A Blueprint for E-business - Jamaica

April 2003

Prepared forThe CommonwealthSecretariat and theGovernment of Jamaica

A Blueprint for Ebusiness in Jamaica

Supporting Documentation

The Allen Consulting Group Pty Ltd

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Preface and Acknowledgements

The ‘Blueprint for EBusiness in Jamaica’ was prepared for the Government ofJamaica - under the overall direction of Angela Strachan, Chief ProgrammeOfficer in the Special Advisory Services Division of the CommonwealthSecretariat –– by The Allen Consulting Group, an Australian economic andpolicy advisory consulting company with experience in ecommerce andregulatory analysis.

The project was funded by the Commonwealth Fund for Technical Cooperation(CFTC), and was managed in Jamaica by the Ministry of Commerce, Scienceand Technology with support from the Jamaica Promotion Corporation(JAMPRO). It was prepared after consultations with Jamaican stakeholders inthe Government of Jamaica, the business sector and the community.

Comments were received during various stages of preparation from Dr. JeanDixon, Mrs. Camella Rhone, Mrs. Beverly Rose Forbes, Mr. Reginald Bhudan,Mrs. Patricia Francis, Mrs. Veneice Pottinger, Mr. Julian Robinson, Mrs. EileenHeaven, Mrs. Leone Hines-Smith, Mrs. Dell Crooks, Mr. Lincoln Price, Mr. R.Phillips, Mr. Roy Miller, Mr. Paul Sloley, Mr. Paul Smith, Mrs. YvonneCrooks, Mrs. Dawn Campbell, Mr. Tony Laing, Mr. Winston Hay, Mr. J.PaulMorgan, Mrs. Barbara Lee, Ms. Wendy Duncan, Mr. Cordel Green, Mr. RoyHumes, Ms. Loreen Walker, Mrs.Dianne Edwards-Davis, Mr. Lorenzo Grant,Mrs. Barbara Scott, Mr. Hugh Taylor, Mrs. Kaye Morrish-Cooke, Mr. DenzlePlummer, Mrs. Shirley Ann Eaton, Mr. Adrian Taitoo, Mr. Andrew Cocking,Mr. Byron Lewis, Mr. Wilburn Pottinger, Dr. John Wright, Mr. Michael Julian,Ms. Karlene Francis, Dr. David McBean, Mr. Seamus Lynch, Mr. Barry Raglan,Mr. Michael DuQuesnay, Mrs Debbie Fraser, Professor Gordon Shirley andMrs. Sandra Glasgow. A complete list of stakeholders that were approached andengaged in the study is attached in Appendix B to this report.

The project team would like to express its appreciation to the personsmentioned above, as well as the numerous persons and research organisations inJamaica and overseas who contributed to making this report possible.

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Table of Contents

Preface and Acknowledgements i

Executive Summary iv

Part A — Context

Chapter OneNew Ways of Doing Business 2

2.1 Ecommerce 2

2.2 Ecommerce and Ebusiness 3

2.3 Driving Change 4

2.4 Ebusiness Dividends 4

Chapter TwoOpportunities and Challenges 7

2.1 Jamaica’s E–Readiness 7

2.2 Progress In Practice 8

2.3 Further Challenges 10

2.4 SWOT Analysis 11

Part B — Jamaica's Ebusiness Foundations

Chapter ThreeAccess to The Ebusiness Environment 14

3.1 ICT Equipment 14

3.2 Telecommunications and the Internet 15

Chapter FourSharpening The Regulatory Framework 30

4.1 Supportive Legal Frameworks 30

4.2 Addressing Cyber Crime 34

4.3 Tax and Ebusiness 35

4.4 Regulatory Institutions and ebusiness 37

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Chapter FiveEnhancing Ebusiness Capability 42

5.2 Human Capital 42

5.3 Developing a More Entrepreneurial Culture 44

Chapter SixLeadership and Coordination 52

6.1 Top Down Leadership 52

6.2 Egovernment 53

Part C —Ebuisness In Key Sectors

Chapter SevenInformation Technology 58

7.1 Situation Analysis 58

7.2 Challenges 68

7.3 Suggested Approaches 69

Chapter EightBanking and Finance 73

8.1 The Sector and it’s Role 73

8.2 Upstream Banking 73

8.3 Downstream Banking 76

8.4 Ebusiness and Capital Markets 83

Chapter NineTourism 88

9.1 Situation Analysis 88

9.2 Challenges and Threats 95

9.3 Response 96

Chapter TenMusic and Entertainment 98

10.1 Music 98

10.2 Film 104

Chapter ElevenCross–sectoral Linkages 107

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Part D — The Ebuisness Strategy For Jamaica

Chapter TwelveThe Strategic Framework 109

12.1 The Blueprint’s Goal 109

12.2 Principles 109

12.3 Strategic Priorities 110

12.4 Actions By Strategic Priority 111

12.5 Timeframe For Action 112

12.6 Concluding Points 114

Part E — Appedices

Appendix AAbbreviations 118

Appendix BKey Stakeholders Consulted 120

Appendix CSources 122

A N E C O M M E R C E B L U E P R I N T F O R J A M A I C A

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Executive Summary

“The time has come to take a clearer view of the Internet. We need to move awayfrom the rhetoric about “Internet industries”, “e-business strategies,” and a “neweconomy” and see the Internet for what it is: an enabling technology — a powerfulset of tools that can be used, wisely or unwisely, in almost any industry and aspart of almost any strategy.”

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Jamaica cannot afford to take any other than a ‘clearer view’ of the Internetwhen framing strategy to develop ecommerce on the island. The scepticismevident in Porter’s seminal Harvard Business Review article is well founded. Thebursting of the ‘dot com’ bubble and other recent developments have resulted ininvestors, businesses and governments wasting resources where the Internet andecommerce have not lived up to expectations.

While ecommerce and the Internet have not taken directions that are easy t opredict, it is clear that they are still important new technologies. Rather thanset up an entirely new business paradigm, these technologies have found a placein the day–to–day world of commerce, in the business of government and arebeing used by ordinary people in the community. Business is taking a ratherpragmatic approach, using these technologies to improve what they do,reengineering rather than indulging in revolutions.

Ecommerce is not just an information technology issue. It has spread beyondthe IT department and is now a strategic issue for organisations. It is reshapingrelationships with customers as well as competitors and has thrown the spotlightupon things once considered pedestrian such as the supply chain. Its use is nowchanging the structure of organisations, industries and government. There issubstantial evidence that ecommerce has helped shape macro economicoutcomes in large economies, not only in its heartland, the United States.

Successful and wise development of ecommerce is likely to shape outcomes forsmall open economies dependent upon trade such as Jamaica. Successfulengagement in ecommerce is becoming vital to raise or even maintaincompetitiveness. Buyers are shifting to the convenience and economy ofecommerce. Supply chains in sectors ranging over sectors as diverse asagriculture, mining, manufacturing, transport, communications andentertainment are now bypassing suppliers that cannot be integrated within newarrangements. Some businesses are obtaining access to global markets. Othersenjoy productivity gains. Ordinary businesses are using this to enhance theirbusiness. Those that do not will be left behind.

1 Porter 2001, 'Strategy and the Internet', Harvard Business Review, vol. 79, no. 3, pp. 62-78 at 66.


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The Government of Jamaica requested expert assistance from theCommonwealth Secretariat’s Fund for Technical Cooperation to:

• develop an ecommerce strategy, which targets four key sectors in theJamaican economy (ie, information technology, banking and finance,tourism, and music and entertainment); and

• provide assistance to strengthen the institutional capability of theregulatory agencies which support ecommerce activities.

The thrust of this report is to suggest ways of using the enabling powers ofecommerce to provide sustainable long term benefits for the Jamaicancommunity. It proposes a pragmatic approach that reflects Jamaica’s underlyingstrengths and weaknesses.

The report is not about how to create ebusiness applications, or specificallyabout their day-to-day use in business. Very few of the key issues are about thetechnology and so little space is allocated to these issues in this report. Inidentifying the things that impede further involvement in ebusiness in Jamaica,and the things that would encourage more rapid adoption of it, the focus tendsto be upon the things that Government can and does address in partnership withbusiness and the community. Inevitably, this has involved a lot of analysis ofthe regulatory issues.

When conducting consultations with key stakeholders many essentially said ‘wedon’t need another glossy report about the massive and exciting potential ofecommerce or ebusiness.” Others said, “what Jamaica needs is a practicalframework based on concrete actions.” The project team has sought to deliversuch a framework.

Roadmap for The Report

This report is divided into five parts:

• Part A — Context. Defines what is meant by ecommerce and ebusiness,identifies the drivers of change and the opportunities and challenges thatestablish the need for a strategic response (Chapters One and Two);

• Part B — Jamaica’s Ebusiness Foundations. Examines the overarchingissues that impact upon the general environment for ebusiness in Jamaicaand proposes means for dealing with them (Chapters Three to Six);

• Part C — Ebusiness in Key Sectors. This part address the use of ebusiness inthe four key sectors identified by the Government of Jamaica (ChaptersSeven to Eleven):

– information technology;

– banking and finance;

– tourism; and

– music and entertainment.

• Part D — The Ebusiness Strategy For Jamaica. This part brings togetherthe actions identified earlier in the report and outlines priorities for theirimplementation (Chapter Twelve); and


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• Part E — Appendixes. This provides material that supports the body of thereport.

The Context

Global Drivers of Change

Electronic commerce, or ‘ecommerce’, is not a well–defined term. At itsnarrowest ecommerce can be viewed as the undertaking of transactions andpayment online using the Internet.

While many early ecommerce ventures have been proven to be non-viable, it isclear that ecommerce is here to stay and is expanding. Forrester Researchindicates that the United States (US) online sales in 2002 grew by 52 percentover the year to reach US$78 billion. Official statistics reported by the OECDindicate that while the US remains the largest and fastest growing ecommercemarket, ecommerce has made significant inroads in most other markets.

Analysts are observing that business is making more use of the Internet thanmerely as a platform on which to conduct transactions. General business relatedactivities are more common on the Internet than sales. Activities include onlinepromotion, online service; provision of information; online delivery; onlinepurchases.

Based on these points analysis of the opportunities and impacts of ecommerceshould extend to the broader concept of ‘ebusiness’. Ebusiness is short for‘electronic business’. Ebusiness describes any business transaction or activitythat uses the Internet. This includes not only the sale of goods and services overthe Internet, but also the use of the Internet to provide an online brochure.Ebusiness can also mean selling products over the Internet.

Ecommerce and ebusiness is increasingly pervasive. Studies in developedcountries show that the majority of businesses have an Internet connection. Infact, in some countries, the proportion is over 90 percent. While theproportion of businesses engaging in ecommerce is much smaller, it is growingquickly.

Ebusiness should not be viewed as being separate or apart from normal business— it is instead better viewed as being part of the evolution of business practicesrequired to maintain competitiveness.

Ebusiness is bringing changes. Key opportunities include:

• New markets. Firms can more easily communicate with and sell to anyone,anywhere, anytime. They can reach the globe, or reach next door.

• Lower costs. Businesses can reach new markets without having to invest inmany of the traditional physical inputs. Many traditional businesses (such asbanks) are being reengineered to scale down on aspects that deliver littlevalue (eg, expensive bank branches) and placing emphasis upon aspects thatcustomers want (eg, service 24 hours a day 7 days a week).


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• A level playing field. Barriers to entry have fallen. Business can contestmarket share against entrenched players. Size is less important.

• Better service. Products and services can be tailored to meet specific requestswhile still meeting the advantages of scale. New technologies provide for‘mass customisation’ where the buyer shapes the final product (productssuch as computers and cars are sold this way now).

• Innovation. More than ever, the emphasis is upon having good ideas andacting upon them. An increasing part of the value of goods and services is ingood design — their knowledge content.

Ebusiness is not limited to business. Government is able to improve theactivities of government with ebusiness approaches. Community groups are alsofinding that they are able to enhance what they do with ebusiness.

State of Play In Jamaica

The overall economy and the community at large in Jamaica is still at arudimentary stage of ebusiness capability. The available research suggests thatJamaica is still at an incipient state of e–readiness. Only 9 percent of businessesin Jamaica have access to the Internet. It is estimated that only 2 percent havea web presence (ie, a website). Only a very small number are currently active inecommerce.

The outlook should not be viewed with excessive pessimism. There is evidencethat Jamaica is making progress in engaging in ebusiness:

• there is significant interest in technology amongst the Jamaican community,including with respect to the Internet and ebusiness. This is strongest inareas that already have an international outlook including sectors such astourism as well as music and entertainment activities;

• Jamaica has a fledgling IT sector and there is evidence that business isturning to ebusiness techniques;

• in general, Jamaica has a well respected regulatory regime which has madesignificant reform progress over recent years;

• a number of recent actual and mooted legislative changes have acknowledgedthe need to amend legislation to make Acts compatible with an Internetenabled world (eg, copyright); and

• the expatriate Jamaican community has most rapidly embraced ebusiness, asevidenced by the number of Jamaica-related web site originated and hostedoverseas, and hence Jamaica already has a substantial presence on the worldwide web.

The last point entails potential vulnerabilities. While there is evidence of avibrant ebusiness presence about Jamaica, much of this activity is not conductedin Jamaica by Jamaicans.

There is less ebusiness activity in Jamaica than there could be. Meanwhile,because of enhanced accessibility through the Internet global players are tappinginto the Jamaican market.


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Unless this pattern is addressed there is a danger that ebusiness will hollow outJamaican industry, shifting higher value knowledge based activities offshore,leaving only a shell of lower value activities in Jamaica. Jamaica would stillprobably benefit from the development of ebusiness in this scenario, but it wouldbe by less than it full potential given adoption of an effective strategy t odevelop domestic capabilities.

Jamaica’s Ebusiness Foundations

Access To ICT Technology

Widespread involvement in ebusiness, and therefore widespread enjoyment ofthe gains relies upon two key inputs:

• Access to computers and ICT technology; and

• Access to fast reliable telecommunications facilities.

Jamaica is a developing country and even though computer prices are falling,they remain expensive and out of reach for many. The ‘digital divide’ poses asignificant challenge for equitable development. It is notable that this is notonly an issue about fairness. Ebusiness in Jamaica and the economy in generalwill operate more efficiently if Internet capabilities are ubiquitous.

The Government of Jamaica is striving to enhance access to computers. Oftenthis is in partnership with the international donor community, business interestsand the community at large.

A key thrust of policy in Jamaica has been to introduce competition intelecommunications. There is compelling evidence that this is paying dividendsin terms of providers investing in delivering new and improvedtelecommunications services, increased consumer contestability, greater choicefor consumers and lower prices.

While the removal of regulatory fetters to competition in telecommunicationsin Jamaica has lead to significant gains, there remains a need for regulatoryintervention in some areas, possibly increasing regulation in some.

Universal access to fixed line telephony will remain a key means of access t othe Internet for some time to come. Reflecting inherent market failures,intervention and regulation may be needed to continue to roll out the networksto continue to raise the teledensity ratio. Compulsory pooled industry fundingappears to be a realistic option.

While Jamaica is strong in broadband telecommunications facilities, laying thefoundations for broadband Internet access and serious business use, the evidencesuggests that there is still a need for an active policy stance in this area. Despitethe promise of alternative technologies terrestrial cable remains the mostreliable technology. In Jamaica, as elsewhere, the owner/operators of terrestrialbroadband technologies benefit from a structural position giving them marketpower and the capacity to apply punitive prices for access. Prices must fall if


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Jamaican ebusinesses, located in Jamaica, are to thrive. This may requireregulatory intervention, or the threat of it.

The Regulatory Framework

There is a need to sharpen the regulatory framework to provide a betterfoundation for the growth of ebusiness in Jamaica. Key measures include:

• Development of a supportive legal framework — the UNCITRAL ModelLaw appears to be a practical way to proceed and could be implemented, as ithas in other Caribbean jurisdictions with little modification.

• Adoption of a practical approach to cybercrime — this could involvelegislation clarifying crimes in relation to authorised access to data,unauthorised modification of data and impairment of electroniccommunications as a key first step.

• Joining in with the international community to shape outcomes in regard totaxation of ebusiness

• Restructuring of regulatory institutions — concentrating scarce expertiseand removing the possibility of overlap and duplication induced byconvergence.

Human Capital and Entrepreneurial Drive: Enhancing Capability

Ebusiness is more about people than machines. A key area of human capitaldevelopment that requires attention in Jamaica (and elsewhere) is in IT skills.Being relevant and in a position to enjoy much of what the digital age has t ooffer is linked to having a well skilled and educated population with aptitude andskills in the application of information and communication technologies ineveryday life.

Successful ebusiness, as with traditional business, relies upon entrepreneurialverve. Entrepreneurship is in short supply everywhere and stimulating it is acentral challenge. The small and medium sized businesses that make up themajority of businesses in Jamaica face many of the same problems as theircounterparts in other countries. They view that it is difficult enough having t okeep one’s head above water without also reengineering the whole business withunfamiliar techniques.

Business incubation can be a powerful means of addressing these challenges.Expansion of leading institutions such as the Jamaican Business DevelopmentCentre and the Technology Innovation Centre offers practical means ofbuilding competitive businesses.

The shortage of capital for high–risk/high–return ventures is a further keyconstraint. This is an area that is difficult for all governments. Governmentknows little about business and the evidence is that governments do badly whentrying to pick winners. Grant funding is also expensive to the budget. What isneeded is an approach that generates a pool of equity available for investmentin new businesses and in spares the budget by limiting assistance to reward onlythose that are a success.


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Leadership

Ebusiness is changing the way that business is done in business, government andthe community. It impacts upon, or has the potential to impact upon, everysector of activity. Ebusiness presents opportunities and challenges in every areaof public administration. While private sector drive is to be encouraged, this isnot something that can be left to the private sector alone.

Key public sector objectives, including equitable growth and prosperity cannotbe assured with public sector leadership.

Key objectives cannot be met with coordination between government agencies.

Leadership also has to be shared between business, government and thecommunity in key areas.

Top down leadership involves commitment at the highest levels, from thePrime Minister down.

Government agencies and their clients can benefit from using ebusinessapproaches. Demonstration that it can be done has significant value. Reflectinglearning by doing delivery of more online services in Jamaica would continue t obuild Jamaican capabilities.

Ebusiness in Key Sectors

Different Jamaican industries have embraced ebusiness at different rates. Sectorsthat were focused upon in the study and approaches to accelerate involvementin ebusiness :

• tourism — this is probably Jamaica’s most well developed sector from anebusiness perspective. There is a wealth of Jamaican accommodation,transport and tourism activities marketed on the Internet. The largemajority are medium to small scale operators. However, inspection of manysites indicates that many are operated overseas;

• music and entertainment — this is another very vibrant sector of Jamaicanebusiness activity. Artists, publishers, and content aggregators and interestgroups abound about reggae music and culture. Opportunities for onlinecommercial transactions are limited in this medium at present because ofchallenges that impact globally (including the oligopolistic nature of theglobal industry and difficulties in protecting intellectual property fordigitised and easily copyable material), but there is evidence of considerablecommercial activity including promotion, advertising, and sponsorship. Aswith tourism, many websites appear to be hosted outside of Jamaica;

• information technology — stakeholders spoke often about the innatestrengths of Jamaicans in this sector and provided anecdotal evidence of thisimpacting on commercial and economic opportunities. It was also apparentthat while many Jamaicans have considerable talent and technical skills, ithas proven difficult to build up a number of Jamaican businesses.Government purchasers of IT services complained that the companies thatwere in Jamaica lacked depth and capacity to undertake large assignmentsand so they had little alternative than to import skills. It seems that manyJamaicans with skills in this area leave the island (some ironically work onwebsites about Jamaica from overseas); and


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• financial services — Jamaican banks, finance companies and insuranceappear to be ecommerce laggards. Not all of these institutions have websites,and those that do have a very low level of functionality. This stands in starkcontrast to the experience in other countries where banks have been at theforefront of ebusiness and obtained significant benefits.

It is notable that there are significant cross sectoral spillovers. Raising globalawareness about Jamaican music, for example, is likely to raise additionalinterest in Jamaica as a holiday destination. Resolving issues about onlinebanking (particularly in regard to support for online transactions for merchants)is important for ebusiness in every sector.

The Ebusiness Strategy For Jamaica

The Aim of the Strategy

Ecommerce and ebusiness are means to an end. That is, they provide new toolsto facilitate the transformation of service delivery and the provision of greateropportunities for Jamaican businesses and consumers. To this end:

The goal of Jamaica’s ebusiness blueprint is to maximiseopportunities to raise Jamaican competitiveness and wellbeingfrom the widespread use of ebusiness.

Guiding Principles

There are a series of principles (some of which, at times, suggest differentdirections) that should guide the development and application of Jamaicanebusiness policy. These are that:

• all Jamaicans should be provided the opportunity to access the informationeconomy, ecommerce and conduct ebusiness with sufficient bandwidth and atan affordable cost;

• all Jamaicans need to be equipped with the skills and knowledge to harnessthe information economy’s benefits for employment and living standards;

• the private sector must lead ebusiness uptake — choices about newtechnology and the exploitation of opportunities must be led by the privatesector. The development of ebusiness will be market-driven, and led byindividuals and business innovators;

• government should be a model user, supplier and purchaser of electronicbusiness services — this will provide direction, education and encouragementto business and consumers;

• legal and regulatory frameworks should be implemented to ensure thatebusiness is safe, secure, certain and open. This involves a number ofelements:

– technological neutrality;

– transparency; and

– international consistency.


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Action

Ten priority areas have been identified for action. Jamaica should direct itsefforts to:

1. progress wider availability, use and familiarity of computers and the Internetand raise awareness of the capacity to use ebusiness to improve business;

2. invest in appropriate human capital;

3. combat impediments to entrepreneurial development;

4. advance affordable access to world class telecommunications infrastructurenecessary to support use of the Internet and ebusiness in Jamaica;

5. build business and consumer confidence in ecommerce and ebusiness throughlegislation that confirms the legitimacy of electronic communication andtransactions;

6. ensure that the regulatory framework is consistent with further developmentof ebusiness in Jamaica;

7. reengineering of government service delivery using ebusiness approaches;

8. complement existing plans to encourage development of the IT sector withmeasures stimulating its use of ebusiness to raise productivity andcompetitiveness;

9. implement some sector specific policies in Jamaica’s strongest ebusinesssectors including Tourism and music and entertainment complemented; and

10. develop the Jamaican banking sector’s use and support for ebusiness andcapacity to conduct payments online to remove this as a potentialbottleneck in the development of ebusiness in Jamaica.

Actions that have been identified as necessary to support the strategic prioritiesare summarised below.

Table 12.1

ACTIONS AND PRIORITIES

Strategic Priority Broad Approach

1. Availability, use and familiaritywith computers and the Internet

Sustain government programs to provide PCs and Internet access in schools andcommunities. Work closely with private sector bodies in joint projects.

2. Investing in human capital Continue to place emphasis upon acquisition of IT skills as a staple skill for most walks of life.Evaluate the balance of supply and demand for IT skills. Make greater use of

3. Combating impediments toentrepreneurial development

Expand and enhance existing ebusiness incubators. Incubation should be an option for existingbusinesses or new businesses wishing to apply ebusiness tools in any field everywhere wherebusiness is done in Jamaica.

Develop approaches to support business in the post incubation phase.

Foster access to finance for emerging businesses through Pooled Ebusiness Funds (PEFs).


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4. Affordable access totelecommunications

Maintain commitment to universal service and access to fixed line telephony which is a keyaccess point to the Internet.

Identify practical means of financing the Universal service/access arrangements that will applyfollowing fully contestable market arrangements as a matter of urgency.

Conduct an evaluation of broadband internet access to assess if it is an emerging bottleneck.

Place broadband prices on the regulator’s price watch list and indicate that the government willdevelop policy options to drive prices down if competition is not effective in reducing prices inthe short to medium term.

The Government should withdraw ISP licenses from those companies that do not enter anoperational phase within 6mths, as a means of boosting substantive competition in the sector.

5. Ecommerce and ebusinesslegislation

Introduce legislation supporting ecommerce as a matter of urgency.

6. The regulatory framework Consolidate the number of institutions involved in regulation as a means of addressingconvergence, reducing potential fragmentation, dealing with bottlenecks and focusing expertise.

7. Reengineering Government asmodel user

Accelerate progress made under the egovernment and government modernisationprogrammes.

Continue to be selective in services and activities that are reengineered focusing on highervalue activities rather than apply across the board targets that are unrealistic and result indiffusion of limited resources.

8. Development of the IT sector Continue to implement the Five-Year strategic Information Technology plan.

Government to raise knowledge about ebusiness developments within the IT sector inJamaica.

Expand incubation of start-up companies.

Engage in post–incubation support for emerging IT companies.

Raise opportunities for partnership building within Jamaica and abroad.

Make it easier to find Jamaican IT companies and learn about their capacities. Encouragedevelopment and maintenance of a private sector ICT/ebusiness portal site. This may includeworking together to improve an existing site.

Promote awareness about Jamaican ICT/ebusiness success stories.

Obtain greater Jamaican development and involvement when making government purchasingdecisions.

Establish KPIs (some suggested) and review progress over next three years.

9. Sector specific policies inJamaica’s strongest ebusinesssectors

Focus industries include Tourism as well as music and entertainment.

Conduct a brief audit about the nature and extent of ebusiness involvement in these sectors.

Continue with plans to market Jamaican tourism businesses through an exclusive site. It isessential that SMEs be involved in that process.

Identify global and regional sites that function as portals and ensure that Jamaican businessesand Jamaica are well represented on those sites. Develop ‘how to guides’ to assist localoperators to be listed on these sites.

Include basic ebusiness practices within industry training schemes.

Enhance involvement of businesses in key sectors in ebusiness incubator programs. Ensurethat there is appropriate after incubator support.

Support demonstration programs for non-English web site development to broaden markets.

Encourage greater use of Internet purchasing and Internet price differentials (particularly fortourism/travel services).

10. Banking sector’s use and supportfor ebusiness

Government should encourage cooperative competition with and between banking institutionsleading to development and use of more efficient electronic payments instruments andfacilities.

Government of Jamaica to use the purchasing power of its agencies to encourage the bankingsector to provide electronic banking services and obtain modern, efficient banking services.

The Government of Jamaica should indicate that it would be willing to consider applications fora banking authority from an Internet bank, subject of course, to meeting prudential and otherrequirements on the same basis as other banks.


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A timeline for action has been established that sorts actions into threecategories:

• immediate action — putting ebusiness legislation in place and making theregulatory framework more ebusiness friendly.

• medium term action — establishing the government as a model user ofebusiness, implementing sector specific approaches in Jamaica’s strongestsectors; and

• longer term action — raising availability use and familiarity with computersand the Internet, building human capital development, combatingimpediments to entrepreneurial development and development ofarrangements to enhance widespread access to Internet friendlytelecommunications with a view to firmer regulation if competition does notfully deliver.

Key Points

The global shift to a digital economy poses major threats and significantopportunities for Jamaica. As a small open economy Jamaica is dependent upontrade and international capital. The country’s small size and traditional relianceon a few primary products and services has constrained industrialisation andeconomic development.

The opportunities are now well rehearsed. Digital technologies and ebusinessapproaches are creating new markets, reinvigorating old markets and makingevery market more accessible. Success in becoming a global player could bringeconomic growth, employment generation, greater social equity, administrativeefficiency and more participatory governance.

The threats are sometimes under appreciated. Economies have to re-equip andre-skill to meet the evolving competition. Government and every sector of theeconomy have to adapt quickly. Areas of the economy that once enjoyednatural protection from imports (including many services) now face fiercecompetition. Failure to address the challenges may condemn many Jamaicans t opersistent poverty and underdevelopment.

At issue is Jamaica’s capacity to enhance its position as a global player and t omaintain or improve competitiveness. The ebusiness challenge is not only aboutwebsites and electronic transactions. The digital revolution is involvingprofound changes. Jamaica must implement policies and provide the frameworkand environment which will facilitate investment, modernise industries, enhanceproductivity and broaden the worldwide presence of Jamaicans.

It is clear that the Government of Jamaica already sees the big picture:

“As we come to terms with the Digital Age, Jamaica has the opportunity toembrace the new concept of a “knowledge based society” for social and economicdevelopment. We must seize the initiative and build on the foundation that wehave already laid, to establish new partnerships, develop new industries, to becomemore competitive in this new age. We have already begun the process throughhuman resource development, the establishment of infrastructure and theenhancement of new legislation and policies to create balance, stability andgrowth…”


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A

Part A

Context


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Chapter One

New Ways of Doing Business

What is ecommerce? Why is it important for business? What good is it and whyis it important to Jamaica?

2.1 Ecommerce

Electronic commerce, or ‘ecommerce’, is not a well–defined term. At itsnarrowest ecommerce can be viewed as the undertaking of transactions andpayment online using the Internet.

Ecommerce is a comparatively recent phenomenon. The Internet has been indevelopment in various forms since 1969, but it has only been in the last decadethat it has been used for business, and that that usage has become widespread. I twas not until 1992, for example, that the US Congress authorised the use of theInternet, which was originally designed for military and then academic purposes,for commercial use.

There was considerable excitement about the potential for ecommerce when itburst its way into the press, daily discourse and the boardrooms of nearly everybusiness around the world. This excitement was driven by expectations aboutnew access to global markets, indications of rapid growth and the lower costs.The turn of events at the end of the last century showed that these expectationswere unrealistic. Fortunes rapidly made were lost as quickly in the collapse ofthe ‘dot com’ bubble.

While many ecommerce ventures have been proven to be non-viable, it is clearthat ecommerce is here to stay. Forrester Research indicates that the UnitedStates (US) online sales in 2002 grew by 52 percent over the year to reachUS$78 billion

2. More sober official statistics reported by the OECD indicate

that while the US remains the largest and fastest growing ecommerce market,ecommerce has made significant inroads in most other markets.

3

Despite rapid growth, the proportion of activity that is transacted onlineremains relatively small. The US Department of Commerce reports thatecommerce hovers at around one percent of total retail sales.

4 Similar

proportions are observed in other developed countries. While disappointing theexpectations of many analysts, this is still a significant achievement given thatthis medium for business activity was not open for business a decade ago.

2 Johnson, C.A., Delhagen, K., Chaskey, K., 2002, 2002 US ecommerce: The Year in Review, Forester

Research, available from http://www.forrester.com.3 A good review is provided in Organisation for Economic Cooperation and Development 2002, OECD

Information Technology Outlook: ICTs And The Information Economy, OECD, Paris.4 US Department of Commerce, 2002, Digital Economy 2002, p.vi.


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2.2 Ecommerce and Ebusiness

Analysts are observing that business is making more use of the Internet thanmerely as a platform on which to conduct transactions. General business relatedactivities are more common on the Internet than sales. Activities that arefrequently observed include:

• Promotion. International statistics and day-to-day observation of the worldwide web shows that most business web sites contain more general marketinginformation and supporting material than anything else;

• Service. Many companies provide after sales service or the opportunity todeliver digitised products and services (eg, software and pictures);

• Information Source. The Internet has made it is easier for government,businesses and consumers to find information to support purchasingdecisions. A little over a decade since it became a commercial product, inmost advanced countries email is nearly as ubiquitous as the telephone inbusiness, government and society at large. The ability to browse and searchthe web has added significantly to the information able to be read andanalysed by anyone with a computer and Internet connection; and

• Inputs and cost savings. Business and government agencies tend to use theInternet more to find a cheaper price when purchasing than to make a sale.Choosing from the lowest cost supplier, better management of inventories,receiving goods and services online, are important opportunities that stemfrom access to the Internet and being engaged in ecommerce.

