Insists SEZ Act must be adhered to
Mixed messages, confusion and uncertainty face investors looking to put money in the ground in Jamaica.
Buoyed by the triumph of the World Free Zones Organization’s Annual International Conference and Exhibition, held in Montego Bay earlier this month, Minister of Commerce and Investment Aubyn Hill announced bullishly that those who opted to invest in the Caymanas Special Economic Zone would not have to pay income tax for 50 years.
Hill was no doubt looking to entice investors to look upon Jamaica favourably and was prepared to offer up inducements for them to do so.
The senator’s eye-catching declaration was picked up by the Washington Informer which wrote: “Hill further noted that 50 years without any taxes on dividends will be beneficial to the developer/investor who can arrange to have as many business operators rent their property, as they will have a long-term lease that will be renewable.”
But, Minister of Finance and the Public Service Dr Nigel Clarke maintains, “there are no new fiscal benefits contemplated for Special Economic Zones at this time. The fixed benefits that already exist, and that are set out in the Special Economic Zones Act are the ones that will apply to any new SEZ”.
In other words the existing law and policy remains in place and fiscal benefits are detailed in the SEZ Act.
According to the SEZ Act, there may be instances where investors may be able to get income tax as low as 7.5 per cent and other benefits listed in the Act but certainly cannot expect a let-off from paying income tax for 50 years.
If you are an investor looking to do business in Jamaica and set up operations in one of the Special Economic Zones what do you do now?
Hill, the investment and commerce minister, has laid down the red carpet, made it worth your while coming into a small developing state which has a high crime rate, depreciating currency, and shortage of skilled workers; while Clarke insists you will have to meet income tax obligations and that the Investment Minister doesn’t know what he is talking about.
It’s a head scratcher.
Aubyn Hill is committed to bringing in more investors to Jamaica and has often spoken about the multiplier effect. With considerable international experience, he views this approach as a way to grow the economy and provide employment for Jamaicans.
But no one is going to invest in Jamaica unless you can make it worth their while. The Government has to be singing from the same hymn sheet when it comes to foreign investment. Right now, the messaging is all over the place and this administration is certainly not in harmony on this.
Dr Nigel Clarke is fiscally conservative and focused on keeping the multilateral agencies happy and maintaining Jamaica’s reputation for honouring its debts. He takes immense pride in Jamaica reducing its debt-to-GDP ratio from 147 per cent to 98 per cent with the aim to get it down to 60 per cent by 2028. That should keep Jamaica in good stead with international lenders.
Heaven forbid, Jamaica can’t go through another FINSAC era where it took it a quarter of a century to recover.
Dr Clarke is cautious by nature and doesn’t want to see Jamaica go the route of the likes of Sri Lanka, Venezuela and Argentina.
Hill is urbane, has all the attributes of an ambassador, and is determined to see Jamaica as a leading investment destination in the region. Undergirding his gifts is an alpha-male-driven to get Jamaica there and bring in investors.
Earlier this year he said: “I firmly believe that Jamaica is an attractive and welcoming investment destination. Our strong economic performance and seven, ten years ago I couldn’t use that adjective – but having gone through the pandemic, signifies Jamaica’s resilience, strategic location connectivity, readiness to do business, natural resources, all wrapped in a cultural package that is appreciated and sought after, around the world.”
That’s a hill, Hill would be prepared do die on. He is wedded to making Jamaica an attractive place to invest in. He firmly believes that at this stage of Jamaica’s development, the country must entice investors, give them a reason to take the risk.
Dr Clarke is centred on Jamaica’s access to credit and it passing all prescribed tests. He is more interested in investors paying taxes and creating revenue that he can draw upon. Giving away the farm and other sweeteners is an anathema to his credo.
I’d like to be a fly on the wall at the next Cabinet meeting.