Manufacturing sector not yet strengthened

Saturday, November 21, 2009 3:00 PM

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Friday, July 03, 2009

IN the 18 years up to September 2007 that the People's National Party (PNP) formed the Government, manufacturing experienced significant decline.

In fact, the then Opposition Jamaica Labour Party (JLP) had hauled the Government over the coals for the sector's poor performance, arguing that it was one of the cornerstones of the economy that needed great attention.

In the run-up to the 2007 parliamentary elections, the JLP, in its manifesto, drew attention to some frightening data that made the party's case for giving focus to the sector.

The manufacturing sector, the JLP pointed out, employed 136,000 persons and accounted for 21.4 per cent of GDP in 1988 under the JLP administration led by Edward Seaga.

"Today, it employs less than 75,000 and accounts for only 12.7 per cent of GDP," the JLP said and pointed to high interest rates, high energy costs, high security costs, high transaction costs and intense competition from cheap imports, especially from China as among the reasons for the plunge in manufacturing.

"The challenge for the manufacturing sector is to identify those areas of production in which it can achieve international competitiveness or for which it can secure niche markets," the JLP said in its manifesto. "We must enable the manufacturing sector to overcome these challenges."

Under the heading 'Financial management, economic development and growth', the JLP pledged to set up an Industrial Plant Modernisation Fund designed, the party said, "to assist manufacturers to install modern equipment and apply cutting-edge technology to improve productivity and competitiveness".

The party also promised to "make available to manufacturers on special terms, factory space currently being used for the warehousing of imported goods".

In addition, the party said it would, if elected, provide special incentives for companies engaged in packaging design and development to improve the marketability of locally manufactured goods.
The party also pledged to provide tax credits for expenses incurred in marketing locally manufactured products overseas.

However, last week, Omar Azan, the president of the Jamaica Manufacturers' Association (JMA), said his organisation was not aware of any of those initiatives being implemented.

"I haven't seen that yet," Azan said of the Industrial Plant Modernisation Fund. "The JMA would have been aware of something like that."

His answer was similar in relation to the proposed tax credit for overseas marketing.

Azan said though that he had heard a lot of talk from the Government about production, and he gave the administration kudos for the removal of Customs User Fees on capital goods and raw materials under the stimulus package announced last December.

But Azan lamented the need for factory space, saying that the rates being charged in Jamaica (on average about US$4.50 per square foot) are too high, compared to the US$1.50 per square foot in Trinidad.

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