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SUPERPLUS FOOD STORES What does Michael Lee Chin have to do with the future of the Supermarket Chain controlled by this brother Wayne Chen?

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“Are you closing down or what, how the shelves dem so empty?” remarked an irate shopper in the Superplus Liguanea branch, confronting one of the store attendants walking through the supermarket. “Is the same way the one down half way tree look” remarked another shopper passing by. A casual stroll through the Kingston located Superplus stores by this writer, revealed much truth in the comments and observations by the two shoppers.

According to one industry watcher, there are unconfirmed reports that the privately held and controlled Wayne Chen led Superplus chain is having problems making payments to suppliers who have now apparently cut off supplies hence the scanty shelves. But how this could be, with reported annual sales of over JA$11B Superplus should be awash in cash. “That how it appears on the surface, the supermarket business is a very thin margin business, ranging from 2-3% and so they may be generating a lot of cash, but very little profit” was how one financial analyst summed up the situation.

This begged the question. Is the supermarket business a good business to be in at this time or quite frankly at anytime? Which led us to ask a very obvious question? Would Michael Lee-Chin invest in the supermarket business?
Given his publicly stated investment views and posture the answer would and should be a resounding NO.

Michael Lee-Chin established investment philosophy is “buying few excellent businesses in long-term growth sectors and holding these businesses for the long term in order to help investors prosper by preserving and growing their capital and minimizing taxes.”
Lee Chins Investment Philosophy
• Use other people’s money
• Find a role model
• Invest in a few businesses you understand
• Stay committed to your investment philosophy
Given this posture would he have advised his siblings to invest in the supermarket business.

More questions. To what extent if he is, is Michael advising his brother Wayne on the merits of investing in the supermarket business? Is he telling Wayne to cut and run or hold for the long term?
Or better still does Lee Chin view the supermarket business as a good investment and is putting his money where his mouth is.

If you were a billionaire and a savvy successful investor with brothers and other family members in the supermarket business and they were having a hard time making money would you bail them out, would you put your own money in, but then you don’t use your own money, you use other people’s money. What would you do?

There are cynics who would suggest that Michael and companies under his control are already major investors or backers of the supermarket group. But would Michael really throw good money after bad or is it that he sees it as a good investment.

These are all relevant questions, as the answer will give a clearer picture on the way forward for Wayne Chen and the SuperPlus Chain of supermarkets.

If you don’t already know Wayne Chen is the younger brother of billionaire Michael Lee-Chen and while heading and running the Super Plus chain, overseas a number of his bigger brother business. He is the Chairman of NCB Insurance Company Limited, West Indies Trust Company Limited and CVM Communications Group, a Director of National Commercial Bank Jamaica, NCB (Cayman) Limited, AIC (Barbados) Limited and the Christiana Town Centre Limited.

Chen stripping the group

Wayne Chen

Wayne-Chen

Wayne Chen announced in October last year that He was contracting the supermarket chain and would close a fifth store in Montego Bay but would expand others. Chen has been stripping the group of its loss-making stores indicating that the business was attempting to grow revenues by concentrating more on services like its cambio operations. Chen said that grocery had become the “loss leader” for the supermarket chain, but gave no specifics on the other business segments that were underperforming. Five stores have been culled from the group, and of the remaining 25, the majority, 22, are controlled by brothers Wayne and Richard Chen, while the others are held by other family members.
More than a decade ago, supermarket owners, hurting from market fragmentation and weak consumer spending, began a process of conglomeration with the hope of restoring profitability to their operations.

Progressive Grocers leads the charge

Back in 2003 there was a merging and acquisition frenzy going on in the supermarket sector with the consortium, Progressive Grocers acquiring four supermarkets in rural Jamaica, bringing to 18 the number in the chain, and helping to reinforce the oligopolistic market that has been developing within this industry.

The five-member grouping acquired a number of Jamaica’s independent supermarkets to become the second largest chain after SuperPlus Foods Stores, which operated at the time 27 outlets. GraceKennedy’s Hi-Lo had 15 shops. Together the three groupings controlled the lion’s share of the Jamaican market.

