Jamaica - the phoenix rising from the economic ashes

Anthony Gomes

Wednesday, January 25, 2012

Dr Peter Phillips's view of the way ahead for Jamaica's economy was well presented as reported in the Daily Observer January 28. Clear, readable language characterised his exposition of the combined growth and development path for Jamaica's economy. He observed that the national debt of 131 per cent of GDP at the end of March 2011 has put a stranglehold on the economy, thereby impeding the provision of funding for vital social services and necessary capital investments to support growth. This constraint is set to continue for some time, but the impact of his comment would have been greater if he had also listed manufacturing and export which largely provide the top line of the national income.

"As it currently stands, interest rates are at the lowest level for decades. Added to that, the currency remains stable, the reserves are more than adequate and inflation is hovering comfortably at around six per cent. These underpinnings of the economy bode well." We agree, and it is gratifying to have achieved stability with these crucial economic indicators that should surely appeal to potential investors and satisfy his aim "to arrive at macro-economic stability".

"If the Jamaican economy is to exhibit signs of meaningful growth, then it must bolster its international competitiveness." Here Dr Phillips mentions three essential ingredients, namely export, investment and job creation that are urgently needed to resuscitate the country's anaemic economy. As a small island state with an open economy, export must be considered of paramount importance to the revival process. As in the case of the Asian Tigers and other superior export performers, maximum attention and assistance is afforded to exporters. As such, Jamaican manufacturers and exporters who are "joined at the hip" need to be given pride of place by the new administration as soon as possible. For this to be achieved, both the Ministry of Foreign Affairs and Foreign Trade (MFA&FT) and the Ministry of Industry, Investment and Commerce (MIIC) need to work shoulder to shoulder in a concerted national effort to stem declining production and ignite a resurgence of this productive sector.

"Jamaica cannot be 'the place of choice to live, work, raise families and do business' (a quote from the National Development Plan), if bureaucratic and other obstacles exist every step of the way in the attempt. Jamaica's overall competitiveness has nosedived from 67th position in 2006 to 107th position in 2011, its worst performance ever". Already, serious damage has been done to the aim of the National Development Plan called "Vision 2030", by the very high debt to GDP ratio, and the continuing, seemingly uncontrollable crime rate, both of which may take many years to resolve, thereby relegating the date for Jamaica's graduation to development status. "There will be a coordinated campaign to remove bureaucratic red tape." This needs to be given high priority, as like the debt burden, however created, either by "running wid it" or "sprinting with it", it is putting a stranglehold on meaningful development progress.

The minister continued: "We would also like to invite the private sector with capital to invest and propose ideas for investment to have discussions with us about how to move such investments forward. FDI must be targeted and deliberately coordinated." Despite the heavy going because of the recession, the private sector, with the necessary resources, has plans for local investment which can be brought to fruition when the time and conditions are right. Therefore the sooner discussions can take place, the sooner viability studies can be started.

In his presentation, Dr Phillips omitted any reference to Caricom, and the very large trade deficit mostly with Trnidad and Tobago, and the plan to create a workable single economic space in which Jamaica is to participate through trade, free movement of migrants and eventually free circulation of imported goods. Apart from the issues concerning Jamaican patties in Trinidad and citrus concentrate with Belize, there is the very relevant issue of the preferential price of electricity in T&T, related to the national cost of LNG. This enigma has endowed T&T with a highly competitive export trade price that is largely responsible for the trade deficit with Jamaica. Under the Revised Treaty of Chaguaramas, this situation should not have arisen if there is to be free and fair trade, with equality between the member states of Caricom. The conundrum continues, and its adverse effect on the national balance of trade.

Finally, it must be mentioned that procrastination, vacillation and hesitation (PVH) that already permeates our national behaviour at all levels, is becoming more prevalent and may blunt Jamaica's thrust towards becoming internationally competitive. PVH can be summed up in one word - punctuality. In both the private and public sectors, the question must be asked whether Jamaica can ever conform to a precise time regime that demands meticulous punctuality such as practised in North America, Europe and Asia. In the free trade environment, a key element of success is to become internationally competitive, which means on-time performance every time. This calls for a cultural change which must start with each and everyone. In due course, "Jamaica Time" has to be reversed including the "minibus lef me" mentality, if we are to compete successfully in the mega trading blocs which now surround us and of which we will eventually become part. Each day we should all repeat this mantra: "Time is everything and I have all the time the world has to give me, that is 24 hours a day, so it is how I manage my time that will make the difference."

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COMMENTS (7)

nervous investor
1/25/2012

I think that more careful examination of costs is required. Please note that Nejeeper KNG is quoting a figure for a person out of COLLEGE. Even if he is correct, my information is that the Philippinos in call centers earn between a minimum of US$182 per month and maybe US$500 per month. Plus a 6 day week is common there. Of course there are some who do highly technical customer support who can get more. Consider our work force however with almost no formal education (maybe 70% or so).

Nejeeper KNG
1/25/2012

The growing preference for the Philippines reflects in part the maturation of the outsourcing business and in part a preference for U.S. English. In the early days, the industry focused simply on finding and setting up shop in countries with large English-speaking populations and low labor costs, which mostly led them to India. But executives say they are now increasingly identifying places best suited for specific tasks. India remains the biggest destination by far for software outsourcing.

Nejeeper KNG
1/25/2012

India, where offshore call centers first took off in a big way, fields as many as 350,000 call center agents, according to some industry estimates. The Philippines, which has a population one-tenth as big as India's, overtook India (2011). Executives say they are worth the extra cost because U.S. customers find them easier to understand than they do Indian agents. A young Filipino fresh out of college earns a beginning salary of $700 (US) a month working as a call center agent. JA can do D same.

Nejeeper KNG
1/25/2012

With a multimillion dollar food import bill that keeps spiraling, Barbados is placing more emphasis these days on agriculture. The primary objective is to grow more of what it consumes. How can we talk about exports when we can’t fulfill local consumption? We are the largest English speaking country south of Florida why can’t we invest in call centers? We speak more comprehensible English than the Indians yet call centers are a central part of India’s economy. @Meat Head good perspective.

Meat Head
1/25/2012

Most would agree that the development of an export-based economy is critical. But, to get there, we must have an educated workforce, low crime, and few govt. hurdles. Information services could take off, if these conditions were present. I am less certain about manufacturing and agriculture due to our built-in inefficiencies. In any event, nothing meaningful will occur, if crime and education remain significant problems. Let's stop putting the cart before the horse.

larry smith
1/25/2012

Well,what becomes of the free-zone,is that complex still exits..if so,why not reopen it.maybe,these complex could be utilized to create jobs.what is it that we can export?rum,coffee,ackee and banana.looking at the picture we are not a nation that produce enough.if we continue to keep borrowing,this counry will be bankrupted.the pnp as the populous party of the two,needs to take more of the blame for where we are today.because since 62,the pnp had served over 30yrs.so how optimisic must we be...

nervous investor
1/25/2012

Thank you for an excellent article. We MUST severely reduce bureaucracy, taxes, improper work ethics and the attitude that "a fi dem problem dat". For Phillips to recognize and actually take action to deal with these things (which have been largely constructs of Governments in which he has served as a Minister) would be a wonderful thing.

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Jamaica - the phoenix rising from the economic ashes