JDX - Progress since the start of the new financial year 2010-2011

Can’t read my

Can’ read my

No he can’t read my Poker Face

Excerpt from the song Poker Face by Lady Gaga

After the success of the JDX (Jamaica Debt Exchange) as stated in the article “JDX ends at 99 per cent; Minister says thanks”, published Thursday, February 25, 2010, The Jamaica Observer (https://www.jamaicaobserver.com) in February, it was expected that the effect of the lower interest rate spreads would be felt immediately. However, this was not the case, despite promising signs as indicated by local lending agencies, such as NCB, Scotia Bank and others lowering their interest rates for borrowing loans. There was a request for the implementation of a Credit Bureau via the drafting of the relevant Credit Reporting Bill by Governor of the Bank of Jamaica, Mr. Brian Wynter as stated in the article “Credit Rating bureau needed quickly - Wynter”, published Friday January 22 2010, The  Daily Observer, by Alicia Roache, The Jamaica Observer (https://www.jamaicaobserver.com).

Having fulfilled this request, there is yet to be word on the development of this Credit Bureau Database (CBD) or if it has been built or when it is to be phased in. Additionally, questions are now being raised months after the success as it relate to the JDX’s effect on pension funds and people who were affected by its implementation, specifically the legality of the Pension Fund Managers at the NIF (National Insurance Fund) allowing the funds which were backed by Government Paper to participate in the JDX and thus lowering the value of the Fund, as Senator Omar Davies, Opposition spokesman on Finance asserts in his budget presentation as stated in the article “Davies wary of Debt exchange effect on NIF”, published Wednesday April 14^th 2010, , The Daily Gleaner, (http://www.jamaica-gleaner.com). I would not gamble with politicians, as their poker faces are not giving away anything at this moment. One has to elucidate what actions being taken in Parliament are having an effect post-JDX by news from the Fourth Estate on the ground, where John Public still is reeling from the lackluster budget and the heavy burden of taxation.

Thus, despite the blundering of the Bruce Golding led Government, event at times appearing to raid Public Sector bodies an accusation leveled by Senator Omar Davies, Opposition spokesman on Finance in the article “Gov't in desperation”, published Wednesday April 14^th 2010, by Edmond Campbell, The Daily Gleaner, (http://www.jamaica-gleaner.com) with the success of the JDX thanks to the cooperation of the people of Jamaica, we are now in a position where growth, for the first time is now not only possible, but also beginning to show early sprouts, with business people encashing their Government Paper and looking to invest in other areas of higher growth or possible future growth in the economy, as suggested by the Jamaica Exporters Association (JEA) president Titus Evans in the article “JDX makes exporting more attractive”, published Wednesday, April 21, 2010, The Jamaica Observer (https://www.jamaicaobserver.com).

If the veracity of his observations can be confirmed, it seems that the as usual money keeps no friend and will naturally like animals running from a flood, seek higher ground to escape the immediate danger of the rising flood waters of the anaemic growth economy by going into the business of export, as the reduction in interest rate spreads means that borrowing loans from the Ex-IM Bank should begin showing signs of increasing interest from prospective borrowers.

This is a rare move by those people in business with the money to be doing what is so often predicted of them by going into export, as not only are interest rates lower for borrowing to start up businesses for the purpose of producing produce for export but also the higher rates of exchange for goods in terms of the value of the US dollar in Jamaican dollars makes going into export manufacture more attractive than letting it sit in the financial institutions not making much profit. Indeed, this “expected behavior” of the people who heavily invested in Government Paper, mostly business people is the linear i.e. predictable, and as it thus fits with assertions by local economists as to the behavior of the business people, and is thus verification of the success of the post-JDX recovery.

