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ZNR UUUUU ZZH
R 251142Z JUL 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 3259
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0173
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 001441 
 
SIPDIS 
 
STATE FOR 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: June 24 - July 24, 2006 
 
 
KINGSTON 00001441  001.2 OF 003 
 
 
¶1. This month's topics: 
 
-- Chavez Visit Postponed 
-- West Indies Alumina Company Cutting Jobs 
-- More Competition in Mobile Market 
-- Finance Minister Heads Team to the UK 
-- Cement Imports Increase 
-- Airline Starts Service to Jamaica 
-- Prices Jump in June 
-- Opposition Spokesman Predicts Room Shortage for Cricket World Cup 
 
-- Jamaican Environment Hostile to New Businesses 
-- Proposed Mandatory Biotechnology Labeling 
-- Brazilian Loan to Rehabilitate Sugar Industry 
 
---------------------- 
Chavez Visit Postponed 
---------------------- 
 
¶2. Venezuelan President Hugo Chavez was scheduled to make a one day 
visit to Jamaica on July 17.  However, due to a scheduling conflict, 
his visit was postponed until an unspecified date later this year. 
 
---------------------------------------- 
West Indies Alumina Company Cutting Jobs 
---------------------------------------- 
 
¶3. Less than six months after granting generous wage adjustments to 
its employees, West Indies Alumina Company (WINDALCO) is slashing 
125 jobs to cut production costs.  However, the National Workers 
Union (NWU), which was embroiled in a long and bitter negotiation 
with the company, is accusing the management of using production 
costs as a cover to intimidate and target union members.  NWU 
Vice-President, Norman DaCosta, is describing the layoffs as an act 
of retaliation against the workers for asserting their rights during 
the 21-month long negotiations.  The company is denying the 
accusations, suggesting that several criteria were used to arrive at 
the final positions, including voluntary layoffs and the severing of 
people eligible for early retirement. 
 
--------------------------------- 
More Competition in Mobile Market 
--------------------------------- 
 
¶4. The GOJ is set to sell another two cellular telephone licenses 
for USD 19 million to Wire9 Plc of the UK and Wiiscom of the U.S. 
The deal is expected to be finalized once the Ministry of Finance 
completes its due diligence.  While the price being paid by both 
firms is well below the USD 45 million paid by two other companies 
five years ago, the price being paid is still surprising given that 
another U.S. telecom firm, AT&T, surrendered the license for which 
it paid USD 6 million last year.  Both companies will also be 
entering into a highly competitive market, with three incumbent 
providers and 81 percent penetration. 
 
------------------------------------- 
Finance Minister Heads Team to the UK 
------------------------------------- 
 
¶5. A team of GOJ officials, led by Finance Minister Omar Davies, 
recently visited Ireland and England to explore ways to strengthen 
ties with both countries.  In Ireland the team met with a number of 
Irish officials, including the Irish Prime Minister, Finance 
Minister and heads of the financial regulatory agencies to discuss 
ways to increase bilateral co-operation and a fact finding mission 
about Ireland's development experience.  In England, the delegation 
met with Gareth Thomas, head of the UK's Department for 
International Development, an agency that provides a significant 
amount of development funding to Jamaica.  When quizzed about the 
benefits of the trip, a source at the Ministry of Finance, told 
emboff that nothing of significance materialized. 
 
 
----------------------- 
Cement Imports Increase 
----------------------- 
 
KINGSTON 00001441  002.2 OF 003 
 
 
 
¶6. In the latest chapter of the sad cement saga (septels), supply 
pressures arising from production difficulties at the local cement 
company were expected to ease with the supply of another 22,500 tons 
of cement to the market.  The increased supplies came from a 
combination of imports and increased production at the local plant. 
Supplies were expected to improve considerably, as another shipment 
was expected from Cuba.  However, the supply pressure could persist, 
as fresh reports surfaced that the local cement company was again 
facing quality problems. 
 
