The Next Step
It is highly likely that the Jamaican dollar will come under pressure since the earnings on US$ denominated instruments, were not affected by the debt swap program. This will occur after existing bonds have matured and government seeks to replace these with new bonds.
It is therefore prudent that the government take immediate steps to reduce the demand for foreign exchange by doing the following.
Imported oil currently accounts for the largest use of foreign exchange in the country, and while the bauxite industry shutdown has saved us billions, we have not come up with a way to decide if we are better off with that industry being closed Vs being opened.
It is therefore prudent that the government take immediate steps to reduce the demand for foreign exchange by doing the following.
- Institute a 5-yr. ban on all motor cars, pickups etc with a gasoline engine whose size exceeds 3000cc.
- A similar 5yr ban should be placed on pickups, cars, minibus with a diesel engine size greater than 4.7L.
- Ban all heavy duty trucks equipment with an engine size greater than 8.0L.
- Restrict import license on agricultural imports on items such as carrots, Irish potato, tomato, ginger, etc for a period of 5yrs. How I see this working is importers will be given a quota, which should be the difference between what we are producing locally and the demand for the produce plus an additional 15-20% which would take care of things like drought or a natural disaster. We have to be very creative here so we do not violate any WTO rules.
- Provide duty free concession for all renewable energy products.
- Use savings from oil to provide incentive for company’s to manufacturer solar water heaters, solar electric panels and other manufacturing process that seeks to bring energy saving products to the market.
- 7. Stipulate that manufacturers and large commercial complex substitute 10% of their energy usage by using renewable or energy saving technologies by the year 2015. This means that over the next 5 years manufacturers, commercial building etc will seek to replace 10% of existing energy consumption with the use of renewable or other energy saving products.
- 8. Investigate Geo thermal plants at Rockfort, Milk River bath in clarendon and Bath fountain area in St Thomas.
- 9. Companies who meets this mandate will be provided with certain tax relief on the investments required in order to achieve the level of energy efficiencies attained. That is if a company had to invest say $10m to retrofit their operations to become an energy complaint or “green plant/business” then they can claim over the next 5 years tax write off which is equivalent to a portion of their investment which was used to gain compliance. They would off course would be subject to an energy audit by the Governmental inspectors, which would be setup to ensure compliance. Too often in Jamaica we make these offering to business only to see them claim write off for “investment” which never made its way into the business itself.
The tax write off should be on a graduated scale for example, if renewable or energy retrofit equate to the stipulated 10% that has been set out, then the company can claim up to 40% of what they spent.
If they achieved say 30-40% savings using renewable or other energy conservation technology, they can claim up to a maximum of 90% of what they spend over a five year period.
We have dug ourselves into a hole and we now need to find a way out, before its too late.
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