Wed | Jun 3, 2020

Jamaica FDI flows fall 18%

Published:Friday | July 6, 2018 | 12:00 AMMcPherse Thompson

 

Foreign direct investment, FDI, flows to Jamaica fell for the second consecutive year in 2017 to US$649 million.

The flows were 17.8 per cent lower than the US$790 million recorded in 2016, according to a newly released report from the Economic Commission for Latin American and the Caribbean, ECLAC.

Mining and tourism attracted the bulk of investments, accounting for 29 per cent and 25 per cent of the total, respectively.

The mining sector attracted US$185 million, a similar amount to that recorded in 2016, reflecting a recovery from the steady fall that occurred between 2008 and 2015.

The report cited US$60 million of investment by Chinese firm JISCO — Jiuquan Iron & Steel Company — following its acquisition of the Alpart aluminium plant in St Elizabeth for US$300 million. It also noted that the reopening of the facilities, which had been closed since 2009, created 800 jobs, and that JISCO had announced an investment plan for US$3 billion aimed at future expansions.

ECLAC, a regional agency of the United Nations, also referenced the 4.3 million tourists who visited the country in 2017, noting that the tourism sector was the recipient of FDI totalling US$161 million.

Contributing to the sector was the Mexican hotel and tourism resort chain, Karisma, which revealed details of its new luxury resort in Ocho Rios, Sugar Cane Jamaica, valued at US$1 billion.

The resort will include seven luxury hotels and more than 5,000 rooms, and development will be staggered over the next decade. In addition, Excellence Group announced the construction of the Excellence Oyster Bay resort in Montego Bay, which opened in June 2018 on the back of an investment of US$110 million.

As for regional FDI, ECLAC said flows to Latin America and the Caribbean fell for the third consecutive year, and that in terms of its weight in the economy, FDI is now back at 1997 levels.

The region’s economy has been recovering after several years of recession and is expected to grow by 2.2 per cent in 2018, on the back of oil and metals prices, which in the last two years have recovered much of the ground previously lost, the report said.

“In preparation for new global scenarios, the region should prioritise local capacity building. The yearly volume of FDI inflows is not an indicator of the quality for that investment. Efforts need to focus on attracting investments that contribute to sustainable development and structural change in the region,” ECLAC recommended.

“In this connection, it is significant that most of the drop in FDI in recent years has taken place in the extractive industries. The upturn in commodity prices may encourage higher levels of investment, but it cannot be taken for granted that natural resource-specialised production will return to driving development in the region,” it added.

According to the report, FDI in the Caribbean subregion grew by 20 per cent last year to reach US$5.83 billion.

More than half of those flows were directed to the Dominican Republic, followed by the Bahamas with 16 per cent and Jamaica, 11 per cent.

mcpherse.thompson@gleanerjm.com