2.0 PRESENTATIONIn my presentation today, Mr. Speaker, my primary focus will be on those aspects of my portfolio that are pivotal to growth, employment and development. As such, I will be speaking to:
Our role in creating an enabling business environment;Promoting local and foreign direct investments to generate hard currency earnings and create jobs;Growing the micro, small and medium-sized enterprise (MSME) sector into the big businesses of tomorrow;Infusing science, technology and innovation in new entrepreneurial ventures;And of course, as the “business ministry” of the Government, I would like to briefly outline some of the strategies for the way forward.
3.0 CHALLENGES Mr. Speaker, in our drive to make our economy more efficient, competitive and business-friendly, we have made significant achievements as a Government, but there is still a long way to go.
These are the obstacles in our way:Excessive bureaucracy, which frustrates our businesses, causing them to lose time and money. Exhaustive and unnecessary registration and certification procedures have a debilitating effect on businesses, and can be particularly crippling to the export industry.Access to capital continues to be a major constraint facing our entrepreneurs, large and smallLack of a trained workforceHigh energy cost, continues to be a major cost of doing business in Jamaica; and of course there is also the high cost of security.
4.0 SOLUTIONS TO CHALLENGES
4.1 Streamlining of Business Registration System
Mr. Speaker, you can register your business in 24 hours using the priority service or 4 days for the normal service. We are also moving to have business registrations done online by the end of the fiscal year. You only register a business once. So, I do not see registering your business with the Companies Office of Jamaica (COJ) as a major bureaucratic hurdle now.
Mr. Speaker, the real annoyance relates to registration with other agencies of Government. Under the present system, after registering a company, the businessperson then has to register for:HEART/NTANISNHT and then on top of that,Apply for a Taxpayer Compliance Certificate (TCC).
Mr. Speaker, this is too onerous for business in 21st century Jamaica. What we are working on now is the development of a super form to be administered by the Companies Office. This means that when you register your company, you would have been automatically registered with HEART/NTA, NIS, NHT and you would get your TCC at the same time. Therefore, you won’t have to relate with these entities. The COJ will do those things behind the scene for you.
4.2 Formation of National Competitiveness Council
Mr. Speaker, previously we had different administrative arrangements to deal with competitiveness. What I have now done is to put all the necessary mechanisms pertaining to national competitiveness under one umbrella – the National Competitiveness Council.
This Council is an amalgamation of:-The National Export Council, which is addressing the operational and legislative constraints facing the export sector, The Trade Facilitation Board, which is mandated to improve efficiency in the exporting and importing processes, and The Target Growth Competitiveness Committee, which actively lobbies for business-friendly policies and regulations.
The National Competitiveness Council coordinates implementation of the National Export Strategy, and promotes partnership to foster robust economic growth. It was established in the interest of administrative efficiency and effectiveness, and provides a single point of reference and support for the various initiatives to be undertaken by the Trade Facilitation Board, the National Export Strategy, and the Target Growth Competitiveness Committee.
The NCC, among other things:Coordinates and drives cross-functional and multi-agency strategies to address the impediments to establishing and doing business in Jamaica;Drives the creation and maintenance of a policy environment that facilitates continued improvements in the productivity and innovativeness of Jamaican MSMEs;Directly addresses complaints regarding delays experienced in the processing of business and investment projects;Formulates measures leading to speedy processing of business and investment projects; andProvides policy advice on steps towards an improved and competitive business climate.
4.3 Partnership for Transformation
Coming out of the National Planning Summit in 2007, the Partnership for National Transformation was established to streamline the work of the Social Partnership and the Planning Summit and achieve a greater level of efficiency in the work towards a competitive business environment.
4.4 Private Sector Development Programme – 2004-2009
Mr. Speaker, in 2004 the Private Sector Development Programme, the PSDP, was launched following an agreement with the Government of Jamaica and the European Union. The primary purpose of the programme was to enhance the competitiveness of our MSMEs and strengthen their support institutions.
Mr. Speaker, the programme’s contribution to the developmental imperatives of the MSME sector has been considerable. We can point to the overwhelming demand for the PSDP’s services, which were implemented in 12 components and resulted in over 16,000 interventions over the life of the project.
