Dear Editor,
I refer to a letter in Sunday Stabroek of January 25th written by Prime Minister Samuel A A Hinds, captioned ‘There is no fire sale or looting of Guyana’s national resources’ in response to the stinging criticisms contained in Dr Clive Thomas’ column in your newspaper. I wish to refer specifically to the PM’s comments on the Case-Unamco group’s plywood project and related matters.
In 1994, Case Timbers Ltd (CTL) was granted forests totalling close to one million acres in the North West District in 2 separate sections. The forest section closest to the Atlantic Ocean, which was described by GFC as “Seasonal swamp” forest, turned out to be permanent swamp forest. After we purchased Unamco from its owner, we applied to have the swamp forests relocated to the Upper Berbice region contiguous to the Unamco forest. This process became extremely tedious and took close to 2 years to resolve. I mention this to clarify the point that CTL did not apply for additional forests for a plywood project but for our leased forests to be relocated to land that was not permanently under water.
When CTL/Unamco decided to invest in a project to manufacture plywood (or sliced veneers) we applied for duty and tax concessions matching those the Hoyte administration had granted to Barama in 1990-91. I remember well that Mr Hinds had heavily criticized the Hoyte concessions to both Barama and Omai. If this was his party’s position it would explain why the Jagdeo administration never granted CTL/Unamco the concessions it needed to produce plywood on a level playing field with Barama its major local competitor.
As MD of CTL/Unamco at the time, I was given the royal run around during my campaign to obtain concessions equal to Barama’s. Chronic delays and crippling bureaucracy were the order of the day. Over a process lasting several months I was advised to consult with the late Minister of Trade Shree Chan, the Head of Go-Invest Dr Ivor Mitchell, The Junior Minister of Finance Bharrat Jagdeo and eventually Ms Sandra Baptiste, a government adviser. I made copious notes of these early plymill days and can inform with accuracy that, in all, I had no less than 23 meetings with the individuals mentioned above. Ms Baptiste was the most helpful and came close to paving the way for the concessions to be made available. Dr Mitchell did give me a letter to give to Minister Jagdeo (as the Head of Go-Invest was about to travel abroad for several weeks) in which he recommended that CTL be granted the duty and tax concessions it applied for. At my brief meeting with the Junior Minister of Finance Bharrat Jagdeo, he made disparaging comments about GO-Invest and threw Dr Mitchell’s letter into the wastepaper basket! By this time my Malaysian partners and I were referring to this revolving process as the “carousel.” It is true that during the ‘carousel’ period some of the CTL forests languished, but government lethargy in granting the requested concessions was not the only problem. The brand new plymill had cost CTL/Unamco over US$30 million to purchase and apart from concessions equal to Barama’s (their plymill was reconditioned) the investors, quite rightly, were unwilling to make the US$20 million investment to assemble the plywood factory unless government converted the State Forest Exploratory Permit over the CTL forest to a 15-year TSA lease before construction started. This started another carousel and a lot of time was lost trying to convince government that no prudent business person invests millions in a project based on rented assets or assets given on approbation. Yes, with at least 2 carousels turning simultaneously, the CTL/Unamco forests did languish. Eventually, my Malaysian partner and I went to see President Cheddi Jagan. He advised us to proceed with the project giving us his personal assurance that the SFEP (SFEP 198 for 346,416 acres) would be converted to a full TSA in due course. The project investors had great respect for President Cheddi and were about to proceed with the investment when, sadly, he passed. The forests then continued to ‘languish’. These forest assets remained idle when we ran into problems in preparing our Environmental Impact Assessment (EIA) for approval by OP. We were being guided through this process by a government officer. The process and forest both languished as the officer kept on insisting on a US$30,000 personal gratuity to do his job.
In 2001 some 6 months before general elections I met now President Jagdeo on a BWIA flight from London. Roughly half way across the Atlantic Ocean he said to me, “Those plywood concessions you keep asking us for…I’m now willing to give them to you…that is providing you make an announcement within the next few days telling the nation that my government has granted you the concessions you asked for and construction of the new plywood factory will start immediately.”
I was flabbergasted as this conversation came out of the blue and was contrary to what the President had recently told me when he was Minister of Finance. Respectfully, I thanked him and let him know I would inform my Malaysian partners and majority shareholders as soon as I arrived at my house that night. When I called my Malaysian partners with the ‘good news’, what they advised me to tell my President cannot be printed here. Part of the problem was that by this time they had become so suspicious and wary over many years of unproductive government interventions, ‘Letters of Intent’ and ‘Memoranda of Understanding’ that they were unable to take a ‘Mid-Atlantic plane promise’ seriously. The result of all that I mention above is that the CTL/Unamco forests did languish as our learned PM posits in his letter.
On the 25th May 1999, American Ambassador to Guyana James Mack gave an investment speech titled ‘Thinking big about the future (Bold steps to make Guyana a winner in the new Global Economy).’ In this seminal address which is in print, Ambassador Mack discussed:
“9 major areas where I think Guyana needs to take bold steps to equip itself to win in the increasingly globalized economy.” In the section dealing with the urgent reforms needed in our Customs and Excise system, Ambassador Mack said:
“We all know the story of an investor who in 1996 brought into Guyana all the equipment to set up a plywood manufacturing plant. If it had come to fruition, this project would have created noteworthy new employment opportunities and the prospect of valuable export earnings. Today that project is dead in the water, maybe forever; and the equipment remains in crates
because Government took too long to work out an agreement with the investor on duties and taxes. Every day that equipment stands idle costs the businessman money. It costs Guyana as well, in the direct loss of jobs, taxes, and export earnings going unrealized. It also costs Guyana in ways impossible to measure, because other business people will look at that situation and decide to send their investments elsewhere.
“Chronic delays, reports of corruption, and seemingly arbitrary or capricious tariff assessments keep foreign investors at bay.”
Government and the Guyanese people may want to know that in August last year we sold CTL’s US$30 million plymill to Barama for US$180,000 to be used primarily for spare parts.
Yours faithfully,
F Hamley Case
