Beyond the IMF - 10 things we must do to stimulate growth
Michael Ennis, Guest Columnist
Despite the sigh of relief on being at the brink of inking an agreement with the International Monetary Fund I believe we are all aware that the deal will not, in and of itself, solve our decades-old problem of low growth, low productivity and low competitiveness. What the agreement will achieve is allowing us now to focus on the growth agenda.
The undisputed key to growth is competitiveness; we are in a globalised marketplace. As such, whether you are planting yams or building sophisticated robots, you have to be efficient and competitive. The key to our competitiveness is our knowledge base and cost-of-production profile. Therefore, in order for us to move on to a sustainable growth path, we must immediately do the following:
1.The cost of energy has to be reduced. We must pursue the long-term strategy of portable nuclear energy. We need to provide aggressive single-digit, long-term financing for alternative energy solutions. Government can jump-start the alternative energy industry by immediately embarking on a programme of installing solar energy solutions to all government-owned buildings.
With long-term financing and partnership with large-scale manufacturers of solar panels, Government can cut its energy cost by 20-30 per cent during the payback period (normally five to six years) and 70-80 per cent afterwards.
2.We need to pursue an aggressive agriculture/agro-processing programme. We need to cut the red tape and get land in the hands of agriculture investors, small and large. We need to appoint an investment czar with powers to get things done quickly. The country's productive capacity is being stifled by draconian laws on procurement and use of government assets. The investment czar should be given a public-private partnership set of tools that would allow agility, flexibility and speed in decision making.
3. Align our educational policy with the sectors targeted for increased production. For the logistics hub, tourism, agriculture, and manufacturing to lead the growth, we need to have qualified workers for these jobs. We can't leave it up to chance that people will change their attitude towards vocational training. We need to engage the private sector, both local and international, to provide scholarships and grants to train Jamaican workers for the jobs of the future.
4. Government needs to immediately implement the long-discussed micro, small and medium-size enterprise (MSME) procurement policy. The prime minister and the Cabinet should mandate ministries to immediately cut their import bill by 20-50 per cent. Spending money with MSMEs will create greater multiplier effect and higher tax revenues, even if the product unit cost is higher, since direct imports by Government bring no tax revenue and zero multiplier.
5. Doing business in Jamaica is still too difficult. Attempts to reform the process of starting a business, and paying taxes and fees are still too complex and bureaucratic. I saw a case recently where it took four attempts to file the company returns. The Companies Office of Jamaica (COJ) will return the forms if you use the short form 'Ltd' instead of 'Limited', or if you wrote 'Kingston 10, Jamaica' but leave off 'St Andrew'. It still takes some five multipage forms and $50,000, including legal fees, to register a company.
The time has come for the COJ to create a new category of limited liability company for start-up MSMEs, a category akin to the USA's LLC or S Corporation.
6. We must create an aggressive export-or die programme. It is time to create an export-promotion company, not a company looking for investors but a company that would travel the world with our manufacturers and agro-processors and market Jamaican products. This company would be responsible for exploiting Brand Jamaica and assisting Jamaican companies in selling their products abroad. It is time to uses our embassies and high commissions as Jamaica's storefront.
7. We need to create an aggressive import-substitution programme. It is time to stop printing educational books overseas, stop importing cheaply made furniture, and restore our screwdriver industry by removing duties on raw materials and increasing duties on finished products. It makes no sense training technicians without an industry for them to find work.
8. Immediately introduce a production incentive programme. We need to create a programme that will provide cash, marketing and/or technical assistance for targeted levels of production for all sectors with special emphasis on foreign-exchange earnings/savings products and services.
9. Fast-track the highway road programmes. These are shovel-ready projects that will provide a significant number of jobs and a shot in the arm of the economy.
10. Finally, we must be prepared to work together. The individual sector self-interest cannot be allowed to derail our efforts. Too often one sector of the society dominates the economic policy direction. Sectoral interest must set aside individual short-terms gains for long-term gains for all.
Some of these actions will require our policymakers to move outside of their comfort zone. We must fix the lethargy of the public service. There are too many people in the service who are experts on 'why things can't be done that way' but very few who know how to get things done. The Government must lead the growth agenda. This is the only way to guarantee a reasonable degree of success. The market, by itself, cannot lead; it must be led.