2004/2005 SECTORAL DEBATE PRESENTATION BY THE HON. PHILLIP PAULWELL, M.P., MINISTER OF COMMERCE, SCIENCE AND TECHNOLOGY (WITH ENERGY) ON MAY 12, 2004


Mr. Speaker, I rise to make my contribution to the 2004/05 Sectoral Debate in a mood of great confidence in our future as a people, faith in our policies and programmes and pride in our accomplishments as an administration working in the spirit of joined-up government and partnership with the private sector.
I must say thanks to the great team of public sector employees in the Ministry of Commerce, Science and Technology and its agencies headed by the hardworking and dedicated Permanent Secretary, Dr Jean Dixon. Thanks to all the Chairpersons, Directors, and heads of the over 20 agencies, as well as to the leadership of the several industry organizations and companies which worked closely with the Ministry to ensure the success of our programmes.
Mr. Speaker, this Ministry has been given a total of $864.5 Million in the 2004/05 Estimates of Expenditures to implement its programmes. There is also a provision of $110 Million in Capital B. Although all Ministries could always use more resources I am pledging that we will deliver value and better service in this financial year.
Mr. Speaker, we are committed to delivering quality service and in a cost effective manner to the public. This year we will, therefore, begin the process of putting the Ministry on a path to qualify for international certification, perhaps ISO 9,000 in the shortest possible time. We will benchmark our performance against international standards in several areas such as general management, financial management, service delivery, business processes, and customer service.
Mr. Speaker, we take our responsibilities very seriously and we are putting in place a number of cost-containment measures in utilities, administrative overheads, procurement of goods and services and other areas.
Mr. Speaker, that will be our major contribution to the success of the Memorandum of Understanding between the Government and the Private Sector. We are assuring the Ministry of Finance, the workers of Jamaica and the Private Sector that specific cost savings measures will be implemented. We intend Mr. Speaker, to facilitate staff training geared to deliver consistently high quality service to the public in keeping with the Government’s commitment in the MOU and to enhance Jamaica’s image as a business friendly destination.
In the area of revenue enhancement, we are equally determined that all our agencies should maximize their own sources of revenue so as to lessen dependence on the Consolidated Fund.
During the last Financial Year, two of our agencies, the Bureau of Standards and the Spectrum Management Authority came off the Central Government budget and are steadily improving their own financial situation.
In the case of the Bureau, because of the efficient way it is now operating, I am in a position to announce today that I propose to meet with the Jamaica Chamber of Commerce shortly to discuss a review of the formula for the import monitoring fees now charged by the Bureau.
Mr. Speaker, the Spectrum Management Authority introduced its Regulatory Fees in 2003, thereby ensuring its own source of revenue for administration. All proceeds from Spectrum Licences, which have tripled since the establishment of the Spectrum Management Authority, are passed on to the Consolidated Fund.
The Board of the SMA recently approved a US$6 Million Business Plan to bring its operations up to world class standards in three years, and the full cost of the first year of that plan is already fully financed by the Authority’s own efforts, without any assistance from Central Government.
Next year Mr. Speaker, I will report on the progress of other agencies, which are working towards self-sufficiency, including the Post Office, which has established its “Road Map to Profitability” programme.
COMMERCE
Mr. Speaker, I want to begin the detailed section of my presentation with Commerce, as this area is so vital to the functioning of business in Jamaica.
OFFICE OF THE REGISTRAR OF COMPANIES
Mr. Speaker, the Office of the Registrar of Companies (ORC) is a critically important organization in the establishment of structures to support trade and commerce and the generation of wealth. Its mission is to enable the legal creation of companies, sole proprietorships, partnerships and industrial and provident societies and its operational principles rest on the creation of an environment of trust and a strong commitment to all its stakeholders.
A major highlight of the year was the passage of the Companies Bill 2004 in the Houses of Parliament. Twelve years in the making, the landmark legislation establishes the framework for the modernization of corporate governance.
Mr. Speaker, I have entertained many discussions with several groups since the passage of this Bill and based on the strong representation, I am to announce that the ORC is now engaged in preparation for effective implementation on January 1, 2005.
CONSUMER AFFAIRS COMMISSION
Mr. Speaker, the activities of the Consumer Affairs Commission continue to stimulate the growth of consumer awareness. Primary emphases of the Commission are on consumer protection and consumer education as well as the parallel concern of educating the business community to develop a business culture that recognizes consumer sovereignty.
