Jamaica slips one place in FDI inflows
Published:Tuesday | June 12, 2018 | 12:00 AM
Jamaica slipped one place to second among the English-speaking Caribbean and small-island developing states, SIDS, in terms of the value of foreign direct investment, FDI, inflows in 2017, according to the United Nations World Investment Report released last week.
FDI inflows to Jamaica reached a high of US$925 million in 2015, retreated to US$856 million, down seven per cent in 2016, but the rebound to US$888 million last year was still four per cent down on the peak achievement, the report indicated.
The Bahamas was the largest recipient economy in the region in 2017 with inflows of US$928 million.
FDI in the 10 Caribbean countries increased by nine per cent to US$2.7 billion in 2017, in contrast to a seven per cent reduction in all economies in the region, according to the report.
Although FDI flows to the majority of states in the region shrank, the strong gains posted by Barbados, up 25 per cent to US$286 million; St Kitts-Nevis, up 50 per cent to US$127 million, and Trinidad & Tobago, up from negative US$17 million in 2016 to US$179 million in 2017 pushed the region's aggregate flows to a three-year high.
The report noted that this was also helped by the resilient FDI flows into The Bahamas and Jamaica.
In the services-based economies of Barbados and St Kitts-Nevis, tourism-related construction projects were the major driver.
In energy-based Trinidad, a decline in negative reinvested earnings in oil and gas activities contributed to the rebound, according to the report, noting that two projects by the United Kingdom-based BP began operation.
Despite the slowdown in the two largest FDI host states in the region - The Bahamas and Jamaica - foreign investors remained active, it said.
In the Bahamas, where FDI dipped in 2017 after a 131 per cent rebound from 2015 to 2016, the opening of a mega resort project, Baha Mar, created nearly 4,000 jobs.
Jamaica, where FDI fell for the second year after a record high in 2015, continued attracting diversified activities, including the US$299-million acquisition of bauxite mining company Alpart, owned by Jiuquan Iron and Steel, JISCO, in 2016 which resulted in an additional investment of US$160 million for expansion in 2017 and a strong uptick in the country's alumina production.
The report said that although China does not appear among the top 10 economies for FDI flows to small-island developing states, it has become an important source for financing capital-intensive infrastructure projects in some of those countries. In Jamaica, for instance, Gansu Province of China, the owner of Alpart through JISCO, has agreed to provide financial support to develop a US$6-billion industrial park, the report pointed out.
FDI flows will remain fragile
The report cautioned, however, that FDI flows into SIDS will remain fragile, noting that greenfield projects announced in 2016-2017 stagnated well below levels observed in 2014 and 2015.
In the Caribbean, policy developments in renewable energy are expected to facilitate implementation of FDI projects in the pipeline and attract more in the coming years.
Given the highly concentrated distribution of announced projects and infrastructure public-private partnerships (PPPs), however, only few SIDS are likely to see significant FDI growth going forward.
"For example, in the Caribbean, Jamaica, which hosts larger infrastructure PPPs involving multinational enterprises, continued attracting the highest value of announced greenfield projects in 2017," it said, referencing the US$330-million Old Harbour power station project.
Global flows of FDI fell by 23 per cent in 2017, said the report. Cross-border investment in developed and transition economies dropped sharply, while growth was near zero in developing economies.
"With only a very modest recovery predicted for 2018, this negative trend is a long-term concern for policymakers worldwide, especially for developing countries where international investment is indispensable for sustainable industrial development," said the investment report, prepared by the United Nations Conference on Trade and Development.