Doing Business in Jamaica

The World Bank is out with their annual Doing Business Report, an examination of  countries in order to rank the countries that are most and least friendly to a start-up business from a government regulation and bureaucracy perspective. Someone should alert the Jamaican press as to date they’ve failed to publish and analyze the implications of this report, though I’m certain they’ll get to it when the report has been out for a few weeks and has lost it’s newness, it may after all be too much to ask them to present cutting edge information to Jamaican consumers in a more timely fashion.

This year the Report gives Jamaica an aggregate ranking of number 63 out of 181 countries profiled, compared to Singapore with its aggregate ranking of number 1, Haiti at 154, and the Democratic Republic of Congo ranking last as 181 of 181. The complete section of the Report on Caribbean states can be found here (Adobe Reader required). I highly recommend that you read it.

Ranking of Caribbean states in 2009 Doing Business Report
Ranking of Caribbean states in 2009 Doing Business Report. Copyright 2008 World Bank

As the Report assumes that a business is locally owned in order to make many of its comparisons, it is a good resource for any would be Jamaican entrepreneur. Additionally, it is a good resource for citizens concerned about how Jamaica can increase the GNI per capita; which is a useful statistic for measuring economic progress. By improving Jamaica’s ranking under this report’s criteria, the Government of Jamaica will be in fact removing barriers to entrepreneurship that stand in the way of many Jamaicans at home and abroad who have an idea for a business but perhaps do not have the access to capital or professional help needed to navigate the regulatory morass.

For example, according to the Doing Business Report, Jamaica requires an entrepreneur to pay a total tax rate of 51.3% on profits; this concerns me. I readily admit my ignorance of Jamaican tax law, so I don’t know what is a validly deductible expense for a Jamaican business. What I do know is that no entrepreneur in Jamaica should be in a mad dash to make as many deductible expenditures as possible from their gross profits (top line revenue) due to the fact the government will take more than half of what’s left as net profit (bottom line revenue) if they don’t. This is a dis-incentive for production, and a bigger dis-incentive for formalization. Why should I tell the GOJ I have a business if they are going to take HALF of my net profits? After dem neva give me nuttin fi put down. The GOJ is not unlike the theoretical woman Eddie Murphy joked would want HAAAAALF his money! Ong Fufu.

Other questions arising out of the report.

Why does Jamaica require more tax payments per year (72) than other Caribbean state yet simultaneously require over 414 hours annually for you to make those payments? This is superseded only by the 480 hours the Dominican Republic requires in the Caribbean region, so is it because the GOJ nuh think you ‘ave betta tings fi do wid you time?

Why does Jamaica require 11% of property values to register a property? Eleven percent?!?!?!?!?

Why is Jamaica dead last among Caribbean states in terms of “cost to enforce a contract expressed as a percentage of claim” with a rate of 45.6%? Which means if you and a business associate have a contract dispute — it will cost you $456.00 out of every $1000 you are owed to collect/enforce on that claim. Contrast that with the price of paying a criminal to “mek him kno’ sey mi serious” and you see what I think has to be a significant driver of the Jamaican murder rate. I wouldn’t claim this is the most significant driver of murder in Jamaica, but it has to figure greatly into some murders and other under-reported crimes like death threats, attempted arson, and malicious property damage. The failure to provide an efficient civil-court infrastructure where commercial and civil disputes can be arbitrated by an impartial and competent authority is costing Jamaica commercial opportunities which would produce jobs, jobs, jobs. The jobs lost due to that failure means that some under-employed & criminally-inclined youths (who don’t believe the state can reach and punish them) will go out to steal a car so they can ‘eat a food’; when they end up murdering the driver during the robbery, that murder will show up in future statistics and further discourage investment in Jamaica. All of it being a vicious cycle that is self-perpetuating.

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4 thoughts on “Doing Business in Jamaica

  1. Need to spend some more time going through this study in greater detail.Nonetheless, a cursory perusal suggests, that we still have a very long and significant way to go.Diatribalist,thanks for featuring this study.

  2. Great post…though distressing…thx. much. Hopefully someone in a position to do something about this here will address some of these issues. Small business is a major engine for growth in any economy and we certainly need some growth…

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