Message from the Editor
Table of Contents
One of the most significant thorns in the side of the Jamaican business sector has been exorbitant energy costs. Various organisations and associations, including the PSOJ, have been increasingly vocal about the need to reduce these costs in order to make our productive sectors more competitive with the rest of the world.
The Position Paper will put forward a series of recommendations that we hope will help to cut Jamaica’s fuel import bill as we improve conservation and efficiency efforts, diversify our energy sources and improve regulation in the sector. Several of these recommendations are included in this issue. We are also gearing up for the PSOJ/Jamaica Gleaner 50UnderFifty Awards later this year, and we feature three new sponsors of the event. We have received tremendous support from the business community for this event, which demonstrates a strong belief in the potential of Jamaica’s young entrepreneurs. The PSOJ is also committed to the development of young entrepreneurs and one way in which we strive to achieve this is through mentorship. One of our programmes, the Mentorship of Emerging Entrepreneurial Leaders Dinner series, has been successful in bringing together some of Jamaica’s most notable business owners with their young counterparts in order to impart well needed strategies and life lessons to not only help them grow their operations, but develop as leaders. The PSOJ remains committed to the task of ensuring that the Jamaican business community continues to grow and develop, which is the only way for the country to prosper.
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Page 3 Member Focus Prime Asset Management: Helping Jamaicans reach their retirement goals Page 4 Nexus Hospitality: Putting the right people in the right jobs
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In addition to hampering business productivity, Jamaica’s current energy crisis is crippling economic growth as the country spends more than double our GDP on fuel. The Energy and Environment Committee of the PSOJ, formed last year, has been working steadily to formulate a comprehensive Position Paper to articulate the organisation’s stance on a number of these issues facing the country. The committee is currently in the final stages of preparing the document for ratificiation by the organisation.
Page 6 COVER STORY Chris Zacca assumes chairmanship of the Energy and Environment Committee Page 7 Highlights of the Energy and Environment Committee’s Draft Position Paper Page 8 MEET THE STAFF David Mason: Bringing innovation to accounting
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Page 9 Carlene Clarke: Chartered accountant in the making Page 10 Lascelles Page continues his climb to success
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Page 11 Sponsor briefs: 50UNDERFIFTY AWARDS GraceKennedy: ‘The future is in good hands’ Page 12 Secrets Resorts and Spas: Supporting those who move Jamaica forward Page 13 Wealth Magazine: Fanning the entrepreneurial flame Page 14 Happenings PSOJ/DBJ Energy Conservation Seminar
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Page 15 Mentorship of Emerging Entrepreneurial Leaders Dinner Sandra AC Glasgow CEO The Private Sector Organisation of Jamaica (PSOJ) 2
Page 18 News from the ceo’s report - Economic overview
member focus
Prime Asset Management: Helping Jamaican workers reach their retirement goals This sole focus has paid off handsomely as the company, which started off managing about $400 million in 1996, is now responsible for some $20 billion in funds and administers about 9000 lives. “We manage about 8-10 per cent of the pension assets in Jamaica, for what I’d call a recently formed company, one without the large financial backing from a conglomerate,” Burchenson said. He attributes a part of Prime’s success to its software system, P3, which was voted number one in the UK in 2006. “It allows us to do many things that our competitors can’t do. For instance, our reports to the trustees go out 10 days after the end of the month, so trustees are always privy to what’s happening with the management of their pension plan,” Burchenson said.
L-R: Rezworth Burchenson – Managing Director, Judi-Anne Marzouca – Pension Administration Manager, Charmaine Johnson – Financial Controller and Herbert Hall – Chairman
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he average worker tends to put off retirement planning until late into his career, if at all. However, failing to plan at an early stage can often lead to hard times as a senior citizen and force many people to work well into their retirement years.
According to Managing Director of Prime Asset Management Limited, Rezworth Burchenson, less than 10 per cent of the Jamaican workforce is involved in a formal pension scheme. If things continue in this vein, Burchenson is predicting “a pension crisis in the next 20 years.” The company is doing all within its power to reverse this dangerous trend. The company, formed in 1996 as a division of Prime Life Assurance Company, offers pension fund management services to both individuals and firms. Prime Asset Management became a standalone entity in 2001. The primary services are in the administration of superannuation funds, which are company-sponsored pension plans and individual retirement accounts (IRAs), where persons make deposits to their own plans. Just about every major financial services company offers pension services, but what sets Prime apart is the fact that it is a “pension specialist”. “We only do pension fund management services and it provides us a kind of focus and in doing that, we get very intimate with our clients. We’re always there to provide the requisite advice,” Burchenson said. 3
In order to press home the importance of retirement planning, Prime also engages in frequent member education activities, such as presentations and seminars, including both current and potential members. The company is gearing up for its annual retirement planning seminar, which will take place on September 27, in collaboration with the Private Sector Organisation of Jamaica. Prime is a member company of the ICD Group, owned by the PSOJ’s immediate past president, Joseph M Matalon, so it has a long history with the organisation. More than 200 people are expected for the seminar, which will feature guest speakers The Most Hon. Edward Seaga, pension attorney Sanya Goffe and Mark Scott from USbased investment firm, Oppenheimer and Company Limited.
We only do pension fund management services and it provides us a kind of focus and in doing that, we get very intimate with our clients. We’re always there to provide the requisite advice.”
member focus
Nexus Hospitality: Putting the right people in the right jobs
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amaica is known for many things internationally, including Bob Marley and reggae music, Blue Mountain Coffee, sprint king Usain Bolt and, of course, our tourist magnets – sun, sea and sand. To complement the latter, we are also known for the fact that generally, we take good care of people. For Nebraska native, Douglas Brooks, who has spent the last 30 years working in the hotel business, this realisation helped spark the birth of his company, Nexus Hospitality, in 2009. Before that, however, he had spent 15 years with the Ritz Carlton Hotel Company, opening hotels around the world, including the property at Rose Hall, Montego Bay. “My job was to go into destinations where we didn’t have hotels and start a new hotel, which meant working with the contractors, really just all the operational things like hiring, staffing, training, organisational development and relationship building with the government, private sector and public sector,” he said. Observing the success of the Ritz Carlton Jamaica, Brooks noted that the hotel staff displayed an “amazing” talent for providing world-class service, which was evident in the number of awards and accolades the hotel received. But while he was noticing the work of the staff, a number of his business friends and acquaintances were paying attention to the fact that he had a hand in their success by training them. “They said, ‘Wow, you did that for Ritz Carlton. Would you be interested in doing that for me and my company?’ That’s how Nexus was born,” he shared.
