High Level Conversation on the impacts and actions taken by States
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Jamaica makes its case at a high level discussion today with Caribbean and South American States to coordinate, learn and take actions on the impact of the Coronavirus and Tourism.
This is a transcript with the address by the Hon. Minister of Tourism Ed Bartlett from Jamaica to this high level virtual conference today.
Thank you Mister/Madam Chairman and in particular to the Permanent Mission of Costa Rica for facilitating this opportunity to share the specific experience of Jamaica in confronting the current pandemic and crafting effective solutions for recovery.
As we have experienced, the virus plunged the world economy into uncertainty, with travel and tourism highlighted as one of the most affected sectors. This represents the worst showing for international tourism since 1950 and puts an abrupt end to a 10-year period of sustained growth since the 2009 financial crisis.
Already for the first quarter, international tourist arrivals (ITA) declined by 44% compared to 2019. In April, with severe restrictions on travel and border closures, ITA declined to 97%. This represents a loss of 180 million international arrivals compared to 2019 with US$198 billion lost in international tourism receipts (export revenues).
Small island developing states (SIDS) face particular challenges to their sustainable development, including small populations, limited resources, vulnerability to natural disasters and external shocks, and strong dependence on international trade. A heavy and deepening reliance on tourism as a priority contributor to the Gross Domestic Product of our countries, accounting for over 50% of GDP in some, could further exacerbate the region’s vulnerability in this present crisis. This is even as we recognize the immense potential of travel and tourism to right our economies on the road to recovery and development.
There are sixteen SIDS in the Caribbean of which Jamaica is one. In 2019, Small Island Developing States (SIDS) recorded 44 million in international tourist arrivals, with export revenue at approximately US$55 billion. For the first four months of 2020, SIDS recorded a 47% decline in arrivals translating to almost 7.5 million arrivals.
In the case of Jamaica, external debt is 94% of GDP as at March 2019 and for March 2020, it is estimated to be slightly lower at 91%. The estimated contraction in GDP from COVID-19 for the Fiscal Year 2020/2021 is 5.1%.
Our projections have estimated an annual loss of J$146 billion to the tourism sector for the fiscal year April 2020-March 2021 and a fallout of $J38.4Billion to the Government from direct revenue from the sector.
Even as we focus on the economic fallout, we are mindful of the over 350,000 workers in the industry whose livelihoods have been severely hampered by COVID. This trickles down to their families and communities in a very real way, exacerbating existing social ills.
It is clear that this is not business as usual and, therefore, our policy responses demand innovative thinking to match the dynamism of this current threat to sustainable development. Effective recovery and the “new normal” will be characterized by greater flexibility and adaptability for the viability of businesses, particularly micro, small and medium sized tourism enterprises; increased application of technology for digital transformation; new modes of work and measurements for productivity; as well as enhanced resilience to withstand external disruptions.
With this philosophy in mind, specific efforts for effective recovery focused on deepening partnerships, especially private-public partnerships. Consultation was and continues to be a key feature of this period. The rich and diverse contribution from all relevant stakeholders in the form of the Tourism Recovery Committee (TRC) established at the beginning of the crisis for Jamaica (March 10 – first COVID case) has greatly improved the slate and quality of initiatives for the recovery of the sector.
Our governments stand at this most crucial juncture to “stop, look, listen and pivot”, i.e., assess the situation; craft strategic policies and responses; monitor the effective implementation of these policies; and prepare ourselves to further adjust and creatively manage these vital developments in global public health and the economy.
An assessment of the situation highlighted that clear and effective protocols were necessary to contain the virus, protect people and prepare for the inevitable re-opening. To this end, the TRC devised precise protocols for sub-sectors of the broader sector that were disseminated in support of the general protocols and guidelines from the Ministry of Health and Wellness.
The virus is transmitted by people, we have to protect people (our nationals and visitors) during this time, and it is people who will drive the success of any initiative. The Tourism Ministry places great priority on human capital development through its Jamaica Centre for Tourism Innovation (JCTI). JCTI undertook to upskill the tourism workforce during this period and, in collaboration with the Tourism Product Development Company, trained tourism workers in the proper application and process for the health and customer service protocols for COVID19.
