Moontown

(BGIS)

The global economic downturn has had some positive spinoffs for the International Business sector, despite a noticeable decline in the number of new entrants.

Word of this has come from Director of International Business, Francoise Hendy, who has described the impact as “quite ironic”.

“I would say the effect of the recession on the economy and the country in respect of International Business has been quite positive. Positive in the sense that the reason for the global meltdown has been a less than robust application of regulation and the importance of regulation when it comes to the financial services sector, in particular.

As a result of that there has been this rush to see how we can improve and rebuild what has been really a collapse of the financial market,” she explained.

Ms. Hendy, who was speaking during this morning’s launch of International Business Week, which is slated to be held October 4–10, contended: “It is ironic in the sense that the world is now looking to see how we can improve our regulatory framework for international business; how we can make business people more responsible and how we can make governments more responsive to the innovation in the market. And it is interesting because that is what we have always talked about. So although we are looking at some decline in the number of new entrants, we are also finding that our existing clients are feeling a lot more comfortable being in Barbados, because they recognise that the Government’s thrust is supportive, and is reinforced by the international agenda when it comes to rebuilding the global market as a result of the recession,” she underlined.

Ms. Hendy stressed that the sector’s marketing pitch going forward  would be about saying that Barbados is on board, with calls for  more appropriate regulation, better  information exchange and transparency.

“It is a lot more than just numbers.  It is about how you build confidence in your existing clientele, and how what we do now is going to impact on how companies look to us as a jurisdiction. 

Beyond the products, and the people, and the services, it is really what the jurisdiction is doing as part of the wider international community of states when it comes to the rebuilding of the financial markets and what is our responsibility going forward, ” she pointed out.

Ms. Hendy maintained that while recession within the context of a business enterprise is often linked to a reduction in sales and perhaps profitability, in the case of International Business it must be considered in relation to the economy, the country as a whole and businesses within the jurisdiction.

This was also underscored by Acting Chief Executive Officer of Invest Barbados, Emeline Taitt, who said since the global crisis there had started been a  noticeable decline in the number of companies approaching Barbados for entry.  She observed that there was “a little contraction here and there among the companies on the ground in Barbados, but nothing worrisome. “

Ms. Taitt said a customer service programme was in place where ongoing dialogue was being held with existing clients with a view to nipping any problems in the bud.

“It (the recession) has happened, but we have to put in a lot more effort to get people here and  increase our promotion so that when the economy picks up again we are in the forefront,” she added.

President of the Barbados International Business Association (BIBA), John Howard, said the organisation, which is spearheading International Business Week,   will be pursuing three major objectives this year - to improve business facilitation in Barbados; to raise the awareness of the strategic importance of the sector and to proactively source new business opportunities.

GREEN SPLIT PEAS AND RICE; MACARONI PIE

VEGETABLE CHOWMEIN; COU COU

GRILLED BARRACUDA; CREOLE FISH

BAKED PORK; BAKED CHICKEN

FRIED FLYING FISH

PLAIN GRAVY; LAMB STEW

STEAMED VEGETABLES; TOSSED SALAD

There will be no more straight flights into the teaching system come 2010.

Minister of Education Dr. Jacqui Quinn-Leandro said the ministry would be putting steps in place to ensure that teachers are trained before setting foot into a classroom.

“The ministry has to grapple with how do we implement this system.

As it stands now, a student who would have graduated from secondary school or from the A’Level or from the university could apply to teach,” the minister said.

“You would not have had any training at all in teaching and you are unleashed in a classroom and then two, three years down the line, you will be sent for your teacher training.”

Dr. Quinn-Leandro acknowledged that the ministry has been approaching the situation in the wrong way.

And so, between now and 2010 they will devise a system to ensure that the right thing is done.

“We have been doing it wrong and we are going to get it right.

“Why is it that you have a teacher moulding, shaping, influencing children’s minds and you are going to unleash someone who has no training at all in the classroom?” she asked.

She made it clear that those persons who have applied to go into the system would have to undergo training in the future.

Meanwhile, Dr. Quinn-Leandro disclosed that they have a “little hitch” in terms of the appointment of new teachers for the September year.

According to her, there have been talks with the Public Service Commission, (the body which is in charge of appointing teachers) to discuss the importance of interviewing and putting persons in place for September.

