WE HOPE that Mr. Phillip Paulwell, the commerce minister, has taken note. On Monday, Mr. Paulwell would have heard the estimate by Dr. Wesley Hughes, the head of the Planning Institute of Jamaica (PIOJ), that the construction sector declined by 6.3 per cent in this year's first quarter.
Construction and installation account for approximately 10.6 per cent of Jamaica's annual output, so any faltering of this sector will have a not insignificant impact on economic growth. Or, looked at another way, the 1.4 per cent growth in GDP in the first quarter would have been far more robust if there had not been this sharp decline in the construction sector.
The tragedy is that the retreat of construction is not the result of a lack of demand. Indeed, as is notoriously the case, several construction projects in Jamaica have been stalled, slowed or put on hold because of a shortage of Portland cement resulting from production and quality problems at the island's monopoly manufacturer of the product, Caribbean Cement Company (CCC).
The Planning Institute's Dr. Hughes expects the economy to rebound somewhat in the second quarter, to record growth of 1.9 per cent. But even then the performance will hardly be great and far from what Jamaica requires to ensure sustained growth and sustainable job creation. And in any event we will still be feeling the impact of the fallout in the cement market, including the absence of the upstream momentum that usually flows from the strong construction sector.
The unfortunate fact of this situation is that it is not the result of mere accident, plain bad luck or a lack of confidence on the part of investors. Rather, it is the direct result of transparently bad policy on the part of Mr. Paulwell as his apparent inability to respond with alacrity and clear-headedness in the face of problems.
More than two years ago, Mr. Paulwell prevailed on his Cabinet colleagues to grant CCC a virtual monopoly in exchange for its promise to invest US$100 million to modernise and expand its plant. Mr. Paulwell and the Government ignored advice to cap the monopoly - ensured by prohibitive duties on imported cement - at the existing productive capacity of the cement company. The upshot is that as the construction industry's demand for cement built up, CCC found it difficult to satisfy the market - a difficulty exacerbated by quality problems that forced it to recall tens of thousands of tonnes of cement from the market.
We do not know exuberance of what kind caused these policy blunders by Mr. Paulwell. They, however, point to a pattern of poor judgement on the part of the minister, going back to the Netserv and INTEC fund debacle. Prime Minister Simpson Miller will have to decide whether, like her predecessor, she so values Mr. Paulwell's ability as DJ who ministrels to her greatness, as to overlook this mishandling of his portfolio, with its consequence for growth.
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