National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 1: Executive Summary .............................................................................................................................................................................................................. 2

Section 2: Situational Context of Industry ............................................................................................................................................................................................. 3

Section 3: Global Perspective and Considerations on Manufacturing-Led Development ..................................................................................................................... 7

Section 4: Status of Manufacturing in Jamaica.................................................................................................................................................................................... 10

Section 5: Objectives, Impacst and Assumptions of the Strategy ........................................................................................................................................................ 18

Section 6: Jamaica’s Ecosystem for Manufacturing ............................................................................................................................................................................ 20 Strategic Initiatives to Boost Manufacturing .................................................................................................................................................................. 24

Section 7: Private Sector Support for Manufacturing ......................................................................................................................................................................... 35

Section 8: Way Forward/Next Steps.................................................................................................................................................................................................... 37 Appendix: Focus Sector SWOT ............................................................................................................................................................................................................ 40 Table of Figures and Tables Figure 1: Strategic Initiatives Required to Boost Manufacturing in Jamaica ................................................................................................................................................ 2 Figure 2: Value-added Manufacturing as a % of Global GDP 1960-2016 ..................................................................................................................................................... 3 Figure 3: PWC’s Projections for Manufacturing ............................................................................................................................................................................................. 4 Figure 4: Role of R&D (Innovation) in the Process Flow for the Manufacturing Industry............................................................................................................................ 6 Figure 5: Industrial revolutions and shifts in manufacturing specialization, late 18th century – present .................................................................................................. 7 Figure 6: Manufacturing Subsectors, Grouped by Pro-Development Characteristics, 2013 ....................................................................................................................... 8 Figure 7: Manufacturing Subsector, Grouped by export concentration, degree of automation, services intensity and tradedness, circa 2011-2015 .......................... 8 Figure 8: Policy priorities to strengthen manufacturing-led development, by country’s level of competitiveness, capabilities and connectedness ............................ 9 Figure 9: Manufacturing as a % of GDP 1983-2017 ..................................................................................................................................................................................... 10 Figure 10: Number of Employees in the Jamaican Manufacturing Sector 2002-2016 .............................................................................................................................. 11 Figure 11: Manufacturing Exports 2000-2017 ............................................................................................................................................................................................. 12 Figure 12: Jamaica's Focus Segments for Manufacturing ............................................................................................................................................................................ 13 Figure 13: Regression Analysis of Real GDP Growth vs. Manufacturing Growth (UWI) ............................................................................................................................. 14 Figure 14: Drivers of Global Manufacturing Competitiveness .................................................................................................................................................................... 16 Figure 15: Jamaica’s Suggested Ranking of Drivers of Competitiveness .................................................................................................................................................... 16 Figure 16: Jamaica’s Manufacturing Sectors’ Competitiveness .................................................................................................................................................................. 37 Table 1: 2017 Exports of Manufacturing Sub-Industries ............................................................................................................................................................................. 12 Table 2: Jamaica’s SWOT Analysis for the Manufacturing Sector ............................................................................................................................................................... 17 Table 3: Status of Jamaica’s Trading Arrangements..................................................................................................................................................................................... 23 A Joint Initiative of the JMEA, MICAF and JAMPRO 1|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 1: Executive Summary  Over the last few decades, while the manufacturing sector has grown, its Figure 1: Strategic Initiatives Required to Boost Manufacturing in Jamaica contribution to global GDP has seen some decline. Global players have been progressively repositioning the industry as part of efforts to remain competitive, particularly through increased innovation and value chain development.  Jamaica’s Manufacturing Sector has been one of the country’s longstanding contributors to its economic development. Its impact on job creation, capital investment, and GDP as well as linkages among the various other productive sectors of the country is well recorded and established, but its contribution to GDP has decreased in recent years.  Currently, the main challenge facing the sector is that the level of efficiency and competitiveness has been decreasing against a backdrop of rising operational costs due to, inter alia, workforce productivity, cost competitiveness, market access, as well as rapid innovations within the global market.  Notwithstanding, some key industry segments have been identified as being critical to advancing the impact of the manufacturing sector, by virtue of their growth potential and global demand.  This Five Year Strategy has been developed to focus attention on the environment necessary to grow and expand Jamaica’s manufacturing industry and increase the industry’s contribution to the country’s economic development projections.  Specifically, the Strategy puts forward a set of strategic initiatives (Figure 1) geared towards growing the contribution of the manufacturing sector to GDP by December 2025, resulting in manufacturing output of J$81 bn.  It is expected that in addition to the initiatives identified, which will primarily be driven by the Government, the private sector will also play a significant role in the expansion of the industry. This includes: capacity building programmes; cluster development; execute strategic partnership; promote industry competitiveness; market access and penetration; domestic linkages and public-private discussions and interactions. A Joint Initiative of the JMEA, MICAF and JAMPRO 2|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 2: Situational Context of Industry In its simplest form, the manufacturing sector refers to those pervasive within the sector and has significant impact on cost control industries that involve the process of converting raw materials, and quality. components or parts into finished goods or intermediate goods that can be used for sale to customers for final consumption or further value-added production purposes. Notwithstanding, there are various forms of manufacturing and a diverse range of processes involved. Various countries also use a mix of definitions for manufacturing for fiscal or statistical purposes.1 While the global manufacturing sector has seen absolute growth of the past few decades, as a percentage of global GDP the industry has been in general decline since the 1960s when industrialism was at its peak. Moreover, as the global marketplace recovers from the economic crisis of 2008, it is widely agreed that the global manufacturing sector is in a state of transition. The Chartered Institute of Management Accountants (CIMA) reports that the manufacturing sector is growing in emerging economies, while in advanced economies the sector is shrinking and simultaneously becoming more productive.2 Figure 2: Value-added Manufacturing as a % of Global GDP 1960-2016 New manufacturing giants leverage low wage economies and tend to compete on cost, while established players prefer to move up the value chain to compete on technology and innovation. “Lean” On the demand side, the global demand for manufactured products manufacturing techniques, which provides tools and processes that is growing at a snail’s pace. Despite the projection of the eliminate or minimize waste from the manufacturing process is International Monetary Fund (IMF) that global output is expected to increase just 3.4 per cent in 2017, the United Nations Industrial Development Organization (UNIDO) reports growth of 1 For the purposes of this document the simple definition, used globally, will be inferred, manufacturing value-added (MVA) in industrialized economies unless otherwise stated. 2 dropped to less than 1.0 per cent in 2016. The MVA growth rate of Chartered Institute of Management Accountants: The Global Manufacturing Report. August 2010 China, the largest manufacturer in the world, dropped to 6.7 per cent in 2016, compared to 7.1 per cent in 2015. The combined A Joint Initiative of the JMEA, MICAF and JAMPRO 3|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica growth of MVA of other emerging and developing economies was have prompted considerable economic uncertainty in the world low, at 2.5 percent in 2016, particularly as a result of a production market. Additionally, in the United States, the new “America First” downturn in Latin American countries.3 approach is threatening to further undermine the free flow of goods by potentially impacting free trade regimes, creating even more uncertainty and constraints upon manufacturing growth. The ripple effects of any attempts to reset trade agreements would be felt in the industrial manufacturing sector in particular. This economic uncertainty is mirrored within the global manufacturing sector as major industry leaders are uneasy and hesitant to make investments, resulting in the weakening of manufacturing growth prospects worldwide. This is reflected in PWC’s projections that manufacturing senior executives are predominately uncertain and pessimistic of the sector over the upcoming quarters. The overall worldwide downward trend in manufacturing as a percentage of GDP can also be attributed in part to the advent of the fourth industrial revolution, which is enabling dramatically higher Figure 3: PWC’s Projections for Manufacturing efficiencies, lower manufacturing costs and therefore lower costs of International Foreign Policy goods, leading to lower effective value-added. One of the key factors at play that significantly impact the success of a country’s manufacturing sector is the current international foreign Post-Financial Crisis Recovery policy environment which over the last two years has seen significant Another key component is the rate of recovery of the sector in the turns in the international policies shaped by the new governments of aftermath of the financial crisis of 2008, which delivered a massive world-leading countries such as the United States (US) and United blow to the global manufacturing sector. While advanced countries Kingdom (UK). have recovered since then, the Caribbean region, and in particular Jamaica is still in a state of recovery. In 2016 and 2017, global growth The potential