Make your own free website on
Blog Tools
Edit your Blog
Build a Blog
RSS Feed
View Profile
« September 2013 »
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
You are not logged in. Log in
Entries by Topic
All topics  «
Dealing with water
Regional Competitiveness
Regional Development
Thursday, 5 September 2013
Chinese Initiative a Game Changer for Jamaica’s Logistics Hub
Topic: Regional Development

To date, I have written three articles about different aspects of Jamaica’s Logistics Hub. This makes my fourth. Frequent readers of the Caribbean Journal may only be aware of three, counting this one. The first, “The Logistics Hub Project and Jamaica’s Development” explained the opportunity the logistics hub presents for Jamaica’s development. The second “What History means for the Jamaica Logistics Hub” illustrated Jamaica’s established strength in such maritime endeavours. By now, some may have already realised that these articles were not arbitrary, but part of what is known as a SWOT analysis: SWOT being an acronym for Strength, Weakness, Opportunity and Threat.

The third article “Preparing for Competition – Strategic Facility Planning for Small and Medium-Sized Businesses” is posted on my blog, and uses the logistics hub as an example in assessing threats: the threat in this instance being the Panama Logistics Hub. So, the astute will now realise I have to date not touched on the hub’s weakness, at least not directly, nor had I intended of do so at this time. But, recent events have prompted me to conclude this series, even though details of the initiative have yet to be made public. Recent pronunciations particularly by public officials have shown a glaring ignorance of the precarious nature of this project, and acting on such ignorance could jeopardize the initiative.

Following my first article, Sheldon Rose – Supply-Chain and International Logistics Professional – pointed out a number of these weaknesses to me. I had mentioned that the logistics hub initiative would be constructed across four of Jamaica’s south-coast parishes. Sheldon pointed out that legally these nodes could not be separate from each other: legislative changes are required to facilitate the transportation of in-bond goods between the respective nodes of the hub, especially without the direct supervision of the customs department. Equipment for transhipment ports have to be custom-built and take years to fabricate. Provision needs to be made for handling hazardous materials, including oil-spills. Also, the hub would significantly impact the bio-diversity of its surroundings, so hydrological and environmental studies were needed to analyze the environmental impact.

The Logistics Hub involves the parishes of Kingston, St. Thomas, Clarendon and St. Catherine.  Starting next year, the Kingston Harbour is to be dredged, and additional berths installed west of the existing piers at the Port of Kingston to accommodate the super-sized vessels that will start coming through the expanded Panama Canal in 2015. Next, a bunkering and commodity transhipment port will be built in St. Thomas; and a dry-dock port, along with cargo and passenger airport built in Clarendon.  However, an industrial park – the Caymanas Economic Zone (CEZ) - is also proposed to be built in St. Catherine in the initial stage: only 200 acres being allocated for the park in the first instance but intended to be expanded to 1,000 acres after subsequent developments.

The expansion of the Port of Kingston later incorporated Fort Augusta, in St. Catherine. Minister Anthony Hylton had initially pitched the merger of the port expansion and CEZ to China Harbour Engineering Company (CHEC).  But, Prime Minister Portia Simpson later disclosed in her contribution to the 2013 budget debate that lands at Fort Augusta were insufficient for CHEC plans. Then, Ronald Mason’s article in the Sunday Gleaner of 18 August 2013 titled “Environment vs. Job, Economic Development” made mention of a US $1.5 billion investment by the Chinese into a development of which Liu Qitao – president of the CHEC parent company, China Communication Construction Company (CCCC) - referred to as the Portland Bight Industrial Park.

The location in question, the Great and Little Goat Islands, are located off the coast of St. Catherine. They are the second and third largest islands in the Jamaican archipelago: being 600 and 300 acres respectively in area. Peter Espeut explains in his Gleaner article “Selling our Birthright”, dated 23 August 2013, that the Goat Islands are connected to each other and to the mainland by mangrove wetlands. The mainland itself is “fringed with hundreds of acres of mangroves” and forms the Galleon Harbour with the Goat Islands.  This area has been declared a fish and game sanctuary by the government: being “one of the most fecund fish nurseries” in Jamaica, and a “habitat to thousands of birds”.

