JMEA Exporters’ Month Magazine 2022
The emerging opportunities for
from the ‘new normal’ Contributed By: Ainsley Brown, Senior Director - Regulations, Policy, Monitoring and Enforcement – Jamaica Special Economic Zone Authority
T
he Covid-19 Pandemic has changed the world of business forever. The Pandemic, with its loss of life, mild and severe illness and government containment measures in response, has had a negative impact on economies the world over. And too Jamaica. However, from out of this storm has blown the winds of opportunity. Modern manufacturing operates in the environment of the global supply and value chains consisting of fragmented production and just in time distribution with multiple countries and companies involved in the production and distribution of
any given product sold locally or globally. However, the Covid-19 Pandemic and the measures put in place by governments, including Jamaica, to slow the spread of the virus exposed many weaknesses and vulnerabilities in this system. This once reliable system, that fuels global trade, became either strained or in some instances completely broken. However, from this chaos has arisen opportunities for Jamaican manufacturing. Supply chains both literally and figuratively are on the move. In a recent Gartner survey 33% of supply chain leaders plan to move at least part of their manufacturing
due in large measure to Covid-19 induced disruptions. In fact, in a paper published by McKinsey in 2020 - Risk, reliance, rebalancing in global value chains – they estimate that between 2020 and 2025 “16 to 26% of exports, worth $2.9 trillion to $4.6 trillion in 2018, could be in play—whether that involves reverting to domestic production, nearshoring, or new rounds of offshoring to new locations.” However, they go on further to sound a cautionary note that “it should be noted that this is not a forecast: it is a rough estimate of how much global trade could relocate in the next five years, not an assertion that it will actually
move.” Cautionary note or not the potential of between $2.9 - $4.6 trillion shifting in the global trading system over a 5-year period should arouse more than just a passing curiosity in Jamaican manufacturers and policy makers alike. In order to better quantity the opportunity for Jamaican manufacturing I will turn the Five-Year Manufacturing Strategy 2020 to ground the conversation. The Strategy has an ambitious but achievable goal of “to grow the manufacturing sector’s contribution to GDP moving manufacturing output from J$66 bn in 2018 to J$81 bn by December 2025.” The fact
Fig 1. Data based on McKinsey’s: Risk, reliance, rebalancing in global value chains, 2020 (in USD)
SECTOR Food & Beverage
50
Total Gobal Exports (2018)
Possible Potential Export Relocation
National Level:
theoretical Jamaican export value capture of 0.01%
$1,149 B
$63 - $125 B
$6.3 - $12.5 M
Furniture
$164 B
$37 – $74 B
$3.7 - $7.4 M
Pharmaceuticals
$626 B
$236 – $377 B
$236 - $377 M
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