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Don't Close Door On Manufacturing, Says JMA
Written by: Jamaica Gleaner
The JMA would like to address Robert Wynter's article in the February 26, 2012 issue of The Sunday Gleaner titled 'Wage-led growth, and manufacturing'.
First, the JMA must agree with Mr Wynter that trade liberalisation, lack of government support and inefficiency are factors that have affected the performance of Jamaica's manufacturing sector. However, it is important to clarify some of the statements to prevent misunderstanding.
Mr Wynter pointed out in his article that the association lobbies for subsidies for the sector, which is incorrect. Instead, we have lobbied for incentives to enhance the competitiveness of the manufacturing sector, which is nothing new or unique to Jamaica. In fact, countries like Trinidad continue to support its manufacturing sector with incentives such as exemption from customs duties, value-added tax and income tax on dividends.
Mr Wynter also declared that a strong manufacturing sector needs no protection, which is also a faulty statement, as manufacturing sectors across the world are built on protection. Countries like China have implemented industrial policies to promote modernisation and a robust manufacturing sector through their Buy China policy. Likewise, the United States (US) promotes a Buy USA campaign, even though it is proclaimed to be one of the most liberal economies. However, we are not asking for protection or handouts, but for greater support of the sector. To tackle trade liberalisation, we have promoted the Buy Jamaican, Build Jamaica campaign.
Even though the sector is in decline, our manufacturers continue to contribute positively to the economy. In 2010, the manufacturing sector contributed 8.1 per cent to GDP, in comparison to tourism and agriculture that contributed 4.8 per cent and 5.8 per cent, respectively. Manufacturing was also on par with tourism in terms of employment.
Mr Wynter has also declared that there has been little modernisation in the sector, which has led to the review of the modernisation incentive. However, we must point out that all incentives are under review, not just the incentive to modernise the sector. The JMA strongly supports tax reform to create a more equitable tax system.
Additionally, our manufacturers continue to retool and expand, despite the challenges, and there are many examples to support this:
Spur Tree Spices, for example, started out six years ago in a kitchen with one person and a blender, to now employing 20 persons and exporting to the US, Trinidad and the United Kingdom.
AMG Packaging continues to invest in Jamaica and is undertaking expansion with a 10,000-square foot warehouse recently purchased to the tune of $58 million. AMG Packaging has indicated that in the near future, it will be producing toilet paper, paper towels and napkins, which have been earmarked as an import-substitution opportunity. Additionally, the company is seeking to expand from standard-box packaging to different types of boxes, as well as providing packaging materials such as bubble wrap and tape.
Trade Winds Citrus, a Jamaica-grown company, continues to operate under the highest production standards, currently has five beverage lines and is planning to launch six new products in the UK.
LASCO Manufacturing recently broke ground for the construction of a new state-of-the-art factory in White Marl, St Catherine, which is expected to provide 250 jobs. The company makes products for the Jamaican market and exports to the Caribbean, Central and South America, US, Canada, UK and the Middle East.
Arc Systems Ltd recently broke ground for the construction of a new wood-treatment plant that will open in April. It is investing in the order of J$200m, and will employ, directly and indirectly, close to 63 persons. This new plant will save on foreign exchange through import substitution and also be a net contributor of forex as it expands exports into the wider Caribbean market.
Manufacturing is, indeed, not dead. We need to recognise the importance of manufacturing in job and wealth creation and work together as Government, private sector and consumers to improve production.
Mr Wynter, we ask, how inefficient could we be if we are servicing the local and international market, and earning foreign exchange to the tune of US$646.7 million? How inefficient can we be when people all over the world are trying to take advantage of the strength of Brand Jamaica? What we need are better policies to support industry and to rid the system of bureaucracy.
Or would Mr Wynter prefer if we give up on the sector, close down our factories, put 74,000 persons in the unemployment line, deprive government coffers of $30 billion in taxes and drive up demand for scarce FX?
Furthermore, if the argument is that the manufacturing sector is marred by low productivity levels and is not strong, we need to create an enabling and facilitative business environment for manufacturers to prosper and a demand for our products by buying Jamaican.
Mr Wynter, let's continue to talk manufacturing, but instead of fuelling negativity, let us focus our energies on highlighting the positives and formulating solutions that will drive growth in manufacturing.
The JMA secretariat is always available and welcomes the opportunity to share information on the sector so that we can all be informed on the facts.