Samuda vs Paulwell: The way forward
Wednesday, October 9, 2002
Samuda and Paulwell
MINISTER OF Industry, Commerce and Technology, Phillip Paulwell, debated Jamaica's development policies with Opposition shadow spokesman Karl Samuda last week.
Addressing the Gleaner's Editors' Forum at its North Street office on Friday, they outlined their views on Jamaica's development path. Chaired by Associate Editor Colin Steer, the following are highlights of the discussion held before senior editorial staff.
Phillip Paulwell: What we are seeing is jobless growth. We are getting investments, we are getting growth but we are not seeing the employment being created and that really has to be a major mandate for the future and we intend to deal with it in a number of ways. Apart from those jobs that we intend to create in these sectors that we have identified, large scale jobs, we are going to have to focus a lot more on the small and micro businesses because in any economy, this is where you are able to maximise in a quick way your growth in the economy.
There is the major project, Highway 2000 which will create a lot of jobs and there are some spin-offs from Highway 2000 , the Vernamfield Development, the construction of fibre optics along the routes so that you can have IT parks along the route and of course, very importantly, as far as my Member of Parliament role is concerned, the Port Royal project.
We have to have it going but it's going to be done more in a phased way than the big bang approach because of the difficulties we had especially since last year in getting some of the major players to invest US$100 Million that we need. What we are going to be doing now is to work with the Port Authority using what they have done in Port Antonio to work towards establishing a cruise ship facility in Port Royal and then to look at the island village concept in Ocho Rios that Chris Blackwell did to get some shopping promenades established in Port Royal and at the same time while we are doing that, we are re-developing the housing and other infrastructure support inside there.
Karl Samuda: I think the most important thing to look forward to is the establishment of macro economic stability in order to achieve sustainable growth and by sustainable growth, the means by which you do that will have to depend on low interest rates, a stable exchange rate, the creation of job opportunities especially for the young. With the advent of globalisation, the indisputable fact is that one has to be internationally competitive. Regrettably, Jamaica has lost its competitiveness over the past five years in particular and as a consequence what we have experienced is, we have experienced a fundamental shift from production or activities surrounding the productive sector into one of more designed for consumption where we are now focusing more on trading rather than on producing goods and services for export, both domestic and export. In order for us to be competitive, our people, our human resource, have to receive a level of training that will make them able to accept the introduction of applied technology.
The question of collaboration between the Government, academia, the trade unions, the private sector must be established and strengthened and perhaps the most difficult thing facing this country at the moment is the extent to which we are strangled by bureaucracy. We need to streamline and simplify the ways by which we approve projects, the manner in which we pay our duties and generally speaking, instead of becoming an impediment, a cumbersome mechanism, Government needs to remove the bureaucracy so that we don't continue using an elephant to crush a peanut and that has unfortunately been our experience.
ON CARIBBEAN SINGLE MARKET AND ECONOMY AND FREE TRADE AREA OF THE AMERICAS (FTAA)
Phillip Paulwell: The time-table now is that within the twenty-four month period we will achieve the Single Market and Economy. Attempts have been made but I don't think it has gone far enough and we therefore have to now do a much more comprehensive public education in our schools, advising our micro and small entrepreneurs and the business sector.
As we move to the Single Market and Economy, we recognise the importance of the FTAA because we can take the benefits of the Single Market and Economy into the FTAA.
Karl Samuda: Jamaica is not ready for the FTAA. The fact is that we have had a growing trade deficit with CARICOM that threatens to swamp us. We are no longer exporting to CARICOM, we are importing. We are the source of their wealth within CARICOM because we have failed miserably to maintain our competitiveness and as a result they are ahead of us. Trinidad and Barbados, for example, are far more prepared for FTAA than we are. We have lost competitiveness primarily because our trade policies have exposed our fledgling industries to a level of international competition that has strangled their opportunity to be able to get up to a starting point where they can then launch into the third countries market.
We have strangled them before they had a chance to get up and get running and what we are doing now is there trying desperately to play catch up and that is why I said earlier we have seen a fundamental shift away from manufacturing to importing.
You have situations where the President of JMA is now into imports. He has given up manufacturing, everybody is giving up manufacturing.
PREPARATIONS FOR THE CARIBBEAN SINGLE MARKET AND ECONOMY
Karl Samuda: Nothing can happen overnight, that's the first bottom line. Whatever happens is not going to be revolutionary over the next two years. What we are certainly expecting, that if elected, just the fact that there is a new team, new players with some new ideas will generate a sort of interest in Jamaica and will take a second look by investors who are no longer interested.
Phillip had a situation where we benefited from NAFTA which opened up our markets considerably, gave us facilities which we never had. We got the facility but what we were not prepared for it because a Kirk Salmon report that was given to the Ministry in 1997 showed that Jamaica was the third highest cost destination of the companies surveyed within our region. So we were losing because not only were we suffering from the difficulties of NAFTA but because of our own internal mechanisms that made us uncompetitive.
When we face the reality that we are uncompetitive and we have to do something about it at the shop floor, giving incentives to investors to improve their infrastructure, to improve their plant, to improve their investments and to apply technology with properly trained staff, then we start dealing with what is ailing us.
Phillip Paulwell: I think this question of competitiveness is so critical and fundamental that I just want to spend a few moments because we have to be careful in recognising that shifts are taking place and there are certain realities and there are certain areas that Jamaica has to understand that we are not going to do well in, and at the same time to recognise that there are other areas.
