Gov't advised to - Tap the market for local investors in large projects
Published:Friday | November 29, 2013 | 12:00 AM
Avia Collinder, Business Reporter
Insurance executive Richard Byles is proposing that the Jamaican Government give local investors a stake in large projects by securitising their debt and equity and floating the securities on the market.
It is part of a multi-pronged growth strategy that Byles, the president and CEO of Sagicor Life Jamaica, floated this week at a lecture on the economy.
The securitisation plan, he said, befits projects like the 360MW power generating plant, expansion of the Kingston Container Terminal, the development of another port and industrial park, the expansion of the Petrojam refinery and the north-south highway.
"We need to view these projects as opportunities for private-sector investment, and the best way to do so is to securitise the debt and equity and offer it to institutional and individual investors through the stock market and the bond market," said Byles.
"Infrastructure projects that have expert overseas management and that offer a reasonable return, will attract private-sector capital. It will build the private sector's commitment to development and excitement about the economy's prospects," he said.
With the same view of generating revenue from non-performing assets, he also proposed that the Government divest assets which remain on its books, including its 19.9 per cent share of JPS, as well as its landholdings and factory and office buildings.
Transparent Process
"A programme to sell or swap some of them for GOJ Global bond debt should be developed. The process should be transparent and administered by a committee of persons of high repute in the Government and non-government sectors," said Byles.
"Debt holders could be induced by suitable discounts, resulting in a simultaneous lowering of debt, a boost to trading in the bond market and further investment by the private sector," he said.
He also declared himself in favour of an import substitution programme that goes beyond the current focus on agriculture.
"Just as the Ministry of Agriculture has done for foodstuff, we should pull together a schedule of imported items by value, suitably edited for those we can't produce for objective reasons, and just publish the list over and over," said Byles.
With tight domestic purchasing power but a competitive exchange rate, this is an avenue for start-ups, expansion, employment and growth, he adds.
There should be central markets in major towns akin to Kingston's Coronation Market, he said, as places where small entrepreneurs can develop and flourish.
He proposed, as well, that the Government and private sector come together to develop shared leadership committees which - similar to the group that guided tax reform consultations - would ensure transparency and bring new energy to the implementation of projects targeted at growth.
Byles', presentation, titled Going for Growth in the Jamaican Economy in a Contractionary Environment, was delivered under the Planning Institute of Jamaica's Dialogue for Development Lecture series.
Byles' proposed growth-inducing formula:
Building private sector confidence in the economic future
Near-term growth-stimulating initiatives
Creation of investment opportunities
Communication
Availability of credit
Tax reform
Credible leadership
Securitising large investments
Swapping debt for assets
Import substitution
Energy
Crime and skills training