thing he fell in love with while working in Montego Bay – he also met his wife Jacqueline Sangster. “It’s funny how Jamaican women can convince men to stay in Jamaica,” he laughed. This self-proclaimed ‘Jamerican’ is actively involved on several boards, including AmCham and the HEART Trust/NTA Programmes Committee. He also joined the Private Sector Organisation a little over a year ago, primarily to support the Youth Upliftment Through Employment (YUTE) programme. “I was always impressed with the work Chris Zacca did and then Joseph Matalon and one of my passions is to really take these interview and selection placement opportunities and help reach kids in the inner cities that would otherwise not have access to these companies. They still have talent, but they may not be found easily,” he said. Brooks is looking forward to getting involved in committee work within the organisation and continuing to contribute to Jamaica’s development. “I have a huge belief in what this country is and can be,” he said, “so I want to do as much as I can do to give back.”
The name Nexus Hospitality conjures up images from the tourism sector and while it forms a significant portion of the company’s business, services are extended to other industries as well, including health care and government entities. Nexus offers services in human resources, recruiting, and training, accounting and financial reporting, internal audits and compensation and benefit programmes. “The core of the business is identifying, through a very scientific interview process, the people that are the best fit for the job. Once you put the right person on the right bus, you can teach them anything. That will then roll into great customer service and great organisational development,” Brooks said. A key focus of Nexus is the Appreciative Inquiry (AI) process, whereby individuals, work groups, organisations and even communities can become engaged and empowered. “AI transforms organisations into places that are alive, where people are eager and filled with positive power; where the creativity of the whole never ceases to amaze. That’s what we did at the Ritz-Carlton Rose Hall when we opened,” Brooks said. Nexus offers its services around the world, but Brooks has called Jamaica home since 1999. The country wasn’t the only 4
Douglas Brooks, CEO of Nexus Hospitality
cover story
Chris Zacca assumes chairmanship of the Energy and Environment Committee We will be taking a position on regulatory issues such as the JPS license, looking at benchmarking that against rest of the world.” issues that have to be resolved for growth to take place. Since growth is my overall agenda, I thought it was very important that the PSOJ take a leading role,” Zacca explained. “The quickest way for me to do that was to take over the chairmanship of the Energy Committee and to revamp its composition.” With his background as the former chairman of the LNG Steering Committee and an advisor to former Prime Minister Bruce Golding on energy issues, Zacca certainly brings relevant skills and experience to the table. His first order of business since becoming chairman has been refreshing the composition of the committee by adding new members. However, he has retained former chairman David Barrett as his deputy, commending him for the important role he had played in leading the committee. “It’s a good team; a good mix of skills, so I’m excited about that,” Zacca said. “We have to step up our voice in the public policy sphere as to what our position is, independent of other organisations that are also looking at this issue.”
Christopher Zacca, PSOJ President and Chairman of the Energy and Environment Committee
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hen newly elected President of the Private Sector Organisation of Jamaica, Christopher Zacca, announced that the primary focus of his second term in office would be encouraging economic growth, the assumption probably was that he would head up a business-related portfolio, like the Trade Policy Committee. However, he has chosen a different approach by assuming the chairmanship of the Energy and the Environment Committee. “As soon as I became President, I realised very quickly, based on conversations with a variety of members and associations, that energy is at the top of most private sector entities’ list of
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Now that the composition of the committee is settled, the first meeting takes place on August 29. Of course, the main item on the agenda will be reaching a consensus on the Position Paper before moving ahead with advocacy plans for approaching the government and civil society. “We will be taking a position on regulatory issues such as the JPS license, looking at benchmarking that against rest of the world. We will also take a position on alternative energy and provision to the grid,” Zacca said. Even after the Position Paper has been ratified by the organisation, the committee will turn its attention to other pressing issues in the energy and environment sector, evaluating the issues and articulating the PSOJ’s position on these matters. “We want the committee to take well-informed positions on a wide range of issues and provide the policy basis for our advocacy going forward,” Zacca said.
cover story
Highlights of the Energy and Environment Committee’s Draft Position Paper at the country’s current national energy policy by the government, including current fuel choices and options for the future,” explained Trade and Environment Manager, Omar Chedda. Perhaps he most important aspect of the upcoming Position Paper is the series of recommendations the committee makes regarding issues such as energy conservation and efficiency and fuel diversification, as well as governance and regulatory frameworks. “Based on studies that have been done, one of the most important actions the country can take to actually reduce its energy bill is efficiency, but sadly, most people are focused on JPS and oil and coal and so on, but actually, by putting in new technology, also by changing your behaviour, you can reduce your energy consumption by about 50 per cent,” Chedda said. He also noted that the findings of the EU-funded audit, in addition to other policy studies, prove that “energy efficiency is a very urgent action to be taken.” Fuel diversification is also vital. “We made some recommendations about supporting the government’s efforts in introducing liquefied natural gas (LNG) and also looking at the feasibility of coal,” he continued. “Initially, the Paper was going to make some recommendations about the energy mix, but it was decided not to do that because we felt it was something that should really be determined by market forces, so we’re depending on company costs and the conditions of the market.” Omar Chedda, Trade and Environment Manager
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he Energy and Environment Committee of the Private Sector Organisation of Jamaica is currently in the final stages of preparing its Position Paper for ratification by the organisation. This will be the first output of the committee, which was formed out of a project carried out by the PSOJ, in partnership with the Caribbean Association of Industry and Commerce (CAIC) and funded by the European Union. The project carried out audits of the energy and environmental policies and practices in business enterprises in Jamaica, Trinidad and Tobago and St Vincent. The Position Paper “starts off looking at Jamaica’s current energy profile, assesses the energy situation historically, factors contributing to Jamaica’s high energy cost and makes some comparisons with other countries in the region. It also looks 7
The Position Paper also contains recommendations regarding improving the effectiveness and powers of the Office of Utilities Regulation (OUR); best practices in the energy sector; net billing, which the JPS introduced in May, as well as points on improving fuel efficiency on the transport sector. Here are some of the key recommendations from the Policy Paper: I. II. III. IV. V.