impact on established world trade arrangements as a averaged 3.1 per cent supported by investments in advanced result of the United Kingdom’s referendum on membership of the economies along with continued recovery in commodity-exporting European Union and the presidential election in the United States by emerging and developing economies, and robust growth in importing economies.4 3 4 International Yearbook of Industrial Statistics 2017. Retrieved from www.stats.unido.org Global Economic Prospects (World Bank), June 2018 A Joint Initiative of the JMEA, MICAF and JAMPRO 4|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica strength of price competitiveness. The backward linkage (or Rebound from the economic crisis has been mixed, and while multiplier effect) shows how much additional output is generated by countries such the US and the UK have surpassed 2007 levels, the a dollar’s worth of final demand for each industry. For the US, every deficit created by the financial crisis has remained in others. The dollar in final sales of manufactured products supports $1.33 in crisis had a significant negative effect on manufacturing in the output from other sectors—this is the largest multiplier of any region. In Jamaica, the decline in capital flow resulted in a decline in sector.9 the National International Reserves (NIR) and sharp depreciation in the exchange rate. Given that the USA is Jamaica’s dominant trading Notably, a review of most literature suggests that with the declining partner, depreciation in the dollar significantly reduced capital share of manufacturing within the global economy, there has been a expenditure and stalled production. The recovery and repositioning trend of deindustrialization over the past few decades. However, in of manufacturing are considered a key component of the solution to a recent UNIDO study, this notion has been countered on the basis rebalance economies and reduce sector dependencies in the wake of that consumers have tended toward manufactured goods that have the crisis.5 become cheaper due to innovation and the greater use of technology within manufacturing firms globally. In fact, when Manufacturing Contribution to GDP assessed from the perspective of the consumer, the importance of Manufacturing in 2012 accounted for approximately 16% of global manufacturing can be seen as increasing while manufacturing as a GDP and 14% of employment.6 In the United States, Manufacturing percentage of global GDP has been decreasing.10 is ranked as second among key sectors where manufacturers in 2015 contributed $2.09 trillion directly to the economy, providing 17 Need for Innovation million jobs and accounts for 12% of the nation’s GDP.7 In North For advanced economies, manufacturing has become a vital source America, manufacturing production maintained relatively higher of innovation and competitiveness, making outsized contributions to growth, primarily as USA manufacturing production rose at a higher research and development, exports, and productivity growth. pace of 3.1 per cent in 2018, compared to 1.8 in 20178. Manufacturing has spilled-over to service inputs in areas such as logistics, construction among others. In some manufacturing Similarly, emerging markets, especially those in Asia can attribute industries, more than half of all employees work in service roles, their growth to their thriving manufacturing sector along with their such as research and development engineers and office support staff. 5 Chartered Institute of Management Accountants: The Global Manufacturing Report. August 2010 6 Manufacturing the future: The next era of global growth and innovation. McKinsey Global Institute. November 2012 7 9 The 5 Industries Driving the US Economy. Deutsch. A, (April 2015) Retrieved from Manufacturing's Multiplier Effect is Stronger than Other Sectors'. Retrieved from www.investopedia.com www.themanufacturinginstitute.org 8 10 The United Nations Industrial Development Organization (2018 Statistics Yearbook) Industrial Development Report, 2018, UNIDO Retrieved from www.unido.org (https://www.unido.org/sites/default/files/files/2017-11/IDR2018_FULL%20REPORT.pdf) A Joint Initiative of the JMEA, MICAF and JAMPRO 5|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Innovation is the trend for the future of the manufacturing sector. Within the advanced countries, there is a shift from basic The challenge is to move up the value chain where the returns are manufacturing towards technology-based on value-added much higher. Innovation, whether it is through investing in research production, which has encouraged manufacturers to reconsider how and development to develop new products or processes, or they operate and what they offer customers. enhanced technologies, more efficient back-office processes, or The search for operational excellence is ongoing and many firms are improved sales and marketing operations, must be incorporated moving towards lean manufacturing methodologies to achieve their within the manufacturing sector to achieve the level of growth best performance. This will require them to increase their focus on desired. eliminating waste or non-value-added processes within their production systems, which is also driving a trend for the creation of Regional manufacturers may be constrained by financial challenges peripheral industries where one company’s waste may be input into to implement the innovation required to compete with advanced another company’s production processes. Applying this concept economies. Nonetheless, they are encouraged to invest in research removes all non-value-added activities and focus only on enhancing and development (R&D) to move up the value chain of their current customer value. It also helps in achieving cost reduction as the non- operational level as well as incorporate environmentally friendly value-added activities are removed or channelled into new product practices. lines. Figure 4: Role of R&D (Innovation) in the Process Flow for the Manufacturing Industry A Joint Initiative of the JMEA, MICAF and JAMPRO 6|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 3: Global Perspective and Considerations on Manufacturing-Led Development A review of a World Bank publication “Trouble in The Making? The Future of Manufacturing-Led Development” (2017) outlines several  Low to middle-income countries will be impacted by the use of critical considerations for governments when positioning the new technologies that will disrupt and change the ‘conventional manufacturing sector as a key driver for economic development. patterns of comparative advantage’. Additionally, the Key among such considerations are: competitive advantage that cheap labour had provided the  The impact of manufacturing can be viewed via five (5) manufacturing sectors in such countries will be further eroded characteristics, i.e.: due to more ‘demanding ecosystems requirements’. Factors o ‘Trade’ in international markets, which refer to the export- such as the relative magnitude of automation, export to-output ratio concentration and services intensity will inform the feasibility of o The extent of innovation, that speaks to the ratio of R&D to manufacturing. value-added o Employment, referring specifically to the total employment sector o Share of unskilled labour, i.e. the share of ‘blue collar workers’ within a sector o Level of value-added, regarding the output per worker.  Due to changes in globalization patterns and the impact of labour-saving technologies, the role export-led manufacturing plays and will continue to play in economic development will be less impactful than what obtained in previous generations.  The opportunities for countries less involved in global manufacturing are affected by changes in the global trade environment and emerging technologies that are creating new product lines and transforming production processes. The COVID-19 global pandemic of 2020 and the resulting economic fallout has further underscored the evolution of business practices and transformation in product development during the post recovery period. Therefore, strategies that seek to foster a Figure 5: Industrial revolutions and shifts in manufacturing specialization, late 18th century – present (Source: Trouble in the Making? The Future of Manufacturing-Led more resilient manufacturing industry are being given greater Development) attention. A Joint Initiative of the JMEA, MICAF and JAMPRO 7|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica  Countries that are not very involved in global trade and whose manufacturing sectors are not very automated are considered low-skill employers, e.g. food processing, wood & paper products, basic metals, nonmetallic mineral products, coke & refined petroleum and chemical products. The figures below illustrate several characteristics that shape the profile and impact on the manufacturing sector within countries. The report outlines policy recommendations for countries ranked according to their levels of competitiveness, capabilities and connectedness (the 3Cs). In general, these elements are influenced by the use of labour saving technologies, the level of concentration in global trade and the rise of services complementary to manufacturing. Figure 7: Manufacturing subsector, grouped by export concentration, degree of automation, services intensity and tradedness, circa 2011-2015 (Source: Trouble in the Making? The Future of Manufacturing-Led Development) Figure 6: Manufacturing Subsectors, Grouped by Pro-Development Characteristics, 2013 (Source: Trouble in the Making? The Future of Manufacturing-Led Development) A Joint Initiative of the JMEA, MICAF and JAMPRO 8|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Figure 8: Policy priorities to strengthen manufacturing-led development, by country’s level of competitiveness, capabilities and connectedness (Source: Trouble in the Making? The Future of Manufacturing-Led Development) A Joint Initiative of the JMEA, MICAF and JAMPRO 9|P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 4: Status of Manufacturing in Jamaica Jamaica has a fairly diversified manufacturing sector, comprising two to revise the National Industrial Policy, the National Foreign Trade main categories – traditional and non-traditional. Traditional Policy which falls under the remit of the Ministry of Foreign Affairs manufactured goods include sugar, molasses and rum, while non- and Foreign Trade as well as by the 2018 promulgation of the Micro, traditional goods include non-metallic products, chemicals and Small and Medium Enterprises (MSME) Policy. petroleum products.11 It is also important to note that the Global Logistics Hub Initiative A review of Figure 5, reveals that the description of the “Industry Master Plan; the Science, Technology and Innovation Policy; the 2.0” best characterizes the manufacturing sector in Jamaica, at Climate Change Policy Framework; and the proposed National present. In large part, the country’s manufacturing sector employs Investment Policy are all in alignment with the Manufacturing mass production based on the division of labour and powered by Strategy. Notably, the synergies among the Strategy and these electrical energy. The sector, nevertheless, has seen the growth of documents reflect the commitment of the government to drive relatively large and successful manufacturing conglomerates over growth within the manufacturing industry. the past 3 – 4 decades. Manufacturing and the GDP “A dynamic, vibrant, market led manufacturing sector making The contribution of the manufacturing sector, by virtue of its high value-added world class products desired by consumers contribution to GDP had a high of 21.5% in 1986. Despite the everywhere, using appropriate technologies and decline over the past three decades, the manufacturing sector has environmentally sustainable processes, linked to other sectors, with motivated, productive employees, within an enabling business and regulatory environment” - Jamaica’s Vision 2030, Manufacturing The sector has been identified as a key area for growth by the Government and is one of the main pillars of the prominent National Development Plan of the country, Vision 2030. The key policy initiatives for the sector are guided by the Ministry of Industry, Commerce, Agriculture and Fisheries (MICAF), and its commitment 11 Economic and Social Survey of Jamaica, 2016 (Planning institute of Jamaica) Figure 9: Manufacturing as a % of GDP 1983-2017 (Source: PIOJ/STATIN) A Joint Initiative of the JMEA, MICAF and JAMPRO 10 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica remained very vital to the economy through the production and Employment in the sector expanded during 2018 with the number of exports of high-quality products. persons employed in the sector on average moving from 79,425 in 2017 to 79,600. The real value-added for the manufacturing sector increased by 0.6% in 2018 owing primarily to the growth of the Food, Beverages and Notable as well is the fact that the sector contributed J$55.9 billion Tobacco and other sub-industry (which grew by 2.3%).12 to the government tax revenue base for 2015/2016, making it the second largest taxpayer in the country.13 Manufacturing outputs have remained relatively constant at an estimated J$60-65 billion over the last five (5) years making the The PIOJ predicts that in 2019, the Real Value-added for the sector the largest contributors to the GDP of all goods-producing Manufacturing industry is expected to increase with higher output industries. The dominance of agro-processing and light from Food, Beverages & Tobacco and other Manufacturing sub- manufacturing is further confirmed in their contribution to the industries. It is anticipated that these will materialize as a result of country’s GDP. improvements made in the production equipment, greater demand and growth in available financing options for the industry. Manufacturing and Trade The manufacturing sector offers several opportunities to impact Jamaica’s growth. In addition to GDP and employment, the sector contributes to exports, provides opportunities for import substitution, and deepens inter-sectoral linkages to other vital economic sectors such as tourism, agriculture, distribution, and transport. In 2018, manufacturing exports were valued at US$624.6 million, an 8.5% growth over the 2017 performance of manufacturing exports, continued recovery from the previous few years where the decline of Figure 10: Number of Employees in the Jamaican Manufacturing Sector 2002-2016 (Source: STATIN) sugar, ethanol, beverages and minerals negatively affected the performance of the sector. Processed foods, beverages and tobacco are at the forefront of this recovery. 