Awaiting answers
BPO sector asks for amendment to SEZ Act
WITH just over a month before a special waiver from the Government to the global sevices sector expires, companies in that industry are still awaiting word on a possible amendment to the Special Economic Zones (SEZ) Act that will allow work-at-home (WAH) employees to use duty-free equipment outside of SEZS.
Since April 2020, the global services industry has been receiving the benefits of the SEZ Act even though some agents have been working at home — and therefore off-site designated special economic zones — due to a waiver from the Ministry of Finance and the Public Service. At that time many business process outsourcing (BPO) operators adopted a work-from-home model to ensure business continuity in a time of the novel coronavirus outbreak.
“So the real issue right now is the fact that we have a temporary arrangement to allow the equipment to move off the special economic zone properties we’re on. Because a part of the rule of us getting those equipment into the island without paying duties was that they would stay on properties in the special economic zones,” Christopher Boucher, country manager, VXI, explained to the Jamaica Observer.
“Now this pandemic has forced the [Government’s] hands to send these equipment to agents’ homes and now they’re planning on asking us to retract those equipment from being work-at-home or we’ll have to pay the penalties,” he continued.
Boucher contends that since most BPO entities have expanded their operations during the pandemic to include WAH agents, and as such cannot accommodate the full staff complement to work on-site, the SEZ Act should make provisions for a hybrid model without penalising companies.
By amending the SEZ Act to accommodate a hybrid model, Jamaica’s global services sector will be nimble, flexible and competitive, Yoni Epstein, founding chairman of itel, argued.
“Now that the current extension ends June 30, 2022, we are continuing to plead with the Government to amend the SEZ Act to allow for up to 30 per cent of WAH employees, if you are registered with the SEZ and follow the guidelines.” he continued.
Like Epstein, president of the Global Services Association of Jamaica (GSAJ) Gloria Henry believes that such an amendment would allow companies to make adjustments in times of disasters or crisis. She said it would facilitate business continuity by allowing some employees to work from home and, therefore, reduce the incidence of disruption to business activities.
“Even with the NWC (National Water Commission) strike [last week], when some of the companies didn’t have water, they sent some people to work from home,” she told the Business Observer.
The sector head said the proposed amendment to the SEZ Act would not allow companies to discontinue operating brick-and-mortar establishments or within the SEZ framework. However, she agrees with Epstein and Boucher that it should accommodate a hybrid model with a buffer for up to 30 per cent employees.
Henry added that when companies outside Jamaica are looking to invest in nearshore destinations or expand their operations, they consider SEZ protection of WAH employees. To this end, the amendment would play to Jamaica’s competitive advantage.
While she notes that the Jamaica Special Economic Zones Authority does not have the ultimate authority to make amendments to the SEZ Act, she believes that the organisation would need to “support it and then it would go through the legal and regulatory process”.
She also indicated that the new minister of constitutional and legal affairs has indicated her willingness to accommodate discussions on the matter.
When asked if the SEZ Act, which was passed in 2016, is now up for parliamentary review, Henry said she can only hope they are reviewing the law to bring it up to date given the changes occurring in the global industry.
“Prior to this, we were asking for some changes to the Act to make it more supportive of the services sector because the Act was designed to support the productive and logistics sectors and it has been a very cumbersome experience for our sector because of the nuances associated with quick turnaround time. We’re not necessarily considered in the process, so we have been asking and this is added to that,” she informed the Business Observer.
She, however, pointed out that the current amendment to the SEZ Act that the global sector require action from the Ministry of Finance and the Public Sector and the Jamaica Customs Agency, though she has appealed to Minister without portfolio in the Ministry of Industry, Investment and Commerce Senator Aubyn Hill to intervene.
In the meantime, Epstein is also appealing to the authorities to consider the threat to Jamaica’s competitiveness as a nearshore destination.
“We aren’t seeking to ask for anything out of the norm when countries like Honduras and Colombia have amended their Act in order to accommodate the ever-growing and competitive BPO market. In Jamaica, we aren’t competing against ourselves; we are, in fact, competing against the globe — Central America, South America, South Africa and the Philippines,” he said.