government-sanctioned incentives for companies utilising combined cycle technologies to increase their fuel-to-ener gy conversion ratios implementing energy efficiency building codes investigating the savings potential of using fuel blends such as E10, E15, E85, and E-100 giving the Office of Utilities Regulation more power to monitor the efficiency of utility companies implementing waste-to-energy and recycling projects
Meet the Staff
David Mason: Bringing innovation to accounting
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ike many entrepreneurs have been forced to do since late 2007, David Mason closed the small accounting company he started a year earlier as the global economic recession went from bad to worse. Taking his young family’s needs into consideration, Mason decided to get back into the regular nine-to-five lifestyle in 2009 and since then, he has worked as the Finance and Operations Manager at the Private Sector Organisation of Jamaica. “A friend of mine who works here, Karis Flowers, knew I was looking for a job and she recommended me to [CEO] Sandra Glasgow,” he said. “I enjoy working with people and I enjoy especially my staff. We do have some good times. We get the work done, but it’s an environment where there is no whip over anyone’s back. We try to be relaxed and I think that makes us even more efficient.” Mason has a solid résumé in accounting, beginning at Chambers, Henry and Partners as a junior accountant after completing his studies at the University of Technology, Jamaica. He then worked at Paul Goldson and Company before joining audit and tax multinational, KPMG. He left KPMG in 2006 to pursue his entrepreneurial dreams.
The scope of Mason’s duties now goes far beyond accounting as he oversees not only the PSOJ’s financial operations but the day-to-day maintenance of the organisation’s property and information technology systems. Over the years, Mason has worked hard to bring the spirit of innovation to his department. “We do have balanced score cards and our goals are usually mapped into those, but we try to be more efficient in terms of our collections and in terms of how we present our financial statements. We try to bring innovative ways to add information to the statements so that people who don’t know accounts can understand,” Mason said. “We try to ensure that the systems are always up and running. Recently, we implemented a new strategy where we send out tips to the staff on how to use the computer and how to take advantage of the servers. So, instead of us getting complaints and we try to fix this and that, we try to be proactive by teaching people how to use the systems properly,” he added. Mason, who is married to his high school sweetheart Tamique and has two children, is not discarding the idea of starting another business, but for now, he is content with progressing in his career at the PSOJ. In just three years, he has already made a mark and only wants to get better from here. “In five years time, I would like to see the PSOJ, in terms of accounting and IT, be at a level where we’re looking way beyond efficiency and looking at value-added services,” he said. 8
David Mason, Manager of Finance and Operations
We try to bring innovative ways to add information to the statements so that people who don’t know accounts can understand.”
Meet the Staff
Carlene Clarke: Chartered accountant in the making
Carlene Clarke, Senior Accounting Officer
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hird form students usually look forward to choosing the subjects they will pursue at the Caribbean Secondary Education Certificate (CSEC) level, with both fear and excitement. This is a crucial moment that traditionally cements your career path and many teenagers are not sure what they want to do with the rest of their lives. However, Carlene Clarke already had her heart set on a career in accounting. “My selection was accounts, food and nutrition and I don’t even remember what the third one was, but accounts was at the top,” said the former Norman Manley Comprehensive High School student. “I was thrown into food and nutrition because at the time, they said that the accounts class was full. And I said well, even if it means I have to stand at the door, I’m going to go into the accounts class.” Luckily, she didn’t have to, or she probably would have missed a definitive moment that cemented her choice. “Somebody came and did a presentation on what roles accountants could play in companies and what caught my attention was the fact that he mentioned that accountants can actually go into a company and somehow take over the business. I was kind of fascinated by that,” Clarke explained. That determination paid off and today, she is the Senior Accounting Officer at the Private Sector Organisation of
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Jamaica, where she has worked for the past 10 years. “I started working at the Jamaica Institute of Bankers, now the Jamaica Institute of Financial Services, as an accounting clerk. At the time, they were trying to do a consolidation of all the associations under the PSOJ and the accounts department was placed at the central point,” she shared. The consolidation didn’t materialise, but Clarke began working for the PSOJ and one year later, she successfully applied for the open position of Senior Accounting Officer. Her primary duties involve providing support for the accounting manager, dealing with payroll, ensuring that the organisation’s taxes are filed on time and preparing financial reports. Clarke’s duties keep her busy throughout the day, so she doesn’t have much time for after-work activities. However, she is planning to dedicate some time to volunteering. She is also studying for her Association of Chartered Certified Accountants (ACCA) certification, which will enable her to achieve her biggest dream: becoming a chartered accountant One thing Clarke does make time for, though, is church. She is currently a new member of the Praise House New Testament Church of God in Spanish Town and is looking forward to joining the choir or praise team.
Meet the Staff
Lascelles Page continues his climb to success Page is understandably proud of his progress and excited about his work. “It couldn’t have been better at all. Ever since I started working here, it’s just like each month is a step. Something good keeps on happening,” he said. As the Assistant IT Administrator, Page is responsible for maintaining the organisation’s computer systems, ensuring that all data are properly backed up and that computers are up and running each day. He has been kept on his toes due to the recent spate of inclement weather, which has caused the system to crash on a few occasions. While it is not easy balancing the responsibilities of work and school, Page is making sure he gets the best of both worlds. “I just have to ensure that I have enough experience here at the PSOJ and, while gaining the experience, I’m qualified,” he said. “One day down the line, there is a bigger position, because IT doesn’t just stop here, being the Assistant IT Administrator. There are other positions higher than this one. That’s really the goal, to get to the highest height in IT.”
Lascelles Page, Assistant IT Administrator
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wo months ago, Lascelles Page was working as an Administrative Assistant in the Office of the CEO at the Private Sector Organisation of Jamaica. It was a job he liked and appreciated, but he wanted something more in line with his passion – information technology. As luck would have it, the position of Assistant IT Administrator became vacant. Page applied and was successful in receiving the promotion. He was unable to hide his joy at this good fortune. “When I heard about the position, I applied for it and just always kept on telling myself I was going to get it because everybody in the office, particularly the managerial staff, they’re the ones who actually saw the potential and knew I would be really good at it,” he said. Page’s journey at the PSOJ has been consistently positive. He joined the organisation for two years as a participant in the Youth Upliftment Through Employment (YUTE) programme. Since then, he has been excelling at work while continuing his studies in Computer Science at the University of Technology, Jamaica on a part-time basis.