While it is well recognized that more could have been achieved, we can take pride in the fact that we have had interventions island wide and across all sectors with the highest number of interventions evident in agri-business, the creative industries, tourism and services.
At the level of the firm, over 80% of beneficiaries of PSDP grants and supporting business development services went to micro and small enterprises.
Access to corporate finance was the greatest challenge. Nevertheless, the target of facilitating J$363M in loans to 100 firms has been met. The average loan size was J$3.6M – up from J$2.5M in the second year of the unit’s operation.
Mr. Speaker, with the benefit of multimedia technology we have assembled here today, some of the proud beneficiaries of the PSDP, who are making big strides in their businesses.
Mr. Speaker, we are fully committed to removing the barriers and improving the environment for competitiveness and growth, in keeping with Jamaica’s Medium Term Socio-Economic Policy Framework (2009-2012).
What this means Mr. Speaker, is that we must now find the right formula to take advantage of the opportunities in order to move this country on a path of sustainable growth.
In so doing, our strategies must be proactive. We must put in place the necessary structures, programmes and policies for the growth and development of this country, and we must commit to the long haul.
Mr. Speaker, we have established a sound foundation on which we can now build this country in a much more predictable and sustainable manner. Interest rates are now the lowest they have been for many years. In addition, our exchange rate has been relatively stable, and our business environment is in a state of continuous improvement.
Our role in this Ministry is to drive production and we will maintain a clear focus on promoting investments and exports, micro, small and medium enterprise development, the application of science and technology, as well as establishing an international financial services centre.
Critical to this process, therefore, are the roles to be played by JAMPRO, the Jamaica Business Development Corporation (JBDC), the Scientific Research Council (SRC), and the Factories Corporation of Jamaica (FCJ).
5.0 DEVELOPING THE CAPABILITIES OF THE MSME SECTOR
The Government is firmly committed to the development of the MSME sector.
5.1 Jamaica Business Development Corporation
The Jamaica Business Development Corporation (JBDC), as the lead agency driving business development and facilitation among MSMEs, continues to play a critical role in this process.
(i) Kingston Urban Renewal Project
Mr. Speaker, one of the main projects implemented by the JBDC in the last two years, is the Kingston Urban Renewal Project (KURP).
Under this project funded by the IDB, which the Member for Central Kingston can attest to, the JBDC has been playing a significant role in the efforts to enhance the social and economic welfare of communities in depressed Central Kingston neighbourhoods, including Tel Aviv and the Southside communities.
Under this project, Mr. Speaker,104 young entrepreneurs have been trained in small business management; 32 businesses have been approved to benefit from a loan fund under the project; 131 students have participated in HEART/NTA certified training programmes; 250 persons have been employed through various components of the project; 62 interns have been placed; and45 persons have received literacy training.
(ii) Incubator and Resource Centre
Mr. Speaker, one of our first interventions on assuming office was to assign the building at Marcus Garvey Drive to the JBDC to implement the Incubator Resource Centre. The JBDC, Mr. Speaker, has a three year rent-free tenure in the building at Garmex.
The approach at Marcus Garvey Drive, Mr. Speaker, has been to provide training and technical assistance to the incubatees, as well as to offer them common business support in the areas of graphic design, packaging and production services. Mr. Speaker, the entire business development team of designers, graphic artists, food technologists and product development officers has been relocated from the Camp Road office of the JBDC in order to provide the requisite services to incubatees. Services are also provided virtually.
During the 2009/10 period, the Incubator and Resource Centre (IRC) continued to play a key role in providing hand-holding and “incubation” services for start-ups and existing small businesses. This included assistance to 12 fashion and apparel incubatees, 150 training sessions, and 3,500 participants.
Mr. Speaker, in order to strengthen the access of MSMEs to technical, business, marketing and financial services, we now have 11 Jamaica Business Information Centres – JAMBICS –across the island. In 2009, over 2,000 persons were assisted by the JBDC through these centres.
We have 80 Business Service Providers (BSP) throughout the island. Through this network, clients are provided with first level JBDC services and are assisted in identifying and meeting new needs.