The acquisitions would give the Progressive Grocers even greater critical mass in procurement, to go up against SuperPlus, the industry’s behemoth that had also been on an expansion binge. The concept of the Progressive Grocers is to create an alliance that could jointly purchase goods to spread administrative cost in the management of this process, as well as marketing, and to create bargaining clout in procurement. Sources say, for example, that the group was also seeking to set up a central warehouse, a move that would allow it to further spread overhead cost.

At the time Hi-Lo had acquired six groceries and wholesales to control a total of 15 stores with plans to open another five stores later that year – one in Mandeville and Spanish Town, with the other three were supposed to be under construction. John Mahfood, former GraceKennedy chief operating officer in charge of retailing and projects at the time said that Hi-Lo would be adding between 5 and 6 stores per year over the next five years, bringing the total number to about 40. This has not materialised.

Not to be undone, Super Plus, with 27 stores at the time, also announced plans to open three more in Kingston.

Come 2006 Supermarket operators were crying out “We’re not making any money”. The tide had turned and the future looked dim.

So what went wrong?

Operating within an oligopolistic market – dominated by four major groups – Jamaica’s supermarkets were now bleeding red ink. This, the owners said, was the result of skyrocketing utility and other operating costs, interest burden on the debt associated with expansion, weak demand, and their inability to pass on costs to the increasingly price-sensitive consumer.

“Right now it is murder,” was how Wayne Chen characterised the business environment. “We are making a small profit, but we now have to be looking at liquidating non-core assets to cut our finance charges.”

In 2005/06 SuperPlus is reported to have recorded gross sales of $11 billion – making the group by far Jamaica’s largest retailer. Such critical mass was part of the business plan – to better spread overhead, give the group procurement clout, and improve its gross profit margin – all of which have been achieved. However, according to Chen, the steep increases in fixed and semi-fixed costs over the last two years have eaten away at the group’s net profit.

For example, there has been about a seventy per cent increase in the cost of electricity across the group over the past year. “Light bill at our Trafalgar Road location has moved from 800,000 to $1.4 million per month,” Chen told the Business Observer. In a business where red ink is all around, SuperPlus with its very small profit was, relatively speaking, holding its own.

GraceKennedy’s supermarket subsidiary, Hi-Lo, was reported to have lost $80 million that year. Hi-Lo’s electricity bill soared to $10 million per month, a 66 per cent increase on the $6 million previously. Security costs jumped by 20 per cent to $60 million. “Increase in costs, lower level in disposable income, compounded with a more competitive market make it challenging for companies,” noted Mahfood.

Hi-Lo by this time closed down two of its Kingston supermarkets – its branch at Tropical Plaza in 2004, and its Hagley Park Road store in 2005 reducing the Kingston branches to four, and the total number of stores islandwide to 13.

Ken Loshusan, operator of John R Wong Supermarket in New Kingston and Loshusan Supermarket Barbican Circle in Kingston, said his supermarkets were also not making any money. “How can you make money when light bill, rent etc. are all over a million dollars? We’re barely breaking even right now. We’re just creating employment, that’s it,” said Loshusan.

According to published reports, on average, the pre-taxation margin of supermarkets in the Progressive Group was about 20 per cent. However, increasing operational costs had eaten away at their margins, thus forcing most of the members into at best, break-even performance. “By the time we pay expenses, pay taxes we are left with nothing,” he complains. “If we raise (margins) half per cent, people will raise hell. All the expenses have skyrocketed. By the time we pay (expenses) we are left with nothing.”

In 2007 Progressive Grocers 28-member consortium comprised the second largest grouping of local supermarkets,

Chen commenting on the situation said that given the constraints faced by the industry in passing on costs to customers, there will be fallout within the industry.”We are gonna see some shakeout in the industry,” he declared.

“Sooner or later, some companies will have to drop out. By the end of the year, I expect some players to drop out.” Commented one operator.

Gassan Azan, the operator of MegaMart store and supermarket, said he too was experiencing sluggishness in the supermarket business, but that other non-supermarket items sold by his chain were helping to counter the fallout.

