Jamaica beyond the JDX

Don Wehby, Guest Writer
don.wehby@gkco.com

The success of the Jamaica Debt Exchange (JDX) and the subsequent reduction in interest rates have opened new avenues for investment and value creation in Jamaica. Despite these and other successes, including the divestment of loss-making entities, the 2010/11 medium-term macroeconomic target for real GDP growth is estimated at 0.6 per cent.

The question remains: how can we transform recent economic successes into sustainable growth?

Crime must be addressed resolutely if we are to create an enabling environment for business.

Over the years, I have met with several international investors in various sectors who have decided not to invest in Jamaica because of the prevailing level of crime. The concerns of these investors about the safety of their staff have deprived Jamaica of many key investments which would have created jobs, increased our growth and accelerated our development.

I have also met many Jamaicans living abroad that are qualified doctors, lawyers, accountants and teachers who wish they could come home and participate in Jamaica's development, but they have great reservations about the crime problem.

The recent events in Jamaica may have seemed like one of the darkest moments in our history; however, this may also have been the catalyst for the change that Jamaicans have been hoping for since independence.

I recently quoted Albert Einstein in a speech at the ISSA/GraceKennedy school-boy cricket awards ceremony: "Insanity is doing the same thing over and over again and expecting different results."

I was referring to developing innovative strategies and structures to transform the West Indies cricket team to return to its glory days. The same can be applied to Jamaica.

In its first quarterly review of Jamaica as part of the standby loan agreement, the International Monetary Fund indicated that growth and employment are expected to remain weak.

For Jamaica to capitalise on the new low-interest environment to achieve higher and sustained rates of economic growth, we need to look for new industries and encourage innovation - we need some game changers.

Establishing an international financial services centre (IFSC) in Jamaica is something I have been advocating since my tenure in government.

The proposed benefits are clear: job creation, increased government revenue, real-estate development, diversification of our economic base, and an increased presence on the international financial market. In return for these benefits, Jamaica offers a large cadre of professionals, a strong regulatory framework and a superior telecommunication infrastructure.

Also in our favour is our history as a stable democracy, proximity to the world's largest market, and the quality of transportation infrastructure - particularly our airports.

As downtown Kingston re-emerges as a premier corporate district through major investments such as Digicel's planned construction of its new head office near the Kingston waterfront, an IFSC would help to increase business from both local investors and international financial entities.

The global impact of social media also holds significant opportunities for Jamaican innovators. The rise of YouTube, Facebook, Twitter and FourSquare has meant that everyone - from the individual entrepreneur to the large enterprise - can now gain direct access to hundreds of millions of consumers just by creating a free account on one of these sites.

Facebook alone attained 500 million users in July - that is 200 times Jamaica's approximate population of 2.5 million.

A small craftsman in rural Jamaica can reach a massive market as long as he has access to a computer. Additionally, social media sites collect large amounts of information about users' likes and dislikes based on their social-networking footprint, allowing for marketing that is more targeted and that engages the consumer on a more meaningful level.

A third area for innovation can be found in cultivating the linkages between tourism and the broader economy - particularly the agricultural sector - so that greater value can be extracted and retained locally.

As chairman of the Tourism Task Force, I am overseeing research that will position tourism as a high-performance engine of growth in the domestic economy. This requires us to both determine the aggregate demand for goods and services in the tourism sector as well as investigate ways for local producers to best take advantage of that demand.

By pinpointing areas where local supply should replace imports and using technology to improve the quality, quantity and reliability of local supplies, we will facilitate job creation and economic growth.

In order to capitalise on these opportunities, Jamaican businesses need to more fully integrate into a global economy that is characterised by increased demand for transparency as a result of ease of access to information; the interconnectedness of markets that both broadens our reach and exposes us to more external risks; and the need to innovate to respond to constant technological change that can have a disruptive effect on business.

The world has changed dramatically in the past few decades and is continuing to change as we speak. Jamaica needs to be agile in order to stay relevant.

There are a few deliberate steps which must be taken to create an environment which encourages this agility and establishes modern trade infrastructure. These include:

a) Investing in infrastructure - having quality roads, airports, seaports and telecommunications reduces the cost of doing business, improves the competitiveness of local firms and facilitates linkages with foreign firms.

b) Investing in human capital - having a literate, trainable workforce will help deepen our absorptive capacity so as to maximise the benefits from foreign and local direct investment.

c) Marketing Jamaica - we have a lot to offer, but in order to attract investment we have to advertise our strengths.

These steps should be designed to increase investment and enhance supply capacity, thereby laying the foundation for economic growth and competitiveness in Jamaica.

As the global economy begins its recovery, investors are planning how best to re-engage.

We need to position Jamaica now to take full advantage of the inevitable upswing in the global economy with an aggressive marketing campaign and strategic investment in our resources.

We cannot afford to miss this opportunity to create jobs, diversify the Jamaican economy and further develop Jamaica as a business destination.

Don Wehby is group chief operating officer of GraceKennedy Limited.