PSOJ

CHIEF EXECUTIVE OFFICER’S REPORT
NOVEMBER 2009

OVERVIEW OF THE ECONOMY
Jamaican Economy Contracts – 3.1% in the Third Quarter.
The Jamaican economy contracted by 3.1% in the third quarter.  This information was reported by the Planning Institute of Jamaica (PIOJ) at a recent press briefing, citing the severe global downturn which is only now abating as the main cause. Between July and September 2009, the Goods producing sectors in Jamaica declined by 10.3% and Services fell  by 0.5%. The main areas of decline in the Goods producing sector were ‘Mining and Quarrying’ down 58.9%; ‘Construction’ down 5.8%; and ‘Manufacturing’ down 4.0%.  ‘Agriculture and Fisheries’ was the only goods producing sub-sector recording positive growth of 10.3%. The picture among services industries was mixed. ‘Electricity and Water’ was up 5.7%; ‘Hotels and Restaurants’ up 3% and ‘Other Services’ up 0.8%. Services declining were ‘Transport, Storage and Communication’ down 4.5%; Wholesale and Retail’; ‘Repair and Installation’ and ‘Producers of Government Services’ were each down 1.0%.

The main contributors to the 10.0% growth in ‘Agriculture, Forestry and Fishing’ was ‘Other Agriculture Crops’ which increased by 18.2%; ‘Animal farming  was up 8.2% and Fishing -up 22.7%. The 65.7% contraction in alumina production reflecting the continued closure of Windalco and Alpart were the main contributors to the massive 60% decline in the mining sector.

Year to date (Jan– Sept.2009), real value added is estimated to have declined by 3.1%. Services declined by 1.0% and Goods Production declined by 9.3%.  Roughly, the same sectors which led the decline (and increases) in the third quarter are responsible for the decline and increases over the longer period.  Mining contracted by 48.4%; Manufacturing by 6.0%; Construction by  5.9% and Transport, Storage and Communication by 6.3%.  The sectors that grew during the last nine months were Agriculture, Forestry and Fishing, up 9.7%; Hotels and Restaurants, up 1.9%; Finance & Insurance Services, up 0.6%; Real Estate & Business Services up 0.2% and Electricity and Water up 2.1%.

The PIOJ projected that the economy will likely contract by 3% in the October to December quarter and during the first half of 2010, before turning up in the second half of 2010. Already, preliminary data for October shows a further 50.4% decline in bauxite production and that while airport arrivals of tourists have increased by 1.4%, cruise passenger arrivals have declined by 21.4%.

Two factors affecting the prospects for the Jamaican economy in 2010 are the readiness and terms of the agreement the Jamaican Government concludes with the International Monetary Fund and the strength and sustainability of the global economic recovery.

As regards the first, expectations are that the Golding administration will conclude an agreement with the IMF before the end of 2009 or early in 2010. Though an IMF Agreement could improve the manageability of the public debt and facilitate some structural reforms of the economy in the medium term, considering that the IMF is likely to require significant cutbacks in GOJ expenditures this could further depress aggregate demand and prolong recessionary conditions in the Jamaican economy throughout 2010.

Regarding the global recovery, while a mood of cautious optimism is growing, (and certainly would have gained further on recent news that the US economy lost only 11,000 jobs in November, continuing the improvement from a high of 760,000 jobs lost in January 2009) doubts have certainly not evaporated about the sustainability of the global recovery.  Among the major industrial economies, only Britain has yet to record quarterly growth signalling the end of recession in that country.  The United States recorded growth of 2.8% in the third quarter breaking four previous quarters of negative growth; Japan has recorded annualised growth of over 3% over the past two quarters; and Germany and France have likewise recorded two  consecutive quarters  of positive growth.  The entire Euro zone recently registered 0.4% growth signalling an end to recession in the aggregate throughout the Euro-area, though not necessarily in countries like Spain and Portugal, which are stilled mired in recession.  China, which never ceased growing while many other countries were contracting, reported 8.9% growth in the third quarter, bettering the 7.3% growth reported in the second.

