Tuesday, March 11, 2014
Why can't we just do it?Keith Collister
The title of this year's Private Sector Organisation of Jamaica annual economic forum, held on Tuesday evening at the Wyndham, was "Consensus But No Action - Why can't we just do it".
In prepared remarks (read by outgoing PSOJ president Joe Matalon), Vice President of the PSOJ and Chairman of its Economic Policy Committee Nick Scott noted that this year, rather than their traditional focus on policy, the PSOJ had decided to focus on the issue of implementation. He noted that there were many areas where legitimate debate exists over what should be done (e.g. tax reform, energy policy, and public sector reform), where "good people can disagree", and getting buy in from stakeholders was a challenging first step. However, this year the PSOJ's focus was on two areas, land titling and secured transactions reform, where despite a broad consensus among the government, opposition, private sector and multilaterals, implementation has been stalled.
The key, according to Scott was "understand how we can overcome the implementation deficit", as if we can't move forward in these areas "we don't stand a chance of moving forward in areas that we don't have consensus. At stake is the outlook for economic growth and ultimately job creation. If we can't get it done, we won't be able to blame political disagreement or fiscal space, and we will have to confront our own paralysis."
This sentiment was echoed in a powerful and wide ranging speech by World Bank representative Giorgio Valentini, "How Implementation Deficit Stymies Jamaica's Growth", who noted the critical advice of a key former mentor that "vision without implementation is hallucination". Referring to the economic reform story of Mauritius, as told by Financial Secretary Ali Mansoor (covered in last week's Friday Observer article "How to move from Austerity to Prosperity"), Valentini noted that in 1960, seven years before Mauritius's independence, Nobel Prize winning economist James Meade stated that the Island's development prospects were bleak and that "It is going to be a great achievement if the country can find productive employment for its population without a serious reduction in its standard of living". Meade was proven wrong, not because he miscalculated Mauritius's adverse inheritance, but because he overlooked the determination of the Mauritian people to succeed. Like Jamaica, Mauritius is an island with a small population, dependent on tourism, and had emerged from colonialism in the same period as Jamaica. The one radical difference is that it has grown at a rate of around five per cent of GDP per year since independence.
Lisa Campbell, Project Director at LAMP (Land Administration and Management Programme), argued that this programme should be at the heart of any social contract between the government and its citizens. In her view, the current legislation is not adapted to the needs of Jamaica's oral society, where land has been paid for, transferred and sub divided without "going to Kingston", particularly in Jamaica's rural communities, and where it is often impossible to meet all the written evidence based standards of the otherwise excellent Torrens regime for registering land titles. The bottom line is that the older "deed" and other land titling systems allowed some level of formality for those without full registered title, and for many decades these "deeds" were treated as acceptable collateral by the Peoples Co-Operative Banks in Jamaica in their lending programmes to small farmers.
Mr Garfield Knight, Chief Executive Officer of Geoland Title Limited (a key private sector partner of LAMP) argued that "overnight" the rules of the game had been changed on all of those possessing less formal titles. Real estate transactions still occurred every day, but without the parties possessing clear title, exposing the parties to fraud, a particular problem for the diaspora.
Both Ms Campbell and Mr Knight believed that Jamaica's people will pay property taxes, and that registering unregistered land would be the single greatest step to the expansion of our middle class. The Jamaican government loses about $9 billion annually from the large number of unregistered parcels of land, about 45 per cent, on the valuation roll. People will pay to register land, but only if they have "trust" that they will get their title (only about 20 per cent are successful). Over the ten year life of LAMP, only a few thousand titles ad been issued and updated, compared with over one million titles at a similar, albeit much bigger project in Peru, due to the difficulty of the legal process.
Economist Dr Paul Holden also spoke on the extraordinarily important (for small businesses) issue of secured transaction reform, whereby businesses could borrow against movable business assets, such as inventory and receivables, through the transparency of a single electronic loan register. He noted that at around 25 per cent, Jamaica is above only Haiti's 17 per cent, in terms of private sector credit as a percentage of GDP. This is because the range of property accepted in Jamaica as collateral is extremely limited, mainly real estate and cars, despite at least twelve different ways of registering a loan.
Secured transactions reform was a key issue in his 2005 Private Sector Assessment for the IDB, and has now been actively worked on for over four years. In fact, Dr Holden had been a keynote speaker at the PSOJ's annual economic seminar in June 2009, when he had again spoken about the need for secured transaction reform, and a credit bureau, with PSOJ President Chris Zacca closing the forum with a strong call to action. It can only be hoped that Jamaica does not take as long to deal with this critical issue as it took to put in place the Credit Bureau, expected to fully operational by the end of this year, which a past Minister of Finance advised was being worked on in 2001.
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