The JLP Development Strategy: macro-economic stability and low inflation growth led by mega-investment projects.

Macro-Economic Stability Plan

The JLP will implement macro-economic policies that will build investor confidence and create the foundation for sustained low inflation, a stable currency, high levels of investment and significant economic growth.

Macro-Economic Stability Plan

#1 Maintain strict monetary discipline by full backing of the Jamaican Currency with foreign exchange reserves of the Bank of Jamaica to stabilize inflation and the rate of exchange of the Jamaican dollar on a sustained basis. This will prevent the printing of money which creates higher costs of living ( inflation) and devaluation of the dollar.

 #2 Eliminate all loans and advances by the BOJ to Government to prevent printing of money.

 #3 Create an Independent Central Bank to separate monetary and fiscal policy and set the foundation for low inflation growth.

 #4 Legislate the above provisions to ensure that future Governments cannot print money for fiscal expenditure and wreck the economy as was done in the 1990s. This was the primary cause of the collapse of the financial sector.

 #5 Maintain strict fiscal discipline by controlling expenditure and maximizing revenues – tax revenues should be targeted not to exceed 30% of GDP.

 #6 Reduce the ratio of debt to GDP by setting and strictly enforcing maximum borrowing levels to minimize the use of revenues to service debt.

 #7 Monetary and fiscal discipline will result in a gradual reduction in interest rates, providing businesses with lower cost funding for investment, growth and job creation.

THE EARN PLAN

The JLP will launch over 30 mega-investment projects through a programme for Employment Action for Rebuilding the Nation (EARN) that will attract significant capital from the private and public sectors in order to generate high levels of investment, stimulate growth, create jobs and reduce poverty.

#1 As a priority, utilize idle resources in lands, technology, hotel rooms, factories and minds.

 #2 Restructure NIBJ to be a proactive central investment bank sourcing private resources for mega-investment projects and for on-lending to private and public investments primarily through development and trade banks.

 #3 Review JAMPRO’s promotion strategy to target high growth sectors. Attract investments with competitive advantage and desirable investment conditions and incentives. Open overseas offices for JAMPRO in strategic locations.

 Development Estates:

 #4 Establish a giant 260-acre multi-purpose freeport facility on reclaimed land at Fort Augusta to employ over 10,000 persons in manufacturing, assembly, retail and distribution, information technology and resort duty free operations.

 #5 Establish a dedicated Science and Technology Estate for companies in bio-technology, bio-genetics, alternative energy and IT software development (working with the universities).

#6 Establish “Education Districts”across Jamaica to attract the establishment of offshore educational institutions (e.g., medicine, veterinary, etc.).

 Information Technology:

 #7 Attract joint ventures to build more information technology (IT) digiports to develop Jamaica as a leading IT operation. Use established international contacts to work with JAMPRO to select clients.

#8 Encourage the installation of broadband, high speed internet and wireless technology to attract a wide range of IT investments.

 Tourism: Resort and Residential Development

 #9 Implement planned developments with resort and residential housing:

- Hellshire Hills: planned residential development.

- Caymanas: golf course and residential units.

- Roaring River and Laughing Waters : resort villa development with hotels and golf courses.

- Seville : hotel, golf course, heritage archaeological programme.

Programme sales of villas in resort developments for returning residents and visitors.

 #10 Promote world-class cultural heritage resort developments in Port Royal ,

Port Antonio, Seville and Falmouth .

  #11 Expand existing cruise ship ports and develop a new port for cruise ships on the South Coast .

 #12 Promote 10,000 additional hotel rooms over 7 years.

 #13 Develop two major stand-alone state-of-the-art convention centres to accommodate 2000-3000 persons.

 #14 Programme “niche tourism” resort development projects targeted at the growing older population, health and eco-tourists, religious groups, and the ethnic market.

 #15 Build a by-pass road around Fern Gully to preserve it for development as a botanical attraction with many small restaurants and shops located at intervals offering Jamaican food, drink, arts and craft. The attraction will have spectacular lighting at nights.

 Agricultural Development

#16 Build a new “super” dam in St. Catherine (near Rio Cobre) to provide water

for 200,000 residents and irrigate all land on the St. Catherine plains where

necessary.