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Page remains a part of the YUTE programme until 2013. His most recent success has been documented in the Development Options Limited newsletter. The company manages the YUTE programme, helping participants find employment and training opportunities. “They keep updated with the participants. As things go on, they make sure they’re a part of it so they can publish it so everybody knows that the programme is still on and running and people are doing well,” Page said.
One day down the line, there is a bigger position, because IT doesn’t just stop here... There are other positions higher than this one. That’s really the goal, to get to the highest height in IT.”
sponsor brief: 50UnderFifty
GraceKennedy Limited: ‘The future is in good hands’
Michael Ranglin, CEO of GraceKennedy Foods
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raceKennedy Limited is one of the sponsors of the PSOJ/Jamaica Gleaner 50UnderFifty Awards, in celebration of the entrepreneurs who will drive Jamaica’s development into the next 50 years.
“Our company is proud of its history of engaging and employing the brightest young minds, vesting them with significant responsibility and empowering them through appropriate assignments to help shape what our business will become,” said CEO of GraceKennedy Foods, Michael Ranglin. “We feel comfortable that the future of our company is in good hands, from the helm, down.” GraceKennedy Limited began in 1922 as a small trading establishment. Carlton Alexander, who was a former chairman and CEO, was one of the founding fathers and the first president of the PSOJ. Since then, many of the GraceKennedy chairmen, CEOs and company executives have served with the organisation, including current group CEO, Don Wehby, who serves as a vice president and Chairman, Douglas Orane who is a past president. Their sponsorship of the 50UnderFifty Awards totals $300,000. 11
GraceKennedy Group CEO, Don Wehby, serves as a Vice President of the PSOJ
Today, GraceKennedy operates in the areas of food processing, distribution and retail, banking and finance, insurance and remittance services. “It has expanded and diversified over the years, to a group which comprises a varied network of some 60 subsidiaries and associated companies located across the Caribbean and in North and Central America and the United Kingdom,” said Ranglin. The company has continuously been doing work on improving its products and services, always keeping the consumer in mind. GraceKennedy takes great pleasure in sponsoring the 50UnderFifty Awards programme as the generation taking Jamaica into the future has much potential. “Currently, there are many young people running companies and playing major roles in the direction and success of Jamaican businesses,” said Ranglin. “The future, to my mind, lies in the hands of these bright, young, technologically savvy and strategically sound men and women, who have changed the game by thinking creatively and exploring innovative ideas to achieve impressive results.”
Sponsor brief: 50UnderFifty Secrets Resorts and Spas: Supporting those who move Jamaica forward
“Without their dedication and drive, we would not have enjoyed some of the successes achieved in the 50 years since our independence,” he said. “These are the persons that our children and young adults will come to emulate and build on these achievements.” As a silver sponsor, Secrets Resorts and Spas’ funding is valued at $500,000, which will include a cocktail reception at the resort for the awardees and their spouses, the sponsors and specially invited guests. Additionally, there will be complimentary rooms and special discounts for the awardees and guests of the reception. Huhn stated that the resort believes in supporting groups that encourage dialogue geared towards improvement and the PSOJ is such an organisation. “We believe that the PSOJ is doing its part in the development of this country, which involves creating an agreeable climate for both local and international investors,” he said. “We have not been as active in our participation in the various initiatives of the PSOJ; however, we are always ready to lend our support wherever needed.” People are the main drivers of success in any economy and the under 50 generation, with its “unique attributes and unwaning energy” is the one that will help the country move forward. “These energies need to be directed towards strengthening the governing structure of this country and developing policies that will be beneficial to the majority, as against the minority,” Huhn explained. “They need to be transformational leaders and spearhead the much needed change in the areas of health, education, industry and the reduction of crime, which has become a sore area to this nation. It is my hope that they can sustain and strengthen the tourism product/industry, one of the main income earners for Jamaica.” Emilio Huhn, General Manager, Secrets Resorts and Spas Jamaica
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ecrets Resorts and Spas is a silver sponsor of the PSOJ/Gleaner 50UnderFifty Awards programme. The General Manager of the resort, Emilio Huhn, feels that it is important to recognise the people who made significant contributions to the development of our country, which is why they didn’t think twice about supporting the programme.
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Secrets Resorts and Spas are owned by AMResorts, a hotel management company that operates more than 30 all-inclusive beachfront properties, including the Secrets brand. Secrets Wild Orchid and Secrets St James were opened in March 2012 and are the only hotels managed by AMResorts in an English-speaking destination. “Jamaica was the perfect destination due to the eclectic mix of culture, natural beauty and, most importantly, its people,” said Huhn. “We knew that we had to have some properties in Jamaica and hopefully, we can offer another brand option on the island.”
sponsor brief: 50UnderFifty Wealth Magazine: Fanning the entrepreneurial flame
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he mantra of Wealth Magazine is ‘to educate, inspire and empower’. With this guiding principle, the magazine’s parent company, Creative Media and Events (CME), is right in line with the mission of the PSOJ/Gleaner 50UnderFifty awards programme, which prompted its decision to become a gold sponsor, providing $1,000,000 in cash and services. The company offers services such as corporate event management, equipment rental and public relations. Wealth Magazine debuted January 2009 and, since then, it has continued to improve on the company’s brand with the monthly networking event, Corporate Mingle and the Wealth Magazine Business Access show. They also have another television series in the works, soon to be launched. “Creative Media and Events embodies the Jamaican entrepreneurial spirit as it was built on the aspirations and hard work of its founders, Garth Walker and Leighton Davis. We believe that inside every Jamaican lies the potential to not only be entrepreneurs, but to do so in our own unique and wholly Jamaican style,” said Wealth Magazine’s brand manager, Simone Riley. “The generation of Jamaicans born after independence is uniquely poised to make a significant contribution to Jamaica’s development. While many of them have heard of the challenges of early independence, they largely do not identify with many of these stories as part of their ‘lived experience’. As such, they are not burdened by many of the tribal and divisive tendencies that have been deeply engrained in members of previous generations,” said Riley. The advent of new information communication technologies has also made the under 50 generation the drivers of the business community all over the world and Jamaica is no exception. “The current generation of Jamaicans has been born into an era of communication technology, which has transformed the very nature of human engagement. While there is much to be learned from those born before 1962, there is also much to be gleaned from a better appreciation of the unbridled innovative nature of the current generation,” said Riley. The PSOJ’s role in the development of business in Jamaica has been an invaluable one and as a young company, Wealth Magazine sees membership in the organisation as part of its natural progression as a successful business.
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Simone Riley, Wealth Magazine Brand Manager
Happenings
PSOJ/BDJ Energy Conservation Seminar
Christopher Brown, Project Coordinator at the DBJ engages participants in his presentation on the ‘Demand Study for Energy Effiency among SMEs’
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he PSOJ and the Development Bank of Jamaica (DBJ), in association with the Greenbiz Energy Programme, hosted a half-day sustainable energy seminar entitled ‘Energy: Renewable, Efficiency, Conservation and Management’ on Thursday, July 26 at the DBJ. Thirty-five persons were in attendance, of which 26 were invited to participate by the PSOJ. The DBJ/IDB GreenBiz programme provides support to the DBJ PetroCaribe Development Energy Fund by creating awareness and encouraging residential and commercial entities to invest in sustainable energy efficiency, conservation and renewable energy projects. The programme is geared at facilitating economic growth and reducing Jamaica’s dependence on imported fuels. The programme was launched in an effort to support the operation of the DBJ’s Energy Fund, by demonstrating the benefits of energy efficiency measures mainly within small and medium-sized enterprises in Jamaica. At the completion of the project, it is expected that there will be an increase in the uptake of financing and implementation of energy-saving measures within the SME sector, and also the number of energy auditors/managers available to support the utilisation of the Energy Fund.
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Presentations included an overview of the DBJ and remarks from PSOJ President Mr Christopher Zacca, who emphasised the importance of energy conservation in Jamaica and its impact on productivity. The three main presenters: Yvette Batts - Managing Director, BCI Solutions; Messrs Ernesto Wagnall and Christopher Brown of the DBJ spoke on the topics “Energy Effiency and Management Tools”, “Financing for Energy Effiency” and the “Demand Study for Energy Effiency among SMEs” respectively. Participants expressed surprise at the variety of loan facilities available to aid the implementation of energy-saving measures in their businesses, as well as the various grants available to them for the implementation of energy conservation projects into their organisations. The participants were reminded that basic energy-saving measures such as turning off equipment, lights and other machinery once not in use were very effective. They were also encouraged to do energy budgets and to ensure proper monitoring on a monthly basis to track energy usage. They all had high commendations for the event which they found to be very informative and well worth the time spent.
Happenings
Mentoring Emerging Leaders dinner
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t was another wonderful evening of sharing as the Membership Committee of the PSOJ hosted the 12th in the series of intimate dinners dubbed ‘Mentoring Emerging Entrepreneurial Leaders’, at the Spanish Court Hotel on August 23.
The dinners host young prospects for membership in the PSOJ, providing them with the opportunity to learn first-hand from Mentors - experienced business leaders in a relaxed, informal setting and illustrating to them the potential benefits of membership in the organisation.
Brian Jardim, CEO of Rainforest Seafoods and co-founder of Margaritaville
The mentor for the evening was Brian Jardim, CEO of Rainforest Seafoods and co-founder of Margaritaville. Rainforest Seafoods was also the evening’s sponsor and the company’s Marketing Manager, Roger Lyn, as well as PSOJ President, Christopher Zacca; CEO Sandra Glasgow and Christopher Reckord, Chair of the Membership Committee, along with six young entrepreneurs, were in rapt attention as Jardim shared the fascinating story of his emergence as one of Jamaica’s most successful entrepreneurs. Most of those present at the dinner knew that Jardim is the son of business icon Gordon ‘Butch’ Stewart, but few, if any, were aware that he first met his birth father at the age of seventeen, having been adopted as a child by a Guyanese family and that he had spent most of his formative years in Guyana. Having reconnected with Stewart and worked with him at Sandals and Air Jamaica for several years, in 1995 he broke the news to his dad that he wanted to start his own business. The story of how he invested in Margaritaville and Marguerite’s on the ‘Hip Strip’ in Montego Bay and the development of Rainforest Seafoods provided the young entrepreneurs with many great lessons about finding the right life/business balance, identifying new opportunities and exploiting them, tapping into export markets, particularly in the Caribbean, and using networks of friends and family to develop one’s entrepreneurial career.
Entrepreneur Wayne Jones, Jr
Two of the entrepreneurs, Oji Jaja and Brian Lumley, young and successful chefs in their own right, expressed their pleasure at having been invited to dine with Jardim and he lauded them for the name they had built for themselves in the market and encouraged them to keep building their brands with what is uniquely Jamaican. Safia Cooper, daughter of Pulse Founder, Kingsley Cooper noted that Jardim’s story was ‘real’ and said how appreciative she was to have spent such quality time with him. Christopher Powell, son of PA Benjamin CEO Errol Powell, remarked how comfortable he felt in the setting and looked forward to speaking with Jardim on ideas about how to penetrate markets in Latin America. Wayne Jones, Jr loved that the dinner linked him not only with the mentor, but with his peers.
Chef Oji Jaja, Safia Cooper and Christopher Powell
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Zacca, in closing, congratulated Jardim on having built a very successful business. “You have done a fabulous job tonight; we could not have asked for a better Mentor,” he said.
