Marcella Scarlett, Business Reporter
Jonathan Blue, chairman and managing director of Blue Equity LLC, says the biggest problem faced by investors trying to do business in Jamaica is dealing with the banks.
But he also says he will not allow it to dissuade his pursuit of additional investment opportunities in Jamaica. Blue Equity recently acquired the Shell Jamaica network of service stations and is in the process of restructuring it.
Blue is not the first investor to lay blame on the banks as a primary roadblock to business.
For years, Jamaican companies and consumers have scolded the banks for excessive fees and expensive credit.
But Blue was more direct.
Usually, overseas investors tend to pinpoint government bureaucracy. The private equity manager, however, sees the latter as an expected cost of business.
"The problems here are not different from anywhere else - only the banking," said Blue, who was speaking at the investor briefing organised by Sterling Asset Management in Kingston last Thursday night.
He said the handling of loan approvals in Jamaica's banking system is inefficient, evidenced by the length of time it takes to process a transaction.
"The banking system here is still at the stage where things go through a relationship manager, then to boards of directors, then it eventually reaches a board meeting that will consider it for approval - and this can take months and months and months," he said.
"In other place such as the US, it goes to a relationship manager then to a team in the bank and then it is approved - and it is done way way quicker than here. In other places, the banking system is more streamlined. Here, it has a longer tail which makes it a little harder to deal with."
As for other problems commonly talked about such as crime and corruption, stability of government, language, availability of qualified/skilled persons, bureaucracy, size of the market, Blue said these are "perceived" challenges and are not Jamaica-centric.
He said current investors and stakeholders can work with the individual and collective markets and governments to overcome these perceptions as they are the "primary deterrents" for international investors.
"Jamaica is open for doing business that is the expression I have heard. From a business standpoint, apart from the banking situation, I don't think doing business in Jamaica is harder or worse than doing business elsewhere," Blue said.
"I don't think the problems in Jamaica are unique; I don't think the problems in Jamaica are simple — but I don't think they are different from anywhere else."
As for the foreign-exchange risk, he said it is a challenge but could be problematic if the Government fails to negotiate an agreement with the International Monetary Fund.
Since the start of the year, the Jamaican dollar has depreciated by 3.8 per cent.
"This is a challenge now but it would be even worse if they don't get an IMF agreement because those of us who have debt in US dollars will find it harder to repay. If they don't come through the Government would not have any money and they would default as well and we will see the exchange rate sliding," he said.
"The problem is going to be that you need more of the local currency to pay off the same old debt, so the debt will be harder to be repaid," he said.
The JMD now sells for J$89.93. The BOJ has been shoring up the rate by selling funds into the market. The weighted rate rose as high as J$89.99 in recent weeks, but has not breached the psychological J$90 barrier.
Meantime, Blue said he is looking to expand his holdings in Jamaica; that his next move is to own a business "that does something that it can export".
He said, however, that Blue Equity has no acquisition target in sight but would be willing to consider investing in coffee.
"We do not go looking for companies; they come to us. Like Shell came to us; we did not go to them," he told the forum.
In 2011, Blue acquired Cool Petroleum Limited from local businessman Joey Issa and the Trinidadian conglomerate Neal & Massy Holdings and has since then renamed it The Antilles Group. The Antilles Group is the licensed operator of Shell brands in Jamaica.
Blue has also invested in Island Ice and Beverage Company Limited, manufacturers and distributors of packaged ice in the Caribbean.