Entertainment loans down – Industry owes banks $472.6 million
Entertainment businesses are borrowing less from commerical banks compared to a year ago, reflecting the first decline since the recession began in 2008.
The entertainment sector had $472.6 million in loans up to June 2010, which was 3.6 per cent below the figure for 12 months prior, according to justreleased Bank of Jamaica (BOJ) data. The decline matched the 3.6 per cent decline in total commercial bank loans over the same period to $249.8 billion.
Neither the BOJ data, nor bank financials disclose which entertainment entities are borrowing these funds. The banks however, previously noted that the recession has hurt their loans growth because cautious investors won’t increase debt via loans. The remainder of the year isn’t expected to see increased economic activity, as Jamaica is projected to grow by only 0.5 per cent this year, which is 10 times slower than the Caribbean and Latin America region at 5.2 per cent, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC) in July.
The rise in entertainment loans when tracked over the past decade has trended below most other sectors of the economy. Specifically, entertainment loans grew 2.5 times, from a low of $151.3 million in 1999 to $530.7 million in 2009. Over the same period however, total commercial bank loans grew six times from $36.7 billion to $256.38 billion.
Economist Dr Vanus James, who led a World Intellectual Property Organisation (WIPO) study, stated that entertainment was not adequately funded. The WIPO data showed that US$1 million was invested in the core copyright sector which includes entertainment earnings of J$6.18 million in value-added versus J$1.49 million for cable and communications including cellphones.
“…It stands to reason that the country is underinvesting in the sector and the country cannot afford this,” James stated about the study published in August 2007.
Entertainment loans comprise 0.2 per cent of total loans despite the core copyright industry contributing 1.7 per cent of gross domestic product (GDP). The core and partial copyright industries collectively contribute 4.8 per cent to GDP.