Mr. Speaker, the Member for East Kingston made a number of observations during his contribution, which raised some issues that I must, however, clarify.
The Member suggested that the Micro Investment Development Agency – MIDA – is now being operated under the Jamaica Business Development Corporation (JBDC) and that by so doing, we have created an institutional conflict of interest by having the same entity wholesaling and retailing funds.
Mr. Speaker, MIDA was physically moved to JBDCs headquarters on Camp Road as part of the Ministry’s rationalization programme to reduce cost and improve coordination and collaboration. However, MIDA does not fall under the JBDC and the JBDC does not influence operational decisions of MIDA. Both share the same board of directors but each is independent and autonomous. The question of conflict of interest does not, therefore, arise.
Mr. Speaker, the Member for East Kingston reported that the JBDC was created with a “core mandate of providing technical support for small enterprises.” Let me assure this Honourable House that the JBDC means: Jamaica “Business Development” Corporation and its core mandate of “business development” has not changed. Its current lending activity is only a small part of its overall operation.
Mr. Speaker, the Member stated that there is nothing in the budget for the incubator centre. I wish to inform him that there is an allocation of $12 million in the budget to support the incubator in the area of food processing.
There is also budgetary provision for the continuation of the JAMBIC centres within the JBDC’s budget.
It has also been suggested, Mr. Speaker, that the JBDC has been reaching only one percent of small and medium enterprises. While we embrace the entire MSME sector, the services provided by the JBDC, both financial and non-financial, deliberately focus on the productive sector. This sector accounts for approximately 33% of the MSMEs or about 132,000 entities. As such, last year JBDC’s 12,000 new clients would account for about 10% of the target sector and not the 1%, suggested.
Mr. Speaker, for the period 2009/10, some 12,350 individuals/entities were assisted by the JBDC. This assistance took the form of general business advice, training, product development, marketing and consultations. Some 2,200 new clients were dealt with during the year.
(iii) Jobs Created
Furthermore, the impact of the JBDC’s work through its network of private business service providers extends to institutions such as Jamaica National, the credit union network, etc, and accounts for an additional 15,000 individuals.
The JBDC is also involved in a number of other programmes and interventions.
Mr. Speaker, the JBDC has been doing tremendous work and I must commend the chief executive officer, Valerie Veira and staff for their achievements.
5.2 Availability of Funds for MSME Sector
It will be recalled that the Prime Minister announced that the DBJ will be providing $2 billion for on-lending this year. I am pleased to announce, Mr. Speaker, that of this amount $750 million will be dedicated to the micro sector. This will be the largest allocation of funds to this sector. This means that institutions that lend to the MSME sector such as Jamaica National, Nation Growth and Access Financial Services will be able to access more funds and provide hope for thousands.
Mr. Speaker, it is reasonable to suggest that a good supply of funds is now available to the MSME sector. In all, we have approximately $6.7 billion available for lending, from both the private and public sectors.
Funds have also been available and disbursed through the following institutions:Micro Investment Development Agency (MIDA)For the period March 2009 to March 2010, the Micro Investment Development Agency (MIDA) disbursed $172.11 million or 877 loans. A total of 1,173 jobs were created or retained.For the 2010/11 financial year MIDA aims to disburse $171 million.
Self Start Fund (SSF)During the financial year 2009/2010 the Self Start Fund (SSF) disbursed 113 loans totaling approximately $27 million.The Fund created or preserved approximately 441 jobs.
For the 2010/2011 financial year, the SSF aims to disburse some $45 million to the SME sector.
Development Options Limited (DOL)
During the period, Development Options Limited disbursed 3,500 loans valued at $186, million. A total of 3,427 jobs were created or retained. For the 2010/2011 financial year DOL aims to disburse $186 million.
Pan Caribbean disbursed $115.4 million, with a total of 2,599 loans during the period. For the 2010/2011 period, they aim to disburse $151 million to the sector.
