Growth may be nearer than we think

Edward Seaga, Contributor

With each announcement of the preconditions required for the IMF agreement with the Government of Jamaica, there is an increasing cry for growth.

The whiplash of increased taxes, near-confiscatory investments, wage freezes and reduction of waivers and subsidies, among other austerity measures, have sharpened the cry for compensatory policies that will produce growth.

It is believed that if the economy would grow again, the pain would be replaced by gain. This is true, but equally true is that austerity and growth do no commingle, except in countries like the United States and China with huge treasuries that can provide investment funds for growth which expands the economy while decreasing it.

More likely is the sequencing of austerity and growth, with the former followed by the latter.

This is how it was handled in the early 1980s when the greatest recession in 50 years hit the country. Austerity measures were applied in 1984 and 1985, with growth commencing in 1986. This can only be done, however, if the austerity years are used to plan growth to commence immediately after the austerity period is over.

In that instance, austerity focused on massive expenditure cuts to reduce the deficit inherited from the 1970s by 17.5 per cent to balance the Budget. The severity of that policy was an unavoidable result of the financial horrors of the 1970s when the Bank of Jamaica virtually ran out of foreign exchange and there was negative growth and record levels of unemployment annually.

That was the scenario that was faced then, which parallels the awesome threat of drowning in debt, which exists today. So in both periods, the imperatives of the harsh measures had to be accepted.

To start the ball rolling, Government has already identified two mega projects, one to start shortly, with the other still in discussion. The early start-up is the north-south highway from Ocho Rios to Kingston, to be followed by the divestment of the Kingston Container Port, which is now under discussion by an Enterprise Team appointed by Minister Omar Davies.

There is some confusion with regard to the scope of the Kingston Container Port project, which has responsibility for the Kingston Free Zone. This free zone was established in the 1950s. It was once booming with garment manufacturers who have virtually all left. Is this free zone to become part of negotiations for divestment?

The Container Port is in a similar position as it owns the adjoining property, a 53-acre peninsula, Fort Augusta. Is Fort Augusta to be included in the negotiations also? Considering that the purpose of divestment of the port is not only to earn from the sale to help boost the revenue, but to expand the port, there is need for clarification.

A Fort Augusta Free Zone was the result of a study I undertook in 1994 of the depth of water in that part of the harbour. The study revealed that the contour of the harbour shelf of shallow water is some 197 acres, which can be dredged. When added to the 53 acres of hard land at the present Fort Augusta, the total would be 250 acres, or eight times the size of the Kingston waterfront redevelopment from the Bank of Jamaica to the new Digicel headquarters.

godsend for second start

Considering the overcrowded and dilapidated conditions of downtown Kingston, I viewed this potential reclamation of the shallow area as a godsend for a second start to build a worthy development with prime access to the harbour.

This would not mean full reclamation of 197 acres at one time. What would be required is the development of a master plan to create a massive area for expansion - in sections. The expansion would be carried out over decades to come as required.

The opportunity would arise for massive commercialisation and industrialisation with the appropriate incentives for development over the years to come. But this would depend on the feasibility of attracting such investment.

Jamaica is a prime candidate as a strategic location directly on the shipping route from Europe to the Pacific, through the Panama Canal, which is now being expanded to take mega vessels for cargo, which will considerably increase shipping activity. This is the rationale for the expansion of the port.

We would be inexcusably negligent if a professional study was not done to determine how much of this potential development could be attracted to Jamaica to be established here. Every business begins with location.

Undoubtedly, expansion of the port would require part of the land for berthing the mega ships by dredging reclaimed land to the required depth.

At present, the Kingston Container Port receives cargo containers, which it forwards to smaller Caribbean ports where bigger ships cannot go. But this service can be considerably extended if a Fort Augusta free zone were to receive cargo from huge vessels which are stripped and the goods sold wholesale and retail.

business boom

Think of the dozens and dozens of businesses retailing Chinese or other imports and wholesalers supplying hundreds of buyers who come to the free zone to purchase supplies and you will begin to see how the property could begin with a sizeable development. Anyone who has been to Panama City recently will understand my excitement in seeing a new Singapore emerging, with countless modern high-rise buildings and bustling trade.

The assembly of component industries, whether electronic or otherwise, is another area of activity which could thrive.

The development would be self-sufficient in hotel accommodation, entertainment and services.

When I visited China in 1996, I explained this proposal to the high-ranking officials with whom I met. I even proposed that they create their own brands and service the Americas from this location.

I don't think there is any further need to elaborate on the many possibilities which exist, except to say that the potential for employment, as indicated by the development study which I commissioned, would be sufficient to take care of unemployment from the Kingston waterfront area, Portmore and Spanish Town.

In addition, the reclamation would extend to the mouth of the harbour just across from Port Royal. This would provide for the transport of visitors to Port Royal by ferry since ships cannot dock in Port Royal without endangering the cultural-heritage relics on the sea floor. This is the only chance Port Royal has to come alive, provide work for its people and establish a First World attraction for Jamaica as the finest marine archaeological site in the Western Hemisphere.

The project should be given the study it should receive, which, if feasible, could turn Jamaica's future around.

I say no more than don't let it go to waste by negligence, or by whatever other motive may exist. It could be the chance of a lifetime.

The time to organise for growth is now, so that in two to four years, the projects will be ready to deliver. Jamaica has that chance because of the investment potential from China, which the Chinese have already magnificently demonstrated here. The investment that growth requires may be nearer than we think.

Edward Seaga is a former prime minister. He is now chancellor of the University of Technology and a Distinguished Fellow at the UWI. Email feedback to columns@gleanerjm.com and odf@uwimona.edu.jm.