Jan/Feb 2016
jambiz@cwjamaica.com
PM Simpson Miller Outlines Economic Programme For Jamaica’s Growth 16 Economy Will Grow 2-3% This Year 13 PIOJ Predicts Economic Growth for 2016 32 J$500.00
COMPANY NEWS | THE ECONOMY | SPECIAL REPORTS | NEWS BRIEFS | REGIONAL NEWS
US$10.00
inside CONTROVERSIAL GLENCORE FOR22 WARD SALE CONTRACT EXPIRES EDITORIAL
SPECIAL REPORT
NEWS BRIEFS
6 Jamaica will have to increase exports
17 AG finds conformity to accounting
29 Oil and Gas exploration resumes
18 OUR draw battle line
29 t-Tech releases successful IPO details 30 Caribbean Creams reaping benefits of
to the US to drive growth
ECONOMIC TRENDS 7 PetroCaribe buyback swells budget 7
estimates Jamaica’s Trade Defit Narrows
9 Jamaican Dollar doing well against 9
trading partners Jamaica well positioned to benefit from Logistics Hub
10 Government revenues above
projections, says WTO Head
10 Income tax filing deadline approaches 10 PM Simpson-Miller lauds BPO sector
standards in $266 billion expenditure by public entities in 2014/2015
FEATURE STORY 22 Controversial Glencore forward sales
forward purchases
30 Senior management changes at
contract expires
32
COMPANY NEWS
32
24 OCG clears multi-billion dollar KCT privatization
26 NCB enhancing mobile and online banking services
REGIONAL NEWS 33 Antigua-Barbuda abolish personal
26 JPS $2.74b Bogue Plant conversion
34
THE ECONOMY
27
36
13 Economy will grow 2-3% this year
27
16
PM Simpson-Miller outlines economic programme for Jamaica’s growth
28 28
project beging Sagicor Investments Ltd. rated top broker for 2015 World of Dolphin successful in mandatory share offer successful JMB increasing its inventory of properties Sonia Davidson’s retirement from SVL triggers management change
Grace Kennedy following Courtney Campbell’s departure PIOJ Predicts Economic Growth for 2016 Minister Hylton Calls for Help for BPO Sector
37 38 38
income tax Employ sustainable energy practices, Guyana tells region Guyana Listed Among 12 Emerging Travel Destinations to Visit in 2016 Energy price collapse threatens Trinidad IDB approved US$11.3 billion in financing for LAC region in 2016 CARICOM Free Movement Sensitization
Vol. 17 | No. 1 | Jan/Feb 2016
PUBLISHER/CEO Earl DeRizzio
CONSULTING EDITOR Ralston Hyman
ASSOCIATE EDITOR Durrant Pate
CONTRIBUTORS Durrant Pate Balteano Duffus
DESIGN & LAYOUT Jabico Design Studio
Produced and published by:
Intellect Publishing Company Limited Mailing Address: 16 East Great House Circle, Kingston 19, Jamaica W.I. Tel: (876) 969-1029 Fax: (876) 969-1146 www.jamaicabusinessmagazine.com | ederizzio@masaka.com Printed by:
DISCLAIMER Jamaica Business considers its sources reliable and verifies as much data as possible. However, reporting inaccuracies can occur, consequently readers using the information contained herein do so at their own risk. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form without prior written permission of the Publisher. Permission is only deemed valid if approval is in writing. Jamaica Business buys all rights to contributions, text and images, unless previously agreed to in writing. © Jamaica Business. All rights reserved.
Jamaica will have to increase exports to the US to drive growth By Ralston HYMAN
G
lobal economic growth is slowing down as China decelerates because it is trying to make the transition from one that is driven by export manufacturing to domestic consumption and services. Growth in China came in at 6.9 % last year and the International Monetary Fund (IMF) and the World Bank are projecting growth of only 6.4 per cent this year despite the best efforts of Central Bank governor, Zhou Xiaochuan and Premier Li Keqiang, which includes monetary stimuli such as quantitative easing and fiscal stimuli such as, heavy investment in infrastructure. The deceleration in the Chinese economy driven by the manufacturing sector has led to a reduction in the demand for all commodities, including oil, leading to a collapse in their prices as the Chinese economy is the world’s second largest and a major purchaser of these commodities.
For all your publishing needs Annual Reports Newsletters Magazines Brochures Manuals Booklets
Intellect Publishing Ltd. 16 East Great House Circle, Kingston 19 Tel: 969-1029 Email: ederizzio@masaka.com
Professional Guidance with Impeccable Service
This reduction in Chinese demand for commodities is having a negative impact on the fiscal and current accounts and by extension the currencies of commodity producing and exporting countries such as Brazil, which is now in recession. Meanwhile, the deleterious effect of the slowdown in the Chinese economy and the consequential reduction in demand for commodities on emerging market economies have been exacerbated by the decision of the Federal Reserve Boardthe American central bank- to raise the benchmark federal funds from the low of 0 to 0.25 % to which it was pulled down by former Fed chairman, Ben “Helicopter” Bernanke as part of the unconventional measures applied by the world’s most powerful central bank to restore the American economy to full capacity. The American economy is now operating at full capacity unemployment is now down to 5.0 % from the 9.0 % to which it jumped in 2009 as the recession took hold. It s now creating an average of over 200,000 new jobs per month and the labour participation rate is increasing as more people become employed. continued on page 11
JAMAICA BUSINESS / jambiz@cwjamaica.com
6
JANUARY/FEBRUARY 2016
TRENDS PetroCaribe buyback swells budget estimates
T
he national budget for the current 2015/2016 financial year has skyrocketed to $808.4 billion, reflected a huge $167 billion increase in capital spending. This increase in capital spending is primarily attributed to the inclusion of the PetroCaribe debt buyback in which Jamaica retired its US $3-billion oil debt with Venezuela at a discounted rate of about 50% with a payment of US $1.5 billion. There were early signs that the national budget would be increased, particularly on the capital side before Prime Minister Portia Simpson Miller calls the date of the next general election. The Opposition were early out the gate
urging the Simpson-Miller government not to engage in any election spending to boost its chances at the national poll, which many expect will take place before the start of the new budget year in April this year. The first supplementary estimates for 2015/16, tabled in the House of Representatives on Tuesday January 19, 2016, reflected a reduction in the recurrent or housekeeping budget from $432.5 billion to $430 billion, a $2.5 billion cut; a slight increase of $2.2 billion in Capital ‘B’ estimates, which account for spending supported by funds from multilateral and bilateral partners; and a whopping $167.3 billion increase in the Capital ‘A’.
The Capital ‘A’ figures showed that the Jamaican Government spending was primarily focused on the PetroCaribe buyback, a one-off expenditure. The result is an increase in the budget from $641.5 billion to $808.4 billion, and pushing up the Capital ‘A’ expenditure under the Ministry of Finance and Planning from $178.6 billion to $344.8 billion, despite savings and under-expenditure of $28 billion. The supplementary budget will now go to the Public Administration and Appropriations Committee of Parliament for closer scrutiny before coming back to the House of Representatives for approval.
Jamaica’s Trade Deficit Narrows
J
amaica’s merchandise trade deficit fell by 13.4 per cent to US$2.9 billion for January to September 2015, when compared to the US$3.3 billion recorded over the similar period in 2014. Co-Chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, credited the improvement to the reduction in food imports and lower oil prices. He said the decrease in food import is due to domestic agriculture and manufacturing becoming more competitive, despite the drought conditions. Mr. Byles, who was addressing EPOC’s monthly press briefing at Sagicor’s head
office in New Kingston on Tuesday (January 19), noted that a competitive exchange rate has also contributed to the reduction in the trade deficit. “Lots of countries that used to export, say biscuit and beverages to Jamaica, find that Jamaican producers are far more competitive because of the exchange rate, because of the price of oil, and therefore the price of energy. That is what is helping to make our merchandise trade deficit better every quarter as we go along,” he said. Mr. Byles, in the meantime, hailed the Government’s tight fiscal policy for the low inflation rate, which was recorded at 3.7 per cent for the 2015 calendar year,
JAMAICA BUSINESS / jambiz@cwjamaica.com
7
and 4.3 per cent for the fiscal year to date. Data from the Statistical Institute of Jamaica (STATIN) shows that the inflation rate was 0.2 per cent for December 2015. Mr. Byles said the figures are the lowest inflation rates Jamaica has experienced in 50 years. “The price of oil has (also) played an important role in bringing this inflation (down),” Mr. Byles said. “When you look on the comparison between inflation for the calendar year and devaluation, it’s within range …so we have gained about 1.3 per cent competitiveness with the US currency,” he added.
JANUARY/FEBRUARY 2016
TRENDS Jamaican Dollar Doing Well Against Trading Partners
C
o-chair of the Economic Programme Oversight Committee (EPOC) Richard Byles is praising the improved competitiveness of the Jamaica dollar against its major trading partners at the hands of depreciation. He observed that despite the badmouthing of the Jamaican dollar by many in society at the depreciated rate of J$120 to US$1, the dollar doesn’t appear too bad compared with some major currencies. According to Mr. Byles, the decline in inflation, in addition to the five per cent currency depreciation the country experienced last year, has positively impacted
the Jamaican dollar’s competitiveness to the United States dollar by 1.3 per cent in point to point currency change. Speaking at a at a press briefing at Sagicor’s headquarters in New Kingston, earlier this month, Mr. Byles said with inflation at a 50-year low and other currencies tanking, the Jamaican dollar doesn’t appear too bad compared with some major currencies. “We have to say thanks to the tight fiscal policy, and very much so to oil which has played an important role in bringing inflation down,” the EPOC Co-chair noted. According to Mr. Byles, “sometimes I
feel that Jamaicans think that we are the only country in the world whose currency is devaluing and that it is a blight visited upon Jamaica. That’s not true. There are many countries that have seen their currency devalued.” In 2015, the Jamaican dollar depreciated by 5% against the US greenback; the Euro dropped by 10.2%; the Canadian dollar by a whopping 16%; the UK Pound by 5.4% and China’s Yuan by 4.3%. At the same time Japan’s Yen depreciated by 0.3%; Brazil by all of 31.8%; the Mexican peso by 14.3% and the Trinidad & Tobago Dollar by 0.9%.
