Jamaica

Macro-economic Overview

Incentives
| Projects

Jamaica, the largest English-speaking Caribbean Island, boasts the distinct qualities of a vibrant emerging market with enormous possibilities for trade and inward investment. Its comparative advantages that attract strategic investors and tourists include natural beauty, geographical location (only one hour and twenty minutes by air from Miami), time zone, English-speaking skilled labour force, strong financial services sector, the world’s seventh-largest natural harbour and mineral resource endowments, as well as a spirit of enterprise and well-established traditions of democracy and accountability.

Jamaica is recognised as the hub for trade within the Caribbean Community and Common Market (CARICOM) and has emerged as a popular centre for some of the world’s major transnational corporations (TNCs). With the global economy showing signs of recovery from the financial storms of 2009, and the Jamaican government’s commitment to macro-prudential policies, the country is well positioned to attract Greenfield investments.

The country offers numerous foreign direct investment (FDI) opportunities in sectors such as infrastructure development, tourism, financial services, beverages, agro-business, base-metal processing, construction, private security, information communication technology (ICT); and emerging sectors such as healthcare and education.

Jamaica’s close proximity to the North American Free Trade Agreement-NAFTA countries (the US, Canada and Mexico) provides ample scope to attract vertical or asset-seeking FDI, which is export-oriented and involves relocating parts of the production chains to low-cost locations. The output is mainly exported to the investor’s home country and/or regional markets. Hence, FDI is unaffected by the host country’s market size. Jamaica is an ideal place for TNCs to base their Caribbean operations and tap into the wider NAFTA markets of 448mn customers worth some US$17 trillion – the world’s largest trading bloc.

It also enjoys favourable access to the US under the Caribbean Basin Trade Preferences. The island’s infrastructure is geared towards supporting output facilities and handling exports with good transport linkages both internal and external, utilities and access to communications. Unit labour costs and wages are moderate.

Nominal gross domestic product (GDP) rose by two-fold between 2004/05 and 2009/10. According to the Planning Institute of Jamaica (PIOJ), real GDP growth is conservatively forecast at 1.8% in 2011/12, edging up to 2% in 2012/13.

Creative entrepreneurship, skilled-adjustable workforce and pro-business policies have supported dynamic expansion in the tourism, financial services, telecoms, and leisure and distribution sectors. Although services accounted for 60% of GDP in 2009, Jamaica also boasted a diversified manufacturing base. Export free zones were created to encourage industrial diversification and FDI.

Jamaica has a track record of implementing micro-business reforms that underpin private enterprise and FDI. Many sectors are fully accessible to prospective investors, though media, life insurance and mining are subject to some restrictions. The FDI code encourages inward investments, guarantees capital repatriation, compensation (if a property is expropriated) and the ‘equal treatment’ of all investors with respect to fiscal incentives. There are no limits on the foreign control of companies and non-residents can purchase real estate. The legal system upholds the
sanctity of contracts. For strategic investors, privatisation offers outlets to acquire under-valued assets that could be turned to profitability after restructuring and capital injections.

The World Bank’s Doing Business 2011 survey ranked Jamaica in the upper half of 183 economies on the ease of doing business for the period April 2009-June 2010. Its global ranking (81) exceeded regional peers – Dominican Republic (91); and Trinidad & Tobago (97). On several criteria such as business start-ups, obtaining construction permits, registering property, enforcing contracts and bankruptcy law, Jamaica scores above the regional average.

This island-nation, among the pioneers of globalisation, is firmly on a growth path and has a strong resolve to expand trade and attract productive investment in the coming years.

Tourism

When it comes to breathtakingly beautiful scenery, luxury surroundings and warm hospitality, Jamaica is unequalled in the world of tourism. The very mention of the island’s name conjures up images of famous, world-class white sand beaches, lush forests and soaring mountains. Every year, over two million visitors travel to Jamaica to experience the country’s natural beauty, exotic cuisine and rich cultural offerings.

In the face of increasing competition from other Caribbean islands, as well as from Florida, Central and South America, and further afield, the government of Jamaica is not resting on its laurels. Significant resources are being channelled into tourism infrastructure, with a view to reinforcing the island’s reputation as a high-quality destination in the 21st century.

The North Coast Highway is now complete, giving tourists and islanders alike a quick route along the picturesque stretch of coastline from Negril in the west to the Blue Mountains in the east. A number of resorts and destinations can be found along this route, including James Bond creator Ian Fleming’s former residence, Goldeneye, now a luxury hotel. Construction is significantly advanced on the South Coast Highway, as well as a north-south highway that will dissect the island geographically, creating easier access between regions in the north and south and opening up the
wilder coastline and the wealth of possibilities for investment in the increased tourist trade that this will provide.

The Ian Fleming International Airport in Boscobel, St. Mary on the north coast officially became the island’s third international airport in January 2011, joining Sangster in Montego Bay and Norman Manley in Kingston. Located approximately 10 km west of the resort town of Ocho Rios, the Ian Fleming International Airport can accommodate private jets and small commercial aircrafts.

