Stakeholders in Jamaica’s manufacturing and export sectors are optimistic that the economy will begin to rebound by September and are ready to invest in expanding their output.
President of the Jamaica Manufacturers and Exporters Association (JMEA), Richard Pandohie, in an interview with the Jamaica Information Service (JIS) indicated over 40 percent of the JMEA’s members believe the economy will start to show signs of recovery by the end of the third quarter of 2021.
He says over 33 percent have indicated they will increase spending to boost production.
He notes the optimism is spurred by vaccine development, the easing of COVID-19 restrictions, and signs of recovery of tourism and hospitality, which will help to reduce the level of contraction of the industries.
According to Pandohie, while the manufacturing and export industries were significantly impacted by the onset of COVID-19, the sectors have not had the level of fallout that was initially anticipated.
“Overall, the manufacturing and export industries have shown resilience despite the challenges, and it is estimated that more than 90 percent of the workforce employed to the sectors were able to retain their jobs,” he said.
The JMEA president said the impact of the pandemic resulted in approximately 55 percent of manufacturers and exporters experiencing cash flow issues, which affected their credit facility or ability to finance themselves.
Similarly, due to extensive shortages of foreign exchange and bouts of high volatility, many manufacturers and exporters were unable to finance their debts or purchase enough raw materials.
He notes that the small and medium-sized enterprises (SMEs) suffered the worst impacts of the pandemic.
“According to the COVID-19 Impact Assessment conducted by the University of the West Indies (UWI), small Jamaican businesses typically only have about one to two months of cash reserves. Such liquid reserves serve as critical buffers when businesses face significant reductions in revenue.
“These companies also faced significant losses or decrease in the local market. Liquidity concerns are exacerbated by the difficulties that Jamaican firms have with accessing external sources of finance and moratoriums for already existing loans,” he pointed out.
He said there is now significant international demand for natural products, such as teas and ginger beverage, leading to a huge opportunity for export growth.
“Additionally, due to the pandemic, customers are now, more than ever, seeking to purchase their products through e-commerce. The JMEA has visibly noticed many companies opting to provide this service to their customers.
However, much more needs to be done in this regard to better facilitate the producers,” he points out.
Meanwhile, the Jamaica Promotions Corporation (JAMPRO) has identified areas for investment in agro-processing, cosmetics, packaging, medical cannabis or marijuana, personal protective equipment (PPE) and medical disposables, and light manufacturing, among others.
The Government has implemented a National Five-Year Manufacturing Growth Strategy, which targets the achievement of $81 billion in manufacturing output by 2025 and an annual average growth rate of three per cent over the five-year period.