Based on these points analysis of the opportunities and impacts of ecommerceshould extend to the broader concept of ‘ebusiness’. Ebusiness is short for‘electronic business’. Ebusiness describes any business transaction or activitythat uses the Internet. This includes not only the sale of goods and services overthe Internet, but also the use of the Internet to provide an online brochure.Ebusiness can also mean selling products over the Internet.

Ecommerce and ebusiness is increasingly pervasive. Studies in developedcountries show that the majority of businesses have an Internet connection. Infact in some countries the proportion is over 90 percent. While the proportionof businesses engaging in ecommerce is much smaller, it is growing quickly.

Ebusiness should not be viewed as being separate or apart from normal business— it is instead better viewed as being part of the evolution of business practicesrequired to maintain competitiveness.

There are many other ebusiness models and many more that are likely t oemerge. A summary of ebusiness models is provided in Box 2.1 below.


4

Box 2.1: Emerging Ebusiness models

Ebusiness is characterised by new terminology and concepts about business. Looking at what ebusinesses do,however, it is helpful to think of seven main types of ebusiness models.

• The content model. Generates income from selling advertising space or by subscription.

• The market maker model. Brings buyers and sellers together and facilitates transactions (includesauction sites and industry specific trading sites)

• The infomediary model. Consolidates and sells consumer data on needs and behaviour (eg sendingemails to users interested in particular goods and services).

• The online retailing model. Sales are made directly over the Internet (the example now knownacross the world is amazon.com)

• The affiliate model. Generates income by providing traffic to other sites.

• The hybrid model. A mixture of two or more other models.

• The clicks and mortar model. This is a pun on the idea that traditional businesses were built onbricks and mortar and that ebusinesses are built on mouse clicks. The fact is businesses today arebecoming a mixture of traditional business structures with an overlay of electronic business features.

Source: The Australian Ebusiness Guide, 2002 and The Allen Consulting Group.

2.3 Driving Change

Ebusiness is bringing changes. Key opportunities include:

• New markets. Firms can more easily communicate with and sell to anyone,anywhere, anytime. They can reach the globe, or reach next door.

• Lower costs. Businesses can reach new markets without having to invest inmany of the traditional physical inputs. Many traditional businesses (such asbanks) are being reengineered to scale down on aspects that deliver littlevalue (eg, expensive bank branches) and placing emphasis upon aspects thatcustomers want (eg, service 24 hours a day 7 days a week).

• A level playing field. Barriers to entry have fallen. Business can contestmarket share against entrenched players. Size is less important.

• Better service. Products and services can be tailored to meet specific requestswhile still meeting the advantages of scale. New technologies provide for‘mass customisation’ where the buyer shapes the final product (productssuch as computers and cars are sold this way now).

• Innovation. More than ever, the emphasis is upon having good ideas andacting upon them. An increasing part of the value of goods and services is ingood design — their knowledge content.

2.4 Ebusiness Dividends

Use of ecommerce and ebusiness brings benefits for business, customers and theeconomy at large.

Many ebusiness or Internet based approaches are inherently cheaper than theprevious means of procuring the same services. Examples of cost savings in anumber of different day to day goods are noted in Table 2.1 on the followingpage.


5

Table 2.1

E–COMMERCE IMPACT ON VARIOUS DISTRIBUTION COSTS, $US PER TRANSACTION

Airline tickets Banking Bill payment Term lifeinsurance policy

Softwaredistribution

Traditionalsystem

$8.00 $1.08 $2.22 to $3.32 $400 to $700 $15.00

Telephone–based $0.54 $5.00

Internet–based $1.00 $0.13 $0.65 to $1.10 $200 to $350 $0.20 to $0.50

Savings (%) 87% 89% 71% to 67% 50% 97% to 99%

Source: OECD 1999, The Economic and Social Impacts of E–commerce: Preliminary Findings and Research Agenda, p.63.

Underlying structural changes appear to be likely. Ebusiness changes the mix ofinputs in an economy. Consumers and businesses use ebusiness to bypass ordisintermediate ‘middlemen’. In some cases the bypass is of informationproviders (eg, marketers, agents, and so on), and in other cases the bypass is ofsupply channels (eg, retail shopfronts, transport, handling, etc). Some industrieswill contract. Those industries that fit new tastes or can take advantage of newtechnologies (and therefore obtain price reductions) can expect to expand.

Ebusiness is playing a similar role to other significant inventions that haveaffected business over the last two centuries. What most have in common is thebreaking down of barriers to communication, particularly what is sometimescalled the “tyranny of distance”. Many have involved getting goods to marketmore quickly (railways and airtravel) or making information more accessible andindependent of location (the telegraph and telephone). Improvedcommunications continues to advance economic activity towards a singleworldwide market. Globalisation is a direct and increasingly difficult to avoidconsequence of these technological changes.

The overarching impact, however, is an increase in economic efficiency. Studiesin the US have identified that ICT investments in that economy havecontributed to multifactor productivity (MFP) growth. They consistentlyindicate that about a quarter of the US growth rates over the later part of the1990s, or more, may be attributable to ICT investment.

5 More recent cross

comparison studies indicate that this is not unique to the US, ICT investmenthas a similar impact in most economies studied to date.

6

The startling aspect of these findings is that the contribution to growth is vastlyout of proportion to the share of ICTs in the capital stock. Investments in ICTassets in terms of millions of dollars are associated with gains in output measuredin billions of dollars each year. This is not merely an attribute of being atechnologically advanced country benefiting from the technology it makes.Similar studies conducted about smaller, less advanced economies have shown

5 See Oliner, S and Sichel, D. 2000, ‘The Resurgence of Growth in the late 1990: Is Information Technology

the Story?’, Journal of Economic Perspectives, vol. 14, no. 4, Fall and Jorgenson, D., and Stiroh, K. 2000,‘Raising the Speed Limit: US Economic Growth in the Information Age’, Brookings Papers on EconomicActivity, no. 1.

6 OECD, 2002, OECD Information Technology Outlook: ICTs And The Information Economy, OECD, Paris,

p21.


6

that it is possible to obtain large productivity gains, and a large growth impetus,by merely using the new technologies.

7

7 Productivity Commission, 2001 Information Technology and Australia’s Productivity Surge, Staff Research

Paper, Canberra.


7

Chapter Two

Opportunities and Challenges

What prevents greater use of ecommerce? This chapter offers views that may beuseful when thinking about answers to these questions.

2.1 Jamaica’s E–Readiness

A key approach of this study is to examine actual market conditions.

The overall economy and the community at large in Jamaica is still at arudimentary stage of ebusiness capability. Key indicators about e-readiness arereported in Table 2.2. In particular:

• only nine percent of Jamaican businesses are estimated to have invested inobtaining access to the Internet; and

• only two percent of Jamaican businesses have a website.

Table 2.2

INDICATORS OF JAMAICAN BUSINESS INTERNET READINESS

Activity Output

Total number of registered businesses in Jamaica 48,978

Number of Internet connected businesses 4,458

Estimated Internet business penetration rate 9%

Estimated number of business with a web presence 1,000

Estimated website penetration rate 2%

Total number of ICT sector companies 96

Source: Allied Research Associates 2002, p. 80

The available research suggests that Jamaica is still at an incipient state ofe–readiness. A recent detailed assessment of Jamaica’s e-readiness painted achallenging picture:

“In brief, the country has good telephone infrastructure; low Internet connectivity,computer ownership and level of commerce; reasonably diffused electricitydistribution but not cost effective or reliable services. Innovations are rare; venturecapital scarce; institutional forces, social and political relationships often distortmarket forces; there are scarce administrative, technical and managerial talents inthe area of information and communication technology; and the investment climateis sullied by the high crime rate security related costs.”

8

8 Allied Research Associates 2002, Jamaica's E-Readiness Assessment, Central Information Technology

Office (Ministry of Industry, Commerce & Technology), Kingston, p. 85.


8

Translated by the Government of Jamaica, these findings have been taken t oindicate that, “e-commerce in Jamaica is in its fledgling stage”.

9

2.2 Progress In Practice

E-readiness is in many ways a one sided perspective. Concentration upone–readiness alone is to take a supply driven approach. That is, to take a ‘build itand they will come’ approach.

Realisation that Jamaica is not yet fully prepared for ebusiness should not beread that little is happening. In much the same way that the Internet has quicklygathered size and momentum from modest beginnings, businesses in Jamaica aremaking use of ecommerce.

Jamaica is progressing down the path established by other ecommerce andInternet economy adopters. There is evidence of a close relationship betweenthe proportion of the economy actively online and the number of web hosts(sites used for business and other services). Basically countries struggle to raisehost numbers and be involved in ecommerce while the Internet populationremains under eight percent of the total. Once they exceed this they havereached the take-off point and gather momentum before really accelerating hostnumbers and the level of ecommerce. See Figure 2.1.

Figure 2.1

THE EBUSINESS TAKE-OFF POINT

0

500

1000

1500

2000

2500

3000

0 10 20 30 40 50 60

Inte

rnet

Ho

sts

Per

10,

000

Inh

abit

ants

Internet Users Per 100 Inhabitants

Jamaica

Take-off point 8-10%

Source: Centre for International Development, Global Information Technology Report2001-2002: Readiness for the Networked World, viewed 25 July 2002,www.cid.harvard.edu/cr/profiles.html

9 Government of Jamaica 2002, A Five-Year Strategic Information Technology Plan for Jamaica, Kingston, p.

54.


9

There is emerging evidence to suggest a higher rate of computer use andInternet awareness by Jamaican business than was previously believed. Forexample, a recent survey of small business in the Kingston area indicates that:

• over 40 percent now use computers in their businesses;

• 31 percent indicated their intent to purchase computers; and

• around nine percent had Internet access while five percent had websites.10

Of course, businesses in the capital and largest city are likely to be closer to thelead than many other businesses in other parts of Jamaica.

Despite the limited IT and Internet penetration, Jamaican business websites areintegrated into the supply chains of the new economy and are listed andprominent on global portals such as Yahoo.

11 People looking for goods and

services that Jamaica sells can find Jamaican business online. Jamaica is on theebusiness map.

Different Jamaican industries have embraced ebusiness at different rates. Thiscan be seen by looking at the four key sectors identified for this study:

• tourism — this is probably Jamaica’s most well developed sector from anebusiness perspective. There is a wealth of Jamaican accommodation,transport and tourism activities marketed on the Internet. The largemajority are medium to small scale operators. However, inspection of manysites indicates that many are operated overseas;

• music and entertainment — this is another very vibrant sector of Jamaicanebusiness activity. Artists, publishers, and content aggregators and interestgroups abound about reggae music and culture. Opportunities for onlinecommercial transactions are limited in this medium at present because ofchallenges that impact globally (including the oligopolistic nature of theglobal industry and difficulties in protecting intellectual property fordigitised and easily copyable material), but there is evidence of considerablecommercial activity including promotion, advertising, and sponsorship. Aswith tourism, many websites appear to be hosted outside of Jamaica;

• information technology — stakeholders spoke often about the innatestrengths of Jamaicans in this sector and provided anecdotal evidence of thisimpacting on commercial and economic opportunities. It was also apparentthat while many Jamaicans have considerable talent and technical skills, ithas proven difficult to build up a number of Jamaican businesses.Government purchasers of IT services complained that the companies thatwere in Jamaica lacked depth and capacity to undertake large assignmentsand so they had little alternative than to import skills. It seems that manyJamaicans with skills in this area leave the island (some ironically work onwebsites about Jamaica from overseas); and

• financial services — Jamaican banks, finance companies and insuranceappear to be ecommerce laggards. Not all of these institutions have websites,and those that do have a very low level of functionality. This stands in stark

10

Allied Research Associates 2002, Jamaica's E-Readiness Assessment, Central Information TechnologyOffice (Ministry of Industry, Commerce & Technology), Kingston, p. 85.11

Jamaica also has its own portal sites. For example:investjamaica.com; www.jamaicatradepoint.com,www.go-jamaica.com; www.jamaicanetlink.com; and discoverjamaica.com/shop.


10

contrast to the experience in other countries where banks have been at theforefront of ebusiness and obtained significant benefits.

(Details of the analysis supporting these summary comments are provided inPart C of this report.)

The overall picture is that there is evidence of a small but vibrant ebusinesspresence about Jamaica.

2.3 Further Challenges

As in many other countries, anecdotal evidence suggests that the majority ofJamaican businesses that have a website are larger, or more establishedbusinesses. With some exceptions, the majority of smaller businesses in Jamaicado not appear to have an ebusiness capacity or presence on the world wide web(www).

Only a small portion of businesses appear to conduct transactions online, withmost engaged in promotional activities, and using the Internet forcommunications and research, including when looking to improve purchasedinputs.

The marketing thrust of many websites appears to be to reach into existingmarkets. Many tourism sites, for example, are targeted at the US audience.Others offer improvements in existing services (eg, mail order) for Jamaicansoverseas. This is works with and enhances existing strengths. The sense of theresearch team in reviewing Jamaica’s existing websites was that there was lessemphasis on developing new markets and new sources of growth.

Comparative data suggests that there are fewer websites in Jamaica than onewould expect, even after taking into account its size and general e–readiness.

12 I t

also appears there are fewer Jamaican websites than other countries in theCaribbean and other comparable countries elsewhere. Meanwhile investigationsby the project team shows that there are in fact a vast number of websites aboutJamaica. These sites are very sophisticated providing considerable services t ousers, very often including the possibility of making online transactions.However, closer inspection of these sites reveals that the majority of them areowned and operated overseas, mostly in the US, Canada, with some hosted inother Caribbean countries.

This reveals a key challenge: much existing ebusiness activity about Jamaica isnot conducted in Jamaica by Jamaicans.

12

See Kirkman, Cornelius, Sachs and Schwab 2002, The Global Information Technology Report 2001–2002:Readiness for the Networked World, Oxford University Press, New York.


11

2.4 SWOT Analysis

Given these forces of change, Table 2.3 reflects the strengths, weaknesses,opportunities and threats that ebusiness poses to Jamaica’s businessenvironment.

Table 2.3

JAMAICA’S EBUSINESS STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS

Strengths Weaknesses

• There is an existing (but limited) ebuisness presence • Outdated legal and regulatory structures – no specificlegislation to support e-commerce or address concernsabout it

• Shortage of entrepreneurs

• People are interested in Jamaica its people and culture • Shortage of capital, especially venture capital

• Advanced telecommunications infrastructure • Low level of domestic demand for ecommerce/Internetservices

• Increasing competition in telecommunications • Low level of participation in information economy/largedigital divide

• Increasing training opportunities • Poor community access to affordable internet andcomputers

• Increasing creativity in software development and webservices with increasing prospect for value added exports

• High cost of broadband Internet access restrictsecommerce exports

• Jamaicans speak English, the language of IT andebusiness

• Restrictive access to electronic payments and bankingsystem

• Proximity to the largest and most advanced ICT andecommerce/ebusiness market

• IT/ebusiness skills shortage

• Jamaicans have close links abroad which may be inclinedto preferentially purchase from Jamaica

• Small domestic market

• Government’s commitment to ICT including a national ITstrategic plan and coordinating organisation.

• Large numbers of small firms may face hurdles to use ofecommerce

• Other Government initiatives supporting uptake ofecommerce including in the areas of tax administration,trade initiatives such as customs modernisation,JAMPRO’s Exporter Registration and Trade Agency on-line integration.

• Government institutions and service delivery not IT ready

• Poor order fulfilment (eg, customs barriers, etc)

• Increasing cooperation in Caribbean IT initiatives • Lack of manufacturing base and production of value addedgoods and services

Opportunities Threats

• New markets may be opened up through ecommerce • Problems from increased globalisation

• New access to old markets • Ebusiness leads to unsustainable import surge

• Efficiencies for Jamaican industry • Ebusiness hollows out Jamaican industry

• Raised productivity for the economy in general • Brain drain depletes entrepreneurs and IT skills

• Increased competitiveness and improved trade • Ebusiness raises competition and reduces profits

• Increased contestability and lower prices for consumers • Digital divide deepens inequality

• Better links across the whole community • Structural change causes social dislocation

• Potential to spread jobs into rural regions

• New services and improved convenience for ruralcommunities better able to communicate

• Loss of competitiveness if the majority of Jamaicanbusinesses do not adopt new technologies while the restof the world does

Source: The Allen Consulting Group and Allied Research Associates 2002


12

The observations summarised in Table 2.3 suggest that ebusiness is both an‘offensive’ and a ‘defensive’ issue. That is, whether or not Jamaica embracesebusiness, ebusiness will increasingly be relied upon by overseas customers andbusinesses, to the exclusion of countries and businesses that do not haveebusiness capabilities. While embracing ecommerce may be seen as detrimentalto Jamaica’s export position (ie, consumers and businesses may bypass physicalbarriers and imports may increase) if ecommerce is not embraced then there willlikely be a reduction in exports because consumers and businesses will deal withcountries other than Jamaica.

Unless the threats and opportunities are addressed there is a danger thatecommerce will hollow out Jamaican industry, shifting higher value knowledgebased activities offshore, leaving only a shell of lower value activities inJamaica. Jamaica would still probably benefit from the development ofecommerce in this scenario, but it would be by less than its full potential givenadoption of an effective strategy to develop domestic capabilities.


13

B

Part B

Jamaica’sEbusinessFoundations


14

Chapter Three

Access to The Ebusiness Environment

In addition to understanding business, widespread involvement in ebusiness hastwo further requirements:

• access to computers (including the knowledge to use them); and

• access to a fast and reliable telecommunications system.

This chapter looks at these issues in some depth.

3.1 ICT Equipment

Despite falling prices in real terms for many decades access to ICT technologyis not cheap. The availability and affordability of computers and relatedequipment pose a significant challenge in developing countries such as Jamaica.

The fact that access to computers is not widespread raises the threat of a digitaldivide — the separation of the information ‘haves’ and ‘have nots’. The keyconcern is that in the information age, being an information ‘have not’ is a lifesentence to poverty and underdevelopment.

The digital divide is not only about fairness. Many of the efficiencies broughtfrom ICT technologies and ebusiness hinges upon network economies. A senseof the gains from network economies can be gained by looking at experiencewith the telephone. One telephone set is merely a curiosity upon a desk. A fewphones in town may be helpful. What really makes a telephone useful for itsusers is the possibility of talking to almost anyone at modest cost. The gains fornetworked business, community and government grow dramatically as ICTtechnologies become as ubiquitous as the telephone.

Evidence presented earlier shows that most other countries did not generate apresence on the Internet (ie, have websites about business opportunities orgovernment services, etc) until after some eight to ten percent of theirpopulation has access to the Internet. Jamaica is some way short of that pointat this time (measured with ITU definitions).

The Government of Jamaica, in partnership with business, is striving to raiseaccess to PCs and the Internet. Current approaches include:

• introduction of PCs into Jamaica’s schools — over two thirds of all schoolsare now equipped with computers, although access by all students is stilllimited. The Government of Jamaica is examining the feasibility of utilizingexisting computer labs as access points for the public;

• the Government of Jamaica is also committed to programs to raise publicawareness about the importance of ICT and the benefits from using it inbusiness and other walks of life;


15

• Grace Kennedy in Partnership with Western Union has installed computerkiosks with Internet access in all the parish libraries;

• C&WJ have agreed to establish a number of Internet Access Points acrossthe island. Some post offices are being equipped with Internet Kiosks withequipment provided by C&WJ;

• the Government of Jamaica has announced that it will install computers inpublic places to provide access to email and the Internet. Community AccessPoints (CAP) are being provided by the Social Development Commission;and

• the Government of Jamaica has also removed all duties and sales taxes oncomputers and peripherals, making their acquisition by ordinary people (andbusiness) more affordable.

These measures, and others like them, are vital in accelerating Jamaicansocieties progress up the social learning curve about PCs and the Internet. Theyare of central importance in ameliorating the threat of the digital divide.

The Government of Jamaica in partnership with business should continue withthe application of a range of measures designed to promote widespread accessto computers and the Internet to all sections of Jamaican society.

3.2 Telecommunications and the Internet

The World Bank has identified that access to telecommunications is a keydevelopmental issue for Jamaica:

“More in some parts of the world than in others, poor people talk about theimportance of telephones to increase their connectivity to information, such as themarket prices for their goods and other knowledge about the outside world. InMillbank, Jamaica the need for telephones was mentioned by several discussiongroups. The researchers write:

The community feels very strongly that the market exists for their enterpriseand the road and telephone would lead to the creation of an economicallyviable industry. However, they ranked telephones as more important as theybelieve these will provide income earning opportunities and a faster responsetime to health or other emergencies that may arise in the community…. Thelack of telephones was a recurring theme, possibly derived from a sensed ofalienation through the remote location. Aside from the telephone, the youngmen and women have a craving for information technology, and are wellaware of the Internet, seeing enterprise opportunities for marketing theirproducts in the area.

In other discussion groups in Millbank, women equate the telephone to the localbridge across the river. In one group, a woman declares “this is the year 2000, theage of technology; it is full time that we get a telephone.” In Little Bay, Jamaica’slack of telephones and post offices is a problem identified by all discussiongroups.”

13

13

Narayan, Chambers, Shah and Peteschp 2000, Crying Out for Change: Voices of the Poor, Oxford UniversityPress, New York, p. 239.

Action


16

Indeed, the anecdotal importance of telecommunications is supported bystatistical evidence; increased telephone access is correlated with per capitaincome.

14

While access to telecommunications services is necessary for communicationusing simple voice telephony, it is obviously also important for the uptake ofebusiness.

Apart from basic fixed telephony, other telecom infrastructures that areessential for electronic commerce include:

• wireless services;

• broadband services (including ADSL, IDSN, cable TV and satellite) — theseallow for fast access to Internet operations; and

• international interconnections — these are constitutive for Jamaica’soverall capacity to access the Internet.

It is not enough to say that such technologies exist in Jamaica. They need to bewidely available and at affordable prices. Jamaica’s telecommunications servicesare both constrained in their relative availability, expensive and relativelyunreliable.

15

Competition is a key to overcoming these problems. While Jamaica’stelecommunications regime is seen as relatively competitive in comparison t oits peers (Figure 3.1), there is scope for improvement in order to advance theuptake of ebusiness.

3.2.1 Progressive competition in Telecommunications

Telecommunications in Jamaica have been subject to regulatory reform.

Prior to March 2000, Cable and Wireless Jamaica Limited (C&WJ) had amonopoly on telecommunications services in Jamaica. C&WJ had an exclusivelicense to provide services for 25 years with an option for renewal. TheGovernment of Jamaica negotiated an agreement with C&WJ to terminateC&WJ’s monopoly and liberalise the telecommunications industry on a phasedbasis:

• Phase 1 — 1 March 2000 to 31 August 2001. Liberalisation of market formobile phones and resale of international voice calls.

• Phase 2 — from 1 September 2001. Scope for competitive entry of:domestic carriers, Internet Service Providers (ISPs) and subscriber TV (STV).

• Phase 3 — from March 2003. All services, including international voicetelephony services, are subject to competition.

These arrangements (among others) were established in theTelecommunications Act 2000 that came into effect on 1 March 2000.

14

See World Bank, as quoted in Grace, Kenny, Qiang, Liu & Reynolds 2001, Information and CommunicationTechnologies and Broad-Based Development: A Partial Review of the Evidence, Draft, p 16.15

See Kirkman, Cornelius, Sachs and Schwab 2002, The Global Information Technology Report 2001–2002:Readiness for the Networked World, Oxford University Press, New York.


17

Figure 3.1

PERCEPTION OF EFFECT OF TELECOMMUNICATIONS COMPETITION ON QUALITYAND PRICEIs there sufficient competition in the telecommunications sector in your country to ensure high quality,infrequent interruptions, and low prices? (1=no, 7=yes, equal to the best in the world)

MauritiusHonduras

Nigeriarinidad and Tobago

EcuadorVietnam

NicaraguaBulgaria

BangladeshSouth AfricaCosta Rica

LithuaniaZimbabweParaguay

UkraineRomania

LatviaPolandChina

SloveniaMexico

Russian FederationBoliviaTurkey

UruguayPanamaJamaica

IndonesiaGuatemala

PeruGreece

ThailandEgypt

Sri LankaIndia

MalaysiaIreland

Czech RepublicPhilippines

HungaryJordan

Slovak RepublicJapan

ColombiaIsrael

EstoniaSpain

ArgentinaVenezuela

New ZealandBrazil

El SalvadorDenmarkBelgium

AustraliaTaiwan

PortugalNetherlands

KoreaIceland

SwitzerlandItaly

FranceSingapore

Dominican RepublicNorway

United KingdomCanadaAustria

United StatesHong Kong SAR

GermanyChile

SwedenFinland

0 1 2 3 4 5 6 7

Country

Value

4.6

MEAN

Source: Kirkman et al. 2002, p. 350


18

Competition in telecommunications has brought about many tangible andmaterial changes in Jamaica. Key aspects include:

• The entry of vigorous competitors. In particular, the establishment ofDigicel and Centenial Digital Jamaica rolling out their cellularcommunications infrastructure and business support systems, in addition tothe expanded activities of C&WJ, has involved some of the biggest directforeign investment projects seen in Jamaica in many years.

• Choice. Consumers can now purchase a wide range of products and services.Some of these are innovative products designed to meet the needs ofJamaicans.

• Price reductions for customers. Prices for wireless telephone services andInternet access have fallen. The deepest price reductions have been in seenin international call (voice) charges.

3.2.2 Fixed Telephony Issues

Fixed telephony (ie, involving terrestrial telecommunications facilities generallythrough physical networks) provides the most widespread, reliable means ofobtaining access to the Internet for many people, businesses, governmentagencies and community bodies. Even in countries with high incomes andgreater potential to purchase alternative technologies, telephone access remainsthe most common means of obtaining Internet access. It will remain importantin Jamaica for some time to come.

The Government of Jamaica has sought to ensure that every household,including rural and the urban poor, has access to basic telecommunicationservices. As part of its agreement with the GoJ, C&WJ undertook to provide asignificant number of landline connections around the island.

Over the past decade there has been a steady increase in the number of fixedtelephone lines in Jamaica, although number of fixed lines now appears to havereached a plateau. Despite this, there is evidence that Jamaicans do not have thelevel of access that would be expected even taking into account ability to payand geographic factors. Analysis recently conducted by the OUR identified thattaking into account Jamaica’s circumstances it should have a teledensity ratio of22.9 percent. Meanwhile actual or measured teledensity stands at 19.9 percent.

16

The OUR findings suggest that Jamaica has under invested in the domestictelecommunications network (fixed line and payphone).

Universal access is one issue that competition will not solve immediately. It isextremely unlikely that another business would seek to enter as a carrier androllout a universal network (and it would probably be economically wasteful ifthey did given the capital tied up in duplication). Competition may in factconfound progress in obtaining universal access.

As with most other countries, telecom companies invest in activities thatgenerate the highest returns. The highest return activity in Jamaica is in

16

Office of Utilities Regulation 2001, Quality of Service Standards for Cable & Wireless Jamaica — AConsultative Document: Final Draft, Office of Utilities Regulation, Kingston.


19

servicing international calls. Once the domestic terrestrial network has includedthe urban and medium density areas, there is little incentive to extend expensiveinfrastructure to remaining areas with lower customer density and higher costs.Thus other less affluent segments of the population are increasingly left behindin the race to connectivity.

The dilemma is whether it is in the public interest for government to interveneand continue to push for the installation of services to all (ie, a universal accessobligation) or to seek to bypass reliance on fixed lines and instead turn t ogreater reliance on mobile services (which would be less useful for widespreadInternet access).

The project team notes that the Jamaica Telecommunications Advisory Council(JTAC) recommended that the Telecommunications Act be altered to addressaccess more directly. In its terms:

“The relevant provision in the Telecommunications Act should speak to universalaccess, as opposed to universal service. The main elements of universal accessinclude:

(a) Physical build-out of the network to cover unserved/underserved areas in bothrural (remote) and urban (inner city) areas.

(b) Ability to utilize the network (knowledge/expertise to use the networkeffectively).

(c) Affordability of the network.

(d) Access to the emergency services, eg. Fire Brigade, Police, Air Sea Rescue etc.(toll-free calls).

(e) Access to the network by persons with disabilities.

(f) Access to public telephones and call boxes (including service delivery via(including pre-paid card, credit card and coin phones).”

17

The OUR’s recent consultation document provided evidence to suggest that theidentified ‘access gap’ in Jamaica may only be closed by additional regulatoryintervention and/or public financial subsidies.

18

The Government’s commitment to making continued progress towards universalservice and access to basic telecommunications services should be reaffirmed aspart of the Government’s ebusiness strategy.

Money complicates the outlook. Fixed lines are expensive to provide. Ifcustomers in difficult to reach locations cannot or do not pay the full cost,someone else has to. Currently fixed line costs are artificially low reflecting theimpact of regulation and community preferences. There is a cross subsidybetween domestic fixed line services and international services. This subsidy wassustainable when C&WJ was the monopoly provider, but there are grounds t osuggest that it will be increasingly untenable to obtain a surplus from

17

See Jamaica Telecommunications Advisory Council 2002, Telecommunications Policy reform in Jamaica:Recommendations to the Minister for Industry, Commerce and Technology, Kingston, July, p 8.18

Office of Utilities Regulation 2001, Quality of Service Standards for Cable & Wireless Jamaica — AConsultative Document: Final Draft, Office of Utilities Regulation, Kingston.

Action


20

international services in a competitive environment. ‘Rate rebalancing’ or ashift to more realistic cost reflective pricing is already underway.

The range of mechanisms available to fund universal access could include:general taxation; higher interconnect charges; continued cross subsidies; or afund raised through contributions from the industry. All of the approaches sufferfrom drawbacks and entail imposing costs on somebody.

The JTAC had earlier suggested that provisions in the Telecommunications Actfor a Universal Service Fund be adjusted to address ‘Access’. The Councilrecommended that the fund be financed through an adjustment in the price capand on the basis of collection from all service providers at a rate not exceeding5percent of revenue.

It is recommended that the GoJ identify practical means to finance theproposed Universal service/access arrangements that will apply in the future assoon as feasible. In this regard it is recommended that the Government closelyexamine the approach suggested by the Jamaica Telecommunications AdvisoryCouncil.

3.2.3 Mobile Telephony issues

Jamaicans have embraced the use of mobile phones. The number of mobilephone subscribers has increased by 440 percent in the two years to December2001.

19

Deregulation of wireless services in Jamaica has seen an explosion in their use(see Table 3.1). Mobile connections now exceed fixed connections.

Table 3.1

ESTIMATED JAMAICAN MOBILE PHONE SUBSCRIBERS (1999-2001)

Year Subscribers

1999 160,000

2000 224,000

2001 (September) 825,500

Source: BuddeComm 2002, p. 9

There is an issue about involvement of mobile phone carriers and retailers inany universal access fund arrangements that may be established. Mobileoperators may point to special provisions of their license requirements thatindicate that the licensee shall provide 90 percent geographic coverage ofJamaica within 5 years of the grant of the license. This implies that they havealready been subject to a fairly onerous universal access burden to be achievedwithin a relatively short timeframe. On the other hand, it is likely that mobile

19

OUR 2002, Toward Universal Service/Access Obligation For Telecommunication Services in Jamaica: AConsultative Document, Office of Utilities Regulation, p12.

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service operators and their customers would also gain through wider access t ofixed line services and they should contribute also.

On balance, mobile operators should contribute to industry fund arrangements, ifestablished, although there may be scope to adjust financial contributionsreflecting the broad picture about responsibilities and capability to pay.