The Private Sector Organisation of Jamaica (PSOJ) has established a Commercial Alternative Dispute Resolution Centre (CADRC) which offers Alternative Dispute Resolution (ADR) services to the business community. The objective of the Centre is to provide the physical infrastructure and technical resources for the provision of Mediation and Arbitration services to commercial ventures as an alternative means of resolving disputes without going through the Courts. The CADRC is also focused on expanding ADR services to small and medium-sized enterprises (SMEs). To achieve this, the CADRC has made available a Matching Grant Programme to stimulate the demand for ADR services among SMEs. A Grant can be awarded up to a maximum of US$1,000. This matching amount is provided to offset the fees of the Arbitrator or Mediator who will handle your case. Any SME is eligible if the annual turnover of the business is less than J$250Million and the business employs less than 100 persons. Please see application form attached or complete it online at http://www.cadrcja.org. The process of resolving a business dispute with the CADRC begins with a complainant or a respondent formally registering the complaint. The Applicant will then be requested to pay the CADRC a registration fee of J$1,000 and register the case with the CADRC, providing all the necessary information relating to the matter including the contact information for the complainant and the respondent. Applicants may register a case online at http://www.cadrcja.org or by completing the attached Case Referral Form. A representative from the CADRC will then contact the complainant/respondent to confirm their willingness to mediate or arbitrate the matter. If this is agreed both the complainant and the respondent would be required to pay the registration fee. If there is a failure to bring both parties to a mediation meeting 50% of the registration fee paid will be returned to the complainant and the respondent. The CADRC understands that once there is a business agreement between two parties, disagreement can occur. We are here to assist in amicably resolving these issues and preserving the integrity of your business and your business relationship. If you have a business dispute that you would like to be resolved, please contact Mrs. Andreen Lee or the undersigned at 978-7171 and we will assist you or answer any queries you might have.
News From the CEO’s Report Economic Highlights Threats rising for Jamaican economy! The softening of the Jamaican economy is accelerating, especially in the external sector. Though business and consumer confidence were generally buoyant in the first quarter of 2012 following the recent general elections, Net International Reserves have declined for 12 of the last 13 months. The Jamaican to US dollar exchange rate has also declined steadily over the same period, accelerating since the beginning of the year. Serious dislocation in the Jamaican economy often starts within the external sector, thus these changes require more detailed examination. $US/$J exchange rate During the first half of 2012, the Jamaican dollar declined by $2.10 or 2.42 per cent to $88.70 from $86.60 at the beginning of the year. This rate of decline is about five times the rate of decline for the year 2011 and the fastest rate of decline since the Jamaica Debt Exchange was initiated in December 2009. In July, the rate of decline accelerated and the Jamaican dollar has now sunk to $89.55 to one $US, about 21 cents off its historic lows of $89.76 and challenging key psychological resistance of $90 to one $US. Given the psychology of foreign exchange trading, if that barrier is broken, decline could snowball towards $100. The likely cause of the decline in the value of the Jamaican dollar is the long hiatus in the Jamaica/International Monetary Fund arrangement since September 2010. This has resulted in increasing uncertainty and a retreat by investors to the safe haven US currency. This retreat is indicated by the fact that foreign currency deposits in the Jamaican banking system are at the highest levels in four years, but even more importantly, by the pressure being exerted on the country’s foreign currency reserves. Net International Reserve Since May 2011, Jamaica’s gross reserves and net international reserve position have deteriorated by about US$800 million. From US$3,224.2 million, gross reserves have declined to US$2,385.1 million and NIR has declined from US$2,334.4 million to US$1,540.4 million. Moreover, the pace of the decline has accelerated since January 2012, with the loss of some US$427 million in reserves. Only about US$300 million of the 12-month decline in reserves has gone to service debt. Close to US$500 million has been spent on open market operations to support the Jamaican dollar. A shortfall in net private capital inflows during the first half of 2012 has also contributed to the shortage of foreign exchange locally. At US$2,385.1 billion, Jamaica has enough gross reserves to finance 15.79 weeks of ‘goods and services’ imports, but the rate at which reserves are declining (an average of US$139 million per 18
month) is cause for concern, especially if, as reported, a new Jamaica/International Monetary Fund agreement is unlikely to be concluded before November 2012. At that rate of decline, over the next four to five months, gross reserves could come close to or breech the standard of reserve adequacy of 12 weeks of imports. The key level of gross reserves to watch for in that regard is US$1,650. Consequences of instability Historically, the effects of instability in the external sector are retardation and a spread of instability to the real sectors of the Jamaican economy. Though the Jamaican economy, like nearly all others globally, has been negatively impacted by the European crises and uncertainty is not the only explanation for the slowdown in Q1 2012 GDP growth to 0.6 per cent relative to 1.7 per cent in Q4 2011, uncertainty likely played some part. Of potentially more far-reaching impact, deterioration of the exchange rate often results in higher domestic inflation, given the large import content of the country’s consumption and production. This in turn often leads the GOJ to hike interest rates to create a more profitable diversion for speculators and to sop up excess local currency in circulation. These higher interest rates further retard local production, raise the borrowing and debt service costs of the Government, and worsen the fiscal deficit.
Other local news Interest rates Continuing the steadiness observed since the beginning of 2012, during June, there were movements on only two rates. The sixmonth Treasury Bill reversed the direction of the previous three months, increasing by 13 bps to 6.52 per cent. Year to date, the six-month T-Bill is up six bps. The average lending rate (ALR), which has been the slowest declining rate over the past three years, but the fastest decliner in 2012, fell by 47 bps to 17.46 per cent. Year to date, the average lending rate is down 84 bps. The average saving rate was unchanged in June.
Inflation The rate of inflation increased by 0.6 per cent during June. The increase was slightly ahead of the 0.51 per cent average monthly increase for the year.
