Gordon Robinson | Production is key to growth

I keep telling you production is the key.

Only production earns real money and hence drives real economic growth. To analyse the problem and find solutions we should look at statistics directly linked to production. For example, World Bank’s published data on GDP at purchaser’s prices.

GDP at purchaser’s prices is the sum of gross value added by all an economy’s resident producers. It adds any product taxes and subtracts any subsidies not included in the value of the products. It values production. No deductions are made for depreciation of fabricated assets or for depletion and degradation of natural resources.

In 2016, Jamaica’s GDP (as defined above) was US$14.08 billion; Haiti’s US$14.07b. From 2017 to 2023, except for 2019 (Haiti US$15.02b; Jamaica US$15.83b), Haiti’s GDP consistently out-valued Jamaica’s hitting a peak in 2021, despite COVID, of US20.88b (Jamaica US14.66b, up from US13.81b in 2020). Since 2021, Haiti’s steady decline saw its GDP value at US$19.85b in 2023 (Jamaica US$19.42b).

In the COVID shock year of 2020, Jamaica’s GDP declined by 12.75 per cent. Haiti’s declined by four per cent. From 2016 to 2023 inclusive Haiti’s GDP purchasing power increased by 41 per cent while Jamaica’s increased by 38 per cent.

So I guess we’re doing fine.

In 2024, Jamaica’s GDP contracted in the last quarter but is estimated to close at US$20.59b (up only 6 per cent; was up 13.6 per cent in 2023). Trading Economics (an accurate online provider of historical and forecast economic data for 196 countries, including Jamaica) has forecast 2025 GDP to decline to US$19.73b (down 5 per cent) after three “post-COVID” years of increases (6 per cent; 16.6 per cent; 13.6 per cent).

Jamaica we have a production problem!

Government’s convenient excuse that a bad mind woman named Beryl the Grey Peril caused it just won’t cut the mustard:

Woman a hebby load

woman a hebby load

woman a hebby load

when Saturday mawnin come.

Fa when di money nuh nuff

when di money nuh nuff

when di money nuh nuff

dem call yu mamma man

dem call yu wutliss man.

As. They. Should!

Even Stevie Wonder can see this problem of low-growth, regardless of measuring stick, has been with us for decades. Using “standard” figures, Jamaica’s average annual growth rate since 1997 has been 0.15 per cent. If we stop at 2019 (before COVID) that average climbs to 0.78 per cent Post Covid growth rates were exaggerated by the COVID plunge but the last three years [2022, 5.2 per cent growth; 2023, 2.2 per cent; and 2024 (estimated) 1.3 per cent] expose returning systemic weaknesses and portend an ominous future. Jamaica is growing like Hank Pym becoming Ant Man.

We MUST transform Jamaica’s productive sector.

As always, the problem begins in our education system where we try to prepare students to become doctors, lawyers, politicians or producers of non-exportable goods and services. Then, when the old time apprentice system graduates masons, carpenters, plumbers or mechanics, public policy prefers squatters, electricity thieves and motor car importers so tradesmen flee and make superior livings being productive elsewhere.

Our doctors, teachers and nurses use Jamaica’s training followed by government abuse of their talent (while paying no-talent politicians huge increases) to seek employment elsewhere. Recently much ballyhooed Public Sector Compensation Review insofar as it pretended to increase incomes turned out to be mostly illusion as allowances were rolled into “salary” and working conditions worsened. Then promised retroactive payments were held up interminably in a drip, drip, tap-drip torture scheme.

Then Government vilifies public servants for following Government’s bureaucratic rules and appoints a former US Ambassador with zero public service experience outside of an Embassy to head up a new Ministry of Efficiency. Is this Jamaica’s version of Trump’s DOGE?

I’m sure she’ll make Government efficient. And, at the same time, a herd of pigs will be seen taking off at Norman Manley International Airport.

Production in Jamaica isn’t constrained by too much regulation. Bandooloo is. Production in Jamaica is stymied by government tax policy that seeks to wring dry the prospects of small business becoming big business and government bureaucracy that makes the slightest attempt by small business to grow as inspiring as a migraine headache. Government continues to surrender to an awestruck anxiety to give Big Business political handouts while ensuring small business remains small.

