Thumbs down to UDC-FCJ merger
Published:Wednesday | January 5, 2011 | 12:00 AM
Avia Collinder, Business Writer
The Ministry of Industry, Investment and Commerce has poured cold water on a suggestion by the prime minister's cost-cutting team to merge the Factories Corporation of Jamaica (FCJ) with the Urban Development Corporation (UDC), saying the idea was not rigorously tested.
"The ministry does not support this recommendation, as we believe that it is not well thought out and will create a cumbersome and inefficient bureaucracy," Budhan said Tuesday.
At the same, Budhan told Wednesday Business that Cabinet has given its go-ahead for the management of the Caymanas Economic Zone project (CEZ) to be stripped from UDC and placed under the control of Factories Corp.
"The UDC already has too much under it. When you put too many things under one umbrella, you create a monster," he said.
"We had to seek Cabinet approval to get Caymanas removed a couple of months ago."
The CEZ development, on the outskirts of Kingston and bordering St Catherine, is projected to cost some US$3 billion.
At last report, Factories Corp was in the process of acquiring the 200-acre CEZ property from the UDC for J$90 million to kick-start the warehouse and distribution hub.
Caymanas Estate is a 10,000-acre property under the control of the UDC. Plans touted for the multifaceted development of the property includes a 1,000-acre industrial estate - inclusive of the CEZ - sporting facilities, some 4,000 new homes, a new base for the army, and the relocated Kingston aerodrome.
The Factories Corp takeover is confined to the CEZ component, Budhan said, to speed up the development.
The Public Sector Transformation Unit (PSTU), which is housed at the Office of the Prime Minister (OPM), proposes in its master plan that the operations of Factories Corp be transferred to the UDC until its properties were divested.
It was further suggested that FCJ buildings could accommodate proposed centres for shared corporate services, whose functions a Green Paper proposes would cover administrative and support functions in eight areas: back-office services for all ministries, including financial management, human resource management, legal services, internal audit, procurement, asset management, information and communication technology, and communications and public relations.
UDC is an agency of the OPM, while Factories Corp reports to the industry ministry.
The PSTU also suggested that the UDC and its subsidiaries, including the merged FCJ, be transferred to a revamped Ministry of Housing and Sustainable Development.
The UDC, it said, should contract out management of heritage properties.
Budhan is predicting the suggestion will die with debate.
"These recommendations have not yet been presented to Cabinet for final decision," he said.
"Such an entity would be unwieldy and result in no serious cost savings. If what you want is efficiency and speed of implementation in management", a merger would not be the solution, he said.
The PSTU has initiated a numberof ministry and agency audits which fed into Cabinet discussion and the finalisation of a master rationalisation plan in July 2010.
Both the FCJ and UDC have been ordered by the OPM to return to core activity and have been offloading assets in the process.
The UDC has been engaged in the last six months in restructuring its operations and beefing up its human resource corps.
Established in 1987, the FCJ is the largest provider of industrial space in Jamaica, with approximately 175,000 square metres, or 1.8 million square feet, under management. The agency manages four informatics centres, 26 industrial estates and individual factories, five former industrial training centres, nine industrial complexes and two free zones.
There is already some symbiosis between the two agencies after the boards of the UDC-operated Montego Bay and Kingston free zones were merged with that of the Factories Corp last year.
The UDC was created in March 1968 as developer of waterfront lands, but over time its functions spread to include urban centres and strategic rural towns.
Managing projects valued at J$5 billion annually, current projects include the Falmouth cruise development whose pier is being designed to accommodate the world's largest cruise ship, Royal Caribbean's Oasis of the Seas. The project has missed two deadlines and is now rescheduled for commissioning on February 15.