What are the terms of the deal with Haier?

Dear Editor,

In an SN article, ‘Haier announces plans for assembly plant, $10M industrial park,’ (February 18), it was disclosed that the Chinese firm, Haier Electrical Appliances Limited, is looking to build a plant that will assemble laptops and computers, and some Guyanese seemed to welcome the news as a sign of development.

The truth is, while all Guyanese should welcome any form of legitimate investment in Guyana to help generate revenue for the economy and create jobs for our people, we should be prepared to ask questions, especially if the investments were part of deals struck during the Jagdeo era.

However, it seems as though some PPP apologists are quick to equate anyone asking questions about deals struck by the PPP regime to being hostile to the PPP and its regime or having an aversion to development. In fact, this is exactly how observers are interpreting government’s hostile reactions to the new parliamentary opposition, which seeks to hold the government accountable and to ensure it behaves in a transparent manner with public funds and resources.

My reason for raising the issue about the Haier assembly plant deal dates back to earlier announced plans by the Jagdeo administration to distribute laptops to families; a concept that has been embraced and successfully implemented by several countries.

When the idea was first announced in Guyana, it received mixed reactions, with supporters praising it and sceptics citing the regime’s penchant for political gimmicks and the secrecy surrounding state-financed projects.

To be quite clear, this letter does not seek to knock Haier, a Chinese multinational consumer electronics and home appliances company with origins dating as far back as 1920; an employer of over 70,000; revenues of US$20.7B (2010); and plants in America and India. This letter seeks to ask about the exact nature of the deal the Jagdeo administration struck with Haier.

Prior to Haier coming onto the scene, I was of the impression that financing of the OLPF project would come primarily from the first tranche of US$30M that Norway would pay to Guyana as part of the November 2009 anti-deforestation MOU signed  between the two nations.

When it became increasingly evident that the money was not quickly forthcoming from Norway via the WB, President Jagdeo secured a US$30M loan from China to help finance the OLPF. According to an October 25, 2010 article in Stabroek News captioned, ‘China to help finance US$30M laptop initiative,’ it was disclosed that “since the money is being provided by China it is expected the netbooks would be bought from a Chinese manufacturer,” and that “a draft document seen by SN had suggested that the distribution of the laptops would be managed through current aid/volunteer organisations and government ministries working on development projects in communities.”

Exactly one year later, SN carried another related story captioned, ‘Laptop programme to roll out shortly,’ (October 25, 2011), and here it was noted that the Jagdeo regime signed a US$7.56M contract with Haier for the supply of 27,000 netbooks for the OLPF project. The news story also said that by Friday, October 28, 2011, some 5,000 netbooks would be distributed and the following week another 8,000 would be distributed.
I have searched without any success and would now welcome anyone with information that shows exactly how many laptops have been distributed by Haier and how many more are left to be distributed.

I have also noted that of the US$30M loan the Jagdeo regime took from China, US$7.56M was awarded to Haier, so where is the rest of the money (US$22.44M)? This is a loan and must be repaid by Guyanese taxpayers.

Additionally, did the agreement between the government and Haier call for Haier to set up an assembly plant?
According to Mr Brian James, Haier’s local partner, “Right now we are looking at the assembly for the laptops and the computers because we’ve already gotten the assembly line conveyor belt, trolleys, technology stuff and so on.” I thought Haier was only supposed to supply computers, but now we are being told of an assembly plant being built. Was this assembly plant arrangement all part of the deal? If so what are the exact terms of the deal?

I ask these questions because Haier is reportedly set to invest US$8M in Guyana and create over 550 jobs over the next five years as part of the goal to assemble and distribute the targeted 27,000 laptops, but will the assembly/production cost per unit make it more feasible to assemble in Guyana than to just buy already assembled? And will Haier be using its own US$8M or money from the US$30M loan Guyana borrowed?

Editor, we are talking about 90,000 laptops for Guyana, and when we look at how many laptops other countries have distributed (at an average cost of US$260) – Portugal distributed 500,000; Brazil ordered one million; Uruguay distributed 380,000; Peru 260,000 and Argentina 250,000  – without assembly plants being set up in those countries, we have a right to ask questions about the nature of the Haier deal, which SN’s report had said was to merely supply laptops. Nothing about an assembly plant.

I would like Parliament to investigate this deal and inform the people of Guyana about its details, including any tax breaks or concessions that are enjoyed by local companies.

Yours faithfully,
Emile Mervin

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