Jamaica Well Positioned to Benefit from Logistics Hub Says WTO Head
D
irector General of the World Trade Organization (WTO), Ambassador Roberto Azevêdo, says Jamaica is well positioned to be at the forefront of transition in the logistics and supply chain of global trade. This, he notes, by virtue of the country’s geographical location, and the quality of its seaport facilities and infrastructure, which are being upgraded to accommodate significantly larger cargo ships, expected to result from expansion of the Panama Canal. Speaking following a tour of the Kingston Container Terminal (KCT), on January 18, Ambassador Azevêdol praised the work being done to improve Jamai-
ca’s port and logistic facilities. “I think that for a country like Jamaica, for whom trade and shipments are part of day-to-day life, the work that is being done here is fantastic. There are a lot of things being done here that other countries should be copying,” Ambassador Azevêdol said. On the planned expansion of the Port of Kingston, Ambassador Azevêdo stated that in light of the upgrading of the Panama canal, currently underway, there are opportunities where Jamaica can benefit tremendously. In welcoming the opportunity to tour the facility, Ambassador Azevêdo re-
JAMAICA BUSINESS / jambiz@cwjamaica.com
9
marked, “we will be going back to the WTO headquarters in Geneva, Switzerland with a much better understanding of what is being done in Jamaica and what has been achieved.” For her part, Jamaica Promotions Corporation (JAMPRO) President, Diane Edward, who also toured the KCT, welcomed Ambassador Azevêdo’s endorsement of the facility, declaring “I was really excited to hear (his) comments.” The visit to the Kingston Container Terminal forms part of Ambassador Azevêdo’s three-day official visit to Jamaica, from January 17 to 19, at the invitation of the Government of Jamaica.
JANUARY/FEBRUARY 2016
TRENDS Government Revenues Above Projections
G
overnment revenues continue to be trend above projections despite lingering concerns regarding the under-performance of some taxes. Latest provisional data from the Ministry of Finance shows that taxes and grants for the period April to November 2015 are ahead of projection by $1.86 billion to earn just over $278 billion. While some taxes have been performing below expectations, others, such as taxes from international trade, have over-performed, thus proving to be a life saver for the national treasury. Taxes such as PAYE, Bauxite Levy and the tax on dividend and government grants have been underperforming, which is a concern for the Ministry of Finance, which faces a hefty repayment bill of $62 billion next month to bondholders in the National Debt Exchange programme. As such tax performance is critical in order to meet this massive debt payment.
While revenues are ahead of projections, the gap between actual collections and budgeted collections has fallen off somewhat. For the period April to October 2015 Government revenues and grants were $2.9 billion ahead of projections but have fallen to $1.86 billion for the period under review.
The same was for grants, which was projected to rake in $6.79 billion but only came in with $3.51 billion, while capital revenues were down 22.8% to earn a mere $477 million. Non-tax revenue accounted for $16.14 billion, up $245.5 million.
In September revenues and grants were a mere $470-million ahead of target. Tax revenue for the period April-November is up $6.18 billion to $278 billion, of which the tax on interest jumped by 119% to earn $7.69 billion.
A major bright spark in government revenues was the tax on international trade, which was a life saver, bringing in $98.68 billion, a 2.1% percent improvement above projection. Taxes on international trade is expected to balloon even further when the figures for December comes in, which is a heavy period for trade.
The other tax sources underperformed namely: PAYE, downtown $533 million to $45.77 billion, tax on dividend, down $606 million or minus 49.4% to earn a mere $621 million for the period. Bauxite levy was minus 41.9%, as only $1.5 billion was earned from the projected $2.72 billion expected.
On the expenditure side, containment was the order of the day, as $308 billion was projected to have been spent but only $300.6 billion was spent, a savings of $8.26 billion or 2.7%. Of this amount $111 billion was spent on wages and salaries as against the budgeted amount of $110.98 billion.
Income Tax Filing Deadline Approaches
W
ith the March 15 Income Tax due date just two months away, Tax Administration Jamaica (TAJ) is urging taxpayers to begin preparations to file their income tax returns early and online to avoid the usual last minute rush. All companies, organisations, self-employed persons, as well as employed persons with additional sources of income, are reminded to file their Annual Income Tax Return for the year 2015 and to de-
JAMAICA BUSINESS / jambiz@cwjamaica.com
10
clare their Estimated Income and Tax Payable for the year 2016 on or before the March 15 due date. Taxpayers, including professionals and self-employed persons such as entertainers, doctors, lawyers, landlords, shopkeepers, barbers, hairdressers, taxi/bus operators and others are encouraged to register to file and pay online via the TAJ’s upgraded tax portal at www.jamaicatax. gov.jm.
JANUARY/FEBRUARY 2016
TRENDS
continued from page 6
Jamaica will have to increase exports to the USA The world’s largest economy is projected to grow at 2.5 % this year, while the rest of the world decelerates on the back of the downdraft in China, the stagnation in Europe and the decline in emerging markets. Jamaica therefore needs to maximize its exports of goods and services to that market in order to accelerate economic growth this year since it is our major trading partner.
Approximately 65 per cent of our tourist comes from the USA, 55% per cent of our remittance flows or just over US$1 billion, one third of our exports or about US$368 million during the first 9 months of last year and almost 50% of our imports came from that market. It is therefore against this background that we are suggesting that while we di-
JAMAICA BUSINESS  / jambiz@cwjamaica.com
11
versify our production and export bases, Jamaica must also seek to do more business with the USA as it continues to grow, while the rest of the world stagnates and decelerates on the back of the down draft in the Chinese economy and its spillover effects on the emerging markets and rest of the world economy.
JANUARY/FEBRUARY 2016
TRENDS Prime Minister Simpson-Miller lauds BPO Sector
P
rime Minister Portia Simpson Miller says Business Process Outsourcing (BPO) companies in Kingston and St. Andrew, Montego Bay and now, Mandeville, are providing increasing employment opportunities for many young Jamaicans.. The Prime Minister was speaking at the official opening of Sutherland Global Services in New Kingston on January 22. She hailed the sector as a game-changer noting that “any industry that can provide some 18,000 jobs in just over 20 years, and 6000 jobs in the past 10 years is indeed a
game-changing sector.” The Prime Minister said that additional operating space is being built by the Factories Corporation of Jamaica in the Montego Bay Freezone and the Portmore Technology Park to facilitate continued growth and job creation in the sector. “This build-out of space has been supported by the Government’s creation of a dedicated and attractive Infrastructure Loan Facility managed by the Development Bank of Jamaica,” she said.
JAMAICA BUSINESS / jambiz@cwjamaica.com
12
Mrs. Simpson Miller noted that her Administration recognises the outsourcing sector as an important driver of economic development through foreign direct investment, job creation and general business expansion. At present, Jamaica offers a comprehensive range of incentives to facilitate firms seeking to establish offshore outsourcing operations in Jamaica. They include: concessions on income tax, exemption from the duties and taxes on imported items for their businesses, employment tax credits, training, and recruitment support.
JANUARY/FEBRUARY 2016
ECONOMY Economy will grow 2-3% this year By: Ralston HYMAN
G
rowth has been accelerating in the Jamaica economy, which declined by 5% from $762 billion in real terms in 2007 to $732 billion in 2011, as the previous administration failed to successfully navigate the impact of the great recession of 2008 on the economy because it did not properly anticipate the event, while refusing to listen to those who did. The delays in approaching the International Monetary (IMF) and its sister agencies, the World Bank (WB) and Inter-American Development (IDB) for balance of payments, fiscal and policy support on a timely basis and the subsequent breakdown of this US$2.4 billion agreement also contributed significantly to the unraveling and free fall in the economy as investor confidence evaporated, leading to a steep fall in foreign direct investment flows from US$1.7 billion in 2007 to a mere US$218 million in 2011 and the withholding of over US$500 million in funding from multilateral sources.
Investor Confidence
Local investor confidence also evaporated and the economy declined for 14 consecutive quarters between the years 2007 and 2011 and the fiscal and current accounts deficits zipped to 6.75% and 13.4 % of gross domestic product respectivel, with no known source of financing. The public debt also ballooned from 115% of GDP in 2007 to 147% of GDP in 2011. The country’s total exports of goods and services also fell sharply from US$2.7 billion in 2007 to US$1.6 billion in 2011, as the bottom fell out of the bauxite and alumina sector and the government maintained an overvalued currency at J$86 to the US$1.00. Some 100, 000 jobs were also lost and the unemployment rate jumped to 16.7 % from 9.9 % in 2007, while the poverty rate also doubled to 20% or 540,000 persons in 2011 from 9.9 % or 220,000 persons in 2007. Inflation also zipped to 7.5 % from 5.0% in 2007.
“
The country has navigated 10 consecutive reviews successfully”
Elections
The poor performance of the economy, as well as the ostracisation of the country by the United States and many of its traditional allies such as, Canada and the United Kingdom (UK) over the government’s poor handling of the former’s request for the extradition of Tivoli strongman, Christopher “Dudus” Coke, which ended with over 70 people being killed forced a general election in December 2011. This election which was won by the Portia Simpson Miller led, Peoples National Party (PNP), paving the way for a recalibration of the relationship with the multilateral agencies and the country’s traditional trading partners. This new relationship with the multilateral agencies was recalibrated through a 4-year extended fund facility (EFF) agreement amounting to almost US$2 billion, with US$932.0 million coming from the IMF and US$500.0 million each from the World Bank and the IDB. The core of the agreement called for the generation of a primary surplus of 7.5 % of GDP throughout its life, which includes some 15 quarterly performance reviews.
