Corporate leaders cautious about gains in Doing Business rankings
There was good news for Jamaica in the latest global survey on business friendliness, but private-sector interests say there is still work to be done on clearing bureaucratic roadblocks.
Ranked at 64 in the ease of doing business, Jamaica moved up seven spots from last year's adjusted position, according to the World Bank's Doing Business 2016 report.
With progress in four major areas - starting a business, dealing with construction permits, paying taxes and resolving insolvency - Jamaica was named among the top 10 economies with the most gains.
"What it indicates is that there have been improvements - I would say some of them significant - but we still have a long way to go on the key areas," said William Mahfood, president of the Private Sector Organisation of Jamaica.
Mahfood pointed to the recent Global Competitive Index, which indicated that there was still too much inefficiency in government bureaucracy, problems with the tax policy, along with concerns about crime and violence, corruption and access to credit.
At 64 on the Doing Business Index, Jamaica is lower down on the ladder than its initial 2015 ranking of 58 had indicated. Last year's rankings was revised to 71 to comport with a change in the methodology.
The World Bank says the Doing Business 2016 report "completes a two-year effort to expand benchmarks that measure the quality of regulation, as well as efficiency of the business regulatory framework, in order to better capture ground realities".
Caribbean economies have an average ranking on the ease of doing business of 108, with Jamaica sitting atop that league. It's followed most closely by St Lucia - 77, and Trinidad & Tobago - 88.
Jamaica ranks among the top 10 economies worldwide excelling in the areas of 'getting credit' and 'starting a business'. It decreased the time to incorporate a business from 15 to three days and required just two interactions with government agencies.
The report also points out that less than half of the 32 economies in Latin America and the Caribbean implemented reforms during the past year. The region is reported to perform particularly poorly in the areas of registering property and paying taxes - a process that takes a local entrepreneur 361 hours to prepare, file and pay taxes, compared to 177 hours in the high-income Organisation for Economic Cooperation and Development economies.
Jamaica made starting a business easier by streamlining internal procedures, it made dealing with construction permits easier by implementing a new workflow for processing building permit applications, and it made paying taxes less onerous and less costly for companies by introducing an employment tax credit and increasing the depreciation rate for industrial buildings.
At the same time, Jamaica also introduced a minimum business tax, raised the contribution rate for the national insurance scheme paid by employers and increased rates for stamp duty, property tax, property transfer tax and education tax.
The net effect was positive. Jamaica remains very low on the paying taxes subindex at 146 of 189 economies, but that is six places up from 152 in 2015.
On the question of resolving insolvency, Jamaica made it easier by introducing a reorganisation procedure along with provisions to facilitate the continuation of the debtor's business during insolvency proceedings and allowing creditors greater participation in important decisions during the proceedings. The Doing Business report also said that establishing a public office responsible for the general administration of insolvency proceedings was a positive move.
Still, Mahfood says that in light of the recent dip in business confidence - the most current indices were released by on Tuesday - Jamaica is not yet at the point where its business community can truly celebrate the gains seen in the World Bank report.
"We're not yet at the point where we can say we've hit nirvana as far as the environment for doing business (is concerned). We're not at the point where business people can feel confident in doing business with various agencies of government," he said.
President of the Jamaica Manufacturers' Association, Metry Seaga, also acknowledged the gains but argued that the authorities need to work on translating policy into real-world experience for the average person.
"What we need to make happen now is the on-the-ground changes, those changes that people will start to see. Yes, we applaud the move in the right direction but, at the same time, we implore the Government and the agencies that have responsibility not to use it to sit on their laurels, but to make sure that they can move forward and get even higher," Seaga said.
There were three areas of the report in which Jamaica lost ground - getting electricity, protecting minority investors and trading across borders.