In the late 1980s when Edward Seaga's government was divesting government assets, the auditing/consulting firm, PricewaterhouseCoopers (PWC), whose name was shorter then, was hired to structure most of the deals.
National Commercial Bank (NCB), before the 1990s financial sector meltdown and its re-nationalisation and subsequent divestment, was among the entities floated by the Government. Nearly three decades later, one of the offshoots of this project, the real potential of which was never fully grasped, has relevance to Jamaica today, as it struggles with its economic crisis.
The NCB divestment strategy got international attention when it was written up by the business review of a major American university, leading to the PWC Jamaica team that structured the deal being engaged for divestment projects in other emerging markets. An important factor here is that in normal circumstances such projects would have gone to PWC partnerships in the developed world, except that it was known that Jamaicans could do the job - and much less expensively.
FAILED TO SPEND
Looked at another way, Jamaica demonstrated competence and comparative advantage in an area of global business in which it was not hitherto considered a player. Unfortunately, we did not expand this toe-hold in the global market for services. Or, more to the point, trade in services is not an area that has, we believe, sufficiently concentrated Jamaican minds, especially with regards to its business relations in the Caribbean Community (CARICOM).
It is an issue that was placed on the agenda last week by CARICOM's secretary general Irwin La Rocque during his visit to Jamaica. Assessment of the performance of, or benefits from the group, he told this newspaper, tends to be, "always measured by trade in goods".
Indeed, Jamaica's near US$1 billion trade deficit on visible trade with CARICOM (primarily Trinidad and Tobago) has been a preoccupation of business interests. Proposals have ranged from total abandonment of the community to a suspension membership of the community - at least for the four-year life of our economic adjustment agreement with the International Monetary Fund (IMF). The expectation is that Jamaica would claw back between J$10 billion and J$17 billion in tariffs on imports from CARICOM that are now duty free.
The debate has been largely absent of serious analysis of the practicability of these proposals within the framework of the CARICOM treaty - except for the suggestion that Jamaica ought not to be constrained by legal niceties. Nor has there been contemplation of the longer-term implications for Jamaica if it leaves the community.
This newspaper, of course, believes that Jamaica must look out for its best interest in CARICOM and ought to utilise the several mechanisms available to prevent cheating by others, including illegal non-tariff barriers to its goods. But we must also fix the problems in our economy that undermine the competitiveness of Jamaican firms.
Mr La Rocque, however, noted that with the understandable focus on visible trade, we tend to miss opportunities in trade in services such as health, medical and legal service, accounting and entertainment, in which Jamaica is likely to possess a comparative advantage.
We have in the past questioned why, given available technology, a Jamaican accounting firm can't provide the accounting/auditing service to businesses in other CARICOM states. Richard Downer, who was the heart of the NCB project, might have a perspective.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: firstname.lastname@example.org or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.