The country has successfully navigated 10 consecutive reviews, while reducing the debt burden to 125% of GDP, the current account of deficit to 3% GDP, a 17 year low and the budget has now been finally balanced, while inflation is now at a 50-year low of 3.4 % on a calendar year basis. Unemployment fell to 13.2 % in July of 2015, as growth accelerated from 0.4 % during the first quarter, to 0.6% in the second and to 1.5 % in the third quarter, on the back of a big improvement in investor and consumer confidence, which was manifested in a massive increase in FDI flows in the tourism, business process outsourcing and energy sectors primarily, to almost US$1 billion. There was also a significant increase in domestic investments in the manufacturing, agriculture, tourism, energy, agro processing and business process outsourcing and other service sectors, as local investors became more bullish on the local economy. The Jamaican stock market was also designated as the leading market of the 92 covered by Bloomberg LP last year, propelled by investor and consumer confidence, increases in revenues, corporate earnings and stock prices, generated by the skillful navigation of the IMF agreement in particular and the economy in general, by Dr. Peter Phillips and his team.
Acceleration
The local and international investor confidence generated by this designation in conjunction with the $8.5 billion in additional fiscal space generated by the reduction in the primary surplus target to 7.0% of GDP, and the extra monetary stimulus from the lower interest rates, which will flow to all sectors of the economy as a result of the $62 billion which will be paid out in February continued on page 14
JAMAICA BUSINESS / jambiz@cwjamaica.com
13
JANUARY/FEBRUARY 2016
ECONOMY Economy will grow 2-3%
(continued from page 13)
of this year, will lead to an acceleration of economic growth to between 2-3% this year. Global economic growth is decelerating as China decelerates as it tries to make the transition from one that is driven by export manufacturing to domestic consumption and services. Growth in China came in at 6.9 % last year and the International Monetary Fund (IMF) and the World Bank are projecting growth of only 6.4 per cent this year despite the best efforts of Central Bank governor, Zhou Xiaochuan and Premier Li Keqiang, which includes monetary stimuli such as quantitative easing and fiscal stimuli such as, heavy investment in infrastructure.
chairman, Ben “Helicopter” Bernanke as part of the unconventional measures applied by the world’s most powerful central bank to restore the American economy to full capacity. The American economy is now operating at full capacity, with unemployment down to 5.0 % from the 9.0 % to which it jumped in 2009, as the recession took hold. It is now creating an average of over 200,000 new jobs per month and the labour participation rate is increasing as more people become employed. Premier Li Keqiang producing and exporting countries such as Brazil, which is now in recession. Meanwhile, the deleterious effect of the slowdown in the Chinese economy and the consequential reduction in demand for commodities on emerging market economies have been exacerbated by the decision of the Federal Reserve Board-the American central bank- to raise the benchmark federal funds from the low of 0 to 0.25 % to which it was pulled down by former Fed
Approximately 65 per cent of tourists to Jamaica comes from the USA, 55% per cent of our remittance flows or just over US$1 billion, one third of our exports or about US$368 million, during the first 9 months of last year, and almost 50% of our imports, came from that market. Therefore, it is against this background that the point is being made that, Jamaica, while diversifying its production and export bases, must seek also to do more business with the USA while the latter continues to grow. In the meantime, emerging markets and the rest of the world’s economies will continue to stagnate and decelerate on the back of the down draft in the Chinese economy and its spillover effects.
Zhou Xiaochuan The deceleration in the Chinese economy driven by the manufacturing sector has led to a reduction in the demand for all commodities, including oil, leading to a collapse in their prices as the Chinese economy is the world’s second largest and a major purchaser of these commodities. This reduction in Chinese demand for commodities is having a negative impact on the fiscal and current accounts and by extension the currencies of commodity
The world’s largest economy is projected to grow at 2.5 % this year, while the rest of the world decelerates on the back of the downdraft in China, the stagnation in Europe and the decline in emerging markets. Jamaica therefore needs to maximize its exports of goods and services to that market in order to accelerate economic growth this year since it is our major trading partner.
Ben Bernanke
JAMAICA BUSINESS / jambiz@cwjamaica.com
14
JANUARY/FEBRUARY 2016
ECONOMY PM SIMPSON MILLER OUTLINES ECONOMIC PROGRAMME FOR JAMAICA’S GROWTH By: Durrant PATE pansion in Agriculture, and a significant increase in manufacturing activities.
The Prime Minister reminded the audience of local and international business persons and other professionals — in attendance at the Jamaica Pegasus Hotel — that a competitive and enabling business environment is essential to attract those vital investments required to support the country’s long-term goal of strong economic growth and sustained development.
P
rime Minister, Portia Simpson Miller has provided a comprehensive report of Jamaica’s economic strategy, which she said has ensured the very survival of the country.
The strategy involves disciplined and prudent debt management, and a programme of aggressive investment expansion, as the nucleus of the growth agenda, while maintaining emphasis on the social sector including health and education.
Addressing the Jamaica Stock Exchange Regional Investments & Capital Markets Conference 2016 on January 18, the Prime Minister emphasised that while Jamaica’s debt history is well known, her
Administration is rewriting the course of that history through new legislation and strategies to ensure effective management and lowering the debt. She made it clear that the Government is focused actively on pursuing the growth agenda to ensure job creation, business expansion and accelerated economic growth.
Private sector led investment
“With the constraint on Government spending, the central strategy for achieving this has been an aggressive programme of private sector-led investments,” Prime Minister Simpson Miller said. These investments she said are targeted at the areas of physical infrastructure development, expansion of Tourism, transformation of the Energy Sector, ex-
JAMAICA BUSINESS / jambiz@cwjamaica.com
16
She underscored her Government’s implementation of reforms addressing policy and structural deficiencies, which hinders competitiveness in the business environment. The success of these measures, she stated, is evidenced by successive upward movements by Jamaica in the ease of doing business index published in the World Bank Doing Business Report for 2015 and 2016. “In the aggressive pursuit of investments, physical and economic infrastructure development has been the centre-piece of the Government’s investment strategy,” the Prime Minister emphasised. She pointed to the North-South Highway, describing it as one signature investment, which is on track for completion by March this year.
Tourism developments
Mrs. Simpson-Miller listed the many tourism development projects recently completed, now underway or about to commence as evidence of the economic expansion and
JANUARY/FEBRUARY 2016
continued on page 19
SPECIAL AG finds conformity to accounting standards in $266 billion expenditure by public entities in 2014/2015
A
uditor General, Pamela Monroe-Ellis, has found that the financial statements and activity-based audits examining expenditure by public sector entities totalling approximately $266 billion during 2014/2015 revealed general conformity to accounting standards. However, the activity based audits carried out on a number of state entities revealed instances of departure from established rules and guidelines as well as instances where management actions contravened good governance. In her just tabled 2014/2015 annual report on her examination on expenditure in the public service, the Auditor General pointed to the general conformity shown to accounting standards. However, she emphasised that the findings from the activity based audits were of serious concern.
Number of audits undertaken in 2014/2015
A total of 348 audits were conducted. They comprised 165 Financial Statements audits, 98 Appropriation Accounts audits, 67 Compliance audits, 14 Activity-based audits and four Performance audits. In her 113-page report to parliament Mrs Monroe-Ellis explained that while the Auditor General’s Department “cannot guarantee that all errors or irregularities were identified, the scope was limited to the sample selected for review. Nevertheless, the audits were planned in such a manner to reasonably identify instances of breaches and irregularities.” She pointed out that all audit findings were communicated to the respective MDAs and
A
Jamaica
AUDITOR GENERAL’S DEPARTMENT
accountability | transparency | efficiency | integrity
they were provided with an opportunity to respond. The Auditor General observed that ”whereas our assurance audits (financial statements and compliance) revealed general conformity to accounting standards, our activity based audits revealed instances of departure from established rules and guidelines as well as instances where management actions contravened good governance.”
Areas of concern
The Auditor General’s concerns were most evident in the Ministry of Health, where there was weak oversight and monitoring of the delivery of the chronic non-communicable diseases management programme by the Regional Health Authorities (RHAs). This weakness, Mrs Monroe-Ellis enumerated contributed to the inconsistent assessment of programme intervention through timely clinical audits, and inadequate reporting on programme outcomes. She gave the example of the Western Region, which reported it had failed to achieve the Service Level Agreement target of 51 percent of patients having controlled glucose levels, while the other three RHAs did not report on their achievement of this target. Turning to the Housing Agency of Jamaica and the National Housing Trust, the Auditor General was critical of their failure to
JAMAICA BUSINESS / jambiz@cwjamaica.com
17
complete the requisite due diligence prior to the commencement of projects and or initiatives, resulting in large expenditures with less than commensurate value being realized. Regarding monitoring and evaluation, the report stated that the Jamaica Tourist Board has no structured mechanism to assess the economy and efficiency of its marketing activities, which limited its ability to determine whether services procured provided value for money and if the intended outcomes are realized. Similarly, the National Youth Service (NYS) and the Universal Service Fund were observed to have failed to implement monitoring and ex-post evaluation mechanisms to assess the impact of their various initiatives. In acknowledging the findings of the audit, Mrs Monroe-Ellis noted that the NYS offered its own suggestion regarding the establishment of a monitoring and evaluation shared service, which can be accessed by Government agencies. “This suggestion is worthy of consideration by the Government being mindful of the pervasiveness of the weaknesses in programme/project implementation, monitoring and evaluation in the public sector,” the Auditor General echoed in her report to parliament.
Audited financial statements assessment
The report details the assessment of the audited financial statements of eight public bodies covered a five-year period up to financial year 2014/15. According to the report, “the assessments were solely analytical reviews as no audits of the operations of the entities were conducted.”