--------------------------------- 
Airline Starts Service to Jamaica 
--------------------------------- 
 
¶7. Virgin Atlantic Airways, the second largest British airline, has 
joined a long list of airlines, particularly from the U.S., that 
have started service to Jamaica.  The airline made its inaugural 
flight to Montego Bay, Jamaica on July 3 amidst much fanfare and 
hype.  The 747-400 aircraft, which is expected to fly between 
Gatwick and Montego Bay twice weekly, brought 451 passengers, 
including its billionaire chief executive officer, Richard Branson, 
and a large contingent of British media personnel.  Virgin officials 
are projecting that the airline will bring about 100,000 visitors 
from the UK within its first year of service. 
 
------------------- 
Prices Jump in June 
------------------- 
 
¶8. Inflation in June 2005 was 1.3 percent, the highest monthly 
increase recorded since September 2005.  The surge in inflation 
reflected higher drink, food and fuel prices.  Despite the 
relatively robust movement in June, inflation for the six month 
period was 5.6 percent, below the 7.2 percent recorded in 2005. 
Inflation for June 2005 to June 2006 also moderated to 7.1 percent. 
However, increased fuel, food and electricity prices are expected to 
feed inflationary impulses in upcoming months. 
 
--------------------------------------------- ---------- 
Opposition Spokesman Predicts Room Shortage for Cricket World Cup 
 
--------------------------------------------- ---------- 
 
¶9. Opposition spokesman on tourism Ed Bartlett has predicted a 
significant shortage of hotel rooms to accommodate visitors expected 
for Cricket World Cup 2007.  Bartlett said that based on his 
projections there will be a shortage of about 8,000 rooms.  He 
therefore urged the GOJ to follow the lead of Barbados in leasing 
cruise ships, as well as making funds available for small hotels and 
private homes to be upgraded to accommodate the expected visitors. 
However, in an earlier presentation, Minister of Tourism and 
Entertainment, Aloun Assamba revealed that over 100 applications 
were received from Jamaicans who want to host visitors.  Assamba 
also announced that the Jamaica Tourist Board would be spending over 
USD 20 million to market the island's tourism product overseas. 
 
 
--------------------------------------------- - 
Jamaican Environment Hostile to New Businesses 
--------------------------------------------- - 
 
¶10. A study conducted by the University of Technology has found that 
almost half of Jamaican businesses fail to survive the start-up 
phase.  The study blamed high taxes, bureaucracy, red tape, crime 
and corruption.  This finding is contrary to the World Bank's Doing 
Business Survey, which surprisingly ranked Jamaica highly as one of 
the destinations it was easiest to do business in.  The recent study 
commissioned by the Global Entrepreneurship Monitor assesses 
entrepreneurial activity and provides information on 
entrepreneurship globally.  The 2005 report showed that of the 
almost 400,000 or 17 percent of Jamaicans who started a new 
business, only 9.5 percent of them survived the first few years. 
 
 
----------------------------------------- 
 
KINGSTON 00001441  003.2 OF 003 
 
 
Proposed Mandatory Biotechnology Labeling 
----------------------------------------- 
 
¶11. Jamaica's draft biotechnology policy, which will be submitted 
for parliamentary approval during late 2006, recommends the adoption 
of mandatory labeling of all products derived from modern 
biotechnology. The proposed regulation is a reflection of public 
opinion, and the resulting position of influential consumer groups. 
The regulation is not associated with an identity preservation 
program, and is therefore, not expected to result in sustained 
declines in U.S. bulk agricultural exports to Jamaica. 
 
--------------------------------------------- 
Brazilian Loan to Rehabilitate Sugar Industry 
--------------------------------------------- 
 
¶12. Against the poor showing of bidders to acquire the GOJ's 80 
percent stake of the Jamaican sugar industry, the government has 
secured a USD 100 million industry rehabilitation loan facility from 
the Brazilian Government.  The funds will be used to acquire 
machinery, equipment, expertise and high yielding sugar cane 
varieties from Brazil to aid the sugar industry diversification 
programs. According to industry sources, the initiative is likely to 
have little impact without a full-scale management reform.  Brazil 
is interested in the sugar industry and the possibility of increased 
involvement in ethanol operations in Jamaica since under the 
Caribbean Basin Initiative Jamaica can sell ethanol to the U.S. on a 
duty free basis.  Brazil is not entitled to the same concession. 
 
 
NEIGHBOUR