12 13 Economic and Social Survey of Jamaica, 2018 (Planning institute of Jamaica) Data produced by the Tax Administration of Jamaica A Joint Initiative of the JMEA, MICAF and JAMPRO 11 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Export of manufactured items has primarily penetrated markets in Based on a preliminary review of the Strategy, these targets were the United States of America, Canada, United Kingdom, CARICOM not met due to a lack of focus on the industry over the last five years and Netherlands. Most recently, there has been some level of covered by the NES. penetration in emerging economies such as Slovenia and Georgia. Table 1: 2017 Exports of Manufacturing Sub-Industries Manufacturing Sub-Industries 2018 Exports % Change US$’000 (2018/2017) TRADITIONAL 63,128 4.5 - Sugar 13,346 -7.1 - Other Products 4,111 -17.2 - Rum 45,671 11.1 Figure 11: Manufacturing Exports 2000-2017 (Source: PIOJ/STATIN) NON-TRADITIONAL 561,437 9 - Processed Foods 139,450 -1.9 - Beverages & Tobacco (excl. Rum) 66,232 -5.5 The Economic & Social Survey of Jamaica (ESSJ) 2018, when - Crude Materials 23,936 -2.1 considering the exports of the manufacturing sector, categorizes the - Mineral Fuels 279,023 19.6 twelve (12) sub-industries into two main groups: traditional and non- - Animal & Vegetable Oils & Fats 321 9.2 traditional. Table 1 outlines the manufacturing sub-industries and - Chemicals (incl. Ethanol) 37,963 56.9 their 2018 exports. - Manufactured Goods 6,576 -40.1 - Machinery & Transport Equipment 1,497 -41.1 Jamaica’s National Export Strategy (NES), which was developed in - Other 6,439 -10.00 2015, has identified Light Manufacturing and Agro-Processing as TOTAL 624,565 8.5 priority areas for the country. The NES targeted a 25% per annum growth in exports and a US$2.5 million export target for light manufacturing export levels by 2019. It has also established a Light manufacturing includes electrical, metal, paper, chemical US$560 million export and the creation of an additional 8,000 job products and building tools, whereas agro-processing includes the target for agro-processing by 2019. manufacture of food-based products. The National Export Strategy A Joint Initiative of the JMEA, MICAF and JAMPRO 12 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica (NES) defines light manufacturing as those activities whichare less Nevertheless, following consultations, six key product segments for capital intensive than heavy manufacturing14, and is more consumer- focus have been identified under this Strategy, based on the oriented than business-oriented (i.e., most light manufacturing country’s competitive advantage and its ability to create niche products are produced for end-users rather than as intermediates products in these areas. for use by other industries)15. Figure 12 outlines the six (6) target areas so identified based on the  Agro-Processing: The area of agro-processing (sugar, rum, core selection criteria, including the: processed foods, beverages & tobacco, etc.) contributed - The ability to drive export volumes, 42% to both areas of manufacturing exports in 2018. - significant opportunity for import replacement in the domestic market as well.  Light Manufacturing: At the same time in 2018, the light manufacturing industries saw a decline, particularly in the sub-industries of chemicals, machinery and transport equipment. Some of the key products that have been positively impacting the country’s trade balance have been rum, other alcoholic beverages, chemicals and sugar. Focus Industries for Manufacturing As noted before, Jamaica’s manufacturing sector has always been closely linked to the country-vibrant MSME sector, which reflects the diversity in the product groups that are manufactured across the island. The range of such products continues to grow, e.g. the craft and bamboo industries. 14 Segments involving steel production, production of industrial chemicals, heavy equipment and machinery typically found in the manufacturing industry are not under consideration in the context of the National Export Strategy. 15 This is comprised of products classified as electrical, optical, plastics, rubber, tools, soaps, furniture and lighting, clocks and watches, paper and paperboard, printed books (to include newspapers, pictures, and other printed products), glass and glassware. Figure 12: Jamaica's Focus Segments for Manufacturing A Joint Initiative of the JMEA, MICAF and JAMPRO 13 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica It must be noted that having regard to the above outlined definitions that ‘a strong manufacturing sector creates a clear path toward of agro-processing and light manufacturing, certain segments within economic prosperity’.16 It does so through: the light manufacturing industry have been identified as targets due - its influence on infrastructure development; to their significant impact on the core selection criteria. It will be - contribution towards job creation; noted that these manufacturing subsectors reveal the Strategy’s - its contribution to gross domestic product (GDP) on both objective of firmly securing its competitive advantages within the an overall and per capita basis; and sector. - contribution towards foreign exchange earnings through As the country’s manufacturing sector evolves, it is expected that it exports will both deepen these current segments, as well as, create new The contribution of Jamaica’s manufacturing sector to GDP, Exports technologically and culturally-driven segments to increase the and Government tax revenue has been mentioned previously. country’s global competitiveness in manufacturing. In order words, Interesting to note however, is that in the publication, Business the profile of the Jamaican manufacturing sector would be Renewal and Performance in Jamaica (2015) by Dr. William transformed to embrace more medium-skill & high-skill global Lawrence, it shows that over 40 per cent of the movement in Real innovators, as per Figure 5. GDP Growth for Jamaica could be attributed to changes in the performance of the manufacturing sector. In other words, a thriving In respect of agro-processing in particular, mention must be made of manufacturing sector is key to stimulating growth in Jamaica. the fact that given the current profile of the manufacturing industry in Jamaica, which comprises almost 50% of agro-processing companies, some attention and priority will also be needed for the agriculture industry in Jamaica. The importance of the value chain in ensuring the viability of this manufacturing segment cannot be understated. As a result, significant work must be undertaken to identify the value chain issues at the point where they transition from agriculture outputs to agro-processing inputs, if the agro- processing segment of manufacturing is to grow and thrive. Rationale for a National Strategy for Manufacturing The 2016 Global Manufacturing Competitiveness Index (GMCI), published by Deloitte succinctly outlines the value of the manufacturing sector to an economy, and reinforces the position 16 https://www2.deloitte.com/global/en/ Figure 13: Regression Analysis of Real GDP Growth vs. Manufacturing Growth (UWI) A Joint Initiative of the JMEA, MICAF and JAMPRO 14 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica However, while manufacturing has made significant contribution to embodied services (e.g. design, marketing, distribution, logistics infrastructure development in the country over the past decades, in services, e-commerce platforms)18. Jamaica, the contribution of the sector to the country’s infrastructural potential is not as pervasive or direct as it is with The Global Competitiveness Index (GCI) also provides a guide other sectors, such as tourism. This highlights the fact that there is regarding the factors necessary to achieve productivity and still significant work to be done to realize the potential of the prosperity. It assesses the competitiveness landscape of over 138 industry. countries, providing unique insights on their current economic standing. There are twelve indicators of the GCI, and Jamaica – which It therefore represents an opportunity for the Government of is ranked at 79th out of 140 countries in 2018 – requires Jamaica to identify and implement targeted interventions to drive enhancement in all twelve (12) areas. For the manufacturing sector, exponential growth in the country’s manufacturing sector, informed chief among them to be addressed by the Government of Jamaica by the global trends outlined Section 3 above. While there are are strategic sector policies, innovation policy, infrastructure, instances where ICT-led industries (such as those covered under financing and talent development. “Industry 3.0” technologies)17 are involved in the manufacturing activity, a number of companies within the sector are characterized The insight provided by Deloitte’s GMCI is useful in assessing and by the assembly line production. Furthermore, the country’s value confirming the priority competitiveness factors for Jamaica. While proposition has been based on its approach to compete on price, the factors and their rankings put forward by Deloitte best suit the with low labour costs being a key determinant of success. However, profile of the more advanced economies that have made significant production processes that utilize “Industry 4.0” technologies are in a investments in their manufacturing sectors, it is important to note position to leverage their use of advanced robotics, 3-D printing and that they reflect the priorities of Global CEOs who lead companies the Internet-of-Things (I-o-T) to produce higher quality items at that Jamaica would wish to attract for investment in Jamaica. It is lower costs. therefore imperative that they form a basis for the country’s sector development if the country is to see investments, or if local One advantage Jamaica has is that the size of its services sector can companies are to be competitive in the global marketplace. be leveraged to better support the manufacturing sector, in keeping with the global trend of increased services-oriented manufacturing. This phenomenon embraces the relationship between manufacturing and services as more than one-third of the value of gross manufacturers’ exports come from the value-added of 18 Trouble in Making? The Future Manufacturing-Led 17 Reference made here to Figure 5 Development A Joint Initiative of the JMEA, MICAF and JAMPRO 15 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica corruption. In order of priority, the next three most problematic areas for Jamaica would be:  Physical infrastructure  Supplier Network  Legislative and regulatory framework. With the implementation of these strategies, it is expected that where the ecosystem improves, priority could then be given to the other factors in the ascribed priority sequence to further develop the sector. Addressing these factors and developing strategies to improve the country’s performance will immediately and drastically improve the tangible and intangible contribution of the sector to the national economy. The recommendations outlined in this Strategy will therefore, focus on the six key areas indicated as being premised on Jamaica’s realities. Figure 14: Drivers of Global Manufacturing Competitiveness 1. Workforce Productivity 4. Physical Infrastructure Indeed, the application of these rankings to the Jamaican reality requires some level of adjustment and reorganization to best reflect 2. Crime & Corruption 5. Supplier Network the immediate priorities of the sector versus those factors that are more long-term. For example, before strategies related to ‘talent’ (as referred by the Index as ‘highly skilled, well-educated workers’) 6. Legislative & Regulatory 3. Cost Competitiveness can be implemented, in Jamaica, significant work would need to be Framework done in respect of Workforce Productivity, which is largely agreed as being the most problematic area for the sector. Figure 15: Jamaica’s Suggested Ranking of Drivers of Competitiveness SWOT Analysis for Manufacturing Similarly, the second most problematic area for Jamaica is the cost of doing business in Jamaica, which includes the cost of bureaucracy, as Jamaica as a country offers a number of strengths and opportunities well as energy costs and other factor costs such as crime and such that the manufacturing sector can maintain its significance as A Joint Initiative of the JMEA, MICAF and JAMPRO 16 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica one of the major engines of economic growth, job creation, and prosperity in the country. An understanding of Jamaica’s current SWOT can position the sector stakeholders to ensure that this happens. By developing deliberate strategies that can leverage the country’s strengths to capitalise on its opportunities, Jamaica may be able to The Appendix shows the SWOT for the six focus sectors of the boost its manufacturing sector and increase its level of contribution Strategy, exploring the sector-specific strengths, weaknesses, to the economy. Similarly, strategies must be put in place to opportunities and threats for each. minimise threats and mitigate against inherent weaknesses in the industry, if the sector is to grow. STRENGTHS WEAKNESS  Good road infrastructure/connectivity  Lower labour productivity  Increased collaboration/ linkages among government agencies  High production costs and other economic sectors including tourism,  Weak supply chain telecommunication, education etc.  