PIOJ Head Says Private Sector Must Take Lead in Economy

Director General of the Planning Institute of Jamaica (PIOJ), Dr. Gladstone Hutchinson, says the economy must be transformed into a private sector-led one, if Vision 2030 or Jamaica’s Fiscal Consolidation Programme is to be achieved.

He challenged local business owners attending the Private Sector Organisation of Jamaica (PSOJ) Chairman’s Club Breakfast, on (September 28), at the Pegasus Hotel, saying the sector had not yet “stepped up to the plate to make consolidation work.”

“Our economy is at a very important juncture, if not at a tipping point in its development. It has taken important strides to transform itself into a private sector-led economy, but for a variety of reasons the private sector and private economy have contracted even more rapidly than the public sector economy over the past few years,” he noted.

Dr. Hutchinson said that as a result, the expected displaced human and capital assets under the rationalisation of the public sector are not being absorbed into an expanding private sector.

He argued that while the role of Government is to create a sound macro-economy and an enabling business environment, the private sector also had a role in creating broad-based growth and development.

The Director General suggested that the private sector could do this by engaging in activities that build productivity and innovation; partnering with the government to discover, develop and take advantage of new sources of competitive advantage in domestic and international markets; and by leading efforts to ensure good governance, transparency and accountability at all levels.

Dr. Hutchinson said the government’s role in private sector-led growth would be to commit itself to efficient production of its core functions, adding that the administration could also help to facilitate growth by reducing crime and violence, which would improve the business climate.

In the short-term, the PIOJ Head also suggested that the government consider tradeable tax credits for start-ups in emerging industries; tax breaks for companies employing new persons; business incubator networks; and introduction of a web-based employment bank.

His recommendations for the medium and long-term included abolition of Estate Duties; giving local authorities the latitude to vary property tax and other local rates and charges; and tax reform.

The Director General warned that unless the country gets to the point where growth in the economy is led by the private sector, instead of the government, Jamaica faces the possibility of missing its development aspirations.

“When the public sector grows faster than the national economy. it diminishes our ability as an economy to modernise ourselves, to grow robustly, and more importantly, it robs us of our personal and collective development, well-being and freedoms,” Dr. Hutchinson argued.