Prisma Reports (PR): The Government is doing great efforts to enhance the ease of doing business and have a more conducive environment and has undertaken a series of pro-investment policy reforms intended to improve Jamaica’s investment climate, which already showed an improvement in the World Bank’s Doing Business Index. This growth is being supported by the international ratings agencies as well. How would you describe today’s business and investment environment?
Mrs. Diane Edwards (DE): As you have just mentioned, Moody’s has just upgraded Jamaica’s outlook from Positive to Stable. Our credit rating has improved from C+ to Baaa – I think we are on a stable path. We have just gone through a four year IMF agreement. We have also been very successful in meeting 13 IMF targets – so much so that we have graduated from that programme and moved to a staff monitored programme. That means that we have been “good guys” in establishing fiscal stability and fiscal responsibility.
The economy is on a growth path. Agriculture has grown by 28% in the last two quarters – a phenomenal improvement. We have seen the economy grow by 2.3% - not that great by emerging market standards, but excellent for Jamaica – which has experienced 40 years of zero or very low growth. A phenomenal turn around. We see potential for the economy to pick up steam through investment in several areas. Investment itself has seen a recovery, particularly in terms of Foreign Direct Investment – 2015 saw US $794m. In terms of local investment, business and consumer confidence are at an all time high – which gives a very positive picture.
If we look internationally, tourism has been growing at about 5% over the past two years. This sector is on a very positive trajectory. We have been able to attract almost all the largest Spanish hotel players, as well as two major Mexican operators – Charisma and Moon Palace. If you look at the significant investments over the past year, the CMA CGM has taken a concession agreement on the Port of Kingston – with US$600m being invested over the next three years. In terms of infrastructure – look at the north coast highway – another US $600m or so of investment – has been crucial. It has opened up the links between the South and North – shortening the times by about 45 minutes. This is critical in the movement of both goods and people.
Regarding the Norman Manley International Airport – we are in the process of divesting the facility. We have set up an enterprise team that is in the pre-qualification stage – looking at the interested parties for the bidding process. If you look at what is happening internationally with Kingston, the city was voted in the top 50 cities to visit in 2017 by The New York Times, which after being neglected by the tourism sector for a long time is a nice accolade. Last year we saw over 32,000 Airbnb visitors alone – mainly in Kingston. We have a lot of interest in the sector. On the logistics side of things – we are seeing big opportunities in the ports for example. The public side of the port is seeing a huge amount of investment. On the private side – it is owned by Kingston Wharves Ltd. They have developed their own logistics center focusing on the transshipment side of things – a critically important venture. We are also developing new legislation on the special economic zones, which will open opportunities for light manufacturing, assembling, warehousing and the whole logistics chain – helping to position Kingston and the Port of Kingston as a lynchpin in the global logistics chain.
If we look at outsourcing – Jamaica has become very successful in this industry, with over 22,000 people employed in the sector. This is not just call center outsourcing but also higher level applications such as finance and accounting, HR and health applications. Agriculture this year is set to take off in a big way. There are a couple of interesting largescale projects – large acreage and scientific projects that will be coming onstream this year. This will really change the picture of the sector. We have been working closely on the linkages between tourism and agriculture, with a tourism demand study to highlight the opportunities. In addition to this, we have been researching the international markets through the Fresh Produce Marketing Association of the US and the Fresh Produce Consortium in the UK in order to identify the markets for fresh produce that we are not yet supplying. The picture is very positive, particularly if you look at the largest Jamaican companies – who are in investment mode. GraceKennedy, for example, is doing a lot of backward linkages into agriculture and expanding their base. Jamaica Producers have just opened a large factory to export Tortuga Rum Cake to the Southern US. All of this is very positive. It is a very good time, as a result, for investors to come to Jamaica.
On the point of the ease of doing business, we have climbed the global rankings to 64th place. Why? Because this is a very easy country to enter and do business in. You can own 100% of your assets. We have a very liberal system based on UK Common Law – a system that is very simple and easy to navigate. We are involved in a business environment reform agenda – BERA. The Port Communities System will allow paperless trading in and out of the country. Then you have the Amanda System – online tracking of Development and Building approvals. So as you can see there is a whole range of changes being implemented by the government.
PR: Mr. Metry Seaga from the Jamaica Manufacturers Association told us that JAMPRO is in the process of developing a one-stop-shop center for businesses.
