The JLP will ensure that our manufacturing sector becomes more competitive and that manufacturers upgrade their facilities and have increased access to overseas export markets.
Current Situation in Manufacturing
- The manufacturing sector has contracted by over 6% between 1996 and 2001 from J$3.3 billion to J$3.1 billion.
- Manufactured exports fell 32% between 1997 and 2001 from US$522 million to US$357 million.
- Employment in manufacturing also fell by nearly 8% from 73,000 in 2000 to 67,000 in 2001.
- Export earnings from apparel have declined for six consecutive years by nearly 50% from US$532 million in 1997 to US$289 million in 2001.
- Employment in the apparel sector is also down by over 30% from 11,362 in 1997 to 7,704 in 2001.
- firms suffer from high operating costs associated with the high cost of electricity and comparatively high security costs.
- Frequent power outages, particularly in 2001, also had an adverse impact on the manufacturing sector negatively affecting export values.
- The prolonged high interest rate regime has increased the cost of funding for manufacturing firms who are at a serious competitive disadvantage.
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- Manufacturing firms face a scarcity of sources for equity capital and are overly-reliant on high cost commercial bank lending for growth capital.
- Legitimate manufacturers face severe and often unfair competition from either dumped goods or goods imported by importers who evade payment of customs duties.
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- Special programmes established by the Government to assist the manufacturing sector are highly bureaucratic and it is extremely difficult to access special rate funding and other concessions.
- The customs department remains difficult to navigate for many manufacturing companies who are importing raw materials and other equipment who have a difficult time processing cargo at the ports of entry.
- Manufacturing Revitalization Plan
- #1 Establish a manufacturing Plant Modernization Fund funded by multilateral sources to help upgrade local plants and manufacturing facilities.
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- #2 Establish a major exporting company jointly owned by the public and private sectors to develop the “Jamaica” brand and provide local manufacturers and other exporters with increased access to overseas markets.
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- #3 Encourage the development of an Integrated Energy Chemical Facility by expanding Petrojam to use imported methanol to produce downstream a wide range of consumer plastic products, creating a plastics sub-sector for domestic and export markets.
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- #4 Simplify the procedures and bureaucracy for manufacturers to access concessionary financing and other special assistance incentives available to the manufacturing sector.
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- #5 Actively support and provide additional incuity capital to businesses with growth potential.
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- #6 Use JAMPRO to promote the establishment of new factories to put idle factory space to use and idle hands to work.
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- #7 Launch a major upgrading programme for the Kingston Free Zone, Montego Bay
- Free Zone and Garmex
- #8 Enforce trade remedies more vigorously (such as the Safeguard Act and other legislation prohibiting dumping).
- #9 Establish a special working group with representatives of the Jamaica Manufacturer’s Association, the Ministry of National Security and the Police Force to identify specific strategies to reduce the high cost of security.
- #10 Expand and modernize the Institute of Design for product and packaging design to market products with attractive designs.
- #11 Launch a comprehensive customs modernization programme to reduce complexity, make it easier to process cargo at ports of entry and enhance tax receipts.
- #12 Allow capital expenditure incurred on approved value-added activities to be immediately and fully expensed in lieu of annual depreciation.
- #13 Provide discretion to export manufacturers to apply accelerated depreciation to the balance of capital expenditure on assets not written off at the end of the tax holiday period.
- #14 Require milk solid imports through the Milk Board to provide production incentives for liquid milk producers to double output as occurred in the 1980s.
Mining Upgrading Plan
The JLP will work to expand the mining sector helping it to become more competitive on an international cost basis and will seek to diversify the mining sector to increase earnings from other areas of comparative advantage such as limestone and gypsum.
Current Situation in Mining
- The mining and quarrying sector experienced two years of decline (1999 and 2000) and only minimal growth recovery in 2001 (approximately 3.7%).
- Output of alumina fell in 2001 primarily because of the temporary closure of the JAMALCO alumina refinery in October 2001.
- Capacity utilization of alumina processing plants has decreased by 5% from 97% to 92% between 2000 and 2001.
- Foreign exchange earnings from alumina have fallen by 7% from US$696 million to US$647 million between 2000 and 2001.
- Internationally, aluminium prices have fallen by over 7% from US$0.71 per pound to US$0.66 per pound between end-of-year 2000 and 2001.
- World consumption of aluminium is down by almost 4% from 24.9 million tonnes in 2000 to 23.9 million tonnes in 2001.
- In February 2002, Kaiser Aluminium corporation, the parent company of Kaiser Jamaica, filed for bankruptcy, raising concerns about the future of its operations in Jamaica.
- The combined production of other minerals in Jamaica such as silica sand, limestone, gypsum, marble, sand, gravel, marl and fill is very low (combined less than 12,000 tonnes in 2001).
Mining Upgrading Plan
#1 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.
#2 Appoint a task force to investigate the feasibility of attracting investors to build another bauxite plant in Trelawny where extensive reserves of high-grade bauxite are located.
#3 Investigate the potential for resuming bauxite mining at the former Reynolds mine which has a capacity of 2.75 million tonnes of bauxite.
#4 Implement current efforts to review the existing production levy to eliminate it and focus instead on the adoption of international best practices in providing other fiscal incentives for increased bauxite production.
#5 Expand existing initiatives with bauxite firms to use red mud lakes to extract iron for producing steel or other products.
#6 Promote joint ventures with leading international firms to expand mining of other minerals, such as limestone, gypsum and gold.
#7 Establish a joint commission with members from all the bauxite companies, community leaders and environmental officials to establish a comprehensive policy for addressing the harms of emissions from the bauxite mining plants to ensure that community members receive adequate protection and compensation for damage.
#8 Investigate the use of liquefied natural gas (LNG) as a method of reducing the energy cost associated with bauxite mining.
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