Companies rate Jamaica highly for ease of profit repatriation, FX market

Jamaica has been positioned ahead of Trinidad and Tobago for ease of funds movement, according to Irish telecoms company Digicel, which is headquartered in Kingston.

This view held by Digicel came after the Jamaica Observer reached out to the telecoms entity for its perspective on the issue of movement of funds and Jamaica's competitive advantage. The response provided said that Jamaica was ahead of others, for example, Eastern Caribbean counterpart Trinidad and Tobago, on several counts.

Digicel is an international mobile phone network and home entertainment provider operating in over 33 markets across the Caribbean, Central America, and Oceania regions.

The company said, “Comparing Jamaica with Trinidad & Tobago, it's easier to get cash out of Jamaica, as there is a deeper market here, limited difference between the quoted rate and what you can obtain, and it's generally a good market to do business in.”

Digicel said, “In Trinidad & Tobago, for example, there are not a lot of dollars available. It is closely controlled by the central bank and there is a significant difference in what you can achieve between the grey market and the official market.”

The company said that Jamaica's biggest disadvantage were challenges relating to the fluctuating and deteriorating value of the home currency.

Digicel stated, “On the downside as it relates to Jamaica, there is, of course, the issue of currency depreciation over the last three years at a rate of around 6 per cent per year.”

However, Fitch noted that Digicel's revenues have been under pressure due to currency depreciation in its markets coupled with other factors which “outweighed gains elsewhere. The Jamaican dollar is now trading at $156.26 to US$1, with value depreciating more since the final quarter of 2021.

Jamaica has a floating exchange rate regime, with the central bank implementing several reforms aimed at deepening the FX market in the last two years. Comparatively, several countries in Latin America have fixed rates and other foreign exchange controls in place.

Jamaica is ranked 71 among 190 economies in the ease of doing business category, according to the latest World Bank annual ratings in 2019. The rank of Jamaica improved to 71 from 75 in 2018.

Digicel's position supports views expressed in a recent Jampro forum targeted at investors in the United Kingdom, which highlighted how the ease of access to foreign exchange and the ability to transfer profit were attractive to investors.

Yago Castro, general manager of Caribbean Cement Company Limited, said in the Jampro forum that incoming investors who were wondering “What happens to my money if I go there and invest? Is my money secure?” had nothing to worry about, as “once you make profit, you can repatriate your profit”.

Jamaican manufacturer Metry Seaga, who was also on the panel, commented, “Many investors see Jamaica as a banana republic and we simply are not. [There is] the ability to take your money out when you want it. Hundreds of millions in pounds and euros are being taken out. We have a stable democracy and our banking and legal systems are really first-world.”

In its latest rating of the telecoms operator, ratings agency Fitch moved the company's ratings on a Rating Watch Positive (RWP) following the announcement of the sale of the group's Pacific assets.

On October 25, Digicel Group Holdings Limited (DGHL) announced the sale of 100 per cent of Digicel Pacific Limited to Telstra Communications Limited for US$1.85 billion.

The transaction is expected to close in 1Q22, and Fitch expects the net proceeds to be US$1.4 billion from the sale, which will be used to repurchase all of DGHL's secured (US$1.05 billion) and most of its unsecured notes (US$425 million).

Fitch said it expects that the net proceeds of US$1.4 billion at closing will be used to repurchase all of DGHL's secured (US$1.05 billion outstanding), and most of its unsecured notes (US$425 million outstanding).

The ratings agency said that the transaction will enable the company to deleverage by approximately 0.5 times, and is expected to improve its financial flexibility.

BY AVIA USTANNY - COLLINDER Senior business reporter

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