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J A M A I C A
COUNTRY OVERVIEW
BASIC DATA
Capital City: Kingston
Land Area:
10,991 sq km
Population:
2.67M
Main Towns: Population in .000 (2001 census)
Kingston 658
Kingston metropolitan area (579)
Spanish Town (132)
Climate:
Language:
Tropical all year; temperate inland
English, English patois
Measures:
UK (imperial system) but converting to Metric System
Currency:
One Jamaican dollar (J$)=100 cents; exchange rates in 2011:
J$85.8:US$1 (average); J$85.60:US$1 (year-end)
GMT -5
Time:
Government: Prime Minister, Defense,
Development Information & Sports
Agriculture & Fisheries
Attorney-general
Education
Finance, Planning & Public Service
Foreign Affairs & Foreign Trade,
Health
Industry, Investment & Commerce
Justice
Labor & Social Security
Mining, Energy & ICT
National Security
Tourism & Entertainment
Transport, works & housing
Water, land, environment & climate change
Youth & culture
Source: The Economist Intelligence Unit as of February 2012
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J A M A I C A
Portia Simpson -Miller
Roger Clarke
Patrick Atkinson
Ronald Thwaites
Peter Phillips
Arnold Nicholson
Fenton Ferguson
Anthony Hylton
Mark Golding
Derrick Kellier
Phillip Paulwell
Peter Bunting
Wykeham McNeill
Omar Davies
Robert Pickersgill
Lisa Hanna
COUNTRY OVERVIEW
A. POLITICAL STRUCTURE
Official Name
Jamaica
Form of Government
Representative Democracy
Head of State
Queen Elizabeth II, represented by the governor-general, who is appointed on the recommendation of the Jamaican prime minister
The Executive
Prime minister, chosen from the majority party in the House of Representatives; heads a
cabinet of not fewer than 11 members.
National Legislature
Bicameral: 63-member House of Representatives (the lower house) directly elected for a
five-year term; 21-member Senate (the upper house), appointed for the same concurrent
term by the governor-general, with 13 seats allocated on the advice of the prime minister
and eight on the advice of the leader of the opposition
Legal System
UK-style judicial system leading to the Supreme Court at the apex; the Judicial Committee of the Privy Council in the UK is currently the final court of appeal.
National Elections
December 2011; the next national election can be held at any time up to December 2016
National Government
The PNP holds 41 seats in the lower house; the JLP holds 22 seats.
Main Political Organizations
Government: People’s National Party (PNP)
Opposition: Jamaica Labor Party (JLP); National Democratic Movement (NDM); United
People’s Party (UPP)
Source: The Economist Intelligence Unit as of February 2012
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COUNTRY OVERVIEW
B. POLITICAL OUTLOOK 2012 - 2016
The new People’s National Party (PNP) government, led by Portia Simpson Miller, will
enjoy a large majority (41 out of 63 seats in parliament). As such, it will face few
obstacles to governability. The Economist Intelligence Unit does not expect a destabilizing change in policy direction by the new government. The PNP manifesto was broadly
similar to that of the Jamaica Labor Party (JLP), which it defeated in the December
election. The PNP has pledged to focus on job creation, reducing the potential for social
unrest related to the weak economy in the short term. However, given the severe constraints on public spending, job creation will be challenging regardless of which party is
in power.
The new government faces a daunting policy agenda, dominated by the weak economy,
the high public debt burden and the increasingly pessimistic outlook for the global
economy. Weak growth prospects for 2012 and austerity measures under the IMF standby arrangement, which include 10,000 possible public sector job cuts a policy prescription that the PNP will struggle to reverse will be unpopular among the public and will do
little to address the long-standing problems of high crime and unemployment. This will
sustain the potential for discontent and protest among the population and among
public-sector unions. One positive note in 2011 was the JLP’s record in bringing down
crime, and this will be something the PNP will hope to make further gains on during the
outlook period. However, a spike in crime rates in early January has fed long held fears
that 2011’s performance (42 murders per 100,000 people) may be hard to sustain over
the medium term.
Jamaica’s foreign policy priorities will remain focused on combating drug trafficking and
strengthening economic ties with the US, its main trade partner. Relations with the US
will remain strong in 2012-13, despite lingering tensions surrounding the 2010 extradition
case of a JLP-aligned gang leader, Christopher "Dudus" Coke. Although ties to Venezuela will remain amicable, the Venezuelan government’s influence previously secured
through PetroCaribe (an energy initiative under which Venezuela provides petroleum
products to Jamaica on concessional terms).will wane as its ability to maintain largesse
falls in the face of ongoing economic difficulties. Relations with the UK and EU will focus
on assistance to debt reduction programmes and promoting growth, as well as compensatory assistance, following the dismantling of the EU sugar regime (a subsidy system
that was reformed in 2006). Ms Simpson Miller also announced that her administration
would begin the process of removing the British monarch as the head of state and
becoming a republic. This will be a largely symbolic move and we do not expect bilateral
relations with the UK to suffer as a result.
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COUNTRY OVERVIEW
C. ECONOMIC PERFORMANCE
End-2011 inflation hit a five-year low of 6%, according to the most recent data released
by the Statistical Institute of Jamaica (Statin, the national statistics institute). This was
well within the 6-8% target of the Bank of Jamaica (BoJ, the central bank), although this
was for fiscal year 2011/12 (April-March) rather than the calendar year. According to the
Statin, inflation was driven by higher food prices and an upward movement in the housing and utilities category (12.3%), owing to the higher cost of oil on the international
market and increased domestic rates for electricity and water. Food and non-alcoholic
beverages. which make up around 40% of the basket of goods used to measure prices.
saw a 5.4% price increase over the year. Barring shocks, we expect price pressures to
remain mild in 2012, as commodity prices ease and demand-side pressures remain weak.