Like the other supermarkets, a major challenge at MegaMart was coping with the high electricity costs. For example, at MegaMart’s Waterloo Road, Kingston location, electricity cost had jumped from $1.1 million per month last year, to $1.7 million per month that year. At the other MegaMart store in Portmore, St Catherine, electricity cost had moved from $1.1 million per month to $1.8 million.

“Do you know how much more goods you have to sell to pay for the increase in light bill?” asked Azan. The two MegaMart stores had combined sales of $3.5 billion, but so far that year, sales have been flat, said Azan.

Moreover, according to Azan, the profit was generated mainly from the non-supermarket items which earned a much higher gross margin, and primarily at the Kingston store. “As a strategy, to achieve profitability what we have been doing is to push our non-food items,” he explained.

Chen cited several factors which he said accounted for the sluggishness in consumer spend at the island’s supermarkets. Among them: the tens of billions being spent each year on cellular phone usage. “The source of the money is not finite and it has to come from somewhere,” he said.

He also cited the increase in consumer electricity and fuel costs which divert consumer spending away from supermarket items, the slow-down in construction and its impact on purchasing power among working class Jamaicans. Chen also noted that the anti-crime measure ‘Operation King Fish’ had also curtailed criminal activities and their ability to fund consumption in the way they once did.

The SuperPlus boss says his stores have felt the impact of these factors.”Most stores in the chain are flat in Jamaican dollar terms, and some stores are down,” he told the Business Observer. “Some of the new ones continue to grow but at the expense at the older stores.”

But according to Chen, SuperPlus has been taking steps to improve its cash flow and financial position in light of the soft market.

“In some instances we are cutting back on wholesaling because of the margins,” he said. “We are looking at all of our resources that are not being utilized with a view to liquidating them to cut our bank finance cost. We are seeking to share the cost of running the business over a wider revenue base.”

A victim of its own success

Wayne Chen is obviously doing everything he can to diversify income streams and squeeze more margins out of the operation; these include building more money transfer facilities, ATMs, cambios, and pharmacies in its stores of which it now had five.

“The main push is to look at fixed cost. We have no control over rent so we need to offer more within the stores to defray them.”

It’s clear that the aggressive investment in new locations has not produced the desired results. SuperPlus’ success at growing into the largest retailer in Jamaica – in 2003, surpassing furniture retailer Courts – less than 10 years after the chain, which was started by Gloria Chen in the 1960s, and had been anchored in southern Jamaica, morphed into the well-organised corporate structure is today a victim of its own success.

Wayne Chen had declared his intention to aggressively grow the firm’s store count and roll out up to 400 additional items under the SuperPlus brand – moving the range to about 700 and, importantly, giving SuperPlus greater control over stocks and the ability to squeeze more profit in a business famous for its thin margins.

In recently published press reports Wayne Chen said he would not refuse a good offer for the islandwide family-owned supermarket chain, but says he has not put the company up for sale. Asked outright whether that meant SuperPlus was hunting a buyer, Chen dismissed it, but did not discount it as a future possibility. “Not at all,” he told the Financial Gleaner. “Not in the short term. We are right-sizing the company now,” he added.

Rumours however persist that Wayne is actively looking for a buyer for the reportedly money losing supermarket chain. But denials are in order until the ink has dried on the contract and the cheque handed over. Plans for an IPO must now be off the table given the current state of affairs and from all indications 2009 is going to be a very challenging one. Margins will be put under far more pressure and more red ink will flow throughout the sector.

And so we are back to Michael Lee Chin. Why? Well if we know for certain Michael’s views and investments in SuperPlus then we will know where it’s going.

Additional sources: Jamaica Observer

https://businessuiteonline.com/index.php/2018/10/09/the-walkbout-homestay-experience-coming-january-2019/

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Unlocking Future Potential: The Impact of USAGE Group’s Internship Programs on Tertiary Level Students

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Bridging the Gap Between Education and Real-World Experience

In today’s competitive job market, the value of practical experience cannot be overstated. Recognizing this need, USAGE Group has pioneered an innovative approach to talent development through its structured Internship Programs, offering university and college-level students unparalleled opportunities to gain hands-on experience while completing their academic requirements.

