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Butch resigns as FDI flows fall to record lows
SUNDAY, 31 JULY 2011 07:30 EDITOR
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There are indications that business mogul Gordon “Butch” Stewart has quit his job as chairman of JAMPRO, the country’s investment promotions agency, following the removal of Karl Samuda from the portfolio.
Stewart’s resignation comes in the wake of 61 per cent decline in foreign direct investment from US$540.9 million in 2009 to US$201 million last year, the lowest level in 14 years. When he took the job on March 15 last year, he asserted that he would have done everything possible to increase the flows of quality investments into the country.
Sancia Bennett Templer, president of Jampro attributes this steep decline to a trend, which started during the year 2008 with the great recession, but the appointment of a big entrepreneur such as Stewart was expected to have stemmed the trend.
The impact of the great recession on FDI flows was exacerbated by the high cost of power, the high levels of crime and insufficient investments in the country’s human and physical capital.
This will lead to continued economic decline, high levels of unemployment, massive trade and current account deficits and a higher debt burden.
Data released by the central bank and Jampro indicated that foreign direct investments in plant and machinery fell by almost US$900 million to US$540.9 million in 2009 from US$1.4 billion in the year 2008, before falling sharply to US$201 million.
This is coming from US$882.2 million in 2006 and US$866.5 million in 2007.
The high cost of power will also make it difficult to maximize the returns from existing investments, making the country uncompetitive in export as well as local markets.
The World Bank, in its latest memorandum on the economy indicated that the high cost of power is one of the variables, which are preventing the country from maximizing existing investments, as well as from attracting new investments.
This view is supported by members of the manufacturing, agricultural and service sectors, as well as by householders.
Devastating impact
Dean Lee, president of the National Poultry Growers Cooperative says the high cost of power produced by the Jamaica Public Service Company Limited (JPS) and the reduction in the average Common External Tariff (CET) to 20 per cent on January 1, 2012 could lead to the devastation of the poultry sector, higher levels of employment a further economic devastation.
In order to support this argument Lee stated that electricity and water account for 60 per cent of the cost of poultry production, while pointing out that the farmers have been trying hard to get these costs down through innovation but argued that it was very costly to do so.
For example, it currently costs some $4 million to convert one tunnel house to solar energy and very few farmers could find this kind of money, according to Lee.
The sector currently has loans and advances amounting to $10 billion with the commercial banking sector and any fallout would have a negative impact on the latter, which is already reeling from a big jump in its non-performing loan portfolio when compared with March of 2009.
These loans jumped by over 30 per cent during March of this year, when compared with the December quarter of 2010. As a result of this potentially devastating impact on the sector, which employs thousands of persons across Jamaica through the Jamaica Broilers Group Limited and Caribbean Broilers Limited scores of contract farmers who are represented by the Cooperative signed a petition to the minister of agriculture Bobby Montague.
Members of the manufacturing sector share Lee’s view on the potential impact of a reduction in the CET. Both current president Brian Pengelly and immediate past president Omar Azan of the Jamaica Manufacturing Association, share the view that high energy cost and a reduction in the CET would have a devastating impact on agriculture and manufacturing.
These two sectors employ almost 300,000 persons or 25 per cent of the country’s labour force, which contributes about 20 per cent of GDP, if agro-processing is included in the calculations.
Manufacturing’s share of GDP is now down to less than 10 per cent when compared with 20 years ago, while employment is down to 72,000 compared with 150,000.
Lee, Pengelly and Azan, therefore want the government to rethink and resist this policy, despite the country’s indebtedness to the multilateral agencies.
SUNDAY, 31 JULY 2011 07:30 EDITOR
User Rating: / 1
PoorBest
There are indications that business mogul Gordon “Butch” Stewart has quit his job as chairman of JAMPRO, the country’s investment promotions agency, following the removal of Karl Samuda from the portfolio.
Stewart’s resignation comes in the wake of 61 per cent decline in foreign direct investment from US$540.9 million in 2009 to US$201 million last year, the lowest level in 14 years. When he took the job on March 15 last year, he asserted that he would have done everything possible to increase the flows of quality investments into the country.
Sancia Bennett Templer, president of Jampro attributes this steep decline to a trend, which started during the year 2008 with the great recession, but the appointment of a big entrepreneur such as Stewart was expected to have stemmed the trend.
The impact of the great recession on FDI flows was exacerbated by the high cost of power, the high levels of crime and insufficient investments in the country’s human and physical capital.
This will lead to continued economic decline, high levels of unemployment, massive trade and current account deficits and a higher debt burden.
Data released by the central bank and Jampro indicated that foreign direct investments in plant and machinery fell by almost US$900 million to US$540.9 million in 2009 from US$1.4 billion in the year 2008, before falling sharply to US$201 million.
This is coming from US$882.2 million in 2006 and US$866.5 million in 2007.
The high cost of power will also make it difficult to maximize the returns from existing investments, making the country uncompetitive in export as well as local markets.
The World Bank, in its latest memorandum on the economy indicated that the high cost of power is one of the variables, which are preventing the country from maximizing existing investments, as well as from attracting new investments.
This view is supported by members of the manufacturing, agricultural and service sectors, as well as by householders.
Devastating impact
Dean Lee, president of the National Poultry Growers Cooperative says the high cost of power produced by the Jamaica Public Service Company Limited (JPS) and the reduction in the average Common External Tariff (CET) to 20 per cent on January 1, 2012 could lead to the devastation of the poultry sector, higher levels of employment a further economic devastation.
In order to support this argument Lee stated that electricity and water account for 60 per cent of the cost of poultry production, while pointing out that the farmers have been trying hard to get these costs down through innovation but argued that it was very costly to do so.
For example, it currently costs some $4 million to convert one tunnel house to solar energy and very few farmers could find this kind of money, according to Lee.
The sector currently has loans and advances amounting to $10 billion with the commercial banking sector and any fallout would have a negative impact on the latter, which is already reeling from a big jump in its non-performing loan portfolio when compared with March of 2009.
These loans jumped by over 30 per cent during March of this year, when compared with the December quarter of 2010. As a result of this potentially devastating impact on the sector, which employs thousands of persons across Jamaica through the Jamaica Broilers Group Limited and Caribbean Broilers Limited scores of contract farmers who are represented by the Cooperative signed a petition to the minister of agriculture Bobby Montague.
Members of the manufacturing sector share Lee’s view on the potential impact of a reduction in the CET. Both current president Brian Pengelly and immediate past president Omar Azan of the Jamaica Manufacturing Association, share the view that high energy cost and a reduction in the CET would have a devastating impact on agriculture and manufacturing.
These two sectors employ almost 300,000 persons or 25 per cent of the country’s labour force, which contributes about 20 per cent of GDP, if agro-processing is included in the calculations.
Manufacturing’s share of GDP is now down to less than 10 per cent when compared with 20 years ago, while employment is down to 72,000 compared with 150,000.
Lee, Pengelly and Azan, therefore want the government to rethink and resist this policy, despite the country’s indebtedness to the multilateral agencies.
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