President (JAMPRO)

Mrs. Edwards the inaugural Jamaica Investment Forum (JIF) in 2012 advanced some US$500 million in foreign investment projects. This year this number is expected to double to around $1 billion. Obviously it has only been one week since the Forum but are you confident that target will be met?

I think so. It’s going to take time to convert because obviously with a forum like this what you have is a number of investors coming together for meetings so in 2012 we had 109 foreign investors this time round we had 133. This time around we paid a lot of attention to organizing business match-making meetings. So we organized 164 meetings but we know that many many more happened on the sidelines spontaneously between people who were networking so the challenge is now to see what happened in those meetings that we organized and those that we didn’t organize. What was different this time around were a couple of things. One is that we had 36 projects which you saw in the Investment Opportunities booklet that we were promoting. I think that focused the mind a lot on specific opportunities not just general ones. Secondly I think that we had a higher quality of visitor and that for many reasons. One it’s a really good time for people to be thinking about Jamaica because with the economy stabilizing, with the increasing FDI from 2013 from 567 million to 2014 700 million that’s quite a big jump so the market is certainly recovering. There’s been a lot of investment in infrastructure which has been driving some of that investment but there’s also new investment in tourism and outsourcing so there’s a lot of buoyancy in the market now so the timing of the conference really was very positive but I think also we put a lot of energy into vetting the attendees. Every single attendee there was properly vetted background checked for levels of seriousness, for CEO and CFOs levels. It was a C-suite group of people who had the way to actually make things happen. So that’s what we wanted and we got decision makers so that was really important in and that’s the feedback we have had from local investors. We had about 54 local investors there as well most of the crème de la crème of the Jamaican private sector so they were very clear that they got good value from the meetings that they had.

Economic reforms in Jamaica have attracted around US$800 million in investments and helped to reduce the island’s debt to GDP ratio. In your opinion what is a realistic ratio to expect come 2030?

That’s really a Minister of Finance question so I think you should ask him that rather than me because I don’t have the information base that he has to project that. Where we’re planning to go I know is to get it under 100% and that’s really where we want to go and that’s the target that we have put out there for 2030. I think the challenge is really to increase the growth rate and if we can have positive growth of 3-5% per annum over that period then we can hopefully see the lowering of that.

As just mentioned the economic reforms have helped to expand the Jamaican economy and attract foreign direct investment. Can you describe some of reforms that the government is currently working on to promote FDI in future?

Certainly one of them is the ability of companies to start up very easily so the whole question of online registration of companies. We are approaching world-class standard. We are not there yet, we still have to finalize the online portion of the company formation but we will certainly be there by the end of the year so you will be able to start a company online in less than an hour as you can in the UK and most of the developed world.

There are a number of acts that the government has passed in the meantime. I think the development of the single electronic window is going to be huge because what that will mean is effectively paperless trading with Jamaica on a B2B and B2G basis so business will be able to send their documents online which will be distributed to customs, to the tax office, to all the relevant players so that you will have a seamless interface. The shipping companies will also be on board with that, online with that. So you will have a seamless interface for importing and exporting and that is a huge linchpin for the logistics hub because you want to do logistics you have to improve the way of getting products in and out of the country and part of that also is the development of a system called ASYCUDA which is a customs data system which we are also implementing as part of that simple electronics window and what that is going to do is put customs online and interfacing with the systems so that you will be able to do online payment of your customs duties, your stamp duties, your consumption taxes, everything will become online seamless so we’re really moving to an “e-government” level. One of the areas that that will improve is the access to information and the generation of data which is really important because if we want to become more scientific in how we plan exports and how we plan the programs that JAMPRO is focused on we have to have more data to be able to do that. So we’re going to get access to a lot more data and this will be more efficiently generated data. And then if you look also at payment of taxes, which is one of the components of doing business report, the payment of taxes online is already a reality so all companies with a turnover higher than JD500million have to file online and it will progressively come down to smaller companies who also have to file taxes online so again you’re creating an easier environment for doing business.

There are a ton of initiatives that we are doing that we can talk about. There’s a security interest in private property, which allows use of moveable property as collateral not just immovable. The point about that is to enable small and medium size enterprises to use some of their collateral which is moveable not just the building as collateral for business loans.

Then there’s the Insolvency Act, which then allows protection from creditors while you reorganize a company that is failing. That is hugely important. The transformation of the commercial court so that commercial activities and litigation go through a quicker channel than going through the regular court system which has a lot of backlog. So it’s quite a huge agenda but I think it’s a very important agenda, which is going to see us move further up the international indices than you’ve already seen.

