WHILE the Government of Jamaica might have anchored Jamaica’s prospects of becoming a logistics hub in the special economic zones (SEZs) framework, a major stakeholder is appealing for a review of the policy and an overhaul of the SEZ legislation.
Executive director of the Jamaica Manufacturers and Exporters Association (JMEA) Kamesha Blake Turner says that while there are benefits to be gained from the SEZ framework, the structure of the Special Economic Zones Act (2016) and its administration make it prohibitive for member companies to access the benefits. Moreover, she argues that the framing of the legislation could be making the country uncompetitive.
Blake Turner is, however, optimistic that Jamaica’s hosting of the World Free Zones Organization’s Annual International Conference and Exhibition (AICE) this week will yield lessons in best practices and that it can propel the country into becoming a global logistics hub.
“I believe this was JSEZA’s (Jamaica Special Economic Zones Authority’s) intention when they would have bid in 2019 for the hosting of this event to be in Jamaica. I believe that they saw it as an opportunity to bring major international investors so that we can show them what Jamaica has to offer,” she told the Jamaica Observer in a recent interview.
“But since then (2019), have we really prepared for the opportunity? So we need to look at how bringing this conference can help us leapfrog,” the JMEA executive director continued.
She further questioned how the Government plans to court international investors to capitalise on SEZ offerings when local companies face difficulty navigating the policies.
“Many manufacturers would have tried to explore getting incentives under the special economic zones framework. However, there are certain limitations where existing companies cannot set up…Quite a number of our members would have explored but the limitation is the legislation,” Turner Blake said.
For manufacturers and exporters who had previously enjoyed benefits from the previous free zone framework, they would have been “grandfathered” into the new SEZ paradigm given they make some adjustments.
However, companies that have applied for SEZ status and are “exploring export markets would have had to set up a totally different company”, Turner Blake explained. Due to this administrative headache, one member of the JMEA, who planned to invest US$10 million in setting up as SEZ operator, instead took its business to another country in the region.
Another JMEA member pointed out that it takes six months to get an approval from JSEZA as an operator and/or developer. By contrast, the same process in the Philippines takes six weeks.
The JMEA has also identified that there is a lack of streamlining of documentation. So whereas companies are required to submit documents on a monthly or quarterly basis to government agencies following a certain format, JSEZA requires submission of documents in a different way.
When the Observer enquired further on the reason for processing challenges, JMEA Export and Research Policy Manager Carlton Thomas, a former employee of JSEZA, shared that the document submission process is not clearly explained to SEZ applicants who have to file documents. Moreover, there is no information sharing between JSEZA and other government agencies and so in the case of copies of documents, applicants will also have to get them certified.
He also pointed out that the writing of the legislation “has been dictated internationally” as it adheres to World Trade Organization policies which recommend moving away from free zones to SEZs. However, Thomas noted that the aim of the SEZ framework is not to exclude local companies, “but the legislation will need to be reviewed to ensure that”.
Until then, Turner Blake said, “what we’re seeing is an uncompetitive scenario. We’re hoping that with the AICE conference coming to Jamaica we can understand some of the best practices and we can also look to adopt some of that,” she stated.
Since the aim of hosting the AICE is to pitch Jamaica and its SEZs for foreign direct investors, Turner Blake advised that the Government should begin addressing the challenges faced by local companies so that when international investors come they are not turned off. In this regard she also suggested a type of SEZ sandbox in which the applications of international investors can be fast-tracked using best practices learnt from the conference.
In terms of the SEZ legislation, the JMEA executive director argued that any changes that the Government will make will need to make good business sense that facilitates efficiency of applications to JSEZA.
On that note, Turner Blake expressed hope that the Jamaica Single Window for Trade and the National Business Portal will incorporate and streamline applications to JSEZA.
In the meanwhile, the JMEA has engaged in dialogue with Minister of Investment, Industry and Commerce Senator Aubyn Hill to address the challenges of some of its members.