JANUARY/FEBRUARY 2016
SPECIAL OUR DRAW BATTLE LINES By Durrant PATE
“
T
he island’s utilities regulator and the government seem heading on a collision course over the just passed amendments to the Office of Utilities Regulation (OUR) Act. In a stinging response to the amendments passed in the House of Representatives, the OUR charged that the bill amending the OUR Act runs counter to enhancing Jamaica’s utilities regulatory framework. As such, OUR is seeking to involve the court of public opinion to derail the amendments being passed into law, as they made their final hurdle in the Senate. OUR have come out swinging, as it draws the battle line regarding the proposed amendments to the OUR Act, which governs its operations. The Simpson-Miller Administration reported that the amendments are designed to enhance transparency and investor confidence within the electricity sector. But not so, argued OUR, which is contending that the amendments pose several risks such as: “reducing OUR’s regulatory independence, increasing vulnerability to regulatory capture, reducing transparency and blurring the lines between policy and operations.” OUR has charged that “if passed the amend-
the proposed amendments and their timing... could be viewed as undermining certain positions currently being argued at the Tribunal and/ or an attempt at circumventing the appeal process”
Lower House.” Further it was not aware that stakeholders in the water and telecommunication sectors have been consulted on amendments that fundamentally affect both the structure of their regulatory agency and the manner of regulation. OUR was quick to point out that the records of the proceedings in the Lower House indicates that concerns were expressed that decisions taken in the electricity sector influenced these changes, particularly Jamaica Public Service (JPS) 2014 tariff review, which is the subject of appeal before the Electricity Appeal Tribunal.
ments would create regulatory asymmetry, making regulatory decisions less objective and reducing predictability and consistency given the possibility of situational shifts in policy directives.”
OUR is of the view that “the proposed amendments and their timing in relation to the determination of tariffs in the electricity sector could be viewed as undermining certain positions currently being argued at the Tribunal and/or an attempt at circumventing the appeal process.”
According to the utilities regulator, “it is constrained to comment on the manner and approach adopted to implementing the proposed changes, arguing that the amendments clearly represent a retreat from independent regulation across all the regulated sectors.”
The tough talking utilities regulator also took the government to task for singling out the electricity sector for specific treatment in an omnibus act and opening up to discretion rather than rules, the determination of the rate of return on investment and country risk in the electricity sector.
OUR further contends that while it continues to hold to the view that independent regulation represents best practice, “it is concerned at the appearance that the significance of this shift of policy direction did not have the benefit of greater and more widescale consultation. “
Such a move, OUR advance is fraught with danger as it opens the issue to regulatory capture and manipulation.
While tempering the tone of its detailed response to the amendments, OUR have placed on record that it only had “sight of amendments after their passage in the
JAMAICA BUSINESS / jambiz@cwjamaica.com
18
The regulatory agent is livid at the proposed amendment authorising Cabinet to issue it with policy directions in respect of any prescribed utility services, declaring that this represents a fundamental departure from the existing regime governing relationships between the executive arm of Government and independent public bodies.
JANUARY/FEBRUARY 2016
PM SIMPSON MILLER OUTLINES ECONOMIC PROGRAMME return of growth. The Hyatt Ziva/Zilara, Moon Palace, Marriott and Melia Braco hotels have all opened their doors recently, as part of what the Prime Minister said was a J$64 billion total investment in the tourism sector since her Administration took office in January 2012. Other hotels, she said, are in the process of planning refurbishment, expansion or constructing new properties. These include the Karisma Resort Group which is starting construction of its US$900 million mega development at Llandovery in St. Ann this year; as well as the devel-
opment of two new hotels in Trelawny, which Ocean By H-TEN, is also expected to start this year.
Transhipment expansion
Further unfolding the Government’s growth strategy, The Prime Minister said her Administration’s active encouragement of investments in transhipment port facilities is a deliberate part of our growth agenda. She explained that “the Port of Kingston development remains high on the growth agenda to capitalize on opportunities aris-
JAMAICA BUSINESS / jambiz@cwjamaica.com
19
continued from page 16
ing from global developments specifically the Panama Canal expansion,” noting Jamaica is already positioning itself to respond to opportunities in logistics to make room for additional cargo after the Panama Canal expansion is complete. The Prime Minister identified Kingston Wharves’ expansion plan involving investments of US$50 million noting that her administration is also pursuing connected opportunities in logistics through the establishment of Special Economic Zones. continued on page 23
JANUARY/FEBRUARY 2016
Economic Programme Oversight Committee (EPOC)
COMMUNIQUÉ #32
The EPOC met on Friday, January 15, 2016 and reviewed the performance of key economic indicators fo
There are no intra-quarter IMF Quantitative Performance Criteria (QPC’s). However, measured again compared to a budget of $50.5B for the fiscal year to November. At the end of December the NIR sto
SELECTED FISCAL AND MONETARY INDICATORS ACTUAL
BUDGET
$55.8B
$50.5B
$226.3B
$250.1B
-$22.6B
-$32.7B
US$2.44B
US$1.64B
Primary Balance of Central Government (November)
Tax Revenues (November)
Fiscal Balance of Central Government (November)
Net International Reserves (December)
Tax Revenues for the first eight months of the fiscal year (April – November) are $6.2B or 2.5% ahead of target and 14.2% or $31.9B above the same period last year. The tax categories with the best performance were Tax on Interest (+$4.2B), SCT (+$2.9B), GCT (+$1.8B) and Company Tax (+$1.4B). Customs Duty (-$0.9B), Telephone Tax (-$0.6B) and Tax on Dividends (-$0.6B) were the main underperformers. Revenue from Grants lags budget by $3.3B, largely the result of capital projects being executed later than programmed Expenditure for the April to November period was $8.3B below budget. Of this amount, Recurrent Expenditure was $4.3B below budget, mainly accounted for by savings of $4.9B on Interest. Capital Expenditure YTD lags budget by $4.0B or 16%. The Statistical Institute of Jamaica (STATIN) confirmed that the economy grew by 1.5% for the third quarter ended September 2015 when compared to the same period last year. This estimate follows on growth of 0.4% and 0.7% recorded for the first and second quarters of 2015. Growth was attributed to improved performances in both the Goods Producing (3.9%) and the Services (0.7%) sectors. Apart from Mining & Quarrying, which contracted by 0.9%, all industries in the Goods Producing sector showed improvement. Agriculture grew by 4.2%, Manufacturing (7.9%) and Construction (0.7%). Similarly, in the Services sector, all industries recorded higher levels of output except Government Services which declined by 0.1%. Electricity and Water grew (3.1%), Hotels and Restaurants (1.3%) and Transport (1.5%).
or the month of November 2015.
nst the Government of Jamaica’s (GOJ) budget, the country produced a Primary Surplus of $55.8B ood at US$2.44B, comfortably in excess of the IMF target of US$1.64B for end-December.
The Statistical Institute of Jamaica (STATIN) reported inflation for December 2015 at 0.2%. This brings the 2015 calendar year rate to 3.7%, and the fiscal year-to-date to 4.3%. This is the lowest inflation rate that Jamaica has experienced in 50 years. For the same period, the Jamaican dollar depreciated by approximately 5.0%, improving its competitiveness versus the US$ by 1.3%. It is interesting to look at how some of our other trading partners currencies performed against the US$:
MAJOR CURRENCY DEPRECIATION IN 2015 Selected Trading Partner Currencies against the USD (% pt-to-pt change)
EURO
Canada
UK
China
Japan
Brazil
Mexico
TNT
-10.2%
-16%
-5.4%
-4.3%
-0.3%
-31.8%
-14.3%
-0.9%
STATIN reported that the merchandise trade deficit for January to September 2015 stood at US$2.9B, a fall of 13.4% when compared to the US$3.3B recorded in the similar 2014 period. The improved trade deficit was largely the result of lower imports, in particular Fuels and Food.
Conclusion and Outlook Eight months into the fiscal year, Tax Revenues continue to outperform the budget and when taken in conjunction with the IMF agreed reduction in the Primary Surplus to 7.25% for the December quarter, it is likely Jamaica will meet this target. The country has already surpassed the NIR target for December. Other important macro-economic indicators continue to show positive signs, including inflation which is at a 50-year low, and the Trade Deficit which has been reduced quite dramatically. The programme remains on track and continues to produce a positive impact on the economy. The next meeting of the EPOC is scheduled for February 12, 2016. Issued by the non-public sector members of EPOC January 19, 2015
FEATURE
Controversial Glencore forward sale contract expires $billions losses over the 10-year period By: Durrant PATE
T
he controversial forward sale agreement, which has resulted in the government joint venture company, Clarendon Alumina Production (CAP), incurring billions of dollars in losses over the last decade, has ended.
The 2005 forward sale agreement between CAP, which owns 45% of the Jamalco bauxite plant in Halse Hall, Clarendon, and Glencore International, saw the then P.J. Patterson administration receiving millions of US dollars in hard currency from Glencore in return for the supply of bauxite at a fixed price.
However, things backfired as over the period the price of aluminium dropped dramatically, while the price of oil and other inputs increased considerably, resulting in Jamaica selling bauxite to Glencore far below production cost. As a result, CAP, and by extension Jamaican taxpayers, lost billions of dollars.
The 10-year agreement was the result of the government’s dire need for foreign exchange in mid 2000 to shore up the local currency, which was experiencing a severe period of depreciation.
CAP losses could be as high as $30 billion
Conservatively, the Jamaican taxpayers spent upwards of $30 billion dollars over the past 10-years to cover losses incurred by CAP, while the government’s joint venture partner in Jamalco, Alcoa, was able to sell its bauxite from the plant at market price not being a party to the forward sale contract. In 2010 alone, taxpayers paid an additional J$4.4 billion to finance the losses that was racked up that year from the forward sale fiasco.
