Tweet
.........there has to be, but what?
<span style="font-weight: bold">T&T 2006-2010 exports to Jamaica: $23 billion</span>
T&T will be taking a team of businessmen to Jamaica to look at potential products they can import from the most populous Caricom country in an effort to reduce the massive trade imbalance between Jamaica and T&T.This was revealed by Trade and Industry Minister Stephen Cadiz, who said that the Government has to find a solution to the continuing trade imbalance.“This will be a reverse to the typical trade mission where businesses go in search of new markets to sell their products. We took a decision late last year to put together this mission as we seek out Jamaican products to buy in an effort to reduce the imbalance.”According to figures from the Central Statistical Office (CSO), in the five years between 2006 and 2010, this country exported more than $23 billion in goods to Jamaica and imported a mere $1 billion. While much of that figure represented products from the energy sector, a lot of it was also locally manufactured goods.Jamaicans have complained bitterly about the imbalance. Cadiz agrees that something has to be done.&#8194;In addition, the Manufacturers Association (TTMA) is setting up a trade desk with an officer dedicated to facilitate Jamaican exports to T&T.In a telephone interview on Tuesday from India, where he is travelling with Prime Minister Kamla Persad-Bissessar, Cadiz said one of the first things he will have to do when he returns to office on January 17 will be to contact his counterpart in Jamaica to assure him that the Persad-Bissessar administration is committed to work with Jamaica’s newly elected government, the People’s National Party (PNP), to correct, as far as possible, this imbalance.Jamaica’s problem: StructuralSome manufacturers who wanted to speak only on the condition of anonymity, said it was unlikely that the T&T trade mission to Jamaica mission will be successful.
They claim that the real problems with Jamaica are structural and that their products simply cannot compete based on price and quality.They argue that the Jamaican manufacturing sector is more than ten years behind T&T’s and that their products and procedures are, by and large, outdated.They pointed to the importation of beef patties to T&T and suggestions by Jamaicans that T&T has been using non-tariff barriers to prevent their import. Local manufacturers say this could not be further from the truth since beef patties do not compete against any product, that the real concern was that of foot-and-mouth disease because of the sources of Jamaica’s imported beef. “Why would we be worried about patties? What are they competing against—doubles?” one manufacturer remarked. It is a view shared by one of Jamaica’s leading financial analysts, Dennis Chung, who, in a telephone interview from Kingston, told the Business Guardian that while the mission is welcomed, the reality was that Jamaica’s problem is structural. Chung pointed to the 1990s when the Jamaican environment did not encourage manufacturing. He said it was a time of high interest rates and there was no motivation to invest in anything else but government paper. He said like all businessmen, manufacturers are also investors and it was easier and, to a large extent, more profitable to invest in bonds.&#8194;
Crime and productivity
Chung said crime was also a major problem in the 1990s, with people living in high-risk areas unable to work the night shift, leading to more problems for Jamaican manufacturers. He also said high energy costs proved prohibitive for many manufacturers, which led the economy to trend away from manufacturing to services. In 2010 Jamaica entered into a standby arrangement with the IMF for US$1.27 billion. The money was designed to help Jamaica:
• Reform the public sector to substantially reduce the large budget deficit
• A debt strategy to reduce debt servicing costs
• Reform the financial sector to reduce risks
He said: “It is going to be a challenging fiscal situation in the short-term. A new budget is expected in the next three months and the country has for a long time not been able to draw down on the IMF funds to assist in its balance of payments shortfall. The situation has worsened and it’s difficult to see where the funding will come from if it doesn’t come from the IMF. According to the IMF, Jamaica’s economy deteriorated due to the effects of the global economic crisis. In addition, the country’s large debt burden has magnified the fallout from the global crisis by limiting the scope of government to implement policies to cushion the negative impact. Sharp falls of 60 per cent in bauxite and aluminum production and exports, and a sharp decline in the amount of funds sent by Jamaicans living abroad, have led to a contraction in the economy. At the same time, with limited financing options, the government has had to raise taxes to offset falling revenues. Chung said it was critical for the new PNP government to saving the IMF agreement because if it seeks to borrow on the market, it will raise interest rates and further increase the debt to gross domestic product ratio while crowding out the private sector for funds. Chung said while the Jamaican economy is expected to improve based on better tourist arrivals and greater remittances, there were significant downside risks based on the continuing European sovereign debt crisis and the risk that places on China and the United States.
Fresh austerity package
Jamaican economist Dennis Morrison has written that the immediate challenge facing the new government is the economy, specifically, the IMF. The latest agreement has been off-track for most of the last year; the government has no choice but to re-establish it in order to access badly-needed funds. The room to manoeuvre is limited. A fresh austerity package is a virtual certainty. He said&#8194;the IMF will also demand credible assurances on policy and institutional reforms; that went awry under the previous government. The PNP government will strive to extract concessions to soften the blow, notably the jobs programme that was the centrepiece of its election manifesto. But the package, as a whole, is likely to be deflationary rather than growth-promoting. And getting sustainable growth remains the number one challenge for Jamaica. This will be the litmus test of the government’s economic performance. Cadiz said this government was interested in the economic well-being of the entire region because it was also in the interest of T&T.
“This government is very pro-Caricom. I have made it clear that a strong Caricom market is a strong T&T. Everytime there is a glitch in the Caricom economies, it hurts our local manufacturers and businesses and, therefore, it is crucial that we take steps to ensure that the regional economy remains as robust as possible.”
http://www.guardian.co.tt/business-guard...aica-23-billion
Comment