CHAIRMAN of the Economic Programme Oversight Committee Keith Duncan has joined the call to Jamaica’s private sector to consider nearshoring opportunities as international events such as the Russia-Ukraine war, global inflation and high freight charges continue to frustrate supply chains.

“So the whole supply chain and logistics architecture is changing and Jamaica is perfectly positioned, based on our location, for nearshoring opportunities and I believe the private sector is very much seized on that fact,” Duncan said at an EPOC press brief last week.

He said that Jamaica has been a beneficiary of nearshoring as companies in North America invest in the local business process outsourcing sector and higher-value information and communication technology operations.

“In fact, we got a report from the Global Services Association [of Jamaica] that there is need for over 160,000 square feet of business process outsourcing space in Kingston and St Catherine. So that means that investors are looking at Jamaica,” he shared.

Nearshoring exports

Duncan believes, however, that in addition to being a beneficiary in nearshoring, Jamaica can play a more significant role in nearshoring through exports to countries in the region, echoing calls from Minister of Industry, Investment and Commerce Senator Aubyn Hill and Jamaica Manufacturers and Exporters Association President John Mahfood.

In particular, he pointed out nearshoring opportunities for players in the agriculture and agro-processing sector, which has seen an upswing in output in the January – March 2022 period.

According to the Statistical Institute of Jamaica (Statin), the agriculture, forestry and fishing sector led growth within the goods-producing industries during the first quarter of 2022 with an 8.2 per cent increase in output. Director general of Statin Carol Coy attributed this uptick to fair weather conditions.

Figures from Statin show that while the value of Jamaica’s overall exports fell by 5.8 per cent between January and March 2022, when compared to the corresponding period in 2021, its exports to countries in the Americas — USA, Canada, Puerto Rico, and Trinidad and Tobago — increased.

Just last week, Minister of Agriculture and Fisheries Pearnel Charles Jr disclosed that Jamaica’s output of agricultural produce had increased to 10.4 per cent in the April – June quarter with traditional crop exports growing by 7.8 per cent.

In June, an Inter-American Development Bank (IDB) study showed that Jamaica could augment its exports by US$138 million through nearshore exports.

“Increased environmental concerns, along with the health crisis and the recent invasion of Ukraine by Russia, has presented an opportunity in which the region can contribute to the global economy and the fight against inflation by taking a more active role in global supply chains in a way that is sustainable and equitable, ” IDB President Mauricio Claver Carone told a group of trade ministers and private sector leaders ahead of the study’s release.

Nearshoring and sourcing raw materials

On another note, president of the Micro, Small and Medium-sized Enterprise Alliance Donovan Wignal has argued that companies should consider nearshoring in their efforts to source more affordable raw material and lower freight costs

As inflation and the scarcity of goods impact prices, some companies are exploring opportunities “to develop solutions locally to go into the manufacturing of goods that can be used as import substitution”, he said during the EPOC press briefing.

In this regard, he noted that “South America is still an untapped area where we can get our goods even though there is a language barrier.” He added that while there is a language between Jamaica and China, local companies still engaged in business with the Asian powerhouse.

“Knowing what is available in other places is important, so once we get our feelers out I think we’ll be able to source cheaper materials and, of course, freight is a lot cheaper than what we’re seeing in some high demand areas like North America and the Far East,” Wignal stated.