Thus we are now in the beginnings of the Government of Jamaica economic recovery plan as laid out in the article “'No more skylarking' - PM outlines economic programme and debt exhange”, published Thursday, January 14, 2010 by Arthur Hall, The Daily Gleaner, (http://www.jamaica-gleaner.com)which, as far as one can see, aims to increase the tax net, reduce local debt, sell off non-performing Government of Jamaica infrastructure, cauterize the continuous slide of the Jamaican dollar via a US dollar denominated loan from the IMF, implementation of laws necessary to encourage growth such as the Credit Reporting bill and the Cyber Crime bill as stated in the article “Move to Tackle CyberCrime - Hacker got Golding”, published Sunday  February 14, 2010 by Philip Hamilton, The Daily Gleaner, (http://www.jamaica-gleaner.com) and eventually reduce inflation by the separation of our economy from the US dollar by liberalizing the Energy Sector.

The last item, the Liberalization of the Energy Economy, is now of greatest importance ever, as it is necessary in order to have production and manufacturing, the main driver that will move us from being a net importer of foreign goods to suit our growing appetite for la dolce vita to a next exporter and earner of foreign exchange, as stated in the article “Debt Swap and Debt Trap”, published Sunday 14 February 2010 by Robert Buddan, , The Daily Gleaner, (http://www.jamaica-gleaner.com), and hence result in employment and further growth in the Services Sector.

Senator James Robertson, Minister of Energy and Mining in the Government of Jamaica has stated in Parliament that Government of Jamaica plans to liberalize the Energy Sector, paving the way for Third Party Power Utility Companies to come to Jamaica to not only produce Electrical Power but to also have a license to distribute, as currently under the Power and Utilities Act, JPS Co (Jamaica Power Service Company) is the only Power Utility Company that can legally produce and distribute Electrical Power. Other Power Utility Companies operating in Jamaica can only produce Electrical Power and resell it to JPS Co (Jamaica Power Service Company)  but they cannot distribute it e.g. JEP (Jamaica Energy Partners) in Old Harbour, which has two (2) floating Power Barges, Doctor Bird 1 and Doctor Bird 2 as well as JEPP (Jamaica Energy Power Partners).

It is very likely, with the current Recession, that there will be an accelerated push for the full Liberalization of the Energy Sector, possibly via negotiations as was the case with the Liberalization of the Telecom Sector in 1997 by the then Senator Phillip Paulwell, Minister of Information and Telecommunications as the Government of Jamaica seeks to sell off its stake in Public Sector Companies that are loss making e.g. Air Jamaica, Jamaica Railway Corporation, JPS Co (Jamaica Power Service Company), etc., hopefully before the year 2015. The year is significant as it is the year predicted by the article “IEA official warns of shrinking oil supplies: Report”, Sunday August 2nd, 9:04 pm ET, AFP, Yahoo! News (http://news.yahoo.com) in which oil production around the world would have been outstripped by demand and thus prices of oil would be driven by demand only and not speculators, an outrageous fortune that has been forecasted by none other than Sir Richard Branson and British Business Leaders in the article “World faces oil crunch in 2015”, published Sunday 14 February 2010, The Sunday Herald (AFP).

If Jamaica is still has an economy dependent on oil and still importing oil for energy purposes by 2015 with no net investment (local and foreign) and increase in production as opposed to an emphasis on services, the global inflationary effect that this increase in the main driver of production will have will most certainly force the entire world into a Second Recession, as is now possible and shaping up to occur in the United States of America, due to its reliance on debt to encourage spending in the short term, its abundance of ill-placed faith in the Services Sector and lack of investment in the Production Sector. This Second Recession, referred to as a Double Dip Recession or “W” shaped Recession Recovery as opposed to a long term “U” shaped Recession Recovery is a theory which is echoed by Dennis Chung in the article “RISK OF A DOUBLE-DIP RECESSION?” published Friday, September 18, 2009, contributed by Dennis Chung, The Jamaica Observer (https://www.jamaicaobserver.com).