#17 Launch a major technological upgrading programme (including centre pivot irrigation) to rescue major export crops like sugar.

 #18 Promote investment in profitable non-traditional crops and areas such as sea island cotton, lucaena, mariculture (e.g., shrimps, scallops and abalone), aquaculture, fruit orchards and horticulture.

 #19 Encourage and develop high technology agriculture, such as soil-less hydroponics, to considerably increase vegetable production and lower prices to competitive levels.

 #20 Promote bio-technology research and extraction to encourage pharmaceuticals, nutraceuticals, essences and flavourings using indigenous botanical species and to develop new marketable varieties of Jamaican fruits and flowers.

 #21 Initiate a “Million Tree” nationwide tree planting programme to rehabilitate denuded watershed areas and stop soil erosion.

 Infrastructure Development

 #22 Build major highways connecting large towns (e.g., Kingston – Ocho Rios – Port Antonio).

 #23 Create major traffic solutions in both Kingston and Montego Bay including the building of “flyovers” where necessary.

 #24 Launch RIDE, a national road maintenance programme for continuous upkeep and repair of damaged roads. The maintenance programme will make the practice of emergency programmes of road works unnecessary.

 #25 Re-establish the railway system initially from Kingston to May Pen with Portmore, Spanish Town and Old Harbour stops.

 #26 Develop UPGRADE a comprehensive plan based on an island-wide survey of townships and major villages to provide adequate and appropriate infrastructure for a good quality of life: housing, clinics, water, roads, electricity, telephones, schools, community centres and libraries. These will enhance rural life and discourage urban drift.

#27 Design and projectize for international financing an island wide drainage system in flood prone areas.

Cultural Development

 #28 Develop the Spanish Town (Emancipation) Square as The National Museum of Jamaica .

 #29 Establish a National Museum of Jamaican Music and Dance.

Financial Development

 #30 Promote the establishment of a private-sector owned securities brokers regulating exchange and credit agency to jump start a formal local corporate bond market.

 Industrial Development

#31 Encourage the development of an Integrated Energy Chemical Facility by developing Petrojam to use imported methanol to produce downstream a wide range of consumer plastic products, creating a plastics sub-sector for the domestic market and export trade.

 #32 Establish a major manufacturing Plant Modernization Fund to be financed by multilateral project flows to help upgrade local plants and other manufacturing facilities.

 #33 Subject to market demand, actively promote and encourage the expansion of alumina production at existing operating plants by 2.3 million tonnes, increasing the present output by almost 60% from 4.0 million tonnes to 6.3 million tonnes.

  Public Investment Plan

The JLP will implement an effective public investment plan designed to increase government revenues in order to create a fiscal surplus and provide the capital necessary to fund infrastructure development and related programmes.

  #1 Support the continued thrust began in the 1980s to divest non-core state enterprises.

 #2 Pursue a “capitalization” model for select state-owned companies to identify qualified international investors who will manage and/or invest in them for greater efficiency.

 #3 List revenue-generating state enterprises on the stock exchange to raise capital and increase transparency in the companies.

 #4 Attract investment capital from Jamaicans based overseas to refinance debt and fund programmes such as the HELPING HAND welfare assistance plan. Remittances totaled over US$800 million in 2001.

 #5 Re-introduce the programme of sales of developed lots and homes in planned developments in new resort locations.

#6 Re-establish an extensive bilateral negotiation programme for debt relief with the United States, UK, Germany, Japan, Middle Eastern states, etc. focused on converting bilateral debt into select “strategic areas” such as drug control and fighting crime.

Case Study: Countries have harvested capital from nationals abroad . . .

 ....In 1988, the Mayor of Pozorrubio, a town in the Philippines , wanted a strategy to shift remittances from consumer goods to infrastructure development of the town.

....He traveled to various countries and formed associations of overseas Pozorrubians to fund infrastructure projects in the town.

. . . The Mayor’s efforts have yielded positive results.

.... Today, Pozorrubio -- which was one of the poorest towns in the Philippines -- has among the highest quality schools, the cleanest town park, the most modern town hall, the best equipped hospitals and the best bus parks in the country as a result of the financial flows from the overseas Pozorrubian associations under the formal programme to attract the investment.

