VZCZCXRO3318
RR RUEHGR
DE RUEHKG #1016/01 3361931
ZNR UUUUU ZZH
R 011931Z DEC 08
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 7021
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 KINGSTON 001016 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/CAR (ACADIEUX) (VDEPIRRO) (WSMITH) 
WHA/EPSC (MROONEY)(FCORNEILLE) 
EEB/ESC/IEC/EPC (MMcMANUS) 
INR/RES (RWARNER) 
SANTO DOMINGO FOR FCS AND FAS 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958:  N/A 
TAGS: ENRG EAIR EINV ECON ETRD KCOR KIPR IADB IBRD IMF
TRSY, XL, JM 
SUBJECT: JAMAICA: NOVEMBER ECONOMIC REVIEW 
 
REF: A) KINGSTON 1001 
B) KINGSTON 770 
C) KINGSTON 936 
 
¶1. (SBU) SUMMARY: 
 
-- The Government of Jamaican (GOJ) announced a 29 percent drop in 
traditional export crops such as bananas, sugarcane and coffee in 
the third quarter. 
 
-- The GOJ has signed another agreement with Guyana to import 60,000 
tons of rice in 2009. 
 
-- The GOJ has received funding from the IADB to help in its 
divestiture of Air Jamaica, which the GOJ maintains will be 
completed by March 31, despite the worsening global economic 
climate. 
 
-- Discount airline start-up Airone has yet to secure a license to 
operate in Jamaica. 
 
-- The Minister of Energy has fired Ian Moore, the Chairman of the 
Petroleum Corporation of Jamaica. 
 
-- The GOJ signed a USD 224 million deal with Royal Caribbean Cruise 
Lines to modernize the pier in the city of Falmouth on the North 
Coast. 
 
-- Leaders in the tourism sector are pressuring the GOJ for a 
financial bailout to help weather the decline in visitors to the 
island. 
 
-- Three major ratings agencies (S&P, Moody's and Fitch) have 
lowered their ratings for Jamaica in light of the challenging global 
economic situation. 
 
-- The Culture Minister, speaking at the funeral reception for 
famous Jamaican musician Alton Ellis, suggested extending the 
royalties period for artists from 50 years to 100 years after their 
deaths. 
 
-- Goodyear Tire may liquidate its operations in Jamaica after a 
shareholders' meeting on December 19; the company's products will 
continue to be sold on the island through a distribution partner. 
 
-- Rohan Barnett, a former Citigroup executive, is the new Director 
of the Financial Services Commission.  END SUMMARY. 
 
Agriculture 
----------- 
 
¶2. (U) In a meeting with the press on November 22, Wesley Hughes, 
the Director General of the Planning Institute of Jamaica (PIOJ), 
announced a 29 percent drop in traditional export crops (bananas, 
sugarcane and coffee) during the third quarter of 2008.  Some of 
this decline was caused by Tropical Storm Gustav. 
 
¶3. (U) The GOJ has signed another agreement with Guyana to import 
60,000 tons of rice in 2009. The agreement calls for Guyana to 
supply Jamaica with an average 5,000 metric tons of rice per month 
at market prices starting on January 1 and continuing to the end of 
¶2009. The agreement was signed in Georgetown, Guyana on November 7 
by Minister of Commerce and Industry Karl Samuda and Guyana's 
Minister of Foreign Trade, Dr. Henry Jeffrey. 
 
Aviation 
-------- 
 
¶4. (SBU) Don Wehby, Minister Without Portfolio in the Ministry of 
Finance, signed a USD 350,000 technical cooperation agreement with 
the Inter-American Development Bank (IDB) on November 26.  The 
agreement is to further assist in the divestiture of Air Jamaica. 
The GOJ is holding firm to its proposed deadline of March 31 for 
selling the airline, despite a difficult global investment climate. 
(COMMENT: The GOJ and Air Jamaica representatives have said publicly 
that they do not have a "plan B" for the airline if it is not sold. 
Wehby who came into his position with an impressive reputation from 
the private sector, is putting his credibility on the line with the 
divesture of Air Jamaica.  He remains confident the airline will be 
sold even as world economic conditions worsen and potential 
investors become scarce.  END COMMENT). 
 
¶5. (U) AirOne Ventures Limited, a newly formed discount Caribbean 
 
KINGSTON 00001016  002 OF 003 
 
 
airline, has expressed frustration publicly with the GOJ's 
unwillingness to approve a license to fly in and out of Jamaica. 
Wehby said the government is relying on advice from international 
consultants before making a decision on the license.  Earlier in the 
year, the GOJ informed AirOne it could not obtain a license until 
the loss-making Air Jamaica is divested (reftel B).  Speaking to 
reporters of the Observer newspaper on November 23, Commercial 
Director of AirOne, Tara Playfair, said she believes the airline is 
being treated unfairly.  AirOne originally had hoped to operate out 
of Kingston as their hub, but moved its operations to Barbados when 
the GOJ refused to issue them a license. 
 
Energy - Firing on PCJ board 
---------------------------- 
 
¶6. (U) On November 11, Minister of Energy Clive Mullings announced 
he had fired Petroleum Corporation of Jamaica (PCJ) board chairman 
Ian Moore.  Mullings was tight lipped about the reasons for the 
firing, saying he would make a public statement at a later date.  In 
the last 13 months, the Jamaica Labor Party-led government has 
replaced the entire board of the Urban Development Corporation, 
significantly revised the board of Air Jamaica, and removed the 
heads of the National Health Fund and the Jamaica Information 
Service. 
 
Tourism - Cruise Lines 
---------------------- 
 
¶7. (U) The GOJ Jamaica Information Service (JIS) announced on 
November 7 that Bruce Golding had signed a USD 224 million deal with 
Royal Caribbean Cruise Lines to modernize the pier in the city of 
Falmouth on the North Coast.  Under the terms of the agreement, the 
GOJ will spend USD 122 million dredging the harbor and building the 
requisite facilities for cruise ships to dock.  Royal Caribbean will 
spend USD 102 million to lease land from the GOJ and to develop the 
infrastructure.  Golding said the project is part of his larger 
strategic plan to expand the tourism sector and develop the area 
around Falmouth. The project is expected to generate 700 
construction jobs and should be completed by May 2010. 
 
Tourism - Bailout Sought 
------------------------ 
 
¶8. (SBU) Representatives of the tourism sector are pressuring the 
GOJ for a financial bailout in light of the global financial crisis 
and the fear of decreases in the tourism sector.  During a forum on 
November 19 at the Gleaner newspaper, Evelyn Smith, the general 
manager of Point Village Resort in Negril, said the sector needs 
easily accessible low-interest loans to help finance their 
operations during the current world crisis.  President of the 
Jamaica Hotel and Tourist Association Wayne Cummings said he made a 
request to Prime Minister Golding for financial assistance, 
including a temporary waiver of General Consumption Tax (GCT). 
(COMMENT: The tourism sector already has received significant tax 
incentives from the GOJ, including 10-year tax free status for new 
hotels, which is often extended beyond the ten years; and reduced 
rates on GCT of 7.5 percent versus the regular 16.5 percent. END 
COMMENT).  To help offset falling demand, the GOJ said it will spend 
USD 3 million on an aggressive overseas marketing campaign to 
encourage visits to the island. 
 
Rating Agency Concerns 
--------------------- 
 
¶9. (U) Between October and November three major ratings institutions 
(S&P, Moody's and Fitch) have lowered their forecasts for Jamaica 
(reftel A).  In November Moody's Investors Service placed Jamaica's 
ratings on review for downgrade as a result of the ongoing financial 
crisis and the pressure being exerted on the country's external and 
fiscal positions.  Moody's announced that the "B1" foreign-currency 
and the "Ba2" local-currency government bond ratings, as well as the 
"B2" foreign-currency bank deposit ceiling, were all placed under 
review.  Moody's said the current account deficit could reach 20 
percent of GDP this year as the economic slowdown in Jamaica's key 
markets such as the United States worsens, likely lowering 
remittances and tourism inflows at the end of the year.  This 
follows the decision by Standard and Poor's on October 21 to revise 
Jamaica's outlook to "Negative" from "Stable" (reftel C). 
 
¶10. (U) Moody's decision comes 24 hours after Fitch downgraded 
Jamaica's sovereign rating and issued a negative outlook for the 
country.  Fitch also announced it had revised its rating for 
National Commercial Bank (NCB) Jamaica's largest deposit taking 
 
KINGSTON 00001016  003 OF 003 
 
 
institution.  NCB's long term local and foreign currency issuer 
default ratings from lowered from B+ to B. 
 
Intellectual Property 
--------------------- 
 
¶11. (U) The GOJ is considering amending the Copyright Act to 
lengthen the amount of time that royalties are paid on artistic 
works after the death of an artist. Culture Minister Olivia 'Babsy' 
Grange, speaking at the funeral reception for famous Jamaican 
musician Alton Ellis on November 4, said royalties are currently 
paid for up to 50 years after the death of an artist.  She suggested 
extending the period to 100 years, so income from the works of 
artists could be used to assist their families after their deaths. 
 
Foreign Investment 
------------------ 
 
¶12. (SBU) Goodyear Tire company may liquidate its operations in 
Jamaica.  Shareholders of Goodyear Jamaica Limited will meet on 
December 19 to vote on a resolution to "voluntarily wind up the 
company," if passed, the net proceeds of the liquidation will be 
distributed among shareholders.  Goodyear Tire & Rubber Company owns 
60 percent of the shares.  The Jamaican subsidiary's has seen a 
decline in profits in recent years, falling from JD 73 million (USD 
985,000) in 2005 to less than JD 14 million (USD 189,000) in 2007. 
In September Goodyear Jamaica signed a distribution agreement with 
Island Tropical Battery for its tires, which will continue to be 
sold on the island (reftel B). 
 
Financial Regulation 
-------------------- 
 
¶13. (U) Rohan Barnett, a Jamaican-born American citizen and a former 
Citigroup executive, was selected to be the Director of the 
Financial Services Commission (FSC).  Barnett is also an attorney 
licensed to practice in New York.  He assumed his new position on 
December 1, a year after Bryan Wynter left the agency to take up a 
new job in Barbados. 
JOHNSON