Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc
Distribution and sales of imported merchandise in Jamaica are done principally through distributors and agents. A large share of materials and supplies including machinery and equipment is imported directly by end users. Close contact with clients, delivery of quality products, after sales service, and competitive prices are all useful business strategies to succeed in the market. Due to Jamaica’s proximity to the United States, many Jamaicans importing materials and products interface directly with U.S. exporters and manufacturers’ representatives, particularly in Florida. Most goods enter through the country’s major port in Kingston and are distributed in smaller quantities by road. This mode of distribution is becoming more efficient with the construction of highways across the country.
Using an Agent or Distributor
There are no laws in Jamaica that dictate contract terms for agents/distributors. Contracting parties formulate their own terms and conditions of agreement with or without the assistance of an attorney. However, regardless of contract terms, every supplier and agent/distributor must be aware of the Fair Competition Act (FCA), which is designed to foster competition. Under Jamaica’s legal system, once an agreement is reached and signed, it becomes a binding document and breaches may be contested in a court of law. Potential sources for business partner leads include the American Chamber of Commerce of Jamaica (AmCham), the Private Sector Organization of Jamaica (PSOJ), the Jamaican Manufacturers’ and Exporters’ Association (JMEA), and the Jamaica Chamber of Commerce (JCC).
Establishing an Office
The establishment of a local office is best approached with the assistance of the Jamaica Promotions Corporation (JAMPRO), the government’s trade and investment promotion agency. Potential investors can also present project proposals to JAMPRO for assessment and guidance. Registration or incorporation of a business should be made with the Office of the Registrar of Companies (ORC).
Under the Companies Act of 2004, a single person may form a company and be its sole director and shareholder. Public companies are required to have a minimum share capital of J$500,000.00 (the exchange rate was JM$151.89 to US$1 at end June 2022) and cannot borrow without first receiving certification from the Registrar. Although the head office of the company may be overseas, the company must now have a registered office in Jamaica. An amendment to the Companies Act in 2017 now requires companies to disclose beneficial owners and retain records of legal and beneficial owners for seven years.
The State Department’s Investment Climate Statement includes information on the investment and business environments pertinent to establishing and operating an office and to hiring employees. (For more information, please see https://www.state.gov/reports/2021-investment-climate-statements/jamaica__trashed/).
To establish a franchise arrangement in Jamaica, the franchisee is expected to register a local company to assume the rights to operate the franchise. There are no specific laws that regulate the operation of franchises and there is a normal business relationship with the locally registered entity and the headquarters of the franchise. The locally registered company is responsible for managing the operation and ensuring conformity to the franchise requirements. Major U.S. food franchises in Jamaica include Burger King, Domino’s Pizza, Kentucky Fried Chicken, Little Caesars, Margaritaville, Pizza Hut, Popeyes, Starbucks, Subway, TGI Friday’s and Wendy’s. There are other types of franchises in areas such as accounting, membership warehouse clubs, automobile sales and rental, real estate, and training.
Mail order sales and catalogs have historically not been popular, though moves towards deregulation and liberalization and the attendant competition have compelled retailers to utilize additional ways of getting their message to customers and achieving sales growth. Some local firms use direct mailings of promotional materials and telephone marketing. Local credit card companies sometimes target cardholders through direct mailing, offering goods and services. Network marketing for the promotion of products has also been successful in Jamaica. Online direct marketing is becoming more popular and social media has grown in popularity as a means for businesses to connect directly with customers.
In a bid to stimulate economic activity, the GOJ has actively encouraged joint ventures and licensing. In 2012, the GOJ approved a Policy and Institutional Framework for the implementation of a Public-Private Partnership Programme (PPPP) to aid in the privatization process. Major opportunities are publicized by the government agency or ministry involved. Non-resident partners are subject to Jamaican tax on their share of the partnership profits that accrue in or are derived from Jamaica. Non-resident foreign corporations pay tax on their share of profits at the same rates as resident corporations. Double taxation relief is available under the 1991 Convention for the Avoidance of Double Taxation.
Three major U.S. based companies (FedEx, DHL, and UPS) offer express delivery service to Jamaica. Deliveries from the U.S. take between one and four days. Several local companies have entered the express delivery space whereby small quantities ordered online are first delivered to a Miami address before being air freighted to Jamaica. This new mode of delivery has taken on added significance in the COVID-19 era, as travel has been stymied. The de minimis value for shipments attracting customs duty is US$50.
U.S. companies planning to do business in Jamaica are advised to conduct thorough due diligence on potential business partners. This is particularly important as while the court system is fair, litigation can be expensive and the pace of resolution can be slow.
The US Embassy can provide an International Company Profile (ICP) which is a paid service. The ICP provides U.S. companies and economic development organizations with a comprehensive background report on a specific foreign company, including general business information, background and product information, key officials, references contacted by ITA, financial data/creditworthiness information, reputational information, a site visit, and interviews with principals; information sources consulted in preparing the report, and analysis of information collected.