Identifier
Created
Classification
Origin
09KINGSTON269
2009-04-07 14:07:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kingston
Cable title:  

JAMAICA: MARCH ECONOMIC REVIEW

Tags:  ECON ENRG SENV ETRD TRSY OPIC OAS IBRD XL JM 
pdf how-to read a cable
VZCZCXRO1661
RR RUEHGR
DE RUEHKG #0269/01 0971407
ZNR UUUUU ZZH
R 071407Z APR 09
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 7483
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 KINGSTON 000269 

SIPDIS
SENSITIVE

STATE FOR WHA/CAR (ACADIEUX) (VDEPIRRO) (WSMITH)
WHA/EPSC (MROONEY)(FCORNEILLE)
EEB/ESC/IEC/EPC (MMcMANUS)
INR/RES (RWARNER)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA
OPIC FOR ALISON GERMAK

E.O. 12958: N/A
TAGS: ECON ENRG SENV ETRD TRSY OPIC OAS IBRD XL JM
SUBJECT: JAMAICA: MARCH ECONOMIC REVIEW

REF: A) KINGSTON 223
B) KINGSTON 97
C) 08 KINGSTON 1016
D) 08 KINGSTON 1028
E) 08 KINGSTON 867

UNCLAS SECTION 01 OF 02 KINGSTON 000269

SIPDIS
SENSITIVE

STATE FOR WHA/CAR (ACADIEUX) (VDEPIRRO) (WSMITH)
WHA/EPSC (MROONEY)(FCORNEILLE)
EEB/ESC/IEC/EPC (MMcMANUS)
INR/RES (RWARNER)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA
OPIC FOR ALISON GERMAK

E.O. 12958: N/A
TAGS: ECON ENRG SENV ETRD TRSY OPIC OAS IBRD XL JM
SUBJECT: JAMAICA: MARCH ECONOMIC REVIEW

REF: A) KINGSTON 223
B) KINGSTON 97
C) 08 KINGSTON 1016
D) 08 KINGSTON 1028
E) 08 KINGSTON 867


1. (SBU) SUMMARY:

-- Representatives from the U.S. Export-Import (Ex-Im) Bank
conducted a site visit with Emboffs to a USD 225 million wharf
redevelopment project to bring Genesis-class cruise ships to the
city of Falmouth;

-- U.S. Treasury provided technical assistance to help the
Government of Jamaica (GOJ) set up a large taxpayer office in
Kingston;

-- The GOJ held a pre-bid meeting for its Waste-to-Energy project;
the effort received technical assistance from the U.S. Trade and
Development Agency (USTDA);

-- The GOJ reopened divesture plans for its former sugar parastatal
after Brazilian firm Infinity Bio-Energy failed to secure the funds
needed to close the deal;

-- The U.S. Embassy participated in the first meeting of the
Biofuels Task Force in Jamaica to develop domestic ethanol
production on the island;

-- The real estate sector is continuing to slow, with rising
interest rates and fears of great job losses;

-- Poor performing loans are on the rise as businesses face lower
revenues;

-- GOJ registers 0.8 percent inflation in February. END SUMMARY.

Tourism/Cruise Line - Ex-Im Bank Project
--------------


1. (SBU) Emboffs joined Ex-Im representatives Annette Maresh,
Director - The Americas Group in the Trade Finance and Insurance
Division and Michael Sams, Senior Electrical Engineer in the
Engineering and Environmental Division, on a due diligence
assessment of the Falmouth wharf redevelopment project on April 1-2
(reftels). The total project cost will be USD 225 million to
include a new 17 acre wharf that can accommodate Genesis class

cruise ships. Expected to open in April 2010, the site will add to
the existing cruise docking wharfs in Montego Bay and Ocho
Rios--both of which currently accommodate two cruise ships. This
project will strategically tie in the north coast tourism belt by
locating between Ocho Rios and Montego Bay.


2. (SBU) The project will create a new focal point for cruise visits
and transform the city by adding restaurants, retail shops,
commercial office space, and an ocean front boardwalk. The plan
preserves the historical integrity of Falmouth, and in fact will
include rehabilitating several historical landmarks. The project is
expected to create at least 700 jobs and lead to a range of new
investment in the city. Ex-Im received an application through HSBC
Bank seeking nearly USD 110 million in loan financing. The loan
would be to the Port Authority of Jamaica with a sovereign guarantee
from the Ministry of Finance and Public Service. Royal Caribbean
will invest 102 million and secure a long term lease of the site.

