Business

Crime hurting businesses

BY JULIAN RICHARDSON Assistant business coordinator richardsonj@jamaicaobserver.com

Tuesday, February 22, 2011    

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PRIVATE sector leaders have bemoaned the high cost of crime on local businesses, which a new Private Sector Organisation of Jamaica (PSOJ) study reveals is almost a burdensome one-fifth of revenues for small enterprises.

According to the PSOJ position paper on crime and violence, on average it is costing Jamaica's businesses two per cent of revenues to protect themselves against crime, but for medium-sized businesses that cost is 7.6 per cent and for small businesses it is a huge 17.8 per cent of revenues. These daunting statistics have been fuelled by an under-resourced national crime-fighting policy, said PSOJ Standing Committee on National Security member, Peter John Thwaites.

"As a percentage of the budget we spend (less) than what they spend in Trinidad (& Tobago) and we are going down rather than going up... and we have the highest murder rate," argued Thwaites at yesterday's Monday Exchange meeting of Observer reporters and editors.

Jamaica spends on average eight per cent of its national budget on national security (police, soldiers, courts and prisons), the PSOJ report said, compared to 9.5 per cent in Trinidad and 12.8 per cent in The Bahamas and as much as 24 per cent for the city of Miami.

"...Truthfully, we need more boots on the ground and we need better equipment replacements," noted Thwaites.

The study said that the police only began to modernise its technologies in 1998 and are still "playing catch-up" today, while the Jamaica Defence Force has "been given a basket to carry water" with their share of the national security allocation declining from 27 per cent in the 1990s to 18 per cent annually during the last decade.

Not only is crime impacting present businesses, it is also deterring future commerce.

According to the study, 37 per cent of businesspersons interviewed in 2001 said they had put off investment because of concerns about crime.

"There are indirect and direct security costs," said Earl Bartley, policy advisor/research economist to the PSOJ. "There is the direct cost of reinforcing your business — putting up burglar bars, high fencing, etc — and then there is the indirect cost of the disincentive it poses for investments," he added.

The report noted that a 2007 World Bank study that estimated that if Jamaica could reduce its murder rate from the current 60/100,000 to 8/100,000 as in Costa Rica, the country could gain 5.8 per cent in annual GDP growth. At that rate, the island's per capita income would double in 12 years, said the PSOJ.

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