The concepts of economic growth and investment are inextricably linked. Over the years, Jamaica has benefited from high levels of foreign direct investment (FDI), an important injector of capital and foreign exchange into the economy.

Between 2003 and 2006, total FDI inflows averaged more than US$720 million, and in 2007 inflows were US$866 million. However, despite high inflows of FDI, Jamaica continues to grow at a sluggish pace. This has led many to question whether we have the absorptive capacity to translate FDI into growth and employment.

Too often, these funds go towards the purchase of imports and end up flowing back out of the country. For example, the tourism sector attracts the most FDI, but a very high proportion goes towards the import of food and manufactured materials, a lot of which we produce here in Jamaica but not in the right quantity or quality. This is also true of labour and expertise in other industries.

It is imperative in the national interest of Jamaica that we increase our absorptive capabilities for foreign investment. In order to do this, we have to put in place certain support structures to promote backward linkages to the local economy. As we look forward to the mega-tourism investments for the Harmony Cove and Celebration Jamaica projects, we have to ensure that their impact on the local economy is positive and deep.

We have to mobilise the agricultural and manufacturing sectors to supply them with goods and produce. We have to ensure that HEART and our universities, through the training of professionals, are catering to the demands and anticipated future demands of these businesses so that we can provide them with labour and expertise. This is how we will maximise the FDI dollar for Jamaica's growth and development.

INCREASING COMPETITIVENESS

We must also remove certain barriers to investment, such as our high crime rate, high energy costs and cumbersome bureaucracy. These issues are high priority reforms for this government. Due to concerns about safety, many international investors have taken their business elsewhere, creating jobs and contributing to growth in other countries instead. Crime is robbing us of investment and, therefore, curbing our true potential for growth and job creation.

And when you compare our energy costs to other countries, we are extremely expensive. This, also, is a major obstacle to investment in the mining and manufacturing sectors in particular. As we go forward, an energy plan, which seeks to diversify the supply and promote energy efficiency and conservation, is essential. I know that Minister of Mining and Energy James Robertson and his team are working extremely hard to finalise such a plan that is in line with our Vision 2030 national development strategy. Energy is also one area where Jamaica would like to welcome sizeable foreign investment with emphasis on renewable energy.

There are other areas as well, outside of traditional investment promotion, which may hold unique potential, such as creative industries and sport. Jamaica has an excellent reputation for the quality of our athletes, as well as our artistes, who continue to demonstrate that they can compete successfully on the international stage. We must, therefore, find a way to harness our cultural capital, protect the Brand Jamaica and turn it into a major attractor of foreign investment.

Reggae music, for example, has cultivated a lot international attention for Jamaica, but we have failed to capitalise fully on it. The music has been developed in an unstructured way without proper protection of our intellectual property, resulting in Jamaica losing out on millions of dollars.

In my view, there are really three essential ingredients that investors concentrate on: 1) the right people and skills; 2) a supportive environment and infrastructure; and 3) a positive forward-thinking attitude. Looking to the example of Ireland, it has attracted business integration and headquarters functions to its economy in areas such as sales and marketing, procurement, supply chain management, regulatory and compliance functions, and intellectual property management. All this has been done through the combination of skills, a supportive business environment, a favourable corporate tax regime and increased competitiveness.

Even though the global financial crisis has affected the inflow of foreign direct investment, there is no better time to put in place the measures that will help to stimulate business development and create a modern trade infrastructure. While maintaining fiscal discipline, there are a few strategic and deliberate steps which we can take to create such an environment:

i. Investing in infrastructure - having good quality roads, airports, seaports and telecommunications reduces the cost of doing business, improves the competitiveness of local firms and facilitates linkages with foreign firms.

ii. Investing in human capital - having a literate, trainable workforce will help to deepen our absorptive capacity so as to maximise the benefits from foreign and local direct investment.

iii. Developing the small business sector - investors will be more likely to choose Jamaica if Jamaica can supply them with the necessary goods and services to support their operations. Small and Medium-sized enterprises will have a major role to play in this area.

iv. Creating a business-friendly environment - we have to reduce crime, energy costs and obstructive bureaucracy.

v. Marketing Jamaica - we have a lot to offer, but in order to attract investment, we have to advertise our strengths, a task that Jamaica Trade and Invest is working hard to do.

These steps are designed to increase investment and enhance supply capacity, economic growth and competitiveness in Jamaica. We want Jamaica to be a place where it is easy to do business, and we must also let the world know that Jamaica is open for business.

Senator Don Wehby is Minister without Portfolio in the Ministry of Finance and the Public Service. Feedback may be sent to columns@gleanerjm.com.