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More investors showing interest in Special Economic Zone

THE Jamaica Special Economic Zone Authority (JSEZA) is reporting heightening investor/stakeholder interest in operating within the country’s Special Economic Zones (SEZs), which are key components of the Government’s Logistics Hub Initiative (LHI).

Dr Eric Deans, chief executive officer of the JSEZA, which is spearheading the initiative’s development, told JIS News that the authority has 31 SEZ applications for established activities such as business process outsourcing, manufacturing, and logistics — pointing out that a significant number of the applicants are micro, small and medium-sized enterprises (MSMEs).

“We are also seeing interest from a wide cross section of industries in new and emerging industries, particularly in the logistics and maritime sectors, which are deemed attractive to operate in Jamaica,” Dr Dean noted.

He pointed out that a JSEZA market analysis identified pharmaceuticals, higher-end agro-processing, electronics, medical device, auto parts, and motor vehicle assembly among the diverse set of additional activities for consideration.

Noting that there is local and foreign interest in pursuing activities in these new industries, he attributes this to new incentives being offered under the SEZ Act that “investors are taking advantage of”, coupled with Jamaica’s strategic location in the Caribbean.

The JSEZA’s director of investor relations and communications, Kelli-Dawn Hamilton said the SEZ incentive regime includes an attractive corporate income tax rate of 12.5 per cent, which she said can be further reduced to 7.75 per cent with the application of various promotional tax credits, compared to 25 per cent in the regular domestic economy.

Additionally, she said SEZ companies are able to import items at the duty-free rate.

Value-Added Logistics Will Drive Growth – Dr. Deans

The Jamaica Special Economic Zone Authority (JSEZA) is reporting heightening investor/stakeholder interest in operating in the country’s Special Economic Zones (SEZs), which are key components of the Government’s Logistics Hub Initiative (LHI).

Chief Executive Officer (CEO) of the JSEZA, which is spearheading the Initiative’s development, Dr. Eric Deans, tells JIS News that the Authority has 31 SEZ applications for established activities such as business process outsourcing, manufacturing and logistics, pointing out that a significant number of the applicants are micro, small and medium-sized enterprises (MSMEs).

“We are also seeing interest from a wide cross section of industries in new and emerging industries, particularly in the logistics and maritime sectors, which are deemed attractive to operate in Jamaica,” Dr. Dean notes.

Dr. Deans points out that a JSEZA market analysis identifies pharmaceuticals; higher-end agro-processing; electronics; medical device; auto parts; and motor vehicle assembly among the diverse set of additional activities for consideration.

Noting that there is local and foreign interest in pursuing activities in these new industries, he attributes this to new incentives being offered under the SEZ Act that “investors are taking advantage of”, coupled with Jamaica’s strategic location in the Caribbean.

The JSEZA’s Director of Investor Relations and Communications, Kelli-Dawn Hamilton, tells JIS News that the SEZ incentive regime includes an attractive corporate income tax rate of 12.5 per cent, which she says can be further reduced to 7.75 per cent with the application of various promotional tax credits, compared to 25 per cent in the regular domestic economy.

Additionally, she says SEZ companies are able to import items at the duty-free rate.

Mrs. Hamilton also emphasises the importance of the Authority’s inclusion of the general economy in the engagements embarked on.

“So through the regime, we have created an incentive framework that allows persons who purchase goods and services in the domestic economy to pay zero per cent general consumption tax, which is a huge win for the investor and for the local economy because it now means that it is more attractive to purchase goods locally,” she states.

The Director also points out that the Authority is keen on creating linkages with domestic suppliers. As such, she says they have been advancing work to create a policy that facilitates a linkage programme, “which sees us connecting local suppliers with investors”.

She further tells JIS News that the Authority is developing an MSME Policy, pointing out that the Special Economic Zone Act stipulates the development of such an instrument.

