VZCZCXRO7434
PP RUEHGR
DE RUEHKG #0354/01 1152032
ZNR UUUUU ZZH
P 242032Z APR 08
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC PRIORITY 6242
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHSJ/AMEMBASSY SAN JOSE 1986
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 KINGSTON 000354 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR (JTILGHMAN)(VDEPIRRO) 
WHA/EPSC (LKUBISKE) (PMAIER) 
 
SANTO DOMINGO FOR FCS AND FAS 
 
TREASURY FOR SARA GRAY 
 
E.O. 12958:  N/A 
TAGS: ENRG EINV EIND SENV ECON ETRD IBRD IADB JM XL
SUBJECT: JAMAICA: PM GOLDING GAMBLES ON CASINOS AS PART 
OF IMPRESSIVE BUDGET PRESENTATION 
 
REF: KINGSTON 279 
KINGSTON 343 
KINGSTON 342 
 
SUMMARY 
------- 
 
¶1. (SBU) Despite strong opposition from the powerful church lobby, 
Jamaica's Prime Minister Bruce Golding has announced his 
government's decision to issue two casino licenses.  The conditional 
licenses will be issued to real estate projects by Celebration 
Jamaica (Palmyra Resort) and Tavistock Group (Harmony Cove) (see 
reftel A).  As part of the agreement, both groups will be required 
to invest a minimum of USD 1.5 billion and build at least 1,000 
rooms. Taxes generated from the industry will be used to fund the 
country's enormous social deficit.  Although casinos took center 
stage, Golding used his first Parliamentary budget speech the 
address the two biggest issues on the island: skyrocketing food 
prices and energy security. Golding's speech appears to have been 
well received, with most pundits suggesting he demonstrated an 
excellent command of his new position.  End Summary. 
 
Vegas on the North Coast? 
------------------------- 
 
¶2. (SBU) After years of robust opposition from Jamaica's influential 
church lobby, Golding took the bold step of legalizing casinos.  The 
decision to revisit the introduction of casino gaming came out of 
the review of a report prepared in consultation with 
PriceWaterhouseCoopers in Canada, which concluded that casinos could 
be a vibrant industry for Jamaica and result in significant new 
employment opportunities. The Government of Jamaica (GOJ) has 
established the following requirements in order to consider 
applications for casino licenses: 
 
A) minimum investment of USD 1.5 billion and the construction of not 
less than 1,000 rooms; 
B) casino component to be no more than 20 percent of the total 
project; 
C) operators of the casino to be subject to the approval of the 
government after appropriate due diligence, including fit and proper 
tests and evaluation of track record of success in the sector; 
D) an appropriate regulatory framework with the necessary 
legislation and enforcement mechanism in place. 
 
While a firm decision has not been made, Golding intimated that tax 
proceeds from the industry will be earmarked in the consolidated 
fund to finance the country's enormous social deficit. 
 
But, Gambling Is Not New 
------------------------ 
 
¶3. (SBU) Although bringing full service casinos to the island has 
always been a lightning rod issue, in reality, gambling has become 
commonplace for many Jamaicans.  There are horse racing events at 
least twice per week, a national lottery, and numerous slot machine 
establishments on the island.  Golding highlighted this fact in his 
speech, arguing that the country has tiptoed around the issue, not 
wanting to be embroiled in the controversy.  "We have sneaked up on 
the issue while proclaiming our opposition to it", he continued.  He 
pointed out that in the 1990s the previous government had started 
issuing licenses for the operation of slot machines, leading to 
several gaming lounges and hundreds of slot machines in operation 
throughout Jamaica.  Golding noted that the only exception had been 
that live gaming tables were not permitted; however, with improved 
technology, many slot machines now carry games which, traditionally, 
were exclusively table games.  To make matters worse, in 2006, the 
previous government had entered into an agreement with the private 
equity group Tavistock for the development of the Harmony Cove 
project which was subject to the issuance of a casino gaming 
license. 
 