Notwithstanding the many signs of improvement, many bearish commentators still warn of the possibility of a “double dip” recession.  This latter group notes that American consumers lost significant net worth when home prices plummeted and they are still deleveraging and trying to pay off their debts.  They argue that the severity and nature of the last recession had a chastening effect on US consumer psyche and that consumers are unlikely to resume their free-spending ways any time soon.  Without a sustained pick-up in consumption which accounts for 70% of the US economy, the “double-dippers” argue that manufactures and employers are unlikely to resume robust hiring, many of the existing unemployed could begin losing their homes and layoffs could continue, or possibly take another down-leg.  Many of these bearish commentators point ominously to high vacancy rates and loan servicing difficulties being experienced in commercial real estate as the “other shoe waiting to drop”.

More optimistic commentators point to the fact that well over half of the projects financed by President Barack Obama’s Stimulus Plan will only come on stream in the first half of 2010 and that US manufacturers and wholesalers have so depleted their inventories that at some stage they will need to restock for even minimal functioning.  These two forces they argue should reinforce and continue to stimulate the recovery and build momentum towards sustainability.

Even the more optimistic however do not see the US auto industry — a key market for Jamaican bauxite and alumina — selling more than 12.5 million autos per annum over the next two years compared with 16.5 million in peak years.  This last will clearly restrain the resumption of full output in the Jamaica bauxite alumina industry.

A possible wild card is whether China or India can boost their domestic consumption sufficiently to sustain global demand in case the recovery in the US falters.  Of particular interest to Jamaica, is how fast these two potentially huge economies can graduate enough of their people to the middle class, increase production of cars and other goods and increase demand for commodities.  Though both economies have being growing very fast, especially China, which recently overtook US for the first time in monthly auto production, it is unlikely that the rate of growth of these countries will have significant medium term impact on demand for Jamaica’s goods.

In the best of times the Jamaican economy has under-performed because of our narrow export base and precarious fiscal position. Now given the likely contractionary effects of the IMF Agreement in the short-term and the uncertainties surrounding the global recovery, the cautious outlook for continued decline in the fourth quarter and a slow to moderate recovery of the Jamaican economy for 2010 seems reasonable.

STANDING COMMITTEE ON NATIONAL SECURITY (SCNS)
The focus of the SCNS meeting held on November 24 was the formulation of the PSOJ Policy Paper on Crime. The draft document was revised and will be further discussed at the Committee’s next meeting.
Another highlight of the meeting was the presentation of five motorcycles donated by Carreras to the Jamaica Constabulary Force.  The motorcycles were handed over to Actg. Commissioner Owen Ellington by Carreras’ Corporate and Regulatory Affairs Manager, Mr. Christopher Brown.

CRIME STOP  
Based on the Crime Stop Coordinator’s report, the following was noted for the first eleven months of the year i.e. January 1 – November 30, 2009:  
•    The ratio of successes to calls investigated was 1:7; for the corresponding period last year the ratio was 1:6.  The monthly success ratio for November was 1 in 9 and in October it was 1 in 5.
•    The number of arrests was 94, including 7 in November and 10 in October.
•    The number of calls received was 1115, of which 87were received in November and 79 in October.
•    The rewards paid totaled $1,686,600, including $40,000 paid in November and $160,500 in October.
•    Property recovered was valued at $15,407,800.  The value of the property recovered in November was $600,000 and in October $1,418,600.
•    The value of narcotics recovered was $40,923,477 of which narcotics valuing  $1,418,239 were recovered in November and narcotics valued at $2,205,778 were recovered in October.

JUSTICE REFORM COMMITTEE (JRC)
The Committee did not meet in November.

CORPORATE GOVERNANCE (CG) COMMITTEE
This committee met on November 2  and the report was included in the CEO’s report for October 2009.

EDUCATION COMMITTEE
   The PSOJ Education Committee had its meeting on Friday, November 13and discussed the following:
•    Scorecard
•    This was further updated and approved.  

•    Articles
 Three Committee members agreed to prepare articles.   In addition, articles will be drawn from the  
 Education policy paper once that is written and approved in 2010.  

•    Meeting with Foundations
A meeting is to be set up with Foundations with a view to a)  sharing with them the PSOJ’s focus as it relates to education  and b) solicit their support and greater collaboration  for programmes with a similar focus.

•    External Committees
After reviewing the External Committees on which PSOJ is represented, it was agreed that the Organisation will continue with representation on a maximum of six such committees.   

