The Jamaica Promotions Corporation (JAMPRO) today announced the country’s steady performance in attracting investments at the launch of the United Nations Conference on Trade and Development (UNCTAD) 2015 World Investment Report, at its headquarters in Kingston. The report, titled “Reforming International Investment Governance: Exploring International Investment Agreements and International Tax Regimes”, sparked discussions on Jamaica’s trajectory for growth among attendees which included the local diplomatic community, multilateral organizations, private and public sector agencies and academia.
According to the UNCTAD report, 2014 world investment inflows fell by 16 per cent which represents US$1.2 trillion in total Foreign Direct Investments (FDI). Europe experienced its third consecutive year of decline, while China was reported as the leading host country for FDI recording US$129 million, ahead of the US that recorded approximately US$92 million in inflows. Investor uncertainties in the traditional markets and geopolitical instability were the main reasons cited for this decline.
With the exception of developing Asia, all other economic regions faced declines, with FDI flows to the Latin America and Caribbean region experiencing a 14 per cent fall to US$ 159 billion due to lower than normal cross border activities. On the other hand, flows to developed countries fell by 29 per cent to US$499 billion, along with an even greater decline to transition economies of 52 per cent reflecting an intake of US$48 billion.The report notes that for the third year in a row the share of FDI inflows to developing countries compared to developed countries was higher, with developing countries accounting for 55 per cent (or US$681 billion) of global FDI inflows. Much of this went to Brazil, China (including Hong Kong), India and Singapore.
Meanwhile, Jamaica reported a higher performance than the global trend with a 7 per cent decline to record FDI inflows of US$551 million compared to US$593 million in 2013. FDI inflows to Small Island developing States (SIDS) increased by 22 per cent to $7 billion in 2014, mostly due to a rise in cross-border merger and acquisition (M&A) sales. Trinidad and Tobago, the Bahamas, Jamaica and Mauritius were the largest destinations of FDI flows to SIDS, accounting for more than 72 per cent of the total.
In her response to the media on Jamaica’s performance, JAMPRO President, Diane Edwards credited the report but lauded the increase of JAMPRO facilitated capital expenditure (CAPEX) of JA$27.1 billion which includes Local Direct Investments (LDI) during the 2014/15 fiscal year.
“Within the context of a 16 per cent global decline in FDI inflows, I am proud that Jamaica has managed to still perform better than a number of countries across the globe. This is partly due to the strong performance of LDIs,” she explained. Edwards also noted that, “a number of projects that would normally be financed by foreign investors were financed locally during 2014. This includes the local financing of a major foreign project and is a testament to the increasing involvement and competitiveness of the local financial sector. As a result, projects that would usually be recorded as FDI were this year recorded as LDI.”
Major capital works projects in the tourism and outsourcing sectors boosted the growth of CAPEX for 2014 to reach the organization’s highest performance in the post-financial crisis era.
Cognizant of the ongoing dialogue in the international arena, the main presentation, delivered by the Ministry of Industry, Investment and Commerce’s, International Trade Specialist, Andrene Collings highlighted the global call for reform of investment arrangements and tax regimes while emphasizing Jamaica’s commitment to clear and coherent tax policies.
She emphasized that “disparity in the rights afforded to investors, lack of reciprocity in investment relations between countries, and the relatively small improvements in the standard of living and quality of life for people in developing countries, mainly due to increased inequality in the distribution of wealth arising from investments”, are key issues identified with many international investment agreements. Jamaica has taken lessons from global leaders in this area and she cited the fact that the country’s late entry into the financial services sector has allowed it to develop legislation that meets the requirements of the Organization of Economic Corporation and Development (OECD).
She also noted that there has been a break-down in the global distribution of benefits arising from investment flows and there is growing need to more equitably allow for FDI flows to transmit between and among developing and developed economies alike.
The launch of the World Investment Report is an annual event hosted jointly by JAMPRO and UNCTAD. The report presents the latest trends in FDI and provides key economic analysis and data for policymakers. It also focuses on the need to reform the regime for international investment agreements by providing an action plan for such reform.
Published Date: June 25th, 2015