Businessuite weekly june 20th issue

1 Businessuite WeeklyIssue: 10

2 Businessuite Weekly Issue: 10

Cover Story

WEEK IN REVIEW

Finance

Regional

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ContentsGiving Reggae Music Life: How Brand Jamaica Brought Californian Businessman and Music Executive Joe Bogdanovich Home

“I, as a person born and raised in California, and one who has worked in the music business in L.A., New York and JA, I see reggae in Jamaica, perhaps more differently than you. What I know is, reggae is ...

Karisma Hotels and Resorts’ Mega Hotel To Move Forward With US$1 Billion St Ann Development Project

Karisma’s US$1 billion mega-hotel project in Llandovery, St. Ann is now set to get underway as the hotel chain has signed the relevant ...

IMF Approves US$80 Million Disbursement Under Extended Fund Facility Programme For Jamaica

The International Monetary Fund (IMF) last week approved the disbursement of US$80 Million to the government of Jamaica under the Extended Fund...

Bahamas Being Developed As Trade Hub In Chinese Currency

The Bahamas is reportedly beng developed as trade hub in Chinese currency. According to Bahamas’ Minister of Financial Services Hope...

IDB Study Finds Regional Growth Hampered By Savings Crisis

A new study released by the Inter-American Development Bank (IDB) has founde that Latin America and the Caribbean faces a savings...

AUTO

6 VW Changes Focus Following Emissions Scandal

Volkswagen CEO, Matthias Mueller has announced the company’s plans to launch 30 all-electric models to reposition itself as a leader in...

Editorial

4 A Long Awaited Return

Hello old friend,It’s really good to see you once againHello old friend...


The Week Ahead

15

Contents

Michael Lee Chin’s Portland JSX IPO To Close On Wednesday

The Initial Public Offering (IPO) for Michael Lee Chin’s Portland JSX (PJX) will close this week. It launched on June 8 with a total of ...

BREXIT Vote Set For This Thursday

British, Irish and Commonwealth citizens over 18 will go to the polls this Thursday ( June 23) to decide whether Britain should leave or remain...

BUSINESSUITE EVENT CALENDAR

Content DirectorKayla Wright

The Businessuite News Centre BNC

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Credits


Editorial

Hello old friend,

It’s really good to see you once again

Hello old friend,

It’s really good to see you once again

I admit it really has been a while, so let me take the opportunity to reintroduce you to an old friend.

Welcome to Businessuite Weekly Issue 11.

Save for our newest edition, the monthly Businessuite Markets and our special editions, you may have missed us. I apologize for the heartache, but let me just say, it’s good to see you again.

For the remainder of this year, we aim to stick to our mandate of providing you with weekly updates on all things Business in Jamaica and the wider Caribbean.

If you want to catch up with what you’ve missed since our break, feel free to visit us at businessuiteonline.com or head on over to Issuu.com/businessuitemagazine.

If you have any suggestions, comments or criticisms, feel free to email me at [email protected].

If you have comments you would like to see published in our magazine under our ‘Reader Submission’ column, share them with us.

If you have a story about how you started your small business and want to share it to encourage other entrepreneurs, also share it with us.

Have a good read. It really is nice to see you again

Kayla Wright

Content Director

r

By Kayla Wright

A Long Awaited Return


Karisma’s US$1 billion mega-hotel project in Llandovery, St. Ann is now set to get underway as the hotel chain has signed the relevant documents to move forward with the development. In making his contribution to the 2016/17

Sectoral Debate hours before the contract signing last week, Tourism Minister Ed Bartlett indicated that the project has been effectively placed under the Ministry’s Shovel-Ready Initiative.

The Shovel-Ready Initiative has been undertaken jointly by the Tourism Enhancement Fund, TEF, Jamaica Promotions Corporation (JAMPRO), the National Environment and Planning Agency (NEPA), the Urban Development Corporation (UDC) and Commissioner of Lands to pre-package a number of investment offerings.

The initiative also seeks to directly assist investors by obtaining tacit development approvals, conducting carrying capacity studies, assessing appropriate land utilization and installing preliminary infrastructure. By doing this, the process of investing in Jamaica’s tourism industry is streamlined and expedited.