“We have been doing this since the close of the last academic year,” the minister said. “I know that qualified and certified teachers are what we are looking for.”

Between 20 to 30 new teachers will be added to the system for the new academic year.

 Within the next two to three weeks, a “mega march” and a complete shut-down of the business community is being planned by the opposition Antigua Labour Party (ALP).

That’s the word of the Deputy Leader of the Antigua Labour Party Gaston Browne as he spoke to the AntiguaSun while just under 300 people, according to Police estimates, assembled on Redcliffe Street for a picket of a department of the Ministry of Finance.

“I would say clearly that more than likely, we will come with a mega march to build on this mega picket and at that time, it is possible we will call for a lock-down because of the increased pressure that we are under,” Browne told the SUN.

Attempts to reach Finance Minister Harold Lovell for a reaction on the opposition’s intentions to close down the business sector proved futile as he was away with senior officials at a meeting in St. Kitts, the headquarters of the Eastern Caribbean Central Bank (ECCB).

Browne revealed that the party will convene a strategy committee meeting next week at which time the details of how they intend to move forward with plans to increase the pressure on government will be discussed.

Browne was asked why he felt that a shut-down would have any effect now, bearing in mind this would not be the first time any government would have faced similar action from the business sector.

“You see, the difference is here, those marches were exclusively political. Because at the end of the day, during that period (when the ALP was in power) the economy of this country was doing very well,” Browne stated.

“People are suffering today. They have a stake in this action. This is not about just changing government as a political thing but changing government to bring relief to the pain and suffering people are experiencing at this time,” Browne stated.

The picket was held under the watch of a heavy police presence that included very senior officers of the force. However, there was no incident.

An exchange between Prime Minister Baldwin Spencer and Opposition Leader Lester Bird brought some anxiety over the staging of the picket.

PM Spencer felt that a letter from Bird was a direct threat to public order and stability and placed the country on alert that the relevant resources available to maintain order in the nation stood at the ready.

Browne used the opportunity to accuse Spencer of causing unnecessary anxiety. “It’s really a stretch by the Prime Minister and I believe that his own statement was really inflammatory and that, in itself, could have been a source of unrest,” Browne stated.

Meanwhile, he added that the unemployment and poverty levels are the two core issues fuelling the frustration of the people.

“There is a certain reality here that poverty levels and unemployment levels have risen exponentially in this country and people are frustrated and they want solutions and if the UPP people cannot provide solutions, they are going to continue to agitate for change,” Browne said.

On the issue of solutions, Browne was further asked why no alternatives have been offered by the ALP. He responded that to do that sometimes becomes, “Like a double edged sword because you get no credit for the recommendations.”

He noted that he was the first to suggest about seven weeks ago that the government should approach friendly governments in order to secure grant aid funding or soft loans.

He said the problem with the government is that they have failed to show fiscal discipline in managing the country’s affairs.

“No matter how much you give them, they manage to spend well in excess of that,” he said, noting that this one of the reasons for his concerns in the government’s planned approach to the International Monetary Fund (IMF).

Usain Bolt. - photos by Peta-Gaye Clachar/freelance Photographer The following story was published in The Star on Tuesday

Usain Bolt may have stopped running for the past few days, but his latest performances are having significant impact on the local economy, especially for one company that manufactures leisure wear.

Sun Island has been reporting incredibly high volumes of sales of the Usain Bolt line of leisure wear, including T-shirts, polo shirts, caps and yoga pants since the world’s fastest man set new records in Berlin. Things have been flying

off the shelves “incredibly fast”, said Amy White, manager of product development and design at Sun Island. “We’ve sold out our stock twice. As we produce, they’re gone.”

This week, at the company’s retail outlet along Molynes Road in St Andrew, scores of customers - young and old - were observed buying armfuls of Usain Bolt T-shirts, caps, yoga pants, among other types of leisure wear.

Leisure wear

The company had entered into an agreement with Bolt to produce a line of leisure wear bearing the image and signature of the sprinting phenomenon following his exploits at the Olympics in Beijing, China, last year, when he won gold medals and set world records in the 100 metres, 200 metres and the 4×100 metres relays.