The Consumer Protection Bill designed to support the Commission’s mandate continued to make its way through the legislative processes. An early tabling in Parliament is expected.
Among the major highlights of the Consumer Affairs Commission’s achievements last year were:
Ninety-four per cent, that is 2,414 of 2,569, complaints handled during the year were resolved.Compensation of over $6.7 M, in addition to rebates, returns and exchanges was negotiated on behalf of aggrieved consumers.
ANTI-DUMPING AND SUBSIDIES COMMISSION
Mr. Speaker, one of the agencies playing a critical role in protecting the nation from harmful trade practices is the Anti-Dumping and Subsidies Commission.
In carrying out its mandate, the Commission is required to conduct detailed analysis of confidential current and past financial data of domestic firms as well as the analysis of factors such as exchange rate fluctuations and market conditions.
International trade remedies, and in particular, Safeguards, constitute a still relatively new discipline in Jamaica. Last October, the Commission began its first Safeguard case in response to a complaint filed by the Caribbean Cement Company Limited and has reached a preliminary determination in the statutory time frame. In December, it initiated a dumping case against cement from a particular exporting country. Investigations will continue toward final determinations, which are scheduled for June 2004 in the open dumping case and July 2004 for the Safeguard case.
Mr. Speaker, as I noted earlier, this is a new discipline for Jamaica and I would like to use this opportunity to encourage all stakeholders to participate fully in the process.
During the year, the Commission was very active in its Advisory role in relation to negotiating positions in the international arena. I am pleased to indicate that the competencies of this “young” organization have been recognized by the Regional Negotiating Machinery of CARICOM and a small team from the Commission travelled to Guyana in January to provide technical assistance with regards to an anti dumping petition mounted against Guyana by the US Southern Shrimp Alliance.
JAMAICA INTELLECTUAL PROPERTY OFFICE
The mission of the Jamaica Intellectual Property Office (JIPO) is to establish and administer a modern, effective intellectual property system, to protect the creativity and inventiveness of Jamaicans and act as a catalyst in the creation of wealth.
Work on the automated Trade Marks Registration System continues and it is expected that it will be fully operational by September.
Mr. Speaker, Jamaica in November 2003 became party to the WIPO Internet Treaties, the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), which provide for the protection of copyright material over digital networks.
Legislation for the establishment of the Patents Directorate is expected to be passed early in the new legislative year. With the new Patents and Designs Law in place and the consequent accession to the Patent Cooperation Treaty, work will begin on the full establishment of this Directorate. Preparation has started for the World Intellectual Property Organization (WIPO) expert mission to install the automated Patents Registration System.
Other significant developments in the field of legislation last year was the passage of the Geographical Indications Act.
The Act has generated much interest among the business community and the public in general. A Geographical Indications Working Group has been formed to explore all aspects of the protection of Geographical Indications locally and abroad. Among the membership are JAMPRO, Grace Kennedy, Lascelles, Walkerswood Food, Coffee Industry Board, Bureau of Standards and Ministry of Foreign Trade and Foreign Trade.
Mr. Speaker, a major undertaking of JIPO this year, in cooperation with WIPO, will be a national intellectual property assets audit. The results will form the basis of a national strategic Intellectual Property Plan.
SCIENTIFIC RESEARCH COUNCIL
Mr. Speaker, over the past year, I have been involved in a number of fora in which the matter of Biodiversity has been under discussion and, the richness of our flora is well recognized. Modern Biotechnology has resulted in genetically modified organisms and foods, and we cannot stand on the periphery of these developments.
The safe and responsible application of genetic engineering and related technologies may hold promise for the country’s agriculture which suffers from various pests and diseases.
However it is necessary to have in place the requisite regulatory framework, testing facilities as well as competence to carry out risk assessments.
As the region moves from a “Common Market” to a “Single Market Economy”, within which goods and services, people, capital and technology freely circulate, along with the implications of ensuring economic stability, there is an urgent challenge for regional capacity building in various areas.
Jamaica, through the Scientific Research Council has therefore taken the lead in proposing:
A high level forum to discuss prospects for the commercialization of biotechnology-derived products in the CaribbeanDevelopment of a National Biotechnology strategy for the Country andThe establishment of a regional center for the testing of genetically modified organisms in Jamaica.