Karisma Hotels and Resorts’ Mega Hotel To Move Forward With US$1 Billion

St Ann Development Project

WEEK IN REVIEW

Bartlett says new investments, like Karisma’s, will play an important role in achieving key goals under the Government’s growth agenda. He says in the coming years, the development, which will be called Sugarcane by Karisma Jamaica, is expected to add some 5,000 new rooms, provide at least 8,000 direct jobs and 10,000 indirect jobs.

“This is particularly close to my heart given the fact that it was several years ago, then as Tourism Minister, that in Germany I met with Karisma and discussed and encouraged their planned developments. Now, we are on the verge of fruition,” shared Minister Bartlett.

Bartlett says he thinks this is a “very critical signal that we are sending to the country that investment will be a critical pillar in driving the growth strategy of this country. It will be a key provider of jobs and we are placing special priority on creating employment for more Jamaicans”.

Negril Based Azul Sensatori Jamaica, Gourmet Inclusive Resort, by Karisma


VW Changes Focus Following Emissions Scandal

Auto

Volkswagen CEO, Matthias Mueller has announced the company’s plans to launch 30 all-electric models to reposition itself as a leader in “green” transport. He presented the broad outline of a

sweeping restructuring last Thursday, vowing to boost profit and push aggressively into electric vehicles and new technology services, even as the company struggles to resolve its emissions cheating scandal.

“The crisis partly eclipsed what we attained as a group over the last few years, but there is a lot more to Volkswagen than diesel,” he indicated.

Mueller says he hopes that by 2025, all-electric cars would account for about 20-25% of the German carmaker’s annual sales. He says as such, huge investments would be needed as the firm moves beyond the “dieselgate” scandal.

Calling it the “biggest transformation in the company’s history,” Müller said the car maker needed to repair its core business, especially the namesake Volkswagen brand.

He says the company is scrutinizing its portfolio and could decide to sell some assets and that it would reduce its stable of 340 individual car models.Outlining what he described as the “key building blocks in the new group strategy”, Mueller said VW aimed to “transform its core automotive business or, to put it another way, make a fundamental realignment in readiness for the new age of mobility”.

He says VW will focus on “the most attractive and fastest-growing market with special emphasis placde on e-mobility. The group is planning a broad-based initiative in this area: it intends to launch more than 30 purely battery-powered electric vehicles over the next ten years.

Mueller says VW’s transformation would involve investments in the double-digit billions of euros, funded by savings and cost-cuts, with all brands and businesses having to contribute. He says “this will require us - following the serious setback as a result of the diesel issue - to learn from mistakes made, rectify shortcomings and establish a corporate culture that is open, value-driven and rooted in integrity.”

VW was plunged into crisis when it was revealed in the US last September that diesel engines had been fitted with software that could distort emissions tests.

Sales of Volkswagen-branded cars rose 4.1% in May, compared to the same month last year. Market share for the group, which includes Audi, Skoda, and Seat, for the five months to May, was 23.9%, the lowest for the period since 2011.


Cover Story


Giving ReggaeMusic LifeHow Brand Jamaica Brought Californian Businessman and Music Executive Joe Bogdanovich Home


I, as a person born and raised in California, and one who has worked in the music business in L.A., New York and JA, I see reggae in Jamaica, perhaps more differently than you. What I know is, reggae is powerful and international and influential.

It’s a force that pulled me to Jamaica and made it my home”.

Those were the words of Downsound Records (DSR) CEO Joe Bogdanovich as he opened the floor for his ‘Monetizing Music’ Presentation as part of the JMMB Joan Duncan Lecture series recently.

The music executive has been in the spotlight several times since the start of the year due to his investments into items synonymous with the Jamaican culture and ‘Brand Jamaica’.

Giving Brand Jamaica LifeLast month it was announced that Bogdanovich was now the majority of the Usain Bolt’s Tracks & Records franchiser. Reports were that he purchased a 51 per cent stake in FranJam, the franchising company of the Jamaican-themed restaurant, from KLE Group.

“

JMMB’s Donna Duncan-Scott (left) is caught in a pointed discussion Josef Bogdanovich (centre), CEO of Downsound Records and Lloyd Stanbury (right), entertainment attorney and Music Business Consultant at recemt JMMB Joan Duncan ‘Montizing Music’ Lecture.