Mrs. Edwards the logistics HUB project dictated discussion at JIF 2015. Can you give your reasons as to why it is so important to pursue this project now? 

The logistics hub initiative is actually a transformational project for Jamaica. Its impact will really reach into almost every sector of the Jamaican economy. First all let me go through why now. Why now because you have the imminent opening of the new upgraded Panama Canal so you have an expected increase of traffic through the Panama Canal and particularly of Post-Panamax vessels, which need a deeper draft in order to dock. Jamaica has the seventh largest natural harbor in the world that is already 15m deep so you need to drudge another 2m to really accommodate these Post-Panamax vessels and that is something that we are actually doing as part of the preparations for the logistics hub. Nicaragua as you know also has a plan through the Chinese to develop another canal. Whether or not that can happen is moot but the point is any increase in traffic through that whole region is of benefit to Jamaica and Jamaica can take advantage of that because there is no better placed harbor in the region to take advantage of traffic going either from Asia through the Canal to the east coast of the US or to South America or going the other direction. So that’s why now.

The importance of logistics is that it is a huge factor in export competitiveness. If we want to be an exporting nation which we have to be because we are a small country we have to improve our access to global value chains and global supply chains and that’s what the logistics hub will enable us to do because logistics is really about interconnectivity and it starts with connectivity within the country to go from the farm gate to the distribution centers to the ports and then from the ports. It’s the connectivity of the air to sea, air to air, sea to sea so it’s really a vast network of connectivity and so that will impact on exports of agribusiness, project products that will impact on the ability to do value added work in manufacturing that will impact on telecommunications on a range of services that will be needed to make that hub efficient and effective so you have the whole back office industry that we are developing here as you know 17,000 people employed in that industry that will feed into the logistics hub. The whole financial aspect of it developing a financial hub will also feed into it. You will have need for a range of professional services – accounting, legal, financial etc so as I’m saying it will open the door to a lot of industries that we are looking at so bunkering for instance and commodity ports that will be one of the new businesses that will open up. The whole question of transshipment, the whole question of value added in special economic zones (SEZs) that’s an integral part of the hub and what is really exciting and enlightening and encouraging is that we are already getting a lot of interest in all of these areas from international players so we know we are on the right track because the demand is coming at us. So really we need to be actually going faster with the build up of the infrastructure.

Jamaica is currently transitioning from free zones, of which there are a limited number, to SEZs. Why is this and will they offer the same incentives?

The migration from the free zones to SEZs is partly a result of the WTO compliance. WTO does not want countries to subsidize exports so they feel that free zones as they currently exist are really outward looking and require companies to export 85% of their production. So what they want is for there to be greater integration between these zones and the local economy. So that is really the driver behind the SEZs.

There are not just two free zones because there is the ability on behalf of the government to declare any entity a single entity free zone. There are actually 22 free zones in Jamaica but they are not all industrial parks so they’re single entity stand-alone operations which are free zones so in total there are 22.

There will be some difference in the tax structure of the SEZ. Now this is legislation that is being worked on and that is just at the Green Paper stage so I cannot say what will be the final structure of the SEZs but what will happen though is that as I said there will be greater integration of these zones into the economy so what you will not have is a requirement to export 85% of your production. There will be no requirement. You will be able seamlessly to export into the customs area of Jamaica so it’s really trying to achieve greater backward linkages into the economy because the free zones have tended to be enclaves where there is very little backward linkage so we need to promote those backward and forward linkages. Right now JAMPRO has a whole linkages program and what we have done is worked on the hotel and hospitality industry. What are their needs? Furniture, artwork, bed linen, disposables, cutlery, crockery etc so we have looked up all of those and looked at what can the local industries supply. I mean every hotel needs a constant supply of fruit and vegetables every day so there are huge opportunities to continue to supply those hotels and linkages into the free zone is another area you know. What do the BPO companies need? They need desks, computers, cubicles, power and fiber optic cable etc so those linkages are what we’re trying to build because it builds the local economy as well.

Mr. Stewart, Mr. Wheby and Mr. Hall epitomize the potential for Jamaicans to succeed in business. They agreed at JIF 2015 that Jamaica’s most valuable asset is its people but given that many young Jamaicans are choosing to go abroad to secure jobs that are suited to their expertise, what is the government of Jamaica doing to ensure the Halls, Stewards, and Whebys of tomorrow remain in the country?