Construction is proposed to commence in 2014. The 100 m high hill on the Great Goat Island is to be “pushed into the sea to cover the wetlands” and create a huge peninsula on which the logistics centre will be built. A further 2,000 acres of land on the mainland is also to be developed, and the seabed dredged to accommodate the super-sized vessels: thus removing coral reefs and shoals in the process. This Chinese initiative consolidates the industrial park and port facilities, so in-bond goods initially will not have to be transported outside the area. As a matter of fact, this new port is now closer to the prospective cargo airport than was previously envisioned; but, having a toll highway to presently connect the various nodes of the Logistics Hub is not satisfactory. Rather than focus only on the ecological concerns though, it should also be appreciated that this Chinese initiative offers the logistics hub benefits it never had, including increased size, and should not be taken glibly, especially in the context of Panama’s offerings.

Panama also has ambitions to be the fourth global logistical hub, and it is far advanced in this regard. The Panama Pacifico Project, which has a duration of forty years, has allocated 3,500 acres of land for its industrial park. Panama’s Colon Free Trade Zone (CFTZ) has been operational since 1947 and now comprises three major ports and an airport, all linked by highway and railway: not to mention the 154 companies that already reside in this logistics park. Panama has two different organizations managing its ports and has made provision for a third: the operator of Singapore’s Logistics Hub. The Goat Islands alone is no match for this. The original hub initiative alone is no match for this. They complement each other. If not the Goat Islands, what alternate green field site does Jamaica have to offer the Chinese?

But, let me not leave my readers despondent: thinking the initiative is a lost cause. It is good that Jamaica realise that Panama’s Logistics Hub is a threat to its becoming the fourth global logistics hub, but it should also be realised that the Nicaraguan Canal is also a threat to the Panama Canal. Jamaica’s strength is in its central geographical location and it is the only hub that can consolidate freight for both canals, as well as tranship freight from either of these canals.  The Chinese initiative cannot be easily dispensed with. It is critical for the success of Jamaica’s logistics aspirations. Jamaica is off to a late start, it cannot afford to drop the baton now. It must decide whether it wants to enter the arena of global trade or be ever satisfied with its meagre tourism, bauxite, and remittance earnings.

Posted by phcjam at 11:36 AM EDT
Updated: Saturday, 19 October 2013 12:39 PM EDT
Post Comment | Permalink
Saturday, 20 July 2013
CARICOM and Caribbean Economic Development
Topic: Regional Development

In 1963, the Centre for Developing-Area Studies (CDAS) was established at the McGill University in Canada. William G. Demas – then Head of the Economic Planning Division of the Government of Trinidad and Tobago, served as its first research fellow in 1964.  Under its auspices, Demas delivered a four-lecture series on economic development of small countries, the substance of which was reproduced in 1965 as a book titled The Economics of Development in Small Countries, with Special Reference to the Caribbean.

In the Preface to the first edition, Demas wrote: “In the course of my work in the field of economic planning in Trinidad, I was led to question the relevance to small countries of much of the accepted doctrine on economic development. I came to the conclusion that a somewhat different approach was necessary for small countries, such as the Caribbean”. In the Introduction to the later edition, Sir Hilary Beckles, pro Vice-Chancellor, Principal and Professor of Economic and Social History at the University of the West Indies, Cave Hill, Barbados, remarked that “This brilliant text emerged from the intensity of his contributions to development ideas within the regional integration movement”.

In 1965, several former British colonies in the Caribbean also formed the Caribbean Free Trade Association (CARIFTA), an agreement between member states to eliminate trade barriers. These former British colonies then formed the Caribbean Common Market (CARICOM) in 1973, which involved the introduction of a common external tariff and free movement of labour and services.

On CARICOM’s fortieth anniversary, Jamaican manufacturers complain of Trinidad’s large trade surplus with Jamaica; that Trinidad maintains non-tariff barriers; and how energy subsidies to Trinidadian manufacturers give them an unfair competitive advantage. However, these Jamaican manufacturers have not sought a ruling in the Caribbean Court of Justice (CCJ), neither has any serious petition been made to CARICOM to establish a policy on the use of subsidies. Yet, there are calls for Jamaica to withdraw from CARICOM, even temporarily.

But, Demas stated that “… economic regionalism offers one important avenue for many small underdeveloped countries to achieve the possibility of a more fully self-sustained pattern of growth”, and “… at least some regional cooperation or some limited measure of economic integration maybe better than none at all, and any move towards regionalism will be a step in the right direction”. Could Demas’ conclusions have been relevant only to Trinidad and Tobago?  Certainly not!

The fact is that Jamaican manufacturers could raise the same objections to trade with the United States.  But, no one is even suggesting that Jamaica cease trading with the US, even temporarily. Demas stated that there are two “essential characteristics of self-sustained growth”: one, savings and investment, and the other he termed “transformation of the structure of production”, noting that “development really means a structural transformation of the economy”. It is my contention that CARICOM has not facilitated this transformation expeditiously, which has led to unbalanced development and discontent with CARICOM itself.