The Government of Jamaica should include mobile service provider in theuniversal access fund arrangements, if one is established. Their contributioncould be adjusted to reflect other requirements that they are meeting.

3.2.4 Broadband and Ebusiness

With ebusiness transactions involving increasingly multimedia applications, highspeed ‘always on’ access to the Internet becomes vital. Alternative broadbandInternet access infrastructure to the basic dial-up system include technologiesthat use basic phone lines (ISDN or DSL), cable TV or satellite.

The Broadband Productivity Dividend

The use of Broadband Internet access is associated with better businessoutcomes. Table 3.2 reports the findings of a study of business conducted forCisco Systems. It illustrates that a higher portion of businesses with a broadbandInternet connection gave a ‘yes’ to each question indicating that they obtainthe expected benefit. This is so for every one of the expected benefitcategories. In short, if using the Internet is beneficial (and there is evidence thatit is), using broadband to access the Internet is associated with obtaining more ofthe benefits.

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Table 3.2

BENEFITS FROM INTERNET USE (PROPORTION OF SAMPLE THAT AGREED TO PROPOSITION

Use of the Internet in yourbusiness has…

Broadband

(%)

Non-broadband

(%)

Total InternetConnectedBusiness

(%)

Increased ease of doing marketresearch

67 61 64

Increased knowledge of market 67 61 64

Increased quality of customerservice

68 59 63

Customers increasingly aware ofchannels to do business

63 55 59

Reduced business costs 62 55 58

Provides access to new markets orcustomers

60 56 58

Provides value-added applications 63 50 56

Increased efficiencies in sales &distribution

57 46 51

Development of closer one to onerelationships with customers &markets

51 45 48

Increased sales, customers orbusiness revenue

49 40 44

Increased ability to customiseproduct for customers’ needs

43 34 39

Source: Cisco Systems, 2002, Built For Business II, p.21.

If there were general benefits from using broadband these would be expected t obe reflected in the bottom line for businesses. There are little or no officialstatistics that allow examination of this possibility. The recent Cisco studyprovides some support for the notion that the gains are related to materialoutcomes for business. It reported that businesses with non-broadband access t othe Internet report costs savings on average of 1.5 percent. However, businesseswith broadband access to the Internet report an additional 4.8 percent worth ofcost savings. Survey results that support this finding are reflected in the Figureon the following page.


23

Figure 3.2

COST SAVINGS FROM USE OF THE INTERNET (% OF CURRENT COSTS)

1 to 5 6 to 10 11 to 25 > 25%0%

2%

4%

6%

8%

10%

12%

14%

Broadband Non-Broadband

% o

f Bus

ines

ses

Average

Broadband Cost

Savings

Average Non-

Broadband Cost

Savings

Source: The Allen Consulting Group Business Database

The dark bars in Figure 3.2 reflect cost savings from use of the Internetreported by businesses with a broadband Internet connection. The lighter barsreflect cost savings reported by businesses with a narrowband connection. Thedotted lines across the bars reflect the weighted average cost saving reported foreach category of Internet connection.

20

Issues To Address About Affordable Access To Broadband

Actual and potential users of broadband Internet in Jamaica complain of thehigh absolute and relative costs.

21 As an indicator some business users advised the

study team that quoted prices for a T1 leased line connection in Jamaica weresome 3 to 5 times more expensive than a similar facility the US or Canada. Inthe meantime, some commentators have noted that broadband access prices inJamaica have fallen over the past year.

22 The project team was unable to obtain

reliable data about the price of broadband Internet access for business orhousehold use.

Further discussion of this issue is provided in the final Booz Allen Hamiltonegovernment report.

23

From the beginning of March 2003 provision of broadband services, like othertelecommunications services, will be contestable. It is not clear that the removalof many regulatory barriers to entry will in fact result in the entry of majorcompetitors, increased competition and price reductions. It is not clear if there

20

The weighting takes into account those businesses that report no cost savings.21

See Grant, France and Hsu 2002, Towards an Internet-Based Education Model for Caribbean Countries, p. 2.22

Booz Allen & Hamilton 2002b, Jamaica Information and Communications Technology Project: E-Government Component — Consolidated Final Report, Booz Allen & Hamilton, McLean (VA), p. 76.23

Booz Allen & Hamilton 2002b, Jamaica Information and Communications Technology Project: E-Government Component — Consolidated Final Report, Booz Allen & Hamilton, McLean (VA), pp. 79-85.


24

are not other, structural barriers to entry. The experience in other economies isthat despite the potential of new technologies, broadband Internet access isdominated by terrestrial telecommunications capacity, particularly fibre opticcable and, for small business and household use, xDSL technologies. This meansthat despite the removal of regulatory barriers to entry, broadband delivery andpricing is typically in the hands of larger, incumbent carriers.

The presence of probable structural factors that provide market power t oincumbents suggests that there may still be a role for regulation, even afterintroduction of full contestability. In its egovernment study Booz AllenHamilton noted that:

“the current price regulation structure designates T1 lines for value pricing ratherthan cost based pricing despite a lack of competition. … The new tariffs should becost-based, with the regulator having received the appropriate documentationjustifying the cost. The Office of Utilities Regulation, OUR, will have to evaluatewhether there is the required level of competition to allow leased lines to beaccessed from the value pricing perspective. … we would argue that C&WJpublish all cost associated with the use of their leased lines and enhance dataservices. To achieve this, the government will have to ensure that there are clearlyoutlined and enforceable regulations, which allow OUR to regulate alltelecommunications operators. The regulation of leased lines and other enhancedservices are critical because of the impact to the overall economic development inJamaica.”

24

While acknowledging that price regulation of broadband and associated servicesis a particularly difficult regulatory area, with many critics of excessive pricecontrol in other jurisdictions,

25 the importance of broadband to Jamaican

ebusiness suggests that it is too risky to take a passive approach. Regulation doesnot imply an immediate heavy-handed response There are a range ofapproaches that should be applied progressively that would reduce risks andmaintain pressure for progress. This would include:

• obtain information about broadband prices in Jamaica — if the carriers donot provide this voluntarily this may require some regulatory force.

• A price watch system should be put in place in order to observe changesover time. This could be performed by OUR, FTC or any other appropriateregulatory body.

• This price watch system should be applied to a number of key Internetaccess technologies and apply to all companies that offer those services.

• If feasible, prices should be obtained for comparable Internet facilities in theUS, other developed countries and the region. The OECD has already madegood progress in setting out a framework for inter-country comparisons inrelation to broadband services and prices.

• Carriers should be advised that if evidence emerges that prices appear to beunsustainably high in Jamaica, the Government will pursue a firmerregulatory response (reflecting a view that in the presence of structuralmarket factors there is insufficient competition to provide an optimaloutcome without intervention).

24

Ibid., pp. 76-7.25

See Brown Regulating Internet Access: An Idea Whose Time Never Came, viewed 17 July 2002,<http://www.adti.net/html_files/telecom/reginternetaccessppr_kbrown030600.html>.


25

• In any case, there is a need to conduct a more thorough investigation intobroadband access and pricing as a potential bottleneck. That investigationshould examine the need for and options available to conduct firmerregulation upon this increasingly crucial aspect of telecommunicationsactivity. The findings of this investigation should be made public. Theinvestigation could be undertaken by a number of bodies including FTC,OUR, the new proposed regulatory body, or a body such as CITO. Given theimportance of resolving the issue, a contribution towards the costs could beprovided by international donors.

Until and unless it becomes clear that there is meaningful broadbandcompetition, appropriate regulatory agencies should establish a price watchsystem tracking broadband prices and access over the island and over time.

Data about broadband prices should also be obtained from other countries(particularly the USA, Canada and countries in the region). Given that othercountries are very interested in this issue also Telecommunications regulators indifferent countries may establish cooperative approaches to this task.

An investigation into broadband access and pricing as a potential bottleneckshould be conducted. That investigation should examine the need for andoptions available to conduct firmer regulation. The findings of this investigationshould be made public. The investigation could be undertaken by a number ofbodies including FTC, OUR, the new proposed regulatory body, or a body suchas CITO.

If it is clear that prices are higher and remain higher for broadband Internetaccess than would appear to be warranted, taking into account Jamaica’s sizeand geography and other factors, the Government should indicate that it willintervene.

3.2.5 Voice Over IP

The Internet can support voice communications as well as data. Voice overInternet Protocol (VoIP) is a generic term for the conveyance of voice, fax andrelated services, partially or wholly over packet-switched IP-protocols acrossthe Internet.

26 Internet telephony may also include applications that

integrate/embed the transmission of voice and fax with other media such as textand images. VoIP offers lower prices for domestic or internationalcommunications, although, using narrow band capacities widely available today,the quality of communication is not as good as that provided by theconventional telephone system.

Internet telephony has been a complex legal and political issue in Jamaica:

• the Ministry for Commerce and Technology (MCT) allowed theintroduction of competition by issuing five licenses to VSAT operators(under the Radio and Telegraph Control Act 1973);

26

The term Internet telephony can be used interchangeably with VoIP (Voice over Internet Protocol).

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26

• litigation was undertaken (and also threatened) regarding access to the localnetwork and the validity of VSAT licences);

27 and

• in February 2002 the OUR issued a Cease and Desist Enforcement Notice toWeb Communications Limited for providing Internet telephony services tothe public without a licence issued under the Telecommunications Act.

The costs and benefits associated with Internet telephony are relatively stark:

“In presenting his report, the Secretary-General underlined the following points,which had emerged from the contributions of the membership:

a) IP-based networks represent a significant new opportunity for the membershipof the Union and are already an important part of the emerging new marketenvironment, in terms of volume of traffic carried and level of investmentcommitted.

b) From a technical perspective, IP-based networks hold the promise of providingmultimedia telecommunications services and new applications, merging voiceand data. IP may well become the unifying platform for emerging convergednetworks.

c) From an economic perspective, the use of IP-based networks promises to reduceprices to consumers, and the costs of market entry for operators, especially forlong-distance and international calls.

d) From a regulatory perspective, the development of IP Telephony is forcing areassessment of existing telecommunications regulation, which may need to bereviewed in the light of the opportunities opened up, and the challenges posed,by this new technology.

e) IP Telephony poses a dilemma for developing countries: on the one hand itoffers cheaper prices and lower costs, but it may also undermine the pricingstructure of the incumbent public telecommunication operator. The transition toIP-based networks also poses significant human resource developmentchallenges.”

28

These are all pertinent observations with respect to VoIP in Jamaica.

Naturally, incumbent carriers (such as C&WJ) are anxious about VoIP and itscapacity to result in bypass of their valuable international telephone services.Bypass presents problems for rate rebalancing processes underway and theability of carriers to meet any universal service obligations placed upon them.

The current situation is that:

• ISPs are basically blocked from offering VoIP services;

• equipment that plugs into computers to permit voice telephony is at risk ofbeing deemed to be contrary to the ‘Prescribed Equipment’ provisions of theTelecommunications Act (which is really intended to maintain the safety ofthe telecommunications network, but in this case is forming a barrier toentry for services which are not unsafe).

• It is unclear what the legal status is for firms who may wish to explore use ofemerging Internet facilities to hold conferences and telephone calls online

27

See Infochannel Ltd. v Cable & Wireless Jamaica Ltd. Suit E014/99.28

International Telecommunications Union 2001a, 'Report by the Chairman', paper presented to WorldTelecommunication Policy Forum, 2001: IP Telephony, Geneva, 9 March, p. 2.


27

(most new computers these days have microphones and video cameras arenot uncommon).

There are doubts about the current approach, which entails adverse implicationsfor the Internet sector, and about its practicality in the medium to longer term:

“While most developing country governments have been supportive of IP-basednetworks in general, and the Internet in particular, they have often taken a differentview of IP Telephony. Consequently, ISPs in these countries may have beendeprived of a potentially valuable revenue source, and this may slow Internetdevelopment. In some cases, ISPs have been requested to block access to specificwebsites, based in foreign countries, which offer free-of-charge IP Telephony calls.As more websites integrate voice applications, such bans will become moredifficult to enforce and the result may be that application service providers andwebsite developers in developing countries are less able to compete with those incountries where IP Telephony is liberalised.”

29

It is likely that support of Internet telephony would likely lead to quickeradoption of computers in homes and workplaces, and generally stimulateebusiness in Jamaica. It would also serve the general aim of recentcommunications in terms of increasing competition and reducing prices forconsumers.

The presumption should be that voice over IP is a legitimate form ofcommunication. In the deregulated telecommunications market that is to applyafter the introduction of Phase 3, ISPs that wish to offer Internet telephonycould become a licensed carrier if they wish. They would then be able to on-selltelecommunications services.

This would still leave the situation for sellers of IT equipment that include voicemicrophones and for businesses looking at implementing their owncommunications capacity without direct use of the telephone system in anuncertain situation.

This is a complex area that should be examined in more detail by a regulatorybody that has responsibilities for balancing the various interests at stake.

The Government of Jamaica should ask the telecommunications industryregulator to examine the issue of VoIP and its emerging potential to contributeto increased competition. That study should also look at the desirability andlegal situation of use of emerging technologies by Jamaican business toconduct voice and video communication without direct use of the telephonesystem.

3.2.6 Internet Service Providers

Another area of telecommunications that is crucial to Internet access is the ISP(Internet Service Provider) sector. Bottlenecks at this point would obviouslyblock access to the Internet for most people and businesses.

29

International Telecommunications Union 2001b, 'Report of the Secretary-General on IP Telephony', paperpresented to World Telecommunication Policy Forum, 2001: IP Telephony, Geneva, 9 March, p. 28.

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28

There are some 45 ISPs licensed to operate in Jamaica. This would normallyindicate vigorous competition. A recent study looking at more than the numberof licenses has found, however, that there is insufficient competition to lead t oimprovements in quality and price in Jamaica.— see Figure 3.3 on the followingpage.

How can this be so? In many countries ISPs are businesses with no particulargovernment rules limiting competition. However, the Jamaican regime restricts,at least notionally, market access through licensing. There are two types of ISPlicences:

• standard ISP licences, of which 37 have been issued; and

• ISP licences for subscriber television providers, of which eight have beenissued.

30

While a total of 45 ISP licences have been issued it appears that the market hasengaged in gaming the regulator, and that the vast majority of licences wereobtained because they were available at zero cost and it seemed a good idea t ohave one in case they became scare (ie, by regulatory action), even though therewere no plans to actually use the licence. The impression is of a highlycompetitive market with 45 or so participants, when in fact there is only ahandful of active ISPs of a sustainable scale.

This situation may be anti-competitive. The stock of non-operating ISPlicensees may overhang the market and intimidate firms with a genuineintention to invest. The arrangements also sends the wrong signals to possiblenew entrants. Overall, it is not clear what public purpose is being served throughthe license arrangements and certainly what is being achieved in having so manythat are not operating.

The Government of Jamaica should consider removing the need to hold alicence to operate as an ISP, or revoke ISP licences that are not being activelyused for more than six months.

30

See Office of Utilities Regulation 2002, Public Register of All Telecommunication Licence Holders, viewed17 July 2002, <http://www.our.org.jm/telecomcurrent.shtml>.

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Figure 3.3

PERCEPTION OF EFFECT OF ISP COMPETITION ON QUALITY AND PRICEIs there sufficient competition in the ISP sector in your country to ensure high quality, infrequent interruptions, andlow prices? (1=no, 7=yes, equal to the best in the world)

MauritiusCosta Rica

VietnamNigeria

ParaguayHonduras

rinidad and TobagoChina

RomaniaNicaragua

Russian FederationBolivia

BangladeshEcuador

ZimbabweSri Lanka

PeruGuatemala

BulgariaLithuania

UkraineSlovenia

MexicoMalaysiaJamaicaThailand

IndonesiaPoland

ColombiaUruguay

PhilippinesPanama

LatviaIreland

VenezuelaIndia

GreeceEl Salvador

Dominican RepublicSlovak Republic

EgyptHungary

TaiwanSouth Africa

JordanPortugal

JapanTurkeySpainBrazilChile

ArgentinaCzech Republic

SingaporeItaly

EstoniaDenmark

NorwayNew Zealand

KoreaIsrael

AustraliaUnited Kingdom

SwitzerlandAustria

BelgiumNetherlands

Hong Kong SARGermanyCanadaFrance

SwedenUnited States

IcelandFinland

0 1 2 3 4 5 6 7

Country

Value

5.0

MEAN



30

Chapter Four

Sharpening The Regulatory Framework

This Chapter deals with matters that are of immediate importance andamenable to immediate solutions, such as the need to provide a legislativeframework that removes uncertainties about ebusiness, as well as some mattersthat take up much of the time of public policy advisors, but are actually mattersthat can be addressed in the medium to longer term.

4.1 Supportive Legal Frameworks

The lack of a supportive legal framework is viewed as being the most significantbarrier to the rapid development of Jamaican ebusiness. It is also one of theeasiest issues to resolve and resolve quickly.

Ecommerce and ebusiness is a new way of doing business. Business, governmentand the community at large has been cautious about these new approaches andthe potential problems that may be encountered.

Stakeholders impressed upon the project team that they recognised that thereare significant issues to be addressed in Jamaica’s legislative framework t osupport expansion of the country’s ebusiness capabilities and competitiveness:

• electronic and digital signatures — stakeholders frequently citeuncertainties about the legal status of electronic signatures and a lack ofconfidence in verification of electronic communication and authenticationas a barrier to greater involvement in ebusiness in Jamaica.

• Evidence Act — one school of thought is that the current act is said tospecifically require signed written evidence of transactions or contracts to beadmissible as evidence in a Jamaican court and hence faxed or electronicsignatures are not admissible.

31 Some stakeholders have argued that this view

is overly cautious and incorrect. While such a divergence of opinions existsthere is a case for legislative clarification;

• Sale of Goods Act — this may need to be updated to address the capabilitiesand potential difficulties posed by online technologies;

• privacy — it is understood that Jamaica currently has no laws regarding thehandling of individuals’ private or sensitive information (except forbackground coverage through common law remedies and high level,constitutional assurances). Global consumers are increasingly reluctant todeal with companies operating outside of clear and robust legislativeframeworks which give consumers rights to protect their privacy. Manyother countries are providing specific laws in this area (notably, these aretechnology neutral and extend beyond online use of personal or sensitiveinformation); and

• intellectual property — there was some concern that Jamaican laws may notbe keeping pace with rapid changes brought about by new technologies,

31

Ibid., p. 9.


31

growth in use of the Internet and new ways of doing business. There is asense that the owners of copyright and other forms of intellectual property,including artistic works such as music and computer software, may face newthreats that are not addressed in existing laws. There is concern that there isambiguity about the applicability of older laws to new kinds of property orthe obligations of new types of businesses such as ISPs in regard to ambiguityabout carriage of information and publishing. There may also not besufficiently strong controls over the use of tools and devices that havecircumvention of technological copyright protection measures as their mainpurpose.

The lack of a supportive legal framework for ecommerce and ebusiness inJamaica is not stopping the spread of the activity. There is evidence ofsignificant online business activity about Jamaica and importing into Jamaica(analysed in more depth in Chapters that follow). Foreigners are selling ormarketing into Jamaica using the Internet. Larger Jamaican businesses can, anddo, bypass the lack of a legal basis for ebusiness in Jamaica by conducting suchbusiness offshore using foreign suppliers.

What the lack of legislation is doing is making it very difficult for Jamaicanmedium sized or smaller businesses to enter into ebusiness. They face morecompetition from the globe while they are handicapped in pursuing ebusinessopportunities of their own while they stay in Jamaica. While this situation ismaintained the main impact of ecommerce and ebusiness will be to ‘hollow out’key sections of value added in the Jamaican economy.

4.1.1 Towards Solutions

The Government of Jamaica has already identified the need to adjust the legalframework that supports business to accommodate new technologies. Thecurrent strategic plan for the ICT sector states that

“Government must ensure that legislation covering such areas as digital signatures,privacy, security and protection of intellectual property is put in place to facilitatethe growth of information technology; existing laws that may hinder the growth ofelectronic commerce should be revised and reflect the new technology.”

32

Significant work has been undertaken over the past year or so with respect t othe legislative changes that need to be made to facilitate the development ofecommerce in Jamaica.

33

The project team was advised that JAMPRO has funded a research project inwhich Normal Manley Law School students identified which laws would needamendment to facilitate ecommerce.

34

The New Economy Project in conjunction with the Government of Jamaicahave commenced a project to draft appropriate legislation — see Box 4.1 fordetails.

32

Government of Jamaica 2002, A Five–Year Strategic Information Technology Plan for Jamaica, p18.33

Booz Allen & Hamilton 2002a, Jamaica Information and Communications Technology Project: E-Government Component Feasibility Study — Final Report, Booz Allen & Hamilton, McLean (VA).34

This report was not made available to the project team.


32

BOX 4.1: NEP Project – Electronic Business Legislation for Jamaica

The need for electronic business legislation, as a key enabler for the promotion of ElectronicBusiness, has been widely supported in numerous studies commissioned by the Government ofJamaica (GOJ) and other bodies.

The NEP has commenced a project assisting the Ministry of Industry Commerce andTechnology in meeting the requirements for electronic business legislation. The deliverableswill comprise:

• recommendations to be used in preparing drafting instructions for new ElectronicBusiness Legislation for Jamaica;

• identification of the modifications required to current regulations and legislation in orderto facilitate e-commerce activities;

• a communications and consultation program for private and public sectorstakeholders.;

• increase the efficiency, accuracy and timeliness of all contractual and financialtransactions. (It is estimated that in 2002 the Global Electronic Market was valued inexcess of US$330 Billion);

• enable implementation of e-government initiatives, which is a priority area for the GOJ;

• achieve improved service quality, reduced cost and time efficiencies ; and

• create and promote increased transparency and efficiency in the procurement and saleof goods and services.

Myers Fletcher and Gordon have been commissioned to prepare the recommendations as a

prelude to the drafting instructions. Consultations with key private sector organisations and

stakeholders within the Government of Jamaica have been initiated. It is intended that the

drafting instructions will be ready for consideration by Cabinet and the Parliament early in

2003.

Source: http://www.neweconomyproject.com/mict.html

4.1.2 A Model Framework

Many of the likely approaches and solutions to the legal framework are notoverly contentious. They have already been addressed in a myriad of othercountries, and the issues have been analysed in detail in Jamaica and practicableapproaches proposed.

35 Most of the practical approaches are set out in the

United Nations Commission on International Trade Law (UNCITRAL) ModelLaw on Electronic Commerce. The Model Law is intended to facilitate the useof electronic communication and storage of information, such as electronic datainterchange and electronic mail. It provides standards to assess the legal value(ie as evidence) of electronic messages and legal rules for ecommerce andebusiness in specific areas, such as the carriage of goods.

It is notable that:

• legislation based on the UNCITRAL Model Law has been adopted inAustralia, Bermuda, Colombia, Ecuador, France, Hong Kong SpecialAdministrative Region of China, India, Ireland, Isle of Mann (CrownDependency of the United Kingdom of Great Britain and Northern Ireland),New Zealand, Pakistan, Philippines, Republic of Korea, Singapore, Slovenia,the States of Jersey (Crown Dependency of the United Kingdom of GreatBritain and Northern Ireland), Thailand, and, within the United States ofAmerica, Illinois;

35

See the discussion and recommendations in: Ibid; Booz Allen & Hamilton 2002b, Jamaica Information andCommunications Technology Project: E-Government Component — Consolidated Final Report, Booz Allen &Hamilton, McLean (VA), pp. 86-99.


33

• uniform legislation influenced by the Model Law and the principles on whichit is based has been prepared in Canada and in the US (Uniform ElectronicTransactions Act, adopted in 1999 by the National Conference ofCommissioners on Uniform State Law) and enacted as law by a number ofjurisdictions in those countries;

While this is a matter already under consideration by the Government ofJamaica, and the consultancy team for this project has already exchanged viewsabout issues and suggestions about how to proceed with the NEP project staff,the terms of reference for this project require recommendations about theappropriate legal framework.

Consideration was given as to whether there is value in having a specificlegislative authority and framework for ecommerce or not? (ie, having an Actdedicated to ecommerce issues or modifying existing acts). This is viewed asbeing a matter for the Jamaican legislative drafting team to resolve and reflectpractical experience in Jamaica.

What is vital is that legislation should be drafted and passed as a matter ofurgency.

Legal uncertainty regarding ecommerce should be addressed by the passage ofecommerce legislation as a matter of urgency.

The thrust that the proposed legislation should take is also a matter to beresolved.

Jamaica’s key trading partners and many of its competitors in the region andaround the globe have already developed and implemented legislativeframeworks that take a position in regard to key issues. There is already a wellestablished model law. While it may be tempting to adopt innovativeapproaches to some of the technical legal issues presented by ecommerce, itwould seem that a prudent approach would be for Jamaica to adhere to the broadapproaches accepted as practical by the remainder of the internationalcommunity unless there is a major national interest at stake. Discussion withlegal experts has not identified any major aspects or issues where Jamaica’sinterests are in fact unique that would demand a unique solution.

It should be noted that deviation from the model law is likely to place a greaterburden upon Jamaicans seeking to engage in ecommerce than upon foreignersseeking to enter Jamaican markets with ecommerce. Providing Jamaicanconsumers with the best protection from potentially unscrupulous electronictraders (including those from abroad) is likely to be given most practical effectthrough measures already engaged, such as coordinated campaigns by the FairTrading Commission and its counterparts overseas, than seeking an optimallegal formulation, which may prove elusive.

Whatever provisions are included in the legislation it is suggested that aprincipled approach be adopted. Key principles that regularly appear to drivelegislation in other countries are:

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34

• functional equivalence. As far as possible, paper based commerce andebusiness should be treated equally by the law; and

• technological neutrality. The law should not discriminate between forms oftechnology.

While discussions often dwell upon difficulties in defining electronic signaturesor digital signatures, the nub of the legal problem is non-repudiation. There canbe no certainty in electronic communications and contracts if the parties mayrepudiate what was said or agreed. The key issues that electronic transactionslegislation normally address include:

• consideration of whether electronic documents can be accepted in place ofpaper;

• the legal status of electronic and digital signatures;

• the formation, validity and enforcement of contracts formed electronically;

• definition of digital signatures;

• production of electronic documents; and

• the need to keep records.

Instructions for draft legislation and the draft legislation itself intending toremove legal uncertainty about the status of electronic communication andtransactions should be assessed against the desire to apply the principles oftechnological neutrality and functional equivalence, as well as address practicalmatters such as defining the legal status of electronic and digital signatures,and the production of documents and maintenance of records.

4.2 Addressing Cyber Crime

Some stakeholders flagged their concern that providing a legal framework t opermit ecommerce and facilitate greater use of ebusiness could expose thecommunity to new kinds of crimes committed over the Internet. They asked ifthere was a concurrent need to address cybercrime?

The project team notes that there is no consensus in the internationalcommunity about appropriate approaches to dealing with cybercrime. There isstill debate about fundamental issues about the definition of a cybercrime, how itdiffers from traditional crime and what are the best ways of dealing with it. Theissues are some way from resolution.

Cybercrime legislation could include elements providing that it is an offence if aperson (or body corporate) causes:

• authorised access to data;

• unauthorised modification of data; and

• impairs electronic communications (eg denial of service attacks).

Cybercrime legislation along these lines has been implemented in manyjurisdictions.

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The further development in this area is the April 2001 Council of EuropeCyberCrime Convention. The Convention is aimed at harmonising laws acrossthe 41 Council states and other countries, and has three major features:

• it includes a list of crimes that each member country must include in itsstatutes. It requires criminalisation of offences such as hacking, theproduction, sale or distribution of hacking tools, and child pornography. Italso features what in some jurisdictions is an expansion of criminal liabilityfor intellectual property violations (Articles 2-11);

• it requires each participating nation to grant new powers of search andseizure to its law enforcement authorities, including the power to require anISP to preserve a citizen’s internet usage records or other data, and thepower to monitor a citizen’s online activities in real time (Articles 16-22);and

• it requires law enforcement in every participating country to assist policefrom other participating countries by cooperating with ‘mutual assistancerequests’ from police in other participating nations ‘to the widest extentpossible’ (Articles 23-35).

Not all of the provisions of the CyberCrime Convention are accepted in everyjurisdiction in Europe. The approach contained in it is not generally supportedin The United States of America. At risk of oversimplification, authorities andbusiness interests in the US are concerned that it may inadvertently become abarrier to trade. It is not clear what elements of the convention would be orwould not be acceptable in Jamaica.

Some stakeholders were not convinced that considerations about cybercrimeshould delay progress in establishing ecommerce legislation. They acknowledgedthat while ecommerce was vulnerable to cybercrime, it should also beremembered that fraud and other crimes are a fact of life with traditionalapproaches to commerce. There is a risk in setting a higher standard of safetyfor ecommerce, and blocking Jamaican involvement in it, by applying higherstandards to ecommerce than are applied to ordinary commerce.

The issues are some way from resolution. The project team considers that theseissues should be subject to continued consideration in Jamaica, but that thisconsideration should not delay the implementation of the basic components ofan ecommerce compatible legal framework as soon a possible.

4.3 Tax and Ebusiness

There has been speculation about what the appropriate response thatgovernments should adopt towards the taxation of ebusiness. At one extreme,there was the view that ebusiness should be allowed to grow in a tax freeenvironment — either by specific legislation or by inaction on the part ofgovernment. At the other extreme, there have been suggestions about theintroduction of new taxes specifically designed to apply to ebusiness and thegrowth of the knowledge economy (eg, a ‘bit’ tax).

Neither of these views has proven to be acceptable to governments or thecommunity. It has been seen that the first approach would ultimately lead t o


36

governments having less capacity to meet the needs of their country for publicservices. It would also induce tax distortions throughout the economy and intrade. The second approach is generally seen as risking the development ofebusiness and the benefits that increased use of it is expected to bring.

The consultancy team did not receive comments from initial meetings withselected stakeholders to suggest that there was strong support in Jamaica for oneview or another. It appears likely that similarly to other countries the mainemphasis in Jamaica is to take a balanced approach that seeks to apply the taxburden fairly, but takes into account the different nature of ebusiness wherenecessary.

It is notable that there are technical challenges to tax administration raised byebusiness including:

• difficulties in identifying the parties behind Internet businesses;

• the ability of these businesses to store tax records offshore, or to encryptthem or to alter them without trace;

• the possibility that some types of electronic money could exacerbate theproblems faced in relation to the physical cash economy;

• the possibility that increased use of ebusiness would lead to the removal ofefficient tax collection points, such as ‘middlemen’ in the distribution chainfrom producer to consumer through the effect of ‘disintermediation’;

• the ability of technology to change the nature of products through‘digitisation’ and hence the taxation treatment of the income from the saleof those products (leading to the shifting sales from services to royaltieswhich may face different tax regimes);

• increased potential for some businesses to engage in tax planning, especiallythe use of ‘tax havens’;

• challenges for tax jurisdictions especially in relation to current source,residency and permanent establishment and allocative rules that underpininternational taxation approaches.

36

Reflecting these technical matters, it was feared for some time that ebusinesswould lead to a reduction in taxation revenue, especially for smaller economieswith less resources to shape the rules and pursue global compliance.

Other economies have been framing their responses to these challenges in thecontext of emerging agreement with other jurisdictions. The OECD in particularis advanced in terms of establishing principles and applying them. Five guidingprinciples that the OECD adopted in Ottawa in 1998 are:

• neutrality — taxation should seek to be neutral and equitable between formsof ebusiness and between conventional and ebusiness, so avoiding doubletaxation or unintentional non-taxation;

36

See Tax and the Internet: Volume 1, Discussion report of the Australian Taxation Office ElectronicCommerce Project Team on the Challenges of Electronic Commerce for Tax Administration, August 1997,AGPS, Canberra, New Zealand’s Revenue Office “Taxation and the Electronic Medium”, April 1998 (availablefrom www.ird.govt.nz), and the United Kingdom’s Inland Revenue “Electronic Commerce: The UK’s TaxationAgenda” November 1999 (available from www.inlandrevenue.gov.uk).


