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Refocus reforms to enhance business environment - IMF

Published:Wednesday | July 2, 2014 | 12:00 AM
Jamaica Business Development Corporation (JBDC) chief executive Valerie Veira (left) and communications manager Kenesha Nooks (right) show off a piece of artwork to Industry, Investment and Commerce Minister Anthony Hylton (second left) and Private Sector Organisation of Jamaica chief executive Dennis Chung at the JBDC's annual Small Business Expo at The Jamaica Pegasus hotel, New Kingston, in May. The International Monetary Fund has urged the Govermment to change its strategy to improve the process of doing business in Jamaica. - File

McPherse Thompson, Assistant Business Editor

The International Monetary Fund (IMF) has suggested that the Jamaican Government refocuses reforms toward enhancing the business environment to support growth, given that reforms, so far, have not translated into measured improvements.

That could also help explain the delayed improvement in export market shares, said IMF country report number 14/169 on Jamaica, released in June as part of the requirements under the four-year extended fund facility.

Noting that Jamaica's ranking in the doing business indicators has deteriorated continuously in the last decade, the report said "this is an indication that past policies have failed to address constraints to doing business in Jamaica, and implies a strong case for refocusing reforms toward enhancing the business environment to support growth."

THREE-PLACE DECLINE

The most recent Doing Business report (2014) shows a further decline by three places compared to the performance in 2013, with Jamaica now ranked 94 out of 189 countries globally and behind most of its peers in the Caribbean and Central America - Columbia, Panama, St Lucia, Trinidad and Tobago, Antigua and Barbuda, Dominica, Guatemala, St Vincent and Grenadines, The Bahamas, and Barbados.

According to the 2014 Doing Business report, compiled by the World Bank, Jamaica has made starting a business easier by enabling the Companies Office of Jamaica to stamp the new company's articles of incorporation at registration.

However, it made transferring property more difficult by increasing the transfer tax and the stamp duty.

Jamaica improved its credit information system by creating a legal and regulatory framework for private credit bureaus, and made paying taxes less costly for companies by reducing the corporate income tax rate, although it also increased motor vehicle and asset taxes.

The country ranked 52 for the ease of dealing with construction permits, taking eight procedures, 135 days and costs 207.1 per cent of income per capita to comply with the requirements, according to the report, which covered the period June 2012 to June 2013.

Jamaica is ranked at 132 for the ease of getting electricity, taking six procedures, 96 days and cost 540.6 per cent of income per capita.

It is ranked 118 for the ease of trading across borders, requiring six documents, 20 days and cost US$1,530 per container to export goods, and seven documents, 17 days and cost US$2,130 per container for imports.

In terms of the ease of enforcing contracts, Jamaica is ranked at 131, requiring 35 procedures, taking 655 days and costing 45.6 per cent of the claim.

WEAKENED COMPETITIVENESS

It is ranked at 31 for the ease of resolving insolvency, takes 13 months, costs 18 per cent of the estate and has a recovery rate of 64.2 cents in the dollar.

The IMF report also said that violence in Jamaica has deterred investment, affected capital formation, and discouraged business development, noting that corporate surveys consistently identify crime as a key constraint to doing business in Jamaica.

The report said Jamaica's ranking in the Travel and Tourism (T&T) Competitiveness Index weakened further in 2013.

Jamaica ranked 67th on the T&T Competitiveness Index in 2013 out of the 140 countries surveyed, a further deterioration from the 65th and 60th ranks in 2011 and 2009, respectively.

It said Jamaica continued to rank behind its key tourism competitors in the region - Barbados, Panama, and Costa Rica. Jamaica was assessed to be less competitive in cultural resources availability, general environmental sustainability, and price.

However, it said that after several years of decline, Jamaica's ranking in the Global Competitiveness Index (GCI) has improved somewhat in the last two years.

Jamaica ranked 94 out of 148 countries, placing it within the top 64 per cent of the countries surveyed, down from the top 67 per cent in the 2012-13 ranking, even though the overall score has remained at an average of 3.9 for the last two years.

The IMF report said the 2013-14 report ranked Jamaica's macroeconomic environment poorly, an assessment that is expected to improve once the full benefits of the current Fund-supported programme begin to impact.

"However, as has been the case in the past, Jamaica's business environment also continued to be constrained by inefficient government bureaucracy, corruption, and crime and theft, which top the list of the most negative factors affecting the cost of doing business in Jamaica," it added.

Jamaica continues to lag behind its peers in the region - Panama, Barbados, Costa Rica, Colombia, Guatemala, and Trinidad and Tobago, the report said.

The Government said it will strengthen the efficiency and quality of the public procurement process, thereby improving the ease of doing business and reducing costs.

mcpherse.thompson@gleanerjm.com