Friday, July 06, 2007

Jamaica: not serious about development

Last week 'Butch' Stewart made a commitment to invest US$100 million in a Portland hotel, but cited the lack of proper infrastructure and the need for the reopening of the Ken Jones aerodrome. Dennis Morrison stated that the Ken Jones aerodrome was not suitable for development, and that the needed J$2 billion would not be spent as the development of the highway would solve the access problem. My own view is that even with the highway an airport may be necessary if we want to go for the high-end tourists.

I had to take a drive down to Portland and was appalled at the poor road infrastructure. Even with the prevalent potholes the parish is still the most beautiful part of the island and the neglect is representative of the way in which we have ignored the development of the country. It seems as if Jamaica is not open for development. Even though we love to blame the government, a part of the problem is that very few members of the private sector are committed to real development instead of paper returns.

A big problem is the high levels of bureaucracy to get a project under way. It is said that in New Zealand, for example, one can set up a company in half an hour. In Jamaica it takes days going into weeks. Even after that, try to get a tax compliance certificate (TCC) or a licence. The TCC process is a symbol of the mindset of bureaucracy, as it treats everyone as a criminal, and fosters corruption. I mean, wouldn't a business-friendly environment be one that uses negative assurance in the process rather than requiring that everyone have a TCC? It would be better to blacklist those out of favour with the tax laws instead of requiring a TCC from everyone. Instead everyone is treated as suspicious, and the process creates inefficiencies and costs for legitimate businesses.

Looking at Portland I have to wonder if we are really serious about development. This, the most beautiful parish, is languishing for need of adequate infrastructure. From Kingston it took over three hours to get to Portland, avoiding the sea of potholes. This is a country that has its most productive foreign exchange earnings coming from tourism. I say productive because remittances are not productive earnings. If we are serious about developing tourism and jobs, why have we for so long neglected the most beautiful parish and left the youngsters to languish and a possible investment in the lurch?

Last week a government official called me to advise that 'Butch' Stewart receives the same tax benefits as overseas hotel investors, and what I wrote last week could be misconstrued as saying the contrary. I am happy to know this because incentives for local entrepreneurs must be applauded. These concessions will never be enough, though, if the infrastructural support is not present, as at the end of the day it is not concessions that drive investment decisions but returns.

It may have been better to spend Air Jamaica's annual J$10-billion loss on Portland so that the economy can develop and foster prosperity. Isn't it better to spend the money where greater value can be created? I really would love to know about the country's development plan. If I were spending the funds the first question I would ask is, which projects can I underwrite that will create long-term developmental value and which ones are easiest to attack? I doubt that Air Jamaica would be in the top 10, but I stand to be corrected.

We must spend our scarce funds so that the country's long-term viability is not sacrificed. And it is not only the economy that is threatened but our unique culture and environment also. These two are integral to the tourism product and we continue to deplete them. Increasingly we chip away at the uniqueness of the Jamaican tourism product until shortly we will lose the competitive advantage.

Vote Jamaica
Last weekend someone said to me that this election we should not vote JLP or PNP but for Jamaica. In other words, we should not be voting based on charisma, polls, who gives bun and cheese, free health or education, but rather on what are the best developmental policies being offered. It was within this context that I was heartened by the live broadcast of the JLP rally last Monday, where I thought Bruce Golding spoke to the real issues to be addressed. But what I found most heartening was his commitment to constitutional reform of a system that places so much power in one set of hands. I am happy to see that he will once again make the separation of powers a focal point. It is important that we hold him to this, as this is the primary reason why in the year 2007 we are still killing each other over politics. The US campaigning continues in earnest but at the same time the capital markets show record highs. In Jamaica while we await the election date everything comes to a standstill. Golding properly addressed the failing of our institutions, such as the public health and judicial systems. I hope that all politicians will start to discuss the issues and stop disrespecting the intelligence of Jamaicans.

Wesley Hughes stated recently that the lack of talent is the main crisis Jamaica faces. If we are moving towards developed country status then we need talent and properly functioning institutions. Democracy, protection of human rights and development cannot happen without these. Until we develop proper institutions and hold on to our most talented, then it makes no sense talking about development. If we really want to create jobs then we must start by developing our country rather than bringing one-time projects. One-time projects only provide temporary jobs, not development. We have to bring out the value in the assets that give us our competitive advantage. We have to develop areas such as Portland that have the greatest tourism potential. We have to reorganise our agriculture away from small farm plots to one where economies of scale can be realised. We have to protect the rights of the citizens and give them opportunities for education to the highest level. We have to improve our public transportation systems such as roads.

These are things that need to be done if we are to develop. We shouldn't feel happy growing at just over two per cent per year, which will most certainly be reduced this year.

So if I were a foreign businessman looking at Jamaica for long-term investment I would say that this country is not serious about development and find another country to put my money. Not just because of government bureaucracy, but because the focus of the private sector has been mostly about paper and not real investments.

Speaking about development, Mirant has really given us a bad deal. After all the "hoopla" when they came on the scene and what they were going to do, here we are a few years later.

Mirant has made hundreds of millions of dollars on the backs of poor Jamaicans. The island wide power cuts over the past few days really demonstrate that nothing has been done to improve the electricity infrastructure. It couldn't be that they are sabotaging the government in favour of the JLP.

In all seriousness, though, in a country that is paying billions daily to service debts, and has a problem with productivity, we should never tolerate this sort of situation from JPS, which has nothing more to offer than PR cover-ups. It's time for the authorities to pull a power cut on them.


bill said...

Dear Mr. Chung

I discovered your blog today and am still in the process of reading your posts. But let me say that from the outset, it is clear that you have a superb perception and conception of the Jamaican condition. It is frustrating to those of us who have learned to love the nation and its people that Jamaica has fallen into such an abysmal state. As a US citizen, I have attempted in small ways to help in the growth of environmentally friendly and community friendly development. Always able to retreat back to the orderly society and economy of California, it has nonetheless created great heartache for me in feeling helpless at times to change things as rapidly as I would like.

I will continue to read your postings and make my comments. Also, you have another blog which is by invitation only....can you issue an invitation to me?

Thank you

Bill Palmer

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