FranJam was spun off and sold to pay off a US$650,000 debt owed by KLE for a loan Bogdanovich gave to the company in 2014 after he took on a 23 per cent stake in KLE and joined its board. The loan initially carried an interest rate of 6.5 per cent for a period of four years and was secured by the assets of Famous Nightclub. It was renegotiated in 2015 for new terms requiring 7.9 per cent interest per annum for three years, while the nightclub located in Portmore, St Catherine, was sold this January.

This announcement had followed an earlier report in the March/ April period that Bogdanovich had acquired ownership to popular music festival, Reggae Sumfest. At the time, he said that there will be major changes in the next two years for the brand. Changes discussed included the re-energising of the brand both in terms of signing local acts that are more youth oriented and at the same time maintain the foundation of relevant reggae/dancehall music.

Bogdanovich had also announced that Sumfest 2016 would look to launch a ground-breaking first by streaming in interactive 360 Virtual Reality (VR). “In order to make this industry thrive”, he said, “It’s critical that the home of reggae music gets its house in order.” He also noted that unity will be the focus as it is through unity that music is a key factor for success in the festival business. The DSR CEO said he was looking to top the USD6 million dollars


worth of Tourism that the music festival brought to the city last year during its staging.

Speaking at the JMMB Lecture, he indicated that some of his investments to date stem from the belief that “our culture in reggae music is slipping away”. Bogdanovich says although Jamaica is the birth place and home of reggae music, today, the hotspot for the music is Germany, Holland, Spain and France. He says it is against this background that “I have made every attempt to sustain some of the existing festival brands and prevent them from dying. So people might think I’m crazy to do this, but it’s a passion; a commitment to give reggae music life”.

“The fact is, premier reggae festivals are no longer in Jamaica, but in Spain., Brazil, Paris and France. Why is this? It’s not just because of poor business management, deterioration of the dollar and lack of tourism. It’s because, as I see it, you do not recognize what you have as being special”, Bogdanovich chastised the audience, “We have something that people like and want. You’re special whether you know it or if you don’t. Foreigners celebrate it. Why don’t you? Fully?”

Take ResponsibilityBogdanovich says if Jamaicans expect to take advantage of the resources the country has to offer, specifically that of music, they will need to have the discipline and attention to save it.

“We are in a crisis and we must do something about it now! To be relevant you have to know yourself and where your music is coming from. Without that, you have nothing. If you do not see the importance of who you are and your responsibility as a patriot to this country and its culture, you have no value, nothing to monetize,” he indicated.

When you travel overseas and you walk up to the immigration officer, and they look at your Jamaican passport, what does the officer say in terms of small talk?” Bogdanovich asks, “Ninety percent of the time it’s about music or sports. That’s what people initially think of you. This is good. This is great. You’re meaningful. You have something. You’re the best. You have the fast man and woman alive in sports. In your music, you have Bob Marley and reggae music and it’s still champion”.

The DSR CEO says as he sees it, he is doing his part to keep Reggae Music and Brand Jamaica alive and well. However, he says Jamaicans at home and abroad need to do their part to monetize and celebrate the Jamaican legacy. “Music is the ball, and you, the people are the bat. You choose to hit the ball as far as you can and score a boundary for your country. Or, allow the most powerful and valuable resource you own, wither away, leaving crumbs for all of you to fight over”.

He says Jamaicans need to make up their mind to support their country and its offerings. “Support the concerts, the festivals, the parties, the artists, the writers, the publishers, the soundman, the dancers, the hundreds of dances and their selectors, the peanut man in front of the venue, in two words: Reggae music. You are the key to monetization”.

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FINANCE

IMF Approves US$80 Million Disbursement Under Extended Fund Facility Programme For Jamaica

The International Monetary Fund (IMF) last week approved the disbursement of US$80 Million to the government of Jamaica under the Extended Fund Facility (EFF) Programme.

It followed the completion of the combined eleventh and twelfth reviews under the EFF. This brings the total disbursements under the programme to about US$748.2 million.

Following the Executive Board’s discussion last week, Deputy Managing Director and Acting Chair, Mitsuhiro Furusawa, indicated that since May 2013, Jamaica’s implementation of the economic reform program supported by the EFF has been “exceptional by international standards”. It indicates that after three years of difficult economic reforms, inflation is at historical lows, the current account deficit has more than halved, net international reserves have doubled, and access to domestic and international financial markets has been restored, supported by upgrades in credit ratings and historically high business confidence indicators.