37

• efficiency — compliance costs to business and administration costs forgovernments should be minimised as far as possible;

• certainty and simplicity — tax rules should be clear and simple tounderstand, so that taxpayers know where they stand;

• effectiveness and fairness — taxation should produce the right amount oftax at the right time, and the potential for evasion and avoidance should beminimised; and

• flexibility — taxation systems should be flexible and dynamic to ensure theykeep pace with technological and commercial developments.

The OECD member countries have used these principles when developing theirTaxation Framework Conditions. This involves, among other things, agreementto achieve a fair sharing of tax base from ebusiness, recognition of the need t omaintain fiscal sovereignty and commitment to intensified dialogue withbusiness and non-member countries.

37

Jamaican business and government authorities are grappling with much the sameissues. What is increasingly evident is that resolution of taxation issues in thisarea, similarly to many others are complex matters. It is also increasingly clearthat the authorities and business have more time than many would previouslyhave thought. Ecommerce, especially business to consumer (B2C) ecommerce isnot growing as quickly as first thought. It would seem that there is scope to takea considered approach to tax issues, involving continued consultation with keystakeholders, including business interests.

The authorities responsible for taxation policy and collection should reduce thepotential for uncertainty regarding their future approach to taxation ofebusiness. They should flag the general approach they intend to take inaddressing the challenges posed by ecommerce by drawing on the OECD’sOttawa Principles and the Taxation Framework Conditions as a basis forJamaica’s approach.

If there are to be any changes to taxation arrangements consideration should begiven to a phased introduction, accompanied by actions to facilitate compliance(eg, moratoriums and the provision of compliance incentives).

4.4 Regulatory Institutions and ebusiness

Is Jamaica’s regulatory framework in shape to address the challenges being posedby the new ways of doing business?

There are five major Jamaican bodies that currently have a role in regulating, t ovarying degrees, the ecommerce and ebusiness space:

• the Office of Utilities Regulation (OUR) — the OUR has responsibility forthe economic regulation of the major Jamaican utilities, with most aspectsof telecommunications regulation transferred to the OUR in 2000;

37

Organisation for Economic Cooperation and Development 2001, Taxation and Electronic Commerce:Implementing the Ottawa Taxation Framework Conditions, OECD, Paris.

Action


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• the Fair Trading Commission (FTC) — the FTC was established under theFair Competition Act 1993 as both a competition and consumer protectionregulator;

• the Spectrum Management Authority (SMA) — the SMA has theresponsibility for regulating the Radio Frequency Spectrum (which waspreviously done by the Post and Telecommunications Department);

• the Broadcasting Commission (BC) — under the Broadcasting and RadioRe-Diffusion Amendment Act 1986 the BC’s role is to monitor and regulate(ie, license) the electronic media, broadcast radio and television, as well assubscriber television; and

• the Jamaica Intellectual Property Office (JIPO) — administers laws relatingto intellectual property rights and has an additional developmental focus,seeking to enhance wealth creation through the acquisition and maintenanceof property rights in Jamaica.

JIPO is the newest of the regulatory bodies. It was established as a separateStatutory Agency in February 2002. It was evident to the consultancy team thatJIPO is making rapid progress in centralising administration of intellectualproperty rights and in meeting Jamaica’s international obligations regarding IParising under the various international agreements. JIPO should be given scopeto continue this progress.

The OUR and the FTC are the older of the five organisations and have beenpraised for their roles in facilitating competitive outcomes in a reformcontext,

38 and in the manner in which they work together:

“In Jamaica the principal competition law is the Fair Competition Actadministered by the Fair Trading Commission. … Under the Act where afterconsultation with the FTC the OUR determines that a matter or any aspect thereofrelating to the provision of telecommunications services is of a substantivecompetitive significance to the provision of the telecommunications services andfalls within the functions of the FTC under the Fair Competition Act the OURshall refer the matter to the FTC.

Under the Telecommunications Act the OUR is required to determine which publicvoice carriers are to be classified as dominant public voice carriers and in makingthis determination the OUR is required to consult with the FTC and take accountof any recommendations made by the Commission.

In practice the OUR and FTC work closely together having regularly scheduledmeetings to discuss cases which affect both agencies.”

39

It is not clear that the structure of the regulatory institutions has been a barrierto the development of ecommerce and ebusiness in Jamaica. Ecommerce andebusiness has proven to be vigorous in countries with poor as well as goodinstitutional frameworks. Jamaicans are engaging in ecommerce under thepresent system.

38

See Lodge and Stirton 2002a, Embedding Regulatory Autonomy: The Reform of JamaicanTelecommunications Regulation 1988 – 2001, Centre for Analysis of Risk and Regulation Discussion Paper no. 5;Lodge and Stirton 2002b, Globalisation and Regulatory Autonomy in Small Developing States: The Case ofJamaican Telecommunications Reform, Working Paper 15, Manchester; Lodge and Stirton forthcoming 2002,'Building Regulatory Autonomy in the Caribbean Telecommunications', Annals of Public and Co-operativeEconomics.39

Foga Introduction to Jamaican Telecommunications Law, viewed 17 July 2002,<http://www.hg.org/art79.html>.


39

What is less clear is if the present structure is compatible with the goal ofseeking to encourage rapid expansion of the use of Internet technologies.

Concerns that were reflected by stakeholders consulted in the preparation ofthis report include:

• ability to deal with convergence – the Internet is progressively removingdistinctions between forms of communications. Telephony is delivered overthrough use of the radios spectrum as well as through physical networks.With VoIP international telephony can be delivered through traditionalmeans or over the Internet. It is expected that the distinction betweenInternet entertainment and broadcasting will progressively shrink as widebroadband capacities become available. Regulatory structures that do nottake these changes into account may lock-out the use of new technologies,reduce choice and competition and raise costs for the economy at large.

• regulatory fragmentation – businesses competing in the same market arecurrently subject to different regulators and may as a result face arbitrarydifferences that induce economic distortions and inefficiency. Theregulation of telecommunications/ICT/ebusiness is handled across parts ofthe various regulatory institutions yet the issues are very much the same.Even with appropriate coordination the outcome is unlikely to be efficient.

• competition vrs consumer protection – the current arrangements maymisleadingly give the impression that price regulation is a separate issuefrom competition (ie, antitrust) regulation and consumer protectionlegislation. Regulation is only necessary to the degree that there is adeviation from that which would occur in a competitive environment. Thus,it is best to see price, competition and consumer regulation as an integratedpackage, and that a full understanding of each component provides greaterprotection of the public interest. For example, a consumer complaint mayprovide some indication of anti-competitive conduct which may in turnaffect the approach to price regulation. The current regime strains thesesynergies;

• regulatory capture – regulatory organisations that are locked in debates withparticular industries tend over time to become heavily influenced by thesuccess or failure of that industry. Such regulators can loose sight of thebigger picture in protecting consumers and the public interest and becomevulnerable to arguments merging the public interest and the interest of theindustry being regulated.

• high cost structures – a multitude of small agencies adds to costs. There areeconomies of scale in regulation as there are in most government activities.A regulatory structure that costs more than it could do will impose costsupon industry and the community.

• organisational sustainability – regulation is a difficult sphere requiringknowledge of specific industries, economics and law among many otherdisciplines. Regulators require access to skilled officials that are scarce inmany economies, including Jamaica. Staffing a number of regulators andfinding appropriate leaders, and ensuring that they have the technical skillsis difficult. The current arrangements divide the pool of available regulatoryexpertise into different organisations, which is likely to reduce overallability to handle technical complexity, and diminish overall regulatorycapability. This may in turn reduce:

– the ability for staff to develop stronger analytical experience in thecomplete regulation of sectors which have common economic and


40

technical characteristics (particularly network industries such astelecommunications, electricity, gas and water);

– the attractiveness of these organisations as working environments; and

– may result in jurisdictional overlap, and hence increased regulatoryuncertainty.

40

In response to many of these concerns and reflecting expectations about‘demonoplisation’ of the telecommunications industry from March 2003(discussed in subsequent Chapters), the Jamaica Telecommunications AdvisoryCouncil (JTAC) has recommended that the government establish a singleregulatory body for the IT/Telecommunications/Broadcasting activity. Thiswould bring together the Telecommunications Division of the OUR, the BC andthe SMA. The remainder of the OUR, dealing with activities without muchcompetition such as water and electricity, would remain as an independentbody.

41

JTAC also sought to improve clarity about the treatment of competition policyissues, especially in relation to overlap and duplication between FTC and thenew regulatory body. It recommended that:

• all competition policy rules governing theIT/Telecommunications/broadcasting area be encoded within the FTClegislation;

• matters which appear on the face of it to be competition issues should bereferred in the first instance to the FTC;

• the new regulatory body, in conjunction with the FTC, should monitor thesector to ensure prohibition of business mergers and acquisaitions that couldlessen the effect of competition in the domestic market;

• unlike referrals to the OUR which have recourse to the TelecommunicationsAppeals Tribunal, appeals to the FTCs decisions would be directed only tothe courts; and

• the FTC should be required to upgrade its technical capacity in this area.

The project team was advised by Government officials that this broad approachwas being examined very closely by the Government of Jamaica.

To be effective, institutional checks and balances provided by a regulatoryframework must be able to cope with two potential pitfalls:

• capture — with regulation serving the interests of those whose conduct wassupposed to be regulated; and

• administrative expropriation — where the regulator sets tariffs or marketrules so that the provider cannot recoup sunk costs.

42

40

See Booz Allen & Hamilton 2002b, Jamaica Information and Communications Technology Project: E-Government Component — Consolidated Final Report, Booz Allen & Hamilton, McLean (VA), p. 85.41

Jamaica Telecommunications Advisory Council 2002, Telecommunications Policy reform in Jamaica:Recommendations to the Minister for Industry, Commerce and Technology, Kingston, p. 4.42

Levy 1998, 'Comparative Regulation', in Newman (ed.), A New Palgrave Dictionary of Economics and theLaw, Macmillan, Basingstoke.


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Generally, measures that have proven useful to avoid adverse outcomes includesystems characterised by substantial checks and balances, including the courtsand Tribunals, as well as certain political safeguards which operate to reduce thepossibility of capture or other regulatory ‘loose cannon’ behaviour. Forexample, the Telecommunications Act requires that OUR regulations be subjectto positive affirmation of Parliament. Similarly, the OUR’s Act authorises theMinister to issue directions ‘of a general nature’, and makes the OUR directlyaccountable to the Minister.

The proposal to consolidate regulatory institutions, particularly the possibility ofestablishing an IT/telecommunications/Broadcasting body should be examinedclosely. Efficiencies and industry benefits should be identified in the process.Appropriate safeguards to ensure that the special regulator is nether capturedby the industry or unduly hash upon it should also be considered.

A further concern underlying many of the regulatory organisations relates t otheir funding base. In particular, there is a concern that across the board fundingdrawn from levies and licence fees may send less than optimal signals to theindustries, the regulatory bodies and the community as a whole:

• reliance on industry levies increases scope for industry capture. This mayoccur because the regulator may be reluctant to impose regulatory decisionswhich may affect its own regulatory base. Even if this is not a problem inpractice, there may be a perception by some in the community that thefunding of the regulator may compromise the regulator’s independence;

• over-reliance on licence fees may act as an entry barrier which may createbarriers to entry and in turn harm competition.

The project team considers that examination of the regulatory frameworkshould include evaluation of the scope to:

• limit the application of fees fund to amounts necessary to pay foradministrative overheads only on a cost-recovery basis. Such fees may coverthe costs associated with lodging applications, processing renewals, and soon;

• fund investigations, litigation, policy analysis and development from generalgovernment revenue; and

• return the monies raised from penalties, and fines and other measures to theJamaican Budget as general revenue.

Limit the scope for regulatory capture and administrative expropriation byplacing funding arrangements for regulatory agencies upon a basis combiningcost recovery for purely administrative tasks and from general revenue for otheractivities. Penalties, fees and fines should be returned to the budget.

Action

Action


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Chapter Five

Enhancing Ebusiness Capability

Ebusiness is more about people than machines. This section focuses upon thefundamental driver of competitiveness in a global knowledge economy —human capital.

5.2 Human Capital

A key area of human capital development that requires attention in Jamaica(and elsewhere) is in relation to IT skills. The Government of Jamaica hasalready set about putting resources in place to raise volume of IT skills trainingprograms — see Box 5.1.

Box 5.1: Human Capital Development Elements of the INTEC Project

The Information Technology (INTEC) Project was initiated in April 2000, in support of the National Strategic Plan for Information Technology. Theplan puts information and communication technology (ICT) at the centre of Jamaica's economic development, as a dynamic industry and insupporting the development of other sectors of the economy.

The INTEC Project is a three-year Project, which is intended to establish the framework for the knowledge-based society within the plan for long-term economic development.

Three basic objectives are the drivers for the project:

• the creation of 40,000 jobs in the short term;

• the development of a knowledge based society through life long learning, the training and retraining of our human resource, and access totechnology; and

• the development of a vibrant local information technology industry.

Human Resource Development to provide a pool of workers able to support the establishment of a range of ICT technologies is one of five keysubprograms . The development of the human resources in respect of job creation is being managed as follows:

• training of students in existing institutions;

• retraining of existing work force;

• scholarship support for talented students;

• development of an appropriate IT curriculum to inculcate the IT culture from the Primary to the Post secondary levels in support of the newobjectives;

• training of trainers to deliver the high end programming curriculum; and

• informal training at the level of the community, including the Physically Challenged and inmates of the Correctional Institutions

Several private and public sector agencies support the objective to provide training at all levels in the ICT sector. HEART NTA coordinates thecreation of the human resource needed to facilitate the employment opportunities. They are supported by other private sector agencies such asDynamic Dimensions Inc., (DDI), Work Force Development Consortium and others.

Over 10,000 persons will receive training in various disciplines such as Word Processing, Spread-sheet analysis, computer programming (using theCIT curriculum), medical transcription, data processing (MOUS certification), CXC Information Technology and computer aided design (CAD). TheCaribbean Institute of Technology (CIT) curriculum, is to be replicated in Community Colleges, Teacher Training Colleges and Private Institutionsacross Jamaica.

In addition to training at the high end HEART NTA has provided training in Industry Based IT (Data Entry), Computer Maintenance, Programming andWeb Based Design, Customer Service Applications, Advance Word and Excel. Some two thousand four hundred people have received such trainingto date. Some three thousand six hundred trainees are presently being trained at this level.

Source: Ministry of Industry, Commerce and Technology 2002a.


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There is little that is new or innovative in advocating investment in humancapital, but it is unavoidable. As a prominent US expert said recently at aconference in Jamaica about preparation for the knowledge economy, key rolesfor government are TRANING, TRAINING and TRAINING.

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The Government of Jamaica and business should continue to place emphasisupon facilitating the acquisition of IT skills by a larger number of Jamaicans.

Lessons from overseas show that it is not necessarily sufficient, or efficient, t oexpand every existing educational program. In some countries courses are beingexpanded while graduates are sitting idle and linger in unemployment queues. Insome cases, jobs for specific areas remain unfilled while more graduates withinappropriate skills enter the market. These quandaries have becomeparticularly pronounced as the ICT industry has shown itself to be vulnerable t ocyclical downturns.

The OECD proposes a framework for thinking about appropriate governmentactions based on experience of member countries. The OECD framework issummarised in Table 5.1.

Table 5.1

ICT SKILLS: ISSUES AND ACTIONS

Skills Formation(Which Skills?)

Skills Acquisitionand Renewal

(When and Where)

Main Issues Areas forGovernment

Action

Professional ICT Skills Skills required todevelop, use or serviceICT professionally

Post-secondaryeducation, IT vendorcertification

• Balancespecialists ICTskills with othermore genericskills

• High mobility

• Recognise non-formalqualifications

• Improveattractiveness ofICT careers

• Assist inproviding labourmarketinformation

• Examine optionsfor using foreignlabour

Applied ICT skills Ability to use ICT innon-ICT jobs

Post-compulsoryeducation, workplacetraining

• Importance ofintegrating ICTinto asector/profession

• Help identifyemerging ICTskillrequirements fornon-ICT jobs

• Provideincentives forfirms to trainworkers

Basic ICT skills Strong life learningskills: fluency to useICT for learning,working, recreation

Learning context,schools (children),training (adults), [atwork, formal courses,informal exposure]

• Develop commonstandards

• Build core ICTcompetencies incurricula

• Enhance teacherskills

• Promote ICTskills asimportant“generic” skillsfor life longlearning

• facilitate roll out ofICT in schools

• promote ICTskills amongteachers

Source: Organisation for Economic Cooperation and Development 2002, p. 174

43

Garrison 2000, 'The Knowledge Economy: A New Context for Development', paper presented to Jamaica inthe 21st Century, Kingston, November 14-15.

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Achieving a better match of ICT skills supply and demand requires information.Without this resources will be wasted. The consulting team were unable t oidentify an existing information source in Jamaica about this matter. Originaldata may have to be collected relating to:

• a survey of industry demand for ICT skills — it is important that thiscollect information from industry in general not just the ICT sector; and

• an analysis or survey of the current enrolment and completion rates ofpublic and private education and training suppliers.

Often the key to progress is in bringing together the various parties in the skillsdevelopment market (ie, buyers and sellers of skills). Other countries have foundthat an inexpensive way to do this is to establish an online forum — an onlineskills exchange.

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The Government of Jamaica should evaluate the balance of supply anddemand in ICT skills. This may involve original data collection. This may be anappropriate Task for CITO with the support of the Education Ministry andbusiness.

5.3 Developing a More Entrepreneurial Culture

Entrepreneurship is in short supply everywhere. This is in part why success iswell rewarded. Some stakeholders reflected that Jamaica faced significantchallenges in this regard:

• it is claimed that the education system places greater emphasis on preparingbright people for the professions, a career in large corporations, or ingovernment, rather than in starting and growing innovative new businesses;

• capital for ebusiness ventures is limited. Banks are the major source offinance for working capital for domestic firms in Jamaica but, reflectingcurrent macro-economic policy settings and the lingering balance sheetrepair difficulties facing the Jamaican banking sector, access to capital istight and funds are expensive. While, of the Caribbean countries, “Only inJamaica is there a small market for short-term commercial paper issued bylarge corporate entities”,

45 venture capital is said to be almost non-existent

at present. There are apparently limited opportunities for incubation of newbusinesses where people with new ideas can learn by doing in association withothers; and

• there are problems with partnering. Many stakeholders reflect thatpartnering is a powerful means of accelerating business development,especially in ebusiness. This has not been lost on Jamaican business interestsoverseas, with many of the more vigorous online commercial activitiesabout Jamaica that are already available apparently involving partnershiparrangements in key aspects of the business. It was reported that Jamaicanbusinesses at home, especially small and medium sized businesses, have been

44

See for example the skills exchange which operates in Australia available at www.ITskillshub.com.au.45

Worrell, Cherebin and Polius-Mounsey 2001, Financial System Soundness in the Caribbean: An InitialAssessment, International Monetary Fund Working Paper WP/01/123, p. 6.

Action


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reluctant to use partnering or strategic alliances in to acceleratedevelopment of competitive capacity in ebusiness.

This situation is not conducive to development of entrepreneurial ebusinessventures. This is not to say that Jamaicans are not entrepreneurial. Someevidence provided to the project team suggests that the contrary is the case.There are already many Jamaican entrepreneurs operating dynamic businessesonline. A challenge is that many have left Jamaica to do it.

5.3.1 Venture Capital And Ebusiness

Access to capital is a key constraint to growth in the Jamaican economy atpresent. Obtaining capital for start up businesses built around an ebusinessstrategy is particularly difficult, especially after the failure of many ‘dot coms’around the globe.

Macroeconomic issues also raise significant challenges to investment. Pricestability, exchange rate stability, rebuilding the banking sector after crisis andmanagement of Jamaica’s significant debt are major concerns.

The Government of Jamaica has also tried various means of creating enhancedaccess to capital for the ICT sector and ebusiness ventures. Most recently theGovernment of Jamaica established an Information Technology Loan Fund andproposes the creation of a Venture Capital Fund.

The Loan Fund has apparently encountered some of the usual difficulties to beexpected in extending public sector money to risky business enterprises.

46

The Venture Capital Fund is to build on the resources of the existingTechnology Development Fund, but will be managed with the flexibility formanaging development funds as obtains in other countries. The aim will be t obuild on the intellectual property of Jamaicans in developing a viable industry.

This was intended to:

• seed the development of an ICT industry in order to ensure sustainability,and

• encourage the establishment of a venture capital industry in Jamaica, inorder to meet the broader economic objective of improving the climate forentrepreneurship.

The viability of the fund was predicated on the financial participation of theprivate sector, and the mobilising of private sector capital for the purpose ofequity and other risk-taking investments in new and early stage companies.

To date recommendations have been received from consultants, and discussionsare being held with potential financial partners of the private sector.

47

46

See Ministry of Industry, Commerce and Technology 2002a, Report on the INTEC Project and theCircumstances Under Which the National Investment Bank of Jamaica Placed Netserve in Receivership,Kingston.47

Ministry of Industry, Commerce and Technology 2002b, ‘Performance of the Information TechnologyResearch and Development (INTEC) Project for 2000/2001 and Focus for Fiscal Year 2001/2002’ Kingston.


46

5.3.2 Stronger Private Sector Involvement

A variation to loan and venture capital schemes is proposed. This variationstarts with the premise that financing ebusiness development is a risky businessbest left to business. Nevertheless, there is a national interest in seeingaccelerated development of the activity and reasons to expect that the marketif left to itself will under invest in it. The challenge is to find a way of providingpublic sector encouragement without providing all of the money and absorbingall of the risk, or even a large part of it. A further challenge is to build thecapacity of the private sector to fill the venture capital role, rather thandisplacing it with cumbersome government bodies.

It is suggested that the Government of Jamaica provide for the establishment ofPooled Ebusiness Funds (PEFs). PEFs would be private companies, establishedunder legislation, that raise capital from investors (no investor would be able t ohold greater than say 30 percent of the PEF’s shares) and use it to invest inebusiness ventures. In return PEFs and their shareholders are taxed at a lowerrate on income generated through PEF activities. The legislation would placeconstraints on what is and is not a legitimate ebusiness PEF and establish aregulatory body to ensure that the rules were followed. Examples of suchrestraints could include:

• PEFs would be required to invest:

– in Jamaican firms that will establish or significantly expand an ebusinessrelated business;

– in newly issued ordinary shares or other kinds of newly issued shares;

– in at least ten percent of the investee business’ paid up capital;

– a minimum percentage of its capital within five years;

• PEFs would be prohibited from investing:

– in other PEFs;

– in retail sale or property developments;

– in companies whose total assets exceed a certain value;

– more than, say, 30 percent of its capital in any one business.

This scheme provides:

• additional capital for ebusiness ventures at low cost to the Government ofJamaica — there is only a cost to the Government of Jamaica if theinvestment actually is profitable (ie, if the investments are unsuccessful thenthere is no cost); and

• the private sector with a framework for partnering:

– PEFs become part owners of the firms they invest in. Beforeapproaching a PEF it is therefore likely that firms will seriously considerwhat they want from a partner with whom they will be sharingownership. The PEFs will need to establish a record of bringing value t othe table in addition to their money; and

– in order to receive money from a PEF it will be necessary to convincethe investors of the potential commercial value of what they are doing


47

(or planning to do). This is likely to improve the quality of ebusinessbusiness development.

Broadly similar arrangements applied elsewhere have stimulated significantinvestment in risky ventures at modest cost to government — see Box 5.2.

The Government of Jamaica should seek to foster greater private finance inebusiness ventures by introducing Pooled Ebusiness Funds.

Action


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Box 5.2: EXPANDING PRIVATE VENTURE CAPITAL FUNDS — INSIGHT FROM AUSTRALIA

A shortage of capital for investment innovative business has been a constraint impeding growth in Australia’s technology sector for some time.Governments had attempted to address this constraint with grant programs, tax concessions and through the establishment of public sector venturecapital funds which provided concessional and commercial debt and equity. These activities met with mixed success, but were expensive forgovernment. The main message was that public sector agencies were not well suited to identifying commercial opportunities.

The national level of Government in Australia, The Commonwealth Government of Australia developed a new system that sought to mobilise privatesector funds and develop the capacity of the private sector to invest in risky, innovative business opportunities. The Pooled Development FundsProgram was introduced in 1992 to develop the market for equity capital for small to medium sizes enterprises (SMEs). Under the PooledDevelopment Funds Act 1992 a private company is established, known as a PDF, that raises capital from investors for investment into SMEs. Todate the Program has been administered by both Coalition and ALP Governments and appears to have bipartisan support.

Establishing a PDF

To become a PDF companies are required to register with the PDF Board and provide the Board with annual returns on the status of theirinvestments.

Concessional Tax Treatment

To provide incentive for investors, PDFs and their shareholders qualify for income tax concessions on income generated from the patient equityinvestments in SMEs that are available under the program. Tax Concessions include:

• PDFs are taxed at 15 percent on the SME component of their investment income;

• Unfranked PDF dividends are tax exempt in the hands of investors (unless the investor elects to be taxed whereby they can use theimputation credits attached to the franked dividend to offset other tax obligations); and

• The capital gains on realisation of shares held in a PDF are tax exempt.

Investment Parameters

Investments made by PDFs must:

• Be in SMEs with total assets of less than $50 million whose primary activities are not retail operations or property development;

• Not be in another PDF;

• Be for the purpose of establishing an eligible business either alone or with other parties; or to increase substantially the production capacityor the supply capacity for an established eligible business and to substantially expand existing markets or to develop new markets for goodsand services of established eligible businesses; and

• Normally investment by the PDF must be at least ten percent of the total capital of the investee’s business although the PDF Board is able toapprove investments of lower proportions. The investment must be in newly issued ordinary shares or other newly issued or pre-ownedshares as approved by the Board. A PDF is not permitted to invest more than thirty percent of its capital in any one–investee companywithout prior approval of the Board.

The Board

The Board is made up of six members who are predominantly drawn from the private sector. The Board’s function and powers as set out in the PDFAct include:

• Consideration of applications for registration as PDFs;

• Registration of PDFs;

• Examination of requests from PDFs to vary investment plans;

• Exercising discretion for PDFs under various sections of the Act;

• Monitoring compliance of PDFs with the legislation;

• Collection and examination of annual returns from PDFs;

• Revocation of PDF registration; and

• Provision of advice to the Minister on the operation of the PDF Program.

State of Play

Over 120 PDFs have registered up to June 2002. They have raised capital of about A$750 million capital. Of this over $350 million has been investedin 350 SMEs.

The Treasury forecasts a ‘tax expenditure’ (ie, revenue loss) from the PDF program of less than A$1 million per annum over the next four years.

Source: Pooled Development Funds Registration Board 2000, Annual Report 1999-2000, AusInfo, Canberra.


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5.3.3 Incubating Ebusiness Growth

Size matters when it comes to ebusiness. So does skill and experience in runningand growing a viable business. Even experienced businesses have to go throughsomething of a transformation as they adapt their business to the opportunitiesand pressures that are associated with the online environment. Making amistake, even in fairly basic matters such as the office establishment can befatal for a new or transforming business.

It is notable that the wave of dot com companies that recently failed had amplecapital and considerable IT skills. What they fundamentally lacked was the skillsto put their strengths together within a sound business framework. As MichaelPorter points out, sound business skills are still the key factor that will sortsuccess from failure.

There is much anecdotal evidence to suggest that the small and medium sizedbusinesses that make up the majority of business in Jamaica face many of thesame problems as their counterparts in other countries. Running a business ischallenging enough without having to think about reengineering it with newtechnology. In addition, while many may view that accessing the Internet wouldbe nice, they may not see how they can make a business around it. Mostimportantly, there are significant issues such as knowing how to do it andperceptions about the cost.

While the traditional focus of encouraging innovation in business has been uponnew businesses or start ups, it is clear that rapid diffusion of this beneficialtechnology hinges on getting existing businesses to change.

Business incubation could be a powerful means of addressing these challenges.Incubators already exist in Jamaica and have met with some success — seeBox 5.3.

In order to facilitate business redevelopment involving greater use of ebusinessand Internet business strategies, it would be beneficial if there was a widernetwork of formal technology innovation centres modelled on the existing TICthat catered to:

• businesses in transformation as well as start ups

• businesses in other major centres; and

• businesses in targeted industries (including say tourism or music).

It would also be beneficial if the Jamaican Business Development Centre’scapacity to give advice about ebusiness and online technologies was enhancedand that this could also be available for businesses in other major centres and inpriority industries.


50

Box 5.3: Business Development and Incubation in Jamaica

The Technology Innovation Centre (TIC)

The TIC is a business Incubator serving new technology-based businesses. Essentially the TICprovides:

• work space through flexible office arrangements;

• shared office facilities such as receptionist, conference rooms, telephone system, fax andcomputer, copier;

• advisory services;

• skills development in business management, marketing and other disciplines;

• speed in securing the needed office facilities as well as facilitating registration, the payment oftaxes, and meeting other regulations;

• access to seed money, through the incubator’s reputation and better business plans, and oftenthrough an internal revolving fund that provides equity or small loans on concessional terms;and

• the synergy of sharing and networking among tenants and with the local community.

A key aspect of the TIC is that resident businesses have immediate access to high bandwidth Internetfacilities at a cost that is a fraction of what they would have to pay in the day to day Jamaican market.Most of not all of the companies in the TIC have been born with a significant Internet umbilical cord, evenif not all are actually based on ebusiness applications from commencement.

The TIC is part of the University of Technology, Jamaica and has established a culture of bringingtogether learning and business. It has been operating for many years and expanded to its current scalecautiously. It is located in Kingston, although it has affiliations with s few other educational institutions onthe Island (and with international bodies).

The Jamaican Business Development Centre

The Jamaican Business Development Centre promotes the creation and sustainable development of themicro, small and medium businesses in Jamaica. It delivers its services through a service mix of:

• technical and business management advice;

• marketing advice;

• production management advice;

• technical advice;

• finance;

• grants and cost sharing schemes;

• training;

• JDDC Seminars Series;

• tourism;

• product development and prototyping;

• sales promotion;

• public relations; and

• business registration.

No charge is made for the help and information given by the Centre’s business advisor. Should technicalor professional advice or training be required, a modest fee is charged.

Source: www.ticjamaica.com and www.jbdc.net.

The Government of Jamaica should develop a broader network of support toincubate companies making the transition to ecommerce and online businessmodels. This should build upon models that are already proving to besuccessful in Jamaica, drawing linkages between business, leading educationalinstitutions and Government support.

Action


51

5.3.4 Emerging Business Support

Having supported businesses through the transition to development of an onlinebusiness model and entry into potentially global markets and competition, theystill need support.

This may involve developing programs for road shows/marketing missions;trade fairs and conferences at a lower level than previously. There may also be aneed to undertake more promotional activity in relation to securing exposureand marketing space for Jamaican business on global ebusiness platforms.

The Government of Jamaica should develop means of encouraging thedevelopment of emerging ecommerce enabled businesses in the crucial post-incubation period. JAMPRO should coordinate actions with incubators toshowcase emerging businesses to international trading partners and potentialinvestors, as well as in emerging Internet marketplaces.

