Editorial | Targeting US investment

It is not clear whether the private sector had a seat at the table when Marco Rubio, the US secretary of state, visited Jamaica last week, or what bearing they might have had on Prime Minister Dr Andrew Holness’ discussion with him.

Either way, the Private Sector Organisation of Jamaica, as well as other representatives of industry and commerce in the island, must get busy helping the administration to map a strategy for Jamaica’s business and commercial relationship with the United States of America’s President Donald Trump, including specific areas and projects that might be pitched to the Americans for investment.

Further, with a general election having to be held by September, the political Opposition, the People’s National Party, should similarly engage the private sector on an approach to the Trump administration to ensure that no, or little, time is lost in developing a consensus with industry should it form the government.

At the same time, Jamaica and its partners in the Caribbean Community (CARICOM), and the Caribbean Private Sector Organisation, should be mapping out initiatives where regional coordination is deemed to be the best option for dealing with the USA.

In other words, with the United States concerned about China’s investment in the region, Jamaica and CARICOM should be prepared to tell the Americans, in clear and concrete terms, to put their money where their mouths are. Which, as the Surinamese president, Chandrikapersad Santokhi, suggested during Mr Rubio’s stopover in Paramaribo, does not have to mean shunning Beijing, if Mr Rubio is to be taken at his word that the United States is not concerned with “spheres of influence”.

For America’s complaint about China, Mr Rubio claimed, was not its presence in the Western Hemisphere, but because it supposedly inveigled developing countries into debt traps with loans, while its companies compete unfairly for infrastructure projects, and do shoddy work.

Indeed, there has been much controversy about China’s loans to developing countries for infrastructure projects and the repayment burdens this debt has placed on some. However, much of recent literature, including on Beijing’s role as lender of last resort to some of its debtors, has been less trenchant about China as a source of a new debt crisis, as well as being a barrier to its resolution.

STRONG AND PRINCIPLED PARTNERSHIP

In any event, for many countries in the Caribbean, China was the only source of capital to finance infrastructure projects, especially in the aftermath of the financial crisis of the mid-2000s. Jamaica’s situation was exacerbated by its own fiscal crisis that caused it to be locked out of the global financial markets.

According to an analysis by the policy group Inter-American Dialogue and Boston University’s Global Development Policy Centre, between 2005 and 2017 Jamaica received US$1.6 billion in loans from China, placing it sixth on the league table of Latin America and Caribbean countries to have received financing from Beijing.

These loans are separate from the direct investments, such as the more than US$700 million spent by China Harbour Engineering Company on the over 40 kilometres of tolled highways, linking the island’s north and south coasts; an investment in the sugar industry by COMPLANT International Sugar Company; and the approximately US$300-million acquisition by Jiuquan Iron and Steel Company of the Alpart alumina refinery, formerly owned by UC Rusal.

By contrast, according to the US Department of Commerce’s Bureau of Economic Analysis, in 2023 the “direct investment position” of US multinational enterprises in Jamaica totalled US$276 million, an increase of 12 per cent from the year before. These companies generated US$952 million in sales and employed 7,000 workers. Notably, according to the World Investment Report, the stock of foreign direct investment in Jamaica in 2023 stood at US$18.763 billion.

Additionally, as the State Department’s investment climate report noted, the US$360 million in foreign direct investment Jamaica received in 2022 ($431 million in 2023) was driven mainly by inflows from Spain and Mexico for tourism-related projects.

The point is, there is room for US capital to flow to Jamaica if both sides can, without prejudicial geopolitical posturings, identify investment projects that meet their mutual economic interests. Prime Minister Holness, after his discussion with Mr Rubio, mentioned energy and logistics, including Jamaica expanding its role as a regional trans-shipment hub.

This newspaper previously mentioned possibilities in bauxite and alumina, which would demand that the Government play an aggressive, catalytic role in restarting the mothballed, Chinese-owned Alpart refinery.

China’s long-standing relations with Jamaica and other countries of the region, founded in mutual respect, ought not be a deterrent to continued strong and principled partnership with the United States, inclusive of capital inflows.

As President Santokhi said of Suriname: “Our position as a country is that we are developing our country with international cooperation ... . All these cooperations are based on pragmatism, based on the needs and the national interest of the countries. So in relation to China, what we are doing as a country is that we do have several areas of development. We are looking for investors.”