Foreign Direct Investments (FDI) into Jamaica fell by 26 per cent in 2009 to just over US$1 billion, according to figures released yesterday by the United Nations Conference on Trade and Development (UNCTAD).

According to UNCTAD in its World Investment Report 2010, which was launched globally yesterday, Jamaica and other “Small Island Developing States” (SIDS) struggled to attract FDI because of the small size of the domestic markets in these countries combined with limited natural and human resources and high transaction costs. This was against the backgound of the global recession that began at the end of 2008 brought on by the subprime mortgage crisis in the United States.

However, JAMPRO President Sancia Bennett-Templer, speaking at the local launch of the report, said that Jamaica continues to do “fairly well” in FDI inflows despite the plunge last year. She supported her assessment by highlighting that, according to UNCTAD’s report, half the total FDI inflows to SIDS last year were concentrated in the top three SID investment destinations of Jamaica, Trinidad and the Bahamas, in that order.

“Jamaica was the highest performer among the states and it is very important for us to recognise that,” said Bennett-Templer at the launch held at the JAMPRO headquarters on Trafalgar Road, Kingston.

According to UNCTAD in the report, given geographical limitations, SIDs are expected to continue to rely on their potential in traditional niche services such as tourism, adding that knowledge-based industries also offer promising potential, provided that SIDS develop adequate information technology and telecommunications infrastructure and improve their human capital.

The wider Latin America and Caribbean region saw FDI inflows decline by 36 per cent to US$117 billion in 2009, with Brazil being the most affected nation with a 42 per cent contraction.

According to the report, UNCTAD estimates that gobal FDI flows will slightly recover to reach over US$1.2 trillion in 2010, before further increasing to US$1.3 trillion to US$1.5 trillion in 2011.

“Only in 2012 is FDI expected to regain its pre-crisis level, with a rage estimated at US$1.6 to US$2 trillion,” said the report.

The theme of the local launch of the World Investment Report 2010 was “Investing in a Greener Future”. Guest speaker at the event, Ministry of Industry permanent secretary Reginald Budhan, acknowledged that environmental-friendly investments has assumed greater significance given the emergence of climate change and its ill-effects. Against this background, he noted that Government is intent on promoting eco-effeciency and investments in the emerging green World economy.

“In order to promote eco-effeciency and the green economy, companies will be encouraged to be more environmentally and socially responsible,” said Budhan.

“Within this context, JAMPRO is focusing attention on the need to facilitate and encourage green investments in Jamaica, and promote opportunities for investments in these projects,” he added.

Photo: Investment Report