Empowering the Next Generation:

At USAGE Group, internships are more than just a temporary stint; they are a gateway to professional growth and career advancement. Through carefully crafted programs, students are immersed in real-world projects and mentored by industry experts, equipping them with the skills and knowledge needed to excel in their chosen fields.

A Dual Purpose:

The internship programs at USAGE Group serve a dual purpose, benefiting both students and the company itself. For students, these programs provide invaluable exposure to the inner workings of a dynamic business environment, allowing them to apply theoretical concepts learned in the classroom to practical, real-life situations. Additionally, students accrue hours of hands-on work experience, fulfilling requirements for their academic programs while laying the foundation for future career success.

Opportunities for Growth:

Interns at USAGE Group are not merely bystanders; they are active participants in the company’s mission to deliver top-tier support services to Caribbean SMEs. From assisting with client projects to contributing to strategic initiatives, interns are given meaningful responsibilities that challenge and inspire them to reach new heights. Moreover, they have the opportunity to work alongside seasoned professionals, gaining insights and mentorship that are invaluable to their professional development.

Building a Talent Pipeline:

By investing in internship programs, USAGE Group is not only nurturing the next generation of talent but also building a pipeline of skilled professionals who may eventually join the company on a full-time basis. Through internships, USAGE Group identifies promising individuals who embody the company’s values and ethos, laying the groundwork for future recruitment and retention efforts.

Testimonials from Interns:

“The internship program at USAGE Group has been a transformative experience for me. Not only have I gained practical skills that will serve me well in my career, but I’ve also had the opportunity to work alongside some of the brightest minds in the industry.” – Sarah, Business Administration Student

“I never imagined that an internship could be this impactful. At USAGE Group, I’ve been given real responsibilities and treated as a valued member of the team. It’s been an eye-opening experience that has solidified my career aspirations.” – John, Computer Science Student

Join the Journey:

For university and college-level students seeking to gain practical experience and jumpstart their careers, USAGE Group’s Internship Programs offer a pathway to success. Whether you’re studying finance, marketing, IT, or any other field, there’s a place for you to thrive at USAGE Group.

Contact USAGE Group Today:

To learn more about internship opportunities at USAGE Group and how you can become a part of our dynamic team, contact us today.

Contact Information: Email: usagejamaica@gmail.com

USAGE Business Support Services Group Internship Program Application Form – 2024

As USAGE Group continues to lead the way in revolutionizing business support services in the Caribbean, its commitment to nurturing talent and empowering the next generation remains unwavering. Through internship programs that prioritize hands-on learning and professional growth, USAGE Group is shaping the future of the region’s workforce, one student at a time.

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Operating from “Silicon Mountain – The Business Technology and Innovation Hub of the Caribbean”
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Revolutionizing Business Support Services in the Caribbean: The USAGE Group Story

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How USAGE Group is Redefining IT-Centered Support for Caribbean SMEs

In the dynamic landscape of Caribbean business, where innovation meets necessity, one company stands out for its commitment to delivering top-tier support services to small and medium enterprises (SMEs). Conceptualized and formed in 2020, USAGE Business Support Services Group has swiftly emerged as a beacon of efficiency and cost-effectiveness, offering a comprehensive suite of Corporate and Operational Services tailored to meet the unique needs of Caribbean businesses.

Unveiling USAGE Group:

At the heart of USAGE Group’s mission is a dedication to providing IT-centered Business Support Services that empower Caribbean SMEs to thrive in today’s competitive market. With a diverse range of offerings, including Accounting and Finance solutions, USAGE Group is not just a service provider but a strategic partner committed to the success of its clients.

Putting Customer Experience First:

What sets USAGE Group apart is its unwavering commitment to customer service and experience. Embedded in the company’s DNA is the mantra “U In Everything We Do,” reflecting a culture that prioritizes the needs and satisfaction of its clients above all else. From the initial consultation to post-implementation support, USAGE Group ensures a seamless and enjoyable experience for every client.

Why Partner With USAGE?

Affordable Quality Monthly Subscription Services: USAGE Group offers cost-effective subscription services designed specifically for SMEs, providing access to high-quality support without breaking the bank.

