KINGSTON — Minister of Industry, Investment and Commerce, Hon. Dr. Christopher Tufton, says although the Government has worked hard to set the stage for the expansion of the manufacturing sector, there are still issues which it has to play a role in adjusting.
"It's a challenge because manufacturing, over the years, has not benefited from a macroeconomic environment conducive to its development and, indeed, to its expansion," Dr. Tufton said.
The Minister was speaking at the launch of the World Investment Report 2011, at Jamaica Promotions Corporation's (JAMPRO) head office, New Kingston, on Tuesday (July 26),
He said that the Government remains committed to the expansion of manufacturing, despite the challenges, and has worked hard to set the stage for sustained expansion.
The Government has done a fairly good job in working with the private sector to achieve a level of containment, in terms of the critical macroeconomic variables that could form the basis for economic advancement and economic expansion, he said.
"Over the last two or so years, there has been some noticeable adjustment to the macroeconomic environment, which could create a platform for an expansion in the manufacturing sector," he noted.
These achievements included the fact that interest rates are now at a 30-year low, while the exchange rate has remained relatively stable over an extended period of time.
"We have seen an NIR (Net International Reserves) which is at a level that is the highest it's been in over 20 years, and we've seen inflation levels contained, which creates stability in our pricing mechanism," he pointed out.
But, Dr. Tufton argued that one of the main issues affecting manufacturing is that, like most other businesses, it has suffered from a lopsided macroeconomic climate in the past decade or more, which has made it more risk-prone than many other businesses.
He also pointed to the cost of energy, as another major issue which has confronted and challenged the sector's expansion and development.
"Not just the cost of energy from the standpoint of generating their direct activity here in Jamaica, but the competition they have to face when compared with other regional players that benefit from much lower cost on energy. And that's a reality we have to deal with," Dr. Tufton stated.
He also argued that the local manufacturing sector has suffered from an unfavourable trade climate.
"I think that the rules that allow for trading has given greater preference to commercial activities in that area, than to the productive sector," he said.
"I think that, from a Government standpoint, it is something that we will have to examine very carefully, in an attempt to try and facilitate further, beyond the macroeconomic stability that we seek to promote, the development and the expansion of our productive base," he stated.
Government's perspective is that "when you establish a strong productive base, you establish a more sustainable economic model", however, that will take a partnership between the Government and the private sector to make it work, he observed.
"I think the entrepreneurs, within the manufacturing sector, will have to play an important role in advancing their own cause," he offered.
The World Investment Report 2011, a publication of the United Nations Conference on Trade and Development (UNCTAD), focuses on trends in foreign direct investments (FDI), at the regional and country levels and emerging measures to improve its contribution to development.
The report provides an analysis of the trends in FDIs during the previous year, with special emphasis on the development implications, ranking of the largest transnational corporations, in-depth analysis of selected topics and policy analysis and recommendations, among other issues.
By Athaliah Reynolds, JIS Reporter