Tue | May 21, 2019

M.K. Mukulu | Belt and Road initiative: Jamaica’s unreviewed embrace

Published:Tuesday | April 23, 2019 | 12:14 AMM.K. Mukulu/Contributor

Though we saw the photos confirming the signing of a memorandum of understanding (MOU) between Jamaica and China in April 2019, Foreign Affairs Minister Kamina Johnson Smith is still to furnish the Jamaican public with the actual details of this deepening of the relationship.

While we await the details, and as the Global Belt and Road Initiative (BRI) Conference is held this month, our government must ensure that it is acting in our best interest, as it is now old news that terms of these loans are usually attracting interest rates which are higher than that available from our traditional sources. This is no small matter, as we owe the people of China $79 billion in debt and so I want to register my reservations.

On hearing my reservation, those in the Cabinet should be ready to deploy a series of points in support of the prime minister’s total embrace of the BRI. The first point in support of our continued participation in the BRI must be that Jamaica is in the clutches of the International Monetary Fund (IMF) and we need foreign direct investment (FDI).

Secondly, jobs are needed in an economy where graduates are sitting at home. Thirdly, infrastructural development, of the kind that the Chinese are engaged in, will set the context for further economic growth.

Positive points abound, but I am getting the impression from listening to members of the diaspora and people who reside in Jamaica, that the PM’s “whomsoever-will-come” policy requires a rethink. We must not forget that the development projects (such as work on our Harbour) will easily create the required modern maritime infrastructure that will allow Chinese goods to be transported, along this section of the Global Maritime Silk Road, to Caribbean consumers. This would be synonymous to that which took place when the Han Dynasty was at its heights.

This expansion by China is needed by the Chinese economy. Therefore, no Jamaican political representative should approach the relationship thinking that somehow China has nothing to gain. If there is any doubt, our leaders can read President Xi Jingping’s address to the 13th National People’s Congress in March 2018. It is littered with economic ambition and this must be sustained as it pursues its projected annual growth of 6.9 per cent. We are part of that projection and it gives us some leverage.

Secondly, the Government’s embrace must be realistic. In that, no matter how wonderful the Chinese are, we must guard against a situation where just about everything that the projects require comes from outside of Jamaica.

I have been informed of the fact that the experience of those in the sugar industry with the Chinese has not been good, as down to toilet rolls were imported, thus excluding those who are local manufacturers.

NO REAL BENEFIT 

As any student of economics will remind the PM, without the multiplier effect being felt throughout the economy, the FDI will be of no real benefit. Should we need any reminder of this fact, we need only to revisit the growth which took place within the first five years after Jamaica’s Independence. It was a growth that was not felt throughout the country. It might have been time for us to follow what the Malaysian government has done, as it has not only renegotiated its agreement with China, but it has secured the inclusion of a provision that states clearly that the local workforce (civil workers) on each project must be 40 per cent, which used to stand at 30 per cent.

Experts and scholars have reminded us that one of the primary reasons why the BRI has lost its glow in some countries is the fact that it is underpinned by a requirement that there is a single bidder for the project. Such a bidder is invariably a Chinese company and equally we access the loans in US dollars.

In her enthusiastic announcement recently, the foreign affairs minister did not bother to inform us whether we as a nation are compelled, as part of the loan agreement, to accept the single bid policy and how Jamaica will run a dollar surplus. I am concerned that we have not been informed as to what will be the consequences if we default, as I would hate to think that we would be forced, as Sri Lanka was, to offer, for example, the Kingston Harbour, or some other prime piece of the rock, on a long-term lease to the Chinese government.

MATTER OF WORK PERMITS

I turn to the issue of the need on the part of the Ministry of National Security, working with the Ministry of Labour, to ensure that the work permits that are processed for those who are part of this Sino-Jamaican partnership are not merely rubber-stamped. We must really ensure that the skills that we are attracting are really absent in our region and there has to be a review of the letters of exemptions/waivers that are granted by the Ministry of National Security as part of the work-permit scheme. There is that feeling among many, though seldomly expressed, that work permits are being doled out in a manner which is not consistent with the applicable immigration laws.

Further, to leverage the obvious requirement that the Chinese have to invest in Jamaica, Dr Horace Chang, as National Security Minister, would be betraying the national interest if he failed to conduct a review of the fees that are charged to those who are seeking a work permit visa as part of a Sino infrastructure development team. The fees must be increased to cover the true costs of the processing of such applications.

As the demand is high, one imagines that price inelasticity will mean much-needed funds for the Consolidated Fund, with no risk of a reduction in demand relative to the increased premiums for such work permits.

I am confident in my position, as we must recall that the Chinese state-owned enterprises, having being granted loans, will want to realise the benefits to be had from such loans.

There are those among us who might read this piece and single out the writer as an enemy of progress. If they take that view, then they should consult with Sri Lanka, Nepal, Zambia, The Maldives and Uganda, ascertain what are the negative things that we can avoid when we embrace, as it seems we have now, the BRI, with eyes wide shut.

Additionally, I would remind them of the fact that President Xi has realised that there are problems, even for China, with the BRI and this explains why at the fifth anniversary meeting of the BRI in August 2018, he emphasised that the march forward has to be different. So I ask Minister Johnson Smith, how have we reviewed our embrace and why had there been no public statement on this issue before we signed this new agreement of which she now boasts?

President Xi seems to know that for Chinese interest there can be no bystanders. Do we even know that we should ask for a review?

M.K. Mukulu is a public law barrister. Email feedback to columns@gleanerjm.com