DE: That is correct, JAMPRO is working on an online-one-stop-shop. A portal that will allow online transactions directly with the government for private businesses.
PR: In the midst of a complex global economic scenario, i.e. slowdown of Europe, China and emerging markets, along with depressed commodity prices, diverging monetary policies and depreciation of emerging currencies… What is your vision regarding the economic outlook for Jamaica?
DE: We have adopted the aspiration for 5% growth in the next four years – which we believe is very achievable. First of all, it is true that commodity markets are in decline, but we have ceased to be a commodities producer. The traditional crops were sugar and bananas – and we were in the market. However, the preferential agreements with the UK have now come to an end, and they are no longer the mainstays of the Jamaican economy. Bauxite and aluminum are the biggest exports from the country. Yes, they declined for a while, but we saw last year the takeover of the Alpart Aluminum Plant in St Elizabeth by the Chinese firm JISCO. They are going to restart the bauxite and aluminum shipments. Prices are growing again, so there is an opportunity for a mineral led recovery. Yes, aluminum is a commodity, but JISCO are talking about value added products. I think that is the fundamental point I want to make. We are not focused on commodities exports, but value added goods. Processed foods are a key opportunity for us. Rum for example – globally the market is in decline, but the market for Jamaican rum is growing. Campari owns the main rum producer – Appleton Estate. They spent US $400m acquiring the brand four years ago – a huge sign of faith in the brand, particularly in the US.
My point is that when you are producing branded products, you are not as subject to commodity prices as in the past. Look at Red Stripe beer. It is owned by Heineken, but they have repatriated the manufacturing from the US back to Jamaica. They are in a backward linkages programme to grow 2,500 acres of Cassava to replace barley, which will be grown here. Carib Cement is looking to export cement and hydrated lime. They now belong to the Mexican group – CEMEX. The point being that, 1, the Jamaican economy is becoming more internationalized and 2 – it is becoming more brand driven. This will give us opportunities for counter-cyclical growth.
PR: Despite the good results, Jamaica still faces some challenges, such as energy or crime. What are the tangible efforts to tackle those problems?
DE: Energy is run by the Jamaican Public Services Company. The company is 20% owned by the government, the other 80% is private. It has focused on a multi-fuel strategy. They are bringing in LNG via a US company and they have already converted one of the two major power plants in Jamaica – in Montego Bay. It is already accepting LNG. They are in the process of converting the 98MW plant in Old Harbor to LNG. This is critical for us as it will bring down the cost of energy. This is a critical lynchpin of the government’s plan - a strategic move in the development of industry in the country.
We are also working on renewable sources of energy – particularly solar. Vision 2030, a bipartisan plan to develop the economy, looks at 30% renewables by 2030. We are currently at 8 to 10%, so there is a way to go but that is another way we are helping by lowering costs. We are looking at bio-fuels, waste energy – all sorts of ways to produce energy and lower the cost of electricity.
Regarding crime and violence – it is a big challenge for the economy and has an impact on the GDP. There is a national plan to combat crime. We have had many partnerships with the US and the UK in order to improve the crime fighting capability of the police force – both human capital and the technological capability of the national police force. On the latter front, there is a new machine being brought in to match the striation on bullets. This will improve crime detection – one part of the strategy. We also have Major Organised Crime and Anti-Corruption Agency (MOCA) - the body to limit organized crime. They are leading a large crackdown on organized crime. The two key sources of crime are – domestic violence and gang/drug related violence. There is a lot of interdiction to be done here. We have also improved our detection abilities on the water. The Japanese have provided two new vessels to patrol the waters. Being an island, it is very challenging as people can fly in, come by boat, etc. We have several strategies to deal with crime. Regarding tourism in particular – we have the courtesy corps. They are in plainclothes – not the police, but the citizen’s police. They patrol the areas to deter crime in the tourism areas and protect the visitors. Most of the crime is not directed against visitors, rather it is internal.
PR: You mentioned that enhancing human resources is critical. One of the most important assets of a country is its people. How would you describe the Jamaican worker to interested investors?
DE: We have a young population. A very trainable population, one that is very enterprising. A high percentage of the economy is in the informal economy – people who are starting their own businesses outside formal structures. We have a very enterprising workforce. In terms of the outsourcing industry, one of the things people appreciate is accent neutralisation. This is something that isn’t really needed in Jamaica. It is a short process to train people to a level that Americans can understand the accent. This is important as the business depends on human beings – as a lot of it is to do with the personality of the people.
