Responding to concerns from some local manufacturers about current challenges when trading in the Special Economic Zone (SEZ), the Jamaica Special Economic Zone Authority (JSEZA) said that while it is aware of the red tapes and has been working to remediate key issues, it is also reminding companies that the SEZ regime was not designed to suit all businesses.

“We are not the enemy, the reality is just that different people have had different experiences and we expect that, because the SEZ is not for everybody. It is not a cookie-cutter approach as the regime is so nuanced whereas it can work well for one manufacturer and not so well for another, which is why we go the route of sitting with our clients and talking them through as we do the necessary handholding to ensure that in the end we can all be on the same page. In light of this, it is therefore worthwhile for all clients to have a discussion with the authority before going down the road of business, so that we can work towards getting maximum benefits from the regime,” CEO of JSEZA Kelli-Dawn Hamilton told the Jamaica Observer in a recent interview.

She said that as the authority continues to work closely with key governmental bodies such as the Tax Administration General (TAJ) and the Jamaica Customs Agency, it should be able to, from very early, gauge feedback from all these stakeholders to harmonise policies while even offering its own set of recommendations to curate a better experience for all users.

JSEZA, an agency of the Ministry of Industry, Investment and Commerce, is responsible for facilitating the development and promotion of investments in Jamaica’s SEZ regime. Guided by the SEZ Act of 2016, the authority seeks to enable businesses operating in these zones to compete effectively while making Jamaica a major player in the global logistics chain. In offering special tax benefits and fiscal incentives to companies operating in the zone, the regime aims to increase economic investments and employment as it encourages growth in new sectors.

Its benefits include a lower corporate income tax for all users (50 per cent less than that paid by businesses operating outside of the SEZ), the removal of duties on imports and on GCT for goods and services purchased locally. Companies having operations in warehousing, logistics, nearshoring and manufacturing, agro-processing and global digital services are listed among those most suited to benefit under the regime.

Despite these attractive benefits and the authority’s continued work to strengthen its facilitatory role, some manufacturers, in openly expressing their frustration at the recently concluded Jamaica Manufacturers and Exporters Association (JMEA) 360° conference, pointed to issues largely concerning rules of origins, yearly fees and structures among other limitation challenges in the SEZ which they said have continued to hinder their businesses in one way or another.

For Cecil Foster, managing director of FosRich, who has had to pull his Blue Emerald business out of the SEZ due to its rules of origin, has since then had to find another outlet to export products to certain parts of the region, a move which sees his business now receiving benefits under the Factories Act of Jamaica.

“Since leaving the SEZ things have been going good for us though we continue to miss out on getting that 50 per cent reduction in corporate tax. While we have been surviving, if the challenges we were facing are addressed we could return to the zone, if we find it making sense for the business,” he told the
Business Observer.

Executive chairman of CPJ Mark Hart, in articulating his own set of challenges at the recently held conference, said that a failure to address obstacles experienced by his home-porting business continue to cast doubts on his company’s ability to take advantage of available opportunities in that area.

Warranting the concerns of the manufacturers as valid, Hamilton said steps are now being taken as the authority moves to improve its facilitation. For those concerns around the rules of origin, which she labels as a “Treaty of Chaguaramas issue”, she said the authority has now engaged a consultant to help the entity in arriving at some conclusions.

“Right now what we don’t have is a national position on the rules of origin because in some instances interpretation under the treaty is that SEZs are not allowed to benefit from rules of origin. As the authority, we now have a consultant on board who is doing that work and between us Customs and all our stakeholders, we will pull together an analysis that will inform and develop the finalisation of a national position on that issue. This is expected to be finalised by about July after which time a national position is to be formed,” Hamilton noted.

“As a body what we want to create is a situation where we are responsive to market needs and that of our private sector. The SEZ regime is relatively new so we recognise that there are opportunities for improvement therefore we also want to hear from our local players so that we can fix things,” she further said.

Touting its work as the regulatory body, Hamilton, in pointing to the successes in helping entities to realise cost-savings, said it is looking at bringing more companies to operate under the regime.

At present there is said to be approximately 190 SEZ locations in operation across the island and about 149 companies approved as a designated zone.

“One of the things that we are doing on the ground is to create packages for our manufacturers as we identify lands/locations for our companies to establish operations. Stemming from our participation in a number of trade missions, we have also sought to make connections for our clients with other jurisdiction in order to help them with market expansion,” Hamilton shared, while noting the recent signing of a MOU with Liverpool Freeport in the United Kingdom, a move aimed at drumming up business for local clients in that market.

“Our aim is to work with all our clients including those small and medium-sized enterprises [SMEs] as we forge the linkages that will help our businesses to grow and expand along the global value chain. We have so far done a very good job in developing small and large companies but we now want to get into those larger scale SEZs such as Caymanas which is being led by the Port Authority. We also want to develop a sporting, creative industries and pharmaceutical zones as well as one that caters to global digital services, some of which we also hope to have a manufacturing component. This, as what we want to do is to create more opportunities to maximise on our competitive advantage as a country,” the CEO added.

JSEZA, as it now moves to integrate greater use of technology in its operations, has also pointed to the digitisation of its application process as critical area of focus.

“Work has already started but it is not yet finished as we are working to have businesses complete applications from their phones and other devices and over a shorter time frame. This may in some instance require legislative amendments because of the requirements stipulated in our regulation, as we do have a line to tow in ensuring that we adhere to our Organisation for Economic Co-operation and Development (OECD) requirements. This, as we also ensure that there is no base erosion and profit shifting while we offer facilitation in an effective way,” Hamilton said.