Welcome foreign investors but beware the fly-by-night operators
Last Sunday, we addressed the issue of foreign direct investment (FDI) and their impact, for good or bad, on our natural investment. Today we return to the issue of FDI, given its overriding importance to our prospects for growth.
Foreign direct investment, like all investments, private or public — and this is a point that we hardly need belabour — comes with benefits and costs alike. The task of the Government is to create a business environment that encourages the maximum private investment, foreign and local, and to ensure that investors operate in the best interest of the country.
Local investors can make investment as long as they abide by the laws of Jamaica. Foreign investors come under greater scrutiny because they cannot be assumed to be patriotic to Jamaica —- even though it can't be said that that all of our own Jamaicans operate in a patriotic manner.
In order for Jamaica to ensure that the country gains the maximum from the operations of foreign investors, the Government must do the following:
First, establish rules and regulations in addition to the laws of the land to regulate the conduct of foreign investors. The Government must never let its desperation for foreign investment cause it to wave these crucial guidelines. A harmful investment, local or foreign, is worse than no investment. This must be kept in mind when examining investment proposals for the logistics hub, otherwise we are destined to repeat the experience of Jamaica's first logistics hub, Port Royal, once a haven for pirate-foreign investors of a type.
Second, there must be adequate institutional arrangements to conduct careful due diligence of foreign investors expressing an interest in operating in Jamaica. The financial records and history of operations must be examined to allow entry of only foreign companies of the highest repute and to prevent money laundering. We must never assume that every cash-rich investor is a desirable investor capable of being a good corporate citizen.
Third, the Government must have adequate arrangements to continuously monitor foreign investors to ensure that they are operating within the laws, stipulated regulations, and adhering to proper labour practices and respecting the environment. Needless to say, foreign investors must pay all taxes and duties on a timely basis. The Government must be willing to take what action is deemed fit within the law to enforce proper conduct and, if all else fails, it must be prepared to close down the operation, as an example to other fly-by-night operators.
Fourth, in our investment promotion programmes, we must seek the "right" foreign investors. The considerations here go beyond the financial capacity of the firm to make the initial investment to include the encouragement (not enforcement) of technology transfers, joint ventures and the utilisation of local labour, raw material, and local suppliers.
Right now, Jamaica is desperately in need of foreign direct investment to help us create jobs and grow the economy. That makes us vulnerable and, in that context, we must be extremely vigilant.