The Most Honourable Andrew Holness ON, MP
Prime Minister of Jamaica
Investment & Capital Markets Conference 2018
January 23, 2018
It is always a pleasure to be here at this conference. I want to congratulate the Jamaica Stock Exchange for hosting what I know will be a stimulating conference. I’m particularly excited about this year’s theme “Driving Growth, Regional Investments for the Climate of Change”.
I also want to congratulate the Jamaica Stock Exchange for its stellar performance last year. The JSE main and junior markets provided average returns of 43.9 percent, that is amazing and the main market appreciated by 50 percent in 2017. That is amazing.
It shows that there is confidence in the economy as was shown particularly business confidence in the last survey that was done. It shows that there is an appetite for risks and that there is capital for businesses to invest.
For a very long time, we’ve not had growth; and I’ve attended several of these conferences and the theme always has somewhere in there about growth. I’ve not seen one of these conferences where growth was not a part of the theme; and so, of course, this year growth is in the theme.
I want to talk tonight, very quickly, about creating the best climate for prosperity and supporting growth in a climate of change.
I think Jamaica has to develop a doctrine of growth; where everyone believes that our economy can grow. Recently I had to talk to the Trade Unions and I said it is the intention of the government not just to grow the macro-economy but it is the intention of the government to grow your household economy. We have to bring this concept of growth into the political economy, into the grassroots thinking. It has to become a part of our culture and truthfully after forty years of no sustained real significant growth, there is a generation that would not have experienced the era of growth starting from in the 50’s and the 60’s. So, in a sense, as a country, we don’t know what it feels like to live in an economy that is booming and the closest we’re coming to that is the stock exchange and its stellar performance.
That doctrine of growth I think would have several pillars but I think I’ll focus on five pillars tonight.
The first is macroeconomic stability and fiscal certainty. For investors to take risks, they need to be assured that government is pursuing a path of fiscal management that is certain. That they can make their plans, make their investments, wake up in the morning and it is still at the same level of taxation, or lower. That means that government can’t take on commitments and make wild promises, and engage in profligacy and overspending or become overly populist. I believe that we have started to develop this culture, this doctrine of fiscal certainty and we’re seeing that emerging now in our monetary policy as well, in terms of how we’re managing our exchange rate and how we’re moving now towards inflation targeting, and these are all positive signs for our economic management.
I think all the macroeconomic figures are pointing in that direction. You see a robust NIR, you will see stability in the exchange rate, you see the stock market doing very well and most of all, which is heartening for me, is the downward trend in the debt to GDP ratio. That is something that this country has paid dearly for across administrations and we have to continue on that road. Many of you probably would have already forgotten we’re coming from 141 percent of GDP and we’re now somewhere below 110 percent by the end of this fiscal year. That’s a sacrifice of businesses, it’s a sacrifice of the unions, it’s a sacrifice of the poor and that cannot be squandered. There are other sacrifices that we will have to make in order to maintain our fiscal certainty.
People don’t make sacrifices for no reason, people want reward. The reward for this fiscal certainty and stability is that investors will invest but we’re not looking for jobless growth and jobless investment, what we want is job creation. So, the other important pillar of the doctrine of growth is that there must be job creation. It’s a very complex subject but I wanted to point out that for growth to really be meaningful to the Jamaican population against the context of historical inequities and unequal distribution of income, President Obama once pointed out that Jamaica was one of the second highest in the region in terms of income inequality, so if we’re going to have growth against the backdrop of social inequalities; if you’re going to share the prosperity of growth, we can’t share it by only looking at a social safety net, we can’t share it by looking at giving out subsidies all the time, we share that growth by giving people independence in their hands; employment.
We are making the sacrifice to create this atmosphere for growth but the investors should invest, and we want them to invest in things that will create employment. And that creates a sustainable environment where the people feel that they are sharing in the prosperity, sharing in the growth and I’m pleased to say that this year we recorded the highest number of Jamaicans ever employed in the history of the data collection on employment. We can boast of net 50,000 or more new jobs. Much of that is coming from the business process outsourcing, tourism and the return of mining and we want to continue to expand employment but there is a slight problem. I never thought I would be saying this but it appears that the labour market potentially could be a constraint to growth, as was pointed out by the Governor of the Bank of Jamaica, that we simply would not have enough labour or rather work-ready labour to supply the immediate needs that are coming on and so we’ve given directions to Heart Trust NTA and the establishment of the new HOPE Programme to start ramping up our training exercises for young people. It’s a good problem to have but it is a problem that we must solve if we don’t want to become an obstacle to our own growth.
