By Ayanna Kirton, Staff Reporter THE act of extortion continued to pose a serious threat to the National Works Agency (NWA). CEO of the NWA, Ivan Anderson said the project management body was plagued by orders from community leaders to only employ persons resident in certain communities at rates of payment set by the community leaders or 'dons'.
In order to combat many of the problems that result from extortion the agency plans to encourage community participation in the implementation and ownership of projects and move away from those communities where extortion is commonplace to those areas where contractors are welcome. Excel Motors, owned by Patrick Marzouca, built the Island Cruiser, a two-door 'jeep-type' vehicle manufactured entirely in Jamaica. With 22 Cruisers built in 2003, Marzouca hoped to boost production from the publicity garnered from the exportation of one of the vehicles to the Bahamas. Mr. Marzouca said the fibreglass body of the car would last a lifetime and would appeal to those living close to the sea because, unlike steel-bodied vehicles that were prone to rusting, the Island Cruiser would not. The Island Cruiser is available in hard and soft-top models and goes for J$669,000-$785,000.
SEPTEMBER 12
Patricia Isaacs-Greene, managing director of Three Rivers Management, the management company for international fast food giant, McDonald's Jamaican operations, left the company to pursue another venture in the restaurant industry. The new restaurant, Kaieteure Foods located at the Jamaica Conference Centre in downtown Kingston, was co-founded with Bevon Morrison. Seeing the downtown area as one with potential despite its many problems, Isaacs-Greene told the Financial Gleaner that the island's capital city could change for the better.
" I have always been a vanguard for change and I want to be a part of the evolutionary process because that would be a hell of an accomplishment."
The United States-based Ruby Mining Company, owners of Admiralty Corporation, got the green light from the Jamaica National Heritage Trust to mine Jamaica's Pedro Banks for archaeological treasures four years after the original licence was granted. The Heritage Trust went beyond schedule because it needed clarification on some areas of the project plan which, they said, did not go far enough in indicating the methodology of certain aspects of the research and to ensure that the materials recovered remain intact. Admiralty is scheduled to begin the excavation early next year in search of the remains of many vessels reported to exist in the depths of the Pedro Banks, and the company's president Herbert Leeming predicted that the project will be a stunning success.
The Bank of Jamaica cut interest rates by an average of 1.6 per cent on four of the central bank's seven open market instruments during the same period that an early Treasury bill issue for September was offered to the market. Rates on the 120-day to 365- day tenors ranging from 21-24 per cent were cut down from the 22-26 per cent rate set in August due to continued exchange rate stability and buoyant flows to the foreign exchange market. The $300 million T-bill issue yielded an average of 23.87 per cent and applications were over $809 million, which reflected a massive over-subscription of 107 per cent.
SEPTEMBER 19
Grace Allen-Young, Permanent Secretary in the Ministry of Health, was the first woman to be elected president of the Commonwealth Pharmaceutical Association. Her vision for the next four years: to ensure effective relationships with all Commonwealth nations, increasing the strength of those nations that are weaker in the area of professional pharmacy practice, and implementing pharmacy practice standards for effective pharmaceutical care for patients throughout the Commonwealth.
Head of the Jamaica Chamber of Commerce (JCC), Michael Ammar, predicted that the upcoming holiday season would be marked with higher prices as merchants updated old stock with new. The president said the cess, which was imposed earlier in 2003, impacted heavily on this trend though shoppers would be spared the full brunt of price increases because of fierce competition among local retailers. Ammar also said final quarter pricing would be affected by foreign exchange availability and consumer confidence while preliminary results from the JCC Business Confidence Index reported that the retail sector was able to withstand the travails of the second and third quarters of the year.
Dennis Morrison, Chairman of the Jamaica Tourist Board, slammed rumours of the under-performance of the tourist industry, saying these were ploys by industry players to get government financial assistance. He said the country would see a 10 per cent increase in growth in the sector, notably similar to visitor levels prior to 9/11. Morrison also said the government would give more assistance to smaller hotels to ensure that they remained successful in Jamaica's very competitive tourist industry.
SEPTEMBER 26
With estimated liabilities of $279.35 million and zero assets, the surplus estimated from winding up Premium Investment Limited was estimated as insufficient to cover all debts of Enchanted Gardens, the resort property owned by Edward Seaga. The majority of the debts of the company owned by Town and Country Resorts Limited were outstanding taxes and penalties amounting to $182.63 million.
After months of deliberation, the Ministry of Land and Environment approved an application for proprietors of Dolphin Cove to carry out their $250 million expansion plan. The expansion will cover 60,000 square feet and will include a new pier to ferry cruise ship passengers into Dolphin Cove. Owner of the facility, Stafford Burrows, said the expansion would help to maintain the attraction's current market share and make it competitive with similar regional and international facilities.
Former president of the Shipping Association and outgoing manager of Seaboard Freight and Shipping, Grantley Stephenson, was appointed managing director of Kingston Wharves Limited relieving Philip Alexander of Grace, Kennedy. Guardian Holding Limited reported net profit of US$19 million while Guardian General Limited, the insurance arm of the company, reported US$6 million. Howard Dotting, group chief financial officer, said the company performed very well with Guardian Life of the Caribbean contributing US$13 million or 39 per cent investment income and US$27 million or 23 per cent of net premium income.