Fiscal accounts During the first two months of fiscal year 2012/13, the government ran a fiscal deficit of -$8.468 billion. This fiscal deficit was exactly in line with the amount budgeted but was -J$1,876.9 billion or -28.5 per cent worse than the deficit recorded during the corresponding two-month period of FY2011/12. The fiscal deficit reflected the fact that targeted expenditures exceeded targeted revenues. Revenue: Total Revenues and Grants to the GOJ during AprilMay 2012/13 was $49.99 billion. This was in line with budgetary projections, but $4.277 billion or 8.6 per cent higher than Revenues and Grants collected during April-May 2011/12. The leading sources of revenue were: PAYE, from which $10.07 billion was collected; GCT (local), which contributed $9.984 billion and GCT (imports), which contributed $7.33 billion. Significant contributions to revenues were also made by ‘STC (imports)’ - J$5.092 billion and Education Tax, amounting to $2.470 billion. Expenditure: The expenditure budget for 2012/13 is $612 billion. For the first two months, total expenditure was $58.46 billion or an average $30 billion per month. Among the main areas of expenditure were: wages and salaries, on which $27.773 billion was spent; recurrent programmes, which absorbed $12.756 billion and interest payments, which absorbed $14.585 billion. In relation to the latter, domestic interest payments accounted for $10.38 billion of interest payments and external interest payments were $4.2 billion. Expenditure on capital programmes accounted for $3.35 billion for the first two months of 2012/13. Fiscal outturn: The fiscal deficit for FY2011/12 (April-Mar 2011) was -$80.74 billion. For FY2012/13, the GOJ is projecting a fiscal deficit of $48.0 million or 4.2 per cent of GDP, implying an average monthly deficit of about J$4.00 billion. As noted, the fiscal deficit for the first two months of 2012/13 is $8.46 billion, which is slightly above target. The primary surplus – a measure of the country’s ability to service its debt from revenues, was $39.97 billion in 2011/12. For FY2012/13, the GOJ is targeting a primary surplus of $60 billion. For April-May 2012/13, the primary surplus was $6.12 billion which was -$1.143 billion less than the -$7.36 billion recorded for the corresponding period of FY2011/12. 19
Within the Consumer Price Index (CPI), the division recording the highest increase (1.8 per cent) was the most heavily weighted ‘food and non-alcoholic beverages’ division. This reflected increases of 7.3 per cent for the classes ‘milk, cheese and eggs’; a 3.3 per cent increase for ‘fish and seafood’, and a 1.3 per cent increase for ‘vegetables and starchy foods’. Within the group ‘non-alcoholic beverages’, the classes ‘coffee, tea and cocoa’ and ‘mineral waters, soft drinks, fruit and vegetable juices’ both increased by 0.6 per cent. The second highest increase (1.6 per cent) was recorded in the division ‘recreation and culture’, reflecting celebrations of Jamaica’s jubilee year. The third highest increase (1.2 per cent) was recorded in the ‘clothing and footwear’ division. This was largely due to a 1.6 per cent rise in footwear. There were also notable increases of 1.1 per cent in the division ‘furnishings, household equipment and routine household maintenance’ and 0.9 per cent for ‘alcoholic beverages and tobacco’ The significant increases in the five divisions above were moderated by declines of -2.3 per cent in ‘housing, water, electricity, gas and other fuels’ and -0.6 per cent in ‘transport’. The declines in these two divisions reflected decreases in international oil prices during June. The other five divisions within the CPI recorded increases of 0.6 per cent to 0.3 per cent. For the calendar year to date, inflation rate was 3.2 per cent, in contrast to 2.5 per cent rise during the first half of 2011. The fiscal year to date rate was 1.5 per cent while the point-to-point rate was 6.7 per cent. Tourism Stopover arrivals in March were 204,724 - an increase of 0.3 per cent relative to the 204,724 stopovers recorded in March 2011. The number of cruise passengers also increased in March 2012 by 82.3 per cent to 161,794 visitors, compared to 106,247 in March 2011. Regionally, stopovers from the US decreased by –2.3 per cent in March 2012 to 118,834 compared to 121,596 in March 2011. Year to date, stopovers from the US are down -2.7 per cent extending the decline from calendar year 2011, during which stopovers from the US declined by –1.4 per cent to 1,225,565 visitors. From the Canadian market, stopovers increased by 7.6 per cent in March 2012 with 57,953 arrivals compared to 53,856 in March 2011. Year to date, the number of visitors from Canada are up 5.5 per cent to 171,054 compared to 108,125 visitors in January to March
2011. This continues the increase in stopovers from Canada during 2011, in which, stopovers increased by 16.5 per cent with 378,983 visitors compared to 325,191 visitors in 2010. Visitors from Europe, including the UK, declined slightly by -4.7 per cent in March 2012 to 20,780 visitors compared to 21,802 arrivals in March 2011. Year to date, visitors from Europe are down 1.9 per cent to 61,373 compared to 62,549 in January March 2011. This continues the decline recorded in calendar year 2011 in which stopovers from Europe declined by -6.7 per cent to 253,049 compared to 271,315 in 2010. Stopover arrivals from the Caribbean recorded a 13.6 per cent increase in 2011 to 66,216, reversing a -10.8 per cent decline in 2010. For the first three months of 2012, however, stopovers from the Caribbean are down slightly by –0.8 per cent to 13,303. On the other hand, stopovers from Latin America are up by 53.4 per cent in January - March 2012 to 5,433 visitors extending their 23.4 per cent rise during 2011. During 2011, cruise visitors to the island increased by 23.7 per cent to 1,125,481 visitors. During January - March 2012, cruise arrivals are up by 52.3 per cent to 161,794 visitors reflecting the opening of the Falmouth Port. Total visitors to Jamaica for January - March 2012 were 366,518 marking a 18.1 per cent increase relative to 310,293 visitors during January - March 2011.