White revealed that as soon as Bolt set the new world record of 9.58 seconds in the 100 metres last week Sunday afternoon, they set about creating designs and started producing shirts and other types of clothing. She said they even worked through the weekend, which is unusual for them. And as soon as they were done, local retailers and “people off the street” snapped them up.

Bolt, she said, was having a huge impact on the company’s bottom line because, otherwise, sales had been slow, largely due to the state of the economy.

The Bolt factor also extends to other businesses as well. White said all the raw material that is used to manufacture the Bolt line of product is made locally, so his success was helping keep people in their jobs.

With that in mind, she hoped she would not see an end to the spike in sales anytime soon. However, realistically, she believed the current sales boost would last between two and four more weeks, by which time new designs for the Bolt line would be ready for sale.

The Bolt line, she said, had generally been successful, as there had been a steady flow of sales since its creation last year. The current spike, White said, was similar to what the company experienced following the 2008 Olympic Games.

Bolt has had a similar effect on products manufactured by his main sponsor, Puma, which reported that all the products that were taken to Berlin for the 12th IAAF World Championships sold out before the championships ended on Sunday.

Market research has also shown that since Bolt’s exploits in Beijing in 2008, his media market value has been estimated at more than J$230 million, or more than US$320 million. The media market value is tantamount to the amount of money Bolt’s main sponsors, Puma, would have to spend to get the amount of exposure equal to what Bolt has given them in the marketplace.

Pulse model André Swaby strikes the ‘to the world’ pose in one of the T-shirts from Usain Bolt’s clothing line.

Annoman Singh in a souvenir shirt bearing Bolt’s record times during the Olympics.

This says comfort and understated sexiness!

R. Anne Shirley, Business Writer
Prime MInister Bruce Golding has promised a report to lawmakers ahead of the IMF deal. - File

The Jamaican Government faces an extremely tight schedule over the next few weeks as it races to put the final touches on both the first supplementary sstimates and the medium term economic programme.

According to the prime minister and the minister of finance, the supplementary estimates should be tabled in Parliament in early September 2009.

The Standing Finance Committee will then review the estimates prior to them being approved by the House of Representatives, and the Senate, respectively.

A team from the International Monetary Fund is due in two weeks on September 8. Prime Minister Golding has said the drafted letter of intent would be submitted to the fund a week thereafter and that a decision on the US$1.2 billion stand-by facility would be conveyed, he expects, by October.

Given the fact that the actual revenues collected during the first four months of the current fiscal year have been significantly less than budgeted, it is anticipated that the Golding administration will be tabling both the revised estimates of expenditure as well as the revised revenue estimates - including the recrafted tax measures - for consideration and approval.

In terms of the proposed expenditure cuts - Golding has mandated cuts of about $17 billion - particular attention will be paid to several big-ticket programmes, such as the constituency development fund.

Back-to-school expenses cut

Already members of parliament have found that earlier this month they only received $1.5 million each for back-to-school expenses, which is a half of what most had requested.

Special attention will also be paid to the revised allocations for loan amortisations in the Ministry of Finance estimates.

The issue is whether the decision will be taken to roll over certain loans due this year, and the extent to which the projected allocations regarding guaranteed loans and budgetary support for certain ailing public bodies such as the Jamaica Urban Transit Company, Sugar Company of Jamaica and Air Jamaica are maintained in the current budget.

Other areas of interest include the allocations for wages and salaries, travelling allowances, and whether cuts in the capital budget are made primarily as a result of delays in implementation of the various approved projects.

At the same time, the Government will also have to share the details of the framework for the Medium Term Economic Framework (MTF) with parliamentarians, as this will form the basis for the letter of intent to the IMF.

The MTF will give a clear indication of the priorities over the next few years.

Already the prime minister has indicated that the administration is committed to eliminating the fiscal deficit by the year 2015 - originally they had intended to do this by 2013 - reducing the public sector wage bill to about nine per cent of the budget, and to reduce interest rates to under 10 per cent per annum.

Policy directive

These and other measures will be spelt out in the MTF, signalling the policy directive regarding energy and the prospects for the productive sectors, including the bauxite/alumina, tourism and agriculture; and proposed areas of emphasis for tax reform and improved tax/financial administration.

All of this will have to take place prior to the IMF board meeting in October.

