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

The Associated Press

In this Jan. 21, 2014 photo, shows the uninhabited, mangrove-fringed Goat Islands in southern Jamaica. A skirmish has been brewing between the Jamiacan government and the conservation lobby over a transshipment port to be developed by state-run China Harbor Engineering Co. that is planned for the uninhabited Goat Islands in a swath of the island’s biggest protected area. (AP Photo/Jamaica Environment Trust, Jeremy Francis)

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By DAVID McFADDEN, Associated Press

OLD HARBOR, Jamaica (AP) — 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.