Inflows of remittances from Jamaicans working abroad for the first ten months of 2011
rose by 7.1% year on year (to US$1.67bn), according to the most recent data released by
the BoJ. The results surprised on the upside given that the UK and US economies the
source of the majority of remittances sent by Jamaicans working abroad remained relatively weak in 2011. Unemployment has remained stubbornly high in the US (estimated
at 9% in 2011) while creeping up in the UK, to an estimated 8% in 2011. However, the BoJ
data show that inflows from those countries, which make up 76% of total remittances to
Jamaica, increased by 6.6% in the US and 7.5% in the UK. Canada, which is the third
largest source of remittances (11.5% of the total), saw an increase of 20% from
January-October, reflecting the more robust state of the Canadian economy. Outflows of
remittances which are far smaller than inflows in nominal terms. also increased, but by
a smaller margin (5.6%), leading to a net increase of 7.3%.
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COUNTRY OVERVIEW
D. ECONOMIC FORECAST
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COUNTRY OVERVIEW
Economic Growth
Although we have revised up our 2012 US GDP forecast to 1.8%, which will have a moderate
impact on tourism and mining exports, the overall global outlook for 2012 (particularly a
forecast recession in the euro zone) remains bleak. Given the Jamaican economy’s vulnerability to external factors and the government’s limited ability to stimulate the economy, we
expect weak GDP growth in Jamaica of 1% in 2012 (up slightly from 0.8% on account of the
US revision). We expect growth to pick up gradually from 2013, in line with more stable
global conditions and higher external demand for Jamaica’s main exports, and then to
strengthen in the latter part of the outlook period. However, as has been the case for at
least two decades now, faster rates of growth will be constrained by domestic structural
weaknesses, such as the high costs associated with pervasive crime and the heavy public
debt burden, which crowds out private investment. We expect a marginal improvement in
private consumption which accounts for over 80% of GDP reflecting a modest rise in
remittances, and a gradual decline in unemployment and inflation. Gross fixed investment
will also remain weak, owing to constraints on government spending under the IMF
programme, which will limit public projects, and as the weak state of the economy deters
private investment. These constraints will also limit growth in government
consumption to around 1% in 2012-13. We expect export volumes to rise (averaging 5.6% in
2012-16) in line with improved external demand. However, their overall contribution to
growth will be partly offset by imports as domestic demand improves slowly.
On the supply side, we expect minimal growth in tourism in 2012, as a result of the deteriorating global outlook and the still-weak recovery in the US, the origin of 60% of tourist
arrivals. Tourism a major employer and foreign-exchange earner will start to pick up in
2013, but the sector will not return to the strong growth rates recorded mid-decade until
demand in countries such as the UK and US is on a more solid footing, and delayed investment in new hotels and tourism infrastructure resumes. Gradually rising demand for key
exports, such as aluminum and bauxite, as well as rising forecast prices, will gradually
return the mining sector to full capacity, while agricultural output will rise moderately
(although the risk of weather-related shocks persists).
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COUNTRY OVERVIEW
Inflation
We expect inflation to remain subdued in 2012 (averaging 6.5%) relative to recent years,
as demand-side pressures remain weak and external commodity prices ease. During
2013-16 consumer prices will rise at an average of 7.9%. driven predominantly by still
high commodity prices. But this will remain below the highs seen in recent years
(average inflation was over 16% in 2007- 08). Upside risks remain, owing to Jamaica’s
exposure to energy price shocks, as well as the country’s vulnerability to frequent
weather-related disruptions. On the positive side, these risks will be tempered by a
reduction of value-added tax (VAT) on fuel, and softening oil prices.
Exchange Rates
Increased risk aversion towards emerging markets, owing to the unfolding debt crisis in
the euro zone, has increased depreciation pressures on the Jamaican dollar, which
traded at around J$85-86:US$1 in the first eleven months of 2011. Under our baseline
forecast, the Jamaican dollar will depreciate only modestly in nominal terms in 2012
(and in real terms it will strengthen), as the monetary authorities use the heavily managed float to help to contain both imported inflation and external debt-servicing costs
(external public-sector debt is currently over 60% of GDP). IMF inflows will provide support, as will a narrowing of the current-account deficit in 2012-13. However, strong downside risks remain. If investor sentiment turns against Jamaica, rapid capital flight will
resume, and the BoJ will have little room to defend the currency, owing to relatively low
reserve levels (covering just 3.6 months of imports) and limited monetary policy instruments.
External Sector
After widening to an estimated 13.5% of GDP in 2011, we expect the current account deficit to narrow to 9.6% in 2012 and 8.7% in 2013. This will be driven mostly by a narrowing
trade deficit, the result of improved aluminum production and prices combined with
easing energy prices. However, from 2013 the current-account deficit will widen modestly as a result of gradually improving domestic conditions (which will boost demand
for imports) and as prices for imported fuel rise. Tourism earnings will rise marginally in
the early part of the outlook period and strengthen thereafter as external conditions
improve, supporting further growth in the services surplus. Although inflows of remittances (which account for the bulk of transfers) will continue to grow, they will decline
as a percentage of GDP. Private capital inflows and foreign direct investment (FDI) will
also pick up during 2012-16, but there will be a continued reliance on multilateral financing in order to meet the financing requirement, if reserves are to remain around current
levels of around US$2.5bn in 2012-13, as envisaged in our baseline scenario.