TELECOMMUNICATION
Mr. Speaker, Jamaica has just completed its first year of full liberalization of the telecommunication sector. Although there are still many challenges ahead, the continued growth in the sector reinforces our position that Jamaica is a success story in telecom deregulation.
Based on any measure of performance recorded in the industry worldwide, the Government can justly claim the success of its telecommunications policy.
Take for instance, tele-density, the number of phones per hundred inhabitants, an important indicator of development. In 2000, tele-density was 30%. By the end of 2003 it had increased dramatically to over 80%.
This has resulted in Jamaican being ranked by the International Telecommunication Union’s Digital Access Index (DAI) among the countries in the world in the upper Access Category. In this region, we are above Mexico, Brazil, Venezuela and Costa Rica.
Mr. Speaker, let us consider the area of investment. In addition to the US$103.5 M paid by cellular providers for licences, other investments in such areas as infrastructure, have surpassed by far, the US half a billion dollar mark. Revenue estimates for the industry in 2003 was J$50 B, with over J$8B being paid in General Consumption Tax.
The major achievements during the year included the sale of a fourth mobile licence to AT&T Wireless. When this new operator rolls out its service here, it will connect Jamaica to a mobile provider with over 45 million customers in the United States and Canada.
Two weeks ago, the Company sent representatives here to assure the Government of its full commitment to the Jamaican service.
Along with the other 15 Caribbean countries in which AT&T has secured licences, Jamaica will become part of one of the largest mobile networks in the world, covering the entire North American continent and the Caribbean Sea. Mobile services will operate freely in any of these locations.
AT&T has indicated their willingness to partner Jamaica in co-op advertising by inserting tourism brochures in mail pieces to its forty-five million subscribers.
Consumers continue to benefit from the continued growth of fierce competition among existing telecoms service providers. An additional 112-service provider and carrier licences were issued during the year, bringing the total number of telecoms licence holders to 392. These licences include 84 international voice service providers, 61 international carrier licences, 76 Internet service providers and 31 domestic voice service providers.
Mr. Speaker, these developments should be considered against the background that four years ago when Jamaica embarked on the process of deregulation, in the face of opposition from certain members of this Honourable House, there was a monopoly provider. This provider was operating under a licence signed in 1988 and scheduled to expire in the year 2038. We have certainly come a long way!
Nevertheless, Mr. Speaker, as I had indicated before, there are challenges facing the industry.
Perhaps the most difficult of these have been in the area of inter-connection and the issue of settlement rates with the United States of America.
We have to arrive at the delicate balance between raising settlement rates high enough to benefit the Jamaican economy while lowering termination rates enough to allow sufficient margins to stimulate sustainable investment in the telecoms industry.
Mr. Speaker, there have also been disappointments in this post-liberalization period. One is an inability to deliver broadband or high-speed Internet service at affordable prices to the Jamaican consumer. At present there are only 95,000 Internet accounts, although a 2003 Internet market study showed that awareness of the Internet among Jamaicans over 15 years old is universal and 80% of non-users are interested in becoming users.
Cable operators have not delivered on their promise of high speed internet through cable modems, and the ADSL access provided by Cable and Wireless is approximately US$93 per month which is still too expensive.
The limiting factor, really, is still the monopoly on submarine optical fibre connecting Jamaica to the rest of the world. We recognize that one of the basic inputs for affordable Internet access is competitive submarine fibre optic connectivity to the regional Internet hubs.
The Government is, therefore, encouraging and supporting companies, which have shown interest in making this investment. Government participation in the venture might also be necessary in order to stimulate investor interest and assure adequate capacity at reasonable prices to public institutions.
A key part of our efforts to bring data access to all Jamaicans may be the use of CDMA technology on the 450 MHz Band. Indications are that this would have the capacity to provide broadband capabilities and would allow deployment in even the most remote areas of Jamaica. The Government is giving consideration to the terms by which the 450 MHz Band can be made available to the telecommunication industry in order to ensure that this additional resource supports the Government’s policy objective for accelerated Internet access.
The Spectrum Management Authority has been given the responsibility to prepare recommendations and I expect them to consult widely so that the position of industry players is taken into account.
Mr. Speaker, while broadband access has been a challenge, the objective of universal voice service throughout the country has been substantially met. The small number of difficult pockets where residents are without service will be provided with pay phones or other special facilities. This will ensure that every Jamaican has access to emergency telephone service, based upon the recommendations of the Office of Utilities Regulation (OUR) for the implementation of universal access.
