Features

Business and Finance in 2011 – Jamaica Year in Review 2011

Written by Cordella Lewis

At the beginning of 2011, Jamaican businesses had an optimistic view of the nation’s economic growth, but consumers were more pessimistic about the state of the economy. In the business sector, optimism rose to its highest level since the third quarter of 2007, when the current government took office. During the last quarter of 2010, however, Jamaican consumers were more pessimistic than they were in the third quarter of the year. However, less than one in 20 citizens blamed the government for the poor state of the economy. In contrast, many business leaders felt the government was the reason for the economic downturn.

Entrepreneurship
Several entrepreneurial programs were made available to women in 2011. Jamaica’s National Commercial Bank made $113 million in sponsorship funding to support women-owned and operated developing businesses, with an additional $100 million provided to support loans. This arrangement represents a partnership with the Women Business Owners of Jamaica Ltd. for a three-year period to provide training opportunities for women entrepreneurs Many women in Jamaica are likely to benefit from the “Way Out” program sponsored by the government. Beginning in March, the program will focus on training and education that will lead to better jobs for women. The former executive director of Jamaica’s Bureau of Women’s Affairs, Glenda Simms, held a recruitment drive in June to find new members for St. Elizabeth Women Ltd., which is dedicated to the creation of sustainable development in rural communities by giving aid to women at the grass-roots level with a focus on  horticulture, farming, and crafts. 

Olivia Grange, Jamaican Minister of Youth, Sports and Culture, took special note of the importance of entrepreneurial activities for youth and announced the commitment of the government to developing the entrepreneurial spirit in young people through organizations like the Jamaica Youth Business Trust and the Young Entrepreneurs’ Association. Because young people represent the largest segment of the population, they are critical to the economic well-being of country in the future. Another government program that focuses on long-term development is Vision 2030, which was designed to encourage Jamaica to recognize its potential over the next 20 years through infrastructure building and economic growth. 

Sir Richard Branson, owner of Virgin Enterprises, launched the Branson Center of Entrepreneurship in September 2011 in Montego Bay. The center is designed to help entrepreneurs succeed in creating responsible businesses. Branson said entrepreneurship is crucial to the creation of a strong, sustainable economy in the region. Michael Stern, Minister for Industry, Investment and Commerce, urged business support organizations to help local firms succeed, noting that these organizations allow small businesses to development the technical capabilities they need to take advantage of existing and emerging trade opportunities. 

Bauxite
Jamaica’s bauxite industry saw several significant developments in 2011. Industry observers said there were indications that the aluminum industry is recovering from the economic downturn. Alumina Company Jamalco reported its best company performance for a six-month period in 52 years. The increased production was attributed to the replacement of old equipment and efficiencies gained by using caustic soda to extract alumina from bauxite. Noranda Jamaica Bauxite Partners estimated that it would reach record levels of production by 2012. Company president Pansy Johnson said that while 2011 would likely be “challenging” for the St.Ann-based firm, production of bauxite would increase by about 20 percent to an estimated minimum of 5.1 million tons during 2012.

Solamon Energy met with the Jamaican government to discuss solar solutions to be developed on sites that were previously the locations of bauxite mines. Jamaica has thousands of unused bauxite mines, and research funding and development are available to use some of these mine sites as solar farms. Solamon will devote its resources to supplying a number of solar farms on the abandoned mine sites. 

Infrastructure
After much delay, the new cruise ship port at Falmouth was ready to welcome its first visitors. Royal Caribbean’s Voyager of the Seas had the honor of being the first ship to dock at the new facility, which opened months behind schedule due to construction difficulties. Work on the port terminal was also delayed by a strike held by 450 construction workers protesting the taxes imposed on their year-end bonuses. Also of benefit to cruise passengers was a new system of transportation announced by Jamaica’s Minister of Tourism Edmund Bartlett. While the current system separates responsibilities for transferring passengers of cruise ships among several entities, the new system uses a single firm, which is responsible for handling ground transportation for all passengers. 

Mike Henry, Jamaican Minister of Transportation, announced a search for some $300 million in private investments to revive an island-wide train system that was discontinued in the 1980s. He cited the success of a month-long trial run of a temporary train system installed between Spanish Town and Linstead, which saw more than 2,000 passengers every day. 

Rose Hall Developments, which owns 7,000 acres of the Rose Hall Plantation and Cinnamon Hill Golf Course, developed and launched Founders Village in Montego Bay. The new community features luxury residences on lots of three to four acres. The gated community provides ocean views of the Caribbean and easy access to beaches, shopping, and golf. 

The new Harbor View Sewage Treatment Plant was finally commissioned after 30 years of non-operation. 