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COUNTRY OVERVIEW
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COUNTRY OVERVIEW
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COUNTRY OVERVIEW
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COUNTRY OVERVIEW
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J A M A I C A
BANKING SYSTEM
A. BANKS IN JAMAICA
The Central Bank stands at the center of the local financial system and is charged with the
responsibility to promote and maintain financial system stability. To achieve this objective,
the Bank supervises the activities of deposit-taking entities as provided for under Section
34A of the Bank of Jamaica Act
Also operating within the financial system is a mix of non-deposit taking financial institutions that fall directly under the regulatory oversight of the Financial Services Commission. Listed below are the deposit taking Institutions.
Commercial Banks Licensed Under the Banking Act
• The Bank of Nova Scotia Jamaica Limited
• First Caribbean International Bank (Jamaica) Limited
• Citibank, N.A.
• National Commercial Bank Jamaica Limited
• First Global Bank Limited
• RBTT Bank Jamaica Limited
• Pan Caribbean Bank Limited
Merchant Banks Licensed Under the Financial Institutions Act
• Capital & Credit Merchant Bank Limited
• Scotia DBG Merchant Bank Limited
• MF&G Trust & Finance Limited
Building Societies Licensed Under the Building Societies Act
• First Caribbean International Building Society
• Jamaica National Building Society
• The Scotia Jamaica Building Society
• Victoria Mutual Building Society
Credit Unions Operating Under the Cooperative Society Act
While the supervisory framework for commercial banks, merchant banks and building
societies are well established in their governing legislation, credit unions were more
recently designated by the Minister of Finance as ‘specified financial institutions' under
the Bank of Jamaica Act, enabling the Bank to obtain information on their operations.
Regulations to establish a formal supervisory framework for these entities inclusive of a
licensing regime, have been drafted after extensive discussions with sector representatives and are to be presented to Parliament.
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BANKING SYSTEM
B. CITIBANK IN JAMAICA
Citibank commenced operations in Jamaica in 1960. Its relationship management
approach is seen as a key ingredient to the continued growth in our business. Today,
Citibank Jamaica strives to provide the most professional and innovative financial
services with the highest quality to select clients, through a team of highly motivated
professionals.
Citibank, NA Jamaica - Banking Services -Citibank, N.A. Jamaica is a full branch of
Citibank, N.A. and its Kingston branch offers a complete package of banking services,
including:
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Trade Finance and Trade Services
Lending (local and foreign currencies)
Foreign Exchange
Derivatives
Local and International Cash Management
Investments
Asset Based Financing
Corporate Finance
Treasury Products
J A M A I C A
CLEARING SYSTEM
A. AUTOMATED CLEARINGHOUSE
In October 2002 the Jamaica Bankers Association formally launched an ‘automated
clearinghouse’ (ACH) through Automated Payments Limited (APL) to replace the previously existing Manual Clearing House (The Association of Kingston Clearing Banks).
The new ACH substitutes electronics for what was a labor-intensive, manual system.
The ACH is a net end of day settlement system.
Under the manual clearinghouse checks took between five to seven days to clear given
the labor intensive process, which increased the cost of processing transactions. Under
the new ‘automated clearing house’, a check deposit now takes three days to clear, with
availability granted on the 4th business day.
B. ELECTRONIC FUNDS TRANSFERS
In October 2006 the “Electronic Origination” phase of the ACH went live allowing for the following:
ACH Credits (Direct Deposits) – of payroll, dividend, pensions and annuities, expense reimbursement etc. This program allows for payments to be electronically withdrawn and the
payment amount credited to the beneficiary account.
ACH Debits (Direct Payments) - allows consumers to authorize corporations and financial
institutions to electronically withdraw the payment amount from their account. E.g. preauthorized payments for Insurance Companies.
C. REAL TIME GROSS SETTLEMENT SYSTEM
In February 2009 Jamaica’s Real Time Gross Settlement System, JamClear, went live.
JamClear is the acronym for Jamaica Clearance and Settlement Assured in Real Time.
Settlement in JamClear occurs in "real time" meaning payment transaction is not subjected to any significant waiting period. "Gross settlement" means the transaction is
settled on a one to one basis without netting against any other transaction. Once processed, payments are final and irrevocable.
With JamClear commercial banks, primary dealers and other financial institutions can
transfer funds between themselves, for their own account, or on behalf of their clients.
This ensures that large value and/or time critical payments can be made safely with
funds becoming available in real time.
In April 2011 the Bank of Jamaica the BOJ established a threshold of J$5,000,000 over
which all transactions must be routed through the RTGS. The BOJ intends to lower this
threshold to J$ 1Mn in the future. This is to reduce settlement risk in the ACH.
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FOREIGN EXCHANGE CONTROLS
Presently, Jamaica has a fully liberalized foreign exchange market, i.e., currency is freely
convertible with demand and supply determining price and availability. Trades are done
with authorized FX dealers i.e. (Commercial Banks, Merchant Banks, Building Societies,
plus an estimated sixty-seven Cambios, currency exchange stores, island wide).
A. MARKET RATES
Spot Market
There is an active spot market extant in Jamaica. Presently, daily average volumes
range between US$20MM to US$30MM. Selling rates are usually not more than 1.5%
above market buying rates.
Forward Market
There is some activity within this market but it is not advertised by the BOJ. Settlement
times for FX - Most transactions are settled on a same day basis. However, the standard
international settlement time of 2 days is sometimes used.
Market Rate Used
Since the market is governed solely by demand and supply, the market determines the
exchange rate used.