Action


52

Chapter Six

Leadership and Coordination

Ebusiness is changing the way that business is done in business, governmentand the community. It impacts upon, or has the potential to impact upon, everysector of activity. Ebusiness presents opportunities and challenges in every areaof public administration. While private sector drive is to be encouraged, this isnot something that can be left to the private sector alone.

Key public sector objectives, including equitable growth and prosperity cannotbe assured with public sector leadership.

Key objectives cannot be met with coordination between government agencies.

Leadership also has to be shared between business, government and thecommunity in key areas.

6.1 Top Down Leadership

The Government of Jamaica is applying leadership from the top down. Keyinstitutional arrangements in government and with connections to leadershipbodies outside of government include:

• The Prime Minister the Rt. Hon. P.J. Patterson, P.C., Q.C. The PMprovided the opening message about working in the cyber world in thecurrent strategic plan for ICT sector

• Cabinet Subcommittee on Technology. This Subcommittee examines keyissues and applies a whole of government perspective.

• Central Information Technology Office. This Office reports to the Ministerof Commerce, Science and Technology. This Office is necessary to carryout and monitor the initiatives identified in the Information technologystrategic plan. This Office is linked with the private sector through theInformation Technology Advisory Council (IAC) and other agencies. Itseeks to identify opportunities for cross-government and private sectorinitiatives, coordinate those initiatives and develop policies and newprogrammes to implement this Strategic Plan and other successor plans.

• E-Business Advisory Committee. This operates under the chairmanship ofthe private sector. The committee has already established priorities for thepromotion of E-Business i.e. developing framework legislation,infrastructure development, and community access and governmentapplications.

Some countries have established a new role to boost ecommerce, or ebusiness ingeneral. The United Kingdom, for example, has established specific Ministerialresponsibilities for ‘ecommerce and competititiveness’, appointed an ‘E-Envoy’ supported by a specific bureaucracy.

48 The Australian Government has

48

See http://www.e-envoy.gov.uk/ for details about role and composition of the e-Envoy and the Office.


53

the National Office for the Information Economy (NOIE), an agency ofgovernment that has responsibilities for development and coordination ofadvice about the information economy, including ecommerce and ebusiness ingeneral.

49

It is not clear that countries with specific information economy or ebusinessagencies are performing better than those without. There is also the point thatthe ultimate aim is to encourage every area of government to use ebusinesswhere they can and have ownership of it. There are concerns in some quartersthat agencies intending to encourage use of e-business, but without the actuallegislative responsibilities for many programs add to the cost of government anda further layer of government.

The key issue is coordination and drive and this can be achieved many wayswithout the need for building in additional bureaucracy. It is recommended thatthe Government of Jamaica continue to use flexible coordination approachesthe continued clear support of the Prime Minister, his Cabinet Ministers and allrelevant agencies of government.

At some points through the report it is suggested that tasks be referred to CITO,for further analysis. CITO has been identified merely because it seemed wellplaced at present. If it is not continued, or its role is defined to focus on otheractivities, it is expected that the tasks identified as being usefully carried out byCITO should be passed to other agencies of government, or reviewed by a taskforce assembled for a specific purpose.

6.2 Egovernment

There has been some criticism of the manner in which government services areprovided to the Jamaican community:

“Currently, the quality of service to the public is deemed as poor and ischaracterized by: (i) cumbersome procedures; (ii) long delays; (iii) unsatisfactoryresolution of problems faced by clients; (iv) high private costs of compliance withlaws and regulations; and (v) discourteous behaviour.

The Jamaican public sector displays characteristics commonly found in mostestablished bureaucracies. Rigid laws and regulations govern Public Sector entities.Compliance with these laws and regulations takes precedence over achievingorganisational objectives. In turn, this reduces responsiveness to emergingsituations and discourages innovation.

Decision-making is hierarchical and most decisions get pushed up the senior level.Many senior level officials regard themselves as policy makers, controllers orregulators, rather than facilitators.

In addition, both managerial and operational business in the public sector need re-engineering. Most of the current business processes were established decades agoand continue unchanged. In spite of major changes in the external environment andthe role of the public sector, business processes have not been restructured. Many

49

See http://www.noie.gov.au.


54

business processes that could be completed in one-step or location are fragmentedbetween different organisations or different sections within a given organization.”

50

Many of these issues are being addressed through the Public SectorModernization Programme.

During consultations the project team heard many examples of activitiesundertaken by the Government of Jamaica that could (and probably should) bedelivered online. Furthermore, a number of stakeholders pointed out that delayin the adoption of ebusiness by the Government of Jamaica is foregoingsignificant efficiency gains and gains from raising awareness and confidence inelectronic transactions.

Egovernment has been a important feature of Jamaica’s governmental reformsfor a number of years. For example, in 2000 UNESCO described theegovernment push in these terms:

“Under the National IT Strategy the relevant goals state that:

‘The Government of Jamaica plans to provide its citizens with efficient governmentservices through the use of IT.’

Networks will be established to allow access to government services from libraries,post offices, banks, hospitals and other public locations. The Government willcoordinate the locations access, presentation methods, and sharing of resources.The key focus is to have citizens throughout the country, even in rural areas, beable to find and receive information and services from different governmentorganizations consistently and easily.

Actions towards this end include:

• delivery of two types of services: i) providing information to the public,and ii) allowing transactions to be performed. Early emphasis is to beplaced on the former, i.e. provision of information to the public. TheMinister of Commerce and Technology will establish a goal to provide acertain percentage of information services to the public within the nextthree years. For example, 25% of information services will be provided bythe year 2003.

• Identifying a set of government services suitable for electronic self-service.Enough progress has been made in other countries in the area of electronicgovernment to permit identification and widespread deployment of a coreset of commonly requested government services that citizens can initiateand complete in a single electronic session.

• Expanding locations where public can access information and obtainpublic services. To ensure that all citizens have equal access totechnology, establish a network of kiosk or computer systems thatprovide Government information and services in prominent locations ineach region of Jamaica.

• Broadening IT access to rural communities through placement of facilitieswhere the public an use it in convenient community locations, such aslibraries, post offices, banks, hospitals, and other government offices. Forexample, rural public libraries can be networked with main libraries toexpand the services that are available to the public throughout the country.

50

United Nations Educational Scientific and Cultural Organization and Comnet-IT 2000, Jamaica, viewed 17July 2002, <http://www.comnet.mt/Unesco/Country%20Profiles%20Project/jamaica.htm>.


55

Use of partnerships to obtain support, knowledge, loans, computers, services andtraining to further the development of the IT industry in Jamaica. Developmentpartnerships with industry, universities, and multi-lateral and multi-nationalorganizations. Partnerships are vital to achieving strategic IT goals. Thesepartnerships facilitate major culture changes throughout the government. Publicand private sector partners work together to provide more efficient and effectivegovernment services.”

51

The project team is aware of a number of ongoing projects to implementebusiness solutions in the public sector and have been assured that progress isbeing made. This progress, and further progress, reflects a number of studiesrecently undertaken for the Government of Jamaica.

52

The box on the following page sets out significant progress in the area ofcustoms administration.

It is notable that egovernment faces many of the same barriers that ebusinessdoes, particularly in terms of legislative issues and electronic banking. In thisrespect, egovernment’s prospects will be significantly enhanced if reformssupported in section 3.5 are implemented

The Government of Jamaica should progress widespread adoption ofegovernment as recommended by Booz Allen Hamilton.

Some governments have set goals to achieve the electronic delivery of a highproportion of government services online with a few years. Progress towardsthese goals has involved more about semantics and playing with definitions thanabout service and substantial change. Government agencies in such arrangementshave felt pressured into use of the Internet rather than fully pursuing theopportunities. In addition the actions have tended to spread IT and ebusinessexpertise thinly.

The shot gun approach seeks to raise ebusiness everywhere, when in practicemore may be achieved in circumstances where there are limited resources byapplying these approaches where the gains will be highest. It is not clear thatJamaica can afford the shot gun approach.

Continue to be selective in services and activities that are reengineered focusingon higher value activities rather than apply across the board targets that areunrealistic and result in diffusion of limited resources.

51

Ibid.52

See Booz Allen & Hamilton 2002a, Jamaica Information and Communications Technology Project: E-Government Component Feasibility Study — Final Report, Booz Allen & Hamilton, McLean (VA); Booz Allen &Hamilton 2002b, Jamaica Information and Communications Technology Project: E-Government Component —Consolidated Final Report, Booz Allen & Hamilton, McLean (VA).

Action

Action


56

Box 6.1: Jamaica Customs Automated Services Online

The Government of Jamaica has developed capacity to provide customs services online. This was delivered by Fiscal Services Limited(FSL), a government-owned information technology company.

Context

The Jamaica Customs Department's responsibilities include facilitating the importation of goods into the island and the collection ofgovernment revenue at the points of entry. The processing of imports had been primarily manual, with a paper-based system at its core. Thesystem involved shuffling large amounts of paper through many sections, most of the time using the Customs Brokers as the carrier. Therewas an inability to reconcile cash collected with the entries processed, as there was no linkage even when the entries were keyed into thecomputer system later. This was fertile ground for fraud, inconsistencies, and an absence of accountability.

Management of the previous approach had became almost ineffective. Customs administration had very little data available to support itsdecision making process; and the data the was available generally was untimely and of questionable accuracy.

A New Approach

As part of the modernisation of Customs The Ministry of Finance and Planning (MoFP) decided to develop a paperless import entryprocessing system. This would involve developing a new Customs back-end entry processing system and an application that would reside onthe importer's computer and capture, validate, and submit C78 customs entry forms electronically.

The system ensures that the entries submitted from the comfort and convenience of the Customs Brokers' offices are fully validated andlodged, thus providing the platform to expedite the processing of shipments. Entries could be easily reconciled against the collection receivedvia the integrated Customs Cash Remittance System at Customs locations. With the implementation of an e-payment component to be addedsoon, Customs Brokers may both lodge their entries and pay duties over the Internet.

Statistics could be gathered easily and distributed to government agencies and trade organisations; management reports monitoring of theoperation would be readily at hand to aid in effective decision making.

Implementation Challenges

There were many challenges. The Customs Brokers were not supportive initially. Many felt that their competitive advantage over each otherwould be diminished by the changes in their interaction with Customs. They also feared technology, many using it for the first time. Others,while somewhat familiar with technology, did not utilise it for mission critical functions. Reactions ranged from organised protest to sabotage.

Among Customs Officers the changes often were opposed for monetary reasons. The new system would eliminate the need for overtime, asthey had to process paperwork well into the evening to keep up with the volume of entries coming in on a daily basis. Others benefited fromprivate arrangements with brokers.

Telecommunication services also presented two significant obstacles:

• Many Customs Brokers required additional phone lines for access to Internet Service Providers (ISP). As it turned out many of thelines could not be made available due to physical infrastructure deficiency in certain areas.

• It proved difficult to access ISPs during peak hours, and the timeliness of response to relay email messages proved problematic. Thiswas true initially as in the early stages we moved entries and acknowledgements via e-mail.

With the backing and determination of the Ministry of Finance, the availability of telephone lines increased. FSL moved from e-mail basedcommunication to an on-line web application, and Customs by then understood the seriousness of the effort. FSL assembled a technical teamto assist Customs Brokers with installation of PC's, training, application software usage, and connectivity to the Internet. In addition a customerservice center with special hot lines were setup to resolve problems quickly.

Benefits and Costs

The project has cost approximately US$5.5 million. While the Government of Jamaica had funded this, there remains a considerable amountof work yet to be done. A World Bank loan, along with government counterpart funding measures, are being utilised to develop and implementE-manifest, Online Release, and Warehouse Control. There isa further stage administrative reform. All of this is founded on the initial softwaresuites that were successfully implemented.

There has been a steady increase in revenue collection, despite little or no economic growth in the country. While the number of transactionshas remained constant or trending down slightly, revenues have increased.

The Customs Brokers have come to appreciate the convenience and increased speed in processing an entry. In contrast to lodgements beinglimited to Mondays to Fridays 9:00 a.m. - 4:00 p.m., the new system permits lodgements 24 hours per day, seven days a week. Brokers arealso gratified that processing of an entry, which previously took two to three days, on average, is typically done in three to four hours. (Thisdoes not include "fast path," which is immediate, for those who qualify, requiring only duty payment.) Now 98 percent of entries are submittedelectronically, with 95 percent of the brokers on-board.

Customs overtime has been drastically reduced and can be completely eliminated once the Customs reforms are fully implemented. Customssupervisors are now better able to monitor and distribute the workflow, thereby achieving greater efficiency. Inconsistency and errors in dutycalculation have been totally eliminated. Changes to tariff rates and other fees are quickly and accurately accommodated. Reconciliation ofpayment is now provided on demand. Management and activity reports are all easily generated and made available through the implementationof Data Warehousing tools. Collection points require fewer cashiers, yet long queues have been eliminated. The cashiers now have only toselect the entry and collect payment, without entering large amounts of transaction details.

Source: Lorenzo Grant, Fiscal Services Limited, Jamaica, June 11, 2001 available in full athttp://www1.worldbank.org/publicsector/egov/jamaica_customs.htm.


57

CPart C

Ebusiness inKey Sectors


58

Chapter Seven

Information Technology

The Information Technology (IT) sector has been of considerable interest inJamaica and the rest of the world because of its potential for sustained rapidgrowth, boosting investment, jobs, output and exports (or at least reducingimport dependence). More recently it is becoming clearer that the IT sector is akey enabler of competitiveness and growth throughout the economy.

7.1 Situation Analysis

The Jamaican IT industry is comprised of approximately 100 companies andcan be divided into the following categories of activity:

• software distributors and dealers;

• professional services ie, consultants, technical support and softwaredevelopment;

• computer training companies;

• Internet Service Providers (ISPs)/web content;

• information technology service providers including data entry, call orcontact centres, Geographic Information Systems (GIS), CAD/CAMoperators; and

• full service or total solution companies.

IT activities of many of the user organisations have become so significant thatthat they are driving convergence and making the task of industry definitiondifficult. This is especially so in the area of communications. Many analystsnow take a broader perspective and talk about the Information Communicationsand Technology, or ICT, industry.

Analysts have observed that the IT industry has grown to provide some orreasonable coverage of most major IT needs within Jamaica. The majorexceptions relate to computer hardware and telecommunications equipmentmanufacturing. This should not be viewed as a major impediment. Hardware andequipment is available at world competitive prices. Entering these markets is arisky venture with very thin margins. Table 7.1 summarises the availability ofIT products and services within Jamaica.


59

Table 7.1

IT PRODUCTS AND SERVICES IN JAMAICA

Service or Product Availability in Jamaica

Hardware manufacture None

Hardware assembly Reasonable

Software development Some

Services/consulting Reasonable

Telecommunication services Reasonable

Telecommunication equipment manufacture None

Internet services/ecommerce Reasonable

Hardware/software-marketing (retail/wholesale) Reasonable

ICT human resource recruiting/headhunting Some

Outsourcing vendor Some

Training Some

Source: Allied Research Associates 2002, p. 55.

The arrival of ISP competition in Jamaica injected the most recent surge ofgrowth into this dynamic sector. The IT service providers have seen sustainedgrowth. Data entry services drove growth in the mid nineties. Call (or contact)centres have been a major source of employment growth in the sector in morerecent years. This is supported by Jamaica’s telecommunications infrastructure,particularly the Jamaica Digiport International, providing fast and reliable linksto the rest of the globe. The Digiport is located in Montego Bay.

Stakeholders advised the project team that the much activity in the softwarearea related to the tailoring of global applications to meet Jamaican andCaribbean needs.

Many key multinational and IT companies have a presence in Jamaica (seeTable 7.2). This is said to reflect saturation of the US and other developedmarkets and the perception that Jamaica can be a gateway to the Caribbean andCentral America.


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Table 7.2

IT MULTINATIONALS IN JAMAICA

Company Activity

Cable and Wireless Telecommunications

Cisco Dealer-network systems

Compaq Dealer-hardware systems

Dell Dealer-hardware

Hewlett-Packard Dealer-hardware

IBM Dealer-hardware

Incomex na

Microsoft Software

Nortel na

Oracle Dealer-software

Fujitsu ICL Caribbean IT Systems suppling Caribbean market

Source: The Allen Consulting Group and Allied Research Associates 2002, p. 85

Education and training of an ICT workforce is a rapidly growing activity inJamaica. This reflects the priority it is given in national industry and ICT policyagendas. The INTEC project, a private-public centre for national ICT strategy,established a goal to create 40,000 new jobs by 2003.

It is also clear that the Government of Jamaica places considerable weight onthe need to develop and expand ICT activities.

“In recognition of this new environment, the Jamaican Government has made theintegration of information technology into the Jamaican economy a high priorityand a strategic imperative…. Jamaica must become the centre for ICT activities andinvestment in the Caribbean. With our proximity to the United States and otheradvantages such as language and relatively low labour costs, we are well placed toattract ICT firms and specialists, and to compete with other developing countriesfor market share of the global ICT business.”

53

Key elements of the Government’s current strategic plan are summarised inBox 7.1.

53

Government of Jamaica 1996, National Industry Policy: A Strategic Plan for Growth and Development,Jamaica Information Service, Kingston, p. 12.


61

Box 7.1: A Five Year Strategic Information Technology Plan for Jamaica

The Government of Jamaica has made the integration of information technology into the Jamaicaneconomy a high priority and a strategic imperative. It aims to promote Jamaica as a Caribbean hub forIT activities and investment. A three-pronged approach envisages transformations in human resourcedevelopment, in infrastructure and in the enactment of an enabling legislative and policy framework. ACabinet sub-committee for IT is steering the process, together with a newly set up Central IT Office(CITO). The former Ministry of Industry and Commerce now has "Technology" added to its name andthe Government of Jamaica has publicised its intention to generate 40,000 IT-related jobs in the comingthree-year period. Strategic and other measures being adopted in the short term include:

• the annual allocation of 2 to 4 per cent of the national budget to IT initiatives

• catalysing Ministry tactical plans, with an emphasis on education, for the harnessing of ICT inthe various socio-economic sectors

• the introduction of a strong IT component in the Public Sector Modernisation Programme

• accelerating the introduction of computer labs in educational institutions

• facilitating private sector initiatives to dramatically increase public access to the internet

• create a Chief Information Officer position within each Ministry

• the establishment of a transparent regulatory framework, adaptable to the emerging e-businessenvironment and covering areas such as privacy, intellectual property and digital signatures

• a system of investment incentives to spread IT activities geographically across Jamaica

• the development of an appropriate infrastructure to facilitate the delivery of governmentalservices.

In addition, a series of high-profile pilot projects are being undertaken to demonstrate the benefits of IT inthe short-term. These projects are intended to further the goal of universal access and emphasise publicaccess to information. The post office network is earmarked for the delivery of a wide range ofcommunity services, such as online health-care, weather and disaster preparedness bulletins, themarketing of products and agricultural extension services. Expansion of this infrastructure will alsofacilitate greater public access to government services, communication with government agencies,Parliament and parliamentarians, thereby reinforcing the democratic process.

Longer term goals include:

• the creation of a nation wide public IT network which is competitively priced, utilises multiplesources and relies on the private sector

• the provision of efficient government services to the public through the use of IT

• the use of IT to increase international trade

• the adoption of ecommerce for government functions, as a stimulus to private sector take-up.The latter will also be facilitated through the provision of the infrastructure components for thetake-up of ecommerce and e-business, particularly by SMEs.

Source: United Nations Educational Scientific and Cultural Organization & Comnet-IT 2000

7.1.1 Electronic Commerce Developments

One means of assessing an industry’s use of ebusiness is to see what it offers onthe Internet. By exploring the www in the much the same way that anecommerce consumer would when looking for goods and services it is feasible t oassess:

• the presence of Jamaican companies on the web;

• the nature of services offered including static marketing information (or‘brochure-wear’), the capacity to lodge queries, capacity to exchangeinformation between buyer and seller, placing orders (not necessarily paidonline), and capacity to make an electronic payment;

• the location of the website (often by asking the webmaster where the site ishosted); and

• other information, such as patterns in the application of privacy policies,security and management of complaints.


62

The project team also assessed how easy it is to find relevant sites. Essentiallytesting presence in the range of widely used channels (portals and searchengines).

This approach does not, of course, provide insight into companies’ use of theinternet for email, purchasing, participation in EDI and many other onlineactivities. It is also recognised that the approach is not scientific, reflectingmore about perceptions and qualitative insights. Insight about these othermatters has to be collected through other means.

This section briefly reports on insights obtained from the consultantsinvestigation into Jamaica’s IT sector.

The Jamaican IT sector is not as visible on the Internet as the other keysectors. The project team was unable to find a large number of Jamaican I Tcompany web pages, but if there are only a 100 or so IT companies that shouldnot be surprising.

54 About two dozen IT companies were identified. This suggests

that nearly a quarter of the total have websites, which is considerably more thanthe national average.

Some observations about selected identified IT company websites are providedin Table 7.3.

Table 7.3

SELECTED JAMAICAN IT COMPANIES ON THE WEB

Company Activity Ebusiness Enablement Web site location Web Address

Advanced DigitalServices

Software developmentand IT consultingcompany thatspecialises inapplications for theinsurance industry

Company information andmarketing. Some priceinformation.

Jamaican developmentand hosting

www.advancedigital.com

Amaze InternetLimited

Website Design,Ecommerce and SiteMarketing

Company information andmarketing.

n.a. www.amaze2000.com

Cable andWireless Jamaica

Telecommunications,ISP, web hosting etc

Company information,product information, mailfor further information, canreview bills. Chat line. Noonline payment facility.

Jamaica home.cwjamaica.com

Colis InternetServices

ISP and Internetservices includingweb page design andhosting.

Company information,product information(including some prices).Email for furtherinformation. No onlinesales facility.

Jamaica www.colis.com

54

The project team found many more listed in various internet directories of computer service companies;there were more than 120 listed in one category of Jamaican computer dealers alone — Jamaica: Computer-Dealers, CaribbeanOnLineYellowPages, viewed 19 July 2002,<http://www.caribbeanonlineyellowpages.com/listings_3/3_category_C_1945.html>.


63


Coltron

International Ltd

Computer sale, repairand maintenance.Network installation.Structured cabling,Web pagedesigning/hosting.

Company information.Some product informationand prices. No informationexchange. No online sales.

n.a. www.coltronja.com

ComputerMerchant

Computer productsand services. websitedesign. Technicalsupport. Training.

Company information.Software downloads.Electronic product quoteand shopping underdevelopment.

n.a. www.compumerchant.com

Cybervale ISP, web hosting andportal for business inSt Catherine

Company information.Prices. Chat room. Noelectronic exchangefacilities. Local contentdirectory.

St Catherine, Jamaica www.cybervale.com

Digital TechnologyInc. Ltd.,

Internet and e-Business SolutionsProvider. Specialisingin softwaredevelopment, websiteproductions and ITconsulting

Company information andmarketing.

Overseas (Jamaicancontent)

www.digtechinc.com

InfoChannel (Alliedwith CentennialCommunicationsCorporation)

ISP. Web hosting.Global roaming.

Company information.Product information.Electronic sign up (email)and support. No electronicpayment.

Jamaica www.infochan.com

Jam Web (a whollyowned Grace,KennedyCompany)

ISP (satellite) Webhosting, consulting,and Internet services.

Company and productinformation (prices). Noelectronic orders orpayment facility.

n.a. www.jamweb.net

Jamaica Focus Website developmentand hosting.

Company and marketinginformation. On line orders.

Developed in Jamaica.Hosted Jamaica andoverseas.

www.jamaica-focus.com/Arrival.htm

Jamaica Online

(US partnerQualitechComputerServices)

ISP. Web and mailhosting with roamingcapacity. Interactiveand eventbroadcasting services.

Company and productinformation with prices.Portal for information aboutJamaica. No electronicsign up or paymentfacilities.

Kingston, Jamaica and inthe US

www.jol.com.jm

Jamaica WebServices

Web hosting, webdesign, and domainservices.

Product and serviceinformation.

Jamaican and overseasinputs. Hosted in USA,Europe and Asia.

www.jamaicawebservices.com

Jam Chat Internet telephonyreseller

Company information.Prices. Electronicpayments (US$ andJamaican$ credit card)

n.a. www.jamchatjm.com

JM.Net Web site consulting,design and hostingservices. Off the shelfweb presence in SeeCaribbean OnLineBusiness directory aswell as custom websites.

Product and serviceinformation.

US www.jm.net

J Zone Ecommerce, businessconsultancy andcustom development

Company and productinformation.

Developed by Jamaicans.Hosted in USA.

www.j-zone.com


64


TeleservicesJamaica

Telemarking servicesincluding call centre,data entry, telephonesurvey, and Internethelp desk.

Company and serviceinformation. Contactdetails.

n.a. www.telejamaica.com

Fujitsu ICLCaribbean

IT Systems supplingCaribbean market

Company and serviceinformation.

Developed and hosted inTrinidad

www.fj-icl.com

Source: The Allen Consulting Group

It is clear from even this partial listing of Jamaica IT company websites thatthis sector of industry has made a significant investment in engaging in ebusinessand the information economy. A sense that the project team obtained whenreading the company histories was that most of these companies have been inthe industry for some time, most over five years, which is a very long time inInternet terms. They mostly appear to be durable companies of substance. Afurther sense is that they are expanding the nature and range of the products andservices they offer. They are growing.

Use of the Internet also seems to be well integrated into their business model.They are not ‘dot coms’ throwing away value for nothing. Most have anunderlying business and are progressively using ebusiness to extend and expand.

It appears that Website use by Jamaican IT companies are largely limited t oadvertising at present. Only a handful had implemented the capacity t oexchange information beyond an exchange of email. Only a couple have thecapacity to place an order online and only one allows for online payment (viacredit card). This is at odds with experience in many other countries where theIT sector is a leader in engaging in ebusiness. IT companies tend to beinnovative and their clients generally have access to PCs and the Internet,making use of ebusiness a natural transition.

It is not clear why the telecommunications companies and ISPs (who make up alarge part of Jamaica’s IT industry) have not advanced further in electronic billmonitoring and payment. Service providers in other countries have encouragedthis not just as a way of winning customers but also of reducing costs.

55

It is not surprising that the IT service companies engaged in web design andhosting do not have electronic payment systems on their web sites. Most valuefor these businesses is created in a small number of transactions with businessclients, rather than a large number of small transactions with consumers.Ebusiness for this group is largely about raising awareness about their abilities.

The project team also observed that inputs are increasingly global. While manyIT company websites are developed locally, most are hosted offshore. Most ofthe value added in a website is in its development and it is encouraging to see useof local development in the companies that responded to questions from the

55

It is notable that one of the major challenges (and a barrier to entry) for the new Jamaican ISPs would havebeen finding customers and also working out how to collect payment from customers all over the island. Theirony is that every customer with a new Internet account, was also acquiring a new means of paying bills.


65

project team. Offshore hosting is not clear cut. When marketing to a globalaudience businesses should send their message through the most efficient means,and this can mean using a host located offshore. Businesses should also draw onthe best the world has to offer when designing their products. The ability to dothis at a relatively modest cost is one of the strengths of Internet technologyand is a driver of globalised production. It would be a concern, however, ifoffshore hosting reflected structural disadvantages in the Jamaican systemforcing some businesses to go offshore.

The comments obtained from website managers contacted for this study suggesta mixture of views and factors.

“Our website was developed and is maintained by one of the several localcompanies that offer this service. When it was launched back in 1997/98 it washosted at a facility in Canada. This decision was made purely for technical reasonsin that there were 5 T1 lines serving that facility. The hosting service has sincebeen changed on at least 2 occasions, and I don't know the identity or location ofthe current hosting service, nor do I really care as long as the site is up and accesstimes are good (hosting might even be done locally now).”

“…most of the web projects are being developed by Jamaicans and me…”

“Local companies offer a very bad relation between service and price, many websitecompanies even just resell hosting space from companies inside USA or Canada.That made the establishing of a website to a very expensive investment.”

“Yes, our site is hosted at our ISP in Jamaica. We constructed it ourselves at thetime of it's last update, so that's probably the reason for its facility. Most Webdesign companies then were more concerned with putting their logo on somethingflashy rather than functional.”

“Yes we are Jamaican! Our web site is hosted in the USA, and our web hostingservices are provided by servers located in the USA, Europe, and Asia (to providethe best service to various international markets).”

“I am a Jamaican living [overseas]. The site is not hosted in Jamaica… ourapproach is about value for money. It is easier to do businesses [here]… we need alot of bandwidth and leased lines cost much less… can take credit card payments,process payments… having easy access to distribution centres was another factor inwhy we are here.”

“The site was developed by [non-Jamaicans] and is hosted [overseas].”

Development of Jamaica’s capacity to build and operate websites competitivelyis a key consideration for the future of ebusiness on the island. Stakeholdersconsulted through this project indicated that Jamaicans were talented webdesigners and builders. Jamaicans are involved in many successful websites hostedand operated in Jamaica. It is likely, however, that Jamaican businesses facemore constraints in conducting their business in Jamaica than they do if theydraw upon capacity from overseas. The technology is making this easier thanever.

The leakage of value offshore points to a theme of the consultancy project thatis even more apparent in other Chapters. There isn’t a shortage of ebusinesssites about Jamaica. What is in shorter supply is Jamaican ebusiness, that is,ebusiness capacity built and operated by Jamaican industry in Jamaica.


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It is not clear that there is a single, consistent factor that drives leakage. It ismore likely that it is a range of factors that is shaping outcomes. many of thesewere identified in earlier Chapters and suggestions made about addressing them.

7.1.2 Finding Jamaican IT Websites

The project team was unable to locate an internet portal or gateway page thatreliably collected information and links about the full range, or even a largerange of Jamaican IT websites. This is in contrast to sectors such asentertainment and tourism where there are many such portals with muchcontent. Some of the websites that promised a directory of Jamaican IT andtelecommunications websites were found to be unreliable (eg, links were oftenout of date). Some were assembled by community groups or industry associationson a voluntary basis and the organisations have apparently ran out of resourcesor interest declined.

While the portals are not reliable (it is necessary to scan two or more to be surethat the searcher has found what is desired), there is no shortage of portals.Some of the major portals and comments about them from the perspective ofusing them to identify Jamaican IT websites are provided in Table 7.4.

Table 7.4

MAJOR INTERNET PORTALS REGARDING JAMAICAN IT SITES

Portal Type Comment

Yahoo.com Global portal Few Jamaican IT site listings. Most links were operational.

handilinks.com Global portal Good Jamaican IT site listings.

Caribseek Caribbean portal Stronger on tourism. Limited number of IT business sites.

See-caribbean.com Caribbean portal Limited number of Jamaican IT sites listed. The see-caribbean sitewas not found quickly by the project team.

Jamaican Yellow Pages Jamaican portal

netsearchjamaica.com Jamaican portal Largest number of IT sites. Many links were unreliable. It was noteasy to find the netsearchjamaica.com site itself.

Top 5 Jamaica Specialist host for Jamaicansites, although it is hosted anddeveloped in Canada

Small number of IT sites. All were operational. This site reliablycomes up amongst the 1st few results when using search enginesabout Jamaica.

Jamaicans.com Jamaican portal Limited links to IT business sites. Better site for Jamaican culture.

Jamaica-gleaner.com Jamaican Business directory has some links to IT business sites.


The profusion of portals is not unique to Jamaica. In fact the large number is apositive sign, indicating that Jamaica is maintaining a broad and vibrant Internetpresence. It remains the case, however, that it is relatively difficult forforeigners or new investors into Jamaica to find Jamaican IT suppliers on theweb.

