President, Jamaica Manufacturers Association

Demitting Office Speech Mr. Brian Pengelley President, Jamaica Manufacturers’ Association Annual General Meeting, June 24, 2015, 10:00am ______

 Board of Directors  Members  Members of the Media

“Courage is not defined by those who fought and did not fall, but by those who fought, fell and rose again.” Ladies and gentlemen, when I took the job as president four (4) years ago, I knew I would not leave the post without some battle wounds. I have fought hard with no regrets, because of the victories won for the manufacturing sector. I would like to thank the strong team behind me and my family and friends who have supported me every step of the way. I have experienced personal growth in this role and had the pleasure of interacting with people from all walks of life who have in their own way impacted me.

When I started the journey in 2011, I had an agenda of continuity to tackle the problems my predecessors had wrestled with and I had new initiatives that I wanted to undertake but I had no idea what was really to come.

During my tenure, the main accomplishments were:

1. Tax Reform: Manufacturers have hardly been able to keep up with the many policy changes. However, I think we have come out with some major wins, as:  Whilst the JMA was unable to have the definition of manufacturing changed in the Customs Amendment Act, the Association was successful in having a six (6) months stay on the implementation of the legislation so that a certification process for manufacturers could be implemented to prevent disruption to manufacturers in benefitting from incentives under the Omnibus Legislations.  Manufacturers continued to get the deferment of GCT payment upfront at the port on raw material, intermediate goods, consumables and packaging material, which was extended to capital equipment and spare parts.

1  Manufacturers of GCT exempt items can now claim a refund of GCT paid upfront at the ports on their input.  GCT Deferment on locally purchased packaging materials was reinstated.  Manufacturers continue to qualify for a 50% discount on container of goods and processing fees for the importation of raw materials, intermediate goods and packaging.

 Manufacturers continue to get stamp duty relief on agricultural inputs.

I am truly proud of the approach by the Incentive Working Group and the Ministry of Finance to consult on policies and hope we will continue to proceed on this path. I think we are beginning to solidify the strength of manufacturing in the minds of the people and the Government.

2. Environmental Levy: Whilst the sector, as at June 1, has to pay a 0.5% Environmental Levy on domestic supplies of all goods, we were able to negotiate that the difference between the claimable amounts on a quarterly basis can be expensed annually.

3. Refined Sugar Importation – The JMA has been successful in maintaining the status quo for the importation of refined sugar for the industry. There remain some issues to be dealt with but the incoming team has my commitment to see those issues through.

4. Energy – The JMA in partnership with the Private Sector Organisation of Jamaica (PSOJ) and the Jamaica Chamber of Commerce (JCC) was successful in the formation of the Electricity Sector Enterprise Team (ESET), to oversee the 380 megawatt (MW) project. Earlier this year, ESET signed off on 330 megawatts of new generating capacity for Jamaica, to significantly reduce energy costs over the short-term.

5. Financing and Foreign Exchange (FX) Access  A number of meetings were held with Financial Institutions, which resulted in the introduction of J$500 million loan fund to the productive sector by Scotiabank, at interest rates as low as 9.5%; and

 With the FX shortage in 2014, the Jamaica National Building Society (JNBS) partnered with the JMA to provide a Special FX

2 Window. US$10 million was made available to JMA members each month, with access of up to US$100,000 monthly per company. This came to an end last December, as conditions have improved in the foreign currency market.

6. Manufacturing/Tourism linkages – Linkages with Tourism and Agriculture have been strengthened through the establishment of a Tourism Linkages Council and Manufacturing Technical Working Group under the Tourism Linkages Hub, formed in 2013. We have collaborated with the hotel and agriculture sector for a number of events such as Expo Jamaica, Caribbean Travel Marketplace, Jamaica Product Exchange (JAPEX), Farmers’ Markets, Suppliers Day at Hyatt and Moon Palace as well as Speed Networking. The newest initiative is ‘Christmas in July’, where the Ministry of Tourism and Entertainment, the Jamaica Hotel and Tourist Association (JHTA), JAMPRO, the Jamaica Business Development Corporation (JBDC) and the JMA will stage a corporate showcase of local products, as gift options for the Christmas season.

7. Jamaica/Trinidad Trade Desk – The JMA partnered with the JCC in a bid to improve trade relations between Jamaica and Trinidad and Tobago, a Trade Desk was established in 2012. The Government however continues to tackle the issue of discriminatory pricing of oil and other unfair trading practices. We have been able to normalize relations between the TTMA and the JMA, as we are both committed to resolving issues as early and as quickly as possible. I am aware that questions still continue about our participation in Caricom but I am also aware that Companies to our South are now taking a hard look at Jamaica as a place to invest in and I have every confidence that our business owners who are equally smart can and will find ways to compete as long as we can ensure through customs that the rules of origin are enforced. So my advice is to keep the pressure on our customs team and then just get on with competing!

