EDITORIAL - Listening to Mr Yamaguchi

IT IS a wont of Jamaican governments and political leaders to pout defensively, or arch their backs, if not to come out swinging, at any and every perceived criticism by foreigners of the country and its problems. Or, it may be all of the above.

So Hiroshi Yamaguchi, Japan's ambassador to Jamaica, ran the risk of a bit of social alienation with his frank warning last week that his country's investors are unlikely to flock to our shores given the level of crime and violence here.

Indeed, Anthony Hylton, the minister of investment, was immediately in contortions explaining why things were not all bad and that foreign direct investments (FDI) still flowed to the island.

Mr Hylton may, arguably, have a point. Our advice to the administration, nonetheless, is to forget its sensitivities and, as we suggested last week, quickly produce credible policies, strategies, and tactics for tackling the country's resurgent crime problem. For although he spoke specifically of Japanese investors, the fundamentals of Mr Yamaguchi's argument are more broadly applicable.

He told an investor forum hosted by the brokerage house, Mayberry Investments: "I must emphasise ... that Japanese investors will not consider investments wherever they think they are in danger ... .

"They always compare the safety situation of potential investment candidate countries with their homeland, where they have been enjoying one of the safest business climates in the world."

No one expects Jamaica's homicide rate to tumble overnight to Japan's less than two for every 100,000 of its population. But our rate, at 45 per 100,000, is frighteningly high, although it is down from 65 per 100,000 of three years ago. The signs indicate that the numbers could be trending back to those ignominious heights.

But there are compelling reasons, rather than it making socially good sense, why we must try. First, there are the oft-quoted studies that crime and its attendant costs lop perhaps seven per cent of potential output from Jamaica's economy annually.

Foreign investments crucial

There is, too, the fact that there is not the accumulation of capital domestically to drive growth and development at the pace needed/required to quickly transform the country. Much of that will have to be FDI, and Japan, as our investment-promotions agency, JAMPRO, has recently recognised, is a potential source, especially in the face of the slowdown in private capital flows since the global financial crisis.

Japan is the world's seventh-largest supplier of FDI, investing US$56 billion in 2010, down from US$75 billion the previous year. Little of that has come to Jamaica. Japan's only significant investment here is Marubeni's 40 per cent stake in the light and power company, Jamaica Public Service Company.

At the same time, FDI in Jamaica has collapsed. It was US$201 million in 2010, down 63 per cent on the previous year's inflow, and 86 per cent less than the 2008 peak of US$1.43 billion. Substantially less than half of Japan's 2010 FDI outflows would have doubled inflows to Jamaica.

The point is that crime affects the economy, and in the absence of economic growth, there is not the surplus to invest in social development. Simple!

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