One of the things that people say about the Jamaican workforce is that there is a strong affinity for the US market. That makes us a great near-shore opportunity for US companies looking to go offshore as there is a minimal cultural gap to jump over. At the same time, we are very Caribbean, so our Mexican and other Latin neighbours appreciate the workforce, as we are very similar to them. It is that work-life balance – work hard/play hard.
PR: You are a senior business executive, with a proven record of building profitable businesses nationally and internationally. What is the importance of the private sector in Jamaica’s development?
DE: The private sector is the driver of development. Governments don’t develop; Governments provide the infrastructure and the framework for businesses to thrive. It is really all about empowering business and that is what JAMPRO is all about. There are three things we really do in JAMPRO. One is to attract investment and get the investment on the ground. Second – we increase exports by finding new markets and helping local players access those markets. The third part is business advocacy. We do a lot of work on the business environment and improvement, following the international rankings. We empower business people. The private sector is primordial. Without it, we are never going to grow the economy.
I think what is instructive is the public-private partnership which is a big plank of the Government’s development program because the Government has a lot of assets which are not productive. These need to be given back to the private sector in one form or another, whether in the form of concessions, sales or leases. The Government is very committed to doing that and I believe that these partnerships are critical going forward. These add to the “Partnership for Jamaica”, which is a social contract, a public-private-civil society-unions – everybody working together.
PR: In that regard, how smooth is the dialogue between the different stakeholders in Jamaica?
DE: It is a very powerful dialogue, one that is bipartisan and has been going on now for 10 years. In other words, this Partnership for Jamaica, is a formal document that the various players signed. The name has now changed to Partnership for a Prosperous Jamaica. It has been signed by government, private sector leaders, civil society and the trade unions. The whole point being for everyone to buy into the direction of development we are following. For everyone to understand their role in it and to agree to the sacrifices that we have to make to get on this growth path. That is one of the key reasons that we were able to complete the 13 IMF tests without any social unrest. It was not easy, there was an austerity programme, certain sectors of the economy were starved of funds. However, you had social acceptance of the programme because of the partnership agreement. That agreement is still in place and was renewed about two months ago.
PR: According to Moody’s, FDI inflows were close to US $1 billion in FY2015/16, an increase of nearly 42% from a year earlier, and it estimates they will exceed 7% of GDP in FY2016/17. The Government has allocated US $850 million to a project to strengthen the enabling environment for private sector competitiveness, which will help the country unleash productivity and growth. What are the strategies to promote partnerships, enhance the role of the private sector and attract FDI.
DE: The biggest thing for us is to improve our penetration of international markets. At the moment, we have two overseas offices – Toronto and London. They work by targeting specific businesses that we want to see established in Jamaica. We also develop projects to be sold internationally – we sell these through road shows. We attend trade shows to promote various sectors. We are using more and more in-market brokers, for instance we signed a broker in outsourcing last month.
We have a very powerful diaspora. We are linking with the highly placed members of the diaspora on the international scene and we are developing a referral system similar to that run by the Irish and Israelis, using the diaspora to reach more influencers and investors. We have a big investment conference organised by JAMPRO every three years, the next one will be in 2018. We bring together international influence builders. It is a great opportunity in terms of media value and in terms of attracting the right kind of people to make things happen.
PR: The Minister of Transport and Mining told us Jamaica is open and ready to do business with those who are looking for investments that can become game changing. JAMPRO continues to focus its development and promotional efforts on key growth sectors identified in Vision 2030. What opportunities for direct investment and/or public-private partnerships would you like to convey to Foreign Policy readers and the international community?
DE: There are huge infrastructure opportunities, particularly in water and irrigation. We have agriculture parks which are areas that are designated for collective development of agriculture – not as a co-operative, but a grouping for the centralisation of agri-services. There is a big need for investment in the road network. The Government has just launched a new program to link Kingston with the east of the island. With regards to agriculture, the Government has a lot of land up for divestment. In logistics, we are right on the direct line of the Panama Canal – the shipping lanes to the East Coast of America and of course internationally. There is a huge opportunity here for light manufacturing, distribution, assembly and warehousing. Outsourcing and shared services are another area we are focusing on. This is a human resource intense sector, and we have the capacity to supply the needs of this industry. Looking at tourism and services – this sector is 74% of the national economy. Services are an important part of what we do.
