Identifier
Created
Classification
Origin
06KINGSTON1256
2006-06-26 11:32:00
UNCLASSIFIED
Embassy Kingston
Cable title:  

KINGSTON POL/ECON ROUNDUP: May 31 - June 23, 2006

Tags:  PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM 
pdf how-to read a cable
VZCZCXRO0370
RR RUEHGR
DE RUEHKG #1256/01 1771132
ZNR UUUUU ZZH
R 261132Z JUN 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 3093
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0170
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 03 KINGSTON 001256 

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

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: May 31 - June 23, 2006


KINGSTON 00001256 001.2 OF 003


UNCLAS SECTION 01 OF 03 KINGSTON 001256

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

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: May 31 - June 23, 2006


KINGSTON 00001256 001.2 OF 003



1. This month's topics:

-- Chilean President Visits
-- GOJ Concerns with Increasing Food Imports
-- Diaspora Conference Held in Kingston
-- Bank Executive Highlights Benefits of Migration
-- Businesses Hurting From Anti-Drug Efforts
-- Huge Demand for Scrap
-- Inflation Moderates
-- IMF Says Growth Higher Than Reported
-- Tourist Arrival Figures Remain Bullish


--------------
Chilean President Visits
--------------


2. On June 9th, Chile's first female president, Dr. Michelle
Banchelet, met with Portia Simpson Miller during a one-day working
visit to Kingston. The meeting between Simpson Miller and Banchelet
covered a wide range of topics including: trade; sugar; the use of
Montego Bay Airport as a transhipment port for Chilean exports to
Europe; tourism; visas; sports and culture; education and training;
and energy.

--------------
GOJ Concerns with Increasing Food Imports
--------------


3. Despite an existing 260% import tariff on "sensitive"
agricultural products, such as: carrots, cabbage, lettuce, and
tomatoes. Jamaica's agricultural sector continues to face stiff
competition from imports. Agriculture Minister, Roger Clarke,
attributes the surge in imports primarily to illegal importation of
these products. According to Clarke, his ministry is currently
designing mechanisms to abate the problem.

--------------
Diaspora Conference Held in Kingston
--------------


4. Over 500 delegates attended a GOJ hosted conference in Kingston

on June 15 and 16, seeking ways to strengthen ties between Jamaicans
at home and abroad. The GOJ, recognizing the importance of the
almost 2.5 million Jamaicans residing abroad, given their over USD 1
billion in remittances annually, has been seeking other ways to tap
into this market. Over 20 resolutions were passed at the
conference, chief among them the establishment of a Jamaica Fund to
help finance projects. Prime Minister Portia Simpson-Miller also
announced the establishment of a Parliamentary Joint Select Diaspora
Committee to consider how proposals from the diaspora could be
translated into national policy. Opposition Leader Bruce Golding
also called for an expansion of the Senate seats to allow
representation from overseas Jamaicans. The next Diaspora
Conference is slated for 2008.

-------------- --
Bank Executive Highlights Benefits of Migration
-------------- --


5. A leading bank executive, Patrick Hylton of National Commercial
Bank, has suggested that Jamaicans should not view migration as
'brain drain', but as 'brain gain'. In making his case, at the
second diaspora conference, Hylton pointed to Singapore, India and
China, which have benefited from the return of expatriates. This
position was supported by another banking executive, Ryland Campbell
of Capital and Credit Financial Group, who urged Jamaicans to
consider migration as something which will be an advantage in the
future. However, many delegates attending the conference said they
were hesitant to invest in Jamaica due to financial risks,
government bureaucracy and high crime rates.

--------------
Businesses Hurting From Anti-Drug Efforts
--------------


KINGSTON 00001256 002.2 OF 003



6. GOJ attempts to dismantle drug networks appear to be gaining
traction, given recent pronouncements from two business heads. In
mid June, CEO of Hardware and Lumber, Anthony Holness, told
shareholders that in addition to hurricanes and competition, success
against drug trafficking was the main reason for the lackluster
performance of the company. Holness explained that there was less
cash to launder by drug dealers, who often turn tainted cash into
fancy homes, shopping centers and townhouse developments.
Nationwide lottery operator, Supreme Ventures, also attributed part
of its declining revenues to anti-drug measures. While this
information has been in the public domain for sometime now, it is
the first time that it has been openly discussed. Suggestions are
that economic activities have been particularly hard hit in Montego
Bay, where police arrested several alleged drug kingpins in 2005.


--------------
Huge Demand for Scrap
--------------


7. Jamaica, grappling for years to manage its solid waste, has
finally found an avenue to dispose of its old vehicles and other
discarded metals for foreign currency. Estimates suggest that over
20,000 tons of scrap metal now leave Jamaica annually for the export
market. With prices at about USD 45.5 per ton, this translates into
export earnings of just under USD 1 million.

--------------
Inflation Moderates
--------------


8. After jumping by 1.1 percent in April on the back of higher food
and fuel prices, inflation rates declined to 0.4 percent in May

2006. This brought inflation for the year to 1.7 percent and
compares favorably with the 5.7 percent recorded during the similar
period of 2005, when food shortages and soaring oil prices led to a
spike in prices. While inflationary impulses will emanate from wage
hikes and increased utility prices, barring weather related and oil
shocks, prices are expected to remain below 2005 levels.

--------------
IMF Says Growth Higher Than Reported
--------------


9. The IMF is again contending that the Jamaican economy is growing
at a much faster rate than reported by the Statistical Institute of
Jamaica, due to unmeasured activities in the informal sector.
According to the IMF's country report on Jamaica, issued in May,
actual GDP may be higher than measured and there is evidence that
the informal sector is large and growing faster than the rest of the
economy. The Fund said services in Jamaica are difficult to measure
and this combined with the size of the underground economy makes
national accounts difficult to estimate. The IMF is basing its
argument on the increase in electricity consumption (proxy for GDP
growth),which has grown by over 2 percent in the 1990s compared
with under 0.5 percent for overall GDP. The IMF said that
correcting for this discrepancy, GDP growth during 1991-2000 could
be as high as three percent. While there is merit to the argument,
it should be pointed out that there is a close link between the
formal and informal economy and some informal activities are
therefore captured in the official data. It should also be noted
that government bureaucracy and high tax rates are responsible for
part of the increase in informal activities.

--------------
Tourist Arrival Figures Remain Bullish
--------------


10. Tourist arrivals jumped by 20.8 percent in May, continuing the
bullish performance observed during the winter season (December to
April 2006) when arrivals soared by a record 15.7 percent. The
impressive numbers, especially from the U.S. and UK, are a direct
result of the hotel rooms added in 2005, particularly by Spanish
chains. A number of U.S.-based airlines (Spirit, Delta and United)
have also begun service to Jamaica. Arrivals should remain buoyant
during 2006, as forward bookings for the traditionally quiet summer

KINGSTON 00001256 003.2 OF 003


season are quite strong. The island should also see record cruise
arrivals this year, as Royal Caribbean's mega liner, Freedom of the
Seas, is set to add 100,000 visitors. The world's largest ship is
expected to carry 4,000 visitors and 2,000 crew members to Jamaica
weekly, adding an estimated USD 15 million to tourism earnings.


JOHNSON