Published: Friday September 26, 2008
Investment minister, Karl Samuda, has said that locals are not reaping enough benefits from the high levels of Foreign Direct Investment (FDI) Jamaica continually attracts, and has cited the need for an integrated approach to solve the problem.
Samuda made the observation while speaking at the global launch, in Jamaica, of the World Investment Report 2008, at the Knutsford Court Hotel in Kingston on Wednesday. According to the report, Jamaica facilitated US$779 million in FDIs in 2007; slightly down from the record US$882 million attracted in 2006, but still creditable.
Tourism attracts the most FDI
The tourism sector attracted the most FDIs last year with US$197 million, a six per cent increase over the prior year; but the largest gain was recorded in the information communication technology (ICT) sector, which saw inflows more than doubling to US$164.5 million last year.
"In all of what has been said, however, Jamaica still strugles with the inappropriate and deficient levels of economic growth," said Samuda. "We have had great achievements in attracting investments, but that has not translated in either growth or increased levels of employment.
"All of this requires an integrated approach whereby the focus must not only be on the notion of attracting foreign investments, as critical as that is, but the kind of investment that is going to create jobs,"
Jamaicans ill-equipped to service foreign investors
The minister said that locals are too often ill-equipped or ill-prepared to service foreign investors, forcing a large number of them to import labour and expertise from overseas -- thus robbing the country of hard currency. He specifically noted that there is too big of a gap between the requirements of the tourism industry and the country's ability to service it, and urged local entrepreneurs to invest in that sector.
"The opportunities are there for persons with the commitment and determination to go more into productive enterprise and to invest in the type of activities that will close that gap so we will be able to maintain the foreign exchange that we earn through the tourism sector," said Samuda. "There is no point having a very impressive sales figure in terms of what the inflows are like through tourism, but equally we have a massive outflow because all the purchases and services have to be acquired from overseas."
More investment needed in infrastructure
Eleanor Jones, managing director and consulting principal at Environmental Solutions Limited, in her analysis of the Report, said that it highlighted that the quality of infrastructure makes a huge difference to the quality of life and the efficiency that is required by a country. She noted that, on average, there is less investment being put into infrastructure by governments in the developing world - an average of 3.4 per cent of Gross Domestic Product (GDP) while the optimal needs to be somewhere between seven and nine per cent on new projects as well as maintenance.
"The inadequacy of our investment in infrastructure has been described as part of the unfinished agenda of developing countries and certainly, in many ways, we fall into that," said Jones. "Economic growth and development is constrained by the quality and quantity of infrastructure; there are huge unmet investment needs, and the gap is exacerbated by the fact that we have more and more people that we need to provide for."
Source: Jamaica Observer