SamuelsTHE EDITOR, Sir:
I WRITE in response to a letter to the Editor appearing in The Gleaner of Thursday, August 12, 2004, titled "Wrong Use of NHT Funds".
Contrary to the writer's assertion, the National Housing Trust's involvement in the proposed Harmony Cove resort development in Trelawny will in no way compromise the Trust's ability to continue providing affordable home loans to its contributors. This point must be emphasised at the outset, as it clearly demonstrates that the writer is basing his argument on a false premise, which of necessity must lead to a faulty, hence equally false conclusion.
It is true that the NHT is a joint funding partner in the Harmony Cove development. The project proposal calls for the NHT to have a 49 per cent equity in the project with the Development Bank of Jamaica having the other 51 per cent. But the Trust's funding-role in this venture is woefully misunderstood by the writer. Contrary to the writer's claims, the NHT's funds in the Harmony Cove project will not be used to build hotels or golf courses. Rather, the Trust's equity fundings in the project will go towards acquisition of land (a prime tract of real estate, I might add), and the preparation of the development plan for the project. The building of hotels, golf courses and other facilities in the project will be done by local and overseas investors who have been invited to finance and develop the planned resort colony.
FREE FUNDS
At any moment in time the Trust has a pool of "free funds" (funds not immediately required for investment in housing, etc.) in its asset-portfolio, on which it takes decisions as part of its prudent financial management, to invest in a mix of securities. An examination of the Trust's investment of portfolio over the years will show that investing in attractive instruments has always been part of the organisation's investment strategy: a strategy which to date has been a successful one, generating returns that can help the organisation to make housing more and more affordable to its
contributors.
The proposed investment in Harmony Cove is clearly in line with how NHT surplus funds are invested for optimum returns. The overall aim of the Trust's investment strategy is to ensure a balanced asset-portfolio, and for anyone to suggest otherwise would be somewhat short-sighted, and not representative of the scientific thinking driving prudent financial management.
It is important to note that the NHT's investment in Harmony Cove is less than one per cent of the Trust's total assets. This compares with the $44.6 billion of the Trust's assets which are now invested in housing. As a matter of fact, the Trust ensures that as a deliberate policy its investments in housing amount to no less than 70 per cent of its assets. In 2002/2003 NHT's expenditure in housing peaked at almost $6.0 billion ($5.8 billion to be exact). And this financial year alone (2004/2005) the Trust projects to spend some $10 billion in housing of which $2.3 billion will represent expenditure on low-income housing through the Innercity Housing Project (ICHP). It must be noted that the ICHP when complete will result in an expenditure of over $7.5 billion over a three to four year period.
MAJOR DEVELOPMENT PROJECT
To further clarify any misconceptions the writer may have, it must be borne in mind that the Trust's involvement in a project such as Harmony Cove is not in contravention of the NHT Act, or the organisation's mission. Rather the NHT's use of the investable funds which it has at its disposal is helping to spearhead a major development-project from which not just Trelawny but the entire Jamaica will benefit. The tourism industry has the potential to bring in the well-needed foreign exchange to support the country's macroeconomic development. The fact that tourism is a highly labour-intensive one also makes investment in the Harmony Cove project one that will definitely be beneficial to the people of Jamaica.
Rather than being a "misuse of funds" as the writer is claiming, the NHT's investment in the Harmony Cove project is expected to generate financial returns which are greater than those that could have ever been had from alternative investments in instruments such as government papers or bank deposits. Additionally, as the writer has alluded to, the NHT's investment in this project will contribute to the growth of the national economy be stimulating jobs, among other things. It is expected that some sixteen thousand jobs will be created at the full development of the Harmony Cove project.
I am, etc.,
EARL SAMUELS
Managing Director
National Housing Trust