I remember when Tastee Patty began in 1966 in a small, hot outlet in Union Square where you left weighing less than you entered due to excessive sweating but with two delicious patties clutched in a precious bag. Today, Tastee owns and operates18 branches and one cafe island-wide; operates as concessionaires in schools; and offers a hugely expanded menu.

But there’s more to the Tastee story. Its success bred competition from “Juicy Beef” (now just “Juici”) that began similarly humbly in 1978 out of a small location in Half Way Tree. But Juici has expanded to over 60 locations locally and distribution networks regionally and internationally!

This is how a nation produces economic growth. Small businesses operate with little government harassment so they can grow into big business employing hundreds of newly minted consumers and thus generating vast sums to the revenue from varied sources. For the past 45 years, potential Tastees and Juicis have been stifled by restricted access to cheap start-up loans; Companies Registry fees; and tax, tax, tax from day one. The Tastee/Juici stories are of people (not industries) allowed to work hard to make their dreams come true.

Today we celebrate expansion by money managers and financial institutions investing other people’s money in stocks, bonds and real estate. In other words, paper shufflers not producers.

One of these days an inspired Government will recognize that the iniquitous income tax inhibits growth and abolish it entirely. GCT (or valued added tax) is the only equitable tax as it ensures the rich pay their fair share because they spend more. Income Tax only oppresses poor PAYE workers (while allowing huge corporations to make accountants rich) and keeps unregistered small businesses unregistered. And small!

Stay low profile; avoid the tax man.

Don’t get me started on customs duties which are simply chaotic and unsustainable. High levels of customs’ duties ensure low collection. Government’s Productive Inputs Relief Scheme (PIR) allows for duty-free imports of raw materials; intermediate goods; Packaging materials; Consumables (for “production”?); Machinery and equipment (and parts). Targeted sectors to benefit are Agriculture, Manufacturing, Tourism, Healthcare, and Creative Industries.

This is a good idea.

But, to access PIR benefits, companies must apply for “Manufacturing Status”. If you are in an approved sector you must first register with the relevant Ministry (which can change at any PM’s whim) for approval as a “Producer”. Approval is based on the provisions of the Customs Tariff (Revision) (Amendment) Resolution 2013, which outlines the material considerations involved in that process. Then, if you run that gauntlet successfully, you are recommended to customs who will visit to inspect operation, storage area, ensure proper accounting for inventory and production. If you pass that inspection, you are certified and can import free of duty, stamp duty, customs fees and GCT.

But my productive sector moles assure me Government hasn’t approached the initiative as a business proposition but as a bureaucratic one. So, once again, Big Businesses not already registered under a prior similar initiative have been able to benefit but MSMEs have problems jumping through bureaucratic hoops. Too many forms. Too many obstacles. Too many small producers, especially farmers who produce for export (e.g. coffee farmers), don’t even try. They see the hidden traps. They recognise “Indian-Givers” when they see them. They turn away.

The real problem is that Government revolves around programs available for grand announcements not people it can help to grow. Production is the only path to growth. People are the only paths to production. Production incentives don’t work without education, ease of access and assurances people won’t be stalked. Most small businesses, based on experience, have a registration phobia. You want me to REGISTER? No sah, Big Business register everywhere a’ready. Dem can galang. You want to mek Govament my spouse? No thank you very much!

Jamaican folk music is all about unique experiences of Jamaican cultural realities. Woman a Heavy Load is a work song of a man having to account to his lady at weekend when di likkle pay can’t stretch. It has been recorded many times but Ernie Smith’s 1992 version, with late, great Dessie Jones (drums); Peter Ashbourne (keyboards); Steve Golding (electric/acoustic guitars); and Glen Brownie (bass) is youngest son SputNick’s favourite.

So, Audrey Musk’s (oops, sorry, Marks’) DOGE can begin by redesigning production incentives for production realities. Then it might consider using effective marketing techniques to teach small producers that Government wants to be a partner not a nagging spouse.

Peace and Love.

Gordon Robinson is an attorney at law. Send feedback to columns@gleanerjm.com