Look to Services – UNCTAD Head

Secretary General of the United Nations Conference on Trade and Development (UNCTAD), Dr. Supachai Panitchpakdi, says that Jamaica should focus on developing its services industry as this is currently the most promising area for economic growth.

Addressing a breakfast forum at the Jamaica Exporters’ Association (JEA) headquarters in St. Andrew on November 15, Dr. Panitchpakdi noted that the services sector is doing well, representing approximately 70 per cent of the country’s export and Gross Domestic Product (GDP), and is the “greatest value-added” sector.

He noted however, that while tourism stands out as a top performer, Jamaica has been losing competitiveness even in that industry, and urged members of the private sector to get together with the Government to find the cause.

“You may need to sit down together to map out why Jamaica has been losing because this is alarming. If you lose competitiveness in manufacturing, in certain processing industries, it is not that threatening, but if you begin to lose competitiveness in some key areas of your services sector like tourism, then you must really be ringing the alarm bells,” Dr. Panitchpakdi said.

He advised that the country develop more linkages in tourism for greater net gain, pointing out that while Jamaica is earning from the industry, it is also spending a lot on imported goods for the sector.

The UNCTAD head also cautioned the Government against too much regulation of the sector. “In the services industry, you don’t go and regulate it too much. This is where the private sector should be telling you what should be done, so that Government can facilitate competitiveness in the system,” he stated.

He also pointed to the need for greater public/private sector partnership in infrastructural development, noting that the Government will never have enough money to tackle large scale projects on its own.

As it relates to foreign direct investment, Dr. Panitchpakdi said Jamaica has to “come back to where you can reach a level of at least US$1 billion per year for foreign direct investment.”

According to the UNCTAD World Investment Report 2011, FDI flows into Jamaica declined by 62 per cent to US$201 million in 2010. The country attracted record inflow of US$1.4 billion in 2008, just prior to the global recession.

Dr. Panitchpakdi noted that many of the major developing countries are now looking to invest, and Jamaica should look towards non-traditional sources such as China and other Asian countries, as traditional partners such as the United States of America, Japan and Europe, no longer have the money to invest.

Turning to global trade, Dr. Panitchpakdi painted a gloomy picture, noting that international trade financing has been drying up in the last couple of years, and projected that the highest growth rate for the year may be 2.5 per cent.  He also pointed to a contraction of global investments of around eight per cent which, he said, was causing a deflationary impact.

He warned that countries will now have to balance their own domestic demand, more so than in the past. “This means that it is a very difficult time for Jamaica to be competitive on the international level. Even if you are competitive, the global market is not expanding at the rate where you can take up a larger share of the market,” he said.

He urged the country to take greater advantage of regional trade through CARICOM and find its niche in the market.

Dr. Supachai again commended Vision 2030 and urged private sector support for the development plan.

JEA President Vitus Evans, in his remarks, acknowledged the need to strengthen the relationship between the public and private sectors to ensure a supportive business climate to facilitate businesses. “We need to ensure that…decisions taken (by the elected officials) are with the objective of attaining growth, and that they are held accountable for their decisions,” he added.