Dr Trevor Thomas, Guest Writer

The Ministry of Finance recently announced that plans for Jamaica to establish an international financial services centre (IFSC) are well under way.

Senator Don Wehby has now received the draft report from the IFSC Special Advisory Committee outlining the proposed strategy.

Let the music play!

Some, however, have raised a question about who will, or more accurately who will not, be invited to the party. They see the obvious advantages for lawyers, accountants, fund managers and the like. They recognise that the IFSC will create an increased demand for the second-tier professionals, including administrators, clerks and secretaries.

The demand for an improved physical infrastructure will employ surveyors and building contractors, who, in turn, will subcontract to electricians, plumbers and masons. All this they accept, and say it is all well and good.

But still they ask, how does this IFSC benefit the ordinary Jamaican?

The question is a fair one. How indeed does this esoteric international financial centre benefit the small-hold farmer in Chapelton, the fisherman in Rocky Point, the labourer in Buff Bay, or the street trader in Spanish Town?

Two answers

There are, I would suggest, two answers: One relates to the effects of the IFSC on the economy of Jamaica; the other to the political will of the Jamaican Government. Each will be addressed separately.

As regards the economy, a very simple example will suffice: A trust company is drawn to the Jamaica IFSC. It buys land and builds an office. Money is paid to builders, who hire labourers to work on the site.

The labourers, in turn, out of their wages, provide for their families in their local communities buying snapper from the fishermen, yam from the farmers and clothes from the street traders.

And out of their profits, the fishermen, farmers and street traders provide for their own families, and so on.

Complex variations of this simple example will be played out in respect of most new investment the IFSC will attract - and repeated one hundred thousand times across the island, day after day, week after week.

In short, the IFSC will be the catalyst for increased economic activity throughout Jamaica. It will raise the economic tide. And when the tide rises, all boats rise too.

Jamaica is a new entrant to the IFSC marketplace.

It is no coincidence that established neighbouring IFSCs, such as The Cayman Islands and Bermuda, currently enjoy a much higher standard of living.

The second answer to the question of how the IFSC will benefit the ordinary Jamaican relates to the action of Government.

As regards the tendering for construction work, this should be handled equitably, with a government-led preference for Jamaican companies, provided they can demonstrate that they have the required experience. The same preference should apply to employment, across the board, that is, for the skilled and the unskilled.

The Government will earn additional revenue out of the establishment of the IFSC from import duties, taxes on financial transactions and trade, licence fees, property taxes and company registration fees.

It should also benefit from the increased direct-tax take, given the overall increase in economic activity within the island.

The increased government revenue could be used for investment in education and training, improving health care, better security and policing.

In this way the funds could - after we have first reduced the national debt - improve the education, welfare and security of all Jamaicans.

Increasing economic activity

Construction work under way at a housing complex in St Andrew in this November 2007 Gleaner photo. Jamaica's offshore centre is expected to boost economic activity in areas such as construction. - File

In summary, the IFSC will not exist exclusively for the well-heeled, tertiary-educated or socially-affluent elite. Its function will be to increase the economic activity on the island as a whole.

And that means that the ordinary Jamaican - the small-hold farmer, the fisherman, the labourer, the street trader and others - will benefit too.

But this is not the end of the party. The IFSC is a long-term project that will benefit future generations.

The sons and daughters of the unschooled will form part of the educated workforce of tomorrow.

Those who wish to stay on the land - and it is an honourable calling - will be supported by agribusiness training and increased mechanisation; likewise, the fishermen.

Ambition is the key. According to the CIA World Factbook, Bermuda enjoys the third-highest per capita income in the world. Our aim must be to compete for entry into that premier league, for the prosperity of Jamaica and all her citizens.

Dr Trevor Thomas is an international tax consultant and the author of 'Offshore Jamaica: The Path Ahead'.

tax@drtrevorthomas.com