Lack of high skilled labour  Port telecommunications infrastructure  Poor access to financing & working capital  Stable macroeconomic outlook  High import dependency  Established manufacturing industry  Manufacturing technologies are outdated  Strong industry association  Lack of diversity in niche products  Competitive labour costs  Poor production standards framework  Access to skilled & semi-skilled labour pool  High cost energy supply  Access to raw material for production  Insufficient industry standards for production  Access to international markets  Sophisticated Special Economic Zone regime  Strong export promotions agency  Existing intellectual property legislative framework  Responsive and flexible standards development process OPPORTUNITIES THREATS  Framework for build out and diversification of the energy base  Limited local economies of scale  Strategic geographical position  Lack of focused incentives for key development areas in  Shifts in global manufacturing patterns manufacturing (e.g. R&D)  Access to large network of existing preferential trade  Bureaucratic banking and government systems agreements and other markets  High crime and corruption rate  Access to scalable markets large consumer base  Strong regional competitors innovating at a faster rate  Development of emerging Technologies  Changing international trading regimes  Access to existing trade agreements  Large informal sector Table 2: Jamaica’s SWOT Analysis for the Manufacturing Sector A Joint Initiative of the JMEA, MICAF and JAMPRO 17 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 5: Objectives, Impact and Assumptions of the Strategy Having regard to the global trends in the role of manufacturing in • Increased export sales of manufactured goods thereby economic development, and given the potential that the sector’s increasing the level of foreign exchange earnings for the development and expansion can have on Jamaica’s economic growth country plans, this strategy is being developed to establish a partnership framework between the Government and the private sector in The key expected impact of the Strategy, therefore, will be to grow creating the ecosystem necessary for manufacturers to invest, the manufacturing sector’s contribution to GDP moving expand, export and positively impact the growth of the Jamaican manufacturing output from J$66 bn in 2018 19 to J$81 bn by economy. Specifically, the national strategy is expected to: December 202520 This growth will be achieved through an aggressive target annual growth rate of 3% per year, which will place • Articulate the challenges and opportunities for growth in the employment at approximately 97,898 and export levels at US$531 local manufacturing industry million. This level of growth is above the global projected growth • Outline the initiatives that are essential to propelling the rate of 1.6-2% per annum over the period. manufacturing industry into realizing greater growth and national impact Key Assumptions • Create a national action plan to grow the local While the strategies outlined in the next section, are designed manufacturing industry over the next 5 years. specifically to impact manufacturing, it is assumed that other critical initiatives will be implemented in parallel in order for these results to With this in mind, it is therefore expected that once the strategies be met. These assumptions include: and action plan have been implemented, the following results will be  Implementation of the MSME and Entrepreneurship Policy, with realized: a focus on the expansion of productive activity in Jamaica, • Increased jobs in the manufacturing industry particularly based on the idiosyncrasies of each sub-sector. • Increased foreign and local direct investment in the  Reform of the country’s Business Environment and other manufacturing industry comprising new and expanded competitiveness issues in respect of the ease of doing business businesses in the country. The work of the National Competitiveness • Increased attractiveness of Jamaica as a location for Council (NCC) is noted as it drives the country’s full manufacturing as evidenced through key global location implementation of the Business Environment Reform Agenda reports that outlines the critical initiatives across the government that • Increased income to the Government of Jamaica through tax work in concert to improve the country’s competitiveness. payments • Increased ability for local manufacturers to supply products into the domestic market thereby reducing the level of the 19 As at 2018 output level (ESSJ 2018, PIOJ) 20 country’s imports This assumes that FY 2020/2021 will be Year 1 of the Strategy. A Joint Initiative of the JMEA, MICAF and JAMPRO 18 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica  Concurrent development within the Services Sector, particularly  Implementation of a National Crime Plan to allay investor fears the areas that support the manufacturing sector. of crime and theft in the country, particularly in respect of  Ongoing reforms to significantly reduce the cost of electricity, larceny, which continues to stymie agriculture and the which is a major pillar in the success of the industry availability/use of local inputs in the manufacturing industry. A Joint Initiative of the JMEA, MICAF and JAMPRO 19 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 6: Jamaica’s Ecosystem for Manufacturing The current profile of the ecosystem for the manufacturing sector in In fact, China’s ranking as the most competitive manufacturing Jamaica is best understood and appreciated within the context of the country in the GMCI is credited to several factors, key among which support infrastructure that the Government has provided is its focus on its innovation infrastructure as reflected in its high throughout the years. A review of the following elements outlines level of STEM graduates. Over the 2012-2017 period, the enrolment the key influences impacting the sector’s development to date: of students in the STEM-related programmes at UWI Mona recording 39% in 2012/2013 and 41.5% in 2016/201722. Non-STEM 1. Workforce Training programmes – such as those in the Social Sciences – continue to At present, there is no standard curriculum and training programme dominate the preferred choice of the UWI student pool. dedicated to the manufacturing industry in Jamaica. There are courses and training modules that address the general disciplines If the industry is to grow, a more deliberate effort must be made to and skills required for manufacturing, such as engineering, create relevant programmes and drive an increase in their enrolment technology applications, production management, and these are levels. Additional promotion of the Industrial Arts and other such taught across the various tertiary and vocational training institutions technical vocations, all STEM-based, may be considered. in Jamaica and the region. 2. Infrastructure Development In addition, the STEM (Science, Technology, Engineering & Factory Space: The Government, through the Factories Corporation Mathematics) disciplines, in particular, have emerged as being most of Jamaica (FCJ), provides industrial and factory space to the relevant to the manufacturing process. The Global Manufacturing manufacturing sector. The state agency has, in some instances, Competitiveness Index (GMCI) recognizes that a nation’s ability to provided subsidies to assist the manufacturing sector, via become competitive is dependent on the ability to attract, develop concessionary rates for example. The challenge facing the FCJ, and retain top science and engineering talent to drive world class however, is the concern regarding the quality and location of the innovation and R& D. This extends to education systems that equip space. students with advanced STEM skills, creative problem-solving skills, entrepreneurial training and leadership skills. The report reinforces Road Network: Over the past 10 years, the government has also that the key to a nation’s greater manufacturing undertaken extensive investments in upgrading the road competitiveness is a workforce that is equipped with science and infrastructure to improve the movement between the commercial mathematics grounds21. urban centres and the rural communities thus allowing for easier transportation of goods across the country. This opens up the 21 22 2016 Global Manufacturing Competitiveness Index UWI Statistical Digest 2012/13 to 2016/2017 A Joint Initiative of the JMEA, MICAF and JAMPRO 20 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica country to other manufacturing facilities across the country rather breathing space to make investments that result in more modern than a concentrated few in areas close to the ports. efficient operations. 3. Cost Competitiveness Port Development: The divestment of the ports will allow for significant improvements that enhance the ability to move goods in Financing: The profile of the traditional commercial banking sector and out of the country. Coupled with the introduction of improved has remained largely unchanged over the past few decades in technologies at the Customs Agency with the introduction of the respect of its support to the manufacturing sector. Manufacturers Automated System for Customs Data (ASYCUDA) and the continue to face challenges in securing competitive loans to support development of the port community system (PCS), trade in their business operations, despite the efforts of the government, as manufactured goods will benefit. it works particularly through the National Export-Import (EXIM) Bank and the Development Bank of Jamaica (DBJ). Energy: The issue of the cost of energy has remained a challenge for manufacturers. Renewable energy is actively being explored to Between both institutions, manufacturers can access short, medium support not only a lower cost, but a more diversified energy sector. and long-term financing at competitive rates. The EXIM Bank Most recent investments in the sector saw the introduction of an provides financial support for a range of activities including working LNG facility that provides cheaper energy to the Jamaica Public capital, equipment acquisition, retooling/upgrading of facilities, pre- Service Company (JPSCo). Also, the JPSCo is investing in the upgrade shipment financing, receivables financing, market research and debt of its facilities, as well as the build-out of additional megawattage. refinancing. The DBJ offers its support via Approved Financial Institutions (AFIs) for similar activities as the EXIM in addition to also Navigating Cross Border Competition: Increased use of the trade providing financing to address the issue of reducing high energy remedies infrastructure will help to improve business performance, costs. The DBJ also provides partial guarantees via its Credit employment and stimulate investment as consumers switch Enhancement Facility that will support accessing financing from the expenditure to locally produced goods. Trade remedies are defence traditional financial community. One additional DBJ product offering measures that result in additional duties on imports deemed, after is the voucher system through which manufacturers can access investigation, to be the result of unfair trading practices and or technical assistance to improve their technical capacity. increased volumes of imports that erode any competitive advantage that domestic manufacturers may have had. The sub-sectors The potential benefits of the DBJ’s product offering are, however, identified for growth are ones in which there are considerable challenged by how the Bank facilitates loans and grants. The competing imports in Jamaica and also in export markets. Any traditional financial institutions, which serve as the AFIs, have been strategy to grow manufacturing must have