•    School Boards
The Committee was advised that the National Council on Education would be writing to the PSOJ  re private sector representation on school boards.   Training of School Board members was also discussed and this is to be further explored with PSOJ’s Corporate Governance trainers and Hillel Foundation’s Rachel Henriques.  

TRADE POLICY COMMITTEE (TPC)
World Trade Organization
The 7th WTO Ministerial Conference commenced in Geneva, Switzerland on November 30, 2009.  Jamaica’s delegation was led by Senator Marlene Malahoo Forte, Minister of State, Ministry of Foreign Affairs and Foreign Trade.

The Meeting reviewed world trade over the last four years including the impact of the global economic crisis and activities of the WTO including the Doha Round.  A full report of the outcomes will be presented at the next meeting of the Jamaica Trade and Adjustment Team on 10 December at the Ministry of Foreign Affairs.

Canada/CARICOM Trade Negotiations
The first round of the negotiations between Canada and CARICOM was held in Barbados, 9-12 November 2009.

Mrs. Imega Breese McNab of the JMA was the only private sector representative at this negotiating session.   A meeting was held at the PSOJ with the JEA, and the SBAJ where we Mrs. McNab informed of the discussions.  

CARICOM’s critical issue in the negotiations is for additional development assistance to accompany reductions in tariffs and further opening of CARICOM markets to Canadian goods and services.  However, Canada believes its current development assistance to the region is already significant and would have to be taken account of in the proposed agreement.  More specifics would be required to obtain progress on this issue in terms of the assistance required for institutional building, and improving standards and quality.

Canada views the inclusion of side agreements on labour and environment as critical to the negotiations.  However, CARICOM would like to avoid any specific commitments in these areas, as fines could be applied where agreed conditions are violated.

There is general agreement on rules of origin.  Differences exist on environmental requirements for certain products, and whether to use a positive list or negative list approach. A positive list approach would be an effective strategy whereby only those sectors and services listed in the agreement would be liberalized, thereby allowing greater protection for sensitive sectors.  Under a negative list approach, all sectors and services would be liberalized except for those explicitly stated in the agreement.  Canada wants to exclude dairy products from the negotiations but requires ambitious market access for all other agricultural products and also non-agricultural products.

Negotiations for tariff reductions will proceed on the basis of current applied rates.

The next negotiating session is scheduled to take place in March 2010 in Barbados.

It was suggested at the briefing session at the PSOJ that the private sector associations should take turns in sending representatives to the meetings.  The JMA would not be able to attend all the negotiating sessions and also has less of a stake in the negotiations as the greatest economic potential for the agreement is in the area of services trade.

USA/CARICOM
Work is continuing on the draft US/CARICOM Trade and Investment Framework Agreement with the possibility of a meeting of the US/CARICOM Trade and Investment Council in 2010.

CSME Single Market Issues
The last meeting of COTED considered, among other things, matters related to the procedures for suspension of the CET and Jamaica’s application for the suspension of the CET on cement.

Other matters affecting Jamaica’s trade with CARICOM were considered including the CARICOM SPS inspection visit related to the export of beef patties and poultry products.

CARIFORUM/EC EPA
Jamaica has continued work necessary to operationalize the EPA including approval by Cabinet to amend the Customs Act to facilitate the tariff liberalization process.

Review of the Revised Treaty of Chaguaramas
The Senior Officials of the CARICOM Legal Affairs Committee (SOLAC) met in Jamaica, 16-19 November 2009 to continue reviewing the Revised Treaty of Chaguaramas.  The meeting focused specifically on the trade chapters – 3 on Establishment, Services, Capital and Movement of Community Nationals and 5 on Trade Policy.

CARICOM Regional Organisation for Standards and Quality (CROSQ)
CROSQ and the EU funding facility, Proinvest, held a regional workshop on standards and quality in Barbados on November 26 to 27.

The aim of the workshop was to draw on the expertise and experience of participants to develop an action plan for a comprehensive and integrated capacity building programme for upgrading standards and quality capabilities as part of the EPA implementation process.

The workshop examined the issues under organizational development and management; legislation and the regulatory environment; awareness building and communication, sustainability and networking; and technology and innovation.  The constraints under each heading and proposed solutions were considered.  A second workshop will be held in February 2010 where a detailed action plan will be drafted out of the initial and ongoing discussions among participants, which will be used as the basis to secure funding for the programme.

