The cost of doing business in Jamaica

 

The ease-of-doing-business survey solicits the opinions of business persons, along with hard, objective data, to make an assessment of the ease with which an entrepreneur can start an enterprise and also move it from a mere start-up to an established operation. The less burdensome this is for business people, the greater will be the levels of investment in the country.

There is no disagreement on the importance of the role of investment in driving economic growth and employment creation, a most urgent need for Jamaica today. What continues to baffle many minds and even the most seasoned and well-respected policymakers and economists in Washington and Brussels is the fact that a country like Jamaica knows its problems, has consensus on what needs to be done, but fails to execute.

Well, if we are to move forward meaningfully, this new Government has a tremendous opportunity to make its mark as we begin the march to another 50 years in our history. The simple fact is this: the Government has to radically transform the way it operates in relation to investment and business facilitation.

The Doing Business report generally measures regulations affecting 10 areas of everyday business activity. These include: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business.

Each year, the report updates all 10 sets of indicators. It ranks countries on their overall ease of doing business and analyses reforms to business regulation – identifying which countries are improving, strengthening their business environment the most, and which ones slipped.

Jamaica’s ranking, in terms of its ease-of-doing-business score, has been declining over the last three years, moving from 67 in 2009 to 88 in 2012 out of the 183 countries studied. We are heading in the wrong direction.

Those business persons who have to interface directly with the workings of government will not be surprised by this score. The simple fact is that there are a lot of inefficiencies in the way government processes work.

There are unnecessary bureaucratic hurdles that only serve to frustrate businesses, and they do not add any value to the process. The processes are costly to maintain and also dissuade investors from even looking to invest in a country like Jamaica. Something has to be done about this.

A concerted effort will have to be made by the Government to rethink the way the public service does its work. The Cabinet of this new Government must mandate that every minister engage his or her ministry in a serious mapping of all the processes that form part of the value chain in dispensing service to the citizens of the country.

This should be driven at the level of the Office of the Prime Minister (OPM). That office should have a team of business-process consultants who are discharged to every area of the public service. Their task is to map the existing process involved in the provision of service to the public. They need to benchmark these processes with those from more efficient jurisdictions. They will then need to hold focus groups with stakeholders in the local jurisdiction in order to get a sense of the most efficient ways to design new processes.

The team should, at the end of the exercise, design world-class standard business processes that will improve the efficiency with which the Government delivers its services. The OPM will have to own these new processes and mandate that all ministers ensure the effective execution of these in their ministries. Sanctions must be put into place for persons who do not execute well. It may mean firing government ministers and removing permanent secretaries.

I am aware that this will not be an effortless task and will require a reasonable outlay of resources. However, if we should do the cost-benefit analysis, the data will reveal that the benefits from more efficient business processes far outweigh the cost of doing the re-engineering.

CEOs from private corporations that have done this exercise will attest to the huge benefits to their bottom line. Xero, for example, is a case in point. In fact, today, a large number of globally integrated enterprises which operate in multiple countries across the world with large portfolios of products and large numbers of functional areas have established full departments that are focused solely on business process re-engineering.

The Government, in all its complexity, needs to do the same thing. When business persons have to go through the torture of dealing with inefficient government ministries, it robs them of a significant amount of time and money that could be used to add greater value to their businesses and even employ a few more persons.

A simple example from the Ministry of Finance can be used to illustrate the point. It is an established fact that public servants at a certain level benefit from a motor-vehicle concession which is given to them every five years. At the end of each five-year period, it takes approximately six weeks to process the next concession due to the public servant.

Let’s say 20 public servants are due this concession in March 2012, and they all decided to buy a motor vehicle for $5 million from a car dealer locally. Because of the six weeks in which to process this concession, the car dealer will not get his $100m until late April. This car dealer will have $100m in capital tied up for six weeks, which he could have used to turn over and possible make $10m in profit if, indeed, he was able to get this money in hand by, say, the first week in March.

Any good businessman will tell you that $100m in his hand today is worth more to him that $100m in six weeks’ time. Irrespective of all the arguments put forward, it is still not clear why a simple process such as granting a concession letter to a group of persons who are eligible for it takes almost two months. This does not only affect the concession holders, but the business persons with whom the public servants will have to conduct business.

This new Government has a wonderful opportunity to make some simple things right in order to improve Jamaica’s ranking and make the country to be seen as business-friendly. Now is the time, now is the hour. Giving us efficient business process is real people power!

■ Dr Densil A. Williams is a senior lecturer of international business and head of Department of Management Studies, UWI, Mona. Email feedback to columns@gleanerjm.com and densilw@yahoo.com.