The National Water Commission and other government agencies were taken to court by area residents who wanted something done about the non-functioning plant. The lawsuit claimed that the absence of the plant caused environmental degradation and presented a significant health risk. In July 2010, an out-of-court settlement was reached, and the NWC promised to build an interim sewage treatment facility within six months. The agency also promised to revamp the Harbor View Sewage plant within 18 months. 

Lloyd Cole, a Jamaican physician, proposed the construction of a dry dock facility in Clarendon at Jackson Bay 20 years ago, but the project, totaling US$3 billion, remains dormant even after gaining the support of government officials in several successive administrations. Cole, who has become frustrated with the delay, made a second appeal for his project, noting that it could create employment for up to 5,000 Jamaicans.

Energy
The Jamaican government is looking for alternative sources of energy to counter the rising costs of oil. It is investigating a variety of energy sources, including wind, solar, tides, and geothermal heat. The government stated its intention to incorporate alternative sources into its overall energy policy and has created the first national energy policy designed to develop a modern energy infrastructure, with energy management a key feature of the policy. In the area of conservation, the Jamaica Productivity Center noted that individual and business consumers could realize savings to J$15.4 billion on power bills if two critical measures of fuel and system losses correlate with regional and sector averages. This was the conclusion reached in a study by the agency showing that savings would represent about 20 percent of the average power bill. Damian Obiglio, the president and CEO of the Jamaica Public Service Company, asked consumers to take steps to conserve energy in response to rising oil prices. Oil prices in December 2010 increased by more than US$91 per barrel, and in 2011, the increase was estimated at US$100 per barrel. EX-IM Bank said that energy producers in Jamaica should retrofit their operations to make them more efficient and to control costs. Additionally, the bank urged producers to access energy loans designed to support the development of renewable energy systems. 

In an effort to give some relief to electricity consumers, the Jamaica Public Service Company provided a reduction of some five percent in the total electric bill for August. The decrease was attributed to a lowering in fuel and IPP charges applied to the August bills. Petrojam, the state-owned oil refinery, announced reductions in gasoline prices for a time due to changes in U.S. Gulf Reference prices. It was expected that there would be some lowering of prices for diesel, propane, kerosene, and butane as well. 

According to a survey from the Consumer Affairs Commission, residents of rural areas pay more for gasoline than do people who live in cities.  The Jamaica Gasoline Retailers Association alleged that these higher costs are not related to transportation expenses, but to pricing policies used by marketing firms. The survey found a price gap of as much as $22 between the prices paid by rural residents for regular gas and those paid by city dwellers. The rural gas gap did increase in 2011, said the Consumer Affairs Commission (CAC), but not by much. 

The Petroleum Corporation of Jamaica Center for Excellence for Renewable Energy and the Caribbean Agricultural Research and Development Institute will invest $10.3 million into determining the feasibility of a biodiesel project based on Jamaica’s oil-seed-bearing plants. The plants, including local castor beans and the seeds of the jatrophe tree, could be used to produce fuel for the automotive industry. The On the other hand, the Canadian oil exploration firm Sagres Energy will invest J$250 million to search for oil in Jamaica. This is the company’s largest outlay of capital to date. The Canadian oil exploration firm said it would start drilling by the end of 2011. 

Engineers at the Annual Conference of the Jamaica Institute of Engineers discussed the future of the island’s energy sector and proposed using more green technology to reduce costs and improve efficiency. Electricity in Jamaica costs just under US$0.40 per kilowatt hour – four times what the average U.S. consumer pays. The high cost is due to the Jamaica’s reliance on old-fashioned generators that use oil, much of which must be imported. More than 90 percent of Jamaica’s electricity is generated with heavy fuel oil and diesel fuel, both very expensive and inefficient sources of energy. 

Paul Chong of St. Mary invested over $5 million in a system to power his house over the past five years. He decided to take charge and generate his own energy after Hurricane Dean, which left him without power for weeks. When the Jamaica Public Service Company recently charged him for 222 kilowatts of power usage over three months when he actually used only 71 kilowatts – a difference in charges of $5,000 – Chong decided to leave the electric grid altogether. He now uses his own wind-driven power system at his residence. 

Jamaica’s government approved the transfer of 40 percent of the shares of the Jamaica Public Service Company to Korea East West Power Company. The shares were sold by Marubeni, a Japanese firm that held 80 percent of the JPS stock. After the sale, Marubeni and Korea East West both own 40 percent of JPS. Minister of Energy Clive Mullings stated that the Korean company will improve the operations of JPS significantly. He also said that Jamaican consumers remain the ultimate shareholders of the firm. 