It is possible that Jamaican IT companies could obtain more awareness andhigher levels of demand if it was easier to find them on the web.


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They may also gain value if they could raise the level of online commercialfunctionality. That is, enable more transactions. Alternatively, they couldreduce costs (for themselves and their consumers) if they enabled electronicpayment rather than physical payment.

7.1.3 Export Potential and Trade Impacts

There is export potential from the IT companies that have an online presence.By definition, those companies that are online are already marketingthemselves worldwide. From the review of selected websites the project team hasobserved that:

• many of the web development and web hosting sites have exported web sitesto buyers overseas. Some are operating business Internet directories andportals for the Caribbean at large from Jamaica (although the host mayactually be located at Network Access Points (NAPs) in the US);

• many of the multinational IT companies located in Jamaica have a specificCaribbean mission;

• the call centres and related services have also built their business on exportpotential;

• some ISPs have located in Jamaica as a base for their Caribbean services; and

• the domestic equipment suppliers appear to be the least export oriented.

It is not clear that it is feasible to encourage the export potential of IT enabledJamaican IT companies without also growing the domestic foundations of manyof these companies. Few, and perhaps none, of the existing companies reviewedwere ‘born global’ in the sense that they started as a purely export business. Asnoted already, most have a foundation in domestic sales.

While the IT sector is export capable, it is also clear that it is import intensive.Many goods and services to support the industry are imported. Certainly thehardware is. Service support is also being effectively imported (eg use ofoverseas web designers or hosting of websites offshore). In an interestingparadox some of the most sophisticated countries in the world experience an I Ttrade deficit (including Germany, France, Italy the UK and Canada, with the UShaving the largest deficit within OECD countries).

56 The countries that have a

sustained IT trade surplus are generally those countries that specialise in I Thardware exports (eg, Japan, Korea and Finland).

It is quite likely that rapid expansion of the IT sector in Jamaica would alsoinduce a rapid expansion of imports.

In other countries the IT trade deficit is not a major concern. The sector is seenas rapid source of domestic growth and employment and more recently, as acritical enabler of competitiveness in other sectors of the economy. This shouldalso be so in Jamaica, although having a small, more vulnerable economy, trends

56

Organisation for Economic Cooperation and Development 2000, Measuring the ICT Sector, OECD, Paris, p.27.


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in the IT trade deficit should be monitored as part of a strategy to expand thesector.

7.2 Challenges

Some years ago the National Industrial Policy identified many challenges forthis sector. These included:

• limited capital availability for start up ventures;

• vigorous competition from other countries such as the Philippines, India,China, and Bangladesh;

• evolutionary change in data entry and data collection that erode some ofJamaica’s advantages;

• bias in the incentive legislation that has favoured only those firms withinthe free zones; and

• weaknesses in the supply of technical and analytical skills from theeducation and training system.

57

Consultations with key stakeholders indicate that these challenges remain aconcern. There is also a significant new challenge, the global downturn in theICT industry. This is expected to be cyclical rather than structural, but it is stillthe case that it is very difficult to encourage investment in the IT industry atpresent. The IT industry in many countries is static, or even shrinking. In thiscontext maintaining trend growth in the IT over the next year or so should beviewed as a major achievement.

A major observation from examination of the Jamaican IT sector is that whileit has made progress and built something of a foundation, it is not yet at aposition to support widespread adoption and use of ebusiness. It is still unclearwhat factors are impeding development of the range of activities that supportand develop Jamaican ebusiness. Major possibilities that have been raised indiscussion with key stakeholders include:

• shortage of technical skills — building a website is not a significant technicalchallenge. The most complex aspects (such as payment and securityarrangements) can be purchased as components “off the shelf”. People withuseful skills are emerging from the education and training system but are notfinding employment in Jamaican workplaces;

• lack of capacity to do large projects — large projects require teams ofpeople with experienced leaders with project management skills.Stakeholders report that there are very few IT companies in Jamaica thatcan manage large projects;

• difficulties facing startup companies — including limited access to venturecapital funds and entrepreneurial know how;

• difficulties in using the Jamaican banking system to support electronicpayment and exchange — discussed in more detail in Chapter Eight);

57

See Government of Jamaica 1996, National Industry Policy: A Strategic Plan for Growth and Development,Jamaica Information Service, Kingston.


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• poor access to affordable bandwidth — business websites need to be reliableand fast. High speed fibre-optic cable is often the only feasible technologicalapproach. While this is available in Jamaica, there is evidence that it isrelatively expensive; and

• lack of a domestic demand — demand for domestic IT/ebusinessdevelopment services may be insufficient to build the industry to acompetitive scale. A range of factors that shape demand for servicesincluding lack of awareness about the potential for ebusiness, where to findJamaican companies that can provide advice about ebusiness, its applicabilityto business in general, especially for SMEs, may be at play. In addition, asnoted at the outset of this study, Jamaica has not yet reached the take offpoint where the Internet has penetrated most walks of life and webdevelopment bursts ahead as the community finds new ways of making lifeand business easier.

7.3 Suggested Approaches

Some specific actions that would advance the strategic goals set earlier in thereport are suggested below.

Continue to implement the Five–Year Strategic Information Technology PlanFor Jamaica.

Raise knowledge about ebusiness use and developments within the IT industry.

Expand incubation of IT ebusiness start up companies.

Engage in post-incubation support for emerging IT companies.

Raise opportunities for partnership building within Jamaica and abroad. A keylimitation has been lack of understanding in depth about the actual JamaicanIT industry as it stands.

Make it easier for companies to find Jamaican IT companies and learn abouttheir market offerings. Encourage co-operation in the development andmaintenance of a private sector ICT/ebusiness portal site. This could includeworking together to improve the positioning of an existing private sector site.

Promote awareness about Jamaican IT/ebusiness success stories and interestingnew ventures.

Obtain greater Jamaican development leverage from government purchasing ofIT inputs.

Review progress against key performance indicators (KPIs) within three yearsand make changes as necessary to the policy mix and strategic approach.

Some of these measures are straightforward and require no further explanation;others do.

Action

Action

Action

Action

Action

Action

Action

Action

Action


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7.3.1 Development of Key Performance Indicators

The development and application of KPIs is an important step in any whole ofgovernment strategy; what gets measured gets noticed. In this regard, someeffort should be devoted in the short term to the development and clearexposition of the indicators and the target benchmarks for which theGovernment of Jamaica should be aiming. In general, it is reasonable for Jamaicato aim to be in the top two Caribbean best performing countries for every KPI.Some suggested KPIs include:

• Internet host penetration;

• Internet user penetration — in addition to being in the top two per capitalInternet users in the Caribbean, Jamaica could seek to pass the ‘takeoffpoint’ of eight to ten Internet users per one hundred inhabitants (see section1.2);

• the cost of telephone access and associated dialup Internet use; and

• the cost of broadband Internet use.

It is only after a number of years that these KPIs would have had time to adjustto the reforms outlined in this report, and it is at this time that the success ofthe ebusiness strategy will be truly apparent. A three year period is proposed.

7.3.2 Raising Knowledge — An ICT Ebusiness Audit

It is proposed that the Government of Jamaica undertake an ICT ebusinessaudit. This is not an examination of the use of ICT with different sectors of theeconomy as proposed under the Government’s Five Year Strategic InformationTechnology Plan For Jamaica. The focus is not upon inputs, rather whatfactors lead to competitiveness and raising demand.

Key dimensions examined should include:

• learning with more precision what kind of companies are in the sector, howmany people they employ, which ones are online (ie, have or use a website)and which are not?;

• what skill sets are required to go online? How are ebusiness facilities enabled?(eg, self owned and operated, outsourced in Jamaica or overseas);

• how are ebusiness facilities in the sector financed? (eg, retained earning,bank finance, venture capital);

• how ebusiness relates to the underlying business model and strategy in formsin the sector, what are their online markets, who are their competitorsonline and through traditional channels?;

• how companies in the sector interface with global supply chains, and waysthat ebusiness is changing this; and

• the extent to which firms in the sector are pursuing new partnershiparrangements to facilitate ebusiness, or where ebusiness facilitatespartnerships for other reasons.


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Aggregate data should be compiled and reported, although an underlying database should be retained for analysis over time.

A natural fit for this task would be to conduct it within CITO, although otheragencies may be able to contribute. This should not be viewed as an overlydemanding process. A team of two reasonably qualified personnel could be ableto do this within two to three months (there are after all only 100+ companiesto identify and review).

Data from the audit should be used to establish benchmarks upon which to assessperformance of policy measures. KPIs could include numbers of companies,levels of employment, levels of investment, volume of sales, entry and exitfrom the industry.

The ICT ebusiness audit results should be distributed widely within theGovernment of Jamaica to raise awareness and understanding about the sector,its ebusiness potential and its challenges.

Findings from the audit should be discussed within various forums. CITO couldorganise forums in key parts of Jamaica to discuss the findings and thedevelopment of performance indicators.

7.3.3 Obtaining Greater Leverage From Government Purchasing

Government agencies should be required to:

• formally evaluate the potential for local sourcing for IT inputs on allprojects. This is mainly to ensure that local producers are not overlooked,not to induce a bias against imports, which would be against the spirit of theWTO and TRIPS; and

• structure tenders to allow (or at least not put up actual or perceived barriers)for local firms to bid as part of local consortia or in conjunction withoverseas suppliers. This is to overcome perceived problems associated withthe small size of Jamaica IT firms and their consequent ability to undertakelarge projects.

Where local inputs are inadequate, unsuitable or not competitive, theprocurement process should formally require investigation of the potential forthe involvement of Jamaican inputs. This should be given a high weighting inprocurement decisions.

The Government of Jamaica should apply ‘moral suasion’ to multinationalsoperating in Jamaica to demonstrate a commitment to developing the JamaicanIT industry. Many countries have ‘Partners for Development’ schemes whichrequire that multinational companies report on additional activities thatcontribute towards local IT industry development over a predeterminedtimeframe (often two to three years). Companies that ‘graduate’ from suchprograms are given preferential treatment in terms of competition forgovernment procurement contracts.

The Government should expect complaints against this initiative frommultinational ICT companies. These companies, especially those from the US,


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are typically initially fractious about the idea of governments posing conditionsupon contracts. That said, once the global companies see that the Governmentof Jamaica is serious in this matter and they start looking for new ways ofmeeting requirements, as well as making a profit, and they discover the benefitsfrom making a real commitment to the market they are operating in, theygenerally acknowledge value in the approach.

If some global ICT companies are genuinely not interested in providing anymore than a sales and marketing office in Jamaica, the leverage approach will a tleast highlight quickly who they are, encouraging the Government of Jamaica t oquickly move on in forming closer relationships with those that offer more. Ifthis seems somewhat discriminatory it should be recalled that the small openeconomies that are making the most rapid gains in accelerating competitivenessin recent decades have done so through close relationships with businesses thatoffered to do more than just make a profit in the host country, as well asproviding an environment where business in general could thrive.

This is an activity that could be administered by CITO or perhaps otherelements of the MCST.


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Chapter Eight

Banking and Finance

Banking and finance is a key sector of interest when considering acceleration ofebusiness and ebusiness usage. This reflects the potential benefits that greateruse of ebusiness can bring to the sector, as well as the importance of this sectorin enabling and facilitating ebusiness in other areas of the economy.

8.1 The Sector and it’s Role

The banking and finance sector contributes significant value added in theJamaican economy. The most important contribution of the sector, however, isin its role in mobilising funds. The sector plays an intermediary role, bringingsavings and investment together as well as facilitating financial transactions.

The funding intermediary function has been a rapid adopter of ecommerce andebusiness in many other economies.

This Chapter looks at the use of ebusiness approaches three aspects of thebanking and Finance sector:

• Upstream banking

• Downstream banking

• Capital markets

8.2 Upstream Banking

Upstream banking deals with the multitude of arrangements and transactionsthat the customer rarely sees between banks and related financial institutions.Most of these arrangements involve use of, or have implications for, thepayments system.

The 'payments system' refers to arrangements which allow consumers,businesses and other organisations to transfer funds usually held in an account ata financial institution to one another. It includes the payment instruments -cash, cheques and electronic funds transfers which customers use to makepayments – and the usually unseen arrangements that ensure that funds movefrom accounts at one financial institution to another. While not exciting formany, the payments system is a vital item of infrastructure that underpins thefunctioning of modern economies.

Delivery costs for a variety of mechanisms for different banking institutions arereported in the table below.


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Table 8.1

DELIVERY CHANNEL COST COMPARISONS (INDEXED WITH IN-BRANCH DEPOSIT COSTS=100)

In-Branch CashDeposit/Withdrawal

ChequeDeposit

Own ATMWithdrawal

EFTPOS Direct Credit

Institution A 100 - 31 18 -

Institution B 100 80 33 18 3

Institution C 100 109 25 24 10

Institution D 100 121 59 29 -

Institution E 100 116 57 29 7

Source: Financial System Inquiry 1999, Final Report , AGPS, Canberra, p. 226.

The table above shows that cheque deposits are typically more expensive thanconducting business through a teller, while electronic based systems (such asAutomated Teller machines (ATMs) or Electronic Funds Transfer (EFTPOS) oreven direct credit (often via phone banking) are consistently cheaper for banksto provide.

Migration from cash and cheques (ie, paper and often manual based paymentsinstruments) to electronic payment mechanisms, especially direct entry credit(or ‘direct entry’) systems, would yield significant cost savings.

Reflecting the potential cost savings for participants in payments systems, theyhave been rapid adopters of electronic technologies. Doing so involvescooperation between the participants in the payments system and coordinatedaction.

There is evidence of cooperative measures being taken leading to gains inJamaica. Details of projects and progress is summarised in the box on thefollowing page.


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Box 8.1: JETS Facilitating Ebusiness

J.E.T.S. Limited is a company created by the seven members of the Financial Service Sector in Jamaica(BNS, FCIB, NCB, RBTT, JCCUL, JNBS, VMBS) to address the needs for banking and finance sector toimprove efficiencies in customer service and reduce processing costs. To date JETS have implemented 3major projects that have made improvements in very specific areas.

1. MultiLink ABM Network - June 1, 1997:

This network allowed customers from any one Member Institution to use their debit card to performwithdrawals or balance inquiries at the ABM terminals of any other Member Institution.

2. MultiLink POS Network - April 1, 1999:

This project extended the use of debit cards into Merchant stores so that card holders could make directpayments via the debit cards using the POS terminals of any of the 4 Members providing MerchantTerminals.

As of November 2002 the MultiLink network boast 267 ABM and 5,869 POS terminals across the island withterminal presence in all 14 Parishes. Over 865,250 cards have used on the network and about 155,000 usersare online in the typical month performing about 3.57 transactions per card. The users who use both ABM andPOS networks tend to produce about 6.48 transactions per month.

3. The Automated Clearing House (ACH) - October 1, 2002:

a) Working with the Jamaica Banker's Association (JBA) J.E.T.S. Ltd. has implemented and operates theACH on the behalf of Automated Payments Ltd.. APL is own by the 6 Commercial Banks in the island (BNS,FCIB, NCB, RBTT, Citibank and FGB). This project benefited from financial and technical assistance fromthe USAID (New Economy Project). The ACH had effectively doubled the speed of clearing cheques (movingfrom 5 or 7 days down to only 3 days).

b) In the second phase of the project JETS expect to implement electronic direct debits and credits tosignificantly reduced the volume of paper cheques related to payrolls, insurance PAPs and other distributedcredit and debits.

c) Also the second phase will seek to introduce cheque imaging to reduce the cost for handling paper items.This will require, in addition to changes in the system, changes in the laws to remove the dependence on thepaper item from several areas of law (Evidence Act, Banking Act, Bills of Exchange Act, etc)

JETS is working on two new projects:

1. A Credit Bureau Service:

The project, in its first phase, aims to capture all consumer and corporate credit information in the majorfinancial institutions into a single database for use in producing credit reports on individuals and companiesseeking loan financing. The measures depends upon the passage of legislation. JETS hope to have the Act inplace by 2003 and expect that once that green light is given Jamaica could have a functioning Credit Bureauwithin 18 - 24 months. (See Box 8.3 below for more details about this project).

2. A Fraud Database:

The Fraud Database will seek to capture information on the instances of fraud within the financial servicesector to record the a) the details of the events, b) analysis of the techniques uses c) advice on how to preventthe attempts d) a database of persons found to be implicated in the frauds. This will not be a public service asin the case of the other services, but rather a private and confidential service to the Financial Institutionsthemselves to help reduce the cases and costs of fraud.

A Model For Cooperation

As a general observation the key to the success of these projects have been the willingness of the FinancialService Sector to work together on a equal footing on joint processing infrastructure projects. Pivotal to thatsuccess is the shared processing platforms remain in the background to their individual and very competitivemarketing fronts to their consumers. Participants call it "Collaborative Competition" based on the J.E.T.S.model where each has equal ownership in a separate services company that works on developments in thebest interest of all the participants.

An adaptable feature of this model is that some special business efforts can be entertained, as was done withthe ACH System. In the ACH case a new company was created with a separate ownership structure among asubset of the banking sector (4 JETS Members and 2 non JETS Members) which in turn contracted servicesfrom J.E.T.S. to handle the technical implementation and daily operations. It is likely that the Fraud Databaseand the Credit Bureau will follow this strategy.

Source: E. Jenez, JETS Limited, Personal Correspondence, December 2002.

Automation of many upstream banking processes has almost certainly involvedsignificant gains for Jamaica’s financial institutions. The previous processeswere labour intensive and subject to long delays and error. Automation has also


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given management better, more timely information about transactions thatrelate to the core business of financial institutions. This should result in betterdecisions and reduced risk. Many of these benefits have in turn been passed onto the consumer in terms of increased convenience or lower fees and interestrates.

Banking stakeholders with responsibilities for the payments system see thatJamaica is progressively advancing towards less costly means of exchange,gradually moving away from cash and cheques, towards electronic systemsincluding ATM and debit cards, within the constraints of a strong culturalpreference for cash.

The Government of Jamaica should continue to encourage cooperativecompetition with and between banking institutions leading to development anduse of more efficient electronic payment instruments.

8.3 Downstream Banking

Downstream banking represents the activities that customers are likely to bemore familiar with. It involves the routine activities of retail or commercialbanks as they provide banking services to customers and businesses.

It is likely that the automation of back–office banking functions (or upstreamprocesses) discussed above represented the initial opportunity from digitisationand increasingly pervasive communications networks. Financial institutions inmany economies are in the process of making further use of emergingcommunication capabilities in the downstream aspects of their business.

8.3.1 Electronic and Online Retail Banking

The kinds of activities that are being developed are discussed in the box on thefollowing page.

The use of ecommerce and ebusiness solutions in banking and finance hasenabled financial institutions to:

• Reduce costs. Many banks have shed high cost branch networks by providingservices through a range of innovative means. The cost saving potentialseems to be significant. Cost savings have been shared between investors (ie,bank shareholders and bank customers through lower cost of funds).

• Increase customer convenience. Customers value their time highly and arequick to move to services where they do not have to queue and waste time inorder to conduct mundane business.

• Lock in higher margin customers. Some financial institutions have identifiedthat Internet literate customers tend to have higher incomes and more needof financial services. Meeting these needs has helped to retain thesecustomers.

• Offer specialised ‘Internet only’ services. These provide customers withhigher interest rates on their deposits and greater convenience.

Action


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• Raise consumer confidence in the new business media. The fact that bankswere associated with cheques and credit card systems appears to have helpedraise confidence in those means of exchange when they were new. Banks inmany countries are being supportive of new electronic systems. In manycases, they use their websites as portals to showcase the goods and servicesoffered by their business customers.

Box 8.2: Electronic Banking and Finance Services to Customers

Emerging electronic customer interface activities include:

Electronic banking. Banks have facilitated electronic data entry for customers that undertook financialtransactions on a large scale for some time. Features included electronic record keeping, settlement andelectronic payroll, among others. These services generally involved custom made applications that wereexpensive. The progressive rollout of electronic payment facilities that are akin to Automated Teller Machines(ATMs) included within business customers’ business operations (ie, connected to customer registers) hassimplified and deepened these arrangements.

PC banking. This was often facilitated through special software made available to the banking client. Thisgenerally involved dedicated facilities that were relatively expensive to install and maintain. The mostsuccessful users of these systems seemed to be medium to larger sized businesses. Some smaller scalecustomers (ie, depositors) experimented with such services.

Telephone banking. The capability to conduct banking activities over the telephone has been developing forsome time. Current systems include account balance information, bill payment, transfer of funds betweenaccounts, transfer to other banks, and others. These systems have typically been slower in obtainingconsumer acceptance than over the counter support, but customers appear to see significant benefits oncethey are familiar with the system.

Internet advertising. Financial institutions provide information about products and services available online.This can be updated at considerably less cost than paper brochures. This has helped customers makeinformed decisions, but institutions have generally found that unless they supported an immediate opportunityto conduct an actual transaction, they were at risk of losing customers to providers who could.

Internet service availability. Initial online systems focused on making limited services available such as theability to calculate mortgage payments. Provision of services relating to customers’ confidential informationcame later and included services included facilities to obtain account balances or electronic statements.

Internet banking. Banks have upgraded their PC banking facilities with Internet systems that require thecustomer to have no more than a basic web browser and Internet access to use. These systems have tendedto provide more functionality than PC banking, frequently providing scope for real time transactions betweenaccounts, payments and account details.

Customer Internet banking. The Internet banking facilities have generally been made available to generalcustomers once higher value customers (ie businesses) have been catered for and the systems have beentested thoroughly.

Merchant Internet transaction support. Many vendors or merchants that offer products online rely on bankingand other financial services support to conduct transactions. Credit card payments remain the most commonmeans of making payment online. These systems often involve bank provision of increasingly standard andless expensive support systems to merchants that integrate with the other equipment operated by themerchant to support their online offerings.

Other support for ebusiness. Some financial institutions are assisting in the development of ebusiness. Somesites act as portals. Their own sites attract considerable visitation and they are able to encourage visitors tolook at the offerings of online merchants through links to their websites. building confidence in onlinetransactions by providing links (naturally these are often institutions that are a customer of the relevantfinancial institution). Some financial institutions seek to highlight that they apply rigorous standards to theInternet vendors that they support.


Use of the Internet by the banking sector in Jamaica in downstream activitiesappears to be in its formative stages.

• not all of the Jamaican banks have established a presence on the web yet;


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• a few have offered PC banking for government agencies and largermerchants for some time, with some testing of on-line systems with trustedclients or are global banks that offer global online products in Jamaica;

• generally domestic banks have been slow to make a general offer of onlinebanking facilities (ie, including services such as the capacity to actuallytransfer funds online); and

• no domestic bank at the time of writing (February 2003) offers online retailbanking services, although at least one bank (NCB) indicated that they wereclose to the launch of such a service.

These observations are the findings of an analysis of the banking sector inJamaica based largely upon what the financial institutions say about theirservices on their web pages. The table below summarises the findings.

Table 8.2

ONLINE CAPABILITIES OF COMMERCIAL BANKS AND BUILDING SOCIETIES IN JAMAICA

Institutions Internet Sites Online BusinessCapabilities

Online ConsumerCapabilities

Commercial Banks

The Bank of Nova ScotiaJamaica Limited

www.scotiabank.com.jm Online access to account balances,transaction information, transactionhistory, transfer of funds, makepayments, cheque reconciliation.

Support for merchants’ electronictransactions (via credit card) forselected customers.

None apparent.

Parent company systems may beimplemented in Jamaica.

Citibank N.A. www.citibank.com/jamaica Electronic transfer between Citibankaccounts, cheque stop andimmediate stop etc

Online banking, apparently forbusiness clients only.

None apparent.

RBTT Bank JamaicaLimited (formerly UnionBank of Jamaica)

www.rbtt.com/RBTTJamaica.htm

None apparent None apparent

CIBC Jamaica Limited www.cibc.com None apparent Comprehensive online bankingcapacity.

National Commercial BankJamaica Limited

www.jncb.com Loan payments, enquiries.

‘Swipe’ point of sale payment optionfor merchants.

Payroll possessing.

Advice that online services formerchants will be available soon

Phone banking.

Significant online servicesavailable to customers soon

First Global Bank Limited None apparent n.a. n.a.

Building Societies

Jamaica National BuildingSociety

www.jnbs.com uncertain Online international payments andremittances

Online utility payments

Victoria Mutual BuildingSociety

www.vmbs.com uncertain None apparent

Source: The Allen Consulting Group and Bank of Jamaica


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8.3.2 Credit Card Issues

Currently most business-to-consumer (or ‘B2B’) business conducted online ispaid for through the use of a credit card.

Jamaican consumers indicate that obtaining a credit card through a Jamaicanbank is not easy. The tests that the banks apply appear to block access formany people.

Many merchants that the project team consulted in the course of the studyadvised that it was very difficult to obtain banking support for credit cardtransactions sourced from on line sales from Jamaican banks. Leading banks thatthe team consulted indicated that they did in fact offer such support, but thatthey have been very selective about merchants that they supported. (Thesebanks indicate that they are in the process of broadening availability ofebusiness facilities).

The approach of the banks in Jamaica towards credit cards has implications forthe development of ebusiness. Marshall has summarised how this reluctance t osupport consumer and business ebusiness facilities are intertwined:

“Businesses involved in eCommerce in the region, are limited in terms of theircustomer base to those people who have access to credit cards. Let us considerwhat percentage of the total population of Jamaica have credit cards. Whatever thatpercentage is, that is the maximum number of potential eCommerce customerstoday. Most online transactions cannot be done today without credit cards. On theother hand, every Jamaican has money to spend. We are not talking about wealth,we are simply talking about the ability to purchase a good or a service.

Electronic commerce, as it is presently conducted, is therefore restricted to a smallsegment of all our societies and will not become widespread until we develop waysto extend it to a greater segment of our societies.

This is again not a purely domestic issue. In much of Latin America, a region thatthe Caribbean is drawing close to, banks have forbidden merchants from clearingcredit card sales online. Most people cannot participate in online commercialactivity unless they have a bank account with one of the few banks which willallow you to manage your account online and make payments via this medium.”

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These factors limit the capacity of Jamaicans to use credit cards for onlinepurchases. This in turn restricts the ability of Jamaican businesses to be paid bythe domestic market. While policymakers encourage business to go global, thefact remains that most businesses find it necessary to learn their business dealingwith local customer base and growing from there. These arrangements also limitthe capacity of Jamaican businesses to take credit card payments from overseascustomers.

58

Marshall 1999, 'Exploiting the Potential of Electronic Commerce: Opportunities and Challenges', paperpresented to FTAA Joint Government/Private Sector Committee of Experts on Electronic Commerce at the WIPORegional Consultation on Electronic Commerce and Intellectual Property, Montego Bay, 9 June, p. 4.


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8.3.3 Implications For Ebusiness

The findings of an independent cross country comparison suggest that,reflecting the factors discussed above, online payment systems are not widelyused in Jamaica. These findings are reported in Figure 8.1.

Figure 8.1

USE OF INTERNET-BASED PAYMENT SYSTEMS (GIVEN COUNTRY POPULATION)

Online Internet payment systems in your country are (1=not available, 7=used by most people)

RomaniaVietnam

BangladeshHonduras

BoliviaEcuadorNigeria

BulgariaEgypt

Russian FederationJordan

ZimbabweParaguay

JamaicaIndonesia

GuatemalaMauritius

GreeceUkraine

NicaraguaLithuania

IndiaDominican Republic

UruguayThailandHungary

Costa RicaChina

PolandEl Salvador

ArgentinaMexico

MalaysiaColombia

VenezuelaSlovak Republic

PanamaTaiwan

SpainCzech Republic

ChileSri LankaPortugal

PhilippinesPeru

JapanItaly

Israelrinidad and Tobago

South AfricaLatvia

FranceSlovenia

IrelandAustriaBrazil

BelgiumSwitzerland

Hong Kong SARGermany

United KingdomTurkey

SingaporeDenmark

New ZealandKorea

AustraliaUnited States

NetherlandsNorwayCanadaIceland

SwedenEstoniaFinland

0 1 2 3 4 5 6 7

Value

Country

3.7

MEAN



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It is concerning to note from Figure 8.1 that Jamaica is ranked behind manyneighbouring countries.

While the capacity to engage in transactions online is viewed as being a subsetof ebusiness activity, it is likely that lagging in this area is unlikely to be helpfulin encouraging the more widespread adoption of ebusiness. In fact, restrictiveaccess to online banking facilities has been identified as a factor limitingJamaican ebusiness offerings.

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Many merchants told the study team about the difficulties that they hadencountered in obtaining banking support for online transactions. In thecontext of inquiries conducted for other chapters many business peopleindicated that one key reason for locating their business selling Jamaican goodsand services offshore was the capacity to bank it there. Banks overseas were saidto have the systems to support ebusiness whereas Jamaican banks were not.

Consultation with leaders in the industry suggest that banks have been obliged t o‘make haste slowly’. Many Jamaican bankers saw banks overseas investsignificant sums in electronic banking systems that failed. Some stakeholdersmake the point that banks and other participants in the financial sector thatimplement electronic exchange arrangements face significant commercial riskswhen they engage in ebusiness. Existing legislative arrangements undermine thestanding of electronic records if payments were disputed. Essentially, it was heldthat at law the only record that would be acceptable to a Jamaican court was asigned piece of paper. This concern would be addressed by reforms discussed inChapter Four.

While the reluctance to facilitate credit card and online merchant services maybe justified as a conservative response to the stability problems faced in the1990s,

60 it is time to move on and acknowledge that concerns about repudiation

and fraud can now adequately be addressed.

Indeed, it is acknowledged by the financial sector that change is inevitable andthe financial system must respond positively:

“The elimination of barriers to trade and financial flows and the surfacing role ofecommerce will undoubtedly further encourage the design of alternative paymentinstruments. The need may fast arise for reform of the current payment systems inthe Caribbean to meet the changing requirements of the marketplace. In order tohave an efficient payment system, it will be necessary to institutionalize moresophisticated e-payment technologies than currently exist.”

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Recognising that something needed to be done, some banking stakeholdersadvise that progress was imminent regarding the facilitation of more effectiveelectronic settlement arrangements.

59

See Grant (ed.) 2001, A Regional Initiative for Informatics Strategies: Workshop on Sectoral Planning forInformation Technology — Final Report, Government of Jamaica, Commonwealth Secretariat, CaribbeanDevelopment Bank, United Nations Educational, Scientific and Cultural Organization, Kingston.60

Langrin 2001, 'Forecasting the Future of Caribbean Business and Trade: Are We Ready for Payment SystemsReform?' CaribExchange TradeNet, vol. 1, no. 1, pp. 17-8.61

Ibid., at 18.


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The concern is that the pace of change is not adequate and that the financialsector is unduly cautious to the detriment of Jamaica’s ebusiness development.

8.3.4 A New Approach

There are few means at hand to encourage banks to invest more in providingbanking services online or to change their approach in relation to access and useof credit cards. History tells us that the use of heavy handed compulsion infinancial services tends to cause more problems that it fixes.

The key approach is to use competition the leverage better outcomes. Twomeans of doing so include:

• providing banks with a strong incentive to offer online payment systems.Government agencies that operate banking accounts with commercial bankscould be asked to undertake a review their arrangements. This could bescheduled to be undertaken over time so that all agencies were not underreview at once. When undertaking the review agencies would be instructed toplace emphasis upon the bank’s ability to provide the service usingelectronic means or preferably, online systems, as well as meeting otheridentified needs. All else being equal switching to electronic approacheswould result in significant cost savings for agencies. If implemented overtime most of the banks would have time to get the message and respond withthe offer of modern banking services (to government and eventually to allof their customers); and

• ask the central bank to indicate that it would be amenable to considerapplications for a Jamaican banking authority (ie a license) from an Internetbank in Jamaica. That is, a bank that offers to conduct all of its businessonline, or without a cumbersome and expensive branch network. Of course,the bank would be subject to prudential supervision on the same basis asother banks.