The Government hopes its letter of intent will be considered at that meeting, and that the board will approve the two-year standby facility requested.

As such, the Government expects to get the signed letter of intent to the IMF by the latest in the third week of September 2009.

It is critical that the Government is able to keep to this timetable, as it will not be able to access funds from the other multilateral agencies for budgetary support without the IMF approval of the standby facility.

As it currently stands, the other multilaterals are awaiting the approval of the IMF facility, and if given, it is understood that Jamaica could access funds in excess of US$800 million during the current financial year.

Most of the funds would be made available by the Inter-American Development Bank, including an emergency loan to a maximum of US$500 million, and budgetary support in the region of US$170 million.

Further funds

The World Bank and the Caribbean Development Bank could provide a further US$100 million and US$30 million, respectively.

The European Union is sticking to the commitments that it had given for the current financial year.

There is, therefore, very little wiggle room for the Government given the tightness of this schedule, and it will be hard-pressed to make the various deadlines while keeping the commitment made by PM Golding that he would outline the terms of the IMF agreement to Parliament and the nation prior to the signing of the letter of intent.

There is where Golding is expected to clearly articulate details of the IMF programme, the conditionalities attached and what this will mean for each and every Jamaica.

It is crunch time now.

Richard Byles Six months ago, Sagicor Life Jamaica president Richard Byles was preparing for a bad year, convinced that thousands of job cuts just months before and an economy falling deeper into recession spelled an erosion of revenue and with it his company’s bottom line.

Or, worse-case scenario, the insurance giant was, as Byles put it, ’staring down the gun barrel of a disastrous year’.

He was wrong.

Not only has Sagicor Jamaica grown profit, it virtually doubled them in half a year ending June 2009 to $3.1 billion. The year before, its first-half profit was $1.8 billion, which puts the company on track to annualised profit of more than $6 billion in 2009, compared to $4.5 billion last year.

‘Unusual transactions’

The company attributed the half-year results to “certain unusual transactions” and acquisitions that boosted top-line income by 59 per cent and profit by 72 per cent. Trimmed of the one-off gains, said Sagicor, earnings would have increased only by 32 per cent.

“Quarter two of the 2009 results benefited from continued strong new business, especially in the employee benefits line,” said a joint statement by president and CEO Byles and chairman Dodridge Miller.

For the reporting period, the employee benefits segments more than doubled its performance, contributing approximately $1.4 billion to profits and surpassing banking and asset management which was the largest component for the similar quarter last year.

The company did pay out and/or accrue 53 per cent more in gross benefits to policyholders and other beneficiaries - wracking up a bill of $5.1 billion up to June - but even this Sagicor said was due to its enlargened portfolio from acquisition deals finalised late last year and in the first quarter.

“Despite these excellent results for the first half year, the macroeconomic environment remains challenging and management is keenly aware of the times in which we operate and will continue to manage operations prudently,” the company said.

Sagicor Jamaica last December acquired the health insurance portfolio of Blue Cross of Jamaica for $1.7 billion, giving it command of more than 80 per cent of the health insurance market.

The company also bought up the portfolios of two separate outfits in the Cayman Islands - Industrial Alliance and Guardian Life.

Unexpected revenue

The acquisitions helped push Sagicor Jamaica’s half-year revenue “ahead of expectations” to $14.7 billion - $1.97 billion from the Cayman operations - and up from $9.2 billion in the 2008 period. And its balance sheet grew 10 per cent in six months and 33 per cent in a year to $129.5 billion. Just under a sixth, $20 billion of those assets, are in Cayman, the rest in Jamaica.

Insurance, annuity and investment contracts have close to doubled in a year from $17 billion at June 2008 to $32 billion at June 2009.

“Recent acquisitions, portfolio growth, better-than-anticipated interest rate spreads, foreign-exchange translation gains and realised capital gains from sale of securities contributed to the revenue growth,” said Sagicor Jamaica, a top contributor to Barbados parent, Sagicor Financial Corporation.

“Revenues from the primary lines of business were higher than the prior year and ahead of expectations.”

Indeed, Byles’ expectations were that business would have declined with the thousands of jobs that companies haemorrhaged in 2008 and at the start of 2009.

