VZCZCXRO1705
RR RUEHGR
DE RUEHKG #1051/01 1501458
ZNR UUUUU ZZH
R 301458Z MAY 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 2888
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0168
RHEFDIA/DIA WASHDC
RUEABND/DEA HQS WASHINGTON DC
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 KINGSTON 001051 
 
SIPDIS 
 
STATE FOR WHA/CAR (BENT) AND WHA/PDA 
STATE ALSO FOR INL/LP (BOZZOLO), EB/TPP, AND EB/IFD 
STATE ALSO DOE CA/OCS/ACS/WHA (RUTH BRANSON) 
STATE PASS OPIC FOR TABERNAKI 
CUSTOMS MIAMI FOR LOWEN AND MAHABIR 
SANTO DOMINGO FOR FCS, FAS, AND LEGATT 
STATE PASS USTR FOR A. GASH-DURKIN 
DOJ FOR OPDAT/R LIPMAN 
TREASURY FOR LAMONICA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: May 13 - May 30, 2006 
 
Ref: Kingston 555 
 
KINGSTON 00001051  001.2 OF 002 
 
 
¶1.   This week's topics: 
 
--   BOJ Reduces Interest Rates 
--   Prime Minister of Malaysia Visits 
--   Jamaican Company to Expand to the Caribbean 
--   Major Investment Project on the Horizon 
--   Cement Troubles Continue 
--   Public Sector Memorandum of Understanding (Finally) 
 
-------------------------- 
BOJ Reduces Interest Rates 
-------------------------- 
 
¶2. (U) Effective May 12, the Bank of Jamaica (BOJ) reduced 
interest rates applicable to open market instruments. 
Signals of a decline were evident from as early as May 1, 
when the BOJ removed the requirement that deposit taking 
institutions hold five percent of their assets as a special 
deposit.  The interest rate reduction, which ranges from 
0.15 to 0.20 percent, was predicated on emerging signs of 
stability in the economy.  Inflation had slowed to 0.1 
percent during the first three months of the year, while 
buoyant private investment inflows have helped to maintain 
relative stability in the foreign exchange market.  The 
stock of NIR has also climbed to USD 2.1 billion at the end 
of March.  Rates might not slow much further in the short 
term, as inflation jumped by 1.1 percent in April on the 
back of higher food and energy prices.  The upward movement 
in U.S. interest rates will also narrow the gap between U.S. 
and Jamaican rates, making dollar denominated assets more 
attractive. 
 
----------------------------------------- 
Jamaican Company to Expand to the Caribbean 
----------------------------------------- 
 
¶3.  (U) Information technology upstart, e-Services has 
signaled its intention to enter the St. Lucian market by the 
end of 2006.  The Jamaican company, which is slowly becoming 
one of the world's leading providers of offshore call 
centers and back office operations, is planning to invest 
over USD 1 million to create over 400 jobs.  The company, 
which began with 35 employees in Jamaica, has grown its 
staff to over 1,500. 
 
--------------------------------------- 
Major Investment Project on the Horizon 
--------------------------------------- 
 
¶4.  (U) US-based firm Century Aluminum and Hong Kong-based 
Minmetals Aluminum Company have entered into an agreement to 
explore the possibility of setting up a joint alumina 
processing plant in Jamaica.  The feasibility study, which 
is expected to begin soon, is slated to take 18 months and 
the plant itself would be completed in six years.  The 
proposed plant would have the capacity to refine 1.5 million 
metric tons of alumina and would require a capital outlay of 
around USD 1.5 billion.  If this investment materializes it 
would be the second major investment in the bauxite industry 
following the USD 1 billion investment being undertaken by 
ALCOA.  However, a number of recently announced investment 
projects have not moved forward and this particular 
investment could hinge on whether aluminum prices remain 
high. 
 
------------------------ 
Cement Troubles Continue 
------------------------ 
 
¶5. (SBU) The troubled cement industry (see Reftel) continues 
to reel under the strain of a chronic shortage that arose 
after quality control concerns forced the recall of 
thousands of tons of the product in February.  Promised 
 
KINGSTON 00001051  002.2 OF 002 
 
 
shipments of cement from Cuba have still not arrived, and 
many in the private sector and the media are calling for the 
resignation of the Minister of Industry, Commerce, Science, 
Technology and Energy Phillip Paulwell.  The announcement of 
a year-long suspension of a 40 percent tariff on cement has 
placated few critics, as it is seen as "too little too 
late", but the recent arrival of a large consignment from 
Venezuela may buy a temporary reprieve. 
 
--------------------------------------------- ------ 
Public Sector Memorandum of Understanding (Finally) 
--------------------------------------------- ------ 
 
¶6. (U) After almost two months of negotiation and debate, 
the GOJ and the Jamaica Confederation of Trade Unions (JCTU) 
finally agreed to a Memorandum of Understanding (MOU) to 
replace the MOU that expired March 31.  It was due to be 
signed May 29, but the JCTU requested a delay because a 
number of its members were unhappy with the draft.  As 
expected, workers received significant wage increases that 
ranged from 13 to 27 percent, depending on the sector, as 
recompense for the previous sacrifice that the JCTU made in 
2004 when it accepted an agreement under which public sector 
wages were frozen for two years.  The Nurses Association and 
the Jamaica Teachers Association, however, backed out of the 
JCTU in an attempt to forge a better deal on their own. 
 
 
JOHNSON