Cur­tis Williams

cur­tis.williams@guardian.co.tt

Last week, the gov­ern­ment of Ja­maica in­vit­ed me to cov­er the World Free Zone Con­fer­ence and Ex­hi­bi­tion held in Mon­tego Bay. It was an op­por­tu­ni­ty for Ja­maica to push its con­fer­ence tourism but, more than that, to show the world its emer­gence as a con­fi­dent and re­silient is­land, ready to take off eco­nom­i­cal­ly with the at­tend­ing so­cial ben­e­fits that come with a thriv­ing econ­o­my.

What was clear from the Prime Min­is­ter and the var­i­ous min­is­ters I in­ter­viewed, is that Ja­maica is firm in its be­lief that the pri­vate sec­tor must dri­ve its eco­nom­ic re­vival and that it is not in com­pe­ti­tion with the sec­tor.

De­liv­er­ing the keynote ad­dress at the open­ing of the con­fer­ence, Ja­maica Prime Min­is­ter An­drew Hol­ness said, “We have es­tab­lished a strong record of macro­eco­nom­ic sta­bil­i­ty and pru­dent fis­cal man­age­ment and have man­aged to main­tain this even dur­ing the pan­dem­ic. Our debt-to-GDP ra­tio be­fore the pan­dem­ic was 94 per cent and is now 96 per cent; on­ly two per­cent­age points high­er. By con­trast, sev­er­al of our peers have seen in­creas­es of 20, 30, 40 and even 50 per­cent­age points.”

He added, “We are see­ing a strong re­bound in our econ­o­my af­ter the pan­dem­ic, with an es­ti­mat­ed six per cent growth record­ed in the quar­ter end­ed March 2022. We are one of few coun­tries in the re­gion with no for­eign ex­change con­trols and a freely float­ing cur­ren­cy. We have a ro­bust and well-es­tab­lished reg­u­la­to­ry and fis­cal regime for Spe­cial Eco­nom­ic Zones.

“We have a track record of large-scale pub­lic-pri­vate part­ner­ships, as I men­tioned ear­li­er, for our air and sea ports and high­ways. We want to en­sure that Ja­maica is a na­tion full of op­por­tu­ni­ties for in­ter­na­tion­al in­vestors as well as for lo­cal en­tre­pre­neurs. Trade and busi­ness are part of our Ja­maican cul­ture just as Reg­gae, jerk chick­en and our amaz­ing Blue Moun­tain cof­fee.”

His words are not emp­ty. Wher­ev­er you dri­ve you can see sig­nif­i­cant con­struc­tion tak­ing place in the ho­tel sec­tor. It has emerged as a ma­jor cen­tre for Busi­ness Process Out­sourc­ing and a glob­al leader in im­prov­ing the ease of do­ing busi­ness.

Forced some years ago to en­ter in­to a dif­fi­cult IMF pro­gramme, Ja­maica has weath­ered the storm and now its un­em­ploy­ment rate is the low­est in its his­to­ry, it has set up the in­sti­tu­tion­al frame­work that forces its gov­ern­ments to main­tain fis­cal dis­ci­pline and cut as much as pos­si­ble wastage out of its sys­tem.

This does not mean that Ja­maica is per­fect. It still has un­man­age­able crime, its econ­o­my is sub­stan­tial­ly small­er than T&T, which is on­ly half its phys­i­cal size and has less than half its pop­u­la­tion and there are con­cerns about the in­equal­i­ty of the re­cov­ery and the qual­i­ty of some of the BPO jobs. But what is clear is that the coun­try em­braces a free open mar­ket econ­o­my and as a re­sult, has seen tan­gi­ble im­prove­ments in its wel­fare.

Com­pare it to T&T, which seems to be limp­ing along, hop­ing for long-term high en­er­gy prices, when we know for a fact that those prices are cycli­cal and will soon come to an end.

Un­like Ja­maica, we have con­tin­ued to utilise way too much of our an­nu­al bud­getary ex­pen­di­ture on trans­fers and sub­si­dies. Not on­ly are these in­im­i­cal to the in­ter­est of the coun­try, but they give a false sense of ex­pec­ta­tion to the pop­u­la­tion that they will con­tin­ue in­def­i­nite­ly and when the coun­try can no longer af­ford them, leads to an even more dif­fi­cult ad­just­ment for the most vul­ner­a­ble in the so­ci­ety.

The Dr Kei­th Row­ley ad­min­is­tra­tion must change its ap­proach to gov­er­nance and see the pri­vate sec­tor as a part­ner in de­vel­op­ment and not in com­pe­ti­tion with the nu­mer­ous state en­ter­pris­es.