It comes back to two things really. One central thing which is really to the build the economic environment and a stable and attractive business environment so you accelerate the creation of businesses because it’s the businesses that are going to provide the growth that will keep the guys home. Two things are interesting here. One is that a lot of Jamaicans professionals educated outside are returning and have returned home. Jeffrey Hall studied at Cambridge. I don’t remember where else he studied but Cambridge was one of them. Nigel Clarke who is in charge of Musson Jamaica he also studied at Harvard. Peter Bronting. We can go through a whole range of top echelons of Jamaica and business and you will find that a lot of them are Harvard, Oxford, Cambridge educated who have returned home. Some of them have worked for years on Wall Street or wherever and they’ve come back home and they entered at the top of society. Now the challenge we have is with the middle management. Because it’s a young society the people at the top are still fairly young so they’re not moving out fast enough to allow the next round to come up so that’s one of the challenges but I think the other challenge for us is that our education system, which was patterned largely on the British education system, really trained people to work for other people so it didn’t really train entrepreneurs. What we have to do is create entrepreneurship and the avenues to entrepreneurship as a career option and a career path because Jamaicans are actually very entrepreneurial and you find that when they go abroad particularly the US and Canada they succeed very well. There are a lot of examples of high level Jamaican expatriates but the society and economy here have not provided that level of mobility. Now it’s not a problem peculiar to Jamaica, the UK is going through a lot of the same issues. I lived in the UK for 16 years so I know it pretty well. The issue is how do you get financing for young businesses to start up and to be successful. So we have a lot of programs going in that direction. The Development Bank of Jamaica is starting a venture capital fund and an angel investor network so that is really important to give young companies access to funding at a very early stage. We've also developed an incubator downtown for people in the technology sphere and that incubator is again to help young businesses to go from the idea stage to the accelerator stage so the stage where their business and business planning and their management structures are now ready to ramp up and accelerate. So we have I think it’s a Jordanian company that is going to do the accelerator phase for these companies that go through the incubation phase. The incubator isn’t just about finance it’s about giving them management assistance, sponsorship and mentorship so that they can arrive at the stage where an early stage investor would look at them. It’s a public-private platform because the first stage (incubator stage) is World Bank funded but as I said there is a Jordanian private company, which is investing in those companies that they feel have the ability to accelerate. So it’s very exciting.

And then there is of course the Jamaica Business Development Corporation, which gives training and capacity building to start up companies. There’s also MIDA and Self Start which are funding agencies under the Ministry of Industry, Investment and Commerce and they also provide early stage financing so we’re really trying to build the micro-financing space because that is vital to the development of SMEs and that’s where you’re going to see more and more professionals wanting to stay here if they see starting a business as an option for them. A lot of the big companies are merging and acquiring so they don’t really create jobs, quite often they destroy jobs.

The potential for medical tourism in Jamaica was emphasized at JIF 2015. This is because of the island’s proximity to the US, the reputation of Jamaican doctors and its extensive experience in the service industry. Given this a $40 billion dollar industry and Jamaica is ranked 14^th in the Medical Tourism Index, why is medical tourism such a nascent industry here? And given, 900,000 Americans leave the US for treatments, what is Jampro doing to make sure Jamaica gets a piece of that pie?

Couple of reasons. I think that the advantages that we have not really been perceived by the medical fraternity in Jamaica nor by the tourism fraternity. So we are slow to get into this game and are way behind a lot of our competition in the Caribbean. But I think that we have a really unique opportunity. If you look at the diaspora that Jamaica has they are actually coming home and getting procedures done here especially for dental care. It’s just no where collected in statistics so if you ask me how many I couldn’t tell you and a lot of them don’t necessarily advertise the fact that they are living overseas. If they come down here with a Jamaican accent and they say they live in Mona no one is going to ask them because they have a sister that lives in Mona so who is going to ask them. A lot of them want to be under the radar because they don’t want to be charged foreign prices. So I think the way our consultant has put it is that the low hanging fruit is diagnostics, diaspora and dental. That’s really where the low hanging fruit is. I think there has been hesitancy on behalf of the tourism authorities to look at medical tourism because they feel that it is risky that we have a great name in tourism already and that one medical debacle could sink the reputation of the country so do you really want to go down a high risk route when you have a product that is thriving and growing and doing very well on its own thank you very much so do you really want to go down this route. So there is a level I would say of skepticism but what we see is that it is now happening because Hospiten, which is a Spanish company and services the needs of the clientele of Spanish hotels. They have invested in a small medical facility in Montego Bay so that’s sort of the start of it but there are a number of private clinics that are going down this route and there’s a medical facility under construction called G-West in Montego Bay as well. It’s a Jamaican doctor who practiced for a long time in Florida who is returning and building this facility. And then we have a couple of other projects on the cards. There is someone here doing hand surgery, he’s doing things like carpel tunnel kind of problems. He’s a Dutch registered surgeon. And then you have people doing plastic surgery obviously and cosmetic dental surgery so there’s a fair bit that’s going on under the radar, which is not properly censored so we have to build on the data. We’re actually in a program right now to look at all the medical facilities in the country and look at the gap of where they are now and where they need to be to achieve international standards. So we’re at the start of it and I agree that we are late to the party but I think that we have opportunities that are quite unique and I think we also the other side of it is offshore medical education. We’ve just seen the start of the Caribbean School of Medical Sciences, Jamaica on Waterloo Road, which will train medical personnel.

