Making real the Jamaican Dream: “Building resilient and sustainable supply chains”. by G. Anthony Hylton

Salutation

“This is the day that the Lord has made; Let us rejoice and be glad in it”

am privileged Madam Speaker, to be addressing this Honourable House on a portfolio subject for the 25th time. Each time for me Madam Speaker feels like the first, because the standards of preparation remains high.

I must begin by recognizing you Madam Speaker, for your professionalism, independence and balance in your stewardship of the affairs of this Honourable House. This has not always sat well with those seeking partiality; nor does it sit well at times with those seeking leniency when you have had to be firm but fair. Madam Speaker we have to give recognition to those who send us here to protect their interests, and those whose support we continue to rely on in the performance of our duties. First Madam Speaker, I must recognize and “bless-up” my constituents of Western St. Andrew for their continuing faith in me to represent their aspirations. They know Madam Speaker, that it is not an easy task. Next, I must recognize workers in the political vineyard, for their hard and tireless work in helping to build and maintain the political organizations. Here Madam Speaker, I must mention my Councilors Hazel Anderson, Byron Clark, Norman Perry and caretaker Michelle Thomas. Also: (i). Cluster Managers (ii). Office Staff Constituency Secretary Office Manager/Assistant CDF Officer Close Protection Officer and driver (iii). Party Leader – Mark Golding (iv). Colleagues on both sides of the House

Last but not least Madam Speaker, my wife and daughter.

Experience Teaches Wisdom

t is said Madam Speaker, that “experience teaches wisdom”. We have all been witnesses to a one in a 100-year Pandemic caused by the Coronavirus, Covid-19, impacting the world, with millions of lives lost, livelihoods affected, jobs lost and the upending of global supply chains. For the better part of a year-and-half, since March 2020, the world economy and society have been in turmoil from the measures imposed by governments in an effort to come to grips with the Pandemic and its effect on businesses and people’s lives. Today Madam Speaker, we are all much clearer that though imperceptible the global supply chain is real, but fragile. For decades a system of sourcing of

Making real the Jamaican Dream: “Building resilient and sustainable supply

were engineered which proved effective in quelling the first wave of the virus. But certainly not its disappearance. Certain of the measures taken by governments to address the spread of the virus are still with us, even as other measures are being revived. materials, production of goods and services, warehousing and distribution operated without much concern, except for the occasional disruption caused by natural disasters (Hurricane Gilbert) or some geo-political upheaval (Cuban blockade) , or trade disputes for which there was a temporary unavailability of goods and services. But nothing on the scale the Covid-19 induced disruption has ever been experienced. There was no blue print for a response.

Madam Speaker, just as the economic recovery was on the way here in Jamaica and globally, the Russia-Ukraine war introduced further complexities to the stability and sustainability of world economic growth, amidst a humanitarian crisis. The resilience of the global supply chain system continues to be tested.

Madam Speaker, due to human ingenuity in Science vaccines

St. Andrew Western Unattached Youth Programme Forklift Training being done in partnership with Zouike Making real the Jamaican Dream: “Building resilient and sustainable supply

3. But What Have We Learned?

adam Speaker, the lens through which I speak to this question is that of the Opposition Spokesperson on Industry, Investment & Global Logistics. The Opposition’s view point Madam Speaker, is very much influenced by its understanding that global supply and value chains are central to the efficient and productive operation of the world economy; and further, that our businesses can gain a competitive advantage through their investment in and implementation of modern systems and methods of supply chain management. Equally, Madam Speaker the Opposition is very clear that a sustained economic recovery must rest on the building of an agile, resilient and sustainable supply chain, both globally and locally. Hence, its naming of a portfolio that continues to give focused attention to global logistics and the supply chain after the 2020 elections. Indeed Madam Speaker, the Opposition in giving the Government its advice in dealing with the Pandemic, identified the logistics and supply chain issues as key to the successful administration of the vaccine program to a population in which the level of vaccine hesitancy was already very high. Yet Madam Speaker, it’s clear that among the problems encountered in the roll-out and administration of the vaccine programme were the unavailability of vaccines, the logistics surrounding their transportation, and the storage and timely administration of the amounts of vaccines with which we were eventually gifted or acquired. As a result, a significant amount of vaccine was eventually dumped. Additionally, the scenes of chaos at several of the vaccination sites bear testimony to the absence of proper logistics planning, which itself contributed to the low level of vaccination currently among the population.

