Wednesday, February 5, 2014

Jamaica could be on a roll

Andrew Mahfood - Food for the Poor Chairman, and CEO of WISYNCO
by  Jean Lowrie-Chin
Excerpt from Jamaica Observer Column | 3 Feb 2014

It was an energetic January, a launching pad for what I believe could be a meteoric year for Jamaica.  Various private sector groups have been drilling down into the issues they must tackle if we are to turn this very deep corner in our economy.  The fact that so many stalwarts in industry and commerce are taking our economy so seriously, is one that should encourage new entrepreneurs to persevere.
I had two important interviews over the past week with two extraordinary Jamaicans – the understated Chairman of Food for the Poor and CEO of Wisynco, Andrew Mahfood; and Jamaican winner of NBC’s ‘The Voice’ our sparkling Tessanne Chin. 
As I spoke with Andrew, I felt the same patriotic fire of his Dad, the late Sam Mahfood who was a dynamic President of the PSOJ.  He gave a tight analysis of our economy at a Jamaica Manufacturers Association Forum last month. 
“Our Nation faces a must win between getting multilateral support and further economic crisis,” said Andrew Mahfood, noting the following (quote):
  •         The exchange rate is declining. The Jamaican dollar has been devalued 14.5% in 12 months – it looks to be slowing but availability is tight;
  •         Inflation is increasing by approximately 10% in the last 12 months. Essentially our costs are increasing; consumers’ purchasing power is therefore down;
  •         Selling prices may need increases but this is difficult as purchasing power decreases
  •         There are pluses and some minuses to the recent Tax Reforms;
  •        The infrastructure slipping – in the areas of education, necessary services, crime.
Andrew’s comment on our infrastructure is well-informed from his active chairmanship of Food for the Poor Jamaica (FFPJ) where he accompanies his teams in health, education, agriculture and housing to identify the most urgent areas of need.  He launched the current FFPJ drive to raise funds for15,000 desks and chairs, badly needed in our schools.
“Too many schools are in dire need of desks and chairs, and so our children have to be standing or ‘kotching’ in class,” he said. “That’s a less than favourable learning environment. We need them to perform at their best, so we need to ensure they have desks and chairs.”

What can we do differently in our businesses to reduce our cost, develop new products, and become more efficient?” asks Andrew, and immediately gave his colleagues these pointers which I am asking our readers to share widely (quote):

-       Tax Reform – this presents a huge opportunity. The Employment Tax Credit (ETC) offers a tax credit of 30% of statutories (NHT etc).  We can reinvest those savings. Note that you have to pay on time and be compliant to be eligible.
-       Low JA$ interest rates – Never before have I seen these rates in Jamaica.
o   What can we invest in now using low fixed JA$ long term loans (five to seven years) – to make more products or become more efficient and cost effective? e.g. one machine to replace six
o   Look to modern technology, energy efficient, and information  systems (must get accurate info to make correct decisions)
-       Can you export? Devaluation has provided an opportunity for us to decrease export prices in order to get greater market share overseas and valuable foreign exchange
-       How many manufacturers produce on weekends? Hopefully all - JPS Rates for off-peak time of day users are the lowest - they work out to approximately 23.5c US/kwh whereas on peak approach almost 50c USD per kwh. Weekends are all off peak with partial peak 6 -10 pm
-       DBJ Renewable energy loans – review some energy saving projects – let the savings finance your programme
-       Invest in our local Stock Market – there are great companies trading below book value

“There are opportunities around us – we just need to be more optimistic/less pessimistic,” opined Andrew as he referred to a Jamaica Observer editorial headlined “Five reasons prosperity is on the horizon”.  The editorial highlighted prospective lowering of energy costs, construction of facilities for the logistics hub, encouraging developments in agriculture, support for the legalization of ganja and economic discipline as a result of our IMF deal, and the resolute leadership of Finance Minister Peter Phillips.

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