The courage to lure investors

Tuesday, March 25, 2014    

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WE have repeatedly made the point in this space that there is no long line of investors at Jamaica's door eager to do business here. As such, we have a responsibility to do what is necessary, within the confines of good sense, to change that, if we are serious about promoting economic growth.

For, make no mistake, other states — especially within this region — are aggressively going after foreign investment. And they are not shy about offering concessions to lure investors, because they are aware that the taxes they give up initially will be returned in greater numbers when people are employed.

We point again to the example of the fierce battle waged by almost 24 states in America for Boeing's 777X aircraft assembly plant. The aircraft manufacturer opened the contest during a dispute with a machinists' union in Washington State, which was eventually successful in keeping the plant, after approving nearly US$9 billion in tax breaks for Boeing to assemble the 777X there.

It helped, too, that the machinists' union settled its dispute with the aircraft manufacturer.

Washington State officials have also been reported as saying that keeping the 777X plant there would result in US$21.3 billion in tax revenue for 15 years, based on a total of approximately 57,000 jobs.

That drive to create jobs was at the heart of the competition between the states, because the authorities in each jurisdiction recognised the economic spinoffs from the Boeing investment.

Recall, too, for instance, the decision of the Missouri legislature which, in its bid to woo Boeing, approved a US$1.7-billion incentive package that would have remained in effect for more than 20 years and create 2,000 new jobs.

Let's revisit, as well, the case of New Jersey offering Forbes Media, publisher of Forbes Magazine, US$27.1 million in tax incentives over 10 years to move 350 jobs from New York.

We heard from the New Jersey Economic Development Agency that Forbes' move will result in a net estimated benefit to the state of US$72 million over 20 years.

More recently, New York launched what it described as a multi-faceted programme to attract jobs and business start-ups by dangling a corporate tax-cut carrot as well as a 10-year tax exemption to businesses that locate in certain areas there.

Here in the Caribbean, some governments are wooing investors with attractive tax breaks as they, too, try to pull their countries from economic decline exacerbated by the 2008 global financial crisis.

Earlier this year, the chairman of this newspaper, Mr Gordon 'Butch' Stewart, called on the Jamaican Government to ensure that this country captures its fair share of new foreign investments.

"Roll the dice, think big," he suggested. "If you don't do that, then you have nowhere going, because the International Monetary Fund is only bailing you out to pay some money; they're not going to help the economy to make money."

There's nothing wrong with stimulus packages. They are used by many countries to generate economic growth. The Government, we hold, should have no fear of offering such packages once it ensures that Jamaica will benefit greatly from the measures.

What the Administration requires is courage.





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