Identifier
Created
Classification
Origin
06KINGSTON1051
2006-05-30 14:58:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kingston
Cable title:  

KINGSTON POL/ECON ROUNDUP: May 13 - May 30, 2006

Tags:  PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM 
pdf how-to read a cable
VZCZCXRO1705
RR RUEHGR
DE RUEHKG #1051/01 1501458
ZNR UUUUU ZZH
R 301458Z MAY 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 2888
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0168
RHEFDIA/DIA WASHDC
RUEABND/DEA HQS WASHINGTON DC
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 KINGSTON 001051 

SIPDIS

STATE FOR WHA/CAR (BENT) AND WHA/PDA
STATE ALSO FOR INL/LP (BOZZOLO),EB/TPP, AND EB/IFD
STATE ALSO DOE CA/OCS/ACS/WHA (RUTH BRANSON)
STATE PASS OPIC FOR TABERNAKI
CUSTOMS MIAMI FOR LOWEN AND MAHABIR
SANTO DOMINGO FOR FCS, FAS, AND LEGATT
STATE PASS USTR FOR A. GASH-DURKIN
DOJ FOR OPDAT/R LIPMAN
TREASURY FOR LAMONICA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: May 13 - May 30, 2006

Ref: Kingston 555

KINGSTON 00001051 001.2 OF 002


UNCLAS SECTION 01 OF 02 KINGSTON 001051

SIPDIS

STATE FOR WHA/CAR (BENT) AND WHA/PDA
STATE ALSO FOR INL/LP (BOZZOLO),EB/TPP, AND EB/IFD
STATE ALSO DOE CA/OCS/ACS/WHA (RUTH BRANSON)
STATE PASS OPIC FOR TABERNAKI
CUSTOMS MIAMI FOR LOWEN AND MAHABIR
SANTO DOMINGO FOR FCS, FAS, AND LEGATT
STATE PASS USTR FOR A. GASH-DURKIN
DOJ FOR OPDAT/R LIPMAN
TREASURY FOR LAMONICA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: May 13 - May 30, 2006

Ref: Kingston 555

KINGSTON 00001051 001.2 OF 002



1. This week's topics:

-- BOJ Reduces Interest Rates
-- Prime Minister of Malaysia Visits
-- Jamaican Company to Expand to the Caribbean
-- Major Investment Project on the Horizon
-- Cement Troubles Continue
-- Public Sector Memorandum of Understanding (Finally)

--------------
BOJ Reduces Interest Rates
--------------


2. (U) Effective May 12, the Bank of Jamaica (BOJ) reduced
interest rates applicable to open market instruments.
Signals of a decline were evident from as early as May 1,
when the BOJ removed the requirement that deposit taking
institutions hold five percent of their assets as a special
deposit. The interest rate reduction, which ranges from
0.15 to 0.20 percent, was predicated on emerging signs of
stability in the economy. Inflation had slowed to 0.1
percent during the first three months of the year, while
buoyant private investment inflows have helped to maintain
relative stability in the foreign exchange market. The
stock of NIR has also climbed to USD 2.1 billion at the end
of March. Rates might not slow much further in the short
term, as inflation jumped by 1.1 percent in April on the
back of higher food and energy prices. The upward movement
in U.S. interest rates will also narrow the gap between U.S.
and Jamaican rates, making dollar denominated assets more
attractive.

--------------
Jamaican Company to Expand to the Caribbean
--------------


3. (U) Information technology upstart, e-Services has

signaled its intention to enter the St. Lucian market by the
end of 2006. The Jamaican company, which is slowly becoming
one of the world's leading providers of offshore call
centers and back office operations, is planning to invest
over USD 1 million to create over 400 jobs. The company,
which began with 35 employees in Jamaica, has grown its
staff to over 1,500.

--------------
Major Investment Project on the Horizon
--------------


4. (U) US-based firm Century Aluminum and Hong Kong-based
Minmetals Aluminum Company have entered into an agreement to
explore the possibility of setting up a joint alumina
processing plant in Jamaica. The feasibility study, which
is expected to begin soon, is slated to take 18 months and
the plant itself would be completed in six years. The
proposed plant would have the capacity to refine 1.5 million
metric tons of alumina and would require a capital outlay of
around USD 1.5 billion. If this investment materializes it
would be the second major investment in the bauxite industry
following the USD 1 billion investment being undertaken by
ALCOA. However, a number of recently announced investment
projects have not moved forward and this particular
investment could hinge on whether aluminum prices remain
high.

--------------
Cement Troubles Continue
--------------


5. (SBU) The troubled cement industry (see Reftel) continues
to reel under the strain of a chronic shortage that arose
after quality control concerns forced the recall of
thousands of tons of the product in February. Promised

KINGSTON 00001051 002.2 OF 002


shipments of cement from Cuba have still not arrived, and
many in the private sector and the media are calling for the
resignation of the Minister of Industry, Commerce, Science,
Technology and Energy Phillip Paulwell. The announcement of
a year-long suspension of a 40 percent tariff on cement has
placated few critics, as it is seen as "too little too
late", but the recent arrival of a large consignment from
Venezuela may buy a temporary reprieve.

-------------- --------------
Public Sector Memorandum of Understanding (Finally)
-------------- --------------


6. (U) After almost two months of negotiation and debate,
the GOJ and the Jamaica Confederation of Trade Unions (JCTU)
finally agreed to a Memorandum of Understanding (MOU) to
replace the MOU that expired March 31. It was due to be
signed May 29, but the JCTU requested a delay because a
number of its members were unhappy with the draft. As
expected, workers received significant wage increases that
ranged from 13 to 27 percent, depending on the sector, as
recompense for the previous sacrifice that the JCTU made in
2004 when it accepted an agreement under which public sector
wages were frozen for two years. The Nurses Association and
the Jamaica Teachers Association, however, backed out of the
JCTU in an attempt to forge a better deal on their own.


JOHNSON