Expo 2010 in Shanghai, China
Expo 2010 will be staged from May 1 to October 31 in Shanghai, China.  70 million visitors are expected to attend the event from all over Asia.  CARICOM has been provided with a pavilion of which Jamaica has been given the largest space, totaling over 3000 ft2.

The main objectives of Jamaica’s participation are:
•    Promote niche value low volume exports
•    Position the country as the gateway to the Americas
•    Promote Jamaica as a viable investment destination
•    Showcase Jamaican culture and promote Brand Jamaica

The product focus for the expo will include spices, condiments, alcoholic beverages, coffee, art/craft, and apparel.

JAMPRO will coordinate shipping of the products to be exhibited which will be free of cost for participants.  Companies sending products do not have to attend the show but could arrange for JAMPRO to manage the promotion and sales of their products.  The Expo will be largely paperless, so promotions would need to be in audio-visual format.  Participants who wish to be present at the Expo would be responsible for all their costs except for the initial shipment of the display products.  The deadline for confirming participation is the end of January.

Jamaica’s Expo focus will be mainly on goods and tourism services.

MEMBERSHIP

New Members
There were two new members for the period:
•    Bars to Go Party Services
•    La Maison Property Services
    

CORPORATE AND PUBLIC AFFAIRS DEPARTMENT (CPAD)
Meetings/ Functions/ Events
•    Public Forum on Justice Reform                            November 4
•    Bank of Nova Scotia/PSOJ Luncheon                         November 18
•    JRRAP Breakfast Meeting                            November 24

Justice Reform Forum
PSOJ once again partnered with the Jamaicans for Justice to host a very interactive public forum “The Justice System: Where are we now and next steps”.  This was held  on November 4 at the Knutsford Court Hotel.  The panelists were Minister of Justice and Attorney General, the Honourable Mrs. Dorothy Lightbourne, QC, Chief Justice Mrs. Zaila McCalla, OJ, the Director of Public Prosecutions, Ms. Paula Llewellyn, QC and Mr. Hugh Small, QC.  The forum was well attended and a segment of the programme was broadcast live on Nationwide radio.

Bank of Nova Scotia/PSOJ Luncheon
PSOJ in association with the BNS hosted a special luncheon on November 18 at the Hilton Kingston Hotel.  Guest Speaker was Dr. Warren Jestin, Senior Vice President & Chief Economist - Scotiabank International and he addressed private sector leaders on “The current state of the world financial system and prospects for recovery”. The luncheon was attended by about 100 persons.

JRRAP Breakfast Meeting
PSOJ in collaboration with the British Government sought the support of private sector foundations as well as NGOs for “The Rehabilitation and Reintegration of Offenders and Deported Persons” project.  To facilitate this support group, a breakfast meeting was organised for November 24, 2009 at 7:45 am at the Jamaica Pegasus Hotel.

Media Coverage
PSOJ

•    November 2     –     Jamaica Observer  - Brief  comments made by Jean Lowrie Chin on
                             PSOJ Partnership for Progress

•    November 3     –     The Daily Gleaner - PSOJ Hall of Fame supplement

•    November 11     –           Jamaica Observer -  Article “Reforms needed to boost productivity,
                                        says PSOJ head”  

•    November 17            –           The Daily Gleaner -  Letter to the Editor with PSOJ-mention

•    November 18             –          The Daily Gleaner  -  Article  “Matalon’s ideas for Jamaica’s growth”   

•    November 20             –          The Financial Gleaner -  Article on PSOJ/BNS  Luncheon
                                                 
•    November 15             –          The Sunday Gleaner  -  Quotation from PSOJ President on Martin
                                               Henry’s article  “Ellington’s Objectives”   

•    November 20             -            Irie FM  –  voice clip with President on PSOJ press release regarding
                                                recommendations for the establishment of a monetary policy committee
                                                at the BOJ

•    November 24             -            Media advisory on handover of five motorcycles donated by Carreras to
                                                the JCF at the Standing Committee on National Security meeting
 
•    November 25             –           The Daily Gleaner - Article “PSOJ backs monetary committee
                                                proposal”

•    November 29             –           The Sunday Gleaner  -  Courts 50th anniversary supplement: PSOJ
                                                President’s Message as well as photo and article  about Courts’
                                                receiving Job Creation Award

Jamaica Bankers Association (JBA)
•    November 2               –           Jamaica Observer - brief comments made by Jean Lowrie Chin on
                                               JBA’s  drive for greater financial literacy

THE JAMAICA INSTITUTE OF BANKERS

MBA PROGRAMME
Tutorials
Eight (8) tutorials were conducted for the month of November, in the Training Room of the Caribbean Centre.  These were the final tutorials for the July 2009 semester.