Access to Multitalented Professionals: Clients of USAGE Group benefit from a team of self-motivated professionals with diverse skills and experiences, capable of tackling even the most complex business challenges.

Expertise and Guidance: Beyond service delivery, USAGE Group offers expertise and guidance to clients, ensuring that every step of the process is smooth and collaborative.

True Collaboration: At USAGE Group, every project is approached as a collaboration, guiding clients from their current state to their desired outcomes with a process that prioritizes mutual growth and success.

Commitment to Quality: From concept to implementation and beyond, USAGE Group remains committed to delivering quality services that positively impact the bottom line of its clients.

Empowering SMEs for Success:

The overarching goal of USAGE Group is clear: to provide SMEs with first-world Accounting, Finance, and Corporate Services that exceed expectations, unlocking their full potential and driving tangible results. By maximizing Business-to-Business (B2B) opportunities and fostering long-term partnerships with SME CEOs, Entrepreneurs, and Business Owners, USAGE Group is poised to catalyze growth and expansion across the English-speaking Caribbean.

In a landscape where agility and innovation are paramount, USAGE Group stands as a testament to the transformative power of strategic partnership and customer-centricity. As Caribbean SMEs navigate the complexities of the modern business world, USAGE Group emerges as a trusted ally, empowering them to thrive and succeed in the digital age.

Contact USAGE Group Today:

For SMEs seeking to revolutionize their business support services and unleash their potential, USAGE Group offers a pathway to success. Contact USAGE Group today for a free consultation and discover how their innovative solutions can transform your business.

Contact Information: Email: usagejamaica@gmail.com

USAGE Business Support Services Group Internship Program Application Form – 2024

Proud Member and Partner of The Silicon Mountain Project
Operating from “Silicon Mountain – The Business Technology and Innovation Hub of the Caribbean”
Mandeville Manchester Jamaica

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Hundreds of Buyer Companies and Delegates Expected at CHTA Travel Marketplace

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More than 150 buyer companies and 1,000 delegates are expected to convene in Montego Bay for the 42nd staging of the Caribbean Hotel and Tourism Association (CHTA) Caribbean Travel Marketplace from May 20 to 23.

Speaking at a press briefing on Thursday (March 14), at the Jamaica Tourist Board (JTB) in New Kingston, President, CHTA, Nicola Madden-Greig, said a special effort is being made to bring more new buyer delegates to participate in the event.

“We have expanded to target buyers from Latin America, Eastern Europe and Asia,” said Mrs. Madden-Greig.

“We will also have for the first time a complete stand-alone MICE (Meetings, Incentives, Conferences and Exhibitions) itinerary with 20 meeting planners attending the first ever CHTA Caribbean MICE exchange,” she added.

The CHTA President pointed out that the MICE market has “tremendous potential” for the region, with more than US$900 billion generated worldwide in 2023.

It is expected to double that revenue by 2032.

Mrs. Madden-Greig also indicated that 50 regional and international media representatives are expected on the island to engage with Caribbean delegates and “share the news of the richness and diversity of our region”.

The 42nd CHTA Caribbean Travel Marketplace will feature three components – the Business of Tourism (The Caribbean Travel Forum on May 20), the Marketing of Tourism (CHTA Travel Marketplace May 21-22) and the Community of Tourism (Responsible Tourism Day on May 23).

Meanwhile, Minister of Tourism, Hon. Edmund Bartlett, said that the CHTA Caribbean Travel Marketplace is “a great moment of anticipation”.

Minister of Tourism, Hon. Edmund Bartlett,

“It is not an event in the context of a singular activity, but it is a great opportunity for us as a Caribbean people, not just to showcase the strength and power of our assets but also provide leadership with innovation,” he added.

The Minister said that he is excited about the various components of the CHTA Caribbean Travel Marketplace.

“The region is ready to take a new perspective on itself in this post-COVID era, to grow tourism to another level and the three key points that [Mrs. Madden-Greig] dealt with, tourism and business, tourism and marketing, but responsible tourism is perhaps at the heart of the innovation that we speak about,” said Minister Bartlett.

