In fact, Mahfood is such a strong advocate for foreign investment, that he considers Jamaica's ability to attract capital from abroad as an important marker of the future viability of the economy.
"There are certain measures that a country uses to determine future viability, growth and so on," he explains. "Local investors are important, but it is assumed by all that we are already here. So it is when the foreign investors take risks here that we send a clear message to the world that there is confidence in the Jamaican economy."
Audrey Hinchcliffe, the founder and principal of corporate outsourcing provider, Manpower and Maintenance Ltd, agrees with Mahfood that an individual foreign investor can have a deeper impact on the economy than the value of his single investment, by triggering the herd impulse among others who may be sitting on the fence.
For example, Hinchcliffe points to the tourism sector which has attracted an avalanche of investment over the past decade and a half, once a single Spanish chain took the first tentative steps on the sands of the island's north coast. What's even more remarkable, she argues, is that so much capital has flowed into an industry that is hypersensitive to crime, at a time when Jamaica has had the ignominious reputation as being among the world's roughest places.
"The fact that they are coming despite our crime and other weaknesses is proof that Jamaica is open for investment," Hinchcliffe tells the Business Observer. "If we agree that jobs contribute to reduce crime and poverty, then they are making an impact; the hotel industry stands out as a major absorber of labour from construction straight to operation."
Hinchcliffe and Mahfood are among 12 indigenous entrepreneurs who, over the years, have been nominated for the Observer's Business Leader Award, and who have agreed to become endorsers of this year's programme which is specifically aimed at promoting Jamaica as an investment destination. Ten foreign investors are expected to be nominated for the award which will be announced at a gala ceremony in November.
The award is sponsored by J Wray and Nephew through its Appleton brand of rums, and the Pan Caribbean Financial Services group.
Charles Ross, the principal and managing director of Sterling Asset Management Ltd, has long been an advocate of broad low interest rates, as the most efficient route to stimulating investment and economic growth. For him, foreign capital assumes an even greater level of importance in an environment like Jamaica's, where high interest rates have for years stultified local investment by raising both the opportunity cost and the direct cost of building or expanding businesses.
"We are by definition short of capital, and it is investment that drives economic growth, so it is really critical for small, developing countries like Jamaica to be able to attract foreign direct investment to create jobs and expand the economic pie to generate growth at a much faster rate," notes Ross.
Ross sees other reasons why countries like Jamaica should celebrate the foreign investor. Here is how he puts it: "FDI (foreign direct investment) brings in new technologies both in terms of physical infrastructure as well as knowledge and management, so you have technology transfer taking place, as well as getting financial and economic impact. It is not only small countries that benefit -- large countries are all trying to attract foreign investment. In fact most of these investments move between developed countries. The Chinese just bought Volvo; Tata (the Indian vehicle manufacturer) bought Jaguar and Range Rover."
If there is any doubt that Jamaica is still able to attract investment from overseas, despite having internal challenges -- like those to which Hinchcliffe made reference, one needs only to review the data on FDI presented by Sancia Templer, the president of Jampro - Jamaica's main investment promotion agency, at the press conference three weeks ago to formally launch this year's Business Leader Award programme. Templer pointed out that the average annual inflow of direct foreign capital into Jamaica had soared to US$816 million between 2001 and 2009, up from US$246 during the preceding decade.
Jampro, as well as another state-run agency, the Jamaica Tourist Board, joined the 12 private entrepreneurs as endorsers of this year's Observer's Award programme to highlight the contribution of foreign investors to the growth of the Jamaican economy.
In providing a profile of the investments, Templer cited tourism and information and communications technology (ICT) as the leading sectors in attracting investment from overseas, with the latter attracting US$257 million in 2008, while US$196 million went into tourism. Agriculture, manufacturing and distribution shared US$75 million, while US$74 million was pumped into mining.
"JAMPRO is delighted to share in this significant occasion, and to offer our congratulations to the Jamaica Observer for the addition of this new, bold dimension to one of its premier products," said Sampler at the press conference that was held at the Jamaica Observer's Beechwood Avenue office.
