THE ARRIVAL TO REVENUE RATIO OF TOURIST TO JAMAICA IS NOT SUSTAINABLE FROM AN ECONOMIC DEVELOPMENT PERSPECTIVE
It is this basic economic misalignment that has seriously placed the Jamaican economic in another round of economic crisis as Chinese funded infrastructures linked to tourism development wont have the future revenue streams to support their development. We are dealing with a very clever development partner who has effectively conned the GoJ in accepting a very long term view of the economic benefits of their investments while they reap the current or present value of the benefits in current dollars. It is essentially a debt trap we have found ourselves in again.
Even if tourism grows 3.6% on average for the next 10 years the marginal cost to subsidized tourism growth in Jamaica would be far greater than the marginal returns, as increasing price pressures resulted in lower yields which mean more devaluations. The fact still remains that if the government does not incur any additional cost and the dollar remains stable. Excluding the cost of the South-East Highway, it would take us some 30 years (2046) or 3 decades to recover the current level of public investments already made to attract and develop the tourism industry in Jamaica.
By 2046 the total combined arrival population is estimated to be around 14. 7 million visitors which would be needed to recover the US$34.0 billion in net economic cost incurred to date. Obviously, to accommodate 14.7 million visitors the government will have to incur additional cost which makes Tourism Development a tool of underdevelopment especially when you consider the impact on the environment and the number of working poor it employs.
Tourism development must be sustainable not only in economic terms but also environmentally and socially. A balance should be maintained between the degree of environmental degradation as well as the capacity of local infrastructure to support increased arrivals and the resulting population growth.
Since 1990 Jamaican Governments spent some US$ 4.5 billion on tourism-related infrastructure projects which equal the same amount Travel and Tourism contributed in total to the GDP in 2012. The constant devaluation to attract tourism investments cost the Jamaican economy some US$32.0 billion overall plus the US$4.5 billion in tourist related infrastructure investments. So in total, it cost the economy US$36.5 billion since 1990 to attract an industry that only recently added US$2.2 billion in direct contribution to the GDP or US$7.0 billion in total.
Over the same period, the Jamaican middle class was decimated as manufacturing fell some 36% and mining 55%. The government needs to focus on lowering the cost of energy to revive our manufacturing base and rebuild the Jamaican middle class. Just think about it, if we invest and build infrastructures to support agriculture, energy and water resources management, we are indeed stimulating tourism investment but indirectly cause as we expand job creation and growth we would have reduced the crime rate and make people feel safer.
The Minister has defined the problem but has the wrong solutions; “Declaring that Jamaica’s tourism sector has under-performed, the portfolio minister, Edmund Bartlett, said value added earnings from tourism amounts to less that five per cent of Gross Domestic Product (GDP).” Bartlett Unveils Five-Pillar Tourism Plan.
by: Silbert Bartlett
