Op-Ed: Kent Gammon on Reversing Jamaica’s Economic Decline

By

By Kent Gammon
Op-Ed Contributor

 

THE JAMAICAN ECONOMY continues to lag behind the rest of the world with a dismal 1.3 percent growth forecast for 2013. The Jamaican dollar is being sold officially for 92 dollars to one US dollar but there is a black market where the US dollar is fetching as many as 96 as at the date of this article.

Jamaica’s Minister of Finance recently stated that there are some “sticking points” in trying to negotiate a new agreement with the IMF. Those “sticking points” are the GDP to public sector wage bill ratio that continues to be too high, public sector pension reform and the non-performing public sector industries — such as, for example, the decrepit Cocoa Industry that demands precious public sector resources.

The current administration seems reluctant to invoke the IMF prescription, as they had told the people of Jamaica last year this time that the JLP administration was “wicked and uncaring” in preparing the populace at large for the IMF prescription to shock the Jamaican economy on a growth track.

THERE’S A HOLE IN THE BUCKET

Jamaica’s public sector is bloated and acts as a powerful voting bloc for the current administration. Indeed, it was in part the wave of fear driven into them by the then-opposition Peoples’ National Party that swept them into power.

The public sector continues to draw down heavily on the country’s resources with no corresponding economic benefits.

The Jamaican work force, by and large, not only is approximately 70 percent without formal training, but its productivity quotient has fallen by an annual average rate of 1.5 percent over the last three decades.

The Jamaican work force cannot improve its productivity quotient if it continues to be mollycoddled at the expense of long-term foreign direct investment.

It is this inertia by the current administration in disciplining the Jamaican work force that contributes to the perilous state of economic affairs and scuttles the prospects of the IMF agreement that the whole country has been on pause since January 2012.

WATCHING THE WORLD GO BY

The emerging economies, that would theoretically include Jamaica, are forecasted to grow by 5.8 percent in 2013 according to the Economist. The rest of the world’s economies are forecast likewise to grow by 3.5 percent.

With the specific forecast for the Jamaican economy projected to grow by 1.3 percent, according to the Bank of Jamaica, it is hardly worth mentioning that the Jamaican dollar will continue to weaken and crime, the country’s most pressing problem, increase.

The opportunities for Jamaica are very limited with the current state of affairs. The only big-ticket item for 2013 is to expand the port facilities at Kingston Harbour to accommodate the large container ships that will travel through the Panama Canal that is expanding its own port facilities by 2014.

The much larger ships that traverse the Atlantic Ocean via the Indian Ocean from China will pass through the expanded port facilities in Panama and Jamaica needs to capitalize on this.

The spin-off industries are also manifold as ships require servicing and re-fuelling as they travel from one port to the next.

The Kingston Harbour is one of the world’s few deepest natural ports and is located just over 1000 kilometres from the world’s largest national economy, the United States of America, with whom we have always had a good economic relationship save for the latter part of the 1970s.

The prospects of trade with Cuba, stemming from the expanded Kingston port facilities, will also be enhanced when the embargoes are lifted with Cuba from the United States of America. The Cuban economy is well over 10 million persons ready to rush onto the world consumption market.

There is every reason to believe that Cuba, a mere 144 kilometres from Jamaica, will be the next largest market in the Caribbean in no more than five years.

Jamaica also has a good economic relationship with Cuba, although trade with that country remains very low over the past two decades. It would serve the Jamaican economy well to forge a symbiotic relationship with Cuba, particularly the country’s engineering industry talents, in gearing up for the expanded transshipment industry the Panama Canal expansion for 2014 will surely bring.

Jamaica must seize the Panama Canal opportunity now with vim or it will have only itself to blame when the rest of the world’s largest ships and trade prospects pass it by.

Kent Gammon is a former candidate for the Jamaica Labour Party, the former Chairman of Jamaica Anti-Doping Disciplinary Committee (2008 -2011) and an Attorney-at-law.

Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal.