VZCZCXYZ0003
RR RUEHWEB

DE RUEHKG #1034/01 3361755
ZNR UUUUU ZZH
R 021755Z DEC 09
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 0330
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHDG/AMEMBASSY SANTO DOMINGO
RUEHKG/AMEMBASSY KINGSTON
RUEHLO/AMEMBASSY LONDON 0097
RUEHOT/AMEMBASSY OTTAWA

UNCLAS KINGSTON 001034 
 
SENSITIVE 
SIPDIS 
STATE FOR WHA/CAR (VDEPIRRO) (WSMITH) (JMACK-WILSON) 
WHA/EPSC (MROONEY) (FCORNEILLE) 
EEB/ESC/IEC (GGRIFFIN) 
EEB/ESC/IEC/EPC (MMCMANUS) 
INR/RES (RWARNER) 
INR/I (SMCCORMICK) 
SANTO DOMINGO FOR FCS AND FAS 
TREASURY FOR ERIN NEPHEW 
EXPORT IMPORT BANK FOR ANNETTE MARESH 
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA 
OPIC FOR ALISON GERMAK 
 
E.O. 12958: N/A 
TAGS: ECON ETRD ENRG EFIN EINV PREL PINR SENV SOCI TRSY
OPIC, IBRD, IMF, XL, JM 
SUBJECT: JAMAICA: NOVEMBER ECONOMIC REVIEW, DROUGHT A RISING CONCERN 
 
Summary 
 
------------ 
 
¶1. (U)  Drought conditions continue to hamper business in the 
Kingston area as water levels reach critical stages from a lack of 
rain; 
 
 
 
-- Entrepreneur and Recording Industry legend Chris Blackwell has 
failed in his efforts to bring a Grameen Bank style micro-lending 
operation to the island; 
 
 
 
--  ScotiaGroup Jamaica has reported net income for the fiscal year 
ending October 31, 2009 of USD 125.3 million, a 16 percent increase 
over last year; 
 
 
 
-- The Standard and Poor's rating agency has downgraded Jamaica's 
sovereign credit as well as long-term corporate credit ratings of 
National Commercial Bank and Air Jamaica; 
 
 
 
-- The U.S. owned Palmyra condominium and spa project in Montego 
Bay has built a USD 25 million tri-generation plant to produce 3.2 
megawatts of electricity; 
 
 
 
--  Jamaica has nearly completed its island-wide roll-out of E-10 
blended gasoline, in an effort to reduce oil imports and increase 
its use of renewable fuels; 
 
 
 
--  U.S.-based Salamander Hospitality will assume management of the 
Ritz-Carlton resort in Montego Bay; 
 
 
 
--  Marriott hotels is partnering with Pan Jamaican Investment 
Trust (Pan Jam) to operate a new hotel in Kingston; 
 
 
 
-- Home Box Office entertainment has stopped three local cable 
companies from unauthorized broadcasting of its channels and is 
working out a deal for compensation to resume service; 
 
 
 
-- The Jamaica Intellectual Property Rights office will soon 
co-locate with the government's trade and investment promotion 
entity.  End Summary. 
 
 
 
Drought Conditions 
 
-------------------------- 
 
¶2. (SBU) Low rain levels have caused some of the worst drought 
conditions in recent years.  Charles Buchanan, Corporate Public 
Relations Manager for the National Water Commission (NWC), told 
Emboffs on December 1 that water supplies are well below their 
normal levels at this time of the year and the drought is a 
significant cause for concern that could rise to a water crisis in 
the coming months. The areas of Kingston and St. Andrew are the 
 
 
 
 
 
most affected, and some area schools have been instructed to close 
by the Public Health Inspector for lack of access to running water. 
Emboffs have spoken to a few area business owners who have 
complained that water supplies are unpredictable, forcing them to 
close their businesses during certain hours.  The water levels at 
the Mona Reservoir are only 51 percent of normal capacity (Mona is 
the largest regional reservoir holding 809 million gallons) and 
Hermitage Reservoir which holds 393 million gallons is at 76 
percent of capacity.  Under normal rain conditions, both reservoirs 
would be near to overflowing at the beginning of December.  As the 
drought is taking place during the main rainy season which usually 
replenishes water supplies, the problem will likely intensify 
during the traditional dry season from late December to March.  The 
GOJ is warning consumers to conserve water as drought conditions 
continue for the near term.  The NWC is hoping to tap into four 
wells in the Kingston area to improve water supplies, but this 
process could take three to four months. 
 
 
 
Banking / Credit / Ratings 
 
---------------------------------- 
 
¶3. (U) Chris Blackwell, best known for his entertainment and 
recording business Island Records, has been stalled in his efforts 
to bring a micro-credit group lending program to Jamaica similar to 
that of the Bangladesh-based Grameen Bank.  Blackwell has had to 
push back his plans after he failed to raise USD 2 million (J$180 
million) in equity capital.  Hotel owner Jason Henzell, who led 
negotiations, says the plan has been delayed, at least until the 
credit markets regain elasticity.   In February 2008, 
representatives of the Grameen Bank visited Jamaica to discuss 
establishing a Grameen style bank on the island.  Muhammad Yunus, 
the founder of the Grameen Bank, also visited Jamaica in June, 2008 
as part of a lecture series hosted by ScotiaBank.  Yunus is famous 
for creating a micro-loan banking system to provide affordable 
credit to some of the world's poorest areas.   His model has been 
replicated worldwide. 
 
 
 
¶4. (U)  On November 26 ScotiaBank Group Jamaica reported net income 
for the fiscal year ending October 31, 2009 of USD 125.3 million, 
an increase of USD 19.2 million over the same period last year. 
The growth came despite a decline in net income of the banking 
division, which the firm said took the brunt of the recession. CEO 
Bruce Bowen said in a press conference, "Scotia Group Jamaica 
continues to report solid earnings due to the Group's strong 
capital and liquidity positions, and our diverse revenue streams." 
Scotia has not emerged unscathed in the current economic downturn 
as non-performing loans have increased by USD 6.95 million over 
last year and currently stand at USD 39.5 million. 
 
 
 
¶5. (U) On November 6, the international rating agency Standard & 
Poor's followed its November 2nd downgrade of Jamaica's long-term 
sovereign credit from CCC+ to CCC with parallel markdowns of the 
island's credit card merchant receivables, as well as the long-term 
corporate credit ratings for the national airline Air Jamaica and 
the National Commercial Bank of Jamaica (NCB).  The agency 
justified the move based on its fears of a distressed debt default. 
The adjustments of the corporate credit ratings are more of a 
policy matter, in line with agency rules as 
 companies cannot be rated higher than the sovereign 
territories in which they are domiciled.   (Reftel A). 
 
 
 
Energy/Renewable Energy 
 
 
 
 
---------------------------------- 
 
¶6. (U) The Palmyra 300-unit condominium and spa project in Montego 
Bay has built a USD 25 million tri-generation plant to produce its 
own electricity, steam, and air conditioning.    The 3.2 megawatt 
plant is fueled by liquid propane gas (LPG), which has virtually no 
greenhouse gas emissions.  The plant will generate 1.752 tons of 
refrigeration for air conditioning.  (NOTE:  Jamaica has some of 
the highest energy costs in the region; Palmyra's move is to 
insulate the project from rising energy costs as well as power 
outages that are caused from an increasingly antiquated electricity 
infrastructure.  END NOTE).  Palmyra is considering future 
alterations to the plant to allow it to use bio-gas derived from 
sewage and to mitigate the cost of purchasing LPG.  Planned 
expansion of the Palmyra site includes shopping, entertainment, 
auditoriums, and a casino. 
 
 
 
¶7. (U) The government announced it had nearly completed its full 
E-10 (10 percent ethanol blended gasoline) roll out at fueling 
stations across the island. Effective November 1, Jamaica's sole 
refinery, Petrojam, started producing its entire 87 and 90 octane 
gasoline with the E-10 blend.  This comes one year after the E-10 
blend was first introduced in 87-octane gasoline.  The full 
roll-out of the E-10 blended gasoline was initially scheduled for 
April, but was delayed mainly because the ethanol storage tanks in 
Montego Bay had not yet been constructed.  The Ministry of Energy 
has made the E-10 program a priority, and it pushed for island-wide 
distribution.  The move is part of the Ministry's goal of 
increasing the use of renewable energy and reducing the island's 
dependence on imported oil. 
 
 
 
Tourism 
 
---------- 
 
¶8. (U) The U.S.-based Salamander Hospitality is set to take over 
the management of the 428 room Ritz-Carlton resort in Montego Bay. 
The resort, owned by Michelle Rollins and the GOJ, has been managed 
by the Ritz-Carton for nine years.  Salamander is owned by Sheila 
Johnson, cofounder of BET media, along with her husband Robert. 
The Johnsons sold BET in 2000 for USD 3 billion.  Salamander 
operates three other hotels in the United States. 
 
 
 
¶9. (U) Marriott hotels is partnering with Pan Jamaican Investment 
Trust (Pan Jam) to operate a new hotel in Kingston.  Pan Jam 
recently purchased a 161,610 square-foot lot for USD 5.1 million 
from the GOJ in the Knutsford Park area of New Kingston.  Pan Jam 
CEO Stephen Facey, speaking to The Observer newspaper on November 
24 said the project will be a mixed use to include the hotel, 
retail shops, office space, and recreational facilities. 
 
 
 
Intellectual Property Rights 
 
----------------------------------- 
 
¶10. (U) Home Box Office (HBO) has scored an intellectual property 
rights victory in Jamaica by reaching an agreement with Telstar 
cable to resume distributing two of HBO's movie channels through 
HBO Latin America Group.  In September, HBO had sent a letter 
ordering Telstar and two other cable operators, Flow and Logic One, 
to stop distributing channels without the proper authorization. 
The cable providers complied, pulling the channels from the cable 
offerings.  HBO has worked out a preliminary compensation agreement 
with Telstar.  It is estimated that HBO was losing approximately 
USD 5 million from the unauthorized broadcasts. 
 
 
 
¶11. (U) The GOJ announced the operations and offices of the Jamaica 
Intellectual Property Office (JIPO) will be moved to the building 
that houses the Jamaica Trade and Invest (JTI) office.  Minister of 
Industry and Commerce Karl Samuda announced the move at the 
Jamaica's National Export Strategy (NES) meeting on November 19. 
Samuda said the move will strengthen JIPO through better 
collaboration among various government agencies and the private 
sector. 
Parnell