Jamaica Under Pressure to Change SEZ Laws For Remote-Workers

The Jamaican government is increasing pressure to amend the country’s laws governing special economic zones (SEZ), as BPOs push to make remote working options permanent.

Under the existing SEZ regulations, the country’s BPO employees cannot take office devices, such as computers, to their homes for work. Nevertheless, nearly 40% of the country’s BPO staff remains working at home, thanks to a waiver that the government introduced in mid-2020 as Covid-19 spread throughout the island. The government has since been considering extending the waiver.

The Global Services Association of Jamaica (GSAJ), formerly known as the Business Process Industry Association of Jamaica (BPIAJ), wants the government to enact an entirely new policy, allowing call centers to convert their facilities into hybrid offices.

In other words, GSAJ is hoping that at least 30% of BPO employees will be given the legal permission to work from home permanently.

The government has not begun the legislative process formally, although some lawmakers look convinced about the need for the amendments.

Marlene Malahoo-Forte, Minister of Legal and Constitutional Affairs, has recently made it clear that she personally supports the idea of enacting a policy. However, she did not promise to ensure that such a policy will be enacted in the near term.

“You can be at ease (but) I can’t tell you how the Ministry of Finance and the Public Service will make the ultimate decision,” she told Jamaica Gleaner recently.

Foreign BPO providers are not voicing their demands openly. However, a few other industry bodies are heaping pressure on the government.

Andrew Fazio, director of business process outsourcing (BPO) and hospitality, Cable and Wireless Business, told reporters recently: “But what we really want to see is that there is a permanent work-from-home directive (law), so that large BPO companies [whose employees] want to work at home on a permanent basis are protected.”

The situation in Jamaica is not unique. BPO industry bodies in Nicaragua, Panama, Honduras, and Colombia, where firms located in SEZs have continued to enjoy tax benefits despite a significant number of their employees still working from home, are also urging their governments to amend SEZ laws.

SEZs and Jamaican BPO

More than 130 firms are operating in the country’s SEZs, according to local media reports. Thanks to their generous tax benefits, SEZs are among the favorite locations for BPOs to set up shop in the country.

Firms operating in SEZs are entitled to lower corporate income tax (12%) and are exempted from general consumption taxes. They are not required to pay duties on the equipment they import.

Some BPO firms say they cannot end remote-working arrangements at short notice due to the hires they have made over the past couple of years in response to the sudden surge in demand for IT/BPO services in the global marketplace.

Partha DeSarkar, Global CEO of HGS, told Ultra News in November that there would be an insufficient number of seats to accommodate returning staff if all employees were forced back to the office. HGS has significant operations in the Caribbean country.