Tue | Apr 25, 2017

Logistics hub far from reality!

Published:Sunday | September 28, 2014 | 9:00 AM
These areas have been colour-coded to reflect the following categorisations: Green - This is an area in which Jamaica already has a distinct advantage. Amber - An area in which: (i) Jamaica has clear potential; (ii) has made recent and significant improvements; and/or (iii) on which the GOJ has placed significant and serious attention. Red - An area in which the country tends to perform poorly.

CaPRI study concludes that Jamaica will have to climb mountains to make proposed hub a viable reality

Arthur Hall, Senior News Editor

Jamaica will have to slay the crime monster, level the mountain of corruption, brave the obstacle course of access to credit and smooth the rising tide of high-cost energy in order to successfully establish a logistics hub. So says the University of the West Indies-based think tank, Caribbean Policy Research Institute (CaPRI), in a just-concluded study on the proposed logistics hub.

The study has also concluded that Jamaica has one of the worst records among comparator countries of attracting foreign direct inflows to the sectors that are critical to the logistics hub core and supported or related industries, and this could be a major disadvantage.

Dubbed, 'Creating National Wealth through the Jamaica Logistics Hub: Looking beyond port and parks to people and processes', the study outlines a number of areas in which Jamaica has been significantly outperformed by potential regional competitors and concludes that several areas need urgent attention if the hub is to become a reality.

"The results of this study have shown that while the planned infrastructural projects and incentives to be offered ... are important, the Jamaica Logistics Hub will not be successful in fostering national job and wealth creation if the general business environment is not improved and the quality of human capital being produced through the country's education system is not enhanced," said the report.

"These issues are not new to the Government of Jamaica, but they have not to date received the concentrated and consistent attention that they deserve.

"This may be because some of the solutions do not involve grand project announcements, but rather require a quiet and determined focus on the nuts and bolts issues that make the difference between great ideas and realisable results," concludes the study.

Industry, Investment and Commerce Minister Anthony Hylton, who is the Government's point man on the logistics hub, has repeatedly declared that it holds vast potential for wealth creation and sustained economic growth.

"Our confidence about the results of our efforts is grounded in the experiences of the major global hubs; we only have to reflect on what global logistics have done for countries like Singapore and Panama," Hylton declared recently.

But according to CaPRI, the proposed hub will only generate significant job and wealth creation if the right types of firms and entities are mobilised to operate the core of the logistics hub, and if new firms arise and/or existing firms expand to exploit the potential for supported and related spin-off industries.

CaPRI further argues that Jamaica is not in a position where the hub is likely to automatically create national wealth as the country does not specialise in the areas of service provision typically associated with logistics operations.

To compound the problems facing the country, the study concludes that Jamaica is outperformed in some key components of the logistics environment by most of the potential regional competitors, including The Bahamas, Brazil, Cuba, the Dominican Republic, Martinique, and Trinidad and Tobago.

These areas in which Jamaica lags behind most of the potential regional competitors include access to credit, the high cost of energy, crime and the control of corruption.

"This study has shown that the country's location, physical infrastructure, and planned special economic zones and businesses parks are areas in which Jamaica either already has a distinct advantage, has exhibited clear potential, made recent improvements, and/or has clearly outlined plans," said CaPRI.

"We, however, caution that over-reliance on these advantages could be detrimental, as locational advantages can be overstated because ships have the capacity to bypass ideally located ports to dock at alternate sites with better facilities and/or services.

"The use of special economic zones and business parks to offer economic incentives as a means of attracting companies to logistics hubs is a risky strategy, as other countries can offer better incentives and lure the companies away; and enclave economies could be created around the these zones at the cost of balanced and sustained national development," added CaPRI.

Efforts to get a response from Hylton to the CaPRI study has so far been unsuccessful as he is off the island and reportedly not slated to return until October 1.