trade remedies defence reluctant to offer the DBJ packages since they have themselves as a key component as this helps to head off competition from developed competing programmes for the manufacturers. The imports that cause or threaten to cause injury and allow for manufacturers are therefore presented with the commercial banks’ products and only where the companies make a specific request, is A Joint Initiative of the JMEA, MICAF and JAMPRO 21 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica the information on the DBJ packages shared. The likely outcome is consistency in how it is applied. Additionally, the benefits are not all the inaccurate conclusion that there is little interest in the DBJ consistent as for example, not all items can benefit from the relief on packages. the CET, as local and CARICOM rules preclude some goods from such relief. In some instances, the rationale for their inclusion no longer The government also introduced the secured transaction regime stands but the process to remove them from the list is tedious and under the Secured Interest in Personal Property Act (SIPPA), which protracted as it involves a series of interactions with the CARICOM has also not yet fully realized its expected benefits. The ability to Secretariat and its organs. leverage non-traditional forms of collateral in order to secure loans has been challenged in part by a) the guidelines issued by the Bank The Special Economic Zone (SEZ) Act offers an additional option for fiscal incentives for the manufacturers. At this time, the eligibility of Jamaica which limit what the commercial banks can accept as criterion for the SEZ precludes existing Jamaican companies from collateral and b) the weak efforts by the lending institutions to accessing the benefits (key among which is a reduced Corporate design instruments that will accept movable assets as collateral Income Tax (CIT) rate and the relief of the GCT upon importation). which would increase access to finance for MSMEs. Given the size of most manufacturing companies, they would qualify as an MSME operator within the SEZ, thus benefitting from various Fiscal Incentives: At the close of 2013, the government revised its concessions. fiscal incentives regime in an effort to make the benefits commensurate with a company’s (and by extension, the industry’s) 4. Trade Agreements Framework contribution towards the economy. The result was the Omnibus Incentives Regime comprising five (5) pieces of individual legislation Jamaica is party to twelve (12) trading arrangements; at both the and offering a range of fiscal benefits for manufacturing firms multilateral and regional levels. These arrangements establish a including a Productive Input Relief system. In general, the Regime framework within which Jamaican manufacturers are able to export allows for: their products to the other parties of the agreements on a preferential basis. - Relief from Common External Tariff (CET) - Relief from Advanced General Consumption Tax (GCT) It must be noted however that while these trading - Relief from Additional Stamp Duty agreements/arrangements are in force; in many instances Jamaica is - 50% Discount on the Customs Administrative Fee (CAF) not in a position to take proper advantage of their provisions. The - Deferment of Standard GCT primary reason for this is due to the supply-side constraints, as well - Employment Tax Credit (ETC) as practical obstacles/barriers imposed by the target State, which curtails Jamaica’s ability to access the relevant markets in actuality. The challenge with the current construct of the fiscal incentives regime for the manufacturers is that in order to access these It is therefore envisioned that the implementation of the National benefits a company must first meet the definition of ‘manufacturing’ Foreign Trade Policy will increase penetration into existing markets, under the Fiscal Incentives Act; a process which requires greater acquire new markets and fully utilize market access in order to A Joint Initiative of the JMEA, MICAF and JAMPRO 22 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica address existing challenges that would otherwise hinder trade. In so Jamaica’s Trading Arrangement Status doing this will strengthen the communication and response CARICOM - Dominican Republic Free Trade Agreement In force mechanisms in respect of constraints to competitiveness and market access identified by the private sector. The Policy recognizes the CARICOM – Colombia Free Trade Agreement In force need for additional financing, technical assistance, institutional strengthening, and capacity-building to implement these agreements CARICOM – Venezuela Free Trade Agreement In force and to overcome existing supply-side constraints in order to make CARICOM - Costa Rica Free Trade Agreement In force effective use of trade agreements/arrangements. CARICOM – Cuba Free Trade Agreement In force These factors can be further alleviated by encouraging and building national capacity to encourage and stimulate export supply from the Petro Caribe Trade Compensation Mechanism In force private sector to exploit existing market access agreements; and enhancing and streamlining, as necessary, the institutional support services available for existing and potential exporters, especially MSMEs, to building national capacity to exploit existing trade agreements, making maximum use of market access opportunities. Table 3 below outlines the status of Jamaica’s various trading arrangements. Table 3: Status of Jamaica’s Trading Arrangements Jamaica’s Trading Arrangement Status The World Trade Organization (WTO) Most Favoured Nation (MFN) In force Treatment Principle UNCTAD Generalized System of Preferences (GSP) - In force The Caribbean Basin Initiative (CBI) Duty Free Access to the US In force market The Commonwealth Caribbean/Canada Trade Agreement In force (CARIBCAN) Duty Free Access to the Canadian Market Revised Treaty of Chaguaramas: CARICOM Single Market (CSM) Duty In force Free Treatment CARIFORUM - European Community (EC) Economic Partnership In force Agreement (EPA) A Joint Initiative of the JMEA, MICAF and JAMPRO 23 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Strategic Initiatives to Boost Manufacturing Using the drivers outlined by the Global Manufacturing Index and the recommended strategies outlined for the sector within the National Development Plan: Vision 2030, the strategic initiatives that are needed to boost Jamaica’s manufacturing sector are outlined below. The relevant implementing agencies are also named. These agencies would also require the support of their individual portfolio Ministries in effecting the recommendations required. Additionally, it is important to note that the Strategy’s development is informed by the varying needs of the Micro, Small and Medium Enterprises (MSME), in so much as it seeks to address critical factors relevant to the MSME sector. The cross-cutting nature of the Strategy will address the general idiosyncrasies among the various segments of the MSME. Ultimately it is expected that one key outcome of implementation will be the sector’s transition from primarily non-productive activity into core manufacturing operations, thus immediately expanding the size of Jamaica’s Manufacturing sector. Enhance Workforce Productivity Expected Impact A. Develop an Apprenticeship Programme for Manufacturing  Highly skilled and One of the key lessons highlighted from the experience of Germany by the Global Manufacturing Report is its specialized labour deliberate strategy of pairing the vocational training with the traditional classroom training, recognizing the force importance of practical experience to reinforce the more theoretical approach to learning. Presently, the Ministry of  Higher income for Education is the largest consumer of furniture. The repair of the furniture is facilitated through students under an manufacturing apprenticeship programme and certificates of participation are issued at the end of the engagement. workers  Increased ability to Recommendation: attract more complex  Establish and institute an apprenticeship programme across all tertiary and vocational training institutions, giving manufacturing priority to the graduates of STEM programmes (including those within the Industrial Arts programmes) from investments into either secondary or tertiary levels. The objective of this approach is to create greater balance within the labour Jamaica pool between the STEM and non-STEM skills set, as at the present Jamaica’s work force is predominantly characterized by a non-STEM labour profile. Partners in this venture would include both government and private companies that utilize the disciplines in manufacturing or manufacturing-related institutions and companies. To ensure transfer of knowledge, the programme could commence at the penultimate year of study. Specifically, one immediate solution is for the:  Establishment a partnership between HEART/NTA, the Ministry of Education & the JMEA to formally structure and align the expansion of the Ministry’s apprenticeship programme with the secondary students along with the joint efforts of the JMEA and HEART (via a MOU). The resulting outcome would be the creation of an institutionalized A Joint Initiative of the JMEA, MICAF and JAMPRO 24 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Enhance Workforce Productivity Expected Impact apprenticeship programme that would offer skills certificates to the participants (see related recommendation below).  Promote the diversity of career specialization for STEM graduates, which includes a range of professions ranging from fabricators, machinists, field service engineers, senior plant engineer, material engineers, economists and nutritionists, to jobs within the life sciences, robotics, big data analytics, mechatronics and social media game development industries.  Build capacity in knowledge and use of trade remedies by manufacturers. This will include delivering certified training programs in trade remedies. [Implementing Entity: Anti-Dumping and Subsidies Commission (ADSC), HEART Trust, MOE, JMEA] B. Develop Core Training Curriculum for Manufacturing Despite the wide scope of productive activities within the industries that comprise the manufacturing sector, there is no set base of skills defined for entry into the manufacturing sector that would begin to frame the profile and scope of the Jamaican manufacturing sector. The objective would not be to develop prescriptive steps to manufacturing, but to establish fundamental core competencies across the many industries within the manufacturing sector. Recommendations:  Create and implement a manufacturing certification programme that focuses on the core skills that would characterize the labour pool within the manufacturing sector. Essentially, the country would adopt an approach similar to what has been done with the outsourcing industry, where HEART/NTA has developed a basic training curriculum that all graduates must undergo that provides the fundamental skillset of the industry. Work with industries leaders will be critical to understanding the core fundamentals and ensure that the quality and relevance of the training will achieve the desired impact. [Implementing Entity: HEART Trust, NCTVET]  Align and standardize the Apprenticeship Skills Certification programme among the relevant stakeholders such as the Ministry of Education (MOE), HEART & JMEA. This effort would also result in the development of a MOU between the JMEA and MOE to broaden the range of students currently included in their established arrangement to now include additional disciplines, based on industry demand, e.g. furniture, fashion and design. This should also include MCGES which is currently exploring programmes for creative-based manufacturing companies. Recommendations have also been made by MFAFT that this could be further expanded to include apprenticeship/vocational training through existing and proposed bilateral cooperation programmes. [Implementing Entity: HEART Trust, MOE, JMEA, MCGES, MFAFT] A Joint Initiative of the JMEA, MICAF and JAMPRO 25 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Enhance Workforce Productivity Expected Impact C. Expand the STEM Programme The Government has been working with the Labour Reform Commission, whose report outlines, inter alia, recommendations for priority attention to imparting training in the STEM disciplines. JAMPRO, itself developed recommendations, which also highlights the critical importance to developing and expanding the STEM disciplines and inculcating a culture of innovation. 