Air Jamaica introduced electronic ticketing system finally enabling passengers to purchase tickets for travel on the airline by phone or the Internet. The airline planned to make e-tickets valid for travel with code sharing partners, Delta, Canada and Cubana within 2004.
OCTOBER 10
As the Jamaican dollar continued to lose momentum against its foreign counterpart, the U.S. dollar, foreign exchange market players said the 18-cent slippage in value was no cause for alarm. On October 9, the Jamaican dollar saw a weighted average rate of $59.97 with the dollar passing the $60 mark to the US dollar. Earl Harriott, an executive with the Cambio Dealers Association of Jamaica, said though the exchange rate appeared to be under stress over the last two months, depreciation experienced during this period was the lowest in 12 years.
High rates of attrition were reported at NCB where in under two years since Michael Lee Chin's acquisition of the commercial bank, many respected financial sector players have left the organisation. Some of these players included Christopher Lowe, NCB's former managing director who was replaced by Aubyn Hill; former deputy chairman, Dunbar McFarlane; Sandra Shirley, former general manager for business development; Audrey Richards, former managing director Edward Gayle; Ravi Rambarran another managing director of Edward Gayle, and Nigel Clarke, member of NCB's Board of Directors.
The Financial Services Commission (FSC) revised its fee schedule for securities dealers and advisers in an attempt to become a self-funding watchdog agency. Wain Iton, head of the Jamaica Stock Exchange, was not supportive of the move, saying the operations of most international regulatory bodies were funded by their governments rather than by forcing dealers to support the agency. The fees will come into effect in the first quarter of 2004.
Karen Turner will serve as mission director of the United States Agency for International Development for four years and will be in charge of spearheading the organisation's strategic objectives in Jamaica. She replaced Mosina Jordan and plans to continue work in the inner-city communities and to provide assistance to the public and private sector to facilitate Jamaica's economic growth.
The Jamaica Public Service Company (JPSCo), owned by leading United States energy company, Mirant, sought capital to fund the expansion of its operations. Citing the real indictors of JPSCo's performance as its return on equity and net income, the company's CEO and president, Charles Matthews, said the Return On Equity (ROE) had to be increased by as much as 20 per cent to convince Mirant that Jamaica was a good investment. Electricity usage was said to be expected to grow by 4 per cent over the next year with JPSCo looking to supply the country with an additional 200 megawatts of electricity over the next five years.
OCTOBER 17
After painting a bleak picture of Jamaica's financial performance, Carl Ross, retracted a bit, tempering his analysis with a more benign view of the country's performance. "The news coming out of Jamaica is mixed, with the 'muddle through' scenario seemingly intact for the time being," said the senior managing director of the U.S.-based investment bank and securities firm, Bear Stearns.
On the positive side of things, foreign exchange reserves were up by US$102 million and T-bill auctions were successful with the government auctioning $500 million of six-month T-bills. The issues were three times over-subscribed 100 basis points to 22.44 per cent. Negatively, a special arbitration panel ruled that the government owed J$12.5 billion (US$208 million) billion to a local transportation company for breach of contract, or approximately 2.5 per cent of GDP.
The Jamaica General Insurance Company announced that they would merge with Globe Insurance Company of the West Indies to form Globe Insurance Company of Jamaica. Evan Thwaites, managing director of Globe, said the merger was an attempt to defend the local market by covering all aspects of the industry. This was primarily due to free trade agreements that would result from the Caribbean Single Market and Economy (CSME), which would lead to increased regional competition in the industry. Thwaites said customers will benefit from the new developments through improved service delivery, better surroundings, better trained staff, and competitive rates.
Dennis Joslin, the man responsible for taking FINSAC's non-performing loans and making returns on them, was the Financial Gleaner's business personality of the month. His company, Dennis Joslin Company, a U.S. firm based in Tennessee, specialising in purchasing non-performing loans for restructuring or resolution, possesses a portfolio of local properties valued at $US26 and offers financing to qualified purchasers with a 30 per cent deposit. Joslin said business was booming for the company so much so that the local stamp office was having trouble with the volume of administrative work involved. FINSAC would receive a percentage of all gross collections after closing as follows: 15 per cent of the first US$50 million collected, 25 per cent of the next US$50 million collected, 35 per cent of the next US$50 million collected, 45 per cent of the next $50 million collected, and 50 per cent of all further collections thereafter.
OCTOBER 24
A US$53 million contract was awarded to the US-based Fluor Corporation to begin construction on new U.S. embassy in Liguanea, St. Andrew. Residents of the Liguanea community met the proposed site of the facility with disapproval and complained of the level of traffic and disturbance an embassy would pose to the suburban community.
The impending regulation of credit unions by the Bank of Jamaica (BoJ) was welcomed by the credit union movement. Although implications of the regulations were not clear credit union heads said business for credit unions would continue as usual with the continuation of non-collateralised loans to borrowers, and dismissed the notion that the regulations would force smaller credit unions out of business.