Making real the Jamaican Dream: “Building resilient and sustainable supply

4. A Critique of Government’s Response

adam Speaker, the just concluded Budget Debate revealed a strategy by the Administration which leaves much doubt as to whether the main challenges to sustained economic growth in this period of volatility, complexity, uncertainty and ambiguity is fully grasped by the Government. The Opposition in its contributions to the Budget Debate argued for flexibility in the approach to the allocation of the available financial resources. Specifically, we argued that in light of the elevated prices of basic goods and services due to the supply chain disruptions and the resulting increase in inflation globally and locally , that some $40 billion dollars be reallocated from the budgeted sums to cushion the effects of the shocks on the most vulnerable in the society, to include MSME businesses. Madam Speaker, the Government has so far remained fixed to economic orthodoxy, at a time when its clear that counter

Making real the Jamaican Dream: “Building resilient and sustainable supply

cyclical measures are needed to respond to a once-in-a-life-time event brought on by the Pandemic and its consequences for the most vulnerable in society. Perhaps the most controversial of these actions is the decision of the BOJ to increase its policy interest rate ahead of, or in tandem with other central banks globally; in what it articulates as its strategy for tamping down imported inflation. The Opposition and other key stakeholders in the private sector have expressed the view, that this orthodox method of fighting supply chain induced inflation is not likely to achieve its intended result in the short to medium term, but will increase pressure on the vulnerable businesses and individuals. The Government, Madam Speaker, nevertheless persists in this questionable policy strategy for fighting supply chain driven inflation, while seeking to grow the economy.

Making real the Jamaican Dream: “Building resilient and sustainable supply

5. SectoralResponse of The Portfolio Ministry Making real the Jamaican Dream: “Building resilient and sustainable supply

adam Speaker, the concerns of the Opposition are further heightened by the recent presentation of the Minister of State in the portfolio ministry to this Honorable House. Listening to the minister’s presentation, one would have thought that the Pandemic and the Russia-Ukraine war, as well as climate change are not real but a mere hoax. Nowhere in the minister’s presentation was there even a hint of any of the headwinds now buffeting the sectors for which he has joint responsibility. Instead Madam Speaker, we were treated to a catalogue of carefully selected highlights of the successes of the portfolio ministry and its several agencies. Many of achievements are commendable, and without being invidious Madam Speaker, I single out for commendation the sustained effort in finally implementing the Madrid Protocol. This has been at least a thirty (30) year trek! I am confident that the benefits of the Protocol make the effort well worth it. JIPO in particular, Madam Speaker must be singled out for special mention. But I digress. Madam speaker, although the portfolio includes commerce in the assignment, nowhere was there any discussion of the strained supply chains or even an indication that any specific solution(s) to the elevated prices of consumer goods and services was being considered by the business ministry. Except, of course, the mentioned successful action by the Consumer Affairs commission in bringing to book some errant businesses for violation of the Consumer Protection Laws. We , therefore, are left to await the presentation of the senior portfolio minister in the Senate ( sometime in the future) to learn of the current thinking of the Administration on the problem(s) at the heart of the price rises for several key commodities, and produced goods for inputs into production of consumer items, e.g. food, oil and gas, houses and transportation, as a result of disruption in the supply chain.

Making real the Jamaican Dream: “Building resilient and sustainable supply

6. The Tourism Minister’s Response

Making real the Jamaican Dream: “Building resilient and sustainable supply

adam Speaker, the only indication given by the Government that it appreciates the ripple effect of the supply chain disruption across industries and portfolios is the proposal of the Minister of Tourism in his opening presentation in this section of the debate. The minister called for the establishment of a committee headed by Mr. Wilfred Bagaloo , of Price Waterhouse Coopers, to set up in Jamaica a logistics center to ensure the availability of supplies of goods and services for the critical tourism sector in the drive for economic recovery. The suggestion, Madam Speaker, clearly recognizes the nature of one the challenges facing the recovery of the sector and the wider economy in the aftermath of the Pandemic, and seeks to do something about it. The Opposition is equally clear that an effective response will not, and cannot come from increased interest rates on the mounting debt already owed by the small and medium size hotels and linked businesses, already heavily impacted by the long shutdown of the sector. A solution is clearly needed for these small and medium sized hotels. Madam Speaker, even as the Opposition welcomes the acknowledgement by the minister of the source of a key challenge to building back better, i.e., the building of a resilient supply chain. And even though the Opposition agrees that the path to immediate economic recovery lies a great deal in the recovery of the tourism sector, other sectors such as the manufacturing, the creative and circular economies have key roles to play in a sustained recovery of the Jamaican economy. Among the lessons learned from the Pandemic, Madam Speaker, is the risks of over reliance on any one sector. Considering, however, the quick wins that are possible from the tourism sector as the economy struggles to recover in a turbulent global environment, the Opposition suggests that it be invited to contribute to the shaping of the terms of reference ( TOR) of the proposed committee, and to play an integral role in what must be an exercise of “all-hands on deck” in this critical period, Madam Speaker.

