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December 1, 2010

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Page 2: Your Money eZine
Page 3: Your Money eZine

If there was one thing to be learned from the recent brou-

haha about Trinidadian Prime Minister Kamla Persad-Bissessar’s decidedly undiplomatic comments in the antici-pation of hurricane Tomas, it is that Jamaican’s know exactly how to forget about an issue. The initial outrage and outcry that accompanied the remarks are now a thing of the past, a testa-ment to how fast popular trends can become forgotten in today’s fast-paced world. Remember our ex-national car-rier? As soon as it became obvious that Air Jamaica’s fate had been decided, most persons simply continued book-ing flights. Is it a testament to our sto-ried easy-going nature that we aren’t

able to hold grudges like this for very long, or should we be concerned that our attitude towards the “foreigniza-tion” of our manufacturing and produc-tive sectors is nothing more than faux indignation?

Jamaica is for most visitors the ideal place to be a tourist. There are multiple testimonials of celebrities who came to Jamaica and were met with a nod and a smile, instead of the usual fan-fare…something that must be refresh-ing to stars. The thing is, most Jamai-cans adopt a tourist-friendly approach when it comes to our business sector, and many foreign companies have been able to set up shop with little more than a smile and a nod from our populace. Communications darling Digicel, who recently won the award for “Best Op-erator in a Developing Market” at the World Communications Awards, is an example of a company that has been welcomed heartily into our country. Our indigenous and most famous beer, Red Stripe, is owned by British giant Diageo, and most people would be sur-prised to know that furniture vendor Courts is not Jamaican owned. The nonchalant manner in which foreign companies are accepted into the coun-try signals a clear disconnect in the way we view our business landscape, and the way we figure into it.

There is nothing wrong with foreign investment in our country, because foreign expertise and operational stan-dards can do a lot for the improvement of our economy, as well as the much

needed infusion of good old cash. The problem is, however, the lack of foreign investment in our existing Jamaican com-panies and our pride, or lack thereof, that should accompany the purchase or support of something Jamaican made. It’s a conundrum of sorts. The hospita-bility that Jamaicans are innately predis-posed to showing to foreigners makes the social transition of companies into our culture very easy, but it clashes with our need to be more self-sufficient as

a manufacturing nation. We cannot be-come inhospitable because that’s just not who we are, but there has to be an infusion of pride about owning or purchasing something that was made in Jamaica by a Jamaican company. Hope-fully that way, we can stop taking snide remarks from our neighbours so per-sonally…for the couple of days it lasts anyway.

Tourism redefinedThe Jamaican economy

yourmoney ezine

The nonchalant manner in which foreign companies are accepted into the country signals a clear disconnect in the way we view our business landscape, and the way we figure into it.

insights

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Page 4: Your Money eZine

business lounge

yourmoney ezine

It’s the turn of the last decade of the 20th century and the writer looks back in order to look forward. A snapshot is painted of expectations and hope; did we achieve any of this?

t’s almost 1990; the worst weather system in decades is firmly in the

rear-view mirror, a peaceful enough election has just been concluded with the charismatic Michael Manley back in power after a nine-year trek in the wil-derness. The past decade, the 1980s, showed that there were positives to be taken, but the devastation that had been caused by the 1988 hurricane “Wild Gil-bert”, has been an eye-opening experi-ence for most of our countrymen who had only heard of such a storm when our parents spoke of the “51 storm.” The last decade of the millennium beck-ons, but what had the 80s given us to see our way to the prosperity that our proud nation so richly deserved?

The 1980s saw our most important sec-tor in terms of foreign exchange and mining, fluctuate somewhat but bauxite remained the most dominant mineral and the most dominant subsector in our economy. Although bauxite has gener-ated almost half of our export earnings since the 1960s, our output in 1985 was six million tonnes, only half of what was

produced in 1980. The obvious benefits of bauxite mining aside, there are some concerns about the subsector. Bauxite production represented only five per cent of Gross Domestic Product (GDP) in 1985, and employed only one per cent of our workforce.

