The third quarter 2005 Business and Consumer Confidence Indices reports a steep decline in business confidence and projects a tougher fourth quarter. This is no surprise as the fiscal revenue shortfall already provided an indication of the economy's sluggishness, where the majority of the over J$5 billion revenue shortfall was as a result of the J$4.4 billion shortfall in consumption taxes for the first six months of the fiscal year.

The reasons given for this loss of confidence includes crime and violence, inflation, rising fuel costs, insufficient local and export demand for goods and insufficient government economic policy. Is this any surprise for any one living in Jamaica for the past year? It has been obvious that if these factors were left unchecked then it would begin to have an effect on the economy. The question has always been when this would happen and if the government could reverse these factors before they started to negatively affect the economy.

It is obvious that the down turn in the United States economy as well as rising fuel prices have combined with our own internal factors to cause the slow down. The question we have to ask ourselves is how we dig our way out of this never-ending hole that we put ourselves into. For me it is obvious that we need to sit down seriously and assess the causes of our dilemma and make a serious thrust to deal with them. Over the past two weeks I have been writing about changing the way we think and the strategic path we are on, as this is what we need to do as a country, as any profit-making organisation would do. If we do not act now then it will be even more difficult for us to do so.

Intellectual property assets
Last Saturday I was at a seminar put on by the Institute of Chartered Accountants of Jamaica, which dealt with the laws and accounting surrounding intellectual property. The seminar brought home the fact that as a country we are focusing on the bottom of the barrel, and not really thinking about our real valuable assets. We continue to fool around with sugar and bananas while there seems to be a lot of potential in the areas of intellectual property. I say this not just because of the end products we have turned out in this area, in terms of our music and unique products, but also the fact that the natural talents of Jamaicans require little training and can be used almost immediately.

Some participants gave examples of the intellectual property values we can intensify by placing greater emphasis on those areas. Tony Laing mentioned that data coming out of the United States estimated that from musical creative rights only, Jamaica is owed some US$60 million from the sale and use of our musical products in other countries over the last 40 years. This is just from the creative side of the music and could in fact be greater. Senator Norman Grant, president of the Jamaica Agricultural Society, spoke to the fact that there has been illegal registration and use of the brand "Blue Mountain coffee" in other countries. The Coffee Industry Board and players within the industry are trying to change this situation, but is it too little too late? Another participant spoke to his experience in a supermarket overseas where he picked up a bottle labeled Boston Jerk Seasoning and when he checked the label closer it said "Made in the USA".

Competitive advantages
The fact is that Jamaica is known for reggae and dance hall music, Blue Mountain Coffee, jerk seasoning, our unique agricultural flavours (Scotch bonnet pepper, ginger etc.), rum, Reggae Boyz and our track and field athletes. In recent years we have become well known for our crime levels also. The point though is that it is not because of our sugar, bananas and political leaders that we are internationally renowned. If that is the case, why are we not focusing on our competitive advantages? Doesn't economics teach us that it is when countries focus on services and products in which they have a competitive advantage that they will more likely have a trade surplus? Instead we continue to place our subsidies and incentives in less profitable products because of political and other reasons.

If we take a look at our external trade for January to May 2005 versus the same period for 2004 we see that our trade balance has worsened from US$896.1 million to US$1,175.5 million. Within the major traditional exports are sugar and bananas, which both have declined year over year. In the case of sugar exports, this constitutes 11.7% of goods exported and is the largest employer of labour and land in Jamaica. In addition to using the greatest resources it also receives one of the largest subsidies because it is unprofitable. There were also declines in bananas and coffee, which in addition to sugar has significant government involvement. On the contrary the industries controlled primarily by the private sector, bauxite, alumina and rum, has shown increases over 2004.

The Balance of Payments shows a worsening in the current account balance from a positive US$3.7 million to a negative US$81.9 million over the January to April period from 2004 to 2005. The US$730.1 million deficit in goods balance was offset primarily because of an inflow of US$479 million in private transfers (includes remittances) and an inflow of US$297.4 million in other private investments. Both groups registered an increase over the prior year of US$72 million and US$92.3 million respectively.

Foreign exchange potential
It is obvious from these numbers where the foreign exchange earnings potential lies. Jamaica's earning power does not lie in our traditional products of sugar and bananas, as we are not capable of producing these more competitively than other countries and can only continue to see declines in these areas, while we employ significant amounts of our resources there. There is opportunity in our unique products such as coffee, peppers, ginger and the spin-off products such as jerk seasoning. There should be greater investment and incentives in agriculture for the development of these unique products and also very importantly for import substitution, as 13.5% of our imports are in the food category. Another area of opportunity is conservation in the use of fuel, where 25.2% of imports are mineral fuels.

The balance of payments shows also that our greatest growth areas lie in tourism and private inflows. In my opinion tourism is an underperformer in Jamaica because of our crime levels and the way we organise our attractions. For example, why is a place like Fern Gully not properly developed as a tourist attraction and marketed worldwide, instead of leaving such a beautiful attraction to the discretion of craft vendors and the damaging effects of fuel emissions.
Our measures to attract tourists to Jamaica are through the massive subsidy of a national airline and increasingly lower room rates. The truth is that if we develop an attractive product, free of the fear of crime, then we wouldn't have to be "begging" people to visit Jamaica, and in the end extracting a lower per tourist spend each year.

Have we determined what private inflows consists of? Instead of using the general term remittances we should try to understand the source of these remittances. These may include earnings from intellectual property rights from music etc., which we have allowed persons in other countries to exploit for years to our detriment. The fact is that, like it or not, the earning power of dance hall and reggae music is always going to be more than sugar and bananas. Tony Laing bemoaned the fact that for decades government and professionals have ignored this lucrative area while our counterparts in developed countries have benefited from Jamaica's assets. It is time for us to stop dabbling in areas where our earnings can only fall and place the investment of resources and strategies in the areas where we have the greatest competitive advantage.

E-mail: dra_chung@hotmail.com

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