Tue | Jan 22, 2019

Negating foreign investment

Published:Friday | March 13, 2015 | 12:00 AM

Governments like Jamaica seek foreign investment because of the economic benefits that should flow to the country, but the same government (because of incompetence or corruption) can take steps to cancel out the economic benefits.

Investment in Jamaica is supposed to lead to employment for Jamaicans, who will fill the Government's coffers through payroll taxes and spend their wages in the local economy by purchasing goods and services, which benefits the private sector. Jamaican workers in the building trades can get work during the construction phase of the foreign investment, but the Government can negate this benefit by granting work permits to foreign construction workers, thereby taking bread out of the mouths of Jamaicans. Do the unions care about this, or are they so much in the pocket of the Government that they accept it without a whimper?

Maybe the foreign workers pay Jamaican payroll taxes, so the Government still benefits; but the foreign workers will take home the bulk of their wages. So it is the Jamaican private sector that is denied the local spend. Usually, the incomes of foreign workers are still subject to taxes in their home countries. Does this mean that foreign workers are subject to double taxation? Usually not. The investor usually arranges tax waivers for its nationals from the foreign government, thereby reducing the benefits to the country from foreign investment.




There is lack of transparency here. Do the hundreds of Mexican workers and the thousands of Chinese workers labouring in Jamaica pay any Jamaican payroll taxes? Are they paid here in Jamaican dollars, or is their salary paid to their families at home in foreign currency? And all they get locally is a small stipend to buy food?

And how much are they paid? Are they paid more or less than the wages agreed by the building industry? Do our unions care about this, or are they so much in the pocket of the Government that they accept it without a whimper?

No foreign worker is supposed to be hired to work in Jamaica if there is a capable and qualified Jamaican worker who can do the job. Usually, the foreign investor is required to advertise the job locally, and may only employ foreign workers if there is a lower-than-required response from locals. Have you seen any advertisements in any local newspaper, or on any local radio or television station, for Jamaicans to work on any Mexican or Chinese construction site? I didn't, but I might have missed it. Is this another case of the law not being a shackle?

Who is going to defend Jamaican workers against their Government? This is the problem with politically allied trade unions.

Another way the Government benefits from foreign investment is when the foreign corporation operating in Jamaica pays local company taxes, and duties to import foreign items. But usually, the foreign investor is offered tax holidays and waivers on import duties as incentives for them to invest.

China Harbour Engineering Company (CHEC) has been operating in Jamaica for a good few years now. Did it declare a profit last year, or the year before? Does CHEC pay company taxes in Jamaica?


special incentives


Does CHEC pay import duties on materials it imports, or is it given duty waivers? Are Jamaican construction companies offered the same tax concessions? Is there fair competition between local and foreign construction companies?

We all know that there are special incentives at work in the hotel and tourism sector. Yet workers for subcontractors renovating the Moon Palace Jamaica Grande in Ocho Rios complain that their bosses have not been paid for work done, while foreign construction workers are being imported. I cannot imagine the foreign workers not being paid.

Maybe the local trade unions are silent, but I have heard complaints from players in the local construction sector about unfair competition. Possibly the concessions foreign companies receive make the employment of foreign construction workers cheaper than hiring locals.

I welcome the intervention of the Office of the Contractor General in investigating these labour contracts. And while he is at it, he needs to investigate the contracts with the foreign investors. There is the need for much more transparency in these matters.

I hope that there are no under-the-table payments being made here for facilitating the rape of Jamaica by foreign investors? Somebody benefits!

- Peter Espeut is a sociologist and rural development scientist. Email feedback to columns@gleanerjm.com.