Record Earnings from Foreign Direct Investments and Exports

It perhaps comes as no surprise that tourism accounted for a significant percentage of the record $22.9 billion in Foreign Direct Investments (FDI), that Jamaica earned during 2007/08.
For upwards of the last two decades, the sector has been the nation’s flagship foreign exchange earner.
What may, however, raise some eyebrows, is that Spain accounted for more than half of the capital expenditure inputs during that period, relegating the likes of traditional North American contributors, Canada and the United States (US) down the order.
President of Jamaica Trade and Invest (JTI), formerly Jamaica Promotions Limited (JAMPRO), the Government’s trade and investment promotion agency, Robert Gregory, tells JIS News, that the $22.9 billion in earnings was some $2.9 billion more than the 2006/07 figure of $20 billion, the previous highest recorded. Tourism, he says, accounted for some 65 per cent of the earnings, followed by manufacturing, with 16 per cent.
Spain, which Mr. Gregory says can be regarded as an “emerging market”, led all comers for the period, accounting for just over 61 per cent of the capital expenditure, primarily in the area of tourism. This mainly comprised hotel developments along Jamaica’s north and west coast resort corridors. Interestingly, Trinidad and Tobago was second, with a 16 per cent input, while Canada, with 14 per cent, and the US, with four per cent, rounded off the top four. The JTI President says the resulting employment generated, was just under 9,000 jobs.
“So, our traditional sources, the U.S. and Canada, are way down in the pecking order nowadays. So it just shows you how radically things have changed, and we have to adjust our focus to reflect that changed environment. This sole focus on North America, and Western Europe, the U.S. and England, is really no longer appropriate. Not that these markets are not important, these are traditional markets. But there are new opportunities emerging in new areas of the world, and we should take advantage of these,” he stresses.
Export earnings for 2007/08, Mr. Gregory informs, totalled a record $2.46 billion, some $36 million more than the figure for the previous year. He describes both sets of earnings, for FDIs and exports, as having far “exceeded projections”, the former by 46 per cent. He advises that, thus far, for 2008/09, the country is “holding close”, to targets for FDI capital expenditure, and exports.
According to Mr. Gregory, the sector profile for last year’s FDIs was, basically, similar to that for 2006/07. He notes that tourism and hospitality, and manufacturing led all areas, with a combined total input of 81 per cent. Other sectors figuring in the earnings include: information and communications technology (ICT); agribusiness; the creative industries; and mining.
Against the background of the record level of FDIs, the JTI President says that for Jamaica, “the challenge continues to be one of how do we enhance the absorptive capacity of the economy.”
“How do we ensure that the Foreign Direct Investments, in fact, all the investments translate as much as possible to decent job creation. And by decent job creation.we want more quality jobs to be created from the FDIs. We also would want to see the FDIs going to paying for Jamaican-produced goods and services, so that Jamaican companies (can) benefit. The [greater the percentage] of the Foreign Direct Investment spend that finds its way, paying Jamaicans, purchasing Jamaican goods and services, (then) what that means is that we are absorbing more of the FDIs,” he argues.
The JTI head warns, however, that inability by Jamaican firms to provide goods and services, or for skills to be availed at the desired and requisite standards demanded by foreign investors, will result in these being sourced externally.
“So there is a challenge for us, as a country, to continue our efforts in regard to education and training, to upgrade our workforce. To lift the standard of living, resulting from FDIs, and enhanced exports.of more sophisticated products and services, will redound to the benefit of the economy. Likewise, the upgrading of our companies, lifting their levels of sophistication, so that they can provide the same quality of goods that investors would be accustomed to elsewhere,” he contends.
Mr. Gregory points out that the JTI’s focus, is on ensuring that the main sectors contributing to FDI maintain a presence in the global marketplace, while developing others. He notes that agribusiness, and in particular, apiculture (bee farming), is a growing area, adding that the US provides a potential market for locally produced honey.
“There are some problems with honey bees in the United States, and there is a growing market for Jamaica produced honey. So apiculture is very important area for us,” he informs.
Manufacturing, according to Mr. Gregory, has done fairly well, adding that “we are positioning (it) strategically, to produce low volume/high value niche market products.”
The same, he says, holds true for products such as Blue Mountain Coffee and Pick-a-Peppa Sauce, which he describes as “highly (and) uniquely Jamaican, design-intensive products.”
“We are taking this… strategic position, because we cannot compete, on volume, with the Chinas of this world; we have to find our niche. Our niche is one that really requires high quality, high design, uniquely Brand Jamaican design, and fetches a higher price,” he states emphatically.
Another sector area of focus, the JTI President informs, is energy, which he notes, is relevant in light of the current global fuel crisis, and the daunting prospects of the country being faced with a US$3.5 billion oil bill this year.
“We are moving, apace, to try and identify and bring on stream.renewable energy sources. The expansion of the Wigton Wind Farm, solar energy, and importantly, now, for us.waste to energy. The real possibility and technology does exist, through some gasification process, to turn the garbage at Riverton, and other landfills we have in our country, into actually generating electricity; and we are actively pursuing that,” he explains.
“We want to diversify the sources of our energy, from sole reliance on fossil fuels. And I hear our Minister of Energy (Clive Mullings) talking about looking at, maybe, as much as 30.40 per cent of our energy being sourced from alternative renewable energy sources. That will have a massive effect on our energy bill for sure,” Mr. Gregory says, adding that a number of bids and tenders for renewable energy projects, particularly from waste, were being pursued.
Turning to trade and exports, Mr. Gregory points out that this area “represents the efforts and achievements of our Jamaican firms, who produce products that are exportable,” noting that last year’s earnings was testament to this.
“This year, we are pleased to announce that we are seeing Jamaican products finding their way onto the mainstream supermarket shelves (in the United States). We believe that, in part, this is due to the fact that we have significant numbers of visitors. now we are over the three million mark; three million persons actually come to our country, whether on cruise ships or (as) stay over visitors. They are exposed to our cuisine, to our fashion, to our way of life, and many of them go back with an appetite for these products.
“And what we are learning is that they (are) asking their supermarket operators… for these products. So the distributors of Jamaican products are seeing a good rise in demand, and the supply is to areas… that, never before, we were supplying,” he advises.
This, the JTI President says, augurs well for local established and potential exporters, as they will be able to exploit the authentic Brand Jamaican reputation, which is gaining traction, particularly in non-traditional areas. As such, he says, the agency and, by extension, the Government, is looking “with great expectancy”, at tapping into some of the emerging markets such as China, Brazil, India, and South Africa.