Dear Editor,
As the debate continues on whether the proposed ‘Regional Joint Support Team’ security unit will add value to the current development agenda of Guyana; my concerns are particularly in relation to business, investment, and human development – youth development, women, and the family. My view is that it will not add value.
The government’s decision to establish a new crime fighting unit, outside of the constitution, as well as without any proper justification; and the way in which the decision was made – the lack of transparency, even at the level of the National Assembly; does not augur well for a country that is touted as the ‘Singapore’ of South America.
This decision is equivalent to the decision by the former President David Granger, to unilaterally appoint the former Chairman of the Guyana Elections Commission (GECOM), Justice Patterson (Rtd.). This kind of behaviour by any government, is one of the areas that increases risks in the business and investment environment in the country.
Business and investment are essentially about risks and returns; investors examine risks in the Guyana environment, as against the returns on their investments. One of the reasons why it is difficult, almost impossible to renegotiate the ExxonMobil agreement, is because international investors are protected by International Investment Law, as a matter of fact, there is a view that International Investment Law is slanted towards protecting the investors.
Let us examine some of the reasons for this. During the 1970’s and 80’s, countries such as Guyana, had followed a path to nationalization and many foreign companies were nationalized. The international investment landscape over the past 40, 30 and even 10 years has changed significantly. Life is about stimulus and response, perhaps, the evolution of the international investment environment – laws, principles, guidelines, etc. was in part, stimulated by the need to implement global rules to protect international investors and their investments in a way that makes it difficult for governments and countries, to unilaterally renege on investment agreements.
Therefore, we can conclude that in the absence of Guyana creating a stable environment for investment and business, and reducing the risk of doing business in Guyana, we have reduced our ability to negotiate above a 2% royalty. Other countries can negotiate for 6% and more because their environment is more conducive and the risk is lower, and the possibilities of higher returns are greater.
At some point the Guyana Private Sector Commission and chambers of commerce need to stop singing our government’s praises and tapping them in the backs for increasing the risk of doing business. The Guyana business community needs to start thinking about filling hotels, flights coming to Guyana and increasing the ability of customers to service loans, mortgages, etc.
International investors will continue to come to Guyana because they are protected under International Investment Law, and they can take their returns out of the country, but the local business community has to decide whether they want to play politics or do business, this is the harsh reality.
Guyana has enormous potential for growth and development, but we would not grow, except our governments align their words with their behaviour. Our governments, this government, need to be more transparent and accountable and adhere to the principles of the Rule of Law and good governance; principles are universal, this is the kind of behaviour that will reduce the risk of doing business in Guyana and perhaps, create the environment for re-negotiating agreements. Nothing just happens, we have to make things happen by having strategic and systemic plans on how to achieve our business and investment goals and objectives. A few examples of countries that we can look at are Mauritius, Rwanda, and Botswana.
A brief comparative review of the World Bank’s ‘Doing Business’ rankings for three developing countries for 2020, and Guyana. The Doing Business project provides objective measures of business regulations for local firms in 190 economies and selected cities at the subnational and regional level. It looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle.
In 2020, eleven indicator sets were covered, these included: Starting a Business; Dealing with Construction Permits; Getting Electricity; Registering Property; Getting Credit; Protecting Minority Investors; Paying Taxes; Trading Across Borders; Enforcing Contracts; and Resolving Insolvency.
The overall ranking for these four countries among the 190 countries which were examined are: Mauritius 13, Rwanda 38, Botswana 87; and Guyana at 134. We need to examine what countries such as Mauritius, Rwanda and Botswana are doing as developing countries, in relation to creating a more enabling environment for business and investment.
As shown in the overall ranking, Mauritius is at 13, this is above Australia which is at 14; and Taiwan, China at 15. Rwanda is at 38, just below Switzerland which is at 36, and just above Portugal at 39; and Poland at 40. Botswana is at 87, just below Panama at 86.
Guyana on the other hand, is reported as one of the fastest growing economies in 2020 which the World Bank describes as an extraordinary growth rate of 43.5%, and as one of the richest countries; certainly, in the Western hemisphere, and is at 134 out of 190 countries in the ‘2020 Doing Business Report’. What this report shows, in the context of Guyana’s growth trajectory, is that if the country continues along this pathway, it will become wealthy but with little change in the local operating environment and the trickle-down effect of the wealth, will be very limited. The scenario above shows that the international investors and a small few who are well positioned, will benefit from Guyana’s wealth, except there is a paradigm shift to create a conducive business and investment environment.
Yours faithfully,
Audreyanna Thomas