B. TAXES
Income Tax
Jamaica's income tax system is based on self-assessment. The estimated or provisional tax
is paid in four equal quarterly installments by the 15th of March, June, September, and
December. Income tax is payable by residents and non-residents in Jamaica on all income,
profits or gains arising from any source whether in Jamaica or elsewhere; and all persons
who, although not resident, derive income from sources in Jamaica unless exempted by
legislation or double taxation treaty. “Persons" includes individuals & corporate bodies
Withholding Tax
Interest arising from the deposit or investment of money is, under the Jamaica Income Tax
Act, subject to withholding tax at the rate of 25% in relation to individuals and 33.3% for all
other persons.
Bodies Corporate - Corporate Bodies that are resident in the island for tax purpose is
taxable in Jamaica on their worldwide income. Bodies corporate are taxed at the rate of
33.3%.
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FOREIGN EXCHANGE CONTROLS
Individuals - Non-resident individuals are taxed on all income arising or deriving from the
island unless specifically exempted by the Income Tax Act or the provisions of a Double
Taxation Treaty. Non-residents are subject to income tax at the rate of 25%. The rate
may be subject to reduction depending on type of & country of residence. For instance,
double taxation treaties are in place with the US & UK, which reduce withholding tax on
interest income to 12.5%.
Other Taxes
Property tax - Evaluations for the purpose of this tax are based on market values relative
to the site value or unimproved value of land (excluding structures thereon). General
Consumption Tax (GCT) – This is a value-added tax with an applicable standard rate of
17.5% (effective January 1, 2010) levied on all goods & services supplied in respect of registered taxpayers who have a gross annual sales value of J$3,000,000 or more
(effective January 1, 2009). Certain commodities are designated as zero-rated under the
GCT Act (1991), while others are exempt.
Transfer Tax
This tax is currently imposed at the rate of 4% on the consideration or value of land or
securities disposed of, and is payable by the transferor to the Commissioner of Stamp
Duties out of the consideration received.
Tax Treaties
Jamaica has double taxation agreements with the United Kingdom, the United States of
America, Canada, Germany, Denmark, Norway, Sweden and Israel. Negotiations on
double taxation treaties have commenced with Trinidad and Tobago, Japan, Italy and
Switzerland.
Special Treaty Rates for Non-Residents:
Interest - Payment to non-residents is subject to 25% withholding tax for individuals &
33.3% for other persons, unless mitigated by a double taxation treaty. The reduced rates
applicable under the treaties are - Canada 15%; USA 12.5%; U.K. 12.5%; The Federal
Republic of Germany 12.5%, with the exception of recipient banks 10%; Sweden 12.5%;
Israel 15%; Norway 12.5%; Denmark 12.5%
Ordinary Dividends:
Ordinary share dividends paid to Jamaican residents by Jamaican resident companies
are payable at a nil (zero) rate. However, the Income Tax Act (section 40) imposes an
obligation on Jamaican residents (prescribed persons) who make dividend payments
(where related to ordinary or preferred shares) to non- resident person, to deduct tax
from such payments at 25% in the case of an individual and 33.3% in other cases, subject to the double taxation agreements.
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TRADE REGULATIONS
A. NATIONAL TRADE POLICY
Jamaica’s New Trade Policy (NTP) was adopted by the Government in 2001. Its three
key objectives are to:
• Expand and diversify exports
• Reduce the share of imports relative to output
• Increase the flow of net positive returns from foreign investment.
Jamaica's trade policy is designed and implemented within the framework of the Caribbean Community and Common Market (CARICOM), of which it is one of the leading
members. CARICOM was established by the Treaty of Chaguaramas, which was signed
on July 4, 1973. The organization forms a free trade agreement among Jamaica and
fourteen other Caribbean countries: Antigua & Barbuda, Barbados, Belize, Dominica,
Grenada, Guyana, Haiti, Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Trinidad and Tobago, and Suriname.
Jamaica provisionally applies the Revised Treaty of Chaguaramas, which is aimed at
consolidating the Caribbean Single Market and Economy (CSME). Through its participation in CARICOM, Jamaica has concluded preferential trade agreements with Venezuela,
Colombia, the Dominican Republic, Cuba, and Costa Rica. Jamaica's exports also benefit
from preferential market access under a number of non-reciprocal preferential trade
arrangements offered by a number of developed countries. Jamaica's growing network
of such agreements raises concerns about the resulting administrative burden, the
impact on trade and investment flows, increased complexity of the trade regime, and
possible trade diversion. One of the challenges Jamaica is facing is adjusting to an environment in which preferential trade treatment is being eroded.
B. GLOBAL CONTEXT
Jamaica is actively engaged in the negotiation of multilateral, regional and bilateral
trade agreements as a means of securing its trade interests and enhancing trade performance. In these agreements it seeks to remove tariff and non-tariff barriers on products
of interest to Jamaica in asymmetrical arrangements with trading partners. It seeks also
to facilitate measures to address supply-side constraints thereby facilitating improved
productivity and competitiveness in both the domestic and export markets.
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TRADE REGULATIONS
Jamaica has been an original Member of the World Trade Organization (WTO), since
March 1995, and one of its most active developing Members. The WTO is a global international organization that seeks to govern and regulate the rules of trade among
nations. Within the WTO, Jamaica has presented numerous submissions advocating
special and differential treatment for developing countries, as well as for increased participation in, and the use of the multilateral trading system by developing countries. In
this context, Jamaica has proposed making some rules more flexible and their application less costly, in order that they may be used by developing countries. Jamaica has
participated as a third party in several WTO panels, mostly concerning issues that might
affect its preferential margins to export markets.
C. REGIONAL TRADE ASSOCIATIONS
On a regional scale, Caribbean trade policy continues to focus on the implementation of
the ACP/EU Economic Partnership Agreement with the joint establishment of committees under the Agreement. Work also continues on preparations for the establishment
of a free trade area between CARICOM and Canada.
CARICOM
Jamaica as a CARICOM member state is part of the following Free Trade Agreements:
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CARICOM – Dominican Republic Free Trade Agreement.
CARICOM – Costa Rica Free Trade Agreement.
CARICOM – Cuban Republic Free Trade Agreement.
The CARICOM – Venezuela Free Trade Agreement.
The CARICOM – Colombia Trade, Economic and Technical Co-operation Agreement.
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INVESTMENT OPPORTUNITIES
Citibank Jamaica and its related subsidiaries offer customers a variety of investment
instruments with which they can manage short-term excess liquidity, such as the following:
A. OVERNIGHT INVESTMENT AND/OR SWEEPS
There is no automatic Sweep mechanism in Jamaica, however, clients may authorize the
bank to place funds overnight or to place funds on call at an agreed rate. This service is
available for both USD & JMD.
B. NEGOTIABLE CERTIFICATES OF DEPOSIT
Local Investments are usually in USD & JMD. Tenors are typically under one year. Interest returns are usually lower than on other money market instruments. Investment
amounts are nominal with the maximum investment amount varying with each commercial bank. Limits set are based on the funding and gapping strategy being pursued. In
Citibank, the bank issues a certificate for the investment, and ownership is nontransferable after issuance.
C. TIME DEPOSITS
The savings accounts for corporations are available in JMD & USD.
D. GOVERNMENT PAPER
There are currently no legal or regulatory restrictions on the purchase of government
securities by foreign investors. Government securities are distributed through auctions
under competitive and non-competitive bidding.
Treasury Bills
Primary short-term instrument used for government local currency domestic borrowing, and are issued on a discount basis. One-week notice is given in most forthcoming
issues, stating the amount being offered, the tenor, dates of issue and redemption.
Tenors range from 1 - 6 months. The take up date is usually within two days after the
tender date, and there is no volume restrictions on tenders placed.
Securities are issued two to three days after the tender, but it may also be on the same
day, to successful parties after the tender by the Bank of Jamaica. Both Treasury Bills
and Certificate of Deposits are Bearer instruments. Citibank permits client documents to
be retained in the bank's custody.
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INVESTMENT OPPORTUNITIES
Bank of Jamaica Certificate of Deposits: Local currency short-term central bank instrument used for monitoring money supply. The certificates are issued at par under competitive and non-competitive bidding. Currently only the one month tenor is available with
Interest paid at maturity date.
Local Registered Stock (LRS): The LRS is a medium to long-term local currency Government Bond with a maximum tenor of 20 years. This is not available for FCY. The window
for LRS tenders is open for 7 days with securities issued on first come, first serve basis.
Payments for the amounts applied for must accompany the tender; Citibank must receive
good value for funds on the take up date. The LRS is not a Bearer instrument, but instead
a registered security.
E. REPURCHASE AGREEMENTS (REPOS)
Repos and Reverse Repos are available with counterparties in the markets.
F. STOCK MARKET
The Jamaican stock market is a vital link between companies needing capital and Jamaicans with money to invest. The Kingston Stock Market was established in 1961 under the
guidance of the Bank of Jamaica, to co-ordinate the activities of traders, or persons who
bought and sold share on behalf of individuals.
The Jamaica Stock Exchange itself began operations in February 1969; to assist in promoting the development of a vibrant capital market and ensure orderly trading in listed
securities, i.e. stocks, shares or bonds that are traded on a stock exchange.
The Jamaica Stock Exchange (JSE) is governed by an eleven-member Council, which
comprises the Governor of the Bank of Jamaica (or his nominee; a representative of the
Ministry of Finance; up to six seat holders representing member-companies and three persons other than seat holders. The Council selects the Chairman, Vice Chairman and Secretary annually. The JSE is a limited liability company with a General Manager in charge of
the day-to-day operations.
On the exchange, only the stocks of those companies that are listed are traded. That
means a company must apply to the JSE and be approved to have its shares traded. A
Company considering listing on the JSE must meet the Exchange's listing requirements,
which include a minimum level of capitalization and the submission of detailed financial
reports.
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INVESTMENT OPPORTUNITIES
Three types of stocks are listed on the Exchange. They are ordinary/common, preference
and debenture/loan stocks. Government bonds are not listed, but are traded in Bank of
Jamaica regulated over the counter markets principally by stock broker-members.
Some forty-six companies are currently listed on the Stock Exchange. Institutional investors, especially insurance companies and commercial banks, because of the significant
influence they have on the outcome of stock prices, play a dominant role in the
exchange. Trading on the JSE is conducted on Mondays to Thursdays, from 10:00a.m. To
1:30p.m. There are currently ten stockbrokers in Jamaica. The JSE is located at 40 Harbour Street in downtown Kingston
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CITI SOLUTIONS & SERVICES
CASH MANAGEMENT
A. GENERAL BUSINESS TERMS AND CONDITIONS
Since September 1991, the Government of Jamaica moved toward a fully liberalized
foreign exchange market. Subsequently, the 90's also saw the deregulation and creation
of a more market driven Jamaican economy and the privatization of a number of government entities and financial institutions. The resulting effect is one that has led to a
more competitive environment for both corporations and financial institutions.
Cash Management Trend in Jamaica
• Companies make decisions to keep foreign currency accounts locally or offshore
based on definite need such as location and method of receivables or payments.