Making real the Jamaican Dream: “Building resilient and sustainable supply

7. Other Government’s Responses to The Crises

he, muted and unbalanced response by our Government in addressing the on-going supply chain challenges, stands in stark contrast to other countries globally and in our region. Madam Speaker, President Biden identified as a key priority action the building of a more agile and resilient supply chain domestically and globally, as a key part of his first 100 Day action plan after his election to office in 2020. Since then he has appointed an Ambassador to lead the effort to solve the congestion at the ports throughout the United States, and has elevated the supply chain challenges as a strategic element in US Domestic Economic and Security Policy. See Building Resilient Supply Chains. Revitalizing American Manufacturing & Fostering Broad Based Growth, June 2021 US Publication. As such, high level meetings with bilateral and regional partners have prominently featured discussions on global supply chain solutions with partners in the Asia-Pacific region and elsewhere. Similarly, a US$ 1.2 trillion Infrastructure Act aimed at rebuilding Americas physical and digital supply chain infrastructure has been signed into law by President Biden. Other governments have established task forces to produce policy strategy and action plans to address this critical challenge to their economic and business growth. New Zealand, a country of roughly our size population, has also produced a policy guide to national discussions termed, New Zealand’s Freight & Supply Chain Issues Paper.

Making real the Jamaican Dream: “Building resilient and sustainable supply

Madam Speaker, from within our own CARICOM region comes news that Barbados and Guyana are planning to build a “Food Terminal” to facilitate the movement of agricultural products within the region. This development is in furtherance of a recent decision by CARICOM Heads of Governments to develop action plans to reduce the region’s food import bill of

some US $6 Billion annually by 25% by 2025. The announcement of plans to build the food terminal was made by Prime Minister Mia Mottley, who reportedly said:

We (have) got to perfect the logistics and we believe that the investment in Guyana and Barbados food terminals will be critical. We have the plans and the numbers we are working on”

Madam Speaker, these governments clearly recognize that the fundamental need in the freight and supply chain markets cannot be accomplished by the market on its own. Coordinated government action is needed. The Opposition again calls for the establishment of a Supply Chain & Logistics Council, to bring together key institutions in both the public and private sectors to share critical highlevel data (notwithstanding the commercial sensitivities) by breaking down “ tribal knowledge” stored in silos in companies and agencies Madam Speaker. The value add of this proposed Council Madam Speaker, is to assist in guiding policy strategy and action plans beneficial to building capacity in this critical supply chain and logistics sector.

Making real the Jamaican Dream: “Building resilient and sustainable supply

8. Action Plan for Fixing the Supply Chain Challenges

adam speaker, the Opposition has not been shy in putting forward its recommendations. Regarding the disrupted supply chain the following solutions are being put forward:

(a) A review and redesign of supply chains be considered by firms to ensure resilience and sustainability of their operational supply chains; (b) The Just-In -Time strategy currently used by businesses to optimize costs, be reformed to a Just-In -Case strategy that shifts focus from cost minimization to value creation, thus capturing the complexity, volatility and uncertainty of the competitive environment in which modern supply chains operate; (c) End-to-End visibility in the supply chain is achievable with existing technology, data, processes and communications to create a dynamic supply chain solution. When combined with data analytics and investment in appropriate technology, it creates the ability to plan and to make better decisions in real time in a fast pace environment; (d) Climate resilience must be a feature of any modern supply chain, in order to survive the extreme weather events associated with climate change. Decarbonization of the entire supply chain requires more than a statement of intent by businesses and governments, but is a call to action by both. Making real the Jamaican Dream: “Building resilient and sustainable supply

