Avia Collinder, Business Writer
Still peeved about decade-old beef ban
Trade between Jamaica and Canada has shrunk dramatically in the past four years, but now Canada is exploring energy investments as one way of arresting the decline.
Canadian companies are pitching investments of up to CDN$500 million (J$43.5 billion) in alternative energy over the next three years according to Rick McElrae, senior trade commissioner for the Canadian Trade Commissioner Service.
Asked to clarify, he said the CDN$500m valuation was an assessment of opportunities. McElrae said the details of the proposals were proprietary to the companies.
Financial Gleaner checks indicate that one company, Solamon Energy Corporation, has pitched a US$444.2-million solar power plant project, which the Petroleum Corporation of Jamaica acknowledged in February as the subject of preliminary talks.
Another energy company is said to exploring the supply of compressed natural gas (CNG) to Jamaica. It's understood that FTI Canada has offered to convert JUTC buses to CNG and set up CNG stations across Jamaica.
McElrae said the inclusion ofCNG as replacement for octane gas could save Jamaica up to J$2 billion.
The idea of including CNG in Jamaica's energy mix was first floated back in late 2006 by Jamaican-Canadian investor Ray Chang, but the plan got nowhere.
Chang and his alliance partner, Sea NG, had tried to sell Jamaica on the idea of buying CNG instead of liquefied natural gas (LNG), thereby eliminating the regasification process.
But Jamaica has stuck with LNG and is in the process of tendering for a developer of the LNG infrastructure, which includes a regasification terminal.
Still, McElrae seemed to believe that there was scope for the alternative fuel at the gas pumps as well as room for other investment in renewables in Jamaica's evolving energy market.
"The trends we should watch for are in the alternative energy sector as the current administration moves forward to reduce the cost of energy," the trade representative said.
"Opportunities exist to attract Canadian investment and technology on alternative fuels for vehicles as, well as solar power generation and energy conservation measures."
In 2007, bilateral trade between Jamaica and Canada was valued at CDN$597 million. But three years after the big world recession, trade flows fell to half those levels to CDN$292 million in 2010. Last year, however, the value of merchandise flows rebounded to CDN$386 million.
The trade balance tips in Jamaica's favour.
Jamaica shipped CDN$274 million of merchandise to Canada in 2011 but bought just CDN$112 million of goods from the North American country, according to StatsCan, Canada's source of official statistics.
Canadian exports to Jamaica dipped by CDN$17 million last year but have fallen by as much as CDN$87 million from 2007. Jamaican exports to Canada rose by CDN$113 million last year, but have dropped by CDN$97 million from 2007 levels.
Canada is the world's third-largest producer and exporter of natural gas. It has 13 per cent of world reserves, based on 2011 data from OPEC. Venezuela has 20 per cent of reserves, Saudi Arabia 18 per cent, and Iran 9 per cent.
McElrae said, too, that there are also opportunities in medical tourism, and eco-tourism that might unfold over the next five years, "depending on investment attraction policies of the new government".
On the matter of general financing, he adds, "Canada is also very experienced in public-private partnerships as a model for funding major projects, so there is potential opportunity there as well."
There are Canadian interests talking to the Government and private enterprise in all areas seen as open for investment, the trade commissioner said.
On a less optimistic note, McElrae also brought up Jamaica's near decade-old ban on Canadian beef.
The 2003 ban was put in place during the BSE or bovine spongiform encephalopathy scare - also known as mad cow disease.
"Canada is now approved by the World Organisation for Animal Health (OIE) as a controlled-risk country, so if and when Jamaica lifts the ban there would be an increase in exports of beef products from Canada, whereas beef products are now from the USA, which has the same OIE rating as Canada," McElrae said.
In recent times, the Canadian government identified Latin America and the Caribbean as a priority market, developing a related market plan.
One area identified are the environmental industries with commercial opportunities identified in water treatment, wastewater management (domestic, commercial, industrial, agricultural), solid waste treatment and studies for project sponsors and financiers.
Canada currently ties for fourth place with Spain in the level of foreign direct investment flows to the Caribbean.
Of the US$112.6 billion FDI in 2010, the majority, 17 per cent, flowed from the United States, followed by the Netherlands 13 per cent, China 9 per cent, and Canada and Spain four per cent.
McElrae notes that Canadian FDI flows to Jamaica include the Cemcorp cement plant under development at Port Esquivel, in which CDN$340 million is being invested over three years.
He adds that a spa and hotel that opened last November in West End, Negril, was direct investment of about CDN$3 million by an Ottawa-based spa business.
"This shows evidence that Jamaica could attract world-class boutique hotel operations, adding variety to the smorgasbord of large all-inclusive hotels," the trade commissioner said.
McElrae notes as well that, although not counted as FDI, three major banks in Jamaica are Canadian, referring to Scotiabank, CIBC FirstCaribbean and RBC Royal Bank. The three have assets of more than J$300 billion, or half of the J$613 billion of assets controlled by the sector's seven banks.