Government's 'free lease' plan has a catch
Published:Wednesday | December 1, 2010 | 12:00 AM
Dionne Rose, Business Reporter
Desperate to stimulate new jobs in the economy, the Government is willing to give up income on unused factory space, but the targeted new manufacturing investors will still have to cough up some cash for the space they lease.
The Factories Corporation of Jamaica (FCJ) normally leases space at an average of J$205 per square foot per year.
It would therefore be giving up J$6.15 million of income on the one year 'free lease' programme on the targeted 30,000 square feet of space to be offered to new manufacturing operations that create jobs.
But, lessees will still be on the hook for the maintenance fees, according to Permanent Secretary in the Ministry of Industry Investment and Commerce, Reginald Budhan.
Those fees are priced at J$216 per square foot, amounting to J$6.48 million of income that FCJ is not prepared to forego.
Incentive plan
The 'free space for jobs' incentive plan, initially announced two weeks ago by Prime Minister Bruce Golding, is still being worked through, Budhan said, including the programme's actual start-up date and duration.
He said, however, that it is also likely that investors will have to commit to retaining the space leased for at least six months beyond the first year, for which they would likely be billed at FCJ's regular per annum rate.
The plan has been given the thumbs up by the umbrella Jamaica Manufac-turers' Association (JMA).
"It sounds like a positive thing for the producers," said JMA president Omar Azan.
"It is a start in the right direction."
FCJ has some 364,353 square feet of vacant space, distributed nationwide: 46,750 square feet in Kingston and some 317,603 square feet in rural parishes including St Catherine, Clarendon, St James, Hanover, St Thomas, Manchester and Trelawny.
The industry ministry sees the free-lease arrangement as a 'win-win'.
"We have a lot of space that is unutilised; it's not that we are giving up normal rental," said Budhan.
Far advanced proposal
He added that except for what he termed some minor details, the proposal, which is expected to be a one-off deal, and not an endless policy, was far advanced and could be implemented in a few weeks.
"The Government just wants to be assured that financing is in place and the project is viable," Budhan said of the eligibility criteria for qualifying new manufacturing investors.
There is unlikely to be stipulations about the amount of investment to be made; government's only concerns, he added, are that the funds to invest are in place and that the venture is viable.
He said it was unlikely that the programme would become policy.
"I think the idea would be a one-off," he said, "I'm not aware that it will be ongoing."
FCJ both leases and sells office and factory space.
If there is interest by the business to buy the space, the FCJ would sell, Budhan said.