He also cited those concerns in the midst of a contentious internal fight to revise the company’s salary policy to ‘pay for performance’ system for all, excluding top managers.

The company in March eliminated 75 jobs, cutting 10 managers and reshuffling other executives in the process. At the same time, the marketing function was merged with that of its highly profitable subsidiary, Pan Caribbean Financial Services.

It cost Sagicor $150 million to integrate portfolios and restructure its operation.

“We are coming off a good year, but last year is last year and now we are staring straight down the gun barrel of a disastrous year,” Byles said back in mid-February.

“With the large numbers of redundancies now taking place, people are losing their health insurance. We have to be paying out pensions. Group life is going to be affected, so too is individual life.”

Byles was expecting at the time that 7,000 to 8,000 of the 13,000 job cuts announced in January was business that his company would lose.

But instead: “The change in insurance and annuity liabilities of $1.67 billion to June 2009 reflects business growth during the current quarter,” said the director’s report, referring to the second quarter outcome.

Revenue rose from $4.6 billion to $8.2 billion in the quarter; but so did benefits and expenses, from $3.5 billion to $6.5 billion, leaving pre-tax earnings in the quarter of a hefty $1.76 billion, up from $1 billion in the June quarter of 2008.

All Sagicor’s business segments grew in the period, with the most robust performance seen in employee benefits which doubled revenue from $4 billion to $8.5 billion.

Janet Silvera, Senior Gleaner Writer

WESTERN BUREAU:

Forced to temporarily close the doors to one of his three Montego Bay resorts, Iberostar Rose Hall’s Managing Director Philipp Hofer said he had no option but to take the difficult decision to send 320 of his employees home.

Hofer, who heads Iberostar’s Rose Hall Beach & Spa Resort complex, said yesterday that as of next Tuesday, the positions all the staff who were employed to Rose Hall Beach Hotel One would be made redundant as a result of the worldwide economic challenges affecting his operation.

Hotel One is part of the resort complex which also includes Rose Hall Suites and Grand Hotel Rose Hall.

“We are currently running at 16 per cent occupancy level, and we see no improvements in forward bookings to minimise the losses,” Hofer said, adding that operational cost at the 366-room property was 40 per cent of the amount to run the two adjoining resorts.

“Electricity at Hotel One consumes 40 per cent of the electricity that the entire company uses,” he explained.

Cannot pay the bills

He noted that it had reached a stage where they could not pay their bills.

Guests who have already booked places at the Rose Hall Beach Hotel will have their stay upgraded to Iberostar Rose Hall Suites.

While Hofer said he had restrained from closing the resort, leaving two other properties open and more than 600 staff remaining in their jobs, the University and Allied Workers’ Union (UAWU) claimed the move was union busting.

“Had it not been (union busting), they would have come to discuss the issue with us,” argued Lambert Brown, the UAWU’s president.

“We would not be averse to temporary layoffs or rotation,” Brown explained.

A meeting at the Ministry of Labour and Social Security regarding the hotel’s closing will be held tomorrow at 1 p.m. Workers will be meeting with the UAWU today.

Yesterday evening, however, Tourism Minister Edmund Bartlett said stakeholders must at all times be careful about the demands they place on the tourism sector, especially at a time of global economic fragility.

Bartlett said in a release that while the temporary closure was unfortunate, it was understandable given the impact of the global economic crisis on tourist travel.

“While tourism arrivals are increasing, we need more than the 3.3 per cent growth which we are now experiencing to fill our hotel rooms at this time,” Bartlett said in a release. “The fact is that our room numbers have been growing, at a time when the world economy is in a downturn and most other tourism destinations have been hurting from serious declines in visitor arrivals.”

Efforts intensified

Bartlett said this was why the ministry had to intensify its marketing efforts and work to increase the number of air seats which would bring people to Jamaica.

“We are doing everything we can to ensure that we do not suffer from decline in our arrivals,” the minister said.

“I regard Iberostar’s action as a business decision which is based on the need for greater efficiencies in order to keep business going and minimise staff displacement.”

Among the marketing efforts Bartlett noted were the extensive promotional work done around the performance of Jamaican athletes at the just-concluded World Championships in Athletics in Berlin, Germany; efforts being made to boost the already buoyant Canadian market; and new initiatives in Latin America which are already showing results.