“We recognise that our MSMEs are central to moving our economy… and so we must carve out a special regime for these players… and it is something that we are actively working on with a number of stakeholders,” Mrs. Hamilton says.

She emphasises that the Authority is implementing a regime that is adaptable and responsive to the market, “while maintaining our role as regulators of the free zone/SEZ space”.

“Our processes continue to be consultative (because) we believe that we must be listening to our clients. But we take our role as regulators very seriously, because there are certain rules that entities must adhere to. We see our SEZ brands as being flag-bearers for the country and for business in Jamaica, and we, therefore, expect that they must be operating at a certain level,” Mrs. Hamilton states.

In emphasising the importance of protecting brand Jamaica, if the country’s development is to be further advanced, she says the Authority “will continue to push that and work with our stakeholders to ensure that the regime achieves its intended purpose”.

JISCO Looking for Partners in Industrial Park and SEZ

The Chinese company, Jiuquan Iron and Steel (Group) Company Limited (JISCO) is looking at possible joint venture Jamaican partners for Chinese companies that will be investing in the Industrial Park and Special Economic Zone (SEZ) in Nain, St. Elizabeth.

The project comprises an already approved US$3 billion investment by JISCO in expanding their refinery and post operations and a projected US$3 billion dollar development in the Industrial Park and SEZ.

Speaking with JIS News, at the 46th staging of Expo Jamaica at the National Indoor Sports Centre on April 20, Minister without Portfolio in the Office of the Prime Minister, the Hon. Michael Henry said the investment will present numerous opportunities for the local manufacturing sector.

“Here is an opportunity for (JISCO) to look at where we are as a country, where the opportunities exist and where we recognize that our market is the world. Come and look at what exists, come and meet the businesses that are here,” he said.

“It is also an opportunity to encourage Jamaican businesses to equally see what are the opportunities, and how you can expand and whether you want to relocate to an industrial park, an SEZ and how that…helps your growth and development,” he added.

While at the Expo, Minister Henry, along with Chairman of JISCO, Chen Chunming; Project Manager, Li Fang; and Assistant Managing Director, Sun Jing, toured several booths.

Expo Jamaica is being held at the National Arena and the National Indoor Sports Centre from April 19 to 22.

Under the theme: ‘Advancing Breakthroughs’, the expo is being hosted by the newly formed Jamaica Manufacturers and Exporters Association, in collaboration with JAMPRO.

JSEZA Hunts Funding For Economic Zone Investments

​The fairly newly minted Jamaica Special Economic Zone Authority, JSEZA, is in the international market to tap billions of dollars in multilateral development financing for local businesses it is trying the lure into setting up mega enterprises in stand-alone economic zones.

It is also celebrating the more than $3 billion in local and international investments it has attracted since the special economic zone regime was formalised with the promulgation of the Special Economic Zones Act two years ago.

Chief Executive Officer Eric Deans says his organisation is now in talks with funding agencies, including the Caribbean Development Bank, CDB, and International Finance Corporation, the private sector funding arm of the World Bank.

“We are trying to be innovative in terms of financing. It is unlikely that we will find many persons in Jamaica with the amount of capital readily available to invest, so we are looking at creating equity funds, where a pool of funds will be created that Jamaican firms can access to allow them to participate in these types of joint ventures and use the revenues from the joint ventures to repay (the loans),” Deans told the Financial Gleaner in an interview on Wednesday.

He is expected to carry his pitch for sustainable financing for special economic zone enterprises to the CDB officials when he addresses the CDB governors conference later this month.

This is part of the push by JSEZA to rely less on foreign investments to drive the zones and to create possibilities for more local firms to take up the tax-free incentives they offer. These include no duty on goods and zero general consumption tax on electricity and telephone calls.

The JSEZA is also in talks with energy providers to introduce liquified natural gas, or LNG, as well as renewable energy to reduce energy input for prospective investors, its CEO said.

