Special Projects, 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:bwillaimson@portjam.com 
 
Ambassador Stewart Stephenson, 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) 
 
                2001    2002    2004    2005    2006    2007 
Inward         4,040   4,409   5,783   6.335   7,264    8,580 
Outward          798     872   1,079   1,174   1,257      817 
Source:  World Investment Report, 2005 
 
Table 2:  FDI Stock as a Percent of GDP 
 
        2001    2002    2004    2005    2006    2007 
Inward      50.5    56.7    66.4    65.1    68.8    76.6 
Outward     10.3    11.2    12.4    12.1    11.9     7.3 
Source:  World Investment Report, 2005 
 
Table 3:  Inward FDI (USD Million) 
 
                  2002   2003   2004    2005    2006    2007 
 
 
Direct Investment  479    721    602     683     882     867 
Bauxite Sector     108    150     57     112     336     217 
JAMPRO              79    201    n/a     173     315     277 
Ret. Earnings      162    158    178     202     132     177 
Divestment          84      0      0       0       0       0 
Other               46    212    367     197      99     196 
Source:  Bank of Jamaica 
 
Table 4: Inward FDI as a percentage of GDP 
 
            2001      2002    2003      2004      2005 
 
 
Direct Investment 8.7       6.6      9.5       6.7       7.9 
Bauxite Sector    1.2       1.5      2.0       0.7       1.3 
JAMPRO            1.6       1.1      2.6       0.9       2.0 
Ret. Earnings     1.6       2.2      2.1       2.0       2.3 
Divestment        3.3       1.1      0.0       0.0       0.0 
Other             1.0       0.6      2.8       3.2       2.3 
Source:  Bank of Jamaica 
 
Table 5:  FDI Projects Facilitated by Jamaica Promotions by Sector 
(USD Million) 
 
                01/02   02/03   03/04   04/05   05/06   06/07 
 
 
TOTAL           289.2   462.7   105.8   153.8   233.2   265.7 
Agriculture       0.0     5.6     2.9     6.4     3.0     0.0 
Music, Film, Ent. 9.8     9.4    14.2    12.3    15.0     0.0 
Info Tech.      186.0   277.0    45.9    11.4    64.3    55.7 
Manufacturing    56.5    85.6    31.1     0.0    11.1    38.9 
Mining/Chemicals  0.4    30.4     0.4     4.6    16.0     1.3 
 
Tourism          36.5    54.6    11.1   119.2   123.9   169.8 
Source:  Jamaica Promotions Agency (JAMPRO) 
 
Table 6:  FDI Projects Facilitated by JAMPRO by Selected Country of 
Origin, FY 99-07 
 
Country and Sector           JDOLS Millions 
BELGIUM 
Tourism                                  100.0 
CANADA 
 
KINGSTON 00001039  012 OF 014 
 
 
Film                                      126.7 
Information Technology         7,068.2 
Manufacturing                          546.3 
Mining and Chemical                   213.5 
CAYMAN ISLAND 
Tourism                                   78.2 
DOMINICAN REPUBLIC 
Information Technology           276.0 
Manufacturing                            284.9 
GERMANY 
Film                                     131.3 
ITALY 
Tourism                                   58.3 
JAPAN 
Film                                      14.2 
RUSSIA 
Film                                     228.5 
SOUTH AFRICA 
Manufacturing                             27.2 
SPAIN 
Tourism                               26,536.0 
ST. LUCIA 
Manufacturing                             88.6 
TAIWAN 
Agriculture                              570.4 
TRINIDAD AND TOBAGO 
Mineral and Chemical           1,466.8 
Manufacturing                      2,327.0 
U.S.A. 
Agriculture                              182.0 
Film                                   1,414.9 
Information Technology      13,508.7 
Manufacturing                      2,367.0 
Mining and Chemicals               674.2 
Textiles                                 102.5 
Tourism                                6,378.3 
UNITED KINGDOM 
Film                                     277.9 
Information Technology                 9,277.1 
Manufacturing                          1,842.3 
 
Tourism                                  124.1 
MULTIPLE OWNERS 
Film                                     784.6 
Tourism                                1,629.1 
Source: JAMPRO (does not capture all new investments) 
 
Jamaica has a long history of attracting foreign direct investment 
from the United States.  Among the major U.S. investors operating in 
Jamaica are: 
 
---------- 
Accounting 
---------- 
KPMG Peat Marwick 
Price Waterhouse-Coopers 
 
----------- 
Advertising 
----------- 
Lindo Foote, Cone & Belding (FCB) 
McCann Erickson (Ja.) Ltd. 
 
-------------------------- 
Agribusiness and Beverages 
-------------------------- 
ADM Milling Company 
Coca Cola Jamaica 
Nabisco Brands, Inc. 
Pepsi-Cola Jamaica Bottling Plant 
Kraft 
 
----------------- 
Banking & Finance 
----------------- 
Citibank N.A. 
 
------------------------- 
Chemicals/Pharmaceuticals 
------------------------- 
Alkali Group of Companies 
 
KINGSTON 00001039  013 OF 014 
 
 
Antilles Chemical Co. 
Cetco Water Laboratories 
Diversey-Lever Jamaica Ltd. 
Fabcon (Caribbean) Ltd. 
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 
Meineke 
PriceSmart 
Rooms-to-Go 
 
--------------- 
Courier Service 
--------------- 
FedEx 
UPS 
International Bonded Couriers 
 
--------- 
Insurance 
--------- 
American Home Assurance Co. 
Blue Cross Shield of Jamaica 
 
-------------------------- 
Manufacturing and Assembly 
-------------------------- 
Baywind Manufacturing Ltd. 
3-M Interamerica Inc. 
Custom Marble & Design Jamaica Ltd. 
Econ Industries Inc. 
Goodyear (distributor) 
Hofmann and Leavy Jamaica Ltd. 
Jamaica Bow Co. Ltd. 
Jockey International Jamaica Ltd. 
Johnson & Johnson 
Sealy Mattress Company 
Singer Sewing Machine Co. Ltd. 
Sportswear Producers Ltd. 
West Indies Nutritional Corporation Ltd. 
Williamson Dickie Jamaica Ltd. 
 
--------------- 
Mining & Energy 
--------------- 
Alcoa Minerals of Jamaica, Inc. 
Alumina Partners of Jamaica (ALPART) 
Jamaica Energy Partners 
Jamaica Private Power Company Ltd. 
Kaiser Bauxite Company 
Texaco Caribbean Inc. 
 
------------------ 
Project Management 
------------------ 
Boyken-Mortimer International LLC 
 
 
KINGSTON 00001039  014 OF 014 
 
 
-------------------------------- 
Tourism and Hospitality Industry 
-------------------------------- 
American Airlines 
American Express Int'l Inc. 
Baskin Robbins 
Churches Fried Chicken 
Continental Airlines 
Hertz (Liberty) Car Rental 
Hilton (Kingston) Hotel 
Holiday Inn Sunspree Resort 
Kenny Rogers Roasters Chicken 
Pizza Hut 
Popeye's Chicken and Seafood 
Renaissance Jamaica Grande Hotel 
Restaurants Associates Ltd. - Burger King 
Restaurants of Jamaica Ltd. - Kentucky Fried Chicken 
Ritz Carlton Hotel 
Spirit Airlines 
Subway (Ja.) Ltd. 
TCBY Frozen Yogurt 
Wendy's 
Wyndham Rose Hall Hotel 
JOHNSON