23. All the top 5 countries ranked by the GMCI have extensive programmes within their education systems focused on the STEM disciplines. In 2017, the Ministry of Education reported that the pass rate for mathematics was 47.7% (a 14.3-point decrease compared to 2015)24. It is appreciated that in the immediate, e.g. during the 5-year period addressed by this Strategy document, there may not be a sharp rise in the number of opportunities for the higher skilled labour pool, e.g. engineers, but rather for those individuals in the Industrial Arts. Nevertheless, it is expected that as the sector begins to grow and diversify, it will begin to attract increased numbers of highly technically skilled individuals. Recommendations:  Increase the level of coordination among the primary and secondary school curricula to place increased priority on the STEM disciplines. Strong performance in the STEM disciplines is not a dominant characteristic of the Jamaican primary and secondary education profile. A committed focus on the introduction and advancement of mandatory STEM subjects within both the primary and secondary school system will create a sustainable solution to the challenge of producing the quality of students for enrollment at the tertiary levels. This approach will also have a positive and reverse impact on the tertiary enrollment in STEM programmes, bearing in mind for example, the decline in the number engineering enrollments at UWI during the 2009 – 2014 period. Ultimately, Jamaica’s ability to effectively compete for global investments based on its talent base would be guaranteed. [Implementing Entity: Ministry of Education (MoE)]  Incentivize student enrolment in tertiary STEM programmes by directing the Student Loan Bureau to prioritize such programmes in the granting of loans and grants for tertiary education. [Implementing Entities: MoE & Students’ Loan Bureau (SLB)] 23 Growth Agenda’s Training Strategy for a Better Economy (GATSBE) 24 http://www.moe.gov.jm/education-ministry-address-decline-csec-math-passes A Joint Initiative of the JMEA, MICAF and JAMPRO 26 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Improve Cost Competitiveness Expected Impact A. Provide Cost Competitive/Innovative Financing Options  Enhanced and While the challenges and original rationale for the DBJ to move away from direct lending are understood, the JMEA diversified financing has argued that the changing landscape and profile of the manufacturing industry may be the reason for the policy to options for be reconsidered as it is their experience that the practice of the AFIs has undermined the efforts at supporting the reinvestment and productive industries. working capital  Ability to lower costs Recommendations: of production –  Explore the feasibility of a dedicated line of credit, directly through the DBJ or EXIM, for qualifying manufacturing through energy activities, as identified by government policy, to provide avenues to boost expansion of the sector. The lines of savings etc. credit should be at lower interest rates and could consider the inclusion of moratoriums for certain categories of  Establish and loans. [Implementing Entity: Ministry of Economic Growth & Job Creation (MEGJC) through Development Bank of Jamaica (DBJ), MICAF through the Exim Bank] incentivize R&D as a  Expand the programmes of both the DBJ and EXIM Bank focused on retooling so as to address one of the issues channel for business facing the more established manufacturing companies, where access to financing has hindered their ability to growth and innovate in respect of their facilities and equipment. [Implementing Entities: MEGJC through DBJ, MICAF through diversification EXIM Bank]  Reduce bureaucracy  Increase the government’s promotional efforts regarding the energy audit services provided and in so doing sensitize and increase factor companies to the cost savings to be derived from implementing energy audit recommendations. Such a campaign (labour) productivity will educate the industry of the energy efficient measures that can increase cash flow to other areas that allow for  Increased formality of expansion and that energy audits are currently offered by the Jamaica Productivity Centre (JPC) and the Petroleum industry players Cooperation of Jamaica (PCJ), as well as energy service companies (ESCOs). It should be noted that DBJ’s Energy Audit Grant allows for financing of the implementation of energy efficiency programmes that will support this thrust. [Implementing Entities: MICAF, MSET, JPC & PCJ]  Create grant schemes to support investment in the R&D activities of the companies. Working through the SRC continues to prove beneficial, but they are limited in the support that they can give, or the number of companies that can benefit from their services. An expansion of this activity, to include working with private and other research bodies could significantly change the profile of the manufacturing sector. [Implementing Entity: DBJ] A Joint Initiative of the JMEA, MICAF and JAMPRO 27 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Improve Cost Competitiveness Expected Impact B. Refine the Fiscal Incentives Structure The use of the negative approach to defining manufacturing has led to greater levels of uncertainty for both the administrators of the policy and the beneficiaries.25 Recommendation:  Expedite the establishment of the Fiscal Linkages Committee and develop Technical Guidance in keeping with the Fiscal Incentives Act. The policy makers, in anticipating the challenges in administering the Productive Input Relief (PIR) scheme within the omnibus incentive regime, had recommended the establishment of an objective committee that would give technical guidance on interpretation issues. Additionally, to ensure transparency and increase the level of accountability among all stakeholders, Technical Guidance Notes should be routinely developed and published by the TAJ on the nuances of the fiscal incentive regime. [Implementing Entity: MoFPS, Customs with technical support from MICAF]  Expedite the finalization of the Large Projects & Pioneer Industries Act (LPPIA) which would provide additional incentives for manufacturers to more fully embrace innovation and dynamism within their productive practices. Coupled with the R&D grants that would address the costs of R&D, the LPPIA would advance those efforts by providing support for the commercialization of the R&R results. [Implementing Entity: Ministry of Finance and Public Service (MoFPS)]  Establish a Linkages Tax Credit scheme, to encourage both foreign and larger local firms to establish business linkages with manufacturing companies and source their materials from the local supply network. The administration of the credit would be based on an established list of qualifying MSMEs and investors/larger local companies. The scheme would further boost and complement the development and expansion of the supplier network of the local manufacturing sector. [Implementing Entity: MoFPS] C. Expedite Full Implementation of the National Energy Policy The cost of energy directly impacts the competitiveness of the manufacturing sector. Recommendation:  Expedite the implementation of the energy policy in its entirety (from types of vehicles allowed into the country to the roll out of the Renewable Energies Plan) would directly influence the reduction in energy costs. [Implementing Entity: MSET] 25 The negative approach definition focuses on what is NOT manufacturing rather than what is, leaving no room for emerging activities that may not clearly fit on the list. A Joint Initiative of the JMEA, MICAF and JAMPRO 28 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Improve Cost Competitiveness Expected Impact  Expedite the implementation of Integrated Resource Plan (IRP), which will facilitate the development of the energy industry and provide cheaper alternative energy sources for all manufacturers The OUR needs to define and issue tenders for additional MW in short order. [Implementing Entity: MSET and OUR] D. Rationalization of Government Permits, Licenses and Authorisations The Trade Facilitation Agreement represents the government commitment to transform the experience at the border when attempting to import and export items into and from the country. The reforms and resulting projects, when fully implemented, will immediately improve the competitiveness of the manufacturing sector as they source their inputs and trade their products throughout the world. One key output is the government’s reduction in the number of permits and licenses required that serve as a disincentive to do business. Recommendation:  Fast track the efforts of the Trade Facilitation Task Force, in efforts to reduce the borders costs and those that impact the movement of manufactured goods to include permits, certifications and border costs. [Implementing Entity: MICAF, MoFPS, Trade Board]. Specifically, immediate attention should be placed on:  Assess and rationalize the number of permits, licenses and authorizations given across government with a view to accommodate either removal or consolidation of these Government approvals. Once the list has been rationalized, the following must be prioritized: o Rationalize and reorganize border agencies and their requirements [Implementing Entity: Ministry of industry, Commerce, Agriculture and Fisheries (MICAF)] o Expedite the required legislative changes [Implementing Entities: Relevant Ministry(ies) and the Office of the Chief Parliamentary Counsel (CPC)] o Where no legislative change is required, the administrative steps to reduce the permits or the process around them must be under taken. [Implementing Entities: As identified by process review]  Implement a National Business Portal, and in so doing, facilitate the full roll-out of the intended services under the Gov.JM platform. The national platform was designed to provide a web-based interface for all government services, of which the business services are key. Full implementation of the Business Portal will simplify the business environment and will aid the facilitation of critical business approvals, thus reducing the cost of doing business in Jamaica. This would require that an audit of the various efforts already underway in partnership with Cabinet Office. This would help to improve government transparency and efficiency through which the business community would benefit. Accountability within the public sector would also be an additional outcome. [Implementing Entities: MSET, Cabinet Office, eGov Ja and JAMPRO] A Joint Initiative of the JMEA, MICAF and JAMPRO 29 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Expand Infrastructure Expected Impact A. Provision of Suitable Factory Space  Diversified and more While the Jamaica Manufacturers’ and ExportersAssociation (JMEA) has conducted research into the factory square cost-effective offering footage required by its membership, a more comprehensive audit would be useful in assisting the government to of factory space develop policies and strategies to address the space gap on a national level.  Lower cost of transportation Recommendation:  Ability to attract more  Create special lease facilities for manufacturing space. Mobilize the Factories Corporation of Jamaica and diversified other state agencies to provide affordable space for manufacturing entities that meet specific criteria. Such a manufacturing programme would be put forward within the context of greater non-fiscal incentives for the industry. A investment interest necessary step would be to complete a comprehensive audit of available factory space for the sector vis-à-vis  Increase the number of how much space is required, including projections for the growth of the manufacturing sector [Implementing Entity: Factories Corporation of Jamaica (FCJ)] manufacturers in the  Development of modern factory space. The creation of new factory space needs to take into consideration the industry direction of the industry and be retrofitted to support the emergence of varying modes of manufacturing.  Enhanced ability for One approach could be to create s’shell’ spaces and then be prepared to retrofit to specifications based on manufacturers to the requirements of a tenant based on a long-term lease agreement. [Implementing Entity: Factories expand their Corporation of Jamaica (FCJ)] businesses  Provide incubators for small and medium manufacturers. The creation of small incubator spaces is of paramount importance to allow manufacturers to test their products in the market making a decision to invest fully in an enterprise. This incubator phase will also allow for proof of concept to financiers that may wish to invest in a more established space. [Implementing Entity: Factories Corporation of Jamaica (FCJ)] B. Address the Challenges in Transportation Logistics The traditional means of transporting goods along parochial roadway is an impediment to the efficient movement of goods from the business operation to their varied destinations. Recommendation:  Introduce fiscal incentives to support investment in critical assets, e.g. refrigerated trucks. At present the fiscal incentive regime does not accommodate relief related to motor vehicles for the manufacturing sector. The considerations made to accommodate the Tourism and Agricultural sectors should also be brought to bear in this specific instance to the manufacturing sector. A Joint Initiative of the JMEA, MICAF and JAMPRO 30 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Facilitate Market Expansion Expected Impact A. Promote and Maintain Local Suppliers’ Directory  Increased awareness The expansion of the suppliers’ network is predicated on potential buyers being able to find the suppliers. Support of local manufactured must be provided to development of such a directory that can be made available to both local and foreign buyers. goods Recommendation:  Increased access to  Expand and promote the suppliers’ directory for the entire manufacturing sector. This includes identifying global markets innovative ways to connect the suppliers with