Davies appeals for private investment in construction
Hit by fiscal constraints, Minister of Transport and Works Dr Omar Davies is urging the private sector to invest more in the construction industry to pick up the slack left by a broke Jamaican Government.
Davies said worldwide, the robustness of the construction sector is a clear indicator of economic health and a clear driver of growth.
"It is not by coincidence that expansion of the construction sector is seen as the most effective way of increasing and growing a country's economy," said Davies last week's at a construction industry event, organised by the Incorporated Masterbuilders Association of Jamaica (IMAJ).
"That, though, only happens in countries with strong fiscal capacities. In our case, the fiscal capacity sharply limits this due to the lack of resources," said the minister. "Note that I deliberately said limits rather than precludes."
Davies cited three areas of infrastructure that need immediate investment: the airports, seaports, and roadways.
As incentive, he pointed to the privatisation of the Sangster International Airport in Montego Bay a decade ago as the type of "breakthrough" deal demonstrating that areas once seen as the province of Government can create value for investors and the economy.
"I say that because it was the thought that operating an airport. was seen as a state activity, and so the State was responsible for finding the additional capital to improve the facilities or expand the airport, so the agreement to privatise was a major psychological breakthrough," he said.
Davies said that over the next three years, Jamaica expects investment in construction amounting to more than US$1.5 billion. He did not specify the split between private and public investment.
"Such investment will have a positive impact on the country. The construction of the north-south leg of the highway, for example, will have several impacts on the economy," he said.
With the shortage of state funds, Davies said he is looking to maximise investment in infrastructure from the private sector.
"In many instances - too many instances - there seems to be reluctance by local investors to invest in or even take a bet on Jamaica. In the meantime, you have foreign investors who are willing to take a bet on Jamaica for the next 30 years, or even more," he told IMAJ members.
"There is a clear unwillingness from local investors to put in the type and level of investment in construction that is needed, even when they can afford to," he said.
Construction GDP has been on the decline since 2007. In 2007, the industry contributed 8.3 per cent of GDP, but by 2011, contributions fell to 7.5 per cent, according to the Economic and Social Survey Jamaica 2011.
Within the same five-year period, jobs in the sector fell from 117,900 to 88,200.