What about eco tourism?

Again I think slow off the mark. One of the things that holds us back in investment is that the bankers are not very supportive shall we say. The banks in Jamaica have kind of had an easy street for many years while the Government Paper was giving such high returns. So a lot of them got a bit lazy and also a lot of the big companies invested in Government Paper so for a long time and certainly in the 80s and 90s and certainly the early part of the noughties you had very little local direct investment. Now what’s happening with the government sort of withdrawing from that and the rate of return on Government Paper coming down into single digits it’s not so interesting now to just park your money and earn double digit rates of return. So you take for instance a company like Sagicor cash rich, pension funds, lots of money and they’ve gone into hotels so they now have four hotels on the north coast and there’s a reason for that they can’t just park this money where they used to park it. They now have to find better rates of return but there is still a lot of risk aversion even in the big companies but as I said you’re slowly seeing that turn around.

Also I think we have in a sense been too narrowly focused in development of our tourism product and that has partly been driven by the source of our guests which is largely US. And because US people let’s say the majority are US package tourists and not really interested in going too far off the beaten track. They want a specific type of product so you have Sandals which have dominated the tourism landscape in Jamaica and so they haven’t left much room for other styles of tourism to develop which would be more interesting for tourists from Europe for instance.  Smaller hotels have struggled in Jamaica because they have been eclipsed by the all inclusives, which have very high rates of occupancy, it’s kind of a simple product it’s easy. Because the small hoteliers do better than I think people who brand off into things like ecotourism.

JIF 2015 showcased the extraordinary potential of Jamaica’s agriculture sector. It was, however, discussed during a break out session that Jamaican farmers often lack the information to know exactly what to plant and harvest. How is the government of Jamaica and JAMPRO planning to rectify this issue and inform these farmers about which crops yield the most profit and are in the biggest demand?

We are working very closely with the Ministry of Agriculture and what they call their extension office of service, which is called (Rural Agriculture Development Agency (RADA), because they are the ones that have the outreach into the small farmer communities which we do not have, that’s not really JAMPRO’s role. How JAMPRO is working with them is that we are looking at what are the market opportunities in the external market in the export market and how can we translate that into something that small farmers can use that as a reason to produce and how do we help them through the Ministry of Agriculture with the agronomic information that they need to produce. So I’ll give you an example, there’s a fresh produce consortium in the UK which is a very influential body and which is a grouping of all the fresh produce importers and distributors in the UK. So we engaged them through our London office and looked at where are the areas of tropic agriculture that you think have potential in the UK. So they came out here with a mission and told us basically melons, sweet potatoes and yams and we looked at what varieties do they want, you know what seasons, what times etc and we’re working with them to go backward linkage into the small farmers and I’ll say to them this is the kind of sweet potato that you need to produce. It needs to be orange not white, which is what you have been producing since your grandfather’s time, because the British consumer wants an orange sweet potato. So it’s really translating the needs of the market to what small farmers are doing so that’s the link. I remember when a mango in Europe had to have a red blush because people wouldn’t believe it was ripe otherwise. But some of the best mangoes that we have never go red. Same with our green oranges. The big companies have marketed that to you. Oranges go oranges because the nights are cold in the Mediterranean so JAFA, which is a big Israeli citrus producer, has basically said to the European consumer this is what an orange looks like, this is its shape and this is its color and they’ve marketed that through millions of pounds of advertising this is what the British consumer retains. So you come at them with a greenish yellow orange and they’ll say that’s not ripe, that’s not normal yet these are some of the sweetest oranges. We are not market makers we are market takers so we are going to have to do what the market wants.

