JAMAICA underperformed the global average in foreign direct investment (FDI) recovery, according to a new report by UHY Chartered Accountants.
The country’s FDI, relative to its economic output, wasn’t even close to the average achieved by nations. On average, countries attracted FDI equivalent to 17 per cent of their economic output in the five years since the “credit crunch”, while Jamaica attracted 2.5 per cent.
The investment to set up new factories and businesses by foreign-based companies are considered FDI. Dawkins Brown, local managing partner in UHY Dawgen, described the island’s performance as a constant recovery towards the global average.
“While Jamaica was not among the 33 countries surveyed, the country has been on a path of recovery since 2010,” Brown said about FDI into Jamaica at some US$360 million in 2012 up 66 per cent over 2011 — a mere 2.5 per cent of GDP at 2012.
“Although this is far from the global average of 17.1 per cent, it represents continuous recovery since 2010,” he wrote in the report.
Jamaica’s annual average hovered at some US$800 million between 2005 to 2007. It then dipped following the economic slowdown in parts of the world — otherwise dubbed the ‘global financial crisis by Western states.
During the period under review, the island saw investments in business process outsourcing and tourism sectors including Sutherland Global, Hinduja and Memories White Sand. Belgium, Singapore and Ireland led the survey of some 33 nations.
The UHY accountancy network indicated that favourable tax systems helped these mostly small nations outperform the world in attracting FDI in the five years since the “global credit crunch”.
Ladislav Hornan, chairman UHY, commented: “Small economies, such as Singapore and Ireland, can punch well above their weight by offering significant tax incentives to companies choosing to locate there.
But those tax incentives only work because they also have a well-educated workforce, strong infrastructure and the sophisticated ecosystem of suppliers that a multinational needs when they decide to locate to a country.”
Attaining FDI provides an important boost to national economies, creating new jobs and tax revenues in the short term, and in the longer term improving productivity by helping to fund capital investment and making domestic companies more competitive, the report stated.
UHY Dawgen is a member of UHY, an international network of independent accounting and consulting firms with offices in major business centres throughout the world.
Established in 1986, and based in London, UK, UHY is a network of independent accounting and consulting firms with offices in over 270 major business centres in 86 countries.
Staff of over 7,100 generated an aggregate income of US$622 million in 2012, ranking UHY the 25th largest international audit, accounting, tax and consultancy network by revenue, the report indicated.
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