Restoring a sense of economic and social stability after a lengthy period of devaluation and inflation was a priority for the Jamaica Labour Party (JLP) when it assumed office four years ago, says the country’s Industry, Investment & Commerce Minister Karl Samuda.
“We had to do that in order to grow our economy and allow people to take us seriously,” Samuda said at a Jamaica Promotions Corporation (JAMPRO) forum in Toronto last week. “No investor would give us a second look if we were an economy that did not reflect that level of positive intention to stabilize itself.
“On looking at the situation and the challenge that faced us, we recognized that we had to engage in a systemic change in our model. We needed to re-focus our priorities and resolutely set about the task of achieving this stability, confident in the knowledge that economic recovery can only be achieved in an atmosphere of sound macro economic policies with a productive and competitive labour force and a business-friendly environment with minimal bureaucracy. Without that set of criteria, no one would take us seriously or should indeed take us seriously.”
To boost investor confidence and prove that Jamaica was open for business, the government stabilized the unpredictably fluctuating exchange rate and reduced interest rates through foreign exchange control.
Samuda said inflation decreased from 16.8 per cent to 11.7 per cent last year and the expectation is that it will be in single digit this year. In addition, net international reserves increased from US$1.9 billion in 2007, which represented 15 weeks of goods imports, to US$2.3 billion representing 28 weeks of imports.
“This sends the right signal and telegraphs to the business community that our exchange rate is based on firm footing,” he said. “And while the net reserves might have been developed through revenues obtained from borrowing, it is our intention to convert that to revenues earned through production so that we can be in an even better position to defend our currency and move the economy forward.”
Samuda assured potential investors the country is on the right path and positioned for growth even though the International Monetary Fund (IMF) last year approved a US$1.27 billion loan to support Jamaica’s plan to recover from mounting government debt, weak economic growth and the effects of the global economic crisis.
Multilateral agencies also approved additional credit of US$1.1 billion.
The IMF predicts Jamaica’s growth rate will be two per cent this year.
“Even though we know there are restrictions when you are engaged with multilateral agencies, we believe that these restrictions imposed on us are requirements that we should have imposed on ourselves, but it just enabled us to recognize the things that we need to do in order to stabilize our country and attract foreign investment,” Samuda, the JLP’s general secretary, said. “These multilateral agencies have given us the opportunity to acquire long-term loans at very concessional rates of interest and we took these proceeds and surrendered high interest debts, thereby enabling us to improve our fiscal situation.
“We are uncompromising in our determination to be fiscally responsible as a country and indeed we have to be under the IMF agreement which we entered.”
As part of a wider strategy to liberalize the Jamaican economy and create a competitive and market-driven environment, Samuda said the government will continue divesting entities.
“No longer could we as a nation be prepared to underwrite the cost of failed entities that are best handled by the private sector because we are a private sector government,” he said. “We have divested our sugar industry, the remnants of the bauxite industry and Air Jamaica which was a massive drain on our economy, denying and depriving the most vulnerable in our society of badly needed revenues in order to underwrite the cost of running the country.”
JAMPRO was created in 1988 to stimulate, facilitate and promote the development of trade and industry and export and investment activities.
The Toronto office, managed by Robert Kerr, re-opened in March 2010 after a five-year closure.
“JAMPRO’s role is not simply to entice you to come to Jamaica and then leave you to fend for yourselves,” Samuda told the gathering at the downtown Delta Hotel. “We want you to succeed and make money. We want to develop a win-win situation where you make money and we make revenues from the taxes resulting from the people you employ. That’s our strategy. It’s simple, but it’s essential that every now and then, we remind everybody of our goals and objectives.”
Samuda is familiar with Canada, having completed his high school education at Lisgar Collegiate Institute in Ottawa and his university education at the University of Ottawa where he obtained a Commerce degree.
“This is a very special country to me and the one I owe the most to with the exception of Jamaica,” he said. “That’s why I come here today to strengthen the relationship between Canada and Jamaica. We have not yet begun to scratch the surface of our trading and investment potential…Jamaica has enjoyed a healthy trading balance with Canada and, in fact, we have enjoyed a surplus in our trade arrangements. Bilateral trade, however, in recent times has fallen off and it’s the challenge of JAMPRO to try to face that in a very dynamic way.
“It’s our hope that we can leave here with some positive signs of commitment to restore our bilateral trade positions.”
Samuda said JAMPRO has secured US$4.8 billion in direct foreign investment since 2007.