Andrew Holness, Jamaica’s prime minister, gave a fulsome and explanatory presentation on what he believes will be needed to spur the economy post COVID-19, and the efforts currently being made to mitigate the financial downturn, during the ground-breaking ceremony for the new IMCA Jamaica, Caterpillar US$8-million corporate headquarters on Spanish Town Road in Kingston.
During his presentation, Holness called for investment in real assets and for the entrepreneurs and finance houses to come together and effectively utilise idle real estate to grow businesses that employ Jamaicans and contribute to the country’s economic development.
Below is his full address:
I am delighted to be at this ground-breaking ceremony as every ground breaking is a signal of confidence in the future. It is a signal of belief in our strong recovery from the effects of the pandemic. But for me above all of that, it is a signal of confidence in the Government that investors both local and foreign will take the risk of putting down cash and that the Government will maintain good economic policies to ensure that these investments are a success.
Last week I toured a magnificent agro-processing facility by Gazan Azan. It is important to highlight these events, because there is a sense sometimes that nothing is happening in the country and that’s understandable because after all we are in a pandemic which has not just had a health effect but also a depressing psychological effect.
So it is important to place in front of the people the other stories, the stories that don’t get carried, don’t get featured, that there is good news happening in the country. This is a major investment and I am pleased that IMCA Jamaica as sole authorised dealer for Caterpillar has chosen to deepen its investment in Jamaica.
Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The Caterpillar brand has had a long and successful history in Jamaica. I am optimistic that this project will be another industrial growth stimulating project for Jamaica as Caterpillar continues to bolster its presence.
There is a lot of work out there to be done by Caterpillar. Yes, there is a lot of construction and mining work to be done because as you would know, our construction industry even during the pandemic has been growing leaps and bounds.
We are happy to see this investment by IMCA Jamaica. The COVID-19 pandemic has had a severe impact on our economy as our Statistical Institute has reported. Real GDP contracted by 6.7 per cent in the January-March quarter compared to the corresponding quarter in 2020 and by 11 per cent for the full fiscal year, March 2021.
The hardest hit sector was the Hotels and Restaurants Sector. Real value-added for that sector contracted by 55.9 per cent as a result of a 71.9 per cent decline in stop-over arrivals. There were no cruise ship arrivals. That was a massive blow to our economy. But we are still standing. People are still investing. Tourism is an important source of foreign exchange. It is an important source of employment, but our economy has diversified sufficiently and with good economic policies and management we are able to withstand the shocks.
This is not bragging. This is just explaining the context within which we are operating. Yes, we have been able to withstand the shocks, but we cannot withstand the shocks for a prolonged period, and we can’t do so indefinitely. So even though we have put in place measures to manage the pandemic, we also have to ensure that those measures allow us space for our economy to breathe and recover so that we can withstand further shocks should they come.
The Government has to balance it – lives and livelihoods to ensure that we all make it out of this pandemic alive and well.
We are starting to see green shoots. We are starting to see a rebound taking place and that’s precisely because of how the Government has conducted the management of the pandemic. We can’t suffocate the economy. We have allowed the economy space to grow.
So since May 2021 there has been a remarkable increase in visitor arrivals. We have had approximately 164,000 stopover visitors in June this year, up from 116,000 in May and before that we only had 83,000 in April. This is roughly now 69 per cent of the pre-pandemic number of 239,000 for June 2019.
The Dominican Republic faces the same set of challenges and essentially have employed similar measures in opening up sectors, providing a pathway for tourism. I follow the numbers there because Jamaica, the Dominican Republic and Cuba are the major tourism destinations in the Northern Atlantic.
Their tourism is also recovering. Tourism around the world is recovering.
The Ministry of Tourism here has recently revised its visitor arrival forecast for the calendar year 2021, up from 1.1 million to 1.6 million which is not bad. It will bring in much needed foreign exchange into the economy. We hear people complaining about the foreign exchange rate, but this is a very important source that can help to bring some stability into that market.
Despite the pandemic, the construction sector has recorded three consecutive quarters of growth. For the January-March quarter 2021, growth in the Goods Producing Sector was largely due to the higher output levels in construction, up from 10.5 per cent and Mining and Quarrying up 7.1 per cent.
So, you see why IMCA is making that investment. These are very resilient sectors of our economy. Our projection is the economy will grow between 7 to 9 per cent for the April to June quarter in 2021 and will grow between 4 to 8 per cent for the fiscal year ending March 2022.
I am cautiously optimistic that growth will trend toward the top end of the forecast given the higher than anticipated cases of our inoculations and the release of pent-up vacation demand and the impact of a significant fiscal and monetary stimulus in the United States.
We are seeing the recovery globally being led by increasing vaccination rates. Countries where we are seeing high vaccination rates are seeing their economies recovering faster and that will have a spill over effect. We will see the impact in our tourism numbers. People will want to travel more when they are vaccinated.
In Jamaica we cannot allow vaccination hesitancy to impact the pace of our recovery. Because the same people who don’t take the vaccine, who demand spaces in our hospitals and treatment from our doctors will say, why isn’t the Government providing the resources to do so? The resources don’t come from air. We don’t pick them off the trees. It comes from the spending of tourists, the spending of investors, the projects like this one from which we get taxes from which we then pay the doctors and hospitals to serve you. There is a connection.
I am urging every single Jamaican to take the vaccine when your time comes. There is a reason why we can’t get vaccines. The smarter people in the world have taken up all the vaccines and made sure they have them first. The richer people have made sure they have them first. That is why we don’t have vaccines readily available. And we must be wondering why is that so? What is it they know that we don’t know?