Systems and processes had to be carefully crafted and managed to ensure that the protocols and relevant actors collaborated effectively for a smooth handling of this pandemic, particularly in view of re-opening the tourism sector.
Even as domestic tourism was promoted and is supported by Jamaicans, with tourism contributing 50% of foreign exchange earnings for the economy, we simply had to re-open our borders and welcome tourists to our shores.
This cautious re-opening which happened on 15 June was phased, founded on all the preparatory processes and with the safety of our nationals, particularly tourism workers, as a priority principle. Re-opening was also zoned in what I dub “resilient corridors” welcoming visitors to enjoy specific COVID-compliant certified tourist destinations and attractions along a prescribed route while allowing for periodic review, monitoring, and containment – the latter, if necessary.
Since this gradual re-opening, Jamaica has welcomed over 13, 000 visitors and earned approximately US$19.2 million. This is a far cry from our strategic goals, however, COVID has highlighted the need to pivot or peril. We are pivoting strategically to ensure that we can emerge from this crisis – bruised but not broken.
The Micro, Small and Medium Enterprises (MSME) sector remains a significant contributor to the economic and social development of Jamaica and the wider Caribbean. According to a 2016 thematic study undertaken by the Caribbean Development Bank (CDB) entitled “Micro-Small-Medium Enterprise Development in the Caribbean: Towards a New Frontier”, MSMEs constitute between 70% and 85% of the number of enterprises, contribute between 60% and 70% of GDP and account for approximately 50% of employment in the Caribbean.
According to the World Trade Organization (WTO) World Trade Report 2019 – “The Future of Services Trade”, in developing economies, the tourism and travel-related industry records the highest contribution in exports by micro, small and medium-sized enterprises (MSMEs) and by women.
Jamaica’s tourism sector is supported by an extensive network of Small and Medium Tourism Enterprises (SMTEs) whose fallout from COVID-19 is an average of J$2.5 million each. As tourism is the lifeblood of the Jamaican economy, so are SMTEs to the Jamaican tourism product and experience.
It is, therefore, imperative that SMTEs not only survive this crisis, but maximise the opportunities offered by emerging trends for scalability and growth to ensure that small and vulnerable economies, like Jamaica, can thrive in the aftermath of this pandemic.
To this end, SMTEs will be provided with resilience packages including protective kits, touchless sanitation devices and thermometers as well as Personal Protective Equipment and relevant training.
There will be a special loan facilitation through the Development Bank of Jamaica (DBJ) to cover 70% of specific service costs and a DBJ Credit Enhancement Facility to allow access to J$15 million maximum as guarantee where SMTEs lack necessary collateral to get loans.
The Tourism Enhancement Fund (TEF) and EXIM Bank Revolving Loan Facility as well as the Jamaican National Small Business (JNSBL) loans allow for loans between J$5 and $25 million at interest rates no more than 5% and between 5 and 7 years to repay.
It is understood that as access is important so too is the ability to repay. In this regard, the current COVID moratorium on repayment has been extended until the end of 2020 (December 31).
Additionally, SMTEs can benefit from grants provided by the Ministry of Finance and the Public Service under the CARE programme which assist employers in covering staff payments and other expenses.
Resourcing the recovery of the tourism industry is key and equally indispensable is digital transformation and resilience-building to ensure that the country emerges from this crisis “building back better”.
The Global Tourism Resilience and Crisis Management Centre headquartered in Jamaica has been consistent, prior to this pandemic, in offering a suite of resources to bolster critical response capacity and strategic solutions tailored to these times.
We have lamented the destructive impact of COVID-19, however, we are reminded that opportunities prevail to increase our application of technologies for greater efficiency. As we grapple with crisis, we should insist on taking full advantage of opportunities where they arise as this is key for the much-needed agility and adaptability to recover, revive and rejuvenate this important sector.