Susan Gordon, Business Reporter

The Jamaica Chamber of Commerce (JCC) has been advocating for the past four years that Jamaica establish an international financial services centre (IFSC) in its capital, saying the country stands to gain economically from this proposition, especially in the area of job creation.

Presenting the concept at a Generation 2000 (G2K) forum held recently a Court Hotel, in St. Andrew on Wednesday, chamber director and acting chairman of its Economic Affairs and Taxation Committee, Keith Collister, argued that a bold new endeavour such as basing an IFSC in Jamaica could help drive the redevelopment of downtown Kingston and help turn around the economy in a similar fashion to what happened in Ireland.

He noted that the JCC was not endorsing the JLP's offshore financial centre for Kingston idea at this time, as they had not yet met with them to determine the exact structure of the JLP's proposal they agreed with the idea in principle.

He noted that Ireland's IFSC contributes close to US$1 billion ($68.5 billion) in taxes, revenue that the Irish tax authorities would not otherwise receive.

Centre to be downtown

The JCC's proposal is that a Jamaican international financial services centre (JIFSC) be set up in downtown Kingston. An IFSC is the equivalent of a free zone for financial services, which recycles and administers funds in the global capital markets. The JCC believes Jamaican IFSC should be closely modelled off the Irish IFSC, which concentrates mainly on internationally traded financial and administrative services such as mutual fund administration.

He said the initiative would require both new legislation and a more active partnership with the Government and private sector. In addition, a Jamaican project would have a significant cost advantage over countries such as The Cayman Islands and The Bahamas where labour and real estate costs are more expensive.

Collister said Ireland's IFSC helped turn around their economy. The IFSC project began the same year the new elected Irish Government came to power in 1987.

The range of activities and ancillary services of that centre was defined by the Finance Act 1987, and subsequent legislation which introduced financial incentives to encourage urban renewal and investment by the private sector. Ireland's Finance Act 1987 also established a special 10 per cent corporation tax rate for certified companies setting up in the IFSC.

Creating opportunities

"This is an excellent way to create opportunities for our local financial market," said Mr. Collister, noting that the Irish economy in the 1980s had a very low to negligible growth rate, similar to Jamaica's currently.

"The IFSC is a vibrant part of the Irish economy. An estimated 10,700 employees worked in the IFSC in 2005, and this figure is expected to continue to grow," explained Collister.

"The goal would be to create far more jobs in the financial services field," continued Collister.

Collister was part of the public private sector team, which ultimately formed the core of the private sector-led Partnership for Progress initiative, who had the opportunity to Dublin courtesy of Digicel in late 2003. In 1987, the future IFSC was some "clapped out warehouses" by Dublin's waterfront, using the exact words of one of the policymakers.

Collister said the Irish Government set up a marketing group, called the "clearing house committee", which went around the world with only marketing brochures, arranging meetings with local banks as far away as Japan. However,Mr. Collister said, the key selling point was "Its 10 per cent tax regime with its broad range of allowed activities." Today, Dublin's IFSC is globally recognised as a leading location for a range of internationally traded financial services.

Critical to the success of the ISFC was its market-driven product development. The clearing house committee invited international banks to set up in Ireland's IFSC. Changes in the product offering were made by the "Clearing House committee", which incorporated the suggestions of overseas banks making the product entirely market driven.

The members of this committee were mainly commercial people, whose basic philosophy was they were "prepared to provide a framework for doing international business that could be done elsewhere."

Collister noted critical success factors for the IFSC's success included prime ministerial leadership, legislation which was private-sector driven, targeting corporations who are international market leaders, and Ireland's double taxation agreements.

Credit given in home country

"The advantage of a comprehensive double taxation treaty is that credit is given in the company's home country for any Irish tax suffered. Special allowances were also made, e.g., accelerated capital allowances, which meant that leasing companies almost never paid tax ," he explained.

In addition, noted Collister, "Ireland was the Hong Kong of the region, functioning as the American beachhead into Europe. To be successful one needs to be a Gateway. It should be noted in this regard that Jamaica has the best airlift in the Caribbean."

At the same seminar, Peter Young, a very successful Cayman-based Jamaican in the financial services industry, made a presentation on how the Cayman Islands had evolved to become a leading offshore financial centre, which unlike the Irish International Financial Centre model is not based on double taxation treaties.

susan.gordon@gleanerjm.com