The movement towards the formation of a single regional stock market took another step forward with the Jamaica Stock Exchange (JSE) being asked to spearhead the formation of a Caribbean Stock Market Association at a business conference of the board of trustees of the Caribbean and Latin American Action in Port of Spain, Trinidad. The introduction of a single regional stock market was also on the agenda. Roy Johnson, JSE's chairman, said the regional exchange could serve all trading members across the region, providing access to all listed shares and other products in accordance with unified rules.
OCTOBER 31
Jamaica Money Market Brokers (JMMB) reported a 10 per cent decrease in profits in its unaudited financial statements for the six-month period ended August 31,2003 due to the rise in interest rates. JMMB's asset base continued to grow with the company reporting total assets of $55.2 billion, up by 18 per cent compared to last year's figures. Shareholder equity increased by 59.3 per cent to $2.7 billion.
The Bank of Nova Scotia's (BNS) Magna Reward Card, launched on October 22, created some problems for consumers because of its dual currency feature where purchases were attracting US dollar charges. The complaints stemmed from adjustments needed to be made to the point of sale machines used by some retailers, which BNS said should be rectified by the same merchants.
Jamaica's Film Commissioner, Dell Crooks, was elected to the 2004 Board of Directors of the Association of Film Commissioners International, the official professional body for film, commissioners who assist film, television, and video production throughout the world.
A U.S. index bond was issued by the Ministry of Finance in an attempt to defend the local currency by mopping up the Jamaican dollar equivalent of US$46.2 million coming into the financial market on November 7, 2003 from a debt instrument issued November 2000. The debt instrument's tenure was scheduled to last 20 months with the interest payments to be made at quarterly intervals and the final payment due and payable to July 10, 2005. For the period November 4-10, interest rates for the U.S. index bond were reported as high as 50 per cent. The National Commercial Bank's Payroll Plus non-collateral loan programme attracted 3000 applicants. The requests for loans were in the $100,000 to $500,000 range and the average loan given was reported at $200,000. Effective rates on one-year loans and five-year loans were 23 per cent and 34 per cent respectively.
The Financial Gleaner spotlighted the opportunities that will be presented by Caribbean Single Market and Economy in November. Most notably, the CSME would foster further integration of the Caribbean region better equipping the small nations to collectively manage the challenges and opportunities of competing within a global village. The advantage of cross border investment was also given prominence. Some of these included the stimulation of market growth and an increase in the flow of foreign exchange to indigenous companies.
Desnoes and Geddes, a subsidiary of Diageo, saw a decline in the volumes of its more popular brands and looked to its export market to generate growth in sales. The decline in volumes was attributed to the 45 per cent increase in the Special Consumption Tax (SCT). Smirnoff Ice volumes declined by 39 per cent and all other brands except Malta and non-alcoholic Dragon registered declines. In response to the challenges the company plans to increase its marketing initiatives which they consider critical to their success in the local market.
The Jamaica Constabulary Force established a special unit to tackle extortion, one of Jamaica's biggest threats to business. Superintendent Norman Gordon, a 30-year veteran of the police force, heads the Organised Crime Investigation Unit Investigation Division (the Unit). Although only 13 cases of extortion have been reported to the police to date, Gordon revealed that in some cases contractors paid as much as $1 million per fortnight to community leaders or 'dons' to ensure that work on construction projects continued smoothly. Gordon felt that members of the business community encouraged this illegal practice, stating that the business of extortion can only be sustained if supported by business owners, who in may cases felt that the police were incapable of providing the security they needed in the areas where their businesses were located.
NOVEMBER 21
The local agricultural industry appeared to be on the mend when the Planning Institute of Jamaica announced that the first three quarters of 2003 performed better than the corresponding quarters of 2002. From January to September agricultural production increased by four per cent but export crop production declined by 0.9 per cent in the third quarter of 2003 compared to 2002. Industry players remained optimistic nonetheless, saying that barring natural disaster, they were looking towards exporting 180,000 pounds of cotton worth a total of US$1.8 million.
The new president of the Jamaica Exporters Association, Dr. Andre Gordon, announced a major push into Caribbean markets. The association planned to undertake this initiative head-on by strengthening key alliances with major productive sector groupings, particularly the Jamaica Manufacturers Association. The sectors to be targeted in the exporting drive include arts and entertainment, software, and consultancy services.
There was a rise in the demand for small business loans applications to credit unions mainly because commercial bank interest rates were unmanageably high. Small business owners were also attracted to credit unions because of the service and assistance provided to those customers who were not able to create detailed business proposals, as well as the ability to use appliances, land, or motor vehicles for collateral.
Due to the substantial deterioration in the Jamaican dollar's exchange rate, Carib Cement reported a significant decline in company profits in U.S. dollar terms, which fell by 19 per cent. down to US$4.7 million for the first nine months of 2003. In Jamaican dollar terms, net profit amounted to 298.2 ,million for the same period, 6 per cent higher than last year's figures. However, the company considered its performance, 'disappointing' attributing it to high levels of imported cement, which it felt, was a major threat to its success.
See conclusion of article in next week's Financial Gleaner.