• There is no longer a significant gap in rates offered on local foreign currency
accounts versus off shore accounts as a low interest rate environment has been in
existence since the Jamaica Debt Exchange (JDX) in 2010.
• It is common practice for banks to (selectively) offer companies interest on their
operating accounts as well as unclear effect lines.
• Bank charges are coming under increased public and ministerial security as it is
felt that banks have been increasing fees in response to lower spreads since the
JDX.
• Technology is playing a major role in the banking sector in Jamaica, with ATMs and
Electronic Banking being increasingly used as a basis of competition in the
Commercial Banking sector. Most banks offer electronic banking; however, the
capabilities of the systems vary greatly. Some platforms are able to provide
information only where as others, such as Citi, have full transactions initiation
capabilities.
• Security continues to be a concern for banks and their clients, with companies
wanting to reduce the opportunities for losses and/or fraud by automating process
and limiting access to funds. In the Jamaican market place there is still some
resistance to, and distrust of electronic banking services by companies. This
resistance however has diminished tremendously in recent years and it is expected
that once security and price effectiveness of electronic mediums are
demonstrated, clients will move more rapidly to automating payment and
collection processes.
Citi Transaction Services Latin America & Mexico
J A M A I C A
22
CITI SOLUTIONS & SERVICES
• The most common form of payments is made via checks (computerized, continuous
form and checkbooks). Payments are usually delivered to the supplier’s office by the
purchaser's bearer, sent via courier or picked up by the supplier. As banks become more
sophisticated in their disbursement methods, companies are transferring more of their
payment services to them. Interbank transfers are also becoming very popular,
especially for payroll services and insurance premiums. With the ACH threshold of
J$5MM implemented April 1, 2011 RTGS transfers should increase in popularity.
B. ACCOUNTS SERVICES SOLUTION FOR JAMAICA
There is no distinction between accounts offered to residents and non-residents, as
both are able to hold foreign and local currency accounts without restrictions. Currently
Citibank N.A. Jamaica Branch offers these services to a select target market of customers. This is due to the strategic decision to focus on Corporate Banking and no longer
offer retail and consumer accounts to the general public.
Current Accounts
Citi’s current accounts are available in either Jamaican Dollars or US Dollars. Checks are
drawn on Citibank, N.A. Jamaica and are subject to local check clearing regulations.
Deposit Insurance
All deposits at Citibank, N.A. Jamaica are insured by the Jamaica Deposit Insurance
Corporation (JDIC) up to an aggregate amount of J$600,000 or foreign currency
equivalent. This is in accordance with the rules and regulation established by the JDIC
unless otherwise specified. JDIC does not protect against foreign currency losses.
Overdraft Facilities
Overdraft facilities are allowed on JMD current accounts (USD facilities expected to be
rolled out Q1 2012) subject to a credit analysis, with the rate subject to negotiation.
Funds Availability
Based on normal banking practice in Jamaica Jamaican Dollar check deposits are held
for three (3) working days, funds are available on the fourth day after deposit. US Dollar
personal checks drawn on a US Bank are held for thirty-one (31) days. US Dollar corporate checks drawn on a US Bank are held for ten (10) days. Locally drawn US Dollar
checks are held for six (6) days. Same day value would be considered (subject to credit
analysis) for check deposits through approval of an un cleared effects facility.
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J A M A I C A
CITI SOLUTIONS & SERVICES
Documentation Requirements
Important information about opening an account with Citibank, N.A. Jamaica Branch:To help the United States Government fight terrorism and money laundering, Federal
law requires us to obtain, verify, and record information that identifies each business or
entity that opens an account or establishes a relationship. What this means for you:
when you open an account or establish a relationship, we will ask for your business
name, a street address and a tax identification number, that Federal law requires us to
obtain. We appreciate your cooperation.
All entities, whether local or international are therefore required to submit the following
when opening accounts with Citibank, N.A. Jamaica branch:
•
•
•
•
•
•
•
•
•
Memorandum and Articles of Association (certified copies)
Certificate of Incorporation (certified copy)
Company Resolution indicating signing authority
Bank references (two)
Customer Activation Form
Contingency Means of Communication
Signature cards
Certified copies of two photo Ids for all authorized signers
Customer Account Due Diligence (Internal form)
C. CITIBANK’S ACCOUNT SERVICES SOLUTIONS IN JAMAICA
CitiDirect Online BankingSM*
CitiDirect is Citigroup’s internet banking platform that provides a single window to all
Citi accounts worldwide for both information and transaction initiation.
Cross Border Payments - WorldLinkSM*
WorldLink is an electronic multicurrency cross border payments system, which gives our
clients the opportunity to streamline the issuance of paper-based and electronic payments to parties around the world and automate the conversion of the related foreign
exchange. WorldLink gives our clients enhanced control over financial operations with
one flexible easy-to-use system.
By using WorldLink for multicurrency payments, our clients do not need to hold local
currency accounts with Citigroup. WorldLink enables them to transact in over one hundred currencies through WorldLink-owned omnibus accounts. Our clients can settle all
WorldLink foreign currency payments in their chosen settlement currency.
J A M A I C A
24
CITI SOLUTIONS & SERVICES
Clients have the option of funding from a local USD account, a Citibank, N.A. -New York
Demand Deposit Account (NY DDA) or a Euro or GBP account with Citibank London.
The payment types available are:
• Funds Transfers
• Remote Checks
• On Site Checks
Local Payments - PayLinkSM*
Local Payments and Collections can be electronically initiated via CitiDirect® though a
solution known as PayLink . PayLink provides business enterprises with a convenient,
fast, reliable, and secure way to make in-country disbursements to suppliers, vendors,
shareholders, employees, other companies, and individuals.