Jamaica National Micro Lending
Additionally, Jamaica National Micro Lending programme disbursed some J$2.88 billion during the period January to December 2009. This involved 42,388 loans and the creation or retention of some 26,000 jobs. Mr. Speaker, it will be recalled that we provided $200 million to Jamaica National last year for its micro lending programme. That money was disbursed in two months. I am advised that the arrears rate is less than 5%. Mr. Speaker, when you consider that those loans were made without the reliance on traditional collateral, we must conclude that this is a highly successful programme and that honest small people repay their loans. I want, therefore, to congratulate Jamaica National for an excellent performance.
Development Bank of Jamaica (DBJ)
During the period March 2009 to March 2010, the DBJ disbursed a total of $2.667 billion to the SME sector. This involved 2,460 loans and the creation or retention of some 16,903 jobs.
JBDC Lending Programme
During the same period, the JBDC disbursed 212 loans valued at $150 million, creating 534 new jobs. The arrears level is approximately 4%.
5.3 Increasing Access to Credit
However, many persons are still finding it difficult to qualify for some of these funds, owing to credibility issues or the absence of suitable collateral. A number of potential borrowers cannot readily provide the necessary documentation such as TRN, TCC, financial information, formal business registration, and so on in order to access loans.
The Government, Mr. Speaker, has neither the financial resources nor the expertise to single-handedly fill the financing gap facing MSMEs. That is why we welcome the increasing involvement of the private financial institutions, including the Jamaica National, NCB, Scotia Bank and others. That is why we continue to support the creation of new financial products suited to the financing of MSMEs, and that is why we have been introducing mechanisms to facilitate the institutionalized sharing of information and risk, as a means of reducing the risk and heavy reliance on collateral.
It is against this background, Mr. Speaker, that the MSME credit bureau and the Junior Stock Exchange have been introduced.
5.4 Collateral Registry
Mr. Speaker, plans are now well advanced towards the establishment of a collateral registry in Jamaica. Such registries provide notice of prior liens to all potential creditors. Under this system, a publicly-available data base is created, allowing borrowers to register the collateral they are pledging against loans. A steering committee for secured transactions is being formed and will consist of the Ministry of Industry, Investment and Commerce, Ministry of Finance and the Public Service and other key stakeholders.
5.5 Role of Science & Technology in Entrepreneurial Development
Mr. Speaker, science and technology underpins virtually everything that we do. This is evident through the technologies developed in areas such as food production, health and environment, the development of local industries, the promotion of competitiveness, job creation, as well as small and micro enterprise development.
A key player in this process is the Scientific Research Council (SRC).
5.6 Rural Youth Employment Project
One of the most recent projects of the SRC, Mr. Speaker, is a 3-year Rural Youth Employment Project, made possible through US$1.25m support from the United States Agency for International Development (USAID) and the United Nations Development Programme (UNDP).
The project, launched in March 2010, is really an initiative of the SRC and the Planning Institute of Jamaica (PIOJ). Its main objective is to reduce rural youth unemployment in the parishes of St Thomas, St Ann, Trelawny and Manchester. It primarily targets youth who are unattached, as well as those earning a living directly or indirectly through agriculture.
The project aims to reduce rural youth unemployment by increasing their access to sustainable livelihood options. This will be achieved through the provision of skills training and increased access to post harvest and agro-processing facilities.
Through the Rural Youth Employment Project, youths will have in addition to important life skills, the necessary skills to identify and access opportunities for engaging in other businesses along the agriculture value chain. The project will work through established community groups but will also accommodate youths not currently involved in such groups.
Mr. Speaker, we expect this project to enhance current efforts to strengthen the linkages between the agriculture and tourism sectors and the servicing of underserved niche markets.
5.7 Lemon Grass Industry
Another important initiative of the SRC, Mr. Speaker, is that of establishing a lemon grass industry.
In an effort to stimulate employment opportunities along the value chain, the Council has revitalized and showcased the potential of essential oils from local plants. The SRC, Mr. Speaker, has been using lemon grass as a model to demonstrate the versatility of under-utilized aromatic plants locally. So far, over 200 persons have expressed interest in farming lemon grass as a crop, while others are already engaged in activities towards the extraction and production of value-added products.
The SRC has also signed a MOU with Churches Credit Union that expressed a willingness to provide concessionary facilities to parties interested in participating in a lemon grass business.