Tax Reform/ U.S. Treasury
--------------


3. (SBU) Richard Teed, Tax Administration Advisor from the United
States Treasury - Office of Technical Assistance, provided two weeks
of on-site technical assistance (March 15th-28th) to senior
management officials of the Jamaica Tax Authority (JTA). Teed
assisted the Large Taxpayer Office Planning Committee with a
business process review for a new Large Taxpayer Office (LTO) which
opened on April 1. The LTO plans to serve the 450 largest tax
paying entities on the island through sector experts and increased
customer service. The OTA's assistance is in partnership with the
U.S. Embassy and USAID to help the GOJ reform the tax system and
widen the tax net to improve collections (reftels).

Energy - Waste To Energy
--------------

KINGSTON 00000269 002 OF 002




4. (U) The Petroleum Corporation of Jamaica (PCJ) held pre-bid
meeting on March 19 for a major waste-to-energy project on the
island. Several bidders from the US private sector were in
attendance. PCJ's Senior Research Officer in Renewable Electricity,
Hopeton Heron, took the opportunity to specifically thank the U.S.
Embassy and U.S. Trade and Development Agency (USDTA) for their
technical assistance on the project. USTDA financed an orientation
visit for three Jamaican officials to visit waste-to-energy sites in
the United States and provided technical assistance to PCJ in
drafting the request for proposals. The proposals are due April 30
for the project.

Energy -- Biofuels/Ethanol
--------------


5. (U) After a breakdown in the divestiture plans for the former
sugar estates (five sugar factories and sugarcane lands) with
Brazil's Infinity Bio-Energy the GOJ has had to regroup. A second
divestment tender reaped 14 bidders including another attempt by
Infinity, which won the previous tender but, given the global credit
crunch and falling world oil prices, was unable to raise the money
by the January 31 deadline, thus forcing the GOJ to end the deal and
reopen the divestment process (reftels).


6. (U) Minister of Energy, Clive Mullings, along with Minister of
Agriculture Christopher Tufton, launched the Biofuels Task Force on
March 10. The Task Force is responsible for creating an appropriate
policy framework and a legal regulatory regime for the new industry.
The Task Force is a collaborative effort between the two
Ministries, several industry stakeholders, the U.S. and Brazilian
embassies and multilateral agencies including the Organization of
American States (OAS) and the World Bank. Mullins said," we will
continue to explore various means of energy diversification and
other strategies that will create a sustainable energy sector. He
went on to list other renewable energy projects including the
expansion of the Wigton wind farm (reftels) and a potential project
for solar panels to Jamaica's hospitals. Econoff participated in
the Task Force.

Real Estate Slowdown Continues
--------------


7. (U) The world slowdown in real estate sales and construction has
not spared Jamaica. Reynold Scott, owner of Geon Group construction
firm and president of the Jamaica Developers Association, told the
Gleaner newspaper on March 22 that rising domestic interest rates
have had a devastating impact on the sector. The high end market
above USD 400k appears to be contracting, although demand still
exists for homes below in the USD 130k. The Jamaica Mortgage Bank
(JMB) announced in March that it intends to offer concessionary rate
for loans to builders of housing developments that have units priced
below USD 170k. The program hopes to keep activity flowing in the
already weakened construction sector. Fear of job losses, coupled
with rising costs of borrowing money, are likely to further depress
demand in the sector.

Non-performing Loans Rise
--------------


8. (SBU) The Bank of Jamaica reports that non-performing loans
across the financial sector stood at about USD 110 million (JD 9.7
billion) in December 2008--about 3 percent of total loans.
Commercial banks registered a 65 percent increase from last year.
Financial analyst Dennis Chung suggests that part of the loan
failings are due to the collapse of alternative investment schemes
and the revenue streams they had provided (reftels). Christopher
Zacca, President of Private Sector Organization of Jamaica (PSOJ),
told reporters of the Financial Gleaner on March 20 that Jamaica is
not immune from the global crisis, adding that as businesses face
reduced sales and less revenue they will have a difficult time
paying debts.

Inflation
--------------


9. (U) The Statistical Institute of Jamaica reports a 0.8 percent
increase in inflation for February, including a 0.1 percent increase
in food prices.
HEG