Both approaches are recommended.

The Government of Jamaica should use the purchasing power of its agencies toencourage the banking sector to provide electronic banking services and obtainmodern, efficient banking services.

The Government of Jamaica should indicate that it would be willing to considerapplications for a banking authority from an Internet Bank, subject to itmeeting required prudential and product regulation.

Action

Action


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Box 8.3: A Credit Bureau For Jamaica

The New Economy Project is working with the Jamaica Bankers Association to develop a Jamaica CreditBureau. The task involves establishment of a new institution that would collect information about companiesand make it available online, as well as traditional means.

The Challenge

Most businesses in the Caribbean are small and micro enterprises. In Jamaica they account for at least 40percent of GDP. Jamaica’s credit systems are compromised by an absence of accessible profiles on potentialborrowers in this category. Lenders have compensated for this deficiency by “over-collateralizing” consumeras well as business loans. One consequence is that SMEs, home offices (SOHOs) and individuals are oftenforced to prepay vendors for essential services (cell phones, utilities etc). Another is that they can beeffectively disqualified from accessing non-collateralised credit. Excessive collateralisation and prepaymentsystems are impediments to SME development and economic growth.

New Economy Project Activity

The goal of the project is to improve SME access to loans and other financial services in Jamaica. In mid-2001, the Jamaica Bankers Association (JBA) asked the New Economy Project to provided advice on theoperational and legal aspects of establishing a consumer credit bureau in Jamaica. The proposed bureau willbe a for-profit company owned and operated by the country’s leading financial institutions.

The New Economy Project hired a specialist with 25 years experience in owning/ managing four bureaus inthe USA to provide similar advice to the JBA. The specialist reviewed the proposed legislation; madepresentations to interested parties on key success factors; and provided preliminary advice on sourcingtechnology and creating a bureau as a going concern in Jamaica.

Project Status

In early 2002 a private company was established to provide credit bureau services in Jamaica. The NewEconomy Project reports that the Government of Jamaica is in the process of reviewing/assessing theproposed legislation.

The move towards establishing a consumer credit bureau fits with other industry reforms aimed at elevatingthe financial sector’s operating framework to First World status. As has proved to be the case elsewhere inthe world, credit bureau services make it much easier for SMEs to pursue expansion opportunities based onlenders access to their personal and business credit histories.

Phase II of the project involves providing assistance to the new company in its start up mode once legislativeand privacy issues have been carefully addressed.

Source: http://neweconomyproject.com

8.4 Ebusiness and Capital Markets

Similarly to financial institutions such as banks, the key role of capital marketsis to mobilise capital. Capital markets work by introducing a more directrelationship between those with capital and those that wish to use it. Essentially,they disintermediate financial institutions such as banks and finance companies.The benefit is more access to capital at a lower cost.

Most countries have one or more exchanges to support transactions in thecapital markets. They are often labelled ‘stock exchanges’, although theygenerally deal with a range of asset classes in addition to stocks (ie shares),including bonds, futures and various derivative products.

A key aspect of the effective operation of capital markets is the provision ofinformation and information services (eg recording transactions). It is notsurprising that stock exchanges have been at the forefront in adopting emerginginformation technology capacity. Similarly to financial institutions, progresswas made first in supporting back office functions.

Widespread access to the Internet and its use by investors and businesses seekingcapital has enhanced the information available to all of the parties operating in


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capital markets and introduced new ways of conducting business in this activity.Key aspects of these changes include:

• detailed real time information about market developments, regulatorydecisions and company performance;

• imposition of rules about disclosure at a high level of detail and open accessto that information;

• information about the exchange members (ie, brokers) to facilitatetransactions; and

• the capacity to trade in capital markets (ie, exchanges) using progressivelymore accessible means.

It is likely that the effect of these changes has been to increase access andparticipation in capital markets. They are also likely to reduce transactioncosts. There is widespread evidence, for example, of brokerage fee reductionsper transaction across the globe. Search costs including in relation to obtaininginformation about companies in various stock exchanges appear to have fallen.These factors appear to have benefited smaller scale parties in capital marketsas much, if not more so than large players or entrenched players that previouslyenjoyed privileged access to information. These impacts seem to have theeffect of enhancing the capacity and role of capital markets in mobilisingcapital.

Any country or economy that fails to keep pace with the capital market leadersis likely to be bypassed. Funds will go to markets where investors have access t osystems that are convenient, trusted and consistently show returns.

The consultancy team undertook a rudimentary benchmarking/comparison ofthe online presence of the stock exchanges in selected countries. The results aresummarised in the table on the following page.


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Table 8.3

COMPARISON OF STOCK EXCHANGE ONLINE CAPABILITIES: SELECTED EXCHANGES

Institutions Jamaica Trinidad andTobago

Malaysia Australia

Exchange Name Jamaica StockExchange

The Trinidad and Tobagostock exchange

Kuala Lumpur StockExchange

Australian StockExchange

Website Jamstockex.com Stockex.co.tt klse.com.my asx.com.au

Listed Company Information

Company listing Y Y Y Y

News and announcements Y N (some summary data isavailable)

Y Y

Annual reports/performance Y N Y Y

Website links Y Y Y Y

Prices (current) Y Y (not real time) Y Y

(history) Y Y Y Y

Member Information

Broker details Y Y Y Y

Website links Y Y Y Y

Exchange Information

Exchange statistics Y Y (partial) Y Y

Exchange regulation/rules Y Y Y Y

Online trading capacity N N ? Y

Brokers

Websites Y Y Y Y

Electronic transactioncapability in Domesticexchange

N N Y (Not all) Y (Not all)

Key: Y=yes, N=no, ?=uncertain


The benchmarking suggests that Jamaica’s stock exchange has made substantiveprogress in engaging and supporting ebusiness. It offers facilities that are aheadof countries that it is normally compared with and which are in line withmarkets operating in larger economies.

Similarly to banking, much progress in using electronic technologies has beenmade in the settlements area — see Box 8.4 on the following page.


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Box 8.4: Jamaica Central Securities Depository (JCSD)

The JCSD, a wholly-owned subsidiary of the Jamaica Stock Exchange, is a facility for holding securitieswhich enables share transactions to be processed by book entry. A book entry system is an accountingsystem that facilitates the change of ownership of securities electronically between parties, without the needfor the movement of physical documents. In short, the JCSD is a means of recording the ownership of shares.

The JCSD allows participating entities such as brokers and institutional investors to place their securities ondeposit at the JCSD.

The JCSD registers the stock in its nominee name, in this case, the JCSD Ltd. The JCSD maintains thecertificates physically in its vaults, records securities movements, and will debit or credit a participatingfirm's position through a book-entry computerized system. The JCSD will shorten the settlement cycle.

The settlement cycle

When a trade takes place, there's a buyer and a seller. The buyer has to pay for the stocks purchased and theseller has to deliver the stocks sold. This is referred to as a "settlement cycle".

In 1987 regulators worldwide decided there was need for stronger measures to reduce risks and promotesafety and soundness in the market place. Since 1991, an international committee of regulators has beenexamining shortening the settlement cycle, among other initiatives, to achieve this goal. Even thoughJamaica’s market is safe, the regulators and securities firms operating in Jamaica want to do everythingpossible to ensure it stays that way.

To achieve even better efficiency, our shift to a shorter settlement cycle in Jamaica, moves the country closerto the international standard that is T+3. A number of advanced markets are contemplating moving to T+1 by2004.

As of September 2, 2002, the Council of the Jamaica Stock Exchange decided to move the stock market to aT+3 settlement cycle. T+3 means "trade day" + 3 business days. With a T+3 settlement cycle buying clientswill be expected to pay for their purchases on T+2, that is, two days after the trade had been effected. On thesell side, clients can expect to receive payment at latest on T+4, that is four days after trade had been affected.

This change is consistent with the JSE's objective of providing Jamaican investors with a stock market thatconforms to international standards.

Advantages for investors and the financial market

As the transactions in shares increase, the ability to settle these transactions through the physical delivery ofcertificates becomes more cumbersome and error prone. Manual processes are no longer practical. The costof manual process is also prohibitive.

The immediate advantage for most investors is convenience. Lessening the time before a transaction iscompleted means it will be posted to investors’ accounts more quickly. All that changes is an entry in theJCSD's book of record showing who owns the shares and bonds and who owes money to pay for them. Thatis convenient when investors need to buy and sell quickly. It also shortens the period in which there issettlement risk.

Safety is a further gain. Risks to the safety for physical certificates are significantly decreased as physicalmovement of securities is no longer necessary.

This approach is consistent with International practices.

Source: http://www.jamstockex.com

The key drawback is that Jamaica’s exchange does not support online trading.This is largely a responsibility of the brokers (ie, members of the exchange),although, similarly to banking, it is probably the case that Jamaican law isuncertain about the status of electronic transactions. The legal issues should beaddressed if recommendations provided in Chapter Four are adopted.

The ability trade shares online was one of the first ‘killer applications’ ofebusiness. Electronic transaction capability introduced discount brokers andmade the process more accessible for ordinary people. While Jamaican’s canaccess markets electronically and buy and sell shares with the click of a mouse ifthey invest abroad, domestic investment faces higher costs and inconvenience.Addressing this issue could assist in retaining capital in the domestic economy,or attracting it back from elsewhere.


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Many factors may be at play in impeding development of electronictransactions on the Jamaica Stock Exchange including the relatively small sizeof the market (raising costs per transaction) and the need to develop keyinfrastructure elements first (which now appear to be largely in place with theJCSD).

Exploring what could be done to accelerate change towards implementation ofan electronic transactions facility should be a task of an organisation such asCITO or its equivalent. This should be undertaken in cooperation with theexchange and the brokers. This is a project that may benefit from internationalcooperation either within the region or further afield.

Establish a task force to identify and remove impediments to electronictransactions within the Jamaica stock exchange, its members (ie brokers) andamong investors. The task force should involve business and governmentleaders.

Action


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Chapter Nine

Tourism

9.1 Situation Analysis

Tourism and tourism related services contribute significantly to Jamaica’seconomy. In 1992 these activities contributed 13 percent of GDP, 45 percentof foreign exchange inflows and about eight percent of national employment.

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Tourism is also a substantial contributor to growth — total arrivals have grownby about 16 percent over the period since 1996 (see Table 9.1).

Table 9.1

TOURISM PERFORMANCE INDICATORS 1996-2000 (AVG. '000)

INDICATORS 1996 1997 1998 1999 2000 2001 % Change1996/2001

% Change2000/2001

Foreign Nationals 1,053 1,085 1,128 1,147 1,219 1,187 12.7 -2.7

Non-resident Nationals 109 107 97 101 103 89 -18.3 -13.4

Cruise Passengers 658 711 673 764 907 840 27.7 -7.4

TOTAL 1,820 1,903 1,898 2,012 2,230 2,117 16.3 -5.1

Source: Planning Institute of Jamaica 2002, p. 15.1

Similarly, over the same period, foreign exchange earnings grew by 13 percent.

Table 9.2

TOURISM-RELATED FOREIGN EXCHANGE EARNINGS (US$ MILLION)

1996 1997 1998 1999 2000 2001

1,092 1,131 1,197 1,279 1,333 1,234


The sustained underlying growth of the sector is attributed to a range of factorsincluding the success of the all-inclusive resort concept, significant expenditureon promotion by the Government of Jamaica and industry, and the underlyingqualities of the destination product (natural resources, culture, entertainmentand ambiance). Key strengths listed by government agencies are listed inBox 9.1.

62

National Industrial Policy, April 25, 1996, A Strategic Plan for Growth and Development.


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Box 9.1: Jamaica’s Key Tourism Strengths• An incredibly diverse topography and superior natural product

• High levels of destination awareness (our name is well known internationally)

• Jamaica's invention and spread of all-inclusives together with our sophisticated marketsegmentation

• High quality and wide range of visitor accommodations

• Vast expenditure on promotion and advertising, especially by all inclusives

• Close proximity to North America

• Jamaica's location in the hub of major air and shipping routes

• Domestic airline connections to major resort areas

• Incentives offered for the accommodations and attractions sub-sectors

• Jamaican hotels are more profitable than other Caribbean hotels and provide better return oninvestment.

• Payroll costs are three times lower than wages in the US

Source: www.jamaicanetlink.com/business/opportunities/tourism.shtml

The commitment by the Government of Jamaica to the sector is substantial. Inaddition to Ministry of Tourism there exists two other offices given themandate of developing a growth path for tourism in Jamaica. The TourismOffice within the Office of the Prime Minister is an overseer to all theorganisations within the industry established to develop the tourism product,such as the Jamaica Tourist Board (JTB) and the Tourism Product DevelopmentCompany (TDPCo). Secondly, JAMPRO, Jamaica's export and investmentpromotion agency, also has a Leisure Industry Department responsible for thepromotion, development and facilitation of investments within the sector.

Fiscal investment incentives also apply to large scale and small tourist activities.These are provided under the Hotels Incentives Act; the Resort CottagesIncentives Act; and the Hotels Refurbishing Act incorporated under theModernization of Industry programme. Incentives are in the form of CorporateIncome Tax Relief, and Duty Waivers on capital items for periods ranging fromseven to 15 years.

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Despite its strengths and support from the Government of Jamaica, the tourismindustry suffered a setback in 2001. Total visitor arrivals fell to 2.1 million, 5.1percent less than the previous year. The economic recession in the UnitedStates and other source markets reduced activity in the early part of 2001.Security concerns following civil disturbances in Kingston in July and onSeptember 11 resulted in a sharp reduction in arrivals and tourist relatedeconomic activity.

9.1.1 Electronic Commerce Developments

Similarly to the analysis in other sectors the project team has examined thestate of play in Jamaican Tourism ebusiness by looking at what is in place todayon the web. The project team examined the use of the web regarding JamaicanTourism in relation to four broad kinds of services:

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See JAMPRO Tourism, viewed 19 July 2002,<http://www.jamaicanetlink.com/business/opportunities/tourism.shtml>.


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• travel — basically, how to get to the tourist destination. This generallyinvolves dealing with transport links (airlines, train, road transport), as wellas travel agency ticketing services;

• accommodation — where to stay at the destination;

• experience — what to do when you get there. Often involving a range ofactivities including sightseeing tours, cultural/heritage tours, weddings,conference planning, bus and car rentals, and destination management; and

• locality guides — these often bundle all three of the above services with anemphasis upon a specific region. They are emerging as very important sitesfor groups of smaller tourist operators.

The project team also looked at the overall balance of sites. In other countriesit can be observed there has to be a balance of all types of functionality. Peoplewill not go to a place that does not look attractive. Equally they need to knowthey can get there affordably. It is noted that the definition between types ofsites is often blurred, where some sites deal with, for example, accommodationand information about attractions.

Table 9.3 summarises observations about selected Jamaican tourism web sites.


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Table 9.3

SELECTED WEBSITES FOR JAMAICAN TOURISM FACILITIES

Institution Internet Online Capability

Travel Air Jamaica www.airjamaica.com Company and product information.Prices. Schedules. Booking viaExpedia.

Air Negril www.airnegril.com Company and service information.Prices. Schedules. Affiliated withcheapairlines.com with booking andpayment capacity.

Information site for Montegobay cruise ship passengers

www.cruisemontegobay.com Travellers information. Schedule ofcruse ship visits.

Derrons car rentals www.derrons.com Company and product information.Prices. Telephone and emailcontact.

Apec car Rentals www.apex-cars.com Product information. telephone, faxand email contact details.

Jamaican Travel Specialists www.jamaicantravel.com Listing of accommodation and travelservices. Electronic bookings.

Great Vacations www.greatvac.com Product information. Phone, fax andemail contact. Bookings and onlineairline reservations via Sabre.

Accommodation Sandals www.sandals.com Product and service information.Some online reservation capacity.

Superclubs www.superclubs.com Product and service information.Online reservation and paymentcapacity.

Inns of Jamaica www.discoverjamaica.com/gleaner/inns

List of accommodation providers.Telephone and email contact.

Jamaica Tourist Board www.insidersjamaica.com Directory of hotels. Booking systemdid not appear to work whenaccessed.

Experience Holiday Services www.holiday-services.com Company and service information.Relies on fax and email.

Leisure For PleasureHolidays & Tours Ltd

www.leisurejamaica.com Company and service information.Price information. Electronicbooking.

Jamaqua Dive Centre www.jamaqua.com Company and service information.Prices. Email and phone access.

Chukka Cove EquestrianCentre

www.chukkacove.com Company and service information.Telephone and email contact.

Calico Sailing Cruises www.montego-bay-jamaica.com/ajal/calico

Company and product information.Price information. Phone and faxcontact details.

Locality Guides Port Antonio Jamaica www.portantoniojamaica.com Locality information.

Montego Bay www.montego-bay-jamaica.com Locality information.

Negril www.negril.com Locality information.


From this analysis it is clear that tourism is Jamaica’s leading ebusiness sector.The key points are:


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• there is already a very large number of websites projecting Jamaican tourismopportunities onto the global marketplace;

• Jamaican tourism facilities are already present in every one of the four broadtypes of services;

• ebusiness is still at an early stage of development. Most sites about Jamaicantourism activities provide information about services offered. Most rely ontelephone and fax contact details to make reservations and transactions, orreceive payment in person. This reduces the cost of the site. It was theteam’s sense that many Jamaican tourist sites or web pages are probably lessexpensive to operate than more traditional forms of advertising, such as useof newspapers;

• the large majority of website relate to smaller tourism operators. They havebeen quick to take this opportunity to use the Internet to advertise to thelarger, global market at modest expense;

• very few use the Internet as aggressively as other operators have in othercountries. This is especially so in relation to pricing and discounting. Theproject team observed that many Jamaican advertised prices were set at ahigher end of the range and did not seem to vary often. The team was notable to find many Jamaican operators using the Internet to sell temporaryexcess capacity at discounted prices in the way highly successful businessessuch as wotif.com or lastminute.com have in hotel reservation or Virgin hasin air travel;

• some Jamaican operators are at the leading edge of ebusiness development.The Superclubs and Sandals websites offer content that is equal to or superiorto global competitors. These businesses may be slightly behind in onlinebooking systems and in not offering customer benefits for online bookingsand are ahead of the Hilton in terms of having some non-English content.Table 9.4 sets out summary finding from a rudimentary benchmarking studyof ebusiness in this area;

• some Jamaican tourist operators are partnering with global or regionalplayers. Jamaica air transport operators rely on global internet systems toundertake reservations and electronic payment. Other sites link within othertourism supply/marketing chains such as Sabre; and

• some Jamaican businesses have partnered to form portal sites, maintainingpresence and reducing costs.


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Table 9.4

BENCHMARKING HOTEL/RESORT CHAIN EBUSINESS FACILITIES

Sandals Superclubs Hilton Club Med

Product Information

Views of facilities Y Y Y Y

Views of rooms Y Y N Y/N

Current price details Y Y Y Y

Specials/discounts Y Y Y Y

Additional languages Y Y N Y

Online Information Exchange

Email Y Y Y Y

Oral help online/free N Y N Y

Telephone hotline (tollfree

Y Y Y Y

Online consumerbookings/reservations

N Y Y Y

Online travel agentbookings/reservations

Y Y Y Y

Exchange

Online payment N Y N N

Discounts availableonline

N Y Y N

Trust

Privacy policystatement on homepage

Y Y(resort pages)

Y Y

Security policystatement on homepage

N N Y Y

key: Y = feature/capability is available. N = feature/capability is not availableSource: The Allen Consulting Group

As with other sectors the project team reviewed the ease of accessinginformation about Jamaican tourist websites online. Key portals and perceptionsof their role played by consultants is set out in Table 9.5. Just as there is adynamic and growing number of tourist related websites, portals for this marketare also emerging to make navigation easier.


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Table 9.5

SELECTED TOURISM-RELATED INTERNET PORTALS WITH JAMAICAN CONTENT

Portal Type/ address Comment

Yahoo.com Global portal A significant number of links. Links were operational. The project teamobserved that there were many global quality Jamaican websites thatwere not present on this index.

Handilinks.com Global portal Relatively large number of travel and tourism listings (large comparedto other Caribbean offerings). Most listings are active. The projectteam observed that there were many global quality Jamaican websitesthat were not present on this index.

Top 5 Jamaica Specialist host for Jamaicansites

Large number of Jamaican tourist related websites. The portal islargely Jamaican, although there are also a few Caribbean sites.

Jamaican Tourist Board(www.jamaicatravel.com)

Jamaican portal Information intensive site with exclusively Jamaican sites.

Jamaica-netlink.com Jamaican portal Strong cultural content exclusively about Jamaica. Limited range ofsites aggregated. Ability to make reservation for some services viapartnership arrangements. Not very visible to the consumer fromabroad.

Netsearchjamaica.com Jamaican portal Large number and range of travel and accommodation sites.

Caribseek Caribbean portal General portal with a focus on tourism.

See-caribbean.com Caribbean portal Limited number of Jamaican IT sites listed. The see-caribbean sitewas not found quickly by the project team.

Jamaicatravelnet.com Jamaican portal Deeper information for explorers a bit off the beaten track. Informationabout discounts. email services.


One portal site is in the process of seeking to carry over the success and brandrecognition of a telephone marketing channel, using a well known 1-800 codeto an Internet service channel. Details are provided in Box 9.2.

Box 9.2: JAMAICA RESERVATION SERVICE (JRS)

The Jamaica Reservation Service (JRS), through 1-800-JAMAICA, is a specialised reservation centreand tour operator offering a variety of quality vacation packages throughout Jamaica. The servicepermits customers to customise their vacation and seek quotes and place reservations online.

1-800-JAMAICA markets Jamaican vacations exclusively, utilising the services of over 130 hotels, carrental companies and ground tour operators. 1-800-JAMAICA (1-800-526-2422) is open 7 days a week:Monday to Friday 9AM to 9PM Saturday & Sundays 10AM to 5PM EST.

The service operates with the support of the Government of Jamaica.

For more information call 1-800-JAMAICA, or visit 1-800-jamaica.com.

Source: www.1-800-jamaica.com

There is an interesting tension between portals that offer Jamaican exclusivityand those that do not. The global portals have the capacity to influence andshape the direction taken of a large Internet audience. Obtaining a prominentpresence there can generate a large market, although other tourist offerings are,in Internet technology, ‘just a click away’. On the other hand, sites that areexclusive to Jamaica tend to be a little harder to find. Their value proposition isthat they can retain the interest of buyers who have already indicated that theyare thinking about visiting Jamaica with reduced leakage to competitordestinations.


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It is likely that rather than one strategy proving to be the right or wrong one,that both will be important to success. Certainly it seems that banking on onlyone or the other appears to entail avoidable risks. Meanwhile, it appears thatthe Government of Jamaica offers most support to exclusive portals. While thisis most clearly in the national interest, there may be some additional benefit a tmodest cost to ensure that Jamaican Tourist companies’ websites are also wellrepresented in the global portals. Obtaining value from the Internet is aboutmaximising the benefits from a range of marketing channels.

9.1.2 Export Potential and Trade Impacts

Clearly, tourist operators are investing in electronic commerce facilities andraising their marketing presence on the Internet. The depth of involvementthat has been achieved in just a few years, some of which have been difficulteconomically, suggests that the investment is paying off for business. It istherefore likely that ebusiness in the tourism sector already plays a significantrole in Jamaican exports.

Ebusiness is still at its early stages in the rest of the world as well as Jamaica andonline transactions and export earnings are still at very modest levels. It islikely that the full impact on exports from ebusiness in this sector is yet to befelt.

Dependence on the US market has been found to be a strategy with anoccasional downside. The Government of Jamaica has already indicated that it iskeen to encourage access to other markets. Use of the Internet offers to helpJamaica to broaden its audience, extending to countries beyond the US.

Very few of the Jamaican sites surveyed had a capacity to undertake actualtransactions over the Internet. Those that did so via partnership arrangementswith global service providers.

9.2 Challenges and Threats

The Government of Jamaica is already addressing real world challengesconfronting tourism. These include combating coastal water pollution, touristharassment and inadequate road infrastructure. Ebusiness is not relevant indealing with those substantive issues.

One of the key issues is that little is known about this sector and its transitionto ebusiness. More information would be valuable in terms of ensuring thateffort was being directed wisely.

One of the key issues in economies concentrating upon tourism is to raiseoccupancy levels. There has been a global shift towards more flexible pricing formany Tourism facilities to raise occupancy and profitability. This has beenenabled by the Internet and ebusiness which permits more flexible price systemsand provides the means to reach a larger number of people that are able to takeadvantage of a special offer. It has to be emphasised that this is not merely astrategy for budget hotels. Developing this capacity in Jamaica or leveraging off


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global systems that are already involved in offering this service could be ofstrategic value.

Enhancing awareness about Jamaica to non-English speaking countries willinvolve much more sophisticated use of websites.

While it was noted that many Internet sites represent smaller businesses, it isalso likely that a smaller portion of smaller tourism operators have invested in apresence on the web, or Internet technologies. If Jamaica is consistent withpatterns of ebusiness development seen elsewhere, and the evidence suggeststhat it is, then small business tends to lag in ebusiness adoption. There is muchto be gained in brining the remainder of the sector online, if this is done in away that is consistent with the operator’s business model.

A broader challenge is to keep pace with the rate of change that can be expectedto accelerate. Other countries in the region are becoming increasinglysophisticated. Travellers are becoming increasingly demanding havingexperienced the best that the Internet has to offer in other areas.

9.3 Response

Key measures that are suggested include the following.

Conduct an audit of ebusiness use within Jamaica’s Tourist industry. Thisshould focus on use and benefits, but also obtain additional informationincluding the cost of ebusiness facilities and difficulties encountered. Use theaudit results in activities promoting use of the Internet by Jamaican Touristoperators.

The Government of Jamaica should continue with its plans to assist in themarketing of Jamaican tourism businesses through exclusive sites such as therevised JRS facilities being developed. It should ensure that SMEs are effectivelycatered for as well as larger businesses.

As part of marketing Jamaican tourist activities abroad JAMPRO and theJamaica Tourist Board should devote resources to identifying global tourismand travel sites and assist Jamaican companies to become listed on those sites.The focus should be upon producing ‘how to’ guides to assist local tourismproviders become listed on these sites.

Include fundamental and simple ebusiness development and maintenancewithin tourism industry training systems.

Develop a network of ebusiness driven tourism industry venture incubators.Incubators should be located in the existing tourist districts and then extend intoles developed areas.

Support ebusiness use by new tourism ventures.

Support demonstration programs for non-English web site development. TheGovernment of Jamaica should also purchase translation inputs from aJamaican supplier for its own tourist related websites. This should assist with

Action

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highlighting the relevance of this approach and developing a Jamaicancapability to do it.

Encourage the Jamaican tourism industry to adopt the more flexible pricingstrategies that are feasible with ebusiness as a means of raising capacityutilisation. Smaller businesses may need most assistance in this regard.

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Chapter Ten

Music and Entertainment

Jamaica's culture, in the words of Prime Minister P. J. Patterson, is “thelinchpin that bonds us as a people and is vital to our quality of life", and likethat of many other countries, it is reflected in everything that Jamaicans do.Jamaica’s culture influences and affects belief systems and the goals set forJamaica’s overall future.

64

The Government of Jamaica has engaged many initiatives aimed at makingJamaica a cultural ‘mecca’, capable of bringing in significant economic benefitsand greater worldwide recognition to the nation in this area. These includeimproving infrastructure at the community level to facilitate cultural exposes,more systematic recording of cultural events and places, and encouragingeducational institutions to offer youth and community-based trainingprogrammes, by the provision of necessary funding and expertise.

The Jamaican cultural expression / landscape is dynamic. Change is an essentialpart of the picture. As soon as one becomes accustomed to a particular trend, itchanges, hinting at the level of creativity and diversity of the people, and theirpassionate desire to be constantly on the move to embrace the next adventure.

The Internet has added to complexity. It is added a new global media throughwhich performers can convey their message. This is likely to have an impact onthe message itself. Culture is also a business. The Internet is changing the waythat business is done. It changes what people buy, how they buy it and where,and the price the pay. It is also changing the relations in the cultural supplychain, the links between performers, producers, marketing agencies, venues,broadcasters and shopfronts.

The music and entertainment industries contribute significantly to growth andwellbeing in Jamaica. Not all of its contributions are revealed in easier t omeasure economic statistics. This sector is important in maintaining globalinterest in Jamaica and the culture of Jamaicans that spills over to commercialactivities.

10.1 Music

10.1.1 Situation

The music industry is global in nature and has a number of key characteristicsthat need to be recognised:

• the global music consumer market is dominated by a number of particularregions — Europe and North America each account for around one third of

64

See http://www.jis.gov.jm/information/Culture.htm.


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total music sales, with Asia also accounting for a little under a quarter of theglobal sales of recorded music. The fastest growing markets, however, arelocated in the developing world;

• the industry has been subject to considerable volatility — the unpredictablenature of consumer tastes means that non-price factors such as fashion, herdbehaviour, and experimentation have had a profound influence on the musicmarket. Adapting to and channelling these influences has become a majorfocus of the leading firms in the music industry and an increasingly dominantinfluence on investment strategies; and

• the music industry has tended to become steadily more concentrated underthe dominance of a small number of very large international firms withbroad entertainment interests.

Through various oligopolistic practices these firms are able to earn the largerents needed to maintain their leadership role in the industry, and to generatethe considerable financial resources which allow them to carry the risks andcosts involved in identifying and developing artistic talent and marketing a riskyfinal product with very large sunk costs.

65

Despite the financial dominance of the majors, the global industry still containsa plethora of smaller independent firms offering a diverse range of services andproducts:

• independent record companies have been able to survive often byspecialising in market niches, although increasingly these companies haveonly been able to continue by establishing ‘alliances’ with the majors; and

• there also exists a highly complex system of sub-contracting on theproduction side among firms of different sizes. Most recording studios areindependent and many producers sub-contract their services to the majors.

This continued role for large numbers of highly specialised firms explains thegeographical clustering of the music business in a small number of key centresaround the world. This reflects:

• the professional advantages that songwriters and musicians themselves canderive from being part of a closely knit community of talent; and

• the need for a readily available supply of specific assets and the advantagesfrom having close communication where relations of trust have to beestablished (eg, between artist and producer).

66 Even for the largest

companies, the presence of music centres such as London, Los Angeles andNew York allow for close links to and familiarity with financial marketsenabling a degree of intimacy to develop between creditor and borrower,which is necessary when large but inherently risky investment projects areinvolved.

Arguably, a developing country such as Jamaica is better positioned to competein the music industry than in many traditional industries. This is because:

65

See Towse 1999, 'Copyright and Economic Incentives: An Application to Performers' Rights in the MusicIndustry', Kyklos, vol. 52, no. 3, pp. 369-90 at 379; Vogel 1998, Entertainment Industry Economics, CambridgeUniversity Press, Cambridge (MA), p. 147.66

Fink 1989, Inside the Music Business, Schirmer Books, New York, p. 58.


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• the basic raw material, such as talent to create new music, is readily availableand entry costs, at least in the case of music, are not as prohibitive as inmany industries; and

• despite the global image of the music industry, there remains a very strongregional dimension to musical tastes. This regionalisation of musical tastespoints to potential markets for Jamaican music in other Caribbean countries.