He says comprehensive reforms in tax policy and administration have been and continue to be undertaken, while strict adherence to fiscal discipline together with a PetroCaribe debt buyback have helped place debt on a downward trajectory.

However, Furusawa says concrete reforms are needed to sustainably reduce the government wage bill, “which continues to crowd out priority social and infrastructure spending. Actions should be expedited to divest and outsource certain government services and implement the human resource management system.

He says Jamaica’s growth remains weak and unemployment, while declining, is still high. “Further structural reforms to boost growth and employment should focus on facilitating private sector development by expanding financial access and reducing financing cost, lowering energy cost, maintaining external competitiveness, reducing tax compliance costs, and improving public sector resource allocation.”


Bahamas,” Strachan said.

“It would eliminate reliance on the US dollar and the transacting of business through the United States. The creation of a platform for the Yuan to trade freely with the Bahamian dollar will allow for international trade finance, and trade and investment to increase significantly.”

She said further that as foreign businesses set up shop in the country, “the potential to increase business activity would be further enhanced. It would also allow for an efficient business framework, underpinned by factors ranging from The Bahamas’ position as a well-respected international financial centre to its strategic geographic location to North American and Latin American markets; and it would facilitate trading without the hurdle of an additional layer of foreign exchange cost and currency risk, and have transactions settled within a favourable time zone”.

“An increase in international trade finance, trade and investment would create jobs for Bahamians and strengthen the Bahamian economy. Economic slowdown in the United States magnifies the importance of the need to diversify cross-border trading with other markets around the world. Further, new financial institutions would be established in The Bahamas, including the introduction of the first Chinese bank to the country,” she said.

REGIONAL

The Bahamas is reportedly beng developed as trade hub in Chinese currency.

According to Bahamas’ Minister of Financial Services Hope Strachan, this move is expected to give the country’s financial services sector a major boost.

Addressing parliament, Strachan indicated that in recent times, the Government of The Bahamas has taken advantage of several opportunities for project financing from the Chinese Government and from Chinese corporations. She says as a result, the establishment of a hub for trade in Chinese currency “is an attractive prospect that the Government of The Bahamas has approved, and my Ministry is diligently pursuing this initiative as a viable project.”

The minister said that the success of this project would translate into an entirely new frontier of financial services and trade business for the country and would be a “monumental achievement” in making The Bahamas the Renminbi (RMB) Trading Hub for the entire region. She said that the hub would facilitate financial transactions and eliminate reliance on the US dollar.

“The rationale is that the Bahamas Government, Bahamian businesses, financial institutions as well as those throughout the region would have the ability to engage in less costly and less time-consuming processes related to transactions involving the direct clearing and payment of the Yuan currency in The

Bahamas Being Developed As Trade Hub In Chinese Currency

IDB Study Finds Regional Growth Hampered By Savings Crisis

Anew study released by the Inter-American Development Bank (IDB) has founde that Latin America and the Caribbean faces a savings crisis, with fiscal and demographic realities making the outlook worse in the coming years.

According to the study, the region faces major fiscal challenges in the years ahead. It also argues that more savings is a key

element to ensure both economic growth and resilience.

The gross national saving rate in Latin America and the Caribbean was just 17.5 percent of GDP between 1980 and 2014, far below the 33.7 percent for Emerging Asia and 22.8 percent for advanced economies. Only sub-Saharan Africa saved less, at 13.8 percent.


Michael Lee Chin’s Portland JSX IPO To Close On Wednesday

The Initial Public Offering (IPO) for Michael Lee Chin’s Portland JSX (PJX) will close this week. It launched on June 8 with a total of 111,818,182 ordinary shares being offered at $ 11.00 each. The company intends to raise $1.23 billion from

the IPO which, if successful, will see the company listing on the main market of the Jamaica Stock Exchange.

According to Managing Partner and Member of the Investment Committee, Robert Almeida, proceeds from the IPO will be invested in Portland Caribbean Fund II. This is a private equity fund, which holds a portfolio of equity and/or debt securities of companies located in Latin America and the Caribbean. To date, PCF II, which started in July 2014, has raised US$136 million to date with a target of US$200-250 million.