Research and Development (R&D) is required now more than ever, especially as Renewable Energy technology is still in its infancy in the United States of America, as the Bio-Fuels market is just beginning to get up and running as stated in the article " “'Green' gas and diesel get boost in Bio-Fuels grant", published December 4, 2009 12:33 PM PST, by Martin LaMonica, CNET News - Green Tech. From the breakthrough by venture capitalist K.R. Sridar, CEO of Bloom Energy in developing what Leslie Stahl on “60 Minutes”, aired Sunday 21^st February 2010 refers to as “the Holy Grail” of power engineering is a Bloom Power Server, as detailed in my blog article entitled “The Secret of the Bloom Energy Server unraveled - and can be locally Reverse Engineered”   

The Bio-Fuel Industry in general, specifically as it relates to the production of Anhydrous Ethanol using sewage, and pyrolized organic waste from any organic source as stated in the article “Microbes to start making ethanol, chemicals”, published November 18, 2009 9:52 AM PST by Martin LaMonica, CNET News – Green Tech, (http://www.cnet.com) as well as the article “Microbe converts sludge to ethanol”, published Friday 11, December 2009, by Martin LaMonica, CNET News – GreenTech, (http://www.cnet.com) the article “Wood-chip ethanol maker opens plant”, published October 15, 2009 7:50 AM PDT by Martin LaMonica, CNET News – Green Tech, (http://www.cnet.com) and the article “A Forest epidemic turns into Energy opportunity”, published April 7, 2010 2:04 PM PDT by Candace Lombardi CNET News - Green Tech, (http://www.cnet.com) must be accelerated.

So too must be the acceleration of the development of Bio-Diesel as detailed in  the article “Gene-altered bus make Bio-Diesel”, published Wed Jan 27, 1:31 pm ET by Yahoo! News (AFP) , (http://www.cnet.com) and the article “'Green' gas and Diesel get boost in Bio-Fuels grant”, published December 4, 2009 12:33 PM PST, by Martin LaMonica, CNET News - Green Tech, (http://www.cnet.com) and the article “Researchers coax bacteria to make Bio-Diesel”, published January 27, 2010 3:59 PM PST by Martin LaMonica, (http://www.cnet.com).

Thus R&D is very necessary, as the Private Sector, both Local and FDI (Foreign Direct Investor), who are in Jamaica to make money yet still do not wish to invest in R&D (Research and Development) with the assistance of the local universities, even being allegedly the root cause of the Economic Collapse that resulted in FINSAC and now still apparently singing the same song in the face of the JDX (Jamaica Debt Exchange)……….albeit one cannot start chastising the Private Sector before the end of the Fiscal Year 2010 – 2011, as it is still early days yet. 

However, once the Energy Policy as laid out by Senator James Robertson, Minister of Energy and Mining is implemented both in terms of allowing competition in the form of issuing Power Utility Company Licenses and Standards to produce and distribute Electrical Power using Renewable Resources, both Centralized and Distributed Models as well as Licenses and Standards for the production and distribution of Bio-Fuels i.e. Anhydrous Ethanol, E85, Biodiesel, Hydrogen, LNG (Liquid Natural Gas) and Biogas, the Private Sector, both Local and FDI (Foreign Direct Investor) will have no excuse, as mass production and economy of scale implemented by interested entrants into the Energy Sector, if facilitated by the Senator James Robertson, Ministry of Mining and Energy by the use of financial incentives, such as equipment importation tax waivers and five (5) year income tax breaks would reduce the overall cost of Electricity and Fuel, prime drivers of inflation, the main disincentive to production.

To be successful, research has to be conducted by the Private Sector, both Local and FDI (Foreign Direct Investor) as this time around one cannot wait until the United States of America or any other Developed country to develop the technology so that we can copy and implement it. All the conditions necessary for easy purchase of equipment and tools necessary to conduct research into Bio-Fuels manufacture and the development of large scale Renewable Energy based Power Utility Companies can be easily achieved.

It is preferable that this research be done in conjunction with the University of the West Indies as suggested in the article  “Turning the energy innovation engine at MIT”, published March 8, 2010 8:29 AM PST by Martin LaMonica, CNET News - Green Tech, (http://www.cnet.com) in light of their current economic difficulties that have resulted in Budgetary Cuts in Subsidies to Tertiary Education as clearly stated in the article “Not Credible”, published Sunday 28^th March 2010, Dariane Luton, Senior Staff Reported, The Sunday Gleaner, (http://www.jamaica-gleaner.com) thereby creating the competition that will not only drive the price of Electrical and Fuel Energy down and be a benefit to not only themselves but also to the environment in a concerted Latin American effort to stave off Global Warming as we approach the year 2015. This culture of Research and Development has to be developed rapidly despite observations by Professor Miguel Carillo, Executive Director of the Trinidad and Tobago Arthur Lok Jack Graduate School of Business, who commented that innovation was not a part of the culture of Private Sector.

