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EDITORIAL - Lesson from a convention centre
Published: Tuesday | February 12, 2013 8 Comments
For years, the noise from tourism interests was deafening. Jamaica, they argued, was missing out on convention business, because of the absence of an adequate facility to host significant conferences.
What is now noticeable is that none of those who talked loudly, and with such certainty, felt compelled to risk their capital on the venture to reap the rewards.
Eventually, the Jamaican Government, with approximately J$5 billion borrowed from China, built a state-of-the-art convention centre in Montego Bay that was expected to gross nearly J$1 billion in its first year of operation.
In the two years since it opened, the facility, as was reported by this newspaper on Sunday, has had only a trickle of business - and little of that from abroad. What it earns is not nearly enough to service the Chinese loans, much more meet its other expenses.
In other words, Jamaican taxpayers, through the Urban Development Corporation, have to cover an additional J$400 million annually for maintenance, plus pay J$230.4 million (US$2.4 million) to a United States-based company, SMG Worldwide Entertainment, for the management/marketing of the facility. Then there is another J$7.7 million paid to a US-based salesperson who is supposed to market the convention centre in America. These, combined, come to nearly J$640 million a year.
The Montego Bay Convention Centre is only one of several projects into which billions of dollars of taxpayers' money have been poured, with little or no return on investment. In some cases, they have largely become white elephants, as is the case with the Trelawny Multi-purpose Stadium and the Downtown Kingston Transport Centre.
These projects, the convention centre in particular, raise serious questions about what we should expect of the State, especially in its stringent economic circumstances. The loans acquired to do them contributed to the country's more than J$1.7-trillion debt, on which the International Monetary Fund has insisted we take tough measures to begin to bring it under control in exchange for its support.
Leave entrepreneurial activity
The point is that a government as broke as ours is must confine itself to the provision of basic infrastructure and the social services necessary for a properly functioning society, and leave entrepreneurial activity to the private sector.
There may be the rare, exceptional service where it is sensible for Government to be involved in the management of a commercial enterprise, but the State must be clear that its primary role ought to be a facilitator, not an active player.
Policymakers must not allow themselves to be goaded into commercial activities by the loud and the glib, who carry no burden when enterprises fail. The losses then, are borne by all taxpayers - or, rather, the handful who actually pay, or pay their fair share.
With regard to the Montego Bay Convention Centre, all may not be lost. Indeed, the exposé of its situation provides the Government with an opportunity to revisit how it is managed. The model for the 'privatised' Sangster International Airport in Montego Bay might be one to consider for the centre.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
Published: Tuesday | February 12, 2013 8 Comments
For years, the noise from tourism interests was deafening. Jamaica, they argued, was missing out on convention business, because of the absence of an adequate facility to host significant conferences.
What is now noticeable is that none of those who talked loudly, and with such certainty, felt compelled to risk their capital on the venture to reap the rewards.
Eventually, the Jamaican Government, with approximately J$5 billion borrowed from China, built a state-of-the-art convention centre in Montego Bay that was expected to gross nearly J$1 billion in its first year of operation.
In the two years since it opened, the facility, as was reported by this newspaper on Sunday, has had only a trickle of business - and little of that from abroad. What it earns is not nearly enough to service the Chinese loans, much more meet its other expenses.
In other words, Jamaican taxpayers, through the Urban Development Corporation, have to cover an additional J$400 million annually for maintenance, plus pay J$230.4 million (US$2.4 million) to a United States-based company, SMG Worldwide Entertainment, for the management/marketing of the facility. Then there is another J$7.7 million paid to a US-based salesperson who is supposed to market the convention centre in America. These, combined, come to nearly J$640 million a year.
The Montego Bay Convention Centre is only one of several projects into which billions of dollars of taxpayers' money have been poured, with little or no return on investment. In some cases, they have largely become white elephants, as is the case with the Trelawny Multi-purpose Stadium and the Downtown Kingston Transport Centre.
These projects, the convention centre in particular, raise serious questions about what we should expect of the State, especially in its stringent economic circumstances. The loans acquired to do them contributed to the country's more than J$1.7-trillion debt, on which the International Monetary Fund has insisted we take tough measures to begin to bring it under control in exchange for its support.
Leave entrepreneurial activity
The point is that a government as broke as ours is must confine itself to the provision of basic infrastructure and the social services necessary for a properly functioning society, and leave entrepreneurial activity to the private sector.
There may be the rare, exceptional service where it is sensible for Government to be involved in the management of a commercial enterprise, but the State must be clear that its primary role ought to be a facilitator, not an active player.
Policymakers must not allow themselves to be goaded into commercial activities by the loud and the glib, who carry no burden when enterprises fail. The losses then, are borne by all taxpayers - or, rather, the handful who actually pay, or pay their fair share.
With regard to the Montego Bay Convention Centre, all may not be lost. Indeed, the exposé of its situation provides the Government with an opportunity to revisit how it is managed. The model for the 'privatised' Sangster International Airport in Montego Bay might be one to consider for the centre.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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