The Kaiser bauxite plant in Discovery Bay, St. Ann.
Andrew Green, Staff Reporter
FINANCE AND Planning Minister, Dr. Omar Davies, has an uphill task. He is trying to convince a generally unbelieving business community and public that Jamaica's production train is finally on track.
His arguments are very convincing. In Parliament last Thursday, he outlined an array of programmes already under way or soon to start, which should mean that we no longer have to hang our heads in shame and contemplate fleeing the country when we contemplate the economic prospects.
Jamaica had the highest tourist arrivals level in its history last year and this year is set to be even bigger, he said. Over this calendar year, at least 800 new hotel rooms will come on stream with the RIU hotel in Negril and Sandals Whitehouse providing the majority of those rooms. The new properties will generate more than 1,200 new jobs.
Later this year construction will begin on four new hotel properties being developed by Spanish hotel chains. They will be situated at Rose Hall in St. James, Oyster Bay in Trelawny, Peartree Bay in St. Ann and Mammee Bay also in St Ann.
The total investment will be about US$550 million, with a total of 5,000 rooms to be constructed over a five-year period.
Dr. Davies said the bauxite/alumina sector had strong performance last year with respect to alumina output, total bauxite production, foreign exchange earnings and new investments.
ALUMINA OUTPUT
Alumina output reached 3.84 million tonnes, the highest ever by Jamaica. Bauxite production was 13.44 million tonnes, the second highest in our history and the highest in 29 years. Gross foreign exchange earnings increased by 8.6 per cent, equalling US$775 million.
Both JAMALCO and Alpart undertook expansion, with investments totalling US$150 million. The JAMALCO expansion increased capacity by 250,000 tonnes and Alpart's expansion will lead to increased capacity of 150,000 tonnes.
Gross foreign exchange earnings from bauxite and alumina exports should increase by over 20 per cent to approximately US$950 million for 2004.
And ALCOA has announced its plans to further expand the JAMALCO plant by 1.4 million tonnes. This project will involve total capital investments of US$690 million of which US$300 million will be spent in Jamaica. Over 2,500 construction jobs will be created.
The EX-IM Bank will provide an $80 million pool of funds to the Information Communication and Technology (ICT) sector for software development, receivables financing, working capital and the purchasing of capital equipment at a 12 per cent interest rate. It also has made a medium-term facility of $60 million available, to established ICT companies registered and operating in Jamaica.
A second EXIM Bank programme involves on-lending US$8.4 million to exporters.
After years of discouraging results, five sugar factories will, for the first time, make an operating profit this year, moving from an operating loss of over $500 million last year.
STEADY PROGRESS
And the country's massive highway expansion programme continues to make steady progress. The second segment of the North Coast Highway is currently under construction between Montego Bay and Ocho Rios.
The second section of Highway 2000 between Bushy Park and the Mandela Highway is scheduled to be completed and opened by October of this year. This will be followed by the section which will include a new Causeway and joined to the Mandela Highway via the Dyke Road. The target date to complete that section is December 2005.
The final Highway 2000 section Sandy Bay to Williamsfield has a projected completion date of August 2008.
Much of what the Minister said, had already been revealed to the public. Well informed risk-takers have already absorbed this data along with other economic information and are making investment decisions about stocks, real estate and money market investments.
But most Jamaicans are yet to be convinced. Corporate Jamaica is faced with the challenge of replacing a large number of skilled workers who are voting with their feet, heading to the United Kingdom and North America.
The Government expects Jamaica's economy to grow faster in the new financial year than in the last one, but the March survey of business and consumer confidence shows the public has a different view. The public expects the country's economy to grow at a slower pace in the new financial year.
The slower growth was anticipated by 63 per cent of all firms in the first quarter of 2004, up from 56 per cent in the prior. Among all firms, 24 per cent expected their profitability to decline while 17 per cent of firms expected their overall financial standing to worsen in the first quarter.
Jamaica Conference Board (JCB) consultant, Professor Richard Curtin, reported that two-thirds of all consumers expected the economy to produce fewer jobs in the year ahead. The JCB survey also revealed that following the devaluation, increases in bus fares, utilities, and oil prices nine in 10 consumers expected continued high inflation in 2004.
Consumer incomes did not rise nor were expected to rise, but the standard of living is rising and expected to continue rising. Professor Curtin said many Jamaicans expected to top up their incomes with remittances coming from overseas.
The Americans have a saying that when your neighbour loses his job, the economy is in recession, but when you lose your job, the economy is in a depression. The converse is also true.
The disconnection between the big projects and the view of the average Myrna Brown on the street, is that she has not seen any benefit from those big projects yet. What she has seen is a decade over which the country has produced little growth and where good-paying jobs have been evaporating and will continue to evaporate.
And Mr. Donovan, who operates his factory on Spanish Town Road, was been hit by deregulation of the domestic market and is still struggling to stay afloat. He is hopeful that he might get some business from the new projects, but worries that the same importers who are undercutting him now will grab that new market too.
THE REAL PROBLEM
The real problem is that the tourism and bauxite/alumina expansion are occurring in sectors which account for less than 20 per cent of the country's economy, said economist Dr. Omri Evans. This year's national Budget is little help because capital spending is what drives growth, and it will be negligible in real terms because of the tight restrictions on spending.
"We are not going to own the bauxite companies and hotels," said Keith Collister, business development manager of First Global Stockbrokers. For the developments to have the maximum impact in our lives, "Jamaicans need to concentrate on spin-offs of the big projects."
Jamaicans can take advantage of the new demand for goods and services the new projects will create, Mr. Collister said. The improved macro-economic climate generated by the increased foreign exchange earnings from the projects also offer opportunities for sharp investors.
But the growth will only start impacting on the average Jamaican when most of the economy gains pace, Mr. Evans said. He doesn't see that happening soon.