I believe we can report success in the area of job creation and there is much more to come. When I see the projects that will come to fruition under the BPO sector, in particular, it is likely that at the end of the next fiscal year we could double the number of persons employed in the BPO sector and that would be amazing, that would be adding over 20,000 new jobs in the economy just in that sector alone.
The other pillar of a doctrine of economic growth is that we must seek to renew our infrastructure, and in particular our urban infrastructure. The truth is that there has been a great level of disinvestment in infrastructure. Jamaica has one of the highest roads per kilometre density in the world and because of that; we would probably have one of the highest maintained road networks if you were to find a metric to judge that in the world. The truth is that we have roads that are not necessarily well connected. We have infrastructure that is not necessarily well planned. If the infrastructure is going to support growth, it has to be smart. It has to be smart infrastructure. It has to be infrastructure that is connecting your airports and your ports to your productive activities and it’s not just roads and ports; it is also your ICT infrastructure because the packets that are being delivered are not all physical. Some of them are small virtual packets over WIFI or broadband or connected through fibre, and we have to be able to deliver that to the world at the fastest speed.
The government is investing in ensuring that Jamaica has world-class connected and smart infrastructure. That is why we have decided to invest and support the development of the government campus which is the Heroes Circle Project to establish the government circle where we will have the campus of government offices all-purpose built in one location. That is why we are making the investments in much of the road network that you’re seeing, please forgive the inconvenience those of you who have to travel on many of those roads, but there will be smarter infrastructure with technology built in to manage traffic flow. So, yes you are inconvenienced now but when those roadways are finally finished you will see an increase in efficiency and you will have a load lifted off your shoulders when you get to work in the mornings and when you get home from work in the evenings; your efficiency and productivity will improve and you’re seeing it right across the corporate area and right across Jamaica.
The other important pillar in the doctrine of growth is public sector transformation. We’ve been talking about his for so many years and we just keep talking about it, but it’s one of those difficult subjects to act on because it has so much political underpinning.
The truth is that the old model of government relied on the public sector to create employment. And so we have a public sector by virtue of that model that may not be the public sector fit for purpose particularly for supporting growth. But we can’t allow the public sector to continue in its current form. It does not serve the people who are working in the public sector because they work with great anomalies in pay; they work in management structures that are not necessarily supportive of their own development or supportive of private sector needs and so the government has undertaken a very comprehensive program of public sector reform. It has started and we are already seeing some benefits. We know it is not going to be easy. It will require some amount of right-sizing It will require that we introduce far more intensive programs of performance-based management and performance based reward systems. Those are all being developed and I’m certain that when we get a public sector that is supportive of economic growth we are going to see Jamaica take off like never before.
The final pillar of the growth doctrine that I want to mention, and I say mention because I won’t spend too much time on it, is security. The markets are the best mechanisms for aggregating information about what the future will look like. The markets grab up all kinds of information even information that doesn’t appear to have any economic value like a state of emergency in St James. All of that will be put into the markets and investors will analyze all of that to say what will be the impact of this security action on the future of Jamaica. My view is that it will be positive.
My view is that the markets will interpret this as the government being instrumental and proactive in taking measures to arrest a crime situation that threatens the economic growth of the country but more importantly threatens the safety, security, rule of law and public order of the country; and that can only redound to the benefit of the markets and the people who are the players in the market. There will be some initial jitters about definitive actions to manage this crime situation but I think in the medium term the country will benefit significantly. It is the intention of the government to be persistent in these measures. These are not short term measures and those who are supporting criminal enterprise should not believe that these are measure that you can wait out. The government has a suit of plans that we are now implementing, we’ve started to implement and we will begin to see significant result particularly with the reduction in murders in the country. It is the intention of the government to not just disrupt but to totally undermine and uproot the criminal gangs and the networks that they have formed. It is the intention of the government not just to address the street level criminals but to address those who facilitate, support and give sucker to the street level criminals.
We should never believe that the street level criminals operate on their own; they are financed, they use our banking network, they’re well connected, they use our telecommunications infrastructure, they have good transportation, they use our roads, they buy our cars and they use them in the commission of crimes. So our crime plan is comprehensive and we intend to deal with this situation once and for all. It took us forty years to get here, it is not going to change overnight; but the message is that the government will be persistent, determined and instrumental in its actions. We ask for the understanding of our international partners in this regard. After all this is what they have asking us to do in taking charge of this problem. Jamaica is the centre of the Caribbean, we’re the centre of culture, arts, lifestyle, entertainment, innovation; we will become the centre of economic activity, growth and prosperity.
God Bless you