Avia Collinder, Business Writer
Jamaica has been touting its plan to develop itself as the world's fourth logistics hub, but Panama is ahead of the game and will likely take that title.
Jamaica is banking on Panama's signature project, the canal expansion due for completion in 2015, to realise its own hub dream which will take a decade to realise.
Panama began rolling out its hub project in 2007, known as the Panama Pacific Special Economic Area (PPSEA). The tendered project was won by British company London and Regional, which has been developing the hub in Port Arthur since then.
The website of Panama Pacifico indicates that several multinationals have also set up office in the PPSEA. The area is now home to 154 companies, 5,400 employees and eight Fortune 500 companies. And companies located in the international business park benefit from designation as a special economic area.
Jamaica meantime is just rolling out its Caymanas Economic Zone project, on which bids have opened, while the highway link construction got under way in December. The expansion of the seaport is yet to launch.
Locally, analysts believe that this facility in Panama and other preparations being made to welcome mega liners post 2015 in countries, such as The Bahamas and Cuba, are unlikely to divert business from Jamaica if the multi-modal transport and logistics hub is in place.
The Panama Canal expansion will open up links to 'key markets' in Europe, the United States and Asia.
"Jamaica, however, has a few comparative advantages such as a more strategic location linking the key markets, and also existing capacity which could be utilised with the canal expansion," said Christopher Tufton, co-executive director of the Caribbean Policy Research Institute (CaPRI) and a former minister of industry.
"It is important, however, that we move quickly to consolidate our position in this market space by moving quickly to privatise the ports", and develop "designated space for associated services for port-linked activity like light manufacturing," said Tufton.
The linkages to key markets will create additional opportunities for trans-shipment business linked to storage, light manufacturing, ship repairs, and logistics, he said.
Emerging market specialist Dr Walter Molano is sceptical.
"Panama has been focusing on developing its logistics and transshipment facilities for a long time. It is using its ports on the Pacific and the Caribbean, as well as railroads and roads as a way to allow shippers a great deal of options when moving goods across the isthmus," said Molano, a managing partner and the head of research at BCP Securities LLC.
"Jamaica will have an impossible time competing for these services," he said.
The world's current three logistics hubs are located in Rotterdam, Dubai and Singapore.
Panama's progress was the focus of a June 2010 study "Development of Panama as a Logistics Hub and the Impact on Latin America" by two MIT masters candidates, Daniel Munoz and Myriam Liliana Rivera, who concluded that the Panama's ambition was realistic and achievable with a mix of government planning and private investment.
Anthony Hylton, minister of industry investment and commerce, who is leading Jamaica's logistics hub project, said in January that Jamaica is late out of the blocks on its project, but hoped to make advances on some components of the plan in time for the commissioning of the expanded canal in 2015.
"Many of the projects presented at this conference are still at the conceptual stage and we have to move them beyond this point, so as to attract the investments necessary to facilitate the implementation of the projects," he said at a retreat on the hub project in Kingston.
All of the projects involved in the logistics hub have been included in the Public-Private Partnership (PPP).
The Development Bank of Jamaica is in charge of drafting a priority list of all PPP projects which is to be submitted to Cabinet for review and sign-off. Hylton said the list is being drafted in collaboration with the logistics task force in his ministry.
At the same time, the Ministry of Foreign Affairs and Foreign Trade is also collaborating on a framework for a trade and investment agreement for the implementation of the logistics hub; while the industry ministry works on the legislative agenda to streamline/fast track review, reform, repeal, pass and implement laws impacting the logistics hub.
Hylton's ministry is coordinating the global logistic hub programme, but the component projects span different government ministries, mostly transport which has portfolio responsibility for roads and ports. The north-south Highway 2000 link and seaport development at Fort Augusta in Kingston seaport are being backed by the Chinese.
The industry ministry is overseeing the Caymanas Economic Zone, which will provide distribution and light manufacturing facilities for investors.
Jamaica's hub project is expected to cost US$8 billion to implement and a decade to execute. The ministry will conclude four days of talks on February 8 with a visiting World Bank team regarding possible financing and technical assistance for the project.