Unfortunately, in recent years Jamaica has been unable to consistentlycommercialise its own music, and returns to Jamaica are on a long-run decline(see Figure 10.1). Given the oligopolistic nature of the industry this is notsurprising as Jamaica does not have the large music businesses and financialstructures necessary to invest significant capital into a sophisticated marketingand distribution machinery with a global reach.

Figure 10.1

EXPORT EARNINGS FROM SELECTED MUSIC FORMATS (US$ ’000)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 20010

100

200

300

400Earnings (US$'000)

Year


Despite this challenge in the outlook, music offers a real hope of providingsustainable ebusiness in Jamaica:

“Caribbean entertainment and culture, I believe, has the strongest potential to be alarge sustainable business on the Internet as it relates to the global village. It is inculture that the Caribbean has a sustainable comparative and competitiveadvantage. From music to dance, it is this area that the Caribbean can use to reachout to a global marketplace.”

67

Ebusiness offers the opportunity to bypass traditional oligopolistic supply chainbarriers and make, market and distribute music directly to consumers. This

67

Chaplin 2001, 'Forecasting the Future of Caribbean Business and Trade: The Caribbean Commune Online',CaribExchange TradeNet, vol. 1, no. 1, pp. 18-9 at 18-9.


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therefore may address some of the criticisms directed at the Jamaican musicindustry.

68

10.1.2 Response

A key criticism of the Jamaican music industry is that it has lacked thecentralised support necessary to work with and against the oligopolistic globalmusic industry; this is changing.

The Government of Jamaica has been active in seeking to create the institutionsto support the Jamaican industry:

• the Jamaican Cabinet has given approval for Jamaica to accede to the WIPOInternet Treaties, the WIPO Copyright Treaty (WCT) and the WIPOPerformances and Phonograms Treaty (WPPT), which provides for theprotection of copyright material over digital networks. Such clarificationwill provide additional certainty to the Jamaican music industry;

69 and

• JAMPRO has developed a strategic plan for the industry, which involves theestablishment of two new entities:

– the Jamaica Music Commission — the Jamaica Music Commission is t obe developed as a statutory non-commercial body operated on apartnership basis by a conglomeration of recognized organisations andthe Government of Jamaica. Its focus will be on education and training,infrastructure, product development, marketing and financing within theentertainment industry;

– the Music Development Foundation — the Foundation is to beestablished to finance activities such as the National School MusicInstrument Programme, the National Band and Choir Competition,music business education and scholarships. It is proposed that revenuewill be generated through the receipt of grants and donations, taxeslevied on audio-visual and entertainment products, and various otherventures; and

– the Jamaica Intellectual Property Office’s (JIPO’s) establishmentdemonstrates a commitment to the administrative framework t osupport the entertainment industry. We understand that JIPO will aimto expand the public education programme on intellectual property inprimary schools and colleges.

70

JAMPRO should allocate resources to include Internet exhibition of theJamaican music industry within its mix of export promotion activities.

JIPO should be active in providing an education programme on intellectualproperty in primary schools and colleges. Information about basic IP rightsand obligations should be made available on the JIPO website in a form that isinteresting and relevant rather than legalistic. Links to this information should

68

See McKenzie Jamaican Music Lacks Mainstream Support, viewed 17 July 2002,<http://ska.about.com/gi/dynamic/offsite.htm?site=http://www.jamaica%2Dgleaner.com/gleaner/20001105/ent/ent3.html>.69

JIPO Intensifies Work on Patents and Designs Act, 2002, Jamaican Observer Internet Edition, viewed 21July 2002, <http://www.jamaicaobserver.com/news/html/20020712T200000-0500_28720_OBS_JIPO_INTENSIFIES_WORK_ON_PATENTS_AND_DESIGNS_ACT.asp>.70

Ibid.

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be posted on sites that Jamaican artists and others in the industry visit often.Budding artists (as well as experienced ones) need to have a workingunderstanding of their rights (and responsibilities) in relation to intellectualproperty.

This newfound support for international legal frameworks and domesticinstitutional structures has been reflected in private sector. For example, this isevidenced by a new regional anti-piracy campaign in the Caribbean, and theestablishment of a national agency — Jamaica Association of Composers andPublishers (JACAP) — to monitor copyright violations and return revenues t othe copyright owners.

71

For good or for bad, the Jamaican music industry is associated with reggae. Assuch, a reasonable objective is to ensure that ebusiness is used to promote reggae.There are a number of ways that this is being, and could better be, done:

• there are numerous sites, mostly hosted outside of Jamaica, that provideportals and value-added information about reggae; and

• Jamaican radio stations have proven to be ambassadors of Jamaican musicover the Internet, and in some cases are based on a subscription model.Examples include IRIE FM (iriefm.net), the Radio Jamaica Group(radiojamaica.com) and until recently HOT 102 FM(www.homeviewjamaica.com/hot102).

There is always the hope of new technologies radically breaking down existingdistribution networks for the financial benefit of artists. For example, in anAfrican context, some commentators have suggested that:

“state-of-the-art technology could enable African musicians to be compensatedautomatically and transparently for the use of their music on the Internet. Newtechnology from IBM has the potential to prevent access without payment, and todeliver instant payments to musicians for the online sale and performance of theirmusic”.

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The potential for such technologies is limited in the short term.

Even direct distribution of music over the Internet (ie, ordering an album andhaving it physically dispatched) is also unlikely to be a panacea at the presenttime. For example, as shown in Figure 10.2, only about three percent of allmusic purchased in the US was ordered using the Internet.

71

See Young 2001, Developments in the Entertainment Industry, viewed 17 July 2002, <http://www.mfg-law.com/dec2001-b.html>.72

Cox Developing the Music Industry in Africa: A Resource for Economic Growth - Experts Look at theNashville Model, viewed 17 July 2002,<http://lnweb18.worldbank.org/essd/essd.nsf/All/CA8F5DDF16D1D00485256923006AE103>.


103

Figure 10.2

AVENUES OF MUSIC PURCHASE BY US RESIDENTS (%)

1992 1993 1994 1995 1996 1997 1998 1999 2000 20010

10

20

30

40

50

60

Record Store

Other Store

Tape/Record Club

Percentage (%)

Year

TV, Newspaper, Magazine Ad or 800 Number

Source: Recording Industry Association of America 2002, p. 1

Some comparison may be made by referring to the Internet capabilities ofmembers of the US National Association of Recording Merchandisers.

73 In the

Association’s most recent survey they found that:

• almost 85 percent of respondents had a web site, primarily to promote andsell entertainment products, promote companies and provide information toconsumers and investors;

• online, CD sales are increasing, but product diversification is carrying overto the online retail arena with increasing number of DVDs and videos beingsold;

• most of the respondents offer digital downloads for both promotional andsale purposes, although sales of digital downloads were almost too small tomeasure;

• reflecting efforts to strengthen their customer service activities, more than80 percent of companies answer inquiries within a day, and over half ofclick-and-mortar sellers accept returns at their physical stores;

• email to customers, affiliate relationships and advertising are the keyingredients of most companies’ Internet marketing strategies; and

• most hope to be profitable on the Internet by the end of the year or in thenext 18 months.

74

These US purchasing and sale characteristics suggest that in the short to mediumterm there will be little benefit in individual artists or businesses. As a result,there may be some scope for a public-private partnership to provide for digitalpayment and delivery of music over the Internet.

73

National Association of Recording Merchandisers 2001, 2000 Annual Survey, National Association ofRecording Merchandisers, Marlton.74

Ibid., p. 7.


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Explore the potential for a public-private partnership to assist individual artiststo make their work available digitally. This may be complimented by a portalsite bringing together information on independent Jamaican artists andinformation as to where and how to purchase their works.

The reality, however, is that the major electronic distribution hubs are likely t obe based overseas. This is unlikely to be overcome, but it therefore creates a rolefor the Government of Jamaica to assist independent artists in having theirmusic available for purchase through these sites.

JAMPRO should construct an inventory of existing and emerging websites whereJamaican music is sold or played and should be available to the globalaudience. It should identify gaps where it is not available, identify the reasons,and identify actions to close such gaps.

Following discussions with major online music distributors, coordinate andfacilitate the uptake of Jamaican music on these sites by producing ‘how toguides’ to assist local music producers make their work available on majoronline distribution sites.

It is on the supply side that ebusiness is particularly relevant:

• with recording of music is increasingly digitised, there is an increasingdemand for high bandwidth connections to transmit in production and finalworks; and

• Internet directories of musicians, production companies, and so on will assistpeople purchasing such services. The Jamaica Film, Music andEntertainment Commission currently publishes a paper directory for theJamaican film, music and entertainment sectors,

75 and a similar web

directory is made available through Invest Jamaica.76

A concern is that theweb directory is very incomplete and out of date in a number of respects (eg,it does not list JIPO almost six months after its formation).

A single directory of firms operating in the Jamaican music industry needs to bemaintained reliably on the Internet.

10.2 Film

10.2.1 Situation

The film industry (broadly defined to include the filming of television,commercial, music video, still shots, etc) is important for Jamaica (seeTable 10.1)

75

Jamaica Film Music & Entertainment Commission 2001, Sounds of Jamaica: Music Industry Directory,JAMPRO, Kingston.76

See Invest Jamaica 2002, viewed 17 July 2002, <http://www.investjamaica.com/industries/film-music/index.html>. Although similar directories are provided by private sector organisations over the Internet(although these tend to rely on organisations self-identifying themselves to the sites — see Reggae FusionJamaica: The Encyclopedia of Jamaica’s Music Industry, Don-Getz Limited, viewed 15 July 2002,<http://www.reggaefusion.com/Resources/Organs.html>.

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Table 10.1

PROJECTS ADMINISTERED BY JAMPRO’S FILM & MUSIC DIVISION (2001)

Project Type Number Earnings(J$ million)

Employment

Feature film 3 22.3 1,188

Television production 23 33.3 274

Televisioncommercials

5 19.3 475

Music videos 10 27.7 169

Documentary 13 8 81

Still shoot 22 18 48

Entertainmentproduction

3 12.2 170

Television series 1 45 532

Short film 1 0 1

TOTAL 81 185.8 2,938


To undertake these tasks the Government of Jamaica and local industry hasdeveloped a comprehensive network of support services and skills to meet theneeds of the international industry. Greatest demand areas include:

• sound stages;

• mobile film production units;

• make up and wardrobe supplies;

• underwater services and equipment;

• set design and construction services;

• editing and post-production facilities;

• props suppliers, (eg, marine and land craft);

• marketing and distribution; and

• processing laboratory.

The Government of Jamaica provides attractive support and incentives t oencourage the development of the film industry. For example:

• the Entertainment Division of the Ministry of Tourism and Sport hasdeveloped and proposed an entertainment sector policy to facilitate thedevelopment of a globally viable Jamaican entertainment industry and thepreservation and enhancement of the creative expression of the Jamaicanpeople;

• profits from overseas release of film and video are tax free for nine yearswhen the production company is incorporated in Jamaica;

• equipment, machinery and material for building studios and support facilitiesare duty and tax free; and


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• dividends paid to resident shareholders with investments in film companiesare tax free, and not subject to withholding tax; non-resident shareholdersearn dividends taxed according to the provisions of the Double TaxationTreaty with their country.

It is on the production side that ebusiness is particularly relevant:

• the Internet is already being used as a means for advertising:

– possible shooting locations — the Invest Jamaica site has some 300location photographs for production planners to view and providesadditional information to facilitate filming;

77

– service providers — the Invest Jamaica web site also has informationregarding production companies and managers;

78 and

• with recording of both music and film increasingly digitised (eg, the recentStar Wars Episode Two was filmed digitally rather than on film) there is anincreasing demand for high bandwidth connections to transmit in productionand final works.

Support for the Jamaican film industry already makes extensive use of theInternet to facilitate inward investment. The next step may be to automate anumber of bureaucratic processes online (eg, the special licence application forproduction), but the benefits will be marginal.

Rather than special ebusiness policies for the film industry, the film industry islikely to be a beneficiary of a series of broader ebusiness-related actions that willfacilitate the availability of increased bandwidth at reasonable prices.

77

See Invest Jamaica 2002, viewed 17 July 2002, <http://www.investjamaica.com/industries/film-music/index.html>.78

See Ibid.


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Chapter Eleven

Cross–sectoral Linkages

No sector of activity functions in isolation. This chapter briefly outlines thenature and impact of some key cross sectional linkages.

Areas where there are strong overlaps with other sectors and issues analysed inthe report are summarised below.

• Tourism and Music — awareness and interest in Jamaica’s music and cultureis a major reason why people visit the island. Many visitors leave with astronger appreciation of Jamaica’s culture and are more likely to purchaseJamaican cultural exports.

• Jamaica’s ICT industry as a ubiquitous industry input — every sector ofindustry in Jamaica will increasingly rely upon having access to reliable,sophisticated and affordable ICT inputs if it is to be competitive. On theother hand, if the Jamaican ICT sector is to grow it has to prove that it canmeet the needs of Jamaican industry better than foreign alternatives.

• Banking and other sectors — tourism operators must be capable of receivingpayment in whatever form is preferred by their global customers (ie, creditcard, US dollars, electronic payments) or risk loosing them to operators thatare better in this regard. Much the same could be said for music and ICTsector exports. Medium and smaller sized tourism operators are particularlydependent upon local banking facilities in this regard.

• Tourism and general issues — tourism is a leading sector for ebusiness inJamaica, but even here there are many legal and structural barriers that needto be addressed if use of ebusiness is to expand.

This is a very short list of the overlaps and commonality that needs to be takeninto account when developing an ebusiness strategy. It highlights howinterconnected the issue is.

Development of stronger ebusiness capabilities and its more general use inJamaica would have a mutually reinforcing impact upon other sectors because ofthese linkages. Equally, failure to make progress will drag down other sectors,even sectors viewed as being relatively strong.


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D

Part D

The EbusinessStrategy ForJamaica


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Chapter Twelve

The Strategic Framework

A blueprint is about setting out a vision for what the future could be like andwhat is needed to get there. This chapter outlines the key elements that form thefoundations for the blueprint.

12.1 The Blueprint’s Goal

Ecommerce and ebusiness are means to an end. That is, they provide new toolsto facilitate the transformation of service delivery and the provision of greateropportunities for Jamaican businesses and consumers. To this end:

The goal of Jamaica’s ebusiness blueprint is to maximiseopportunities to raise Jamaican competitiveness and wellbeingfrom the widespread use of ebusiness.

12.2 Principles

Rapid progress with systematic reform requires the clear exposition of a set ofprinciples that can guide the bureaucracy, legislators and industry alike. Indeed,if well defined, such principles are likely to have a greater longer-term impactthan any specific strategies of actions identified in this strategy.

There are a series of principles (some of which, at times, suggest differentdirections) that should guide the development and application of Jamaicanebusiness policy:

• all Jamaicans should be provided the opportunity to access the informationeconomy, ecommerce and conduct ebusiness with sufficient bandwidth and atan affordable cost;

• all Jamaicans need to be equipped with the skills and knowledge to harnessthe information economy’s benefits for employment and living standards;

• the private sector must lead ebusiness uptake — choices about newtechnology and the exploitation of opportunities must be led by the privatesector. The development of ebusiness will be market-driven, and led byindividuals and business innovators;

• government should be a model user, supplier and purchaser of electronicbusiness services — this will provide direction, education and encouragementto business and consumers;

• legal and regulatory frameworks should be implemented to ensure thatebusiness is safe, secure, certain and open. This involves a number ofelements:

– technological neutrality — approaches taken should, wherever possible,be technology neutral. The rational for this principle is that wheretechnology specific legislation if favoured there is a tendency for either:


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costs to be imposed upon the development and uptake of more efficienttechnologies (eg, requirements that certain bank documents be ‘inwriting’ appears to have hindered both banking by fax, phone and theInternet); or the market will seek to innovate around the technologyspecific requirements (ie, the regulatory response is likely to beinadequate as it only covers a particular technology when in fact itshould have possibly covered every technological option);

– transparency — legal and regulatory frameworks should provide for apredictable, simple, and consistent legal environment for ebusiness.Where the Government of Jamaica intervenes it will do so in atransparent way; and

– international consistency — because electronic commerce crossesnational boundaries, where ever possible, preferred legal and regulatoryapproaches should be consistent with those evolving in a wide range ofinternational fora.

These principles should be referred to when the Government of Jamaica seeks t oformulate any policy that may impact (directly or indirectly) on thedevelopment and uptake of ebusiness.

12.3 Strategic Priorities

Following consultation with a range of stakeholders, ten priority areas havebeen identified for action. It is suggested that Jamaica direct its efforts to:

1. progress wider availability, use and familiarity of computers and the Internetand raise awareness of the capacity to use ebusiness to improve business;

2. invest in appropriate human capital;

3. combat impediments to entrepreneurial development;

4. advance affordable access to world class telecommunications infrastructurenecessary to support use of the Internet and ebusiness in Jamaica;

5. build business and consumer confidence in ecommerce and ebusiness throughlegislation that confirms the legitimacy of electronic communication andtransactions;

6. ensure that the regulatory framework is consistent with further developmentof ebusiness in Jamaica;

7. reengineering of government service delivery using ebusiness approaches;

8. complement existing plans to encourage development of the IT sector withmeasures stimulating its use of ebusiness to raise productivity andcompetitiveness;

9. implement some sector specific policies in Jamaica’s strongest ebusinesssectors including Tourism and music and entertainment complemented; and

10. develop the Jamaican banking sector’s use and support for ebusiness andcapacity to conduct payments online to remove this as a potentialbottleneck in the development of ebusiness in Jamaica.


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12.4 Actions By Strategic Priority

Actions that have been identified as necessary to support the strategic prioritiesare summarised below.

Table 12.1

ACTIONS AND PRIORITIES


1. Availability, use and familiaritywith computers and the Internet

Sustain government programs to provide PCs and Internet access in schools andcommunities. Work closely with private sector bodies in joint projects.

2. Investing in human capital Continue to place emphasis upon acquisition of IT skills as a staple skill for most walks of life.Evaluate the balance of supply and demand for IT skills. Make greater use of

3. Combating impediments toentrepreneurial development

Expand and enhance existing ebusiness incubators. Incubation should be an option for existingbusinesses or new businesses wishing to apply ebusiness tools in any field everywhere wherebusiness is done in Jamaica.

Develop approaches to support business in the post incubation phase.

Foster access to finance for emerging businesses through Pooled Ebusiness Funds (PEFs).

4. Affordable access totelecommunications

Maintain commitment to universal service and access to fixed line telephony which is a keyaccess point to the Internet.

Identify practical means of financing the Universal service/access arrangements that will applyfollowing fully contestable market arrangements as a matter of urgency.

Conduct an evaluation of broadband internet access to assess if it is an emerging bottleneck.

Place broadband prices on the regulator’s price watch list and indicate that the government willdevelop policy options to drive prices down if competition is not effective in reducing prices inthe short to medium term.

The Government should withdraw ISP licenses from those companies that do not enter anoperational phase within 6mths, as a means of boosting substantive competition in the sector.

5. Ecommerce and ebusinesslegislation

Introduce legislation supporting ecommerce as a matter of urgency.

6. The regulatory framework Consolidate the number of institutions involved in regulation as a means of addressingconvergence, reducing potential fragmentation, dealing with bottlenecks and focusing expertise.

7. Reengineering Government asmodel user

Accelerate progress made under the egovernment and government modernisationprogrammes.

Continue to be selective in services and activities that are reengineered focusing on highervalue activities rather than apply across the board targets that are unrealistic and result indiffusion of limited resources.


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8. Development of the IT sector Continue to implement the Five-Year strategic Information Technology plan.

Government to raise knowledge about ebusiness developments within the IT sector inJamaica.

Expand incubation of start-up companies.

Engage in post–incubation support for emerging IT companies.

Raise opportunities for partnership building within Jamaica and abroad.

Make it easier to find Jamaican IT companies and learn about their capacities. Encouragedevelopment and maintenance of a private sector ICT/ebusiness portal site. This may includeworking together to improve an existing site.

Promote awareness about Jamaican ICT/ebusiness success stories.

Obtain greater Jamaican development and involvement when making government purchasingdecisions.

Establish KPIs (some suggested) and review progress over next three years.

9. Sector specific policies inJamaica’s strongest ebusinesssectors

Focus industries include Tourism as well as music and entertainment.

Conduct a brief audit about the nature and extent of ebusiness involvement in these sectors.

Continue with plans to market Jamaican tourism businesses through an exclusive site. It isessential that SMEs be involved in that process.

Identify global and regional sites that function as portals and ensure that Jamaican businessesand Jamaica are well represented on those sites. Develop ‘how to guides’ to assist localoperators to be listed on these sites.

Include basic ebusiness practices within industry training schemes.

Enhance involvement of businesses in key sectors in ebusiness incubator programs. Ensurethat there is appropriate after incubator support.

Support demonstration programs for non-english web site development to broaden markets.

Encourage greater use of Internet purchasing and Internet price differentials (particularly fortourism/travel services).

10. Banking sector’s use and supportfor ebusiness

Government should encourage cooperative competition with and between banking institutionsleading to development and use of more efficient electronic payments instruments andfacilities.

Government of Jamaica to use the purchasing power of its agencies to encourage the bankingsector to provide electronic banking services and obtain modern, efficient banking services.

The Government of Jamaica should indicate that it would be willing to consider applications fora banking authority from an Internet bank, subject of course, to meeting prudential and otherrequirements on the same basis as other banks.

* Refer to earlier sections of the report to read the full details about recommended actions.

12.5 Timeframe For Action

Where to begin? What should be done now and what else will take more time?The timeline for action sorts priorities into three categories:

• immediate action;

• medium term action; and

• longer term action.


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12.5.1 Immediate Action

Immediate action should be very focused. Action to achieve the followingstrategic priorities will be addressed first:

• Put Ecommerce and ebusiness legislation in place.

• Make the regulatory framework more ebusiness friendly.

These strategic priorities and the actions necessary to advance them involveaspects that are within the core responsibility of the Government of Jamaica.These actions should be undertaken and resolved within three months.

It has been identified that accelerated involvement in ebusiness in Jamaicahinges upon removing barriers in these areas and preparing a favourableenvironment. Essentially these actions involve the removal of bottlenecks.

12.5.2 Medium Term Action

Actions related to the following strategic priorities should be commenced withinthree months with a view to making substantial progress within two years.

• Government as model user of ebusiness in key areas.

• Implement sector specific approaches in Jamaica’s strongest ebusinesssectors (tourism as well as music and entertainment).

• Stimulate the banking and finance sector’s use and support for ebusiness.

• Development of the IT sector and its use of ebusiness approaches.

The medium terms actions involve change in existing businesses processes orthe development of new ebusiness facilities and approaches. These actionsinevitably take some time. The identified actions (detailed in the body of thereport), if adopted would establish more tangible evidence of ebusiness activitiesworking in the interests of Jamaicans and raise awareness and confidence inthese new approaches to business.

12.5.3 Longer Term Action

Identifying actions as requiring a longer timeframe does not imply that they areless important than the earlier actions. In fact, the opposite applies. The itemsidentified for longer term attention are viewed as being crucial for Jamaica’sprospects. They are placed in the longer term category merely because theyaddress structural facets that will take time to change and time to see results.

In addition, because these actions will take some time before outcomes areevident, and because they are so important, it is crucial that work proceed t oimplement them as soon as possible. The clarification of these actions as longerterm generally relates to the notion that commitment will be required t oachieve them over some time, rather than a notion that they can be put off fora while.

The longer term strategic priorities and actions are:


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• Raise availability, use and familiarity with computers and the Internet

• Invest in human capital development that builds the foundation forinvolvement in ebusiness.

• Combating impediments to entrepreneurial development – raising theavailability of capital and capability to engage in ebusiness, especially bysmaller businesses and start up businesses.

• Develop arrangements to enhance widespread access to Internet friendlytelecommunications and monitor developments following increasedcontestability in this sector, with a view to firmer regulation if competitiondoes not deliver expected benefits.

12.6 Concluding Points

The global shift to a digital economy poses major threats and significantopportunities for Jamaica. As a small open economy Jamaica is dependent upontrade and international capital. The country’s small size and traditional relianceon a few primary products and services has constrained industrialisation andeconomic development.

The opportunities are now well rehearsed. Digital technologies and ebusinessapproaches are creating new markets, reinvigorating old markets and makingevery market more accessible. Success in becoming a global player could bringeconomic growth, employment generation, greater social equity, administrativeefficiency and more participatory governance.

The threats are sometimes under appreciated. Economies have to re-equip andre-skill to meet the evolving competition. Government and every sector of theeconomy have to adapt quickly. Areas of the economy that once enjoyednatural protection from imports (including many services) now face fiercecompetition. Failure to address the challenges may condemn many Jamaicans t opersistent poverty and underdevelopment.

At issue is Jamaica’s willingness and capacity to become a global player and t omaintain or improve competitiveness. The Ebusiness challenge is not onlyabout websites and electronic transactions. The digital revolution is involvingprofound changes. Jamaica must implement policies and provide the frameworkand environment which will facilitate investment, modernise industries, enhanceproductivity and broaden the worldwide presence of Jamaicans.

There is evidence that Jamaica is making progress in engaging in ebusiness:

• there is significant interest in technology amongst the Jamaicancommunity, including with respect to the Internet and ebusiness. This isstrongest in areas that already have an international outlook includingsectors such as tourism as well as music and entertainment activities;

• Jamaica has a fledgling IT sector and there is evidence that business isturning to ebusiness techniques;

• in general, Jamaica has a well respected regulatory regime which has madesignificant reform progress over recent years;


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• a number of recent actual and mooted legislative changes have acknowledgedthe need to amend legislation to make Acts compatible with an Internetenabled world (eg, copyright); and

• the expatriate Jamaican community has most rapidly embraced ebusiness, asevidenced by the number of Jamaica-related web site originated and hostedoverseas, and hence Jamaica already has a substantial presence on the worldwide web.

The last point entails potential vulnerabilities. While there is evidence of avibrant ebusiness presence about Jamaica, much of this activity is not conductedin Jamaica by Jamaicans.

There is less ebusiness activity in Jamaica than there could be. Meanwhile,because of the accessability of the Internet, global players are tapping into theJamaican market.

Unless this pattern is addressed there is a danger that ebusiness will hollow outJamaican industry, shifting higher value knowledge based activities offshore,leaving only a shell of lower value activities in Jamaica. Jamaica would stillprobably benefit from the development of ebusiness in this scenario, but it wouldbe by less than it full potential given adoption of an effective strategy t odevelop domestic capabilities.

There is potential to improve outcomes in Jamaica in the near to medium termwith some targeted changes in areas including:

• removal of legal uncertainties about ebusiness transactions — digitalsignatures, privacy laws, and so on — have been a barrier to investment.These uncertainties can be addressed relatively easily and quickly inlegislation;

• increasing access to reasonably priced ebusiness infrastructure, especiallycomputers and telephone lines through direct support and increasedcompetition;

• encouraging the Jamaican banking and finance sector to support onlinebusiness facilities for Jamaican ebusiness businesses and for online facilities ingeneral;

• access to capital is an issue for Jamaica generally, but particularly so forsmall ebusiness startups. This can be overcome at low cost, and byfacilitating partnering, and through more effective venture capitalarrangements (by the introduction of innovative venture capital fundingarrangements, such as PEFs, that reward investors when they makeprofitable investments – not those that are merely better at seekinggrants).).

The ‘digital divide’, the separation between the information ‘haves’ and ‘havenots’ is a particularly important problem in a developing economy such asJamaica. The Government of Jamaica sees that beating this divide is not onlyfair, its is essential. The objective reality is that the ease and speed of thegeneral population’s adoption of ICT skills, and the capacity of ebusinesstechnologies to spread throughout business, including smaller businesses and start


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up ventures, will be a major determinant of the pace and nature of developmentin coming years.

The thrust of measures in the longer run will turn around enhancing humancapital. Being relevant and in a position to enjoy much of what the digital agehas to offer is linked to having a well skilled and educated population withaptitude and skills in the application of information and communicationtechnologies in everyday life. Translating this into economic advantage reliesupon developing more widespread entrepreneurial verve and capability.

The Government of Jamaica already sees the big picture:

“As we come to terms with the Digital Age, Jamaica has the opportunity toembrace the new concept of a “knowledge based society” for social and economicdevelopment. We must seize the initiative and build on the foundation that wehave already laid, to establish new partnerships, develop new industries, to becomemore competitive in this new age. We have already begun the process throughhuman resource development, the establishment of infrastructure and theenhancement of new legislation and policies to create balance, stability andgrowth…”

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Dixon, J. 2003, “Establishing a Policy Agenda, Framework and Legislative Programme for the New DigitalAge”, Presentation to the Heart/NTA National Development Conference, Kingston, January 29.


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E

Part E

Appendices


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Appendix A

Abbreviations

ACCC Australian Competition and Consumer Commission

ATM automatic teller machine

BC Broadcasting Commission

B2C business to consumer

C&WJ Cable and Wireless Jamaica

CAD/CAM computer aided design/computer aided manufacture

CAP Community Access Point

CD compact disc

CITO Central Information Technology Office

DVD digital versatile disc

FTC Fair Trading Commission

ICT information, communication and technology

ISP Internet service provider

I T information technology

JACAP Jamaica Association of Composers and Publishers

JIPO Jamaica Intellectual Property Office

JTB Jamaica Tourist Board

KPI key performance indicator

MCT Ministry for Commerce and Technology

NAP Network Access Points

OECD Organisation for Economic Co-operation andDevelopment

OUR Office of Utilities Regulation

PC personal computer

PEF pooled ebusiness fund

SMA Spectrum Management Authority


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SME small and medium-sized enterprise

TDPCo Tourism Product Development Company

TIC Technology Innovation Centre

TRIPS Agreement on Trade Related Intellectual PropertyRights

UNCITRAL United Nations Commission on International TradeLaw

US United States

WCT WIPO Copyright Treaty

WIPO World Intellectual Property Organization

WPPT WIPO Performances and Phonograms Treaty

WTO World Trade Organization


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Appendix B

Key Stakeholders Consulted

Organisation Invited Attended Commented

APM Terminals ! ! !

Bank of Nova Scotia Jamaica Ltd. ! ! !

Broadcasting Commission ! ! !

Cable & Wireless ! ! !

Capital & Credit Merchant Bank !

Centennial Digital Jamaica Ltd. ! ! !

Central Information Tech. Office ! ! !

Digicel ! ! !

Fair Trading Commission ! ! !

Fiscal Services Limited ! ! !

Inter-American Dev. Bank ! ! !

Ja. Intellectual Property Centre ! ! !

Jamaica Bankers Association ! ! !

Jamaica Business Centre !

Jamaica Computer Society ! ! !

Jamaica Customs !

Jamaica Exporters Association !

Jamaica Intellectual Property Office ! ! !

Jamaica Promotions ! ! !

Jamaica Reservations Services !

Jamaica Tourist Board !

Min. of Com’ce Science & Tech ! ! !

Ministry of Finance & Planning !

Ministry of Industry & Tourism !

Myers, Fletcher & Gordon ! ! !

N5.COM ! ! !

National Commercial Bank ! ! !

New Economy Project ! ! !

Office of Utilities Regulation ! ! !

Planning Institute of Jamaica !

Port Authority of Jamaica ! ! !

Port Computer Services !

Price Waterhouse Coopers !

Spectrum Management Authority ! ! !

Technology Innovation Centre ! ! !

Tourism Product Development. Company ! ! !


121

Organisation Invited Attended Commented

United States Agency for Int’l Dev. ! ! !


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Documents

A Blueprint for E-business - Jamaica