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ICT - Lack of local space stifling sector growth

Published:Monday | August 18, 2014 | 12:00 AM
Energy Minister Phillip Paulwel

Mark Titus, Gleaner Writer

Western Bureau:

Despite being constantly on the wish list of foreign investors, Jamaica's failure to construct sufficient business-ready office space is said to stifling growth in the local information and communication technology/business processing outsourcing (ICT/BPO) industry. As a consequence, Government is appealing to the private sector, including real-estate developers, to invest in the sector.

"It is an excellent time to market Jamaica, because we see where fatigue has set in a number of the US agencies that went to India and the Philippines," said Phillip Paulwell, minister of science, technology, energy and mining (STEM), in a recent interview with The Gleaner. "... There is a growing recognition that it is better to do the business in this region."

"The Caribbean (is) English speaking, very strong. We are 90 minutes between Miami and Montego Bay, and the cultural affinity makes it ideal," continued Paulwell. "... These are among the things we are now pushing as part of the promotions, but plug-and-play facilities are a crucial component, and this is the reason why we are urging the Jamaican private sector to partner with the Government."

The technology minister said growth in the sector is being hampered by a space consideration, as according to him, investors are wary of coming here to create their own space.

"The major problem is space," noted Paulwell. "Space has been, from my time through the last government, and now, the major obstacle, because investors don't want to come to Jamaica to be in construction of these facilities, they want ready-made plug-and-play facilities to start business immediately."

The Planning Institute of Jamaica's (PIOJ's) 'Growth Induced Strategy for Jamaica in the Medium and Short Term', indicated that, while there was robust performance in the BPO market over the last 10 years, there were no significant investments in Jamaica during that time, which contributed to a drop in the global ICT rankings.

Large investments

The governments of Colombia, Indonesia, India, Vietnam and other prime ICT/BPO destinations have invested heavily in the construction of plug-and- play facilities.

According to a Jamaica Promotions Corporation (JAMPRO) official, who spoke on condition of anonymity (he is not authorised to speak on the matter), several North American firms in India and other parts of Asia are holding discussions about relocating to the Caribbean, in particular Jamaica. However, they are turned off because of insufficient office space.

"We have been aggressive in our promotion of Jamaica as a place to do business, but while there is a flood of interest, especially for ICT, our credibility will come into question if the very important issue of office space is not addressed," the official stated. "We are talking here about the credibility of the island as a near-shore location servicing the US and strengthening the local economy by putting more people to work."

Investor Mark Kerr Jarrett of Barnett Estate Limited has led the way with the establishment of the Barnett Tech Park at Catherine Hall, in Montego Bay, which is now home to international firm Vista Print's local operation. An additional 50,000 square feet of space is now under construction, which is being made possible through a US$20-million loan facility established by Government to enable investment in the ICT sector.

"We are urging the finance ministry to increase this US$20-million concessionary loan facility and I would appeal to the investing community to follow the example of Mark Kerr-Jarrett and his team and invest in the build-out of more office," said Paulwell.

Dr Christopher Tufton, former industry minister in the Bruce Golding administration, agrees with Paulwell that the space situation in Jamaica is creating in terms of attracting investment.

"It has been a chicken-and-egg situation," said Tufton. "... Nobody wanted to build unless they had a contract and nobody wanted to give a contract unless they saw a building, but it's time to move forward."