Israel offered to help Jamaica with its energy crisis.1Israel’s ambassador to Jamaica, Moshe Sermoneta, also noted that agriculture and tourism in Jamaica could benefit from a closer relationship with Israel. Because Israel has few natural resources, it has been forced to develop alternative energy sources, and Jamaica could reap the benefits of its experience, said Sermoneta.

Product Promotion
Jamaican-based chef and singer Keith “Levi Roots” Graham appeared on a television program in the United Kingdom in 2007 that showcased Jamaican entrepreneurs. The program, called “Dragon’s Den,” gave individuals the chance to pitch business ideas to five investors. Graham brought his Jamaican jerk sauce, which he represented with a reggae song about his business. Now, four years later, he remains the chief marketing feature for the company, and his Levi Roots brand is now the main Caribbean brand in the UK. 

The Culinary Federation of Jamaica (CFJ) showcased some of the foods featured in competition at the International Culinary contest in Miami, Florida. Executive chefs on the island used local produce to highlight regional foods. The participating chefs embraced the “Eat What You Grow-From Farm to the Table” campaign sponsored by the Ministry of Agriculture in their contest submissions. 

The Jamaica Reggae Industry Association (JaRIA) designated the month of February as a time to celebrate reggae music. The annual Dennis Brown concert will be held during Reggae Month, and other activities, including Save the Music also occur. The Save the Music initiative provides weekly concerts at the Edna Manley College. The JaRIA Honor Awards are presented at the time as well. Olivia “Babsy” Grange, Jamaica’s culture minister, encouraged local music industry representatives to adapt to the global economy and participate in similar marketing efforts. 

In a blow to the Jamaican brand, the island’s signature beer, Red Stripe, decided to move its production facilities for the United States to a North American location, causing significant job losses for Jamaica. However, the company believes that overall returns from the U.S. penetration of the product will make the company stronger in the long run

Technology Sector
The Jamaican government approved a merger between Digicel Jamaica and Claro. The merger joins the largest and smallest telecommunications firms on the island. The new combined firm will represent over 75 percent of the wireless market in Jamaica, and government immediately faced criticism for its decision to approve the merger. 

The telecommunications company LIME introduced a new plan designed to enhance Internet penetration across Jamaica. It offers customers an inexpensive laptop computer with a two-year residential service package. Known as the “FLIPtop” plan, LIME implemented the new offering after examining survey results showing how the high cost of computers and other devices kept many people from accessing the Internet. LIME also signed an agreement with the secretariat of CARICOM to provide video-conferencing services and equipment to Jamaica and seven other member nations. CARICOM appointed the firm after issuing a request for proposal to provide and install the equipment. LIME will work on this project with Polycom, a leader in unified communications solutions. 

Marc Canter, founder of Macromedia, will invest in a local start-up firm. Canter, who founded the American software firm that introduced Flash technology, said that opportunities are “ripe” for tech start-ups in Jamaica.  In fact, he said Jamaica may even have a better investment environment than the U.S. at present. According to Canter, the tourism and cultural sectors in Jamaica also represent major investment opportunities. 

Paul Lennox Buchanan, parliamentary candidate for West Rural St. Andrew, said that the area’s unemployment can be addressed by turning to information technology. His opinion created a stir in the constituency because the area has historically been focused on farming. West Rural St. Andrew comprises rural living areas and upper middle class settlements, struggles economically and needs to find real solutions. Buchanan said that all modern nations promote information technology, and this area offers considerable human potential that only needs technical training to create stable jobs in computer programming and software.

Tourism
The deal between Air Jamaica and Caribbean Airlines was “up in the air” for some time during 2011, causing uncertainties in the marketplace. Ultimately, it was finalized and agreements were signed by Audley Shaw, Jamaican Minister of Finance, and Winston Dookeran, finance minister of Trinidad & Tobago, in the presence of T&T Prime Minister Kamla Persad-Bissessar. Under the agreement, Jamaica’s government has a 16-percent stake in shares of Caribbean Airlines and makes the airline the national carrier of Jamaica. In May, many flights to and from Jamaica were delayed or cancelled as air traffic controllers went on strike, leaving passengers stranded in airport lobbies. 

Edmund Bartlett, Minister of Tourism, encouraged the island to promote its facilities in the faith-based tourist market. The inaugural stop of the ship Carnival Destiny’s “Cruise with a Cause” in Montego Bay brought more than 4,000 passengers and crew members to the port.  Passengers included religious leaders and music ministers who accounted for almost J$1 billion in expenditures, plus the passengers participated in a number of community outreach projects on the island. Dr. Paul Rhodes, hotelier and medical practitioner, proposed transforming downtown Kingston into a destination for religious tourists. He noted that the several churches located in the area make Kingston an under-utilized “cultural gem” of the Caribbean region. Christian heritage tourism could bring a boost to downtown Kingston. The Great Huts Hotel partnered with Olde Jamaica Tours to offer visitors an eight-night tour of the church treasures of Jamaica.Bartlett also announced making aggressive marketing approaches to China to enhance trade and tourism between the two nations. More tourists from China have been coming to Jamaica in recent years. 