9.SEZs As Opportunity Government’s Responses to The Crises

adam speaker, the Special Economic Zone was conceived as a key part of the Global Logistics Hub Initiative & Master Plan articulated by the Opposition in Government, and designed to give legislative/ regulatory support to create the ecosystem necessary to attract investments in a range of commercial, industrial and service businesses permitted in the SEZ. Madam speaker, to date there are some 160 SEZs, mostly of the single entity type engaged in a variety of business activities, mainly in the Business Process Outsourcing (BPO) sector which accounts for thousands of jobs, some with career appointments. The BPO sector contribution to economic growth during the Pandemic was and remains significant. Madam Speaker, two multi-user SEZs have been announced by the government as being preapproved by the Jamaica Special Economic Zone (JSEZA) as planned SEZs, namely Seaview Eco-Industrial & Logistics Park (SEILP) and the Caymanas Special Economic Zone, to be located in the Seaview Gardens/ Riverton area of my constituency, and in East Central St. Catherine, respectively. Madam Speaker, The World Free Zone Conference 2022 to be held in Montego Bay from 13-17 June, is testimony to the appeal Jamaica continues to have with the rest of the world as a potential major player in global logistics. This is especially so after the Pandemic, Madam speaker, because a noticeable shift is occurring in the global trade and the supply and value chains. The major trend is towards SEZs or trade zones located in countries or regions that offer political stability and access to major consumer markets. This development is being referred to as “near shoring” or “friend shoring”. Making real the Jamaican Dream: “Building resilient and sustainable supply

18 Unfortunately Madam Speaker, the Conference will be taking place with issues relating to the optimal operation of SEZs still unresolved or in urgent need of reform. Among the issues are

The market access for goods and services produced in SEZs within CARICOM member countries; ii. The availability of competitively priced energy in industrial zones: iii. The significant lag time in the development of the Caymanas Special Economic Zone announced in 2014 under the previous Administration; and the uncertainty surrounding the development of Vernamfield Aerotropolis, pursued in several different forms/names by successive Administrations; iv. The need for an updated CARICOM trade policy/ strategy; (v)The need for an updated Industrial Policy/strategy (vi) Appropriately skilled professionals in the range of logistics and supply chain activities contemplated in an industrial/supply zone. Notwithstanding, these issues the Conference is supported by the Opposition as an important first step in publicizing Jamaica’s significant opportunity and interests in becoming the fourth node in the global trading system.

Making real the Jamaican Dream: “Building resilient and sustainable supply

9. Conclusion:

adam speaker, the Opposition has demonstrated its awareness of the gaps in Jamaica’s supply chain capabilities and the risks associated with these gaps. Specifically, the Opposition has been consistent in demonstrating insight and courage in commissioning the World Bank financed Global Logistics Hub Initiative & Master Plan,etc, and consistency in calling for its implementation. Had this been responded to in a timely manner, Jamaica would, today, be way ahead of its competitors regionally and positioned to compete extra-regionally. Is this a case Madam Speaker, of Nero fiddling while Rome burns? Still, Madam Speaker, “it’s better late than never” that the Government has finally announced an intention to develop the Caymanas Special Economic Zone, which has been in gestation for over 10 years. The Opposition Madam Speaker, calls for a similar resolve by the Government to advance plans to build the Vernamfield Aerotropolis announced even earlier than the Global Logistics Hub Initiative under successive Administrations. One stumbling block in the way of the Vernamfield project implementation is the existence of an exclusivity clause in the Divestment Agreement of the Norman Manley Airport, which restricts development of Vernamfield to a cargo only airport in the foreseeable future. Madam Speaker, since the bulk of airfreight transported globally is carried in the belly hold of passenger aircraft for cost efficiency, the restrictive clause should be amended to allow for long-haul passenger carriers to fly direct from the Asia- Pacific region, or from the Middle East and Africa with both passenger and cargo. Madam Speaker, this would diversify and extend Jamaica’s global foot print and positively impact our trading opportunities in tourism, export manufacturing and agriculture trade with the fast-growing regions of the world. Such a move would make more resilient Jamaica’s global supply chains, and enhance our prospects for recovery, sustained growth and development of our economy and people. I offer these recommendations Madam Speaker, in an effort to realize and to make real the Jamaican Dream for All the people. May God continue to bless Jamaica Land We Love! Making real the Jamaican Dream: “Building resilient and sustainable supply