But there’s a lot of new investment in agriculture now that is going to change the picture substantially. We have new players in coffee and cocoa. One of the biggest Jamaican success stories is a guy called Michael Lee Chin who is a Canadian billionaire who bought National Commercial Bank. He has bought into both the coffee and cocoa industries. We also have a company out of the UK which actually has a chocolate maker that is looking at investing in backward linkages into cocoa so I think that is what is going to change the landscape is serious players who have a more scientific approach to agriculture investing in production. That is what is going to change the picture. We were successful in the 50s and 60s with Blue Mountain Coffee. I think everyone who is in the coffee business knows Blue Mountains is top but we don’t produce enough of it so again it’s that link between production and the market, that’s what JAMPRO is trying to broker.

There is significant discussion at the moment about the Dangerous Drugs Act and the decriminalization of medical marijuana. How is this of interest to JAMPRO?

It’s the decriminalization of two ounces of marijuana for recreational purposes but JAMPRO is not interested in recreation, it has nothing to do with us as that’s the Ministry of Justice because they are interested in the human rights and recreational aspects of marijuana. What we are interested in at JAMPRO is developing a cannabis industry, which is industrial hemp and medical marijuana.

Could foreign investors benefit in any way?

Absolutely. We are fashioning legislation to enable that industry and set up a proper licensing regime. As you know marijuana is still an internationally interdicted substance so you have to be really careful about how you set up a framework that allows people to produce for medicinal purposes but not for recreational purposes. For recreational purposes, Jamaica has basically producing a high THC content plant because that’s what you smoke to get high. What we are interested in is CBD particularly and how do you create new strains that are high in CBD and that have high medical application. So there is opportunity for research and development and there’s an opportunity to take that research and develop new products. We have done some new product development in the past with Asmasol and Canastol, which are cannabis-based medicines in circulation in Jamaica, which treat asthma and glaucoma. We need to develop the intellectual property aspect of it because it’s an internationally indicted substance so you can’t really patent it. That’s one of the challenges so what we have to do is allow foreign investment in research and development and joint venture partnering with Jamaicans so we can grow the strains under controlled conditions and under licensed conditions so we are licensing the people who grow and we’re controlling who grows the whole value chain so that we can benefit from it without it interfering with our government obligations.

Mrs. Edwards out of all of main sectors in Jamaica’s economy, for example, logistics, eco-tourism, agriculture, ICT/BPO, financial services and energy, which one do you think will attract the most foreign investment in the coming years and why?

If you are talking value of foreign investment then I would say tourism because we do have natural advantages in tourism and so many untapped areas such as eco-tourism. There is so much more we can do with activity-based tourism you know horse-back riding, playing polo, fitness camps, sports-based tourism I think we have opportunity there. We have urban tourism which we haven’t even started so what you’ve got in tourism also is the North-South Highway which I think is strategically important because that will open Kingston as a gateway to the north coast a Ocho Rios will actually be within 40 minutes of Kingston whereas it still takes an hour and a half from Montego Bay so you will be better off landing in Kingston to get to Kingston and then you will be able to access the attractions that are closer to Kingston such as Bob Marley’s house and tenement yard Trench Town, Blue Mountains and Devon House. Then there’s the whole music scene which is really Kingston-based so I think that north coast highway will really open Kingston a lot and I think the other types of tourism that will exploit. You will have more 5 star properties yes but you will also have more alternative styles of property so in terms of value of FDI, I think you will get in tourism.

I think in terms of job creation I think you’ll get it in BPO because it doesn’t require the same volume of investment to have a viable opportunity but it’s very labour intensive so I think that ultimately it will create as many jobs as the tourism industry does.

Logistics finally is the unknown quantity but has the potential really to be a big as tourism if we get it right and there are some key projects within the logistics hub that will create a huge amount of jobs if we get the interconnectivity that I was talking about right and the value added in these SEZs right then that can be a huge industry.

As you very well know the readers of the HBR include some of the world’s most powerful and influential women and men. What message would you like to send them?

That I think Jamaica, because of its successful tourism brand, is much overlooked as a business brand and what we are about is making the business brand for Jamaica because a lot of Americans who come to Jamaica go “Wow I didn’t realize there’s a whole economy here, that there’s a multifaceted economy with huge opportunities for different types of investment” so it really is to say to those of your readers take a deeper look at Jamaica because you will be very surprised at what you find. You will find a viable economy with real growth and profit potential. We have been really encouraged by many of the visitors who come for the first time to the Investment Forum because they were pleasantly surprised by what they saw there and that is why we designed that whole homegrown multinationals session because we wanted people to know that here are real businesspeople with multimillion dollar enterprises who have the same problems as you have in the US, UK, Canada, South Africa, the world. We are all watching our bottom line, we are all trying to cut costs, we are all trying to export more so it’s the same business environment and a business can grow and thrive here.