Almeida says this offer is one that potential investors should not pass up lightly. Speaking with Businessuite Magazine following a recent Investor Briefing on the PJX, put on by brokers, Victoria Mutual Wealth Management, he indicated that Portland was built on the premise of ‘wealth creation for all’. He says the opportunity will not only offer potential investors the

Week Ahead

opportunity to have insight into Michael Lee Chin’s investment portfolio but will also provide them with an opportunity to join him in his investments.

However, the management partner says, should still not find this investment as a profitable one and not support the IPO in search of the full $1.23 billion, the company will consider other avenues for listing on the JSE as it already meets all the requirements. In October 2015, Portland JSX did a successful private placement, raising $1.7 billion from several local and regional institutional investors.

“As a company, we already have the capital….because we already raised the money in our private placement, at worse we’ll be a $1.7 to $2 billion capital company. So even if we do not raise the additional $1.2 billion, it’s still a decent amount of capital and we can still list. We’ve got enough capital, we don’t need the extra’, he told Businessuite Magazine, “the thing is, it’s not just about creating an opportunity for just institutional partners to participate, but for the broader public to participate”.

The report analyzes the reasons behind the region’s chronically low savings by households and governments, and its economic impacts, from behavioural biases among individuals to structural inadequacies in financial systems and fiscal budgets. It also looks at inefficiencies in savings by firms, which invest too little.

The IDB says the “savings crisis means the region is struggling to find the resources needed to finance new and much-needed airports, ports, roads and other infrastructure that can boost future growth”. It says the region must increase investment by between 2 and 4 percentage points of GDP per year “(depending on the country) for decades to loosen this binding constraint to growth, or by between US$100 billion and US$200 billion a year”.


BREXIT Vote Set For This Thursday

British, Irish and Commonwealth citizens over 18 will go to the polls this Thursday ( June 23) to decide whether Britain should leave or remain in the European Union.

Prime Minister David Cameron had promised to hold one if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum.

As such, citizens over 18 who are resident in the UK, along with UK nationals living abroad who have been on the electoral register in the UK in the past 15 years as well as members of the House of Lords and Commonwealth citizens in Gibraltar will vote on the question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”.

However, ahead of the vote, the International Monetary Fund (IMF) has weighed in once more with its thoughts on Britain’s referendum, warning the UK could slide into a recession if it quits the European Union.

In a 64-page document, the Washington-based fund said that the size of the hit would depend on a multitude of factors, though its overall assessment is that the UK “would likely be worse off economically in the long run.”

The IMF also warned of a potential credit squeeze if liquidity markets dry up, which could stymie spending and investment.

In its report, the IMF presented forecasts for “limited” and “adverse” Brexit scenarios. In the worse situation, it sees growth slowing sharply this year and the economy shrinking 0.8 per cent in 2017. The impact would see the economy 5.6 per cent smaller by 2019 compared with a baseline forecast, while unemployment would rise above 6 per cent and the deficit would be wider.

In the worse situation, the IMF sees growth slowing sharply this year and the economy

shrinking 0.8 per cent in 2017.


Businessuite Event Calendar5

Monday, June 20 Sunshine City Chambers of Commerce AGM Venue: McMasters Plaza on the Roof St. Catherine

Tuesday, June 21 CariCris & Fitch Learning Workshop - Risk Management in Banks Venue: Jamaica Pegasus Hotel

JEF Workshop “Successfully Managing Your Time & Priorities” Venue: JEF Training Center

JAMPRO Management Consulting & Professional Services Forum Venue: JAMPRO Business Auditorium

Wednesday, June 22 Jamaica Mortgage Bank - Housing Seminar 2016 Venue: Jamaica Pegasus Hotel Accelerate Caribbean in Jamaica: Next Entrepreneurial Ecosystem Development Workshop Venue: Spanish Court Hotel 1 Saint Lucia Avenue Kingston

Montego Bay Ice Company Limited AGM Venue: 2 Creek Street Montego Bay

Thursday, June 23 Kingston Wharves Limited AGMVenue: Jamaica Pegasus Hotel Jamaica Stock Exchange Limited AGM Venue: Jamaica Stock Exchange

Friday, June 24

Jamaica Producers Group AGM Venue: The Knutsford Court Hotel 16 Chelsea Avenue Kingston 5

Businessuite weekly june 20th issue

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