Repatriated profits on the decline
Primary income, representing outflows repatriated from companies located in Jamaica with an international shareholder base, has been declining since 2018, data from the Bank of Jamaica (BOJ) reveal.
The BOJ-compiled current accounts, which show the net flow of profits, interest and dividends from investments indicate that in 2018 these outflows amounted to US$596 million.
However, in 2019 the number fell to US$441.5 million, without much recovery in 2020 when outflows were US$454.5 million.
Last year, in 2021, payments overseas amounted to US$418.7 million.
Over the five-year period under review, the largest outflows are in the March quarter of each year, which is the end of the tax year in Jamaica, and the smallest in December, generally from trends seen in the BOJ current account data.
Proportionally, profit repatriated is about one-eighth of the island’s secondary income which comes from inflows arising from payments for goods, services, income, or financial items.
Inflows increase
In 2018, comparatively, inflows were US$2452.1 million; 2019 US$2416.5 million; and 2020 US$2961.5 millon. Inflows in 2021 were US$3572.6 million.
Profit is often repatriated from Jamaica in the form of dividend payments to shareholders resident abroad. The international companies which have branches in Jamaica cover a wide swath of industries, with one of the largest being banking and insurance.
Other sectors are aerospace and defence, telecommunications, agriculture, foods, automotive and transport, wood and paper products, metals and mining, chemicals, consulting including accounting, construction, cosmetics and computer hardware.
Others are energy and water, hotels, pharmaceuticals, business services, advertising, apparel and pharmaceuticals.
Jamaica has been positioned ahead of Trinidad and Tobago for ease of funds movement (profit repatriation), according to Irish telecoms company Digicel, which is headquartered in Kingston.
The company told the Jamaica Observer, “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 stated, “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 gray 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.