CAP can explore better pricing for its bauxite supply
The December 2015 end to the forward sale agreement now unlocks CAP to explore better priced contracts for the supply of bauxite from the Jamalco plant. In December 2014, global commodities company, Noble Group acquired Alcoa’s 55 percent stake in Jamalco, while CAP retained its 45 percent ownership of the joint venture. However, Alcoa continues to operate the refinery on Jamalco’s behalf. continued on page 23
JAMAICA BUSINESS / jambiz@cwjamaica.com
22
JANUARY/FEBRUARY 2016
For a number of years, the Jamaican government was trying to negotiate an earlier end to the contract with Glencore having realized that CAP was losing heavily in selling at the fixed price, which by then was far lower than production cost. However, Glencore was adamant that the terms of the forward sale agreement be honoured and that any renegotiation should not result in a dwindling of its favourable position.
Glencore unrelenting
In spite of many overtures by the Patterson government which initiated the contract, the successive Simpson-Miller administration, which inherited it and the Bruce Golding led Cabinet that attempted to re-negotiate the contract, no deal could be reached, as Glencore held fast to retaining their favourable position. Meanwhile, the debt ridden CAP, which has been an albatross around the neck of taxpayers for the past 10 years, is slowly emerging from the financial quagmire. The company, which has racked up billions of dollars of debt over the years, has been cutting its liabilities for the last two years.
CAP recovering from years of constant losses
While CAP continues to record losses, the Dr. Vin Lawrence led board is confident that the company will soon be out of the red. In fact, the 2014/2015 financial year is the second fiscal year that the company is being operated without any contemplation or possibility of resorting to the national budget since the forward sale contract. Since the disastrous forward sale experience, there have been many improvements at CAP both in terms of financing as well as upgrade of the Jamalco plant. Consequently, losses have been trimmed and there has been no necessity to seek taxpayers’ support for the last two years. The year under review marks the second year that CAP did not have to call on the national budget, as its finances continue to show improvements even though still in the red. The company recorded pre-tax losses of US$64.54 million in 2014/2015, an improvement of US$9.2 million over the US$76.7 million losses experienced in 2013/2014. The US$76.7 million loss in
2013/2014 was itself a further improvement of US$14 million over the previous year. Were it not for an extraordinary expense in the form of a write off of Jamalco’s mining assets to the tune of US$13.44 million, CAP’s pre-tax losses would have declined to US$51.1 million instead of US$64.54 million. CAP Chairman, Dr. Vin Lawrence, in his forward to the audited financial statements for the year under review, emphasised that the prospects for the future are good. He said that, in the short to medium term, expected favourable heavy fuel oil prices should complement the new financing arrangement. This new financing arrange will see CAP borrowing against its 45% interest in Jamalco with no exposure to the Government of Jamaica or the national budget. It’s definitely not smooth sailing by CAP but the company is now showing brave effort at navigating through choppy seas.
PM SIMPSON MILLER OUTLINES ECONOMIC PROGRAMME
continued from page 19
“By later this year, for example, phase one of new manufacturing activities in the Spanish Town Special Economic Zone, is expected to be up and running,” the Prime Minister said, noting that Special Economic Zones will facilitate strategic investments that will serve as a catalyst for driving economic growth and facilitate linkages between global and domestic markets.
supply-chain networks and overseas markets. A framework is being developed by the government through which to continue supporting the development of the MSME sector as an avenue to stimulate growth. Mrs. Simpson-Miller pointed to new initiatives such as increased funding through the Development Bank of Jamaica in the amount of $4.1 billion for 2015/16.
According to the Prime Minister, Jamaica has seen noteworthy growth in the industry with the introduction and expansion of several BPOs across the country, including Xerox Commercial Solutions, Sutherland Global Services, Bioprist, Barnett Tech Park and IBEX, which relocated part of its operations from India to Jamaica.
MSME & BPO push
In the Government’s investment push the Business Process Outsourcing (BPO) industry is already poised to be a game-changer with the prospect for signif-
Additional operating space, she said is being built by the Factories Corporation of Jamaica in the Montego Bay Freezone and the Portmore Technology Park.
In all of this, a platform is also being provided for Micro, Small and Medium Enterprises (MSME) to participate in global
JAMAICA BUSINESS / jambiz@cwjamaica.com
23
icant job creation.
JANUARY/FEBRUARY 2016
COMPANY OCG clears multi-billion dollar KCT privatization Concessionaire misses deadline for financial closing
T
he Office of the Contractor General (OCG), reportedly, has cleared the privatization process of the Kingston Container Terminal (KCT) through a 30year Concession Agreement with Kingston Freeport Terminal Limited (KFTL). The OCG was called in to carry out a thorough investigation following concerns, which the Opposition raised regarding the privatisation process and the pending lease of KCT to KFTL. News came from the government earlier this month that the OCG advised that the transaction had adhered to the applicable policies and procedures. The Concession Agreement was signed on April 7, 2015 with KFTLto finance, expand, operate, maintain, and transfer KCT back to the government at the end of the 30-year concession. Having found nothing wrong with the privatization process, the government on its part is moving full speed ahead in closing the deal.
Expansion hits a snag
In the meantime, the much anticipated multi-billion dollar expansion of KCT in preparation for the opening of the expanded Panama Canal has hit a snag. KFTC has reportedly suffered a delay in securing funding to cover Phase 1 of the capital works needed. KFTL and its sponsors were given six to eight months to finalize the requisite financing arrangements. The deadline expired last month without KFTL securing the funds. However, because of the exhaustive nature of the due diligence undertaken by KFTL main lender, the Inter-American Development Bank (IDB) and other financiers, the date for financial closure has been delayed
by three months. As a result, the date for closure has been extended to March 2016. Transport, Works and Housing Minister, Dr. Omar Davies, who made the disclosure in parliament, said the IDB board only approved the loan in mid-December and that other financial entities are in the process of doing so.
Further delays
Dr. Davies said the necessary documentation and other legal requirements are currently being put in place and financial closure is expected to take place by the end of March with handover of the facility taking place simultaneously. As part of the IDB due diligence process, it is a requirement that the environmental study for projects, such as the KCT privatization, be posted on its website for a period of four months. This, the Minister pointed out further delayed the process. “Mr Speaker, notwithstanding the delay in achieving financial closure, the Concessionaire and the Port Authority of Jamaica (PAJ) have been working in a focused way to prepare for the handover to the Concessionaire and the commencement of the dredging and civil works of Phase 1,”Dr. Davies reported.
Procurement of equipment on the way
He disclosed that a Transition Committee chaired by the PAJ and consisting of members from both PAJ and the KFTL is now in place and has been carrying out a number of activities such as the purchase of key container handling equipment needed to supplement KCT’s stock. Orders for these have already been placed and the major items will be delivered starting in the second quarter of 2016.
JAMAICA BUSINESS / jambiz@cwjamaica.com
24
Dr. Davies told fellow Members of Parliament that it was agreed with KFTL that specified pieces of equipment, costing up to US$15million, would be purchased by the Port Authority, owners of KCT on the understanding that such sums will be reimbursed to the authority once handover took place. For its part, the Concessionaire has already engaged three top executives - the Chief Executive Officer, Chief Operations Officer, and a Chief Financial Officer, - who are already on site and working on matters relating to the transition process. In addition, KFTL has indicated that it will rehire all existing personnel once they meet the Concessionaire’s requirements and will provide training as appropriate, in keeping with the company’s policies. Additional employment is expected to materialise as a result of the Concessionaire generating increased volumes and shifting cargo to KCT. Dr Davies stated that KFTL has also arrived at an understanding with ZIM for them to continue to operate at KCT.
Phase 1 expansion work
Phase 1 of the expansion, will commence immediately after handover, and will include dredging of the Access Channel and Basin to accommodate vessels with draught of 14.2 metres. It will also include the rehabilitation of 1,200 metres of sheet piles on the South Terminal to facilitate additional deepening of the berth, and strengthening of the piles to be consistent with international codes. The overall construction is scheduled to be completed within 24 months and will be phased such that transhipment operations at the Port are maintained throughout the construction period.
JANUARY/FEBRUARY 2016
COMPANY NCB enhancing mobile and online banking services
J
amaica National Commercial Bank (NCB) Limited revealed recently that it has completed a pilot of a mobile banking solution for which it expects to get Bank of Jamaica’s (BoJ) approval for its release to consumers this year. The bank expects to spend approximately $500 million to introduce several digital services aimed at improving internal operations and the customer experience in using money services. Chief digital and marketing officer at NCB, Nadeen Matthews, said that the bank will use an app produced by Quisk, a global mobile payments technology firm based in the US, to offer its customers mobile point-of-sale (POS) and money transfer services. For example, customers will be able to use their mobile phones, as digital wallets, to pay for goods and services, and send money to family and friends. The system, which is cashless and cardless, only requires a cell phone, and phone and PIN numbers for transactions. On roll out of the planned services, NCB
will join Jamaica Cooperative Credit Union League (JCCUL), which uses a mobile system called Connec, in the local mobile money market. Connec allows users to receive and send cash of maximum $150,000 in value to other registered users, top up phone credit, transfer money between credit union accounts, pay selected utility bills and check account balances. Last Januaryt, NCB introduced cross-banking, another digital solution, which allows customers to transfer funds to other banks using its online platform. Cross-banking allows customers to make same-day Jamaican dollar transfers to other local financial institutions. Matthews noted that “Customers can conduct RTGS (Real Time Gross Settlement) or ACH transfers through the retail online banking platform. Customers will no longer need to visit the branch to conduct these transactions and they are also more affordable online. These transactions are also more secure than cash transfers and faster than cheque transfers.”