Accommodation on the island ranges from the economical to the 5-star, and attracts a high level of foreign direct investment (FDI). Market leaders such as Sandals, AM Properties and RIU run a number of sites on the island, and with the additional increase in ’boutique’ hotels, it is expected that an extra 10,000 rooms will be created by 2012 on top of the 24,000 already available. The cruise industry forms a crucial part of the tourism  income for Jamaica, and it remains one of the world’s most popular cruise destinations.

Around Ocho Rios in the north of the island there is an established infrastructure known as Island Village, which caters to the cruise passengers who dock there, and this type of development is being encouraged in the other destination ports. The historic town of Falmouth, located in the parish of Trelawny on the north coast of Jamaica, is the latest cruise destination in Jamaica following the recent construction of the Falmouth cruise ship pier.

An integrated tourism system is being encouraged whereby cruise line operators, accommodation, and activity providers work together to attract as many tourists as possible, for as long as possible, maximising the revenue from them whilst they are in the island.

As the economic climate improves over the coming years, not only will the tourism industry pick back up again, but so will investment in Jamaica.  Sites and businesses relating to tourism that are currently available will be bought, and those that invested will reap the rewards of this good timing and the knowledge that when people are looking for the ultimate holiday experience, one of the first places they will think of is Jamaica.

ICT

Today’s Jamaica is a highly competitive and attractive business destination, which has emerged as the leading contact centre location in the English-speaking Caribbean with over 10,000 full time agents in the offshore business process outsourcing (BPO) sector. With an established track record in finance & accounting, human resource outsourcing (HRO), receivables management, technical helpdesk support, outbound sales and lead generation, Jamaica has been recognised by Gartner as a destination to watch and by A.T. Kearney as a favourable BPO destination.

With nearshore access to the US, low attrition rates and high labour force availability among secondary and university graduates (over 20%), Jamaica provides great value to anyone looking for a BPO destination. This value proposition is bolstered by average call centre and BPO salaries being 40-60% lower than the corresponding salaries in the USA. These advantages, as well as the fact that the government has demonstrated its support for this priority sector, have kept industry heavyweights such ACS (Xerox), Teleperformance and West Corporation operating in the island for almost a decade.

Why Jamaica for outsourcing?

✓ Close to the United States

✓ Educated English speaking workforce

✓ Dedicated and productive workers

✓ Competitive business costs

✓ Priority on improving Data security

✓ Excellent telecoms infrastructure

✓ Established track record in BPO

✓ Strong government support for ICT

✓ Stable business climate

✓ Great quality of life

Jamaica’s BPO providers typically operate as free zone-type companies, whether or not they are physically located in a Free Zone. The flexibility of Jamaica’s Free Zone laws allows for Single Entity Free Zones, which can be established anywhere outside of a designated free zone space. In both scenarios, companies operating under the Free Zone Act are eligible for a range of benefits (See ‘Incentives and Opportunities’). Designated Free Zone areas in the island are located in Montego Bay, Kingston and Portmore.

In addition to the work being done by the government to provide more space within the Free Zones for expansion among existing players and the accommodation new entrants, there are private sector-focused BPO projects, such as the Barnett Tech Park in Montego Bay, which will allow operators to build their own facilities or to partner with the park owner in the build out process. Currently, Vistaprint, a leading online provider of marketing collateral, is building its Caribbean headquarters in the Barnett Tech Park. They have hosted their English language customer service operations in Jamaica since 2003 and will be significantly expanding their operations in this new environmentally friendly workspace.

The government continues to maintain dialogue with the sector, with the singular purpose of ensuring that all the right issues are adequately addressed.

Jamaica offers great value: a ready domestic market, closeness to other huge international markets, a trained English-speaking workforce and the capacity to support all aspects of businesses operating in the ICT industry. With continued planning and execution by the Jamaica government, the country will continue to be the nearshore destination of choice in the Caribbean and Latin American region for years to come.

Manufacturing

With Jamaica being located at the hub of air and sea routes in the Northern Caribbean, the country is ideally placed for export-oriented manufacturing and assembly operations, which represents a clear competitive advantage in today’s global marketplace. The light manufacturing industry is one of the most dynamic sectors of Jamaica’s economy. The sector is diversified and many of the sub-sectors are well developed.

For companies with an interest in manufacturing, Jamaica offers the opportunity to produce goods at a lower cost than competitors, while converting cash 8-10 weeks faster than manufacturers in the Far East and roughly 2-3 weeks faster than other Caribbean and Latin American competitors targeting the North American markets.

The country provides significant qualitative and quantitative advantages as an offshore manufacturing location. Chief among Jamaica’s competitive advantages are its skilled and vibrant workforce, attractive fiscal incentives, high levels of social stability, competitive labour costs, and strong intellectual property laws. Additionally, its strategic geographic location at the centre of the main shipping routes between North and South America, Europe and the Far East, as well as preferential access to the world’s most important markets, combine to make Jamaica an ideal exporting platform.

Source Jamaica Investment Forum 2012