As a result of a vibrant promotion campaign to stimulate the lemongrass industry, over 180 enquiries have already been processed, with commitment from farmers to cultivate over 986 acres of lemon grass for value added products.
Mr. Speaker, the SRC in enabling economic activity, has interacted with over 2000 customers, mostly through the efforts of Marketech Ltd, the marketing and business development arm of the SRC. This has resulted in a 55% increase in the number of requests for food product development and a 107% increase in contracts with MSMEs for product research and development activities. Over 32 food and personal care formulations have been sold to MSMEs.
The SRC’s effective use of its patented environmentally-friendly wastewater treatment technology continues to protect Jamaica’s natural resources for our generation and generations to come. In a time when manufacturers are complaining about high energy costs, this technology can contribute to improving competitiveness through the use of renewable energy.
5.8 Wooden Products and Furniture Incubator Project
Mr. Speaker, in addition to all of this, we have developed a programme specifically geared towards providing technical support to micro and small manufacturers of furniture and wooden products. A total of $35 million has been allocated through the Bureau of Standards Jamaica (BSJ) to finance the project for this year. Over the duration of the three-year project, a total of $100M is to be made available.
The project, Mr. Speaker, is being implemented in collaboration with a number of public and private sector bodies, including the Ministry of Education, HEART/NTA and the Jamaica Wooden Products and Furniture Association (JaWFA). A nine month pilot phase, which ended in December 2009, saw the establishment of the administrative framework for the project and the launch of a Design Centre at the Bureau. For the 2010/11 financial year we are looking towards the establishment of six hubs islandwide (for technical and financial training) and the incubation of some 40 wooden furniture manufacturers.
6.0 INTELLECTUAL PROPERTY PROTECTION
Mr. Speaker, the success that Jamaica has been enjoying on the world stage with our athletes, has underscored the challenges associated with protecting our niche products, our intellectual property rights and “Brand Jamaica”. Countries and companies worldwide have been taking advantage, exploiting our country’s good name and gaining commercially from our reputation.
I brought some examples of the wanton cases of piracy now taking place with respect to some of our Brand Jamaican commodities around the world: Swiss Barbeque original Jamaica Jerk Sauce – Made in Trinidad & Tobago; Jamaica Jerk Sauce, which has on the bottle the map of Jamaica, the Jamaican doctor bird, the Jamaican colours and refers to Boston-style jerk – Made in Costa Rica;Ron Jamaica – which in English translates “Rum Jamaica” – Made in Ecuador;Jamaica Energy Drink, this product is being advertised and sold on the Internet as if it were from Jamaica – Made in Croatia, and Jamaica Coffee, Blue Mountain Ground Coffee, with the map of Jamaica and the doctor bird – Made in the USA.
Mr. Speaker, we have been getting all our producers organized, beginning with coffee, jerk and rum. In legal terms, JIPO is establishing what are called “Codes of Practice”, which clearly set out specific rules and standards by which our fine Jamaican products can be registered locally and internationally. By so doing, Jamaica will be in a better position to police and prosecute infringements of its intellectual property around the world.
7.0 INVESTMENT PROMOTION AND TRADE FACILITATION
Mr. Speaker, I now turn to another important area — investment promotion and trade facilitation.
Over the past several months, the role of JAMPRO has been comprehensively refocused from a wider approach to investment promotion and facilitation, to a more specific sector targeting approach. Simultaneously, the trade and business development side of the agency has increased its services in the development and capacity-building of local businesses to compete at global standards.
In so doing, JAMPRO is engaging in more aggressive export promotions while implementing a national linkages programme that is connecting competitive Jamaican producers with local and foreign buyers.
I pause here to commend the JAMPRO team under the leadership of president Sancia Bennett Templer for the solid work being done against the backdrop of an unfavourable global climate for trade and investments.
7.1 The New JAMPRO
Mr. Speaker, the new JAMPRO of which I speak, is being reconfigured to address, and to become an even more critical institution to support the Jamaican business community, in particular, our large, medium and small exporters.
7.2 JAMPRO Business Hub
With regard to export development, JAMPRO has renewed its focus on business facilitation and on product development, which are key functions underpinning the organisation’s promotional activities. This is based on the organisation’s recognition that in order to effectively promote exports to the international market, we must ensure that companies are export-ready and can sufficiently meet the standards and capacity requirements of the global marketplace.