The creative industries are an area we are developing. We have undertaken a consultancy process looking at where the opportunities lie in the creative industries and where we can generate IP content - a critical part of our strategy. We have filmmakers, musicians, you name it – a vibrant creative industry. We are using this sector to galvanise young people – along with technology. Technology provides an opportunity for our young population. We have incubators where you can develop apps and where you can outsource your app development to the tech companies that are forming in Jamaica.
PR: When we interviewed the Hon. Kamina Johnson Smith, Minister for Foreign Affairs and Foreign Trade, she mentioned that the Ministry is spearheading various projects this year with an emphasis on expanding investment and trade, and looks to complete the Foreign Trade Policy. What does this policy actually mean for Jamaica and what is the role of JAMPRO within it?
DE: We work very closely with a constellation of ministries, departments and agencies. Of course, Foreign Affairs and Foreign Trade is intrinsic to what we do. This is because the trade agreements are critical for both local exporters and foreign companies looking to locate here and use the island as a springboard for exports. The whole area of trade treaties, double taxation agreements and investment protection agreements – all of this is critical. One other area to mention is the International Financial Services Authority that is looking to develop the financial services product outside Jamaica. Therefore, the Ministry of Foreign Affairs and Foreign Trade plays an important role in opening access to new markets. We have some trade treaties, but we need a lot more trade agreements – particularly to Latin America as we suffer from an Anglo-Saxon myopia. We need to be much closer to our neighbours, both in a regulatory manner and a logistics sense – we need greater integration. The World Bank just came out with a study on the question of integration between the Caribbean and Latin America and intra-Latin American markets. So, there are a lot of opportunities there that we are not yet taking advantage of and I think that JAMPRO is well placed to work on.
PR: The Most Hon. Prime Minister Andrew Holness expressed, during a talk with U.S. Vice-president Pence, optimism about the future, and confirmed Jamaica’s continued interest in building stronger ties with the United States, Jamaica's most important trading partner, and enhancing current partnerships. JAMPRO signed last July a MoU with the AMCHAM Jamaica to increase and strengthen trade and investment links between both nations. What is your overview on the diplomatic and commercial relations of both nations, especially now in the Trump era?
DE: I think that there are positive, strong relations with the US. Those relations will continue. There are so many close interconnections between the Jamaican and US economies – they are our largest trading partner and largest source of visitors. We have a huge diaspora in the US. There is no way that we can loosen those ties in any way – if anything they are only going to become stronger. There is a large US demand for Jamaican goods from food to rum to lifestyle products. Therefore, there is a huge opportunity to strengthen that relationship and I do not see any real change in that as a result of this administration.
Late last year we had the Caribbean Strategic Engagement Act signed in the last days of the Obama Administration. As a result, I see a continued bipartisan support of that engagement with the Caribbean. The region is strategically important to the US and I do not expect any US government to go against that. I expect a continuation of strong relations with the US.
PR: In a recent interview I conducted with the Chairman of the East African Business Council he told me that for him to succeed and get to the top, he had to “think outside the box”. Which lessons did you learn during your business journey and what are the innovations you are the proudest of?
DE: I worked for the rum company Appleton Estate in London for quite a while, and one of the things I learnt was that it doesn’t matter if the market is in decline – you can still grow your product. You have to have a quality product, a strong brand and a product that people want. Jamaica at this point has a product that people want. We are at a really exciting moment in our history and our development. We can capitalise on the strength of that brand – we are one of the few countries in the world that has that kind of brand. Other countries do not have the recognition, the emotional connection that we have. The fact that we do have those links, those positive emotional connections is a huge plus for us. This is something we can really capitalise on and use to build our product and services for the future. I spent 10 years building brands – the brand is what people buy into. A lifestyle that is attractive and has a positive aura. That’s what people want nowadays and is something that we have.
Another area I haven’t spoken about is that of medical tourism. This is a new area that JAMPRO is promoting. We have done a lot of background work on that, and will be launching our medical tourism products. The whole spa and nutraceutical area is a natural for Jamaica. It is said that we have half the medicinal plants in the world growing in Jamaica. Furthermore, we have a traditional healing and use of herbs mentality. So we can do a lot with these natural products that people want to buy into. They also want to buy into the culture. It is all a kind of holistic approach to marketing Jamaica as a brand and this is what we are all about.