Keith Collister, Contributor
( L - R ) PATTERSON AND GOLDING
PRIME MINISTER P.J. Patterson says that while his Government had been able to secure significant foreign investment in tourism, infrastructure and the bauxite and aluminium sectors over the last few years, this had not been accompanied by any commensurate increase in domestic investment, particularly domestic equity capital.
He stated that this was a matter of great concern as in other regions equity capital had proved to be a valuable way to mobilise funds. He was making the opening address for the Jamaica Stock Exchange's inaugural regional conference on investments and capital markets at the Half Moon Hotel last week.
Referring to the limited activity witnessed in the stock market, the PM ascribed this to cultural issues. In his view, a public listing represented a complete change in operating philosophy for many of our native companies. The predominance of family-owned structures was inhibiting the ability of many companies to make the transition from the domestic, to the regional and ultimately the global market.
HIGH COST OF LISTING
Opposition Leader Bruce Golding, speaking at the same opening dinner, stressed a different factor that had discouraged more companies from being listed.
He stated that there were several companies in Jamaica, with proven track records, attractive share earnings and good growth prospects which opt for debt-financing even in our prolonged high interest rate environment rather than seeking public subscription.
Mr. Golding asked his audience to consider the difficulties that smaller companies had in coming to the market, where costs and listing requirements were beyond their capabilities.
THE LISTING OF PUBLIC ENTITIES
Referring to the debate over the listing of Government's assets, the Prime Minister shared with his audience some key considerations in that regard.
While admitting that the initial capital injection from listing public assets could provide the budget with some welcome relief, he stated that a detailed analysis of the costs and benefits, including any changes to the present operations, was required first.
He appeared undecided as to whether the nation was better served with full privatisation, private sector participation such as outsourcing aspects, or continuing Government ownership.
LISTING OF MORE PUBLIC SECTOR ENTITIES COULD EXPAND THE MARKET
Mr. Golding's view appeared much more definitive, stating simply that we could have done more to expand and strengthen the market. As an example, he stated that in the Government's divestment programme, less than a handful of government companies were the subject of public share offer. Even now there were profitable, well-run government entities such as the Port Authority, which could easily raise capital for expansion through the stock market rather than through loans which require government guarantee.
Mr. Golding's argued that the key challenge facing our individual stock exchanges was the need to achieve the critical mass that any market, whatever its product, requires.