Why are we here in Jamaica following nonsensical arguments about the vaccines? Take the vaccine! Jamaica has had a long and beneficial history with vaccines. All of you when you were in primary school took vaccines. It wiped out many diseases that threatened us. So, I am using this platform to appeal to every single Jamaican that when the time comes take the vaccine.
We will have more supplies of the vaccine soon. We expect to fully supply and treat the more vulnerable groups by August. Once we have cleared that group in the society, then we will start progressing down the line of the age groups. The quicker we take the vaccine the more appealing our economy looks. When people have to make their travel decisions, Jamaica’s vaccinated rate “will be high and comparable to where I am coming from so that is a safe place for me,” many will reason.
You can’t have it both ways. We can’t want to open up the economy while at the same time we don’t want to take the vaccine. The two things are just not going to work. If we keep the economy closed, we can’t provide the services you need. It is important that you are rational and responsible. Take the vaccine!
This presentation is not about vaccines but you will understand that every opportunity that I get to converse with the Jamaican people, I want to raise these issues and reason with them and bring them on board since we have not said it is our intent to make taking the vaccine mandatory. At every opportunity we have to reinforce why we should take the vaccine.
The key downside risk to the growth of which I spoke and the possibility of getting to the higher trajectory in the growth projection remains the domestic spread of COVID-19. This depends on how diligently we practice our prevention and control measures and how we take the vaccines when they are available.
The importance of partnerships
This venture today demonstrates the value of partnerships like we see between IMCA Jamaica and the Sygnus Group. Also, we see what can happen when the private sector and public sector groups like JAMPRO (acting as facilitators to obtain regulatory approval) work together. I must say that I am receiving good reports about the work of JAMPRO in facilitating investment. I must say in recent times investors have been complimentary of the facilitating work of Jampro.
This a very important point because at another event earlier I made some comments which I expect to be taken up about the public sector and the growth strategy.
The growth strategy has to involve the fiscal management issues to create the stability within the economy. But it also involves instrumental direct and deliberate growth strategies whether it is incentives and so forth. An important part of the growth strategy is the ease of doing business and whether companies fell facilitated in their environment.
Businesses have multiple destinations to choose from. We are not special in any way. If you take away our location and the fact that we are English-speaking, we have to compete with the entire Latin American and Caribbean region.
What will give us the edge is not how many incentives we give away or how far we lower our tax rate but when an investor says to another investor, “ You know, I like to invest in Jamaica because the regulatory agents, the environmental agents, the investment promotion agents all work together to bring a sustainable solution in quick time for my business.”
Investors want to hear yes or no quickly
Investors want to hear an answer. Is it yes or is it no. Sometimes the issues are complicated, but you must engage them, explain, give alternatives. Sometimes they get a stonewall, they get the run-a-round, bureaucrats sending them all around and they don’t get a response. That cannot be the Jamaican public bureaucracy. That does not inure growth. And so I am very happy when I hear JAMPRO being commended and I want to encourage Diane Edwards (Head of JAMPRO) that this is the general view of JAMPRO.
I do hope all Jamaican public sector entities will adopt this facilitating and forward reaching approach to ensure more investments in this country. More investments mean more taxes, means more revenues for the Government and when you have a Government like ours that believes in equity that means better pay, better conditions.
I am also pleased to see the innovation that entities like Sygnus have brought to our corporate finance landscape. Innovative and flexible financial structures bringing investors and financiers together and patentnising the development of real estate projects such as the one we celebrate here today.
I would like to thank IMCA Jamaica for having the confidence in Jamaica and commend you for your business acumen in positioning yourself in one of the most ideal locations along our main industrial corridor.
Getting Growth in Jamaica
You know how we are going to get growth in Jamaica? It’s when we have a thousand of these projects. But there is a block in our minds that we can’t see that we can have a thousand of these projects. If you just drive along this corridor you can see how many pieces of real estate properties are idle, not utilizing their full value. What is stopping them?
Well, you need people with vision and entrepreneurial ability. People like Sygnus who will bring people like IMCA together. But we also need a facilitating government that can streamline the regulatory process, to have all these idle properties being developed.
Granted, Jamaicans are only now recovering from the FINSAC era where our entrepreneurial class was decimated. We are now seeing that entrepreneurial class re-emerge.
I want to see more Sygnus’ come to market, bringing solutions and matching resources like land with the financial wherewithal. The Government must stand ready to give the support to these partnerships. Once that engine is working, people will find use for these properties. They will begin to invest in them, moving their money from paper into real assets thereby creating real jobs.
This is when you will see the economy truly grow. This will not be a lop-sided or unfair growth. It is the kind of growth that will include the small man as well. His share in that partnership will be his labour and wages. This is how we are going to get growth in the country.
I want to encourage Sygnus in what it is doing. Put together more deals, more transactions. Build these properties that are just laying there giving cover to criminals, with others rotting and rusting away. Let’s get all these idle properties into meaningful economic activities.
It is not just industrial activities that we should be focused on. We must do the same with agriculture. We had the Bernard Lodge properties sitting there for almost forty years, nothing happening. We have now got them into productive activity.
If we don’t have enough Sygnus’s then the Government has to play market maker and find ways to get investors in.
This investment will be approximately US$8 million and will see the employment of 200 workers over the course of the construction. The new building will house 82 staff members. That is significant.
These investments don’t have to be as much as US$8 million. They can be US$1 million or even less. Whatever it is, if you have these properties sitting down on, let’s get them utilised. Let’s get the full benefit of the asset. This is how together we can grow Jamaica.
I am happy for this and want to see more of these projects.