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Jamaica Looks To Join Caribbean Offshore Club

by Amanda Banks,, London

17 September 2007

Jamaica's newly sworn-in Prime Minister, Bruce Golding, has ambitious plans for turning round years of economic stagnation and under-investment, with proposals to develop an offshore financial centre, and new tax and regulatory policies to attract the "right kind" of foreign investment.

Golding was sworn in as the country's new leader last Tuesday after bringing the Labour Party back to power in an election on September 3, ending 18 years in opposition for the party. His priorities are reversing the "erratic financial mismanagement" by previous administrations which has led to a devaluation in the Jamaican dollar to $69 per US dollar from $5.50, high levels of government borrowing which have forced up interest rates and stifled investment, and crippling inflation that once topped 100%. He intends to do this by repeating the recipe put in place in other Caribbean jurisdictions with much success.

The Labour Party's election manifesto pledges to: "Establish Kingston as a choice location for offshore financial services to exploit the benefits currently being enjoyed by countries such as the Cayman Islands and Bermuda. This will be sited in downtown Kingston as a fulcrum for the much needed redevelopment of that part of the city."

“There are other islands in the Caribbean that have done very well in their offshore activities," Golding told the UK's Financial Times in an interview. "We believe that it is an area that Jamaica can secure benefits from."

While admitting to the paper that the creation of an offshore financial centre was something that he would not have considered 15 years ago, he now believes that the offshore world has moved on considerably in the last two decades, and that regulatory mechanisms "are sufficiently well developed to give us the kind of protection that we want in order to ensure that we are not taken advantage of”.

“Importantly, it would be a critical engine to drive the redevelopment of the city of Kingston," he added, in reference to the city's high rates of crime.

Golding also wants the government to embark on "a comprehensive reform programme designed to simplify the tax system," to make it more equitable, remove disincentives for investment and job creation, and ensure greater compliance. Proposals include the elimination of double taxation on dividends for non-listed companies to encourage re-investment for expansion. The tax-free threshold will also be increased substantially to provide relief to thousands of wage earners.

Large-scale investment projects are being sought by Golding, designed to generate significant numbers of new jobs and create opportunities for investment linkages, including an air transshipment hub, a freeport facility to be located on the Fort Augusta peninsula to provide assembling and duty free shopping comparable to that which exists in Panama, and the redevelopment of Jamaica's port and harbour facilities to encourage more cruise ship visits and expand cargo capacity.

To effectively communicate its message that it Jamaica is open for investment, the new government is also radically overhauling its investment promotion bureaus, and plans to merge Jamaica Invest (formerly JAMPRO), the Development Bank of Jamaica (DBJ) and EXIM Bank to become one integrated investment promotion, financing and marketing powerhouse, the Jamaica Investment and Development Corporation (JIDC).

“We need to find the kind of investments that can put Jamaicans to work," Golding told the FT.

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