Samuda says manufacturers not trying hard enough
Published:Friday | January 28, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
Manufacture output has fallen off by 66 per cent in the past five years, according to Karl Samuda, who on Wednesday asserted that the sector was in deep trouble and becoming less productive, even though employment has increased over the period.
Samuda, the minister of industry, investment and commerce, says manufacturers must find ways to improve.
"The government will try its best to open the doors to opportunity, but the sector too has to respond and rebound," said Samuda, speaking at the Jamaica Stock Exchange's annual regional conference on capital markets and investment.
"There has to be some reciprocation and work to improve output."
Samuda said that output within the sector dropped to US$35 million at the end of 2009, down from US$90 million in 2003. The sector, he says, is now only contributing 8.3 per cent to GDP compared to 20 per cent in former years, and creating only 2,000 net jobs in the last couple of years.
Samuda asserted that the sector has declined even in the face of various incentives afforded it by the Government and called for greater assessment of performance against these incentives.
"There is a government ability and inclination to provide incentives, but not an inclination of assessment of performance against those incentives," the minister said.
"Although with incentives and removal of things like the CUF (customs user fee) - the sector is still in trouble. They pay fewer taxes but have become less productive."
Omar Azan, a maker of furniture and president of the Jamaica Manufacturers' Association, said the minister has a misinformed view.
He said manufacturing has been impacted by factors relating to globalisation and continues to be exposed to shocks, requiring support to return the sector to its glory days.
"We need a culture change, and to create demand by supporting our brands," said Azan.
Compared to other sectors, Azan contends that the manufacturing was performing credibly, providing important economic linkages that contribute to GDP and employment.
"The manufacturing sector has both backward and forward linkages and a multiplier effect to fuel growth in other sectors of the economy," he said.
While Samuda agrees that help is needed in reviving the lost enthusiasm of entrepreneurs, he said it has to be a collective effort.
He cited government initiatives to reduce bureaucracy, training facilities and the creation of factory space for entrepreneurs, while also making access to capital easier with a reduction in the require-ments for collateral.
There is approximately 360,000 square feet of factory space available that can facilitate some 13,000 workers, although not all of it is in a state of readiness, the minister said.
Of the 360,000 sq ft, just about 200,000 sq ft is available to be occupied. He cited the special programme of free rental of factory space for a year to entrepreneurs, and at 50 per cent of the cost in the second and third year of rental, to spur new investment.
"If we don't generate a level of entrepreneurism within the productive sector, then collectively we are not going to achieve the results desired," said Samuda.