Now, Karl focused almost exclusively on the goods producing side and I appreciate Karl that there are certain areas in goods producing that we can still maintain competitiveness in but not the garment industry as you know it. It has to be a different industry.
We are focusing a lot on a lot of the services industries because these are the fastest growing industries of the world now, tourism, entertainment, consultancy services, (and) the information technology revolution.
In agro-business you are going to find some opportunities. For example, we are now exploring the possibility of entering the flavours market. There is this thriving flavours market worldwide. We are not going to make it as primary producers of yam, of melon, of onion but when you extract the flavours and our flavours are richer than many of the competitors, you are going to be able to sell at a price which will ensure the viability of farmers. And we now have the technology. In fact we have just ordered what is called a spinning cone device which is going to enable us to extract our melon flavours, our ackee flavours and be able to package and sell them overseas.
So that is one area that we are focusing on but I think when we argue we are not appreciating sufficiently the fact that Jamaica is moving away from being goods producing. Right now Mexico is complaining that the jobs are going to China which Mexico three years ago took our jobs. They are now saying that they can't compete because China is taking over 200,000 jobs in the garment industry. That's an industry that we don't have a future in unless you move to the upper end which is the fashion side of business where Jamaica is focusing. Next month we stage the Caribbean Fashion Week trying to promote Jamaica as a destination of high quality design, high quality fashion, greater value added than just stitching button holes all the days of your life.
ON PROMOTING BUSINESS DEVELOPMENT
Phillip Paulwell: We do have programmes targeting all the sectors excluding none. This year we started with the JMA and we have had an excellent working relationship with JMA. This year, every single Friday I am out in the field, not focusing only on large businesses but those medium size businesses as well, trying to encourage them to utilise technology for greater efficiencies and so on and we are seeing some benefits as a result of that. I think you are seeing now a greater appreciation now on the part of the private sector. It's long in coming but it is there now where they have to make a transformation and we provide the incentives. The Industry Modernisation Programme is now being heavily called on for getting new equipment, retooling, and about $2.5 Billion last year was spent on companies in Jamaica, not only large companies but medium size companies as well utilising that incentive for greater retooling. We also have the Capital Depreciation Programme, the Accelerated Depreciation Programme. Those are all assisting in the retooling effort.
Karl Samuda: Phillip said I am emphasising the goods sector. No such thing because tourism is not considered under the goods sector, and I think tourism has been the cornerstone and I have spoken about this repeatedly in Parliament of the immediate kick-start that we need for our economy. Just to simply move the occupancy level right up to 70 per cent would improve our foreign exchange inflows by nearly US$250 Million per annum which is quite considerable, so that is an immediate response to our unemployment and to our growth.
The services sector up to the end of last - the most recent end of play that he has available to him, that is the last financial year shows a decline of US$221 Million in that sector. In the goods sector, the trade balance is minus $1.5 Billion and it exceeds - the trade deficit alone exceeds the total export of goods from this country and it's climbing. Now, you may ask the question, what is propping up this economy. The current account ladies and gentlemen in the foreign exchange account, the balance of payment account up to the end of the year was $723 million in deficit. The IMF considers that unsustainable.
The fiscal deficit right is now 5.8 per cent of our Gross Domestic Product, another unsustainable level that the IMF says it cannot continue and they will not permit it to continue and have their name used as a staff monitoring agency for accessing funds from the financial institutions of the world. It's as simple as that. ``` What we are looking at is a serious economic crisis in the country, 64% of our total budget is used to service debts.
ON JOB CREATION
Phillip Paulwell: Job creation is the most important issue that we face on the campaign trail and earlier Karl acknowledged that the official figures will show that there has been some slight improvement in terms of our unemployment level but we cannot sanguine about an unemployment level of 15 per cent, it's far too high. What we have found in many cases is that as the economy is transformed, people are doing a number of things that we are not really taking note of. You will see a great experiment being done in Portmore now where we are using waste water from the housing development to regenerate some land back into farming, over forty hectares. But what I am saying is, it can't be old time farming, you have to now understand there is a market for certain things and that you have to go and get it and also, and this is where the younger people come in because I think they might be able to more appreciate the need for greater value added and to use technology. ``In St. Elizabeth now, they are drying pumpkin and making it into pumpkin powder which has a longer shelf life and greater marketability and this is the way we are gong to take our agro business and I am determined in the next term that we need to get some higher profile being put on agriculture.
Karl Samuda: Government needs to look at bringing industries into the communities and not necessarily the other way around. We have got to go into every community across the country and establish facilities where you can have mini factories set up. Where you access the technology that is derived from these high flying trips that Ministers take abroad, where people offer technical advice, where you can get the guys from Taiwan and other sections of China, the whole Far East, experts in the field of craft, experts in the field of small item manufacturers, like little curios and so on, you go in the shops, in the most exquisite stores in New York, Miami, anywhere and you see these little items, they are expensive and when you check where are they made, Taiwan, China, this , that. How are they made? They are made with human hands but there is a technology that's applied to them. I am saying, import the technology, bring it to the inner cities, bring it to the communities, establish the facilities in what I call special community economic zones, you have the population ready to be trained, give them that access and give them a kick start by funding them.