By Andrew Green, Staff ReporterA NEW approach is needed to meet the challenge of Jamaica's economic stagnation, several commentators told the Financial Gleaner.
Jamaicans had higher income levels in 1975 than they did two years ago, according to a United Nations Development Programme (UNDP) human development report released last year. Only Madagascar, a large island off the cost of Africa, suffered a similar economic misfortune.
"It can't be business as usual," said Montego Bay Chamber of Commerce and Industry president Mark Kerr-Jarrett. "The Government has completed its first 100 days in office and we cannot have a continuation of the last 13 years."
Jamaica has not been proactive in promoting economic growth over the period, he said. Agriculture has not been developed, high interest rates have been a hindrance to business expansion and collateral development has not taken place in the tourism industry to adequately support the increase in the number of rooms.
Jamaica is now at a "defining moment," which will determine whether it succeeds or ends up as a failed society, said National Housing Trust chairman Kingsley Thomas. He was speaking at a Private Sector Organisation of Jamaica (PSOJ) job creation awards ceremony at the Terra Nova hotel on Tuesday.
Unless the country can reverse its economic stagnation then it will not be able to solve the problems of unemployment and rampant crime, Mr. Thomas said.
Minister of Finance and Planning Dr. Omar Davies already has an agenda to stimulate growth. In a media presentation at the Gleaner Company on Wednesday, he said growth would be boosted by infrastructure development such as the development of highways, ports and the expansion of Sangster International Airport. Tourism growth is anticipated, along with growth in mining and telecommunications and recovery in sugar and coffee.
Major projects have a role but, "we also have to find what constraints face the private sector," economist Errol Gregory said. "We need to see what can be done to get the sector moving."
Capital will flow into businesses when "we get interest rates down to a level where it makes more sense to invest in production rather than government paper," Mr. Kerr-Jarrett said. "Right now you can get more money on government paper with no risk and no need for management oversight."
Another problem is that government is too big and inefficient, Mr. Kerr-Jarrett said. Public sector wages have been increased to 80 per cent of the level in the private sector, but the efficiency levels have not risen as much.
Public expenditure as a percentage of Gross Domestic Product (GDP) has almost doubled from 37 per cent in 1992 to 67 per cent in 2002, although in
real terms the GDP. at the end of 2001, was only 12.3 per cent higher than in 1992, according research done By Dr. Omri Evans.
The research showed that at the same time the relative contribution of the producers of Government services to real GDP fell from 6.6 per cent in 1992 to 6.2 per cent in 2001.
"Government is an impediment to growth right now," Mr. Kerr-Jarrett said.
But there is scope for optimism, Mr. Gregory said. The Jamaica Exporters Association has started to form clusters of exporters in some sectors.
It is easier to deal with the needs of a cluster of exporters rather than the individual companies, Mr. Gregory said.
Government is tackling crime but not enough is being done to deal with praedial larceny, Mr. Kerr-Jarrett said. A system needs to be introduced to register farmers so that crops could be tracked from producer to consumer.
"If we could come together, the public and private sector, and come up with one agenda, we would be well on the way," said Gaudia Chevannes, managing director of Spa Aesthetique. She was speaking at the same PSOJ function as Mr. Thomas.
"There is a divide between our political parties, and there is a further divide between the parties and the nation," said Mr. Gregory. "You cannot downplay that."
The challenge is, "to make everyone feel they have a role to play in the society," Mr. Gregory said.
"The country cannot progress with this division," Mr. Thomas said. He called for a meeting between the private sector, Government and Opposition, "to settle on one agenda."