NCB’s digitization drive continued in February with the enablement of online account opening and remote cheque deposit capture. Also introduced is a new online portal allowing customers to initiate account opening and application processes for loans, credit cards, deposits, investment and insurance products. Customers can submit supporting documents by scanning or taking a photo with smartphone/tablet and uploading. The bank’s digitization initiative also includes intelligent ABMs and kiosks, which are part of NCB’s Bank on the Go programme. NCB said it had also introduced a new mobile tablet application, Zap In, for sales persons, in December 2015. The application allows sales persons to input customer product applications in real time and upload photographs of supporting documents. “The process ensures that customer applications are input in a timely manner and reduces the level of manual work required by the sales persons upon returning to office after sales visits,” Matthews noted.
JPS $2.7b Bogue Plant Conversion Project Begins
T
he project to convert the Bogue power plant in Montego Bay to operate on liquefied natural gas (LNG) commenced two weeks ago. On completion, the plant will be able to operate on either LNG or its current fuel source. Jamaica Public Service Company has said (on its website) that it is investing US$22.74 million or about $2.7 billion in
the conversion. Conversion of the plant to LNG is on track for completion in the second quarter of this year. JPS said the project would add significantly to the country’s energy diversity, fuel security, flexible generation and production of clean energy. “Improvement in air quality is an essential outcome of this project. Gas provides
JAMAICA BUSINESS / jambiz@cwjamaica.com
26
an avenue for clean energy that is not intermittent and is available at night when our peak load challenges us. These benefits cannot be overstated,” said JPS President and Chief Executive Officer Kelly Tomblin. New Fortress Energy will supply gas to the Bogue plant. The former began developing its terminal and pipeline at the Montego Freeport at the end of last year.
JANUARY/FEBRUARY 2016
COMPANY Sagicor Investments rated top broker for 2015
T
billion units, valued at $72.07 billion, which were traded in the Jamaican-dollar market in 2015. The top three dealers - Sagicor (43%), NCBCM (16.59%), and Mayberry (14.49%) – accounted for 75 percent of the trades made.
HE Jamaica Stock Exchange (JSE) has ranked Sagicor Investments Limited as the top brokerage firm trading on the Exchange in the Jamaican dollar market in 2015. NCB Capital Markets (NCBCM) Limited and Mayberry Investments Limited were ranked second and third, respectively. The ranking is based on the total value of regular trades, exclusive of block transactions. Marlene Street-Forrest, General Manager of the JSE, said that “value and volume arising from block transactions are not included in our computation nor our index”. There were 10 block transactions during the year with a total value of $44.2 billion and involving 2.34 million units by volume. Included among the large block trade was one in March 2015 when the
Bank of Nova Scotia transferred all of its 71.78 per cent shareholding in Scotia Group Jamaica Limited to Scotiabank Caribbean Holdings Limited, a 100 per cent-owned regional financing and holding subsidiary in Barbados. Approximately forty security dealers are registered locally and managed the 5.4
On the US dollar market, 24,602,573 units, with a value of US$5,035,436, were traded. Proven Investments Limited, with 48.7 per cent of value traded, was the top broker in this market. In second place was Mayberry Investments with 13.07 per cent of value traded. In third place was Scotia Jamaica Investments Limited with 12.66 per cent of value. The only two companies currently listed on the US-dollar market are Margaritaville (Turks) Limited and Proven Investments Limited.
World of Dolphin mandatory share offer successful
T
he new majority owner of listed company, Dolphin Cove is reporting success in its mandatory offer to acquire the remaining company shares, up to a maximum of 79.99% at US 13 cents per stock. World of Dolphins was required by Stock Exchange rules to make a mandatory offer to acquire the remaining 162.8 million stock units, having bought just over 229-million shares representing 58.51% of the tourist attractions company. Word of Dolphins President, Eduardo Albor has announced that his company
was successful in acquiring 12.44% of the shares issued by Dolphin Cove, thus achieving the 79.77% threshold. Given that the shareholding falls below 80%, Dolphin Cove can remain listed on the Junior Market and continue to enjoy the Junior Market tax reliefs which it now currently enjoys.
Stafford Burrowes, the Chairman and principal shareholder of Dolphin Cove also sold a further 35.4 million shares to World of Dolphins, which is based in Barbados. As a result of the foregoing transactions, World of Dolphins will hold 79.99% of the shares issued by Dolphin Cove.
The mandatory share offer, which opened on December 2016 and closed on January 8, 2016, was accepted by 110 shareholders, who tendered 48.8 million ordinary shares.
JAMAICA BUSINESS / jambiz@cwjamaica.com
27
JANUARY/FEBRUARY 2016
COMPANY JMB increasing its inventory of properties
T
he Jamaica Mortgage Bank (JMB) has increased its inventory of properties for sale and development through land transfers and foreclosures, while undertaking an aggressive programme of reducing its bad debt portfolio. The inventory include properties transferred from an unnamed subsidiary of the Ministry of Transport, Works and Housing from a botched housing development as well as a transfer of land at Whitehall in part settlement for that failed development. In addition, the Ministry is to transfer one additional parcel of land to JMB to fully cover the obligation of that unnamed subsidiary. Properties at Whitehall, Phoenix Park, Norwich and Mount Gotham have also
been added to JMB inventory. JMB closed the 2014/2015 fiscal year with $413.5 million worth of land held for development and sale compared to $379 million in the previous year.
to reduce its bad debt portfolio, JMB has also instituted foreclosure proceedings on some properties held as security, which it has been unsuccessful in selling under its Power of Sale.
In the meantime, the JMB has received land in respect of a loan which was fully provided for in previous years. The cost of the land was determined by an external valuator.
A total sum of $266.6 million was collected for the financial year 2014/2015 against a budgeted sum of $644 million.
Turning to the issue of bad debts, JMB has taken steps to sell properties being held as security to recover outstanding loan sums. To this end the bank has sold five lots at Phoenix Park during the year, resulting in loss on disposal of $3.29 million. In addition to selling some properties
This shortfall in the bad debt collection was primarily attributed to the delay in the completion of the foreclosure proceedings for lands held as security for two loans. This was compounded by the delay in the commencement of a court hearing in a lawsuit filed against a delinquent developer for over $1-billion.
Sonia Davidson’s retirement from SVL triggers management changes
S
upreme Ventures Limited has advised of the retirement and promotion of a number of its senior management staff to the executive level. Long-time Vice President, Group Corporate Communications, Sonia Davidson has retired, effective December 31, 2015. She was among other things responsible for managing the operations for all the local lottery game draws and the Super
Lotto game draw, which is streamed to the other jurisdictions in the Caribbean and Latin America. In the meantime, James Morrison has been promoted to the post of Chief Financial Officer & Senior Vice President Finance; Lancelot Thomas has been promoted to Vice President Finance, while Tashia Hutton has been elevated to the position of Vice President Customer Sup-
JAMAICA BUSINESS / jambiz@cwjamaica.com
28
port and Regulatory Affairs. Also promoted to the executive level are Carolyn Bolt Nicholas as Assistant Vice President, Human Resources & Administration and Krista –Gaye Fisher, who is now Assistant Corporate Secretary and Legal Officer. All promotions took effect December 1, 2015.
JANUARY/FEBRUARY 2016
NEWS Oil and Gas exploration resumes
T
he Petroleum Corporation of Jamaica’s (PCJ) Oil and Gas exploration programme is progressing steadily with seismic survey activities set to take place in Jamaica’s offshore areas for the first time in almost a decade. Tullow Jamaica Limited will undertake a 3,000 km, 2D seismic survey as part of the work programme outlined in the Production Sharing Agreement (PSA) the company signed with the PCJ in November 2014. Under the PSA, Tullow is carrying out
exploratory work on blocks off the south coast of Jamaica and this week the company contracted the BGP Challenger, a seismic vessel, for the current phase of the programme. The BGP Challenger, which is currently docked at the Port of Kingston, is scheduled to head to the South Coast later this week, where it will remain for about a month conducting seismic surveys in Jamaican waters. The ship’s state of the art equipment will capture images of the rock layers beneath
the seafloor which will be carefully analysed to assess if there are any accumulation of hydrocarbons. The data will be integrated into sophisticated computer programmes to further analyse Jamaica’s potential for having commercial oil and gas. The information gathered will broaden Tullow’s knowledge of the geological makeup of the island’s seabed and give the PCJ additional seismic data to enhance the oil and gas records that the Corporation has amassed.
t-Tech releases successful IPO details
I
nformation Technology Service Provider, t-Tech Limited has released details of its successful Initial Public Offer (IPO) in which it received a total of 289 applications for shares, valued at approximately $172. 4 million. However, only $50.26 million in working capital was being sought from the IPO. Just over 25 million ordinary shares at a price of $2.50 per share went on sale on December 16. t-Tech’s IPO was such a success that it closed on the very day it was opened on December 16 and not two days later on December 18 as scheduled. Applications for shares, valued at $172.39 million, were received for the $50.26 million expected from the sale of 25-million 652-thousand ordinary shares on offer priced at the price of $2.50 per share.
Given the overwhelming response from the local investing public the basis for allotment has been finalized as follows: The Reserve Share applicants, which comprise 35% of the shares offered, will receive 100% of the number of shares they applied for while applicants for the General Pool, representing 57% of the shares offered will receive 100% up to 10-thousand shares applied for. Pursuant to the prospectus, 8% of the shares offered have been allocated at the discretion of the company’s Board of Directors and the remaining shares will be allocated on a proportional basis equivalent to approximately 19.96% of the total application amount. The company, headquartered at 69 ½ Harbour Street, downtown Kingston will
JAMAICA BUSINESS / jambiz@cwjamaica.com
29
use the proceeds from the IPO to further develop its managed IT services, particularly in the area of security, which has been identified as a service offer that will afford the Company growth opportunities. The funds will assist t-Tech in equipping itself and making the necessary investments to take advantage of this growth area. The company is now in the process of making an application to the Jamaica Stock Exchange for the shares to be admitted to the Junior Market. t-Tech was incorporated in Jamaica on December 1, 2006 as a managed I-T service provider with its main services being the management of client’s IT infrastructure remotely and on a monthly or recurrent basis.