The capital intensive nature of the in-dustry, the fact that the number of American companies are increasing, the decrease in receipts and the obvious rise in our tourism product, could be an indicator that there will be a shift in where the bulk of our foreign exchange comes from. The effects of mining on the environment are also becoming telling, as the number of red lakes has increased and the import heavy nature of the industry makes for a dangerous combination. We have reserves to last us for about another century, but with-out the help of a crystal ball there is no way of knowing if bauxite will be viable for a next 20, much less 100 years.

Our manufacturing sector in the 1980s also showed buoyancy with our diversi-fied portfolio of manufactured products accounting for 15.7 per cent of GDP and almost 12 per cent of employment. The previous government’s structural adjustment policies have encouraged labour-intensive, export oriented light manufacturing and out of the seven priority subsectors that were outlined by the government, only garment and food processing have achieved any real growth. In the early 1980s, the reduc-tion of output in the heavy manufactur-ing sectors might have been offset by the number of garment factories that

has popped up, but sustainability into the 1990s is an issue.

Construction saw some definite im-provement in the 1980s, mostly because of the investments in bauxite and tour-ism which are very infrastructure inten-sive. With the continued rise in tourism that is expected, construction could see an uptick for at least the first half of the 1990s. With our political process rela-tively stable, the major concern that Ja-maicans have for the new decade would be our financial status, which will see almost 40 per cent of foreign exchange income going to servicing our debt. This

will undoubtedly put pressure on the balance of payments and the exchange rate. Our overall economic growth might be a little restrained because of these problems, but the other indicators show that the 1990s might be a better decade for us than the 1980s.

A vIeW fROM 1990jamiaca:

Our manufacturing sector in the 1980s also showed buoyancy with our diversified portfolio of manufactured products account-ing for 15.7% of GDP and almost 12% of employment.

byAndreBurnett

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Page 5: Your Money eZine

e often recognize the sig-nificance of the Acquired

Immune Deficiency Syndrome (AIDS) as a threat to our personal health and those around us, but how often do we perceive the epidemic as a threat to our economic and social wellbeing and our way of life? In the very same way that the virus attacks the cells of persons living with HIv/AIDS, the epidemic also attacks the individuals of a coun-try, reducing productivity and putting a strain on the host and eventually, if not contained, can cause the demise of the society.

Statistics show that at the end of 2008, there were 240,000 persons living with HIv and AIDS in the Caribbean, with 20,000 new infections and some 12,000 AIDS-related deaths. These numbers are by no means comparable to those stated in regions such as Africa, but for our small populations these numbers are significant. Health is directly pro-portional to productivity and happiness and as such, the control of HIv/AIDS and education about ways in which it is spread, will be an integral part of our progress in the 21st century.Some schools of thought have posited that the effect that AIDS has on the socio-economic landscape of a country would be negligible, because those that are usually affected are usually the poor and the unskilled. This is, of course, a very narrow view to take because when the breadwinners are infected with HIv/AIDS, the chances of survival and success of the young in that family are severely limited. The state becomes re-

sponsible for the care of those who can-not help themselves, and the strain is felt by the tax payers who have to pick up the tab for health care, reduced produc-tivity and of course loss of income.

Increased mortality will of course lead to a smaller skilled population, resulting in a smaller labour force with less ex-perience and reduced transference of knowledge, ultimately leading to a drop in productivity. Human capital will take a hit and the taxable portion of our popu-lation will be reduced, so much so that the strain on those that can be taxed will be unbearable. UNAIDS has estimated that when HIv prevalence rates rise to

more than 20 per cent, the Gross Do-mestic Product can fall by about two per cent annually.

The reach and scope of AIDS has far-reaching impacts that go beyond our personal health, yet it all stems from paying close attention to our health. The education of disadvantaged members of society will be the key to the control

and eventual success in the fight against AIDS, but we should all realize that the health of each other is directly related to the health of our country.

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Statistics show that at the end of 2008, there were 240,000 persons living with HIV and AIDS in the Caribbean, with 20,000 new infections and some 12,000 AIDS-related deaths.

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