A meeting of minds and management on exports

ANTHONY GOMES

Wednesday, January 11, 2012

It is now accepted that Jamaica has to grow itself out of its perilous economic situation through a combination of manufacturing for export and investment. Regrettably, exports are in the doldrums and have been sluggish for a considerable time. That there are only 680 exporting companies existing, versus 3,785 importing firms, is evidence of the significant distortion resulting in the adverse balance of trade.

Given this acknowledged predicament, quite rightfully the question has been asked: how is the problem to be solved in its immediacy? The main target for remedial strategy is manufacturing and export, which is succinctly expressed in the National Export Strategy (NES). However, in establishing export objectives and goals, the critical path and most beneficial direction to be followed, along with the organisation to make accomplishment possible, is the purpose of the export-led Trade Policy being formulated.

The main component in this process is the involvement of the private sector companies that are export-ready, and those who are acquiring the expertise, products and finance to enable them to begin exporting.

In the past, the reluctance of such private sector firms to participate with the Government in export policy formulation has been an impediment to the process. There have been, in the past, a limited number of private sector executives who have taken part in the consultations and discussions, but they have been insufficient to make the desired impact on the policy.

Enter the Jamaica Chamber of Commerce with a constructive scheme to finally create a fusion of minds and management between the private sector representatives and the Government in policy formulation.

After extensive discussions with the Ministry of Foreign Affairs and Foreign Trade (MFAFT) over time, the oft-heard question was how to engage the decision-makers of private sector firms which are exporters or aspiring exporters and manufacturers, to become more involved in the trade policy formulation process? Recalling that Jamaica's present trade policy, written 10 years earlier, has been overtaken by a radically changed international trade environment, the challenge faced was how to regroup and move forward by revising the Trade Policy of 2001 and transforming it into a contemporary export-led Strategic Trade Policy, with a focus on the National Export Strategy (NES) together with Vision 2030, Jamaica's National Development Plan.

Such a transformation would rely heavily on Professor Donald Harris's "Towards a Strategy of Export-led Growth for Jamaica". The NES and Vision 2030 provide a comprehensive structural base from which to extrapolate new directions in the short to mid-term forward planning and beyond. This initiative led to the establishment of the Foreign Trade Advisory Council (FTAC) similar to those operating in the US, Canada and the Asian Tigers.

The FTAC is an innovative strategic initiative designed to introduce private sector expertise in the areas of manufacturing and export into policy formulation, through close co-operation with the architects of the process that include, along with the MFAFT, a team of trade policy consultants from SAANA Consulting, funded by the European Development Fund.

The relationship between the FTAC and the ministry is one of "partnership" with a unity of purpose to produce an export-led Trade Policy to resuscitate Jamaica's productive sector. Already two meetings have been held with the consultants and the ministry, and a draft of the Revised Trade Policy is being prepared for issue in February for consideration by the Government.

Coincidentally, at a meeting of private sector business leaders hosted by Mr Gordon 'Butch' Stewart and reported in the Sunday Observer of December 18, some significant comments on export trade were made by participants, two of whom are members of the FTAC that support the direction being taken by the council. Referring to the political debates leading up to the general election, Mr Stewart remarked that: "Nobody addressed the subject of export as the real source of income and expanding the economy."

On the subject of the tax reform proposals, Mr Stewart said: "There are generally not notable concessions for exports, and scant attention is paid to growing the economy via exporting goods and services."

He also said: "There is no future without earning incremental amounts of foreign exchange and we are only fooling ourselves if we think otherwise. If we are serious about fixing our fiscal deficiencies we had better start talking exports fast."

A relative opinion was also given by Jasper Biram of Surbiton Capital in London: "Many will share Stewart's sentiment, but the problem Jamaica faces is that it is largely a service-based economy and not a goods-producing one. If you are going to be export-driven, then business leaders like Stewart must encourage manufacturing and other goods-producing businesses and place an emphasis on quality. For the first seven months of this year, Jamaica spent over US$3.5 billion on imports, almost a quarter of its total GDP. It earned less than US$1 billion from exports and that picture tells you all you need to know. You can't just talk about exports in a vacuum. Particular attention must be paid to energy costs, bureaucracy and crime. All these measures have to be enacted in concert. Just look at Panama."

These measures in their entirety are being treated in the revised trade policy deliberations. There are 23 CEOs listed so far as members of the FTAC, and it is hoped they will take heed of these various views and bring to the table their extensive experience to ensure that a brighter future is possible for manufacturing and export due to their invaluable participation.

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A meeting of minds and management on exports