Caribbean Travel Marketplace affords tourism suppliers the opportunity to meet face to face with wholesalers from around the world selling Caribbean vacation travel.

The main objective is for suppliers and buyers to conduct negotiations that benefit the region.

Only CHTA members can attend the event.

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Stocks and Securities Limited Fraud Investigation Progressing – Dr. Clarke

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Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Stocks and Securities Limited (SSL) fraud case investigation is progressing.

“The magnitude of the case has warranted a long and thorough investigation. A file was submitted to the Office of the Director of Public Prosecutions by the FID (Financial Investigations Division) for the consideration of criminal charges against individuals, and the DPP is doing her job; and I think that Office has publicly stated that they will make a ruling at some point,” Dr. Clarke said during his opening presentation in the 2024/25 Budget Debate in the House of Representatives recently.

Dr. Clarke said the engagement of American financial and advisory firm, Kroll, was critical to the investigations.

He noted that they undertook an independent forensic audit to discern the facts relating to the fraud perpetrated at Stocks and Securities Limited over the period 2010 to 2023.

“The company was selected because it did not have any connection in Jamaica and because of the complexity of the matter, the volume of transactions, the number of accounts held by clients and the number of bank accounts held by the SSL network of companies.

“The Kroll team, working with the support of government agencies, including the FID and FSC (Financial Services Commission), utilised technology, data analytics and forensic expertise to produce a comprehensive and independent report of its findings in November 2023. The Kroll Report has confirmed that the suspected fraudulent activity and mismanagement at SSL and its related parties were much broader than initially understood,” the Minister stated.

Dr. Clarke said the investigative authorities now have a much clearer picture of what took place and those involved, adding that they are committed to bringing the persons involved to justice.

“The FID will use all the powers at our disposal to attempt to recover as much of the dissipated funds,” the Finance Minister informed.

Providing details on the fees paid to Kroll, he said the UK provided the equivalent of US$50,000 as an initial retainer for the firm’s engagement, pointing out that the total cost was US$1.2 million which was paid from the Civil Recovery Fund held by the FID.

“In addition to the payment to Kroll, the FID transferred J$100 million from this Civil Recovery Fund to the Consolidated Fund as budgetary support, including support for national security. Kroll was essential to the point where we have something before the DPP,” he said.

By: CHRIS PATTERSON JIS, March 18, 2024

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Brand Jamaica Must Be Protected – Senator Hill

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The Government continues to enhance the development and protection of the intellectual property (IP) rights of Jamaicans as a key contributor to national development, says Industry, Investment and Commerce Minister, Senator the Hon. Aubyn Hill.

“Brand Jamaica and the excellence of our products and services must be protected and not infringed if they are to contribute meaningfully to Jamaica’s growth and development,” he noted.

The Minister, who was addressing the recent CARIFORUM Intellectual Property Rights and Innovation Case law Conference at the Spanish Court Hotel in Kingston, said that through the Jamaica Intellectual Property Office (JIPO), works as diverse as music and computer programmes are protected by copyright; pharmaceuticals, by patents; and clothing and jewellery are protected as designs.

He informed that Jamaica jerk and rum have Geographical Indications protection, which provides safeguards against misuse or imitation of the registered names and guarantees the true origin of the products to customers.

The Minister noted, further, that Jamaica is a signatory to international treaties that have enabled businesspersons to more easily access the global IP system for the registration of their intellectual property.

“Examples are design rights through the Hague Agreement concerning the international registration of industrial designs, inventions and innovations through the Patent Corporation Treaty and, of course, the protection of business owners’ trademarks through the Madrid Protocol, which we most recently signed. We have ensured that this is a local provision through JIPO and have facilitated the international provisions through these international treaties,” he informed.

Senator Hill, in welcoming the staging of the Case Law Conference said the work of the judiciary in interpreting and giving effect to clarifying issues that arise in IP legislation is one of the key pillars of governance.

The hybrid conference was attended by members of the judiciary and academia from Caribbean and Latin American countries.

It aimed to increase capacity and knowledge among the judiciary, the legal profession and relevant educational institutions about intellectual property issues.

By: ROCHELLE WILLIAMS, March 18, 2024

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