The payment types available are:
• Managers Checks
• Book Transfers
• Domestic Funds Transfers
Domestic funds transfer may be done in US dollars or in local currency. There is no US
Dollar automated/electronic funds transfer system. Instead funds transfers are done via
presentment of local USD checks. The value date for these transfers is same day and the
cut-off time is 11.00a.m.
Jamaican Dollar Domestic Funds Transfers are currently executed using either the Automated Clearing House (ACH; net end of day settlement) or the Real Time Gross Settlement System (RTGS; gross intraday settlement). The Bank of Jamaica ( BOJ) has established a threshold (J$5 Million) over which all transactions must be routed through the
RTGS (effective April 2011). The value date for these transfers is same day and the cut-off
time is 1:00pm.
Book transfers are also available in local currency and US dollars and the value date is
same day with a cut-off time of 4:00p.m.
Beneficiary Notification
Through CitiConnect we provide notification about our clients payments to their beneficiaries. CitiConnect is an Internet window for use by our clients’ beneficiaries, offering
them a secure information channel to view information on payments generated through
Citigroup’s local payment products.
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J A M A I C A
CITI SOLUTIONS & SERVICES
Prepaid Card
This MasterCard Branded card can be either reloadable or non- reloadable. Cardholders
can access funds at MasterCard enables POS terminals or ATM machines only up to the
amount pre loaded on the card.
D. CITIBANK’S COLLECTIONS SOLUTIONS IN JAMAICA
Cross Border Collections
Funds Transfers- International incoming funds transfers may be received in any major
international currency or US dollars. Value date for international transfers is the day
after receiving the transfer.
Local Collections
Once approved, clients can initiate incoming payments through CitiDirect. This collection mechanism uses ACH debits to pull funds from any account at any local commercial
bank. Clients can use this to concentrate cash at other banks to their Citi account. Additionally, with the required approvals in place, clients can initiate debits for payments due
to them.
Incoming funds transfers
International incoming funds transfers may be received in any major international
currency with value same day if received before 2:00p.m. or with value as per instructions received. Domestic funds transfers are executed same day via manager’s checks or
foreign currency drafts if received before 2:00p.m.
Pick Up Services
Citibank uses one armored transportation service, which is used primarily to transport
funds between Citibank and the Central Bank, and on a limited basis between Citibank
and other financial institutions and in some cases, corporate clients.
Citibank's Collection System in Jamaica - Presently, Citibank Jamaica offers collection
services through the Citibank SpeedCollectSM* service.
Citi Transaction Services Latin America & Mexico
J A M A I C A
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TRADE SERVICES
A. COUNTRY TRADE FLOWS – 2010 (USD)
•
•
•
•
GDP: $13,863,000,000
Total Imports (54% of Total GDP ): $4,629,300,000
Total Exports (16% of Total GDP ): $1,370,400,000
Domestic Sales = 2010 GDP + (Exports - Imports): $10,604,100,000
B. TRADE PRODUCTS AND SERVICES
Trade Service
Import Letters of Credit
A Letter of Credit (LC) is an undertaking issued by a bank (Citi) in favor of a beneficiary,
by which the bank substitutes its own creditworthiness for that of the Applicant by
promising to honor (pay) if the documents specified in the Letter of Credit are presented
in a timely manner.
Standby Letters of Credit (SBLC)
SBLCs are issued to support payment, when due or after default, of obligations, based
on money loaned or advanced, on behalf of the applicant, in favor of the beneficiary. E.g.
A “Financial Standby” supports an obligation to pay money, including any instrument
evidencing an obligation to repay borrowed money.
Customs Guarantee
A Customs Guarantee is issued to facilitate import/re-export activities by deferring until
month end (or such time as the parties may agree) the payment of duties applicable to
import merchandise. A Customs Guarantee is an assurance of payment to the Beneficiary (the customs authority) in the event that the Applicant (the importer) fails to pay
the duty applicable to the import merchandise.
Documentary Collections
A documentary collection is a payment method which is less costly than a letter of credit
and provides more security than open account.
Import Collections
Under an import documentary collection, the shipping documents (title documents,
invoices, etc.) are sent to a bank in the buyer's country. The bank holds the documents
until it receives payment or an accepted draft from the buyer, after which documents
are released to the buyer to collect/clear merchandise.
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J A M A I C A
TRADE SERVICES
Export Collections
Export Collections represent an alternative method for the payment of goods or services
between trading partners and facilitates payment against export documents.
Channel Finance
Citi’s Supply Chain Finance Solutions support Citi’s clients’ trade and working capital
financing needs via a range of customized and structured solutions:
• Distribution/Accounts Receivables Financing supports local and global trade collections
flows associated with the following:
- Sale of goods/service
- Accounts receivable collections
• Supplier/Distribution Financing supports local and global trade payment flows
associated with the following:
- Accounts payable Financing
- Production Process
Trade Finance
Export and Import Financing is available to any target market exporter in Jamaica that is
in possession of an export contract or any company that requires imported materials for
intermediate or finished goods respectively. Loans can be issued in various currencies
including US dollars, Euro, Yen or Pounds.
Tenors are usually short-term, ranging from 90 to 180 days for pre-export finance and for
post-export finance. Typical import finance tenors are typically 6 months or less (but can
range to tenors up to one year) and those with tenors greater than 1 year are restricted to
capital goods.