Jamaica hosted a two-day regional meeting focused on the economic potential of sports. The Business of Sport conference attracted presenters from the United Kingdom, the United States, and the Caribbean. Olivia “Babsy” Grange, Jamaican Minister of Sport, and her counterpart Anil Roberts of Trinidad and Tobago, presented the government perspective on the issue and looked at how governments can support making sport a viable industry in the Caribbean.

Agriculture/Farming
Crop production in Jamaica rose by 24 percent in the first quarter of 2011 compared to production in 2010, according to the Ministry of Agriculture. A total of 147,378 tons of produce was grown in the first quarter of 2011, the highest amount recorded for a single quarter period since 1999. 

Noranda Jamaica Bauxite Partners (NJBP) partnered with small farmers and schools in St. Ann to encourage the use of greenhouses to improve production. A program developed together with USAID allowed the Greenhouse Association, Rural Agricultural Development Authority, and the Bauxite Institute, to build four greenhouses to augment three experimental greenhouses built in 2009 on rehabilitated mine lands in Burnt Ground. 

The Coffee Industry Board received an emergency loan totaling J$310.5 million via the Ministry of Agriculture and Fisheries in an attempt to save the coffee industry. The money comes from the EX-IM Bank and the Development Bank of Jamaica and will purchase coffee in the High and Blue Mountains for coffee dealers. 

A cassava processing plant was opened by Tropical Foods Ltd. in March 2011. It is expected to produce as many as five tons of bammies and other cassava products each week. 

Poultry producers in Jamaica presented a petition designed to pressure the Ministry of Agriculture to join with them in fighting a plan to reduce the taxation of chicken imports. The proposed cuts from the Ministry of Finance, which are meant to reform the Common External Tariff structure, would lower the duty on chicken to 20 percent from 100 percent. 

Jamaica’s sugar industry saw a ray of hope in the daily factory operations report presented in June. It showed a total of 134,507 tons of sugar produced among five of seven estates, and three factories reported surpassing their projected totals for the year. 

More than 40 shrimp vendors in Middle Quarters, St. Elizabeth, participated in Team Jamaica training as part of the Jamaica Social Investment Fund’s Rural Economic Initiative program. The program provided $3 million in funding for training that covers self-esteem, customer service, cultural awareness, and history. The vendors were also trained in business development and food handling. 

Dr. Christopher Tufton, Minister of Agriculture and Fisheries, called for more agricultural sector investments, noting the opportunities available in the growing of local produce. Tufton said now is a good time to use entrepreneurial methods and creativity to improve systems for production. He stated his position at the launch of the “Eat Jamaican Campaign,” as $17.2 million project of the Food and Agricultural Organization, the European Union, and the Agriculture Ministry meant to encourage the consumption of locally produced food.

Workforce Issues 
The Land Administration and Management Program allowed more Jamaicans to become landowners during its 11th year of operation. The program seeks to end poverty and facilitate economic growth and create efficient markets for real estate in urban and rural areas. The most recent part of the program focused on St. Elizabeth, Manchester, and Clarendon. In commenting on land ownership among workers, Ronald Thwaites, a deacon and member of the Opposition People’s National Party, noted that Jamaican laws and high costs linked to regularizing tenure denied the working class the right to own property and keeps these workers from participating fully in the national economy. 

The year 2011 saw reports of color prejudice among Jamaican employers in their hiring practices. Labor and Social Security Minister, Pearnel Charles, compared discrimination on the basis of skin tone to apartheid in South Africa and promised to bring bigoted employers to court. Portia Simpson Miller, Opposition leader, suggested boycotting businesses that appeared to hire only light-skinned individuals.

Companies that refuse to pay their workers the lowest wage named under the National Minimum Wage Act will be assessed a fine of $1 million, up from the previous amount of $1,000. The law also imposed a one-year prison sentence on employers who do not comply with its provisions. Both a fine and prison could be imposed. The National Minimum Wage rose from $4,070 per 40-hour week to $4,500 per 40-hour week as of February 28, 2011. 

Tang Jianguo, the chief executive officer of the COMPLANT Group of Companies, the Chinese organization that bought Jamaica’s sugar factories, said most of the managers and workers at the factories will be Jamaicans, and not foreign workers. He made his assurances in the light of criticism of the company’s policies. Day-to-day operations will be handled chiefly by local Jamaican workers, Tang said.

About the author

Cordella Lewis