Ease of doing business fuels Chinese investments in Ja
Published:Friday | December 20, 2019 | 12:00 AMHuntley Medley - Senior Business Writer
The size of the Chinese investments in Jamaica is said to be around US$3 billion and growing, leading many persons to wonder what is the attraction. It turns out that it is easy for Chinese firms to set up shop in Jamaica, and they are loving it – even the test of wringing profits out of challenging businesses. That is the sentiment of China’s top diplomat for economic and commercial affairs in Jamaica.
Jianghong Fan, counsellor for economic and commercial affairs at the Embassy of the People’s Republic of China in Jamaica, told the Financial Gleaner in an interview that the operators of Chinese businesses – state-owned and privately run – are pleasantly surprised at how easy it is to incorporate and do businesses in Jamaica.
The World Bank’s Doing Business 2020, measuring the business regulations for local firms in 190 countries, places Jamaica at number 71. It is not the country’s best-ever performance in the rankings but is an improvement on the 75th place it scored in 2018.
By accounts from Chinese business people to their embassy in Kingston too, managers of Chinese firms seeking to establish themselves in Jamaica are relieved that, unlike in some other jurisdictions, Jamaican government officials and employees of state agencies are not in the habit of asking for personal payment in return for routine business registration and operation.
The upshot is the number of firms originating in China and doing business in Jamaica growing to 28, with a third of them being state-owned corporations and the remainder private enterprises like Huwaei, ZDA, and Jiangsu Jiangdu Construction Group. Some leading Chinese businesses here have formed the Association of Chinese Enterprises in Jamaica.
At the macro level, Jamaica has a debt stock of about $80 billion it owes to China, and the Chinese estimate that their aid package to the island stands at about $44 billion. Jamaica also earns US$20 million from exports to mainland China each year, while the Chinese enjoy a gigantic balance of trade surplus, selling some US$660 million in products and services here every year.
Fan says there is scope to grow Jamaica’s exports to China, now
comprised mainly of sales of coffee, rum, lobsters and scrap metal. He says the Chinese are interested in buying from Jamaica, more tropical fruits, bauxite/alumina and manufacturing-grade limestone for use in making cosmetics and some food products.
Zeroing in on specific Chinese companies and their businesses in Jamaica, Fan could not say exactly what is causing the delay in China Harbour Engineering Company (CHEC) developing the vast tracts of land near the North-South Highway it received from the Government as part of compensation for the more than US$730 million the Chinese firm spent to build the roadway linking Kingston and Ocho Rios in St Ann.
“We keep asking them from time to time. The embassy is not supposed to interfere with the internal decision-making of the firms, but we ask about the developments,” Fan points out.
He adds: “They are a state-owned company and very huge. Making investments abroad takes time. Maybe given the not-so-profitable business of Alpart and sugar, they are like a reminder that they have to be careful, but they say they are very serious with the investment.”
Of CHEC’s planned buildout of a special economic zone commercial and industrial park on lands at Caymanas, on the outskirts of Kingston bordering on St Catherine, Fan could only speculate: “CHEC has so much on their plate. They are very active. They have so many things to submit to the decision-makers. They would have to work out the order of priority, but CHEC and JISCO are very serious.”
JISCO is the Chinese firm Jiuquan Iron and Steel Company, also state-owned, that acquired the Alpart bauxite alumina plant at Nain in St Elizabeth a few years ago, but has shuttered operations there for upgrading and modernisation after posting huge losses. Fan points to the commitment given by officials of JISCO that the closure will be for about two years with plans for further investments in the plant in the future.
The Chinese Embassy official, who works with China’s commerce department in Beijing, also responded to questions about reports of losses being made by Pan Caribbean Sugar Company – a subsidiary said to be 70 per cent owned by China state-owned Complant – on its sugar operations in Jamaica.
Of that situation, Fan says: “Sugar is a sunset industry. Pan Caribbean is now trying to purchase as much sugar cane as possible to support the processing of sugar. They are also considering seriously to shift some of the production to other cash crops that can sustain their operations to be profitable. But they can now make both ends meet, if I heard correctly. The domestic market is quite profitable.”
He points out that all Chinese companies, including those that are owned by the government – controlled by the Communist Party of China – are expected to make a profit on their operations.
Meanwhile, the Chinese Embassy is classifying Prime Minister Andrew Holness’ recent visit to China as “a great success that has elevated the strategic partnership between the two countries to a new high”.
The embassy says Jamaica is the first Caribbean country to have signed a strategic partnership memorandum of understanding with the government of China; the first country in the region to have participated in the recently held China International Import-Export Epxo as one of a few guest countries of honour; and the first country in the Western Hemisphere to have signed on to China’s Belt and Road global development, investment and aid initiative.
Quizzed on the displeasure of the United States of American at Jamaica’s cosy relations with Beijing, Fan says China is not seeking a monopoly on business and friendship with Jamaica.
“We are here not to seek anything other than friendship and business. The only thing, maybe is that China is developing too fast (and) as people would say, ‘we touch their cheese’. Our culture is that if we have something that we enjoy, we share it with other people.”