JANUARY/FEBRUARY 2016
NEWS Caribbean Creams reaping benefits of forward purchases
C
aribbean Creams Limited, manufacturers of ice cream and ice cream products, is reaping huge benefits from locking in the prices for its raw materials through forward purchases. The company has credited this business decision to the increase in profits and operational efficiencies now being experienced at the company, which trades under the name, Kremi. Net profit for the nine-month period ended November 30, 2015 was up $123.7 million and $39.9 for the quarter. The just released unaudited results show that the company continues to
benefit from price reductions on its main ingredients. Chairman, Carol Clarke Webster and CEO, Christopher Clarke declared that Caribbean Creams has also seen an improvement in operational efficiencies from the move. They emphasised the importance of locking in prices for raw materials given the soft market in which the company is operating. In addition to forward purchase of raw materials, Caribbean Creams has been improving its capital base through savings on electricity and cost reduction in processing time.
Senior management changes at Grace Kennedy following Courtney Campbell’s departure
L
ocal conglomerate, Grace Kennedy Group has announced a number of senior management changes at First Global Bank (FGB) and the wider group consequent upon the resignation of Courtney Campbell. News came yesterday that Campbell, CEO of Grace Kennedy Financial Group and FGB has resigned effective January 31, 2016 and will be heading Victoria Mutual Building Society, replacing Richard Powell, who is retiring. In a statement, Grace Kennedy Group CEO, Don Wehby stated that Campbell will also be resigning from the boards of Grace Kennedy Group, FGB, GraceKennedy Financial Group as well as other boards within the Group.
The new management changes as Grace will see Mariame Robinson, who is currently a member of FGB board being appointed President and CEO of the bank, effective February 1, 2016. Paula Robertson Barclay, currently Chief Credit Risk Officer for the bank has been promoted to General Manager, also effective February 1, 2016. Several other senior management changes will take effect within the Group on February 1, 2016 including, Grace Burnett, who has been promoted to CEO of GraceKennedy Financial Group, while continuing to serve as Managing Director of GK General Insurance Company.
Steven Whittingham will be appointed Chief Investment Officer for the Group with responsibility for devising and executing strategy across GK’s businesses, and identifying and leading key investment opportunities. He will also continue to lead GK Capital Management. Mr. Wehby noted that both Mrs Burnett and Mr Whittingham will report directly to him expressing confidence that the senior management changes will strengthen the leadership team and allow the company to achieve its goal of becoming a Global Consumer Group and a significant player in the regional financial sector.
GK Capital Management Limited CEO,
JAMAICA BUSINESS / jambiz@cwjamaica.com
30
JANUARY/FEBRUARY 2016
NEWS PIOJ Predicts Economic Growth for 2016
T
he Planning Institute of Jamaica (PIOJ) is forecasting that economic growth for 2016 will follow the positive trends of 2014 and 2015.
however, that the programme has had some “contractionary effects,” but said that they have been necessary in creating the platform for sustained growth.
“We expect another year of positive growth (for) the calendar and fiscal year,” said Deputy Director General of the PIOJ, Richard Lumsden, speaking recently at a labour market forum at the Jamaica Pegasus hotel.
He further noted that the programme has been facilitating investment projects, which generate employment, increasing business competitiveness, human and community security, and environmental resilience as it relates to reducing the impact of disasters and increasing adaptation to climate change.
Mr. Lumsden pointed out that the growth momentum is a laudable achievement in the context of an economic programme, which is aimed at achieving fiscal consolidation, macro-economic stability, and social protection for the most vulnerable within the society. He was quick to note,
Mr. Lumsden cited a number of emerging industries, such as sports, animation, the cannabis industry, medical tourism, and renewable energy, which, he said, offer vast economic opportunities.
Mr. Lumsden pointed out that these industries are “very important for inclusive growth, and fostering and supporting the development of the Micro, Small and Medium-sized Enterprise (MSME) sector. Sport is becoming more recognised as an economic opportunity.” The labour market forum focused on training to facilitate economic growth; and strategies to create greater linkages between training providers and employers to ensure that programme offerings are in keeping with present and future labour market needs.
Minister Hylton Calls for Help for BPO Sector
M
inister of Industry, Investment and Commerce, Hon. Anthony Hylton, has renewed the call for private sector entities to partner with the Government in providing additional work-ready space for the Business Process Outsourcing (BPO) sector.
Speaking at the official opening of Sutherland Global Services’ New Kingston offices on January 22, Minister Hylton said, “The Government is unable to provide all the space needed for outsourcing companies wanting to set up shop in Jamaica. We are moving ahead with our plans for the development of the Naggo Head (technology park) to make available additional space for the sector. The demand for space, outpaces the supply and the speed at which we are able to create these
work-related spaces, we simply cannot keep up at this point.” Sutherland Global Services occupy approximately 70,000 square feet of office space in the former Claro building through partnership with Cari-Med’s Chairman and Chief Executive Officer, Glen Christian. He noted that such action by the private sector shows “a level of maturity in sharing risks and wanting to contribute to the growth and development of this sector.” Minister Hylton said the Government will continue to work towards the development of policies, legislative framework, and the provision of financing to support the sector.
JAMAICA BUSINESS / jambiz@cwjamaica.com
32
“Only last year, we launched the National Outsourcing Strategy, which outlines the five-year development plan for the industry,” he said. The strategy summarises a range of programmes and initiatives geared towards the continued growth and development of the sector as well as the Government’s plan to attract further investments. It focuses on the policy and legislative framework, infrastructure development, labour pool enhancement, and market penetration activities. Mr. Hylton noted that these are critical “if we seek to move up the value chain to knowledge process outsourcing.”
JANUARY/FEBRUARY 2016
REGIONAL Antigua-Barbuda abolish personal income tax The loss of $37 million from the elimination of the PIT will be partially substituted by an increase in the Revenue Recovery Charge (RRC) from 10 percent to 13 percent, which is expected to yield an additional $20 million in revenue. Mr Speaker, all food items in the ABST (Antigua and Barbuda sales Tax) basket of goods will be exempt from this increase,” he announced. He concluded that his government expects a more buoyant and expanded economy to empower the government with increased revenues to fund socio-economic development programmes.
P
ersonal income tax (PIT) will be repealed in Antigua and Barbuda effective next April. Prime Minister Gaston Browne made the announcement in his presentation of the 2016 Budget. “Effective April 2016, personal income tax will be abolished in its entirety. That was a major campaign promise, and my government honours its word to the people. Promise made, promise kept. There is credibility in our words and reliability in our actions. What we say is what we mean. Abolishing personal income tax is an important reform. Not only will it put more money in the pockets of the people, so that they can save or spend more for the benefit of the economy as whole, it will help to re-establish our country as one of the most competitive in the Caribbean and beyond.” “Mr Speaker, abolishing the PIT will put over $30 million back into the pockets of
people,” Prime Minister Gaston Browne announced. The Prime Minister noted that previous Antigua and Barbuda Labour Party administrations governed Antigua and Barbuda successfully for 27 years without personal income tax. PIT, introduced by the now opposition United Progressive Party when it assumed office in 2004, imposes a tax of 8% on residents earning an income above $3,500 and 15% on those earning an income above $25,000. “Antigua and Barbuda will become a competitive location to attract the headquarters of companies and for professionals to relocate, thereby creating more jobs. Retirees will choose Antigua and Barbuda as their retirement home; CIP investors will invest and chose Antigua and Barbuda over our competitors.
JAMAICA BUSINESS / jambiz@cwjamaica.com
33
Harold Lovell, the leader of the main Opposition United Progressive Party (UPP), says new tax measures would make life harder for citizens of Antigua and Barbuda. Lovell said the Government has not remained true to its original plan to reduce taxes overall. “Now in terms of the abolition of personal income tax, when he argued in his paper that he would abolish personal income tax he did not say that he would increase any other tax. He said he would eliminate waste and by eliminating waste he would be able to abolish personal income tax.” He said increasing the RRC would result in an increase in the cost of living and that the Government “would put the burden of the additional revenue on the backs of poor people and that is not fair. “We have been opposed to that because we said that is a regressive form of taxation rather than a progressive form of taxation.”
JANUARY/FEBRUARY 2016
REGIONAL Employ sustainable energy practices, Guyana tells region
“
We are an unflinching subscriber to the CARICOM Energy Policy...”
carefully examining hydropower projects, which caters for sustainable development. Minister of Natural Resources, Mr. Raphael Trotman, addressing the Trinidad and Tobago Energy Conference
G
uyana’s Minister of Natural Resources, Raphael Trotman, has challenged Caribbean governments to employ and promote sustainable and environmentally friendly practices in their energy sectors, even as they pursue their countries’ development. Mr. Trotman made the appeal in his address to the just-ended Trinidad and Tobago Energy Conference, regarded as the leading energy conference in the Caribbean. He said his government aims to ensure that the country becomes a green economy by 2020, through the development and promotion of green initiatives and practices in the various sectors of the economy. He told those in attendance that all countries, especially those in the region, must begin to see their natural resources as part of their God-given national patrimony and aim to develop them in keeping with the recently defined sustainable development goals.
“In 2016 we realized even more that the two, energy and the environment, are inextricably and inexorably linked. Guyana, therefore, has a simple and strong objective to sustainably harness and develop the natural resources with respect for the environment and the promotion of the dignity of the people,” Minister Trotman said. Speaking of the recent discovery of oil in Guyana, he indicated that while Guyana is excited at the prospects of being an oil producer, it is also cognizant of the fact that it has committed to becoming a country that utilizes 100 per cent renewable energy within the next decade. Trotman noted that Guyana’s challenge, shared by all Caribbean states, is to be self-sufficient in energy and produce a surplus that can be sold on the world market. He said, however, that the country has been unable to access reliable power at stable, reasonable costs and, as such, has been
JAMAICA BUSINESS / jambiz@cwjamaica.com
34
“A potential alternative such as hydropower is within the hinterland regions, which are sparsely populated and away from the typical centres of consumption. Access to the natural resources is already there. Infrastructure and viable energy options remain a challenge and hopefully, with vision, planning and expected revenues, we can provide an energy mix that sees us using more renewables and selling the vast majority of our hydrocarbons,” he said. “We are an unflinching subscriber to the CARICOM Energy Policy that mandates its member states to transform the energy sector through the provision of secure and sustainable supplies of energy in a manner which minimizes energy waste in all sectors, to ensure that all CARICOM citizens have access to modern, clean and reliable energy supplies at affordable and stable prices. We each have our peculiarities in terms of location, size, industry, state of development, strategic economic and development plans; and commodities on offer, but our diversity must not be a barrier to our integrated development,” the minister added.