Jamaica has now achieved its universal service objectives in terms of voice. There are 1.6 million cellular users and 500,000 landlines, which means that of the current population of 2.7M there are now 2.1 million active voice lines, a growth of 300,000 over last year. Digicel reached the one million customer mark last month.
The universal service objective will now have to move from voice communication to the provision of data access across the length and breadth of Jamaica to include free Internet access to public institutions such as schools, libraries and post offices.
Mr. Speaker, we have initiated dialogue with the major telecoms providers, Cable and Wireless, Digicel and Oceanic Digital, to lay out our vision and solicit their support in achieving this goal as part of their Universal Service Obligations (USO) under the Telecommunication Act 2000. This law provides for the imposition of USO fees of up to 5% of the revenues of service providers. The option we are proposing would be less costly and would create a quantum leap in achieving our information society goals for Jamaica.
Our intention is to encourage the major telecoms providers to buy in to our vision of creating a knowledge-based society under a major e-learning project.
The estimated cost of implementation over three years, is J$4.5 Billion. Mr. Speaker, the Honourable Minister of Education and myself will speak further on this matter.
SINGLE REGULATOR
Mr. Speaker, as this vibrant industry goes forward on a secure and sustainable foundation, there are two critical issues which we must now address as a Ministry. First is the promulgation of a new telecoms law to ensure a modern legislative and regulatory framework and a single regulator for the industry.
As technologies and services converge, the present regulatory framework is less able to deal with the regulatory and institutional issues, which impact on liberalization, convergence, pricing, international services and spectrum policy.
The sector has to contend with directives from the OUR, the SMA, Broadcasting Commission, and Fair Trading Commission. Although these institutions have generally performed very well, the time has come for Jamaica to implement a single regulator policy, by creating a legislative and institutional apparatus, to handle this growing and changing industry.
Recently, an Inter-American Development Bank (IDB) sponsored expert in Telecommunications Policy and Regulations from Canada spent a week in Jamaica partnering with a local team drawn from the relevant areas in the Ministry. The team met with a broad cross section of industry personnel and other stakeholders and examined many issues related to the local telecom industry.
We expect the report to inform the decision regarding an appropriate regulatory system for telecommunications, broadcasting, cable television, spectrum and the competition issues which affect all. There are many models such as OFCOM in the U.K., the F.C.C in the U.S. and Industry Canada which can serve as examples to Jamaica.
ICT INDUSTRY
Mr. Speaker, I want to take a quick look at the ICT Industry but first let me pause to congratulate Mr. Patrick Casserly, Chief Executive Officer of e-Services Group International and Sitel Caribbean on his recent Award as the Jamaica Observer Business Leader of the Year, as well as other Job Creation Awards from the Private Sector Organization of Jamaica and this Ministry’s Job Creation Award.
Mr. Speaker, e-Services, which was started in Montego Bay some four years ago, now employs 1,400 Jamaicans in Kingston and Montego Bay. It leases a total of 168,000 sq. ft. of office space including 93,000 sq. ft. in the Montego Bay Freezone, making it the largest client.
The user-friendly surroundings include a gym, 4 cafeterias, a physical therapy room, 11 classrooms to train workers and a media room.
Patrick Casserly and the e-Services group have truly been outstanding achievers and are the biggest advertisement for the Jamaican IT Sector. Their clients include major US Corporation such as Blue Cross Blue Shield of Georgia, Colonial Penn Insurance, Phillips Consumer Electronics, United Health Group, the largest health care management company in the United States, Nippon Telephone and Telegraph of Japan and Bankers Life and Health Insurance of the United States.
Mr. Speaker, alongside this phenomenal success, there have been problems too. I would also like to update the House on the efforts of the Ministry in association with the National Investment Bank of Jamaica to rescue the failed projects which were funded under the Intech Project.
Teleservices Jamaica Limited, which borrowed $226 Million was put into receivership by NIBJ in June last year and the assets sold to West Corporation, one of the largest tele-marketing companies in the United States for J$270 Million, payable over 5 years. The deposit of J$84 Million has been paid and the company is now operating the former teleservices call center.
Netserv was placed in receivership early in 2002 and the assets sold to Touch Point Centers International Jamaica Limited for J$240 Million with a deposit of J$27Million and the balance payable over 7 years at 4.25%. Netserv was loaned $199.6 Million.
