Fairness needed for both foreign and local investors
Aubyn Hill, Financial Gleaner COLUMNIST
There is a quite pervasive perception among many Jamaicans that foreign investors who come to Jamaica are welcomed with open arms and given all kinds of concessionary deals and arrangements that their Jamaican counterparts can never dream of getting.
At the 'big man' level, this is discussed sometimes with vehemence but is generally shrugged off as 'this is Jamaica'.
Among small investors and shopkeepers there is real resentment, lack of information and a strong feeling that this treatment by their Government is patently unfair.
Heaven knows Jamaica needs investments, and especially foreign investments, given the dearth of local ones and or reticence on the part of local investors. But when both local and foreign investors step forward, the two sets should be encouraged and placed on an essentially level playing field.
I have lived in a bunch of different countries around the world and, together with my family, have been the beneficiary of a great deal of hospitality and kindness from many foreigners and foreign communities.
It has also been my privilege to lead a team of professionals to divest six Government of Jamaica-owned sugar estates on about 40,000 hectares of land to two large Jamaican business houses, and a large Chinese state-owned company.
I welcome foreign investors to Jamaica. But that welcome is certainly not mutually exclusive to treating Jamaican investors - especially the fledgling and small ones - with care, fair and transparent assistance.
From Kingston through to Savanna-la-Mar and on to Negril, there is a constantly repeated line of local talk which says that Chinese shopkeepers and similar Chinese-owned establishments get special tax and other concessions from the Government. These concessions, it is claimed by local people who must survive with these foreign-owned firms, make it near impossible to compete effectively with them.
In the case of the Westmoreland parish capital, the Custos Rotulorum of the parish was on the record in The Gleaner in April of last year bemoaning the purely extraction-from-the-economy approach of foreign Chinese and Indian business persons who do business in Savanna-la-Mar, without any giveback to the communities that support their businesses.
Many local people claim that the Chinese investors have a very slick method of perpetuating these concessions, perennially.
They say it works in this manner: A family of Chinese business persons arrives and the concessions are given to one person in the family for, say, three years. Near the end of the three years a new business person arrives from Hong Kong, or mainland China, and buys the existing business, which is registered under a new name.
The former chief technical director of the Financial Investigations Division, Justin Felice, made the claim in a July 2013 newspaper article that many foreign Chinese investors in the local market take tax concessions when they are not awarded. In his observation that foreign Chinese business persons are sometimes targeted for cash because they assiduously avoid conducting business through the regulated banking system, Felice said: "So we have to educate them to put the money into the system. But they don't want to do so because they don't want to pay the 25 per cent or 30 per cent tax".
Jamaicans are obliged to pay these taxes.
Many Jamaican small and medium-size business operators say not only are they, as Jamaicans, not given tax concessions, but many are targeted for tax audits while their foreign competitors get their foreign-exclusive concessions and then go and evade more taxes.
LEVELLING THE PLAYING FIELD
Foreign investors may play games just the same way many Jamaicans play the system when they go abroad. The foreigners continue here because our Government gives them a wink and a 'bly'.
If concessions are still being given to foreigners, then consideration needs to be given to local business people. Clearly, the foreigners have found out that a fee to the right persons at our ports can wipe away much of the customs duty, which others have to pay.
A good part of what our Government can do to assist is simply to disseminate information about the Chinese and other nationalities, their cultural differences and factors which we all share. On the other hand, Jamaican investors rarely secure the services of well-trained, informed and experienced negotiators to carry their investment cases to the Government.
Mostly, our local investors rely on political or similar connections. Those may be necessary to open the door to get in and walk out with the deal, but they are often ill-informed and inept at negotiating tax, investment, market, land, people and other concessions.
An advertising piece from Jampro in September 2014 carried the headline: 'Jamaica wide open to Chinese investors' and started with this: "As the gateway to the Americas, Jamaica offers lubricate opportunities for Chinese investors in areas such as renewable energy, agriculture and infrastructure, a leading Jamaican business promoter has said".
Great for the Chinese and I welcome them. But, what about the opportunities open to ordinary, small, Jamaican business entrepreneurs?
Aubyn Hill is CEO of Corporate Strategies Ltd and chairman of the Economic Advisory Council of the Opposition Leader.Email: firstname.lastname@example.orgTwitter: @hillaubynFacebook: facebook.com/hillaubyn