"The overseas-based companies that have injected significant capital and foreign exchange into the island now stand today as outstanding examples of how leadership, clarity of purpose, creativity and drive can lead to great success," the Jampro president noted. "We are therefore pleased to be associated with this initiative to recognise the best from among our investors, most, if not all of whom we have worked closely with to facilitate their settling down and growth in Jamaica."
Based on his own line of business, it is not surprising that Fred Smith, the principal of the Montego Bay-based Tropical Tours Ltd would champion the cause of foreign investment.
"It is a vehicle to propel us forward," he puns. "Since we are in one global district we will need international bond to take us forward."
Smith's company transports tourists throughout Jamaica, so he would be a direct beneficiary of the geographic expansion and rapid increase in the hotel room-count that Jamaica has witnessed over the past several years.
Another company that is directly dependent on tourism and which therefore would have also benefitted from the increase in the number of rooms, is the soft adventure operator, Chukka Caribbean Adventure Tours.
One of the principals of this family enterprise, Alexander Melville, believes that while investment coming from abroad represents an "integral part of any country's development", the optimum model is when there is local/overseas partnerships in enterprises. "When you have both, you can achieve great things," he says.
The Melvilles were named Business Leader Family last year, as the Observer award programme turned the spotlight on families in business.
Yet, it is Patrick Casserly, the entrepreneur who was rocketed to prominence with his selection as the Observer's Business Leader for 2002, who stands as arguably the finest exemplar of what can be achieved with the kind of overseas/local business partnership that Melville promotes.
A decade ago, Casserly teamed up with a group of overseas businessmen, taking a minority but sizable stake in the technology company e-Services Ltd that rapidly became one of Jamaica's largest employers of labour. They sold the firm in March 2009 for over US$70 million to ACS, an American Fortune 500 which itself was later acquired by another US giant, Xerox.
Casserly harbours no illusions that his success would be possible without the foreign partners.
"The genesis of e-Services was the result of foreign direct investment," he notes. "It demonstrates the importance of our international business partners. As Jamaica goes forward we must continue to open our doors and our minds to the importance of FDIs and the nature of international business today."
Now the president of Montego Bay Chamber of Commerce, Casserly is again teaming up with foreign investors to pursue opportunities in agriculture and finance in Jamaica.
Like Ross, Casserly believes the interest rate in Jamaica is prohibitively high, and argues that capital originating from lower cost jurisdictions creates a distinct advantage for the investor.
"The cost of funds in Jamaica for entrepreneurial effort is not in line with the rest of the international community," he stresses. "Any kind of debt in Jamaica becomes prohibitive, whereas international funding at four to five per cent per annum is geared towards expansion and enterprise."
For Gassan Azan, the principal of the MegaMart chain of stores, Jamaica reaps synergy with foreign capital each time there is a positive investor experience here.
"The recognition that you get from investors who come here and have good experience is as powerful as the recognition we get from sports," says Azan. "In this century the world is an extremely small place with news getting around the globe within hours."
Like Casserly, Paul Hoo, the founding and current chairman as well as major shareholder in the gaming company, Supreme Ventures, knows first hand the benefit of foreign investment - his firm having sought partnership with the American technology giant, G-Tech Ltd to provide the technology infrastructure on which Supreme's games are run.
Hoo says that while investors gain access to new markets when they venture into other jurisdictions with their capital, "the receiving countries or companies benefit from new technologies, management, job creation and hard currency inflows".
Today, Supreme Ventures ranks as one of Jamaica's largest employers, if the thousands of individuals who are indirectly employed by the company, are counted.
Editor's note:
Five of the endorsers of the foreign investor award programme could not be reached for contribution to this story. They are: Donna Duncan-Scott of JMMB; Audrey Marks, the principal of Paymaster Jamaica and current ambassador to the USA; Ryland Campbell, executive chairman of the Capital & Credit Financial Network; and Chris Berry, chairman of Mayberry Investments.
Source: Jamaica Observer
Wednesday, August 25, 2010