Demas postulated “seven basic elements” of this second characteristic, which are:

·         Capacity to transform;

·         Unification of the national markets for goods and services;

·         Shift of production and labour between sectors of the economy;

·         Interdependence between domestic industries and activities;

·         Changes in the importance and composition of foreign trade;

·         Reduction of dualism; and

·         Development of appropriate institutions.

From CARIFTA through to the CARICOM Single Market and Economy (CSME) in 1993, the focus has been on the element “unification of the national markets”, and more so for goods than services. So, a country like Trinidad which has 59% of its Gross Domestic Product (GDP) derived from production of goods would have benefited much more than Jamaica, which has 30% of its GDP derived from production of goods. Most Caribbean service-producing countries also depend on tourism which has been shown to be an enclave sector, that is, one in which a large proportion of their inputs are imported from outside the region, even though they may be available regionally. Therefore, “Interdependence between domestic industries and activities” also needs to be addressed in these service-producing countries and, Demas cautions that “… an enclave economy – even one which yields a high level of per capita income and consumption to its inhabitants – cannot be considered truly developed”.

It was previously stated that the Jamaican manufacturers could take their case to the CCJ. The CCJ is one of the institutions falling under the element “Development of appropriate institutions”. However, the CCJ came into being long after Jamaica first started protesting about Trinidad’s trading practices, and as such, its late establishment would have effectively denied affected parties any means of redress.  Capital and other financial institutions are other relatively new additions to CARICOM, even though Demas first highlighted their importance forty-eight years ago. Other important institutions involved are education and training, public and business administration, land tenure, agrarian systems, and an “appropriate structure of incentives”.

Another issue, raised by other commentators, is Jamaica’s comparatively low productivity to Trinidad.  This is what Demas refers to as “dualism”- in this case, both regional dualism and dualism between economic sectors are involved.  In this regard, Demas notes that “… development of a national economy really means that all sectors – whether goods-producing or service-producing – and all regions become technically progressive, although not necessarily at the same rate”.  Here, Demas recommends that sector-dualism be addressed in the initial stages of development, followed by regional dualism.  However, we have already established that the goods-producing and service-producing sectors were never handled in a balanced manner.

The productivity of Jamaica, as a predominantly service-producing economy, has declined over the past thirty years. One of the reasons given for Jamaica’s fall in productivity is the unresponsive nature of its labour costs to productivity. This shows poor “capacity to transform”, which is essentially the ability to respond to price and market conditions, especially those outside the local market. Jamaica also has a large proportion of unskilled labour, which means shifting “labour between economic sectors” will be problematic, if not impossible.  CARICOM is yet to guarantee the free movement of labour, but these categories of workers will understandably not be in high demand elsewhere by CARICOM member states.  CARICOM will not be able to offer Jamaica a “quick-fix” to these problems.

However, “changes in the importance and composition of foreign trade” are a potential threat to regional trade itself, and by extension regional integration; if transformation issues are not addressed better than they are now. When a nation’s economy transforms, Demas states that the proportion of its trade to GDP may be unchanged, but the composition of its imports shifts away from consumer goods towards intermediate and capital goods.  Unless regional partners also start producing more intermediate and capital goods, they will therefore experience a trade surplus with a more developed partner.


CARICOM really needs to do a better job than it is presently. It needs to address these transformation issues expeditiously. Institutions like the CCJ and integration of capital markets need to become fully functional in short order. Dualism between the goods and service sectors needs urgent attention; and, an effort needs to be made to integrate the region’s industries and activities. CARICOM cannot afford to be preoccupied with unification of the mercantile markets at the detriment of all else.  It needs to decisively address Caribbean economic development. But, it cannot rectify all the deficiencies alone. So, member states must not renege on their own responsibilities to achieve self-sustained growth. 

Posted by phcjam at 8:49 PM EDT
Updated: Tuesday, 3 September 2013 2:44 PM EDT
Post Comment | Permalink
Wednesday, 2 February 2011
Location of future PHC Projects blogs

Please note that blogs can now be found at the following locations:



Lecture notes:


Paul Hay

Managing Partner

PAUL HAY Capital Projects




skype name: phcjam



Posted by phcjam at 4:16 PM EST
Updated: Saturday, 22 February 2014 2:49 PM EST
Post Comment | Permalink

Newer | Latest | Older