C. FOREIGN EXCHANGE REGULATIONS
FX Controls: No
Central Bank provides the FX: No
Restrictions on hard currency transfers: No
Restrictions on income in investments: No
Citi Transaction Services Latin America & Mexico
J A M A I C A
28
MARKET GUIDE FOR TREASURY
Allowed —No
material
restrictions
Allowed
—Straightforwardregulations, approval
or license
Allowed
—Challenging
regulatory
approval or
license
Allowed
—Subject to
acomplex
setof rules
Strictly
Prohibited
Operating Accounts 1
Onshore local currency
Onshore foreign currency
Offshore local currency
Offshore foreign currency
Non-Residents
Residents
Overdrafts 2,3
Onshore local currency
Onshore foreign currency
Non-Residents
Residents
Interest-Bearing Accounts
Non-Residents
Onshore local currency operating accounts
Onshore foreign currency operating accounts
Residents
Time Deposits 4
Onshore local currency
Onshore foreign currency
Non-Residents
Residents
Domestic Notional Pooling 5,6
Onshore local currency
Onshore foreign currency
Non-Residents
Residents
Inter-Company Lending 7
Non-Resident to Resident Resident to Non-Resident
Local currency
Foreign currency
Non-Residents
Residents
Local currency
Foreign currency
FX Convertibility/Transferability
• Local Currency is freely convertible domestic and offshore. Dealings
(e.g., trading) in foreign exchange require a licence issued by the
central bank or an exemption granted (e.g., IBF).
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J A M A I C A
MARKET GUIDE FOR TREASURY
Central Bank and Other Regulatory Requirements
• See comments related to Banking regulations.
Tax and Transfer Pricing Considerations
• Under the local Income Tax Act, the Bank is required to withhold at source
the applicable tax in respect of outbound payments. VAT (locally, General
Consumption Tax) is applicable at the standard rate to intercompany
services. (However, the relevant section in the Act related to imported
services has not yet been operationalized.)
Other Payment and Clearing Considerations for Treasury
• ACH facilitates the origination of electronic debits and credits to move money in
local currency only among commercial banks as a net end-of-day settlement system
— mainly used for low-value/high-volume and non-time-sensitive transactions.
• RTGS facilitates credits to be settled on a gross basis within real time (two hours)
— mainly used for high-value/low-volume and time-sensitive transactions.
For more information, please visit www.transactionservices.citi.com.
Notes:
1 As dollars are not legal tender outside of Jamaica, offshore local currency accounts are not allowed.
2 USD overdrafts not facilitated by Citi.
3 All overdrafts are ultimately subject to Legal Lending Limit restrictions under the local Banking
Regulations.
4 Total deposits are restricted to 25 times the capital base of the bank under the local Banking Act/Regulations.
5 This pertainsto intercompany pooling within a group.
6 Allowed as long as agreements between parties provide.
7 Unsecured credit extended to related parties is totally prohibited under the local Banking
Act/Regulations.
J A M A I C A
30
CONTACT INFORMATION
Industry Sector Heads
Carolina Juan
Treasury and Trade Solutions Client Sales Management
Latin America & Mexico Head
Citi Transaction Services
Email: [email protected]
Cel: + 57 (316) 743 - 9347
Of. Phone: +57 (1) 639 - 4026
Industrials Sector
Ines Vargas Barrera
Email: [email protected]
Cel: +52 (181) 8366 - 5190
Of. Phone: +52 (81) 1226 - 8525
Central America
Evelin Madrid
Email: [email protected]
Cel: + 506 8701 - 4529
Of. Phone: +506 2588 - 7541
Based: San Jose, Costa Rica
Branding, Consumer and Healthcare Sector
Oscar Mazza
Email: [email protected]
Cel: +1 (305) 588 - 9396
Of. Phone: +1 (305) 347 - 1336
Mexico
Miguel Ytuarte
Email: [email protected]
Cel: +52 (1) 55 4088 - 2284
Of. Phone: +5255 (1226) 8895
Based: Mexico DF, Mexico
Technology, Media and Telecom Sector
Gabriel Kirestian
Email: [email protected]
Cel: +54 (911) 3301 - 4826
Of. Phone: +54 (11) 4329 - 1516
Energy, Power and Chemicals Sector
Peter Langshaw
Email: [email protected]
Cel: +55 (11) 6183 - 6958
Of. Phone: +55 (11) 6183 - 6958
Public Sector
Jorg Paasche
Email: [email protected]
Cel: +52 (1) 55 5453 - 0103
Of. Phone: +52 (55) 2226 - 6020
Based: Mexico DF, Mexico
Non Bank FI Sector (NFBI)
Ricardo Dessy
Email: [email protected]
Cel: +54 (911) 6641 - 9752
Of. Phone: +54 (11) 4329 - 1471
Based: Buenos Aires, Argentina
31
Brazil
Adoniro Cestari
Email: [email protected]
Cel: +55 (11) 7130 - 9447
Of. Phone: +55 (11) 4009 - 7838
Based: Sao Paulo, Brazil
J A M A I C A
Sales Heads
Andean Region
Carolina Juan
Email: [email protected]
Cel: + 57 (316) 743 - 9347
Of. Phone: +57 (1) 639 - 4026
Based: Bogota, Colombia
Argentina
Adrian Scosceira
Email: [email protected]
Cel: +54 (911) 5674 - 6966
Of. Phone: +54 (11) 4329 - 1194
Based: Buenos Aires, Argentina
Citi Transaction Services
www.transactionservices.citi.com
© 2012 Citibank, N.A. All rights reserved. Citi and Arc Design is a trademark and service mark of Citigroup Inc., used and registered throughout the world. All other
trademarks are the property of their respective owners.