On Tues­day, the Na­tion­al Flour Mills an­nounced what may ap­pear as a sud­den in­crease in flour prices. The truth is that it should have been ex­pect­ed as we watched grain prices sky­rock­et on ac­count of the Russ­ian in­va­sion of Ukraine. The ques­tion is why do we have to have a state com­pa­ny in­volved in the im­por­ta­tion of wheat and pro­duc­tion of flour? Is this nec­es­sary? Could this not be done by the pri­vate sec­tor? Is the NFM cost struc­ture in keep­ing with an ef­fi­cient­ly run com­pa­ny? We have to move away from the mo­nop­oly and oli­gop­oly sit­u­a­tions that dom­i­nate this econ­o­my, to one of free and open mar­ket com­pe­ti­tion.

What was al­so clear from the Ja­maica trip was the fo­cus on at­tract­ing for­eign di­rect in­vest­ment and on pub­lic-pri­vate part­ner­ship (PPP). They see it as cru­cial to mo­bil­is­ing cap­i­tal that may not be read­i­ly avail­able in the coun­try. T&T’s fo­cus for FDI has been al­most ex­clu­sive­ly in the en­er­gy sec­tor, with the reg­u­la­tions for the spe­cial eco­nom­ic zones not even draft­ed.

Ja­maica has shown how you can get sig­nif­i­cant in­fra­struc­ture projects done with­out the gov­ern­ment build­ing it. Its ma­jor high­way sys­tems are ex­am­ples of this. One won­ders if this ap­proach would not have been bet­ter for the now 12-year-old at­tempt to build a high­way to Point Fortin and the South West Penin­su­lar.

It has al­so hand­ed over the run­ning of its two ma­jor air­ports to the pri­vate sec­tor, which is now in­vest­ing in their ex­pan­sion be­cause pri­vate cap­i­tal goes where it gets its best re­turn.

T&T has to move away from the over-re­liance on its en­er­gy sec­tor and to re­alise that if its econ­o­my is at­tract­ing in­vest­ment in many sec­tors and grow­ing, then the risk of a melt­down is sig­nif­i­cant­ly re­duced.

In an IMF study on how ben­e­fi­cial For­eign Di­rect In­vest­ment for De­vel­op­ing Coun­tries is done by Prakash Loun­gani and As­saf Razin, it was found that FDI al­lows the trans­fer of tech­nol­o­gy—par­tic­u­lar­ly in the form of new va­ri­eties of cap­i­tal in­puts—that can­not be achieved through fi­nan­cial in­vest­ments or trade in goods and ser­vices. FDI, the study said, can al­so pro­mote com­pe­ti­tion in the do­mes­tic in­put mar­ket.

Re­cip­i­ents of FDI, the study found, of­ten gain em­ploy­ee train­ing in the course of op­er­at­ing the new busi­ness­es, which con­tributes to hu­man cap­i­tal de­vel­op­ment in the host coun­try and prof­its gen­er­at­ed by FDI con­tribute to cor­po­rate tax rev­enues in the host coun­try.

The study read, “In­ter­na­tion­al flows of cap­i­tal re­duce the risk faced by own­ers of cap­i­tal by al­low­ing them to di­ver­si­fy their lend­ing and in­vest­ment. Sec­ond, the glob­al in­te­gra­tion of cap­i­tal mar­kets can con­tribute to the spread of best prac­tices in cor­po­rate gov­er­nance, ac­count­ing rules, and le­gal tra­di­tions. Third, the glob­al mo­bil­i­ty of cap­i­tal lim­its the abil­i­ty of gov­ern­ments to pur­sue bad poli­cies. In ad­di­tion to these ad­van­tages, which in prin­ci­ple ap­ply to all kinds of pri­vate cap­i­tal in­flows.”

Ja­maica has al­ways played a lead­er­ship role in the re­gion. In the present set up with Bar­ba­dos Prime Min­is­ter Mia Mot­t­ley be­ing the tit­u­lar leader of the re­gion, Guyana, by the sheer size of its re­sources, in­clu­sive of land-space, now emerg­ing as an eco­nom­ic pow­er­house and Ja­maica show­ing what good eco­nom­ic pol­i­cy can achieve, T&T’s Gov­ern­ment must awak­en from its prover­bial slum­ber and chart a course for­ward that will com­bine sound eco­nom­ic pol­i­cy with a com­mit­ment to a free-mar­ket econ­o­my, fis­cal dis­ci­pline and bold vi­sion.

On­ly when we do that may we re­gain our con­fi­dence and do like the Ja­maicans, who are bold­ly cel­e­brat­ing their 60th an­niver­sary of in­de­pen­dence this year, while we ap­pear to want to pre­tend that a ma­jor event is not up­on us.