8. MSE Membership Facility – I wanted to open up the Association to smaller manufacturers so that they could benefit from our value-added services to grow their business. This was realized with the launching of the Micro and Small Enterprise (MSE) Membership Facility in 2012, to include members employing less than five (5) persons. To date, over fifty (50) MSE members are registered with the JMA.

3 9. Partnerships – We recognize the importance of collaboration in developing the sector:

 We partnered with the National Commercial Bank for the 3rd phase of the ‘Buy Jamaican…Build Jamaica’ Campaign from 2011- 2014. Activities included Road Shows, Linkage events, the mounting of billboards as well as the School Book Distribution initiative in primary schools and a Public Education Campaign. The partnership with NCB continues for 2015.

 We signed a Memorandum of Understanding (MOU) with Bureau of Standards Jamaica (BSJ) in 2013 and members have benefitted from technical assistance geared towards improving their competitiveness through the use of standards. We started off the year with a number of ‘Knowledge Transfer Sessions’ in manufacturing companies to train staff on Good Manufacturing Practices (GMP). Upcoming training will also be provided in other areas such as HACCP, Packaging and Labeling.

 We continue to work with the University of the West Indies (UWI) to conduct a baseline study to assess the state of the manufacturing sector and to determine what is necessary for further development. The UWI has developed a survey instrument and has started interviews with manufacturing companies. The study is expected to be completed this year.

 Transportation and logistics are vital in increasing exports. We therefore signed a MOU with Guadeloupe based company CEIBA to promote the sea freight application BECCA, which optimizes shipping supply and demand, and ensures that cargo is able to be transported worldwide at competitive rates.

10. Projects

 We successfully executed the “Improving Packaging for Export” project funded by Caribbean Export Development Agency. Ten (10) local manufacturers received product assessments and twenty (20)

4 graphic artists received training to improve packaging and labeling designs.

 We have also completed workshops under “Improving Access to Finance” project funded by the Development Bank of Jamaica (DBJ), where an assessment of ten (10) Micro, Small and Medium Enterprises (MSMEs) were done and each was awarded a credit score and given recommendations to improve.

The work continues and we cannot let down our guard. The issues still on the table comprise:

1. Special Economic Zone (SEZ) – This is identified as a critical component in driving the development of a logistics centered economy and the country’s growth agenda. A major concern is the removal of the export condition requirement, where only 15% of goods produced in the Free Zone were allowed to enter the local market. With the SEZ, there are no restrictions, which mean greater liberalization. In our review of the Green Paper on the SEZ, we have urged the Government to ensure that decisions are informed by cost benefit analyses and that policy prescriptions under SEZs are implementable and will not displace local manufacturers.

2. Domestic Industries Development Policy – We continue the call for the implementation of the Domestic Industries Development Policy, which would provide a 15% price differential over foreign suppliers of goods and a 10% set-a-side for domestic firms. As the largest purchasers of goods, Government procurement officers should be buying local where possible. Valuable foreign exchange earnings are lost when contracts are awarded to overseas companies. If support is not given to the manufacturing sector, then the continued dependence on imports will erode any employment or economic growth objective.

Bureaucracy, crime, energy costs, transportation costs, dollar devaluation and access to financing continue to impede the development of the manufacturing sector. We need to address these issues and create an environment that will boost local and overseas investment.

5 Policies critical to the survival and growth of the manufacturing sector, which are strategically very important to the Jamaican economy must be implemented; and support must be given to the range of quality, world class products made in Jamaica, to expand production, encourage import substitution and put the country on a path of significant growth.

I will continue to play my part as the Immediate Past President as we strive to meet these goals.

For years, we have been saying that the manufacturing sector is the engine of job and wealth creation and the recent employment figures indicate that we are indeed once again returning to growth. Over 1000 manufacturing jobs were created in 2014 relative to the previous year. That’s a great example of growth.

I want to stop here and acknowledge the secretariat of the JMA led by the Executive Director Imega Breese McNab. This small team is a shining example of how a high performing team should and does work and how critical good and strong leadership is as is demonstrated by Imega.

Many thanks to the Past Presidents who I have had to call on for their opinions and guidance and to the members of the board that have supported me over the period. I know this is dangerous but I do want to make special mention of Simon Roberts who has been by my side through some tough negotiations and a calming influence many times.

Times are changing and so must the JMA, as we look to how we should be innovating in order to serve our members better and to serve those that may be looking for a strong and respected organization to represent their interests domestically and in foreign markets. I hope you like our new look which clearly signals the change program we have embarked upon.

To the press, I congratulate you on the job you do and thank you for the balanced reporting that you have provided and I assure you that I will not miss receiving your calls in the evenings or weekends.

Thank you.