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Foreign Investment: Jamaica, the next big tax haven

Posted January 29, 2008

“Is it possible that a debt ridden, third world country could become an international offshore financial center?” — Bob Bauman

by Bob Bauman, The Sovereign Society

Baltimore – (TFN): After being sworn in as Jamaica’s prime minister last September, Bruce Golding announced his ambitious plans for the Caribbean island. Among Golding’s plans, he raised the possibility of the island becoming another offshore financial center.

Perhaps P.M. Golding was gazing with envy at it nearest neighbor to the west, the Cayman Islands, and due south to Panama. So he noted: “There are other islands in the Caribbean that have done very well in their offshore activities, and we believe that it is an area that Jamaica can secure benefits from.”

As leader of the Jamaica Labour Party (JLP), Golding promised to reverse Jamaica’s fortunes. He’s battling 18 years of the People’s National Party (PNP) government’s failed efforts to solve problems of slow growth and crime.

Golding admitted that 10 or 15 years ago, he would “not have been prepared to consider” Jamaica as a possible offshore tax haven. But now, he said, “Regulatory mechanisms are sufficiently well developed to give us the kind of protection that we want in order to ensure that we are not taken advantage of.”

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Golding has set up a special advisory committee, headed by a tax expert from PricewaterhouseCoopers, to explore the development of an “International Financial Services Center” in Jamaica.

Foreign Investment: An economic booster shot

Jamaica, located south of the eastern tip of Cuba, certainly needs an economic shot in the arm.

Its 2.8 million people struggle under an average GDP of only US$4,800 each. The economy faces serious long-term problems, including high interest rates, increased foreign competition, exchange rate instability, a sizable merchandise trade deficit, large-scale unemployment and underemployment, and a debt-to-GDP ratio of 135%.

Jamaica’s onerous debt burden is the fourth-highest per capita in the world. It’s the result of government bailouts to ailing sectors of the economy, most notably the financial and banking sector in the 1990s - not a good omen for an offshore center.

The historic irony is that, under British control after 1655, sugar made Jamaica one of the most valuable colonial possessions in the world for more than 150 years.

Today more than 60% of the economy depends on services, mainly tourism. Jamaica gained independence in 1962. Since emigration to the U.K. was restricted in 1967, a major flow has been to the United States and Canada.

About 20,000 Jamaicans emigrate to the U.S. each year. Another 200,000 visit annually. Remittances from the expatriate communities in the U.S., U.K. and Canada, estimated at up to US$1.6 billion per year, are a big chunk of Jamaica’s economy.

Foreign Investment: Is this plan even possible?

Is it possible that a debt ridden, third world country could become an international offshore financial center?

Derek Sambrook, a long time member of The Sovereign Society Council of Experts and director of Trust Services in Panama, observes:

“In today’s services industry the ability to diversify and adapt, despite being a well-worn cliché, is a must… “ Read on to learn if Jamaica can turn its economy around and become a haven for foreign funds.

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