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Construction sector hungry for big gov’t projects

BY DONNA HUSSEY-WHYTE Observer staff reporter husseyd@jamaicaobserver.com

Monday, February 04, 2013    

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DESPITE a depressed economy, reduced buying power among citizens and beaurocratic challenges hampering the construction industry in Jamaica, some contractors, architects and housing developers say they are somewhat optimistic that things will change for the better.

“From the reports that we have had, several major projects should come on stream, so we are cautiously optimistic,” Deanall Barnes, vice-president of ARC Systems, manufacturers and distributors of building materials, said in a panel discussion on issues facing the sector at the Jamaica Observer last Wednesday.

“We speak about the Caymanas economic zone,” Barnes said. “There are several major hotel projects that are coming on stream. Riu (hotel chain) has started and White Diamond hotel (formerly Star Fish) is doing some work,” he said.

“Our research has shown that domestic construction, which is really the backbone of the country, that although there has been a significant downturn in that, there is still activity there. Because the truth is, contrary to what most persons believe, and I am talking about raw construction, that is the backbone and bedrock of the construction industry. So despite facing difficult times we see that persons still want to put on a little room here and there and take their little time and continue their activities. So we are very optimistic, and once the Government does what is required to ensure the Caymanas economic zone port expansion and all these many projects come on stream, then it should all go well for the construction industry,” Barnes said.

The Special Economic Zone, proposed for the Caymanas Estates lands in St Catherine, should consist of 1,500 acres of prime real estate situated at the confluence of the major population centres of Kingston, Spanish Town and Portmore, of which 40 acres have been marked for the development of Phase 1 of an Information and Communications Technology (ICT) Park.

Delays have plagued the starting of infrastructural work at the proposed business development, which was initially slated to begin last August. The Factories Corporation of Jamaica (FCJ) said then that it was aiming for the US$210-million (J$18-billion) project to begin around October 2012.

Barnes later explained that other major developments should take place at the Sangster International Airport in Montego Bay — which will include an extention complete with a new runway— and the construction of the Portmore Hospital in Newlands, St Catherine.

But according to Barnes, several issues confront the building industry today that serve to depress the vibrancy of the sector, not the least of which are high interest rates.

“We would like to see lower interest rates, because lower interest rates would spur some developments which would do well for our trade,” he said.

“The issue of foreign exchange devaluation could be looked at in two ways. Obviously, from our perspective, there is an increase in our buying costs, and because of the average reduction in disposable income, less is being purchased. Albeit there are several players who were engaged in the importatation of building materials before, but because of what has been happening in the last six, seven months you have less persons importing now,” Barnes said. “So as a result, companies like ourselves will probably not see a significant reduction in activities.”

Michael Lake, president of the Jamaica Developers’ Association, added that the construction sector needs to perform at maximum capacity to help save the Jamaican economy.

“At the end of the day we do need construction to ramp up to its maximum in Jamaica because it is one of the largest employers of basic labour, and that’s the truth,” Lake said.

“We are in a period of low interest rates which generally fosters more activities, more development. But there is a concern because what happens is that you will find it will only foster a certain type of development because of the challenges that exist in the market,” Lake said, pointing to delays in building approvals by state agencies and municipal government.

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