Montego Bay is one of the best-known tourism resorts in the world, but the impact of Covid-19 on the tourism industry could severely dent Jamaica’s FDI appeal. (Photo by Prakash Singh/AFP via Getty Images)

Jamaica concluded 2019 with a total of $665m in foreign direct investment (FDI) inflows, a five-year low and 14% down from 2018, according to the UN Conference on Trade and Development (UNCTAD) World Investment Report for 2020.

UNCTAD also highlights that the country saw $446m in outflows in 2019, significantly up from the $13m in 2018. Despite these figures, Jamaica was the top host small island developing state (SIDS) for FDI in 2019.

The sectors attracting the most FDI in Jamaica are the bauxite industry, telecommunications, tourism and construction. The US, the UK and Canada are the leading investing countries.

In its report for the final quarter of 2019, the Bank of Jamaica said that the dip in FDI that the country had experienced reflected lower spending on mining, energy and infrastructure activities, which was partly offset by an increase in expenditure on tourism-related projects.

Jamaica’s reliance on tourism for FDI

As one of the sectors hardest hit by Covid-19, tourism is unlikely to offer much salvation to Jamaica in the coming years with regards to attracting foreign investment.

UNCTAD’s 2020 report also noted that “in recent years, dependency on tourism FDI in SIDS has risen at the expense of construction, and mining and quarrying projects.

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“Announced greenfield FDI data for 2015–2019 shows that travel, tourism and hospitality projects contributed to more than half of the total of new investment announced in SIDS, compared with 16% in the preceding five-year period.”

Jamaica alone attracted 35% of the announced value of all tourism-related projects among the SIDS, comfortably the highest figure.

“The importance of these projects is significant even for a relatively less tourism-dependent economy, such as Jamaica, where tourism-related projects (mostly hotel construction) accounted for 54% of the total value of announced greenfield FDI projects,” UNCTAD concluded.