Cable: Blinded PNP failed to heed cement-crisis warning

Wary of claims that the 2006 cement crisis was triggered by the inaction of the then government, the Bruce Golding administration has vowed never to be caught in the same trap.

A May 2006 cable from the United States Embassy in Kingston suggested that the People's National Party (PNP) administration was warned about the looming crisis, but ignored it because it was pandering to the Caribbean Cement Company Limited (CCCL) and blinded by the prospect of a multimillion-dollar investment by the company.

"The cement crisis was not unexpected given submissions presented to Anti-Dumping and Subsidies Commission during its investigations. However, it was evident from the outset that the GOJ (Government of Jamaica), searching for success stories, was bent on protecting CCCL in exchange for the proposed US$100-million investment," the cable claimed.

"Ironically, the policy decision has come back to haunt the (Portia) Simpson Miller government and the lost output and associated costs could end up costing the country multiples of the proposed investment.

"The reactionary approach to the crisis also suggests that the GOJ did not anticipate the potential impact of the shortages, despite being forewarned about the possibility of CCCL not being able to meet the expected hike in demand," the cable added.

The cement shortage, attributable to quantity and quality, shocked the Jamaican economy, with real GDP for January to March 2006 growing by only 1.4 per cent, caused, in part, by a 6.3 per cent decline in construction output, a far cry from the seven per cent growth recorded in 2005.

projects suspended

With less than two-thirds of daily demand being met, a number of construction projects were suspended.

Against that background, the present minister with responsibility for industry and commerce, Karl Samuda, told The Gleaner that his Government will never make such a mistake.

"This administration would never provide incentives to satisfy the desire of one corporation that needs to create a monopoly," declared Samuda in response to the claims of the US diplomatic cable.

According to Samuda: "This is the reason why I have repeatedly attempted to ensure that some element of competition is introduced … . In the case of cement, I have fought vigorously for a 20 per cent importation from extraregional sources."

He said this decision resulted in the CCCL being forced to go in search of foreign markets.

"They have had reasonable success, evident in trade with the Dominican Republic and others in the region," Samuda said.

"It could never be contemplated that the increased level by CCCL to export the product and increase production was predicated on 100 per cent of the Jamaican market," added Samuda as he pointed to the recent cement dispute involving the Dominican Republic.

Cement from CCCL had been denied entry to the Dominican Republic for weeks, leading to a fuss between the two countries.

The cement was recently allowed entry after officials in the Dominican Republic satisfied themselves about the quality and Jamaica imposed requirements for the importation of cement.