Jobs, Jobs, and more Jobs... 
---------------------------- 
 
¶4. (SBU) The decision to bringing major casinos to the island was 
not surprising, given that then shadow Finance Minister Audley Shaw 
told emboffs in August 2007 that casino gaming would be introduced 
irrespective of which party was elected.  Members of the Harmony 
Cove board told emboffs casinos were "a done deal."  Minister of 
Tourism Edmund Bartlett has used the last four months promoting 
gambling as a way to expand the tourism sector.  The most important 
 
KINGSTON 00000354  002 OF 002 
 
 
factor leading to the approval of casinos is that the Jamaican 
Labour Party (JLP)-led government is coming under increasing 
pressure to deliver on its promise to provide "jobs, jobs and more 
jobs."  In this regard, the government has approved proposals from 
the developers of the Palmyra Resort and Spa, operating as 
Celebration Jamaica Limited for a 2,080 room hotel at a cost of USD 
1.8 billion.  As part of its casino license, Tavistock also has 
agreed to increase the size of its project from 4,500 rooms to 8,500 
with an additional investment of USD 1 to 2 billion.  With each 
hotel room requiring two workers, these two investments are expected 
to employ over 20,000 people. 
 
Investment Climate 
------------------ 
 
¶5. (SBU) Golding also spent much time addressing the perilous state 
of the investment climate and the steps being taken to improve it. 
"We are taking steps to improve the country's business friendliness. 
 We want to roll up the red tape and roll out the red carpet", 
stated Golding.  Chief among the measures being taken are tax and 
labor market reforms, reduction in bureaucracy, and overhauling the 
development approval process to create a one-stop agency to evaluate 
land use and building projects with a 90-day period for approval or 
rejection.  By way of major investments, Golding announced that 
7,000 new rooms are to be built over the next two years, with 
expenditure of USD 157 million this year.  This is to be 
complemented by the development of a cruise ship terminal through a 
collaborative effort between Carnival Cruise Lines and the Port 
Authority of Jamaica.  Additionally, projects such as the Vernam 
field cargo transshipment airport, a new passenger airport, and a 
major free trade zone complex are in the pipeline. 
 
Energy and Food Crisis 
---------------------- 
 
¶6. (SBU) Since most Jamaicans are reeling from rising food and 
energy prices, Golding spent most of his speech addressing both 
concerns.  He was particularly alarmed about the impact of soaring 
food prices on the over 350,000 Jamaicans living below the poverty 
line.  The potential for social instability was not lost on Golding; 
he pointed out that the world was facing the worst food crisis in 
more than half a century, and noted that riots have broken out in 33 
countries and that more rioting is likely to follow.  To assist the 
poorest of the poor, Golding outlined a series of relief measures 
(Note: Septel will detail government response to rising food prices. 
End note). 
 
¶7. (SBU) Although food was the critical social issue, the cost of 
energy was highlighted as the most immediate challenge facing the 
oil dependent economy.  Jamaica's oil bill is now equal to 70 
percent of exports.  To stem this tide, Golding announced that he 
had instructed all government departments to target a 15 percent 
reduction in energy consumption.  Other initiatives include the 
changing of the incentive structure to encourage energy efficient 
devices such as solar panel systems and developing a National 
Building Code to include mandatory stipulations for energy 
efficiency.  Golding also said he had a plan to work with a private 
sector company to convert ubiquitous taxis from petrol to LPG, which 
could save 30 percent on fuel costs. 
 
Comment 
------- 
 
¶8. (SBU) From all indications, Golding's maiden budget presentation 
appears to have been well received among Jamaicans.  Most analysts 
are suggesting that he demonstrated a good command of his areas of 
responsibility.  This is not surprising, given that he started 
preparing for this moment almost 36 years ago.  Performance aside, 
the decision to introduce casino gaming is fraught with political 
danger, given the influence of the church, and must have been a 
delicate balancing act between economics and politics.  But 
Golding's government must start delivering on its promise of job 
creation, so economics was the easier choice at present.  The fact 
that the decision was taken so early in the administration allows 
the government some time to point to any economic expansion that 
follows before facing elections. There is speculation that at least 
two more licenses may be issued in the near future.  The likely 
candidates are Canadian-Jamaican billionaire Michael Lee-Chin and/or 
hotel mogul Gordon "Butch" Stewart.  Both have major interest in 
Portland, an unspoiled area currently being developed as a high end 
tourist destination. End comment. 
HEG