Numbers growing

Deans pointed out that there are now some 190 free zone businesses across 12 parishes operating under the old regime. JSEZA is charged with transitioning these firms to the new special economic zone regime with a statutory deadline of December 31, 2019, to do so; attract and process new applications even as it ensures the overall governance, legislative and operational framework; and regulates all entities under the SEZ architecture.

SEZs in Jamaica include technology parks such as the Barnett Tech Park in Montego Bay, several business process outsourcing operations, the Kingston Container Terminal, Kingston Wharves, Walkers-wood Caribbean Foods agro-processing business in St Ann, a petrochemical manufacturing firm located in Old Harbour in St Catherine, and the Garmex industrial and commercial operation in Kingston.

The size of existing SEZs is fairly small and one of the preoccupations of the authority now is to encourage the scaling up of future investments to the mega developments being pursued elsewhere in the world, such as in China and Singapore, that includes large commercial, industrial, residential and recreational facilities in one location.

A typical SEZ in China is said to be around 400 square kilometres, whereas Jamaica’s largest SEZ, the Kingston Free Zone, is 19 acres or 0.076 square kilometres. JSEZA sees the joint-venture model as the best way of achieving the setting up of bigger zones in Jamaica.

Mega SEZs in the pipeline ,such as the planned 1,200 acres Caymanas zone in St Catherine, the 6,000-acre Jiuquan Iron and Steel Company industrial park for Nain in St Elizabeth, as well as the talked-about 4,000-acre Vernamfield airport city in Clarendon, are intended to be of the large scale contemplated.

The investments being hunted and promoted are expected to be multibillion-dollar enterprises which would dwarf the US$400 to US$600 million a year in investments Deans noted that Jamaica has attracted over the past 10 years.

The aim is to get closer to the US$1 billion to US$4 billion per year being raked in by Jamaica’s regional competitors, including Costa Rica, Colombia, Dominican Republic and to a lesser extent, Trinidad & Tobago and emerging Cuba.

The feasibility study for Caymanas is not expected to be completed until August this year, and Vernamfield is even farther off. Deans said requests for proposals will be invited from prospective investors immediately thereafter.

The timeline for Caymanas, he said, does not represent an unusually slow movement on the long-proposed project, as the concept has been radically changed from a real estate project selling lots to an integrated township develop-ment with commercial, industrial and residential components.

Deans pointed out that the take-up of SEZ opportunities by Jamaican businesses has been among the high points of the work of the authority to date. Kelli-Dawn Hamilton, director of investor relations and communication at JSEZA, said investors and business owners have been “very vocal” in their feedback.

This response has included opposition to the initially proposed flat fee-rate structure across the board for SEZ businesses. The revised fee structure is now based on square footage and is payable by the developers of SEZ space.

Even though the SEZ legislation replacing the old free zones act was passed in 2016, it wasn’t until late last year that the companion regulations needed to give effect to the law were out in place, giving the authority and its 12 staff the mandate to operate from its 13 Waterloo Road offices in St Andrew since January last year.

Deans, who is also the chairman of the Jamaica Logistics Hub Taskforce, is regarded in some circles as the principal technical architect of Jamaica’s logistics hub initiative. He is an associate professor in logistics and supply chain sustainability at the Caribbean Maritime University, CMU, serves as executive director of the CMU’s centre for sustainable supply chains, and was at one time Jamaica’s representative to the International Maritime Organization.

He is still gung-ho on the vast potential of Jamaica logistics initiative meant to capitalise of the country’s central location in the global goods-supply route to generate industry, jobs and economic growth.

In fact, former Trade and Investment Minister Anthony Hylton appears vindicated by the early success of the initiative he was famous for having trumpeted during past People’s National Party-led administrations to some scepticism.

Kingston Wharves’ successful total logistics centre, Deans said, scaled up from its initial plan as a result of the early success of the venture, buttressed by the incentives offered under the SEZ regime.

Source: http://jamaica-gleaner.com/article/business/20180504/jseza-hunts-funding-economic-zone-investments