5.143 million tonnes relative to 2010. However, reflecting the softening conditions in the global economy over the past three quarters, production of alumina is down –8.4 per cent to 904,067 tonens in the first six months of 2012 compared to 986,706 during the corresponding period of 2011. Production of crude bauxite is also down –8.13 per cent to 2,330.6 million tonnes relative to 2,536.7 million for the corresponding period of 2011. External Trade During the first three months of calendar year 2012, Jamaica’s exports grew by US$38.9 million or 9.6 per cent to US$446.2 million, compared to US$407.3 million during January - March 2011. Imports for the period grew slightly by US$7.58 million or 0.5 per cent, to US$1,547.8 million compared to US$1,540.3 million during the corresponding period of 2011. Given the stronger growth of exports over imports, the negative imbalance in Jamaica’s merchandise trade narrowed in January - March 2012 by US$31.3 million or 2.8 per cent to -US$1,101.7 million compared to -US$1,133.0 million in January - March 2011. Foreign Exchange The movements of the Jamaican dollar against the currencies of our major trading partners month over month and year to date (to the end of June 2012) are summarised below. The table shows that the Jamaican dollar declined against the listed currencies in June 2012, and with the exception of the Euro, is also down against the noted currencies year to date (end of June 2012). 31/12/11 Pair $J/USD 86.61 $J/GBP 133.30 $J/CAD 84.76 $/EUR 111.85 $J/TT 13.50
May close
June 28th
MoM change $J
YTD $J
88.06 136.74 85.52 109.13 13.72
88.70 137.40 85.72 110.11 13.80
0.55 0.66 0.76 0.98 0.22
2.10 4.10 0.96 -1.74 0.30
(- appreciation of J$; + depreciation of J$)
Bauxite/Alumina Production of alumina in June 2012 amounted to 129,081 tonnes compared to 156,533 in June 2011 - a decrease of –17.5 per cent. For its part, production of crude bauxite in June 2012 increased by 13.9 per cent to 390,890 tonnes compared to 343,154 in June 2011. During calendar year 2010, alumina production fell by –10.3 per cent to 1.59 million tonnes and alumina exports by –16.4 per cent to 1.56 million tonnes compared to 2009. But reflecting the upturn in the global economy, during calendar year 2011, alumina production increased by 23.2 per cent to 1.959 million tonnes; while production of crude bauxite was up by 19.5 per cent to 20
Stock Market During June 2012, market capitalisation decreased by -J$29.5 billion or 4.8 per cent to close at J$582.9 billion. Four of five indices on the Jamaican Stock Exchange declined during the month and one was unchanged. The main JSE Market Index declined by 993.0 points or –1.12 per cent to close at 87,389 points. The JSE All Jamaican Composite declined by 1,661.6 points or –1.82 per cent to close at 89,652 points. The JSE Select Index declined by 45.5 points or –1.78 per cent to close at 2,510 points, while the JSE Cross Listed Index of mostly foreign companies operating in Jamaica, was unchanged at 785.3 points. The JSE Junior Market Index was the only index advancing during the month gaining 7.55 points or 1.18 per cent to close at 648.2 points. Market volume was quite heavy in June 2012 with 211 million units valued at J$1.4 billion changing hands compared to 209 million units valued at J$5.4 billion during May 2012. Overall market activity resulted from trading in 47 stocks of which 17 advanced, 25 declined and five traded firm.
The Global Picture Swarming recessionary forces now seem to be engulfing the last few glimmers of hope in the global economy. Over the previous four quarters, despite the troubles engulfing Europe, and the up and down struggles of China with overheating and deflation, the US economy had shown steady if unspectacular growth. During the first quarter of 2012, US economic performance appears to have peaked. Non-farm Payrolls (NFP) were 275,000 and 240,000 in January and in February 2012 respectively, though 2012 GDP growth was downwardly revised to 1.9 per cent. In March 2012, however, non-farm payrolls dropped sharply to 120,000 and several other indicators since, most notably, retail sales and manufacturing have been showing such weakness that notable investment houses like PIMCO - the world’s largest bond-traders - are now arguing that they are signaling impending recession in the US.
Retail Sales NFP
April
May
June
0.1% 68k
-0.2% 77k
-0.5% 80k
to market watchers. China’s has been the engine driving the global recovery since 2009 through its importing of raw materials and other commodities from the rest of the world, and analysts view any slackening off of China’s import growth with concern.
In addition to the retail and NFP data, four of five regional Purchasing Managers Indices (PMI) - which are forward looking indicators of future economic activity - have recorded weaker than expected performance during Q2 2012. Another possible sign of encroaching recessionary currents is the fact that of the 104 companies in the Standard and Poor 500 Index that had released earnings reports as of July 20, 74 per cent reported earnings per share (EPS) that beat mean estimates but only 45 per cent have reported sales above the mean estimates. This retrenchment of revenues is an indication of weak consumer spending. Only the beaten down housing sector in the US is now appearing as a ray of hope showing increasing signs of stabilisation. ‘Housing Starts’ were 760,000 in June 2012, beating expectations for a 745,000 rise and the previous outturn of 711,000. The 1.5 per cent preliminary reading of US Q2 GDP, though in line with expectations and generating relief that it was not worse, confirms the general weakness of the US economy.
The situation in Europe continued, however, to be most worrisome for investors. Despite the bailout and the victory of probailout parties in the recent Greek elections, some analysts are anticipating that Greece may still have to leave the Euro-zone. Their argument continues to be that the bailout terms are so constraining of growth that Greece will not generate the revenues to commence the virtuous cycle of reducing the fiscal deficit, reducing borrowing and promoting growth.
In China, the June data was also slightly weaker than the previous month, reinforcing perceptions that growth is moderating. China’s Q2 2012 GDP of 7.8 per cent was slightly weaker than the 7.9 per cent expected, and weaker than the 8.1 per cent recorded during the previous quarter. China’s ‘Purchasing Manager’s Index (PMI) Manufacturing’ for June, though beating forecasts for contraction, came in only slightly above expansion levels at 50.2 per cent. China’s Industrial Production (10.5 per cent); Retail Sales (13.7 per cent); and Fixed Assets Investment (20.4 per cent) were, however, roughly in line with expectations.
The five-year bond rose to 7.28 per cent, marking the first time it traded above seven per cent since the euro’s inception; while the 10-year yield continued to climb, albeit at a more modest pace, trading up at a fresh euro-era high of 7.45 per cent. To recall, rates above seven per cent are generally regarded as unsustainable requiring a bailout. Given the serial evolution of the Euro-zone crisis, concerns have heightened in relation to Italy with the yields on 10-year Italian Government debt rising to 6.35 per cent.
But while China’s trade balance rose strongly in June to US$31.7 billion, handily beating forecasts for a rise of US$24.0 billon, the sharp fall-off in imports growth (6.3 per cent relative to expectations of a 11.0 per cent rise), was worrisome 21
Added to the worries about Greece, the simmering concerns that Spain will soon join the list of countries (Portugal, Ireland, and Greece) needing a bailout has begun to roil markets. The impetus for that nervousness are reports that six more Spanish regions were poised to ask the Spanish Government for financial assistance following such a request by Valencia at the end of June 2012. Longstanding worries about the weakness of Spanish banks loaded up on Government debt have added fuel to those concerns.
The unity project in Europe is now regarded as being at a crucial crossroads, with one road leading to disintegration, and the other to a much tighter fiscal, as well as, monetary union. The lingering hope is that the former would be so disastrous for the global economy, it cannot be contemplated as a real possibility, leaving only a slow, dithering process towards fiscal union.