This is the next step which is expected, and already inklings of this are present, what with the recent courtship of the Government of People’s Republic of China who have already begun negotiating with the Government of Jamaica as it relates to acquiring the Kingston Wharves as part of a US$6 billion investment in the relocation of Tinson Pen and VernamField Aerodromes and the development of the railway specifically for the transshipment of goods and services between the aerodromes and Kingston Wharves as stated in the article “CHINESE WANT KINGSTON WHARVES” published Monday, March 08, 2010 by Paul Henry Observer staff reporter henryp@jamaicaobserver.com, The Jamaica Observer, a deal negotiated by Senator Karl Samuda, Minister of Industry and Commerce.

Coupled with moves by the Government of People’s Republic of China as it relates to China Radio International and China Central Television push into the broadcasting of Chinese and English language programming in Jamaica being facilitated by Senator Daryl Vaz, Minister of Information as a part of the cultural exchange that is a cementing of ties that date as far back as 1972 and apparently now being cemented with trade and cultural ties, despite the MAJ (Media Association of Jamaica) being in the dark as stated in the article “Chinese media proposal troubles local interest group”, published: Tuesday  April 6, 2010, The Gleaner, this is positive indication that the conditions are being created for an investment atmosphere suitable for investment.

The learned John Public, though depressed, finds all this activity by the Government of Venezuela, Government of the Peoples Republic of China and even the Government of Mexico uplifting. The declaration by Mexican Petroleum interest PEMEX (Petroleos Mexicanos) of its intention to construct a US$6 billion dollar Refinery and mysterious hastily commissioned  two (2) week restoration of a 15-foot statue named El Atlante de Tula by Mexican Ambassador to Jamaica, Leonora Rueda as stated in the article “Mexico's new refinery to take shape this year”, published Thursday April 1^st 2010, by Nadisha Hunter, Gleaner Writer, The Daily Gleaner, (http://www.jamaica-gleaner.com).

The Greeks plan to upgrade to a land based facility for the storage of MGO (Marine Gas Oil) and MFO (Marine Fuel Oil) as stated in the article “US$20M more to Bunker - Greek firm eyes investment in Jamaican storage facility”, published Wednesday, April 07, 2010 BY CAMILO THAME Business, The Jamaica Observer (http://www.jamaicaobserver.com). The planned expansion of JEP (Jamaica Energy Partners) which appears to be a push into power distribution based on the location of the new plant as stated in the article “JEP lands power deal”, published Friday April 9, 2010, the Friday Financial Gleaner, (www.jamaica-gleaner.com/gleaner/sfg) these examples rest in stark contrast to statements by the Deputy Director of the OUR (Office of Utilities Regulation) Hopeton Heron, who stated that due to JPS Co. exclusive power distribution license, competition will only be among power suppliers to the JPS Co. as JPS Co. exclusive distribution license will not end until 2020.

Recent declarations by the Government of the People’s Republic of China as it relates to the purchase of our alumina interest and supplying them with the LNG to reduce the cost of energy used in the process of making alumina as stated in the article “Noranda Bauxite targeted for aquisition”, published Wednesday April 14^th 2010, Business Section, The Daily Gleaner, (http://www.jamaica-gleaner.com) is also a very good sign.

Calls by Senator Philip Paulwell, Opposition spokesperson  on Energy and ICT for the Liberalization of the Energy Sector and the issuing of licenses for Power Utility Companies to be able to produce and distribute electrical power as a means of forcing the cost of electricity down and thus making doing business easier in Jamaica as reported in the news report on Prime Time News, aired Wednesday April 14^th 2010, on Television Jamaica, a member of RJR Communications Group are all indications of major movements in the Energy Sector which has people like myself very excited as to what the next phase in the Golding Administration’s plan for growth in the economy by keeping on the path of the straight and narrow will yield in the next two (2) financial years 2010 – 2011 and 2011 – 2012.