buyers whether through existing networks or diversifying the ways  Increased awareness in which products are featured in the directory. The management of the directory by the Ministry of Industry, of Brand Jamaica in Commerce, Agriculture and Fisheries and the JMEA would ensure comprehensive updating and the widest global markets circulation. [Implementing Entities: MOT, JMEA, MICAF and the Tourism Linkages Council/Ministry of Tourism, DBJ,  Increased access to EXIM] GoJ as a purchaser  Enhanced B. Establish Accountability Frameworks for Government Set-Aside Policy The government has taken all the steps necessary to fully implement its commitment to establishing a set-aside within opportunities for the public procurement process for local manufacturers. Ministerial Orders have been signed, thus effecting the investment and regulations to the Government Procurement legislation which seeks to support the manufacturing sector, and in export growth particular the MSMEs. Specifically, the Regulations provide for: - 20% set aside in the government’s annual procurement plans for small and micro enterprises - 20% margin of preference for domestic producers when bidding for government projects - 100% government procurement within targeted industries, including drapery, uniforms, printing, furniture and other industries identified as critical by the government. Recommendation:  Expedite the adoption and implementation of the regulations for the Public Procurement Act that provides the administrative and operational framework for the implementation of the legislation, in which the government’s set aside policy is outlined. [Implementing Entity: MoFPS]  Establishment of a robust and dedicated monitoring and evaluation plan to track and analyze the performance of the various MDAs vis-à-vis the objectives of the government’s set-aside policy [Implementing Entity: MOFPS, MICAF and JMEA]  Expedite and expand the training of the government’s procurement officers to the new paradigm created by the legislation and new regulatory framework. [Implementing Entity: MoFPS] A Joint Initiative of the JMEA, MICAF and JAMPRO 31 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Facilitate Market Expansion Expected Impact C. Accelerate Promotional Initiatives to Increase Market Share Globally Continued support for the export promotion of locally manufactured goods is critical to the expansion of the supplier network. Positioning JAMPRO to expand its services to an increased number of manufacturers in its promotional activities is to the advantage of the sector. D. Recommendation:  Develop and implement a comprehensive Sales and Promotion Strategy for the Sector [Implementing Entity: JAMPRO]  Encourage joint promotional activities between JAMPRO and the JMEA and other interested parties [Implementing Entities: JAMPRO & JMEA] D. Diversify the Brand Jamaica Product Offering Jamaica is traditionally known as a country of samples with minimal diversification across product types and brand, most having the same commonalities. As a result, the market is saturated with products having the same unique selling point which weakens Jamaica’s Brand position in the market. Recommendation:  Develop a Nation Branding Strategy that will outline the approach to be taken to leverage the strength of the manufacturing sector in Jamaica while also introducing innovative means by which to identify and promote new products and services [Implementing Entity: JAMPRO] E. Use of the Trade Remedies Infrastructure Identification of special opportunities in external markets as a result of trade remedies training and knowledge. Recommendation:  Analyse trade remedies activities in export markets and competitors’ markets; knowledgeable exporters may exploit the opportunities in overseas markets where there are trade remedy measures. [Implementing Entity: ADSC] F. Expand the Online/Web-Based Interface The competitiveness of the manufacturing sector will be immediately improved where it fully embraces the reach of web-based interfaces, beyond websites and social media platforms. There is an increasing demand for online purchasing and more consumers are opting to e-stores as their preferred purchasing option. Statistics indicate that A Joint Initiative of the JMEA, MICAF and JAMPRO 32 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Facilitate Market Expansion Expected Impact 43% of B2B buyers prefer to buy a product directly from the brand that manufactures it, rather than the distributor that sells it, and 20% of them are willing to pay slightly more for the opportunity to do so (Forrester Research, 2017). In the US, more than 60% of people are purchasing goods online from the comfort of their home and this figure is increasing constantly. Recommendation:  Implement training & capacity building programmes to train new and existing manufacturers on how to build out an e-commerce arm of their operations. This includes engaging financial institutions and the Jamaica Bankers Association who can educate and sensitize them to the costs associated with this service. [Implementing Entities: JMEA and JBDC, MICAF]  Consult with the banking community to develop innovative systems to facilitate easier access to e-commerce solutions as thus identifying means through which issues, such as the hidden costs associated with these activities, can be removed and the process of e-commerce made simpler for both financial institutions and the merchants. [Implementing Entities: JMEA and JBDC, MICAF] Incorporate Innovation Strategies Expected Impact A. Establish Network of Innovators  Diversified As Jamaica works at strengthening its foundation as a manufacturing sector by addressing the training & skills manufacturing development needs, emphasizing the use of data & a data ecosystem, as well as establish frameworks to facilitate the products ‘servicification’ of manufacturing, efforts are also required to advance the sector’s use and profile as an innovator  Increased IP within the local and even regional economy. The first step in the sector’s journey towards achieving the Industry 4.0 protection for status is to start a dialogue within the country about the desired outcome and its transformational impact on the Jamaican products country’s economy. This dialogue should leverage the expertise of both public (e.g. the Scientific Research Council  Increased income (SRC)) and private sector stakeholders who are mandated and driven to introduce innovative and revolutionary from IP earnings technologies and processes to the productive sector. Recommendation:  Create a clear communications plan for the entire manufacturing sector to highlight the benefits to be derived from this approach and seek to establish a mechanism that support capacity development in the industry. [Implementing Entity: JMEA and JAMPRO]  Enter in partnerships with local and foreign manufacturing think tanks that can help to identify and develop innovation driven concepts for the local manufacturing sector, informed by the work of the SRC. The expansion of A Joint Initiative of the JMEA, MICAF and JAMPRO 33 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Incorporate Innovation Strategies Expected Impact the STEM education and labour pool will provide the ideal resource upon which to develop this initiative. [Implementing Entity: MICAF, SRC and JMEA]  Expand the IGNITE Programme by DBJ to address resource requirements for participants to allow them to better assess the viability of their products. Such support should be supplemented by the SRC’s expansion of testing lab facilities to support the development of the product from conceptualization to distribution. This includes assessing the products for feasibility once it enters the market. [Implementing Entity: DBJ and SRC] B. Establish Comprehensive Intellectual Property Rights (IPR) Framework Establishing a culture of innovation presupposes the existence of culture and system that protects the creative process. Intellectual property protection rose toward the top of competitive advantages in the United States and Europe. New inventions and discoveries which may realize higher profits require a solid IP infrastructure to protect the rights within such works. Accession to the Madrid Protocol has been a protracted exercise. This will extend to the overall modernization of Jamaica’s IP regime supported by a similar thrust across the region which will seek to protect Jamaica’s products and services. Recommendation:  Accede to the Madrid Protocol, which will include expediting the passage of the legislation and any regulations to ensure Jamaica’s accession to the Protocol. This will facilitate the international registration of trademarks. A similar thrust is required in relation to patents. This will also assist in facilitating e-commerce for Jamaican products. [Implementing Entity: MICAF and JIPO] A Joint Initiative of the JMEA, MICAF and JAMPRO 34 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 7: Private Sector Support for Manufacturing The manufacturing sector has been supported by a very robust and strong private sector since its inception as an industry before Jamaica’s independence. The industry comprises of over nine hundred (900) micro, small, medium and large enterprises including start-ups and longstanding companies, which have played a key role in building Jamaica’s brand recognition as a place to do business and producer and exporter of quality products. This has resulted over the years in large investments by family owned, other local businesses as well as regional and multi- national companies in manufacturing. The Jamaica Manufacturers’ and Exporters Association (JMEA) was the leading representative body for the sector for seventy (70) years. Recently, the Association merged with the Jamaica Exporters’ Association to form the Jamaica Manufacturers’ and Exporters’ Association (JMEA), but their focus, mandate and commitment to serve the manufacturing industry have not changed or diminished. Generally, the Association provides a range of services to the industry, including government lobby and advocacy, market research and training and mentorship of its members. Historically, the JMEA worked closely with JAMPRO and other Government Ministries and Agencies including the Ministry of Industry, Commerce, Agriculture and Fisheries, Ministry of Tourism and Jamaica Business Development Corporation as well as other private sector bodies such as the Jamaica Exporters’ Association, the Private Sector Organization of Jamaica, and the Chamber of Commerce in championing the cause of the industry. As a merged entity, the new JMEA is committed to and is aggressively broadening its support for the sector and in executing the strategy. Specifically, the private sector will support in the following ways:  Capacity Building Programmes: to promote and encourage training programmes within the industry designed to provide knowledgeable personnel to meet the needs of the industry. Training will be conducted in areas such as standards and quality, market intelligence, productivity among others. In addition, capacity support will be provided by the JMEA as a partner for the DBJ’s VTA Programme in areas such as Mentorship and Coaching, Business Plan, Account Management and Marketing and Promotional Plan development.  Cluster Development Programmes: to develop and manage clusters as a model for growth, in sectors such as the castor, agro-processing industry and light manufacturing.  Execute Strategic Partnerships: to partner with key government agencies and private sector to drive skills development, competitive financing and factory space allocation for the industry. The Association will continue to develop partnerships with financial institutions for tailored banking products/solutions for the manufacturing sector. A Joint Initiative of the JMEA, MICAF and JAMPRO 35 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica  Promote Industry Competitiveness: encourage private sector investments in renewable energy and other efficient and modern technologies, among other initiatives such as contract manufacturing, advanced manufacturing, standards development and innovation.  Market Access and Penetration: to promote and conduct industrial trade shows and inward missions as well as gather market intelligence data to increase local and international sales of Jamaican goods through initiatives such as Buy Jamaican Campaign, Expo Jamaica, Jamaica International Exhibition (JIE) and development of Market Profiles.  Domestic Linkages: to promote the linkages between manufacturing, agriculture, tourism and the creative industry through participation on the Tourism Linkages Network executing events such as Speed Networking, Christmas In July and Suppliers Directory. Additionally, executing matchmaking events between the manufacturing sector and the distributive trade to promote import substitution.  Public-Private Discussions and Interactions: to continue dialogue and provide key personnel and industrial players to serve on committee(s) developed for the implementation of the strategy and other areas of growth to ensure that industry issues remain relevant and are addressed at the firm, national, regional and international level.  Proactive Efficiency in Energy Use: as a part of t energy conservation efforts manufacturers should perform energy audits as a precautionary approach to enhancing their efficiency of production costs. In this, the Jamaica Manufacturers’ and Exporters’ Association (JMEA) should implement a programme to promote energy saving practices amongst its members. A Joint Initiative of the JMEA, MICAF and JAMPRO 36 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica

Section 8: Way Forward/Next Steps The value of the manufacturing sector to Jamaica is undoubted and continues to be proven by virtue of its job creation, tax revenue and overarching contribution towards Enhance Workforce Competitiveness the GDP of the country. The impact of the sector can be far greater and, as outlined in Increase Cost Competitiveness the very ambitious national targets that have been set, the country has committed to creating the framework within which they can be met. Develop Infrastructure It is within this context that the role of agro-processing and light manufacturing, in Expand the Supplier Network particular, must be fully appreciated and all effort be made by both government and the Incorporate Innovation Strategies private sector to fully and expeditiously implement the recommended strategies and initiatives outlined within this document. The critical success factors required to Figure 16: Jamaica’s Manufacturing Sectors’ Competitiveness transform this sector to propel the national economy towards its 2025 growth target and beyond can therefore be summarized in Figure 8 above. Activity Launch (Required Implementing Entity Requires Action/Milestones Timelines) Lead Support  Establish and institute an apprenticeship programme across all tertiary and MOE, Private <2 years HEART/NTA vocational training institutions Sector  Create and implement a manufacturing certification programme <1 year -  Promote the diversity of career specialization for STEM graduates <0 – 3 months  Increase the level of coordination among the primary and secondary school <0 – 3 months MOE curricula to place increased priority on the STEM disciplines HEART, JMEA,  Alignment of the apprenticeship programmes <0 – 3 months MFAFT SLB MOE  Incentivize student enrolment in tertiary STEM programmes <6 – 9 months MEGJC & MICAF  Explore the feasibility of a dedicated line of credit for qualifying manufacturing <1 year (through EXIM & MOFPS activities DBJ)  Expand the programmes of both the DBJ and EXIM Bank focused on retooling <6 – 9 months MEGJC through DBJ MOFPS  Create grant schemes to support investment in the R&D <2 years SRC  Expand the IGNITE programme <3- 6 months -  Create affordable lease facilities for manufacturing space <0 – 3 months MEGJC through FCJ A Joint Initiative of the JMEA, MICAF and JAMPRO 37 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Activity Launch (Required Implementing Entity Requires Action/Milestones Timelines) Lead Support  Implement a National Business Portal eGov, Cab. Office <1 year Private Sector, Develop and implement a comprehensive Sales and Promotion Strategy for the <3 months MICAF through MICAF Sector JAMPRO  Encourage joint promotional activities <3 – 6 months JMEA  Create a clear communications plan <1 year  Develop Nation Branding Strategy <1 year JIPO  Expedite passage of the legislation and any regulations to ensure Jamaica’s <0 – 3 months accession to the Madrid Protocol. TFTF  Assess and rationalize the number of permits, licenses and authorizations given <1 year across government related the sector -  Enter in partnerships with local and foreign manufacturing think tanks <3 – 6 months JMEA  Consult with banking community re e-commerce solutions <0 – 3 months JMEA  Develop PR to encourage energy audits among manufacturers <0 – 3 months MICAF ADSC  Amendments to legislation that result in greater clarity and ability of <2 years manufacturers to use the legislation  Full operationalization of an industry help desk. This desk would prepare applications on behalf of domestic manufacturers for trade remedy against imports that cause or threaten to cause injury whether due to unfair trading <1 year practices or increase in import volumes. Trade remedy analysis of overseas competitors activities would contribute to better ability to compete where there is dumping or subsidisation JMEA, MICAF, Expand the suppliers’ directory. Despite lead responsibility by MOT, MFAFT and their Tourism Linkages consulate offices would have this directory within their Brand Jamaica marketing Council/Ministry toolpack (including Consulates). Other key stekeholders such as partnering financial MOT institutions would also be leveragesd to promote this directory on their digital <0 – 3 months of Tourism, MFAFT, DBJ, platforms in one unified approach. EXIM TAJ  Expedite the establishment of the Fiscal Linkages Committee and developed <0 – 3 months Technical Guidance Notes  Expedite the finalization of the Large Projects & Pioneer Industries Act (LPPIA) <0 – 3 months MOFPS  Establish a Linkages Tax Credit scheme <6 – 9 months JMEA  Establishment of a robust and dedicated monitoring and evaluation plan for the 3 – 6 months Government’s Set Aside Policy A Joint Initiative of the JMEA, MICAF and JAMPRO 38 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Activity Launch (Required Implementing Entity Requires Action/Milestones Timelines) Lead Support MICAF  Expedite a Pilot Project for the Government Set-Aside Orders to inform full <0 – 3 months implementation across the GOJ  Expedite and expand the training of the government’s procurement officers to <0 – 3 months implement the Government’s Set Aside Policy -  Establish incentives for refrigerated trucks (etc) <0 – 3 months - -  Increase the government’s promotional efforts regarding the energy audit <0 – 3 months services provided MSET -  Expedite the implementation of the energy policy in its entirety <0 – 3 months -  Expedite implementation of Jamaica’s Integrated Resource Plan (IRP) <0 – 3 months MICAF  Establish capacity development programmes 3 – 6 months Private Sector MICAF, MEGJC  Establish cluster development programmes 3 – 6 months  Establish strategic partnerships <0 – 3 months JAMPRO, MOT  Promote domestic linkages <0 – 3 months JAMPRO, MICAF  Support market access penetration initiatives <0 – 3 months A Joint Initiative of the JMEA, MICAF and JAMPRO 39 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Appendix: Focus Sector SWOT PACKAGING Strengths Opportunities  Growing number of manufacturers  Development of new technologies  Existing fiscal incentives  Growing global market (2.9% by 2022) 26  Technical support of JBDC’s Design House  3-D printing of packaging solutions  BSJ Packaging Lab  Training programmes available to build expertise Weaknesses Threats  Limited range of available options  Cost of new technology  Limited access to financing  Growing concern re environmental impact  Lack of innovative financing solutions  Increase in cost due to new government regulations  High energy costs  Low levels of investment in the industry  Low emphasis on competitive, high quality labelling and packaging materials  Widespread non-compliance with minimum labelling standards 27 PHARMACEUTICAL Strengths Opportunities  Presence of international players able to make high quality products  Development and accessibility of new technology  Presence of industry competition to drive performance  Growing trend to offer related customer service beyond the sale of the  Well regulated industry drugs  Growing number of dispensaries  3-D printing of drugs  Promotional strength of JAMPRO  Research and Development support is available  Established niche markets  Proximity to main export market (USA)  Technical guidance of the FTC 28  Growth in potential linkage industries such as health and wellness  Growing cohort of pharmaceutical graduates (& related studies) at the  National focus on development of cannabis industry tertiary levels 26 https://www.smitherspira.com/industry-market-reports/packaging/the-future-of-global-packaging-to-2022 27 http://www.paho.org/hq/index.php?option=com_docman&task=doc_view&gid=19301&Itemid=270&lang=en 28 http://jftc.gov.jm/wp-content/uploads/2017/09/Assessment-on-Impediments-to-Competition-in-the-Pharmaceutical-Sector.pdf A Joint Initiative of the JMEA, MICAF and JAMPRO 40 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica Weaknesses Threats  Slow pace of registering new products  Cost of new technology  High input costs  Violation of geographic indicators by foreign products  High energy costs  Increasing number of international and local regulations  Small percentage of trained cohort involved in manufacturing  Low levels of investment in the industry pharmaceuticals 29 FURNITURE Strengths Opportunities  Vocational training progammes at secondary schools & HEART  Few local manufacturers have global experience  Preferential market access in target markets  Development of 3-D furniture solutions  Growth in demand from among local middle & upper class  Growth of millennials purchasing furniture 30  Rapid growth in townhouse construction  Strong demand for unique, but functional designs  Large number of small entrepreneurs  Growth of online retailing  Growth in hotel room count  Emergence of Internet Of Things (IoT) solutions  Technical support provided by JBDC and BSJ  Stronger linkages with the tourism sector  Training programmes available to build expertise Proximity to main export market (USA) 3132 Weaknesses Threats  High propensity of consumers to prefer cheaper imports  Speed of technological change  Existence of largely a cost-based model  Erosion of preferential market access in target markets  Weak linkages with regional players  Weather conditions impact raw material supply  Need for greater use of design & use of computer aided design &  Fast evolving product designs in competing countries manufacturing (CAD/CAM)  Low growth in the domestic market  Lack of product differentiation  Lack of access to bamboo raw material  Weak branding of locally produced items  Perception of low-tech, low income industry  High cost of locally produced items not competitive 29 http://jamaica-gleaner.com/gleaner/20110220/focus/focus8.html 30 https://www.cmtc.com/blog/furniture-manufacturing-challenges-trends-2016 31 http://jamaica-gleaner.com/gleaner/20110220/focus/focus8.html 32 http://jamaica-gleaner.com/gleaner/20110213/focus/focus7.html A Joint Initiative of the JMEA, MICAF and JAMPRO 41 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica COSMETICS Strengths Opportunities  Growing number of local players with export experience  Growth in potential linkage industries such as film, and fashion  High demand for local raw materials e.g. Jamaican black castor oil  High demand for natural ingredients in skincare and haircare products  Established niche markets  Growth in global cannabis market that can drive new product  Promotional strength of JAMPRO development  Growth of online retailing  Research and development support available Weaknesses Threats  Slow pace of registering new products  Inability to penetrate markets where there is strong brand loyalty  High input costs  New product development in competing countries  High energy costs  Increasing number of international and local health and safety  Weak export focus of potential or existing players regulations  Low levels of investment in the industry LIGHT MANUFACTURING Strength Opportunities  Vocational training progammes at secondary schools & HEART  Jamaica’s Special Economic Zones  Growing number of small entrepreneurs  Proximity to main export market (USA) Weaknesses Threats  High propensity to import  Speed of technological change  Perception of low-tech, low income industry  Low levels of investment in the industry  Few local manufacturers have global experience  Economies of scale in India and China with large domestic markets AGRO-PROCESSING Strengths Opportunities  Streamlined fiscal incentive regime and strong utilization of incentive  Growing demand for organic food items offerings  Strong demand for Jamaican products  Established niche markets, brands, and products  Stronger linkages with the tourism sector  Growing number of small entrepreneurs  Training programmes available  World Class enterprises within the industry  Growth of online retailing A Joint Initiative of the JMEA, MICAF and JAMPRO 42 | P a g e National Five-Year Strategy to Grow Manufacturing Sector in Jamaica  Strong international brand  Research and development support available  Export oriented; diverse product range  Promotional strength of JAMPRO  Support programmes in place for the industry  Presence of industry competition to drive performance Weaknesses Threats  Poor road network between farm & manufacturer  Speed of technological change  High propensity to import  Inability to penetrate markets where there is strong brand loyalty (threat  Weak linkages with regional players or weakness)  Inadequate linkages in the supply chain  New product development in competing countries  Weak branding of the majority of locally produced items  Weather conditions impact raw material supply  Inconsistent supply and quality of raw materials  Increasing security costs  High Cost of Inputs  Increasing energy costs  High energy cost  Low levels of investment in the industry  Inadequate IP protection in place  Uncompetitive marketing efforts within the industry A Joint Initiative of the JMEA, MICAF and JAMPRO 43 | P a g e