Pathways Technologies which borrowed $158.8 Million for 6 years, suspended operations in August 2003, as a result of its inability to continue to finance itself. NIBJ appointed a receiver who last week signed an agreement with a Trinidad Company to lease the assets. The effective date of the Lease is February 2004. The loan which was partially secured by a hypothecated deposit J$60 Million by the Pathways’ Principal is being serviced by interest from the deposit.
NIBJ is pursuing various options with regards to the $64 Million turn key facility which it owns at the Kingston Freezone.
Bay Telemarketing which borrowed $35 Million is repaying its loan in accordance with its terms.
Mr. Speaker, it is my firm belief that the NIBJ will be able to bring a positive conclusion to all the outstanding issues in relation to the Intech Loan Project.
Mr. Speaker, I now move to the major ICT project in the Ministry being funded jointly by the Inter American Development Bank and the Government of Jamaica.
The total project cost is US$23 Million, of which the IDB is providing US$17 Million. The loan agreement was signed on June 25 last year and the project officially launched on March 24, 2004. The Project is now in full implementation with the highest priority being Jamaica’s e-readiness.
As a result, the project is focusing on assisting the Trade Board and Fiscal Services Limited to purchase computer equipment and relevant software.
Both institutions are critical to the implementation of the e-Government initiatives. This US$6.9 million component of the project integrates and web-enables the systems of government agencies to remove duplication and reduce the number of places citizens have to go to transact business.
Mr. Speaker, Jamaica is currently ranked in the top ten countries in the world to do business. When this project is concluded, so long as the criteria remain unchanged, I confidently expect our ranking to be improved, perhaps to number one as that is our objective. We are not satisfied with just being in the top ten.
The Trade Board has been mandated to develop a government Public Key Infrastructure (PKI) to secure electronic service delivery by government ministries and agencies as well as Jamaican businesses. It will also facilitate electronic commerce over the internet as well as inter and intra national trade.
The Trade Board will be custodian of the PKI and will be the certification authority, enabling electronic services delivery and electronic commerce through the use of digital certificate and digital signatures.
The International Telecommunication Union (ITU) is providing technical assistance for establishing the PKI and the Ministry is spearheading the drafting of the e-transactions legislation as well as cyber-crimes legislation to provide the legal foundation for the use of the PKI and digital signatures.
Mr. Speaker, the draft of the e-Transactions Bill was widely circulated for comments and these are now being incorporated into the document. We expect to have this Bill presented to Parliament for debate shortly. Again Mr. Speaker, I would like to invite Jamaicans to avail themselves of the opportunity to comment on the proposed cyber crimes legislation.
Mr. Speaker, the project is also financing technical assistance to strengthen the Ministry including the Central Information Technology Office (CITO). CITO is mandated to periodically update Jamaica’s strategic ICT plan, develop a monitoring system and develop action plans for the introduction of ICT in sectors such as education, health and agriculture.
POST AND TELECOMMUNICATIONS DEPARTMENT
Mr. Speaker, there are very encouraging developments in the Post and Telecommunications Department. Despite constraints, the Department continued to pursue its strategic objectives aimed at implementing the necessary modernization and commercialisation of the postal services.
In response to its mandate, the newly appointed Board set to work on developing a “Roadmap to Profitability” determining the status of the postal reform process, reviewing the strategic objectives and setting priorities.
Continuing the focus on Customer Relations, the Customer Service Unit has been strengthened. The Hotline was activated and closer links established between the Unit and front line personnel. Three Hundred and Two persons received Customer Service training.
The most significant achievement for the year in review has been the re-engineering of sorting and delivery operations, which began last July. An end-to-end measurement system was introduced, allowing for tracking of the movement of mail.
Feedback from customers and test mailings of letters indicate that delivery standards of 2-3 days in the Kingston Metropolitan Region and 4-5 days island wide are being met in 65% of mailings. The local express mail 24- hour guaranteed service has shown steady growth, despite inadequate funding for promotion. For the period under review, 11,267 pieces were delivered island wide.
“Track and Trace” software for the express mail service has been installed and the service to Canada, the United Kingdom and the Caribbean will be re-introduced in the new financial year.
Infrastructure development remains an important strategic objective for the post office.
The Liguanea Post Mall, the centrepiece of which is the new Post Office, is to be officially opened next month. This first-of-its-kind modern state-of-the-art facility, will offer a suite of commercial services, including bill payment, money transfer, virtual phone card and fax and photocopy services. There will also be an Internet caf

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