KINGSTON, May 16, 2019 – The Jamaican government has ambitious objectives: to become a world class logistics hub and to stimulate economic growth through trade. To achieve these goals, the country has embarked on a bold trade facilitation agenda to tackle trade obstacles, with support from the World Bank Group.
Jamaica's current trade environment is characterized by complicated and inefficient procedures that lead to high costs and delays. Jamaica continues to lag behind the rest of the Latin America and Caribbean (LAC) region when it comes to trading across borders (ranking 27 of 32 economies in LAC and 134 out of 190 economies in the World Bank’s Doing Business Report for 2019). Furthermore, Jamaica exports far fewer goods and services (35.1% of GDP) than other countries in the region, such as Aruba (70.8%) and Grenada (55.8%).
The high cost of trade and delays in Jamaica can be attributed to several factors: high levels of physical inspections, high and multiple taxes and fees, lack of coordination among agencies, multiplicity of licenses, permits and certificates, absence of an integrated and harmonized framework for border agencies, prevalence of manual processes, and low capacity at the firm level to implement international requirements. The additional time and expense incurred as a result of these issues ultimately impact the final cost and quality competitiveness of a product or sector.
Trade facilitation brings predictability, simplicity, transparency and uniformity to the process of border clearance. This translates to economic gains for developing countries, whose traders experience lower costs and fewer delays.
According to the OECD, trade facilitation improvements can reduce trade costs by up to 13% for middle income countries such as Jamaica. The OECD further predicts that, for every 1 percent reduction in global trade costs, global income goes up by $40 billion. For the private sector, delays at the border can result in lost sales, delayed production and demurrage charges. For the public sector, complicated processes and procedures and over regulation creates inefficiencies and discourages compliance.
“When I engage with business owners, I find that they have a difficult time navigating their way through the complex processes involving cross-border trade,” said Michelle Chong, CEO Honey Bun Limited (the fastest growing wholesale bakery in Jamaica) and former President of the Jamaica Exporters Association.