Editorial: Tourism bank a bad idea
It is a few days since he assumed his ministerial job, so Ed Bartlett may have been tapped for a speech before he had an opportunity to think seriously about his tourism portfolio and the structure of government in a changed economic paradigm.
We, therefore, give him the benefit of the doubt, assuming his proposal to be an aberration - a fleeting spur from an early hazy time in office.
We refer to Mr Bartlett's idea - we hope it is not settled government policy - to establish something he called a tourism credit bank, to provide loans to, it seems, small players in the sector using, initially, money from the Tourism Enhancement Fund.
Initially, Mr Bartlett said he intends to have the Export-Import (Ex-Im) Bank administer the credit, but that will "morph over time into a full-fledged institution ... geared to supporting the needs and requirements of tourism".
"You have an Agricultural Credit Bank (ACB). Why not a tourism credit bank?" he asked. For the record, there is no specialist government institution providing credit to agriculture. Fifteen years ago, the ACB was one of several financial institutions collapsed into what is now the Development Bank of Jamaica (DBJ). There is, though, the farm-based cooperative, People's Cooperative Bank, which seems to be perpetually in trouble and seeks to raid taxpayers for help.
Another institution that was merged into the DBJ was the National Investment Bank of Jamaica, an equity investor and venture lender which had a portfolio bulging with duds, including many in the tourism sector. Borrowing money from taxpayers, it seems, is not perceived as business, but social welfare. The administrators of the loans seemed to be of the same mindset.
The DBJ has done somewhat better than its predecessors, in part because it has largely eschewed direct lending, preferring to channel its money through commercial intermediaries, which insist on the application of business principles by borrowers. The DBJ, nonetheless, offers special finance arrangements to some categories of borrowers of the kind to which Mr Bartlett referred.
Or, put another way, what businesses in tourism or any other sector require is not another state-run financial institution, creating clutter in the public sector, doling out taxpayers' funds and promoting inefficiencies. The need is for good ideas that translate to feasible business projects from which there will be sufficient profits, inclusive of what is required to service debts. Indeed, firms that have products and export markets and are in need of interim financing can get that from the Ex-Im Bank.
The larger point is that Jamaica has made substantial headway over the past four years in stabilising its macroeconomy, putting its debt on a downward trajectory and improving investor confidence, not by adding to the public-sector red tape, or assuming that the hand of some bureaucrat is better than the market's. Rather, there has been a real effort to reduce bureaucracy and enhance policy certainty, which helped entice a swathe of investments in the tourism sector.
This disentanglement of red tape and bureaucracy, as well as the promotion of macroeconomic stability, must be accelerated.