Guided by the refined and targeted focus on companies within the small and medium-sized enterprises sector, JAMPRO will identify and support such entities that demonstrate strong export potential for development into export viable companies, whose products can then be promoted.
Key to this process is the execution of export readiness diagnostics, facilitation of technical assistance, access to financing, facilitation of business linkages, coordination of cluster and sector initiatives, stakeholder partnerships and ongoing client interface with the export clientele to identify issues affecting export expansion.
Within the next 4 months, Mr. Speaker, JAMPRO will transform nearly 7,000 sq. ft of the ground floor of its head office to create the JAMPRO Business Hub. This Business Hub will be the only one-stop ‘business facility’ of its kind in Jamaica.It will allow for easier and more direct access by clients to business information via touch-screen monitors, Internet desks and a modified contact centre; The establishment of a permanent showroom/exhibit displaying a variety of Jamaican products with an emphasis on new and emerging products/brands and a virtual and physical information hub that provides data to assist clients in making critical business decisions.On certain days of the month, JAMPRO will facilitate ‘full service’ days, where it will assemble all Government-related services for the conduct of business in the Business Hub, and invite the business community to access these services.
As Minister, I am concerned with “What is it that hampers production and the growth of Jamaican exports?” I am determined to overcome the hurdles and bureaucratic ‘red tape’ that stifle the growth of the export sector, especially in a new paradigm where the reforms instituted by this Government to our financial system have effectively coerced the banks to go out and find productive projects for financing.
It is my resolve, as interest rates continue to trend downwards, to create a more business-friendly environment for the increasing numbers of local entrepreneurs and producers seeking to go into the export market; that these proud, brave men and women, receive the highest quality of export facilitation from JAMPRO, on par with the best in the world!
They deserve no less. And this Government through the Ministry of Industry, Investment and Commerce and all its agencies, and especially JAMPRO, will re-double its efforts to make it happen for our entrepreneurs and producers, who take the risks to lead the production drive of this country.
It is against this background that the new JAMPRO is being branded, and that’s why it gives me such pleasure to unveil in this Honourable House, in this important sectoral debate, the face of the NEW JAMPRO!
JAMPRO: TRADE, INVESTMENT, JAMAICA!
Mr. Speaker, let me quickly point out that:-This is not about changing labels. It is about taking Jamaica’s productive promise to the next level.It is about seeking out new investments, wherever we can find them in the world to create new jobs in the economy; It is about stepping up the services to exporters and producers in keeping with the goals of our National Export Strategy, to expand businesses, which will employ more workers, and to increase Jamaican exports to one-fifth of GDP by the year 2013.
7.3 JAMPRO 2009/2010 Performance
Mr. Speaker, everyone in this Honourable House is acutely aware of the extreme challenges in the current environment for attracting and landing investments in Jamaica.
Notwithstanding what has been the worst year for the flow of foreign direct investments around the world, JAMPRO has achieved another creditable year of performance:-For the fiscal year April 2009-March 2010, JAMPRO facilitated and landed investments in Jamaica to the tune of J$17.12 billion in capital expenditures (CAPEX), or approximately 76.4% of the target for the fiscal year. Despite a 30% decline in global trade and a 32% decrease in Jamaica’s non-traditional exports , some sub-sectors proved particularly resilient during the period under review. Export sales facilitated by JAMPRO was J$3.43 billion as at March 2010, or 98% of the fiscal year’s target. The value of linkages contracts facilitated by the organisation was approximately J$935 million, relative to J$113.8 million in FY2008/09. The majority (85%) of the linkage contracts signed were in the ICT sector. In the area of employment creation, 4,574 jobs were created, representing approximately 69% of the target for the year. Mr. Speaker, I should point out that some of the shortfall in employment relative to target was attributed to the capital intensive nature of a significant proportion of the foreign investments facilitated during the year.
As a Government, our approach in attracting investments to Jamaica, has been decidedly proactive and purposeful. This Government understands the inextricable link between landed investments and the creation of jobs. I have had the job as Minister for the past 2