MBA Rap Session
In order to encourage a more interactive information session for prospective MBA students, the Caribbean Centre held its second rap session on Thursday, November 26 at 6:p.m.in the PSOJ Board Room.  Four prospects were in attendance.  Mrs. Doneth Brown-Reid, President of the Alumni Association and Mr. Peter Williams, a member of the Alumni Executive shared their experiences as students and the benefits derived as graduates.  The attendees asked quite a number of very interesting questions, both of the graduates and the Caribbean Centre representative.

Accreditation Update
The report on the Reaccreditation exercise, which was conducted in September, was received, with recommendations for improvement of the programme.  The Caribbean Centre is now expected to provide a response to the report to the UCJ which they will review at a meeting of the Accreditation Board scheduled for January 2010.

Information Sessions
Three information sessions were held in November:
1.    November 5 – Montego Bay: The Director and Senior Training & Education Officer conducted an information session in Montego Bay at the Wexford Hotel.  While the attendance was not overwhelming, there were several attendees who had a very strong interest in joining the programme.  One of these attendees has submitted an application and has received an offer of a place in the programme for the January 2010 semester.

2.    November 17 – Trinidad:   The Director of the Caribbean Centre and the Director of the North American Region conducted an Information Session in Trinidad.  They used the opportunity to meet with the North Caribbean Manager of ACCA, to look at ways in which an alliance can be formed to promote the programme to Certified Accountants around the Caribbean.  Discussions also continued regarding the promotion of the MBA for Engineering Business Managers in Trinidad.   Steps are also being taken to receive Government Assistance for Tertiary Expenses (GATE)  where the Government provides students with 50% of tuition fee for tertiary education.

3.    November 18 – Barbados:   The Director of the Caribbean Centre and the Director of the North American Region conducted an Information Session in Barbados.  They also met with Mr. Robert LeHunte, graduate and MBS Ambassador for Barbados, to discuss opportunities for promotion in Barbados based on his position as Managing Director  of the Barbados National Bank as well as President of the Caribbean Association of Indigenous Banks (CAIB).  He assisted in the placing of advertisements in the Barbados newspapers for the Information Session.

Attempts were made to meet with the Presidents of the Association of Professional Engineers in both Trinidad and Barbados to promote the MBA for Engineers and Engineering Business Managers, but time did not allow for this.   

Examinations
The examinations for the July 2009 semester commenced on November 30, and will run for the entire week ending December 4, in the Old Library of the University of the West Indies.
 
DEVELOPMENT PROGRAMMES
Open Market Courses

1.    The Jamaica Institute of Bankers partnered with Knowledge Works Limited to host another Harvard Business Publishing Programme, Stepping Up To Management, a series of workshops which includes 4 days spaced learning along with 12 months of online access to tools, tips, articles and course content of the 8 modules.  The final workshop in the series was held on November 17 in the JIOB Training Room.  The graduates were presented with their certificates.

2.    Loan Securities Documentation was held on November 4 - 5 in the Training Room of the JIOB.  The Presenter was Ms. Shirley Ann Eaton.  Thirteen (13) persons were in attendance.

In-house Training Programme

-    An in-house training programme, Proceeds of Crime Act (POCA), was held for the Directors and Senior Officers of EXIM Bank on November 10, 2009.    Ms. Shirley-Ann Eaton was the presenter.

General

The Director and Training and Education Officer, met with Mrs. Pamela Folkes of the Financial Investigation Division to promote the programmes being offered by the JIOB as well as to discuss possible collaboration on seminars regarding the Proceeds of Crime Act.  It was agreed that quarterly seminars would be held in this regarding during the coming year.

December 6, 2009