VZCZCXRO0370
RR RUEHGR
DE RUEHKG #1256/01 1771132
ZNR UUUUU ZZH
R 261132Z JUN 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 3093
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0170
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 03 KINGSTON 001256 
 
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 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: May 31 - June 23, 2006 
 
 
KINGSTON 00001256  001.2 OF 003 
 
 
¶1. This month's topics: 
 
-- Chilean President Visits 
-- GOJ Concerns with Increasing Food Imports 
-- Diaspora Conference Held in Kingston 
-- Bank Executive Highlights Benefits of Migration 
-- Businesses Hurting From Anti-Drug Efforts 
-- Huge Demand for Scrap 
-- Inflation Moderates 
-- IMF Says Growth Higher Than Reported 
-- Tourist Arrival Figures Remain Bullish 
 
 
------------------------ 
Chilean President Visits 
------------------------ 
 
¶2. On June 9th, Chile's first female president, Dr. Michelle 
Banchelet, met with Portia Simpson Miller during a one-day working 
visit to Kingston.  The meeting between Simpson Miller and Banchelet 
covered a wide range of topics including: trade; sugar; the use of 
Montego Bay Airport as a transhipment port for Chilean exports to 
Europe; tourism; visas; sports and culture; education and training; 
and energy. 
 
----------------------------------------- 
GOJ Concerns with Increasing Food Imports 
----------------------------------------- 
 
¶3. Despite an existing 260% import tariff on "sensitive" 
agricultural products, such as: carrots, cabbage, lettuce, and 
tomatoes.  Jamaica's agricultural sector continues to face stiff 
competition from imports. Agriculture Minister, Roger Clarke, 
attributes the surge in imports primarily to illegal importation of 
these products. According to Clarke, his ministry is currently 
designing mechanisms to abate the problem. 
 
------------------------------------ 
Diaspora Conference Held in Kingston 
------------------------------------ 
 
¶4.  Over 500 delegates attended a GOJ hosted conference in Kingston 
on June 15 and 16, seeking ways to strengthen ties between Jamaicans 
at home and abroad.  The GOJ, recognizing the importance of the 
almost 2.5 million Jamaicans residing abroad, given their over USD 1 
billion in remittances annually, has been seeking other ways to tap 
into this market.  Over 20 resolutions were passed at the 
conference, chief among them the establishment of a Jamaica Fund to 
help finance projects.  Prime Minister Portia Simpson-Miller also 
announced the establishment of a Parliamentary Joint Select Diaspora 
Committee to consider how proposals from the diaspora could be 
translated into national policy.  Opposition Leader Bruce Golding 
also called for an expansion of the Senate seats to allow 
representation from overseas Jamaicans.  The next Diaspora 
Conference is slated for 2008. 
 
--------------------------------------------- -- 
Bank Executive Highlights Benefits of Migration 
--------------------------------------------- -- 
 
¶5.  A leading bank executive, Patrick Hylton of National Commercial 
Bank, has suggested that Jamaicans should not view migration as 
'brain drain', but as 'brain gain'.    In making his case, at the 
second diaspora conference, Hylton pointed to Singapore, India and 
China, which have benefited from the return of expatriates.  This 
position was supported by another banking executive, Ryland Campbell 
of Capital and Credit Financial Group, who urged Jamaicans to 
consider migration as something which will be an advantage in the 
future.  However, many delegates attending the conference said they 
were hesitant to invest in Jamaica due to financial risks, 
government bureaucracy and high crime rates. 
 
----------------------------------------- 
Businesses Hurting From Anti-Drug Efforts 
----------------------------------------- 
 
 
KINGSTON 00001256  002.2 OF 003 
 
 
¶6.  GOJ attempts to dismantle drug networks appear to be gaining 
traction, given recent pronouncements from two business heads.  In 
mid June, CEO of Hardware and Lumber, Anthony Holness, told 
shareholders that in addition to hurricanes and competition, success 
against drug trafficking was the main reason for the lackluster 
performance of the company.  Holness explained that there was less 
cash to launder by drug dealers, who often turn tainted cash into 
fancy homes, shopping centers and townhouse developments. 
Nationwide lottery operator, Supreme Ventures, also attributed part 
of its declining revenues to anti-drug measures.  While this 
information has been in the public domain for sometime now, it is 
the first time that it has been openly discussed.  Suggestions are 
that economic activities have been particularly hard hit in Montego 
Bay, where police arrested several alleged drug kingpins in 2005. 
 
 
--------------------- 
Huge Demand for Scrap 
--------------------- 
 
¶7.  Jamaica, grappling for years to manage its solid waste, has 
finally found an avenue to dispose of its old vehicles and other 
discarded metals for foreign currency.  Estimates suggest that over 
20,000 tons of scrap metal now leave Jamaica annually for the export 
market.  With prices at about USD 45.5 per ton, this translates into 
export earnings of just under USD 1 million. 
 
------------------- 
Inflation Moderates 
------------------- 
 
¶8.  After jumping by 1.1 percent in April on the back of higher food 
and fuel prices, inflation rates declined to 0.4 percent in May 
¶2006.  This brought inflation for the year to 1.7 percent and 
compares favorably with the 5.7 percent recorded during the similar 
period of 2005, when food shortages and soaring oil prices led to a 
spike in prices.  While inflationary impulses will emanate from wage 
hikes and increased utility prices, barring weather related and oil 
shocks, prices are expected to remain below 2005 levels. 
 
------------------------------------ 
IMF Says Growth Higher Than Reported 
------------------------------------ 
 
¶9.  The IMF is again contending that the Jamaican economy is growing 
at a much faster rate than reported by the Statistical Institute of 
Jamaica, due to unmeasured activities in the informal sector. 
According to the IMF's country report on Jamaica, issued in May, 
actual GDP may be higher than measured and there is evidence that 
the informal sector is large and growing faster than the rest of the 
economy.  The Fund said services in Jamaica are difficult to measure 
and this combined with the size of the underground economy makes 
national accounts difficult to estimate. The IMF is basing its 
argument on the increase in electricity consumption (proxy for GDP 
growth), which has grown by over 2 percent in the 1990s compared 
with under 0.5 percent for overall GDP.  The IMF said that 
correcting for this discrepancy, GDP growth during 1991-2000 could 
be as high as three percent.  While there is merit to the argument, 
it should be pointed out that there is a close link between the 
formal and informal economy and some informal activities are 
therefore captured in the official data.  It should also be noted 
that government bureaucracy and high tax rates are responsible for 
part of the increase in informal activities. 
 
-------------------------------------- 
Tourist Arrival Figures Remain Bullish 
-------------------------------------- 
 
¶10.  Tourist arrivals jumped by 20.8 percent in May, continuing the 
bullish performance observed during the winter season (December to 
April 2006) when arrivals soared by a record 15.7 percent.  The 
impressive numbers, especially from the U.S. and UK, are a direct 
result of the hotel rooms added in 2005, particularly by Spanish 
chains.  A number of U.S.-based airlines (Spirit, Delta and United) 
have also begun service to Jamaica.  Arrivals should remain buoyant 
during 2006, as forward bookings for the traditionally quiet summer 
 
KINGSTON 00001256  003.2 OF 003 
 
 
season are quite strong.  The island should also see record cruise 
arrivals this year, as Royal Caribbean's mega liner, Freedom of the 
Seas, is set to add 100,000 visitors.  The world's largest ship is 
expected to carry 4,000 visitors and 2,000 crew members to Jamaica 
weekly, adding an estimated USD 15 million to tourism earnings. 
 
 
JOHNSON