Others suffering

Despite the minister’s optimism however, checks made by The Gleaner have revealed that the majority of the island’s hotels are doing below average and, even though September and October are traditional slow months, the global crisis seems to have now reached the country full force.

The 1,000-room Grand Palladium Hotel is running an occupancy level of 15 per cent; Sandals Montego Bay is at 32 per cent; Grand Lido Negril - 19 per cent; Bahia Principe - 35 per cent; The Ritz-Carlton Rose Hall - 17 per cent; and Riu Palace - 38 per cent.

The only hotels that seem to be doing a little bit above par are Riu Montego Bay and Ocho Rios.

“People who are coming now are really on a budget, we have to be discounting up to 60 per cent,” said one hotelier.

The new Digicel data storage facility, located at Caymanas in St Catherine, which is to be opened in November, as seen on Wednesday. - photo by Mark Titus

Mobile phone operator, Digicel Jamaica has built itself a new command centre in Caymanas, St Catherine, that will become the base of its venture into a new line of business - data security and storage for corporate clients, at least three of whom are already signed up from Jamaica.

The data centre, developed at a cost of $500 million, will officially open for business in November.

The facility will also house Digicel’s own technical team - the centre will employ 10 persons - who will largely operate from the ground floor of the three-storey building.

Digicel CEO Mark Linehan is promising a virtual data fortress for company information parked on the new servers for safekeeping.

Good fit

The new operation, while a departure from its core mobile business, would be a good fit with Digicel’s operation, Linehan says.

“The more we engage our customers , the more we learn of their needs,” he said Wednesday during a tour by the Financial Gleaner of the new plant.

“This is why we invested half a billion dollars in such a project, because companies have been expressing their concern about the continuity of their operation if hit by hurricane or any other disaster.”

Digicel has some two million subscribers on its client list, and while the company’s operation is now centred on cellular service, it will next week announce the rollout of its more advanced 4G network, offering mobile broadband.

The Irish-owned outfit has also partnered with Jamaican investors on a wireless subscriber television service to be called DigiTV, though little has been said about the latter project since its unveiling by press release nine months ago. There are now questions surrounding DigiTV’s viability.

Digicel Jamaica’s CEO Mark Linehan (left) and his head of ICT, John Clear, discussing aspects of the newly installed system at the data storage centre in St Catherine, on Wednesday. - photo by Mark Titus

Digicel will itself take up 4,000 square feet of space at the Caymanas facility.

It will be run by John Clear, Digicel’s head of information and communication technology, who will also be in charge of keeping contract companies’ backed-up data secure.

Clear would not be pressed into quoting a rate for the service, saying cost was determined by space, power and connectivity required per individual contract.

Already signed up are Jamaica Money Market Brokers, Insurance Company of the West Indies and Northern Caribbean University. Digicel also said two other regional outfits are on board, saying one is a managed services provider and the other a major financial services institution, but did not name them.

“These companies were looking for a solution within the country that they can be sure that the data that they have collected over the years is safe, or has a redundancy or a system built that if their system goes down, they can bounce back in the quickest time possible by accessing back-up data stored in a facility like this,” said Linehan, referring the broader market it anticipates will buy its new service.

Built to withstand disasters

The data centre is a three-storey bunker-style building, constructed to withstand natural disasters.

Its infrastructure features two fibre networks - JPS and Flow - connectivity from Digicel’s own network as well as Flow’s, and two 1400 KVA back-up generators to ensure the system is never forced offline by power cuts.

Digicel’s team is already in place at ground level, while the first floor of some 4,000 square feet is being fully fitted out for corporate customers.

Clear said the servers rest on a raised floor made of removable square tiles for uniform air distribution and to provide space for power cabling.

The flooring provides a plenum - that is, a sort of chamber to hold air or gas at positive pressure - for air to circulate below the floor as part of the air-conditioning system, he said.

The servers are mounted in rack cabinets and placed in single rows that form several corridors. The mainframe computers and storage devices big as the racks themselves are placed alongside them.

With the sensitive information involved, physical access to the site is restricted to selected personnel. There were areas that even the CEO and ICT bosses could not access unless they were buzzed in by a watcher, while armed security guards stood at each point of entry.