JANUARY/FEBRUARY 2016
REGIONAL Guyana Listed Among 12 Emerging Travel Destinations to Visit in 2016
O
n the cusp of the 50thIndependence Anniversary celebrations Guyana has been accorded yet another distinction, having been featured in the Business Insider UK’s ‘ 12 Emerging destinations you have to visit in 2016’.
car, the Arctic: Iceland, Greenland, and Norway, Mongolia, Papua New Guinea and Kyrgyzstan.
Over the years, Guyana has cemented its position as a leading Sustainable Tourism Destination, and has gained international recognition as ‘National Geographic Traveler 2014’s must-see places on planet earth. Guyana earned a coveted spot on this exclusive, very short list for the very first time in 2014’and BBC Travel’s ‘Five destinations you should know more about’, among many others.
In this most recent feature, Broadcast journalist and photojournalist, Anisha Shah explains that 2016 is all about emerging destinations. “Wilderness, wildlife and culture; these themes will illuminate the year’s travel itineraries. Escapism and authenticity are key and nowhere offers them quite like fledgling and far-flung nations,” she said. In sharing her perception of the destination, Shah, who is now a freelance journalist for CNN, BBC Travel and Huffington Post wrote, “Dripping in rainforests, Guyana’s untouched pristine interior is sparsely populated, home only to few Amerindian villages. Wildlife far outnumbers the people, with jaguars, pumas and sloths the real locals. The majority of people inhabit the North-eastern narrow Atlantic Ocean coastline of blonde castaway beaches backed by dense forest, home to endangered sea turtles.” She explained that Kaieteur Falls, one of the grandest falls not known by many, is the world’s widest single-drop waterfall, peaking at 76m and encased in virgin ancient jungle. “Seeing it by tiny charter flight is unforgettable,” Shah emphasised. Also making the list of the 12 Emerging Travel Destinations to visit in 2016 were, Glacier Bay National Park: Alaska, Japan, Gabon, Uganda, Iran, Taiwan, Madagas-
section of travelers with varying interests , and the ability to lure those looking for unique adventures in ‘off the beaten path’ destinations.
These recent accolade augurs well for Guyana, as the destination prepares to celebrate its Golden Jubilee with great fanfare and welcomes any opportunity to promote the vibrancy, raw authentic adventure, stunning scenery and rich culture that is unique to this South American country. Guyana’s Tourism Minister, Catherine Hughes, in her response to the news pointed out that Guyana’s unique blend of tourism products is as rich and as attractive as those found in any part of the world. She noted too that the destination has the potential to attract a wide cross
JAMAICA BUSINESS / jambiz@cwjamaica.com
36
“With the attention that ‘Guyana- South America Undiscovered’ is receiving, there is no doubt that the sector will be propelled to greater heights in 2016. We have made great strides in promoting Guyana, and the country is now internationally recognised as a viable eco-tourism destination,” Director of the Guyana Tourism Authority, Mr. Indranauth Haralsingh explained. He stated that the destination features an irresistible combination of captivating natural beauty; pristine Amazonian rainforests; immense waterfalls; amazing wildlife, blended with a vibrant indigenous culture, rich heritage and the most hospitable and friendly people in the world; niche products include Bird Watching, Sport Fishing, Community Based Tourism, Wildlife Spotting and Yachting.
JANUARY/FEBRUARY 2016
REGIONAL Collapsing oil price threatens Trinidad
I
n the times of high oil prices, earnings from natural gas and oil exports made Trinidad and Tobago one of the richest countries in the Western Hemisphere, but the collapse in world oil prices, the country is facing the threat of difficult economic times. After two decades of nearly uninterrupted prosperity, the government is being forced to scale back spending by 7 percent, siphon some $1.5 billion from a stabilization fund over the next couple of years and warn its 1.3 million people that they will have to make do with less. “We must all appreciate that the circumstances we now face as a nation require sacrifice and managed adjustment in our living standards,” Prime Minister Keith Rowley warned in a recent speech. Those standards include American-style shopping malls, cheap electricity, subsidized gasoline and so many families with multiple cars that highways weaving past abandoned cane fields are often clogged with traffic jams in both directions. Things have been going so well for so many years that locals repeat the mantra “God is a Trini,” meaning the twin-island republic, known for high spirits and rollicking Carnival celebrations, is so blessed that things will always turn out well. But the specter of tough economic times is starting to prompt a glum self-examination. Previous governments have spent too lavishly and now it’s time we have to pay the piper,” said Adrian Lashley, a father of five who runs a small clothing shop in downtown Port-of-Spain, the capital. Trinidad gets roughly 45 percent of its
gross domestic product and 80 percent of export revenue from the energy industry.
In June 2014, the price of Trinidad’s benchmark crude was $106 per barrel and the government had drawn its 2015 budget anticipating $80 a barrel, but the price has plummeted to near $30. Prices for liquid natural gas, Trinidad’s main export, have declined by some 45 percent. With forecasts suggesting that world prices won’t recover anytime soon, economists say this downturn will have a serious bite here. Last month, the Central Bank of Trinidad and Tobago announced the country was officially in recession, with no economic growth in 2015. “The situation is very, very dire because of the extent to which we depend on the oil and gas sector. The government’s no longer going to have access to the kind of resources it’s been used to in order to maintain the country,” said economist, Indera Sagewan-Alli, executive director of the University of the West Indies’ Caribbean Center for Competiveness. Trinidad and Tobago, just 7 miles (11 kilometers) off the coast of oil giant Venezuela, became a significant global energy player about 25 years ago when it tapped big reserves of natural gas. That helped
JAMAICA BUSINESS / jambiz@cwjamaica.com
37
rescue the country following an oil bust in the 1980s that touched off labour unrest, contracted the economy by 35 percent, and forced the government to seek help from the International Monetary Fund. Rowley, who took office in September, has warned that the country will have to go to the IMF again if it doesn’t make the right adjustments now. Trinidad and Tobago has few local industries so the economy is almost entirely dependent on foreign exchange. The government is calling on businesses to find cheaper sources of imports and for consumers to buy whatever locally produced goods they can find. Rowley said government spending must be slashed as its expenditures are roughly 35 percent of gross domestic product. For many years, officials have repeatedly said that Trinidad’s economic base had to be broadened to provide protection from global energy downturns. Yet, little has been achieved. Terrence Farrell, a former Central Bank deputy governor, said Trinidad and Tobago is in a stronger position now than during the oil bust of the early 1980s. It’s built up roughly $10 billion in official reserves and $5.6 billion in a “heritage and stabilisation fund” created in 2007 can help cushion swings in energy prices. Still, he said mismanagement and corruption over the decades has meant far too much money vanished or was frittered away.
JANUARY/FEBRUARY 2016
REGIONAL IDB approved US$11.3 billion in financing for LAC region in 2015 sector programs and eight per cent to trade and integration projects. During 2015, the IDB completed the process of consolidating its private sector activities into the Inter-American Investment Corporation (IIC). The expanded IIC, which began operations earlier this month, aims to approve up to US$2.9 billion in its first year of merged activities.
T
he Inter-American Development Bank (IDB) approved loans and guarantees totaling US$11.3 billion and disbursed US$10.4 billion to borrowing countries in Latin America and the Caribbean during 2015. In keeping with its mandate to support the region’s smaller and vulnerable economies, the IDB devoted 50 per cent of the resourc-
es approved last year to borrowers of those characteristics, 14 per cent more than the previous year. Last year’s lending was concentrated in priority areas established in the IDB’s 2010 capital increase agreement: 39 per cent went to projects involving infrastructure and the environment, 32 per cent to institutional development, 21 per cent to social
In addition, the IDB began to implement an exposure exchange agreement with other multilateral finance institutions, which enables regional development lenders to lower their geographic concentration by diversifying their risk. The IDB also took a series of administrative austerity measures, reflecting similar steps taken by many of its member countries to adjust to changing global economic conditions. These internal cost-saving efforts will continue in 2016.
CARICOM Free Movement Sensitisation
T
he CARICOM Secretariat hosted a two-day sensitisation workshop on Free Movement within the CARICOM Single Market and Economy (CSME) January 13-14 2016 in Guyana. The aim is to share information and increase awareness of the free movement regimes. The target groups for this activity are the private sector, employers’ organizations and trade unions in CARICOM Member States where free movement processes are
operational. Approximately thirty stakeholders are participating in the Guyana workshop that will be held at the Grand Coastal Hotel. The activity is funded by the European Union under the 10th European Development Fund (EDF). The sensitisation workshop will highlight the provisions of the following CSME regimes: free movement of skills/labour and the facilitation of travel generally; the right of establishment; and the free movement of services. Participants will be apprised of the operations and benefits of these process-
JAMAICA BUSINESS / jambiz@cwjamaica.com
38
es and how they can make full use of the cross-border economic opportunities. This awareness drive across the 12 Member States will run from January to May 2016. Resource persons from the CARICOM Secretariat will conduct the sessions. This series of workshops represents the first time that the Secretariat is bringing together members of the private sector, employers’ bodies and trade unions for such an activity.
JANUARY/FEBRUARY 2016