Despite financial woes, Jamaica aims to become global port hub and transform economy

OLD HARBOR, Jamaica – This hardscrabble harbor town on Jamaica's southern coast seems an unlikely contender in an emerging regional competition over the shipping routes that fuel global trade.

But as Jamaica joins a rush to lure the bigger, deeper-drafting boats expected to cross an expanded Panama Canal by mid-2015, political leaders and civic boosters envision the Old Harbor area as a cornerstone of what theyenvision as a transformative, dream development for the Caribbean island.

Jamaica aims to become a global logistical hub when mammoth "post-Panamax" ships start carrying a growing share of cargo, much of it from China. So far, construction hasn't started, but blueprints call for an expansion of the island's existing container terminal, airports and roads while a Chinese engineering company develops a $1.5 billion transshipment port on a couple of mangrove-fringed islands just off Old Harbor.

"The proposed transformation of Jamaica into a world-class logistics center is unquestionably the most ambitious and far-reaching project on which this nation has been engaged since we became an independent state over 50 years ago," said Francis Kennedy, president of the Jamaica Chamber of Commerce.

All over the Caribbean, the Panama Canal expansion, despite its recent delays, has caused no shortage of countries to think big. With Brazilian financing, Cuba recently started developing a new port it hopes can play a major role in global logistic chains. Ports in places like the Bahamas, Colombia and Miami are also busily strengthening infrastructure.

In Jamaica, technical studies to evaluate the dredging of Kingston Harbor to 15.5 meters were recently completed and bidders have been pre-qualified. Kingston's busy container terminal is expected to be privatized and turned over to an international operator soon. And the government has been busily meeting with investors from China, the U.S., Germany and other nations.

The plans have excited many in this country of 2.7 million people known mostly for its beaches, reggae music and dominant Olympic sprinters. Industry Minister Anthony Hylton said it's such a high stakes competition that he is "up at nights, frequently in the wee hours of the morning, cognizant of the fact that the future of our economy depends on us getting this initiative right."

Yet it's far from clear whether debt-shackled Jamaica can realize its ambitious goals, despite its strategic location by busy sea lanes between North, Central and South American markets. Jamaica has had one of the world's slowest growing economies over the past four decades and a four-year loan package with the International Monetary Fund is propping up the island.

Those economic woes severely limit Jamaica's ability to invest in the project, which is estimated to cost as much as $15 billion. That means the private sector would need to provide almost all of the financing.

Damien King, head of the economics department at Jamaica's campus of the University of the West Indies, said the plans are worth pursuing but transforming Jamaica into a logistics center would require a huge level of public sector organization and management.

"It is far from obvious that the Jamaican government can muster that even with throwing a disproportionate share of its capacity at the problem," King said.

At the same time, a skirmish has been brewing between the government and the conservation lobby over the proposed port to be developed by state-run China Harbor Engineering Co. on the uninhabited Goat Islands in a swath of Portland Bight, the island's biggest protected area. Environmentalists argue the port would have a devastating impact on a coastal zone that was shielded in 1999 to safeguard reefs, mangroves and fish nurseries.

Diana McCaulay of the watchdog group Jamaica Environment Trust has called for more public consultation about the China-financed port but requests for more information have been denied. Without knowing specifics of the deal, she said it's impossible to assess the benefits.

"I don't understand those who are uncritically accepting that there will be sufficient benefits to destroy one of our protected areas," she said, adding that her environmental group is not opposed to a logistics hub in Jamaica but is fighting against a big transshipment port in the Portland Bight area.

To fuel the hoped-for revival, the government plans to cluster global companies into as many as 16 special economic zones and pitch incentive schemes comparable to those offered in logistic centers like Dubai and Singapore. One of Jamaica's main goals is to convince companies to outsource parts of their production there and bring the country into the global supply chain.

Officials also hope that warehousing and manufacturing operations will add value to partly finished products shipped from China that are destined for North America and elsewhere.

"Stockpiling goods in Jamaica will mean that it will take a day or two to be delivered as opposed to weeks when ordered directly from China," said Eric Deans, chairman of a task force to advance the hub plans.

Paul Bingham, head of economic analysis at consulting firm CDM Smith, which specializes in large water and transportation infrastructure, said he wouldn't discount the impact of the "post-Panamax" ships on a country such as Jamaica with a regionally competitive port. But he believes the growth in regional business will be incremental.

"I don't want to get caught up in hype and say that this will be a revolution for these economies. I think that's putting too much expectation behind what will likely be netted from the operational changes," he said.

But in Old Harbor, where badly overfished waters form the spine of the local economy, many say they're hopeful the island's plans will provide a needed lifeline

"My children, my grandchildren need jobs," said Compton Campbell, a veteran fisherman in his 70s as he stood by his small battered boat, paint flaking off the sides. "They need opportunities. I believe this port business will be good for Jamaica."

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David McFadden on Twitter: http://twitter.com/dmcfadd