Oil and gas no sure thing for prosperity

– GMSA President

Guyana’s economy could still falter, the imminent exploitation of oil and gas notwithstanding, unless we remain focused on “the broader imperatives of supporting investments and job creation across our society”, according to the President of the manufacturers association, Shyam Nokta.

Nokta was speaking at a forum organised by the Guyana Manufacturing and Services Association (GMSA) at the Georgetown Club on September 28 to enable an open discourse between the business community and the Guyana Revenue Authority (GRA).

“There is much talk on how the imminent emergence of an oil and gas sector will change everything for our country. On the one hand that is true, it will change everything – and that is precisely why we need to ensure we build all the institutional defences against the well-known economic and governance risks that oil and gas could bring,” Nokta told the forum.

GMSA President Shyam Nokta

Like other private sector officials and  public commentators before him, Nokta said that while there is the need to prepare for the advent of oil and gas it was also necessary for Guyana to “stay the course by ensuring that other sectors of our economy continue to grow” in order to fulfill the country’s potential.  He added that the country’s economy could still falter “if we don’t remain focused on the broader imperatives of supporting investments and job creation across all our economic sectors.”

And while, according to the GMSA President the manufacturing and services sector “remains committed to playing our part in grasping this broad potential” there was a need for “meaningful progress” on long-standing challenges to the growth and development of the sector including the reliability and cost of electricity, access to finance on reasonable terms, high freight costs and challenging market access.

Unsurprisingly, Nokta used his presentation, delivered in the presence of several of the GRA’s top officials, including Commissioner General Godfrey Statia to raise what he described as “tax measures…which are frustrating our members’ goals” of adding value to the productive sectors including “the recategorisation of zero and standard rated items to exempt; VAT on electricity; VAT on forest products which he said had had the effect of undermining the competitiveness of manufacturers and by extension, the country’s economy. Nokta said that having again raised the same issues with Finance Minister Winston Jordan just a few weeks ago “and proposed several measures for consideration” the GMSA was hopeful that evidence could be forthcoming, when next year’s budget is announced, “of what can happen through collaboration between the private sector and government.”

Beyond those considerations Nokta further rolled out the manufacturing sector’s ‘wish list’ which he said includes “the review and hopefully removal of VAT on electricity, water, education; targeted assistance for struggling sectors such as forestry through the removal of VAT on forest products, the establishment of consolidated facilities for wood products and agro-processing through public-private partnerships; incentives for investing in renewable energy options; locally manufactured products being given a larger share in public procurement; and adherence to the Small Business Laws which state that at least 20% of public spending should be towards local procurement from small businesses.”

More fundamentally, the GMSA told the forum that the private sector and specifically the GMSA was seeking to play a part “in supporting modern and effective taxation systems,” through “dialogue in the formation of tax policies.”

Government and the private sector have, for years, been at loggerheads over differing opinions on the fairness of tax policies and Nokta said that the country would be hard-pressed to sustain “what is now eleven years of uninterrupted economic growth” without “open, frank exchanges” on tax-related issues among other considerations.

Nokta further extended his presentation into a range of practical and logistical considerations which he said were inhibiting private sector entities including “difficulties with outstanding exemptions for manufacturing imports; VAT refunds; Trusted Traders Compliance; inspection of containers with perishables; processing of export documentation; damage of goods for export and the use of the GRA Scanner,“, which issues he said “serve as barriers to doing business,” but can be resolved through “meaningful, practical, problem-solving partnership between the GRA and private sector organizations such as the GMSA.”

And while Nokta said that the GMSA was seeking to have the Revenue Authority “appreciate our issues,” he also called on the private sector to “work to take advantage of the GRA’s perspectives on where businesses can gain benefit through identifying and utilizing tax incentives and other policies” that businesses might not be using “to maximum gain” at this time.

 

 

 

 

 

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