Jamaica aims to revive economy with port hub

Posted on Monday, 02.17.14

Jamaica aims to revive economy with port hub
BY DAVID MCFADDEN
ASSOCIATED PRESS

OLD HARBOR, Jamaica -- This hardscrabble harbor town on Jamaica's
southern coast seems an unlikely contender in an emerging regional
competition over the shipping routes that fuel global trade.

But as Jamaica joins a rush to lure the bigger, deeper-drafting boats
expected to cross an expanded Panama Canal by mid-2015, political
leaders and civic boosters envision the Old Harbor area as a cornerstone
of what theyenvision as a transformative, dream development for the
Caribbean island.

Jamaica aims to become a global logistical hub when mammoth
"post-Panamax" ships start carrying a growing share of cargo, much of it
from China. So far, construction hasn't started, but blueprints call for
an expansion of the island's existing container terminal, airports and
roads while a Chinese engineering company develops a $1.5 billion
transshipment port on a couple of mangrove-fringed islands just off Old
Harbor.

"The proposed transformation of Jamaica into a world-class logistics
center is unquestionably the most ambitious and far-reaching project on
which this nation has been engaged since we became an independent state
over 50 years ago," said Francis Kennedy, president of the Jamaica
Chamber of Commerce.

All over the Caribbean, the Panama Canal expansion, despite its recent
delays, has caused no shortage of countries to think big. With Brazilian
financing, Cuba recently started developing a new port it hopes can play
a major role in global logistic chains. Ports in places like the
Bahamas, Colombia and Miami are also busily strengthening infrastructure.

In Jamaica, technical studies to evaluate the dredging of Kingston
Harbor to 15.5 meters were recently completed and bidders have been
pre-qualified. Kingston's busy container terminal is expected to be
privatized and turned over to an international operator soon. And the
government has been busily meeting with investors from China, the U.S.,
Germany and other nations.

The plans have excited many in this country of 2.7 million people known
mostly for its beaches, reggae music and dominant Olympic sprinters.
Industry Minister Anthony Hylton said it's such a high stakes
competition that he is "up at nights, frequently in the wee hours of the
morning, cognizant of the fact that the future of our economy depends on
us getting this initiative right."

Yet it's far from clear whether debt-shackled Jamaica can realize its
ambitious goals, despite its strategic location by busy sea lanes
between North, Central and South American markets. Jamaica has had one
of the world's slowest growing economies over the past four decades and
a four-year loan package with the International Monetary Fund is
propping up the island.

Those economic woes severely limit Jamaica's ability to invest in the
project, which is estimated to cost as much as $15 billion. That means
the private sector would need to provide almost all of the financing.

Damien King, head of the economics department at Jamaica's campus of the
University of the West Indies, said the plans are worth pursuing but
transforming Jamaica into a logistics center would require a huge level
of public sector organization and management.

"It is far from obvious that the Jamaican government can muster that
even with throwing a disproportionate share of its capacity at the
problem," King said.

At the same time, a skirmish has been brewing between the government and
the conservation lobby over the proposed port to be developed by
state-run China Harbor Engineering Co. on the uninhabited Goat Islands
in a swath of Portland Bight, the island's biggest protected area.
Environmentalists argue the port would have a devastating impact on a
coastal zone that was shielded in 1999 to safeguard reefs, mangroves and
fish nurseries.

Diana McCaulay of the watchdog group Jamaica Environment Trust has
called for more public consultation about the China-financed port but
requests for more information have been denied. Without knowing
specifics of the deal, she said it's impossible to assess the benefits.

"I don't understand those who are uncritically accepting that there will
be sufficient benefits to destroy one of our protected areas," she said,
adding that her environmental group is not opposed to a logistics hub in
Jamaica but is fighting against a big transshipment port in the Portland
Bight area.

To fuel the hoped-for revival, the government plans to cluster global
companies into as many as 16 special economic zones and pitch incentive
schemes comparable to those offered in logistic centers like Dubai and
Singapore. One of Jamaica's main goals is to convince companies to
outsource parts of their production there and bring the country into the
global supply chain.

Officials also hope that warehousing and manufacturing operations will
add value to partly finished products shipped from China that are
destined for North America and elsewhere.

"Stockpiling goods in Jamaica will mean that it will take a day or two
to be delivered as opposed to weeks when ordered directly from China,"
said Eric Deans, chairman of a task force to advance the hub plans.

Paul Bingham, head of economic analysis at consulting firm CDM Smith,
which specializes in large water and transportation infrastructure, said
he wouldn't discount the impact of the "post-Panamax" ships on a country
such as Jamaica with a regionally competitive port. But he believes the
growth in regional business will be incremental.

"I don't want to get caught up in hype and say that this will be a
revolution for these economies. I think that's putting too much
expectation behind what will likely be netted from the operational
changes," he said.

But in Old Harbor, where badly overfished waters form the spine of the
local economy, many say they're hopeful the island's plans will provide
a needed lifeline

"My children, my grandchildren need jobs," said Compton Campbell, a
veteran fisherman in his 70s as he stood by his small battered boat,
paint flaking off the sides. "They need opportunities. I believe this
port business will be good for Jamaica."

David McFadden on Twitter: http://twitter.com/dmcfadd

Source: OLD HARBOR, Jamaica: Jamaica aims to revive economy with port
hub - Business Breaking News - MiamiHerald.com -
http://www.miamiherald.com/2014/02/17/3940914/jamaica-aims-to-revive-economy.html