Jamaica has many candidates for the “capitalization” model . . .

  Case Study: Japan ’s low interest rates make it ideal for raising low cost debt.

 ....In 2000, foreign issuers raised over US$20 billion in low interest bonds aimed at Japanese investors (“Samurai Bonds”) looking for higher yields on Japanese interest rates, which are near zero percent.

 ....Emerging market countries such as Argentina , Brazil , Tunisia , and Lebanon have successfully raised low cost debt using Samurai Bonds.

 Case Study: India has successfully issued retail bonds for overseas Indians.

....In 1998, the Indian Government raised US$4.2 billion in bonds aimed at overseas Indians -- “Resurgent Bonds” -- offering low rates of between 5% and 8%.

....In 2000, the Indian Government raised US$5.5 billion in bonds from over 70,000 overseas Indians -- “Millennium Bonds” -- offering low rates of between 4% and 8%.

Tax Relief for Savings and

Investment Plan

 The JLP will simplify the taxation system, reduce the tax burden and encourage increased savings and investment by companies and individuals through a targeted programme of incentives.

Current Situation in Taxation

Jamaica has a high tax burden with several forms of taxation both directly and indirectly (through user fees).

Tax Relief for Savings and

Investment Plan

#1 Undertake a comprehensive tax burden study to identify all forms of taxation (direct and indirect including user fees) to identify which taxpayers are unduly burdened and to devise strategies for reducing the burden on these taxpayers.

#2 Launch a major revision of the taxation system including a review of all taxation legislation in order to simplify and streamline the taxation system and make it easier for taxpayers to meet their fiscal obligations.

#3 Re-institute within the Customs department a special investigations unit to enhance tax collections and to identify and remove unnecessary bottlenecks in the system.

#4 Institute a tax incentive scheme that allows for qualified investors, a five-year period to retain in any year of assessment an amount equivalent to 20% of profits tax for investment in approved value-added activities.

#5 Grant a special tax credit for homeowners equivalent to 25% of the interest paid on the remaining principal during a year of assessment.

 The HOPE Savings Plan

Establish a voluntary individual retirement savings plan in which contributors will be able to contribute and save tax-free and use the contributions for Health, Housing, Pension and Education (HOPE).

The JLP HOPE Plan would enable all Jamaicans to save in a special tax-free plan by providing health, housing, pension and education benefits reflecting the JLP’s commitment to creating a secure future for Jamaicans.

Many Jamaicans are retiring without adequate savings or pensions resulting in:

- Inadequate health care

- Lower standard of living post-retirement

- Increased dependency on family and state

- Low self-esteem and high rate of depression

- Poor housing options (e.g., rent too high or inability to afford mortgage payments)

....The HOPE Savings Plan will allow individuals the choice to commit a specified percentage of pre-taxable income into various investment options of their choice which will generate the greatest yield for retirement.

 .. Each year, contributors can save a specified amount of their gross salary without attracting tax initially or on receipt of benefits:

- Under J$250,000: 15% of gross salary

- J$250,000 to J$500,000: 9% of gross salary

- J$500,000 to J$1,500,000: 6% of gross salary

- J$1,500,000 and up: 4% of gross salary capped

HOPE Savings Plan

....Each contributor would have the choice of selecting the investment vehicle from among a list of approved investment companies certified by Government as authorized plan investors. Government would also approve the list of investments in which these future HOPE investment companies can invest.

....At five year intervals, contributors would be able to make withdrawals tax free if withdrawals are used to provide health, housing, pension, or educational needs. Withdrawals cannot exceed 50% of contributions. For pension purposes, 100% can be withdrawn when the contributor reaches pensionable age.

The Objectives of the JLP Strategy

Industry Strengthening and

Diversification Plan

  .....The JLP will strengthen the major foreign exchange industries (i.e., agriculture, tourism, manufacturing and mining) and actively seek to diversify foreign exchange earnings in new areas such as information technology.

.....The overall strategy is to restructure the economy to provide a wider base of foreign exchange earnings as was accomplished in the 1980’s

Diversification of the economy requires: