PIOJ's growth-boosting strategy

Martin Henry, Contributor

As the Manatt-Coke commission of enquiry rambles on, the Planning Institute of Jamaica (PIOJ) is to launch A Growth-Inducement Strategy for Jamaica in the Short and Medium Term on Tuesday in the same venue that the enquiry is being staged, the Jamaica Conference Centre.

I can just imagine the distracted prime minister having to sprint between both conference rooms if he is called to appear before the commission of enquiry on Tuesday. Or having to make that painful decision, in the full glare of the media, about which room to stick to, because both are important.

At the root of the commission of enquiry are nasty things in the dirty politics of the country which have helped to cripple growth. As the PIOJ puts it, at the opening of the growth document: "The Jamaican economy has been in a chronic state of near stagnation for at least 35 years. During that time, there have been fits and starts, but no demonstrated capacity of the economy to sustain forward movement. The deadweight of that history now hangs heavily over the present. The process of awakening and recovery from this state of inertia is a difficult one that will take time. It requires a systematic approach to designing and implementing integrated policy solutions aimed to modernise and transform the economy so as to meet the challenges of operating in a dynamic, competitive world where the country has lost ground relative to others that it led or equalled some 50 years ago. It also requires determined and forceful leadership."

Cinderella enquiry

Across town, the Cinderella FINSAC commission of enquiry is paddling along in the tears of people broken by the financial meltdown of the 1990s and their subsequent FINSAC-ing. By a clear head, the FINSAC commission of enquiry has beaten the Manatt-Coke commission of enquiry in a recent newspaper poll asking which is the more important of the two.

The public view has the support of the minister of finance, Audley Shaw, who has publicly stated that the FINSAC commission of enquiry is of much more fundamental importance than the Dudus-Manatt commission of enquiry.

It is a little difficult to see where fiscal prudence ends and political opportunism begins. The FINSAC minister, Dr Omar Davies, who has laboured manfully to have that commission of enquiry shut down, argues that FINSAC represents tough and prudent management which prevented the financial services from collapsing from their own imprudence and excesses. His post-FINSAC antagonist, Shaw, is bawling "ministerial incompetence and irresponsibility".

This is precisely why we need a commission of enquiry to establish the truth of the matter and to prevent the recurrence of the sorts of financial problems which wrecked businesses and lives and bred FINSAC. A sound and trustworthy financial system is an absolutely necessary for the kind of growth the PIOJ is proposing.

But the thin-skinned media have other views about the importance of the FINSAC commission of enquiry, largely denying it coverage in favour of the theatre of Manatt-Coke and little things like the chronically uncouth, now resigned, former Member of Parliament Everald Warmington telling them to "go to hell". On their way to heaven, the media should stop by the FINSAC commission of enquiry for some serious coverage. The people, to whose defence the media perennially spring when they feel insulted or sidelined, say this one is more important than Manatt-Coke.

According to the acknowledgements, the preparation of the PIOJ Growth Strategy was under "the guidance and leadership of the Honourable Prime Minister Bruce Golding". Golding has been publicly floating the idea of "fiscal space" in the upcoming Budget for growth. Half of the Cabinet, with Shaw topping the list, was listed as being consulted in the preparation of the document for which growth expert Donald Harris was lead consultant. Harris, a Jamaican, is professor emeritus of economics at Stanford University.

Almost everybody else was also consulted, which makes me a little nervous. I distinctly remember the set of five-year plans of the early 1990s which was prepared by some 30-odd task forces doing cross-country consultations but which were quickly forgotten, and the National Industrial Policy which followed, with the same process - and the same results. And I go back to that excellent Independence Five-Year Development Plan, 1963-1965, crafted by the planning agency of the time under the leadership and guidance of Minister of Welfare and Development Edward Seaga, who subsequently crafted Tivoli Gardens. A development from which the extradition of Christopher Coke has precipitated the Manatt-Coke commission of enquiry. That plan, the first in Independence, jumped tracks and the current prime minister has said it needs revisiting as mission unaccomplished and still outstanding.

Sustaining growth

But I very much like this growth-strategy document, which reflects so much of my own non-specialist thinking and writing about how we could escape the doldrums and go for sustained growth. We will know how serious the Government is about it when we see to what extent the practical and sensible prescriptions of the Growth Strategy are incorporated into the 2011-2012 Budget with its anticipated "fiscal space" for growth.

"In preparing this report, the singular objective," it says for itself, "has been to analyse the current state of the economy and, on this basis, to develop recommendations for policy and action to induce economic growth, starting with the upcoming Budget process for the new fiscal year 2011-2012 and going forward into the medium-term 2012-2014. We were not called upon to construct a plan for long-term development of the economy. However, a detailed road map for such a plan is laid out in the Vision 2030 Jamaica National Development Plan. That plan also states, in bold relief, the aspirational goals firmly expressed by the Jamaican people in direct consultations held throughout all sectors and regions of the country. The specific proposals presented here aim to provide a practical vehicle to carry forward that plan in the short and medium term."

The guiding principles of the growth-inducement strategy are:

1. Unleash entrepreneurial dynamism by unlocking latent wealth tied up in idle assets.
   
2. Infrastructure investments as catalyst for job creation through strengthening resiliency of the built and natural environment.
   
3. Build an innovative and competitive modern economy of big and small firms by strengthening business networks and removing supply-side constraints.
   
4. Modernise and improve the efficiency of government.
   
5. Social inclusion through community renewal, expanded self-agency and equity.
   
6. Proactive partnership between government and private sector.

"At its core, the strategy recognises a basic fact, i.e. that there exists a sizeable pool of latently available and potentially productive assets - financial assets, physical capital, buildings, labour, and land - that currently lie fallow, dormant, and/or underutilised and/or wasted. There also exists throughout the economy, in big, medium, and small businesses, entrepreneurial talent ready to act to bring these assets to fruition in productive activities. Foreign investors and diaspora partners have also shown an active interest. In some widely reported cases, creative moves in this direction are already being made in various sectors of the economy ... . The strategy seeks to strengthen and accelerate these positive developments by setting in place the necessary support framework to mobilise potentially productive assets and unleash entrepreneurial dynamism.

Significant costs

"However, there are significant costs, real and perceived, which stand in the way of realising this potential. Of these, the single most important is the cost of crime. It is estimated to cost the economy between five and seven per cent in gross output." The minister of national security was among the members of the Cabinet consulted. Crime containment is a critical growth and development issue.

The key components of the growth strategy are:

1. Tax reform to free up resources.

2. International competitiveness by lowering the cost of energy and of capital, among other things.

3. Using the business network model to promote synergies within and among clusters of economic activity.

4. Protect and strengthen the built environment, reducing restoration costs and creating jobs through public works.

5. A community-renewal programme.

6. Improving the efficiency of government through public-sector modernisation.

"In total, this strategy is comprehensive in scope, highly focused in its targets, rooted in national initiatives and effort, and eminently practical and doable. It effectively deploys limited financial resources in a tight budget scenario while calling for forceful leadership and exercise of political will."

New approach needed

I see my running advocacy for infrastructure and environment public works to fix up the country, while creating jobs and pushing money into the base of the economy as stimulus playing out. As well as the call for massive low-income housing development. Community renewal as both a social and an economic good. Skills training with work. Nothing new really. We just need to do it. And here is a comprehensive and well-organised strategy to guide the doing.

We are not about to have any time soon any more money for 'development'. If it is going to work at all, we have to adopt an 'as is, where is' approach. It is this pragmatism and practical planning that I like most about this Growth-Inducement Strategy to be launched on Tuesday.

The final chapter of the strategy is a paper that was delivered to the Chairman's Club Forum of the Private Sector Organisation of Jamaica last September by the energetic and aggressively determined new director general of the PIOJ, Dr Gladstone Hutchinson. The paper/chapter is 'From the IMF Programme to Private-sector-led growth within Vision 2030'. Hutchinson, like Professor Harris, is a returning resident come back to help. Jamaicans, led by a Government serious about growth and transformation, need to pitch in. A Growth-Inducement Strategy for Jamaica in the Short and Medium Term can be found at http://tinyurl.com/piojgrowth.

Martin Henry is a communication specialist. Email feedback to columns@gleanerjm.com and medhen@gmail.com.