…in response to Finance Minister’s criticisms
Private sector players have taken umbrage at Finance Minister Winston Jordan’s scathing criticisms of their willingness and ability to take risks and invest in the local economy.
During a diaspora meeting in Washington DC on Friday, Minister Jordan slammed the local private sector for being “stuck in their ways”, and not adapting to the changing business environment.
Jordan said: “I met the existing private sector, and they are stuck in their ways. We need to have an expanded breed of private sector players. We need a private sector who shall take more chances.”
But the heads of two major private sector umbrella bodies, Eddie Boyer of the Private Sector Commission (PSC) and Deodat Indar of the Georgetown Chambers of Commerce and Industry (GCCI), told the Guyana Times Newspaper on Sunday that the minister’s complaints are unreasonable.
Boyer explained that both the Government and the private sector drive investment, but the latter is not going to invest if the conditions are not favourable.
According to the veteran private sector official, Government needs to create the incentives in order for the private sector players to take up the challenges.
He noted, too, that the projects have to be bankable, as access to finance for investment is another major hurdle in doing business locally.
Boyer also noted that the current spate of taxation is doing more to discourage investment.
GCCI President, Deodat Indar, noted that many businessmen have complained of the overwhelming taxes and the impact the new tax regime has on doing business in Guyana.
He noted that the number of taxes have resulted in the slowdown in the velocity of money flow, and this has ultimately impacted on the various sectors of the economy.
Indar explained that in the face of an overall economic slowdown, private sector individuals will not find it attractive to invest.
Both officials have defended the private sector’s willingness to invest in the local economy, but have asserted that Government needs to work with the key players to develop strategies which can jumpstart the economy.
Local content and carpetbaggers
Jordan had said that the private sector players are not making the necessary investments, internally and externally, that would help the economy to grow.
“In spite of all the local content legislation we may put in place, few private sector firms will not benefit if they do not re-orient the way they do business,” Minister Jordan had stated.
The private sector officials have, however, posited that local content legislation will actually serve as an incentive to invest.
The GCCI President outlined that, currently, cement for the oil drilling purposes is being sourced from Trinidad and Tobago, and is being docked right there. He argued that if local content legislation were in place, such services could be acquired locally, so the private sector could benefit from that foreign investment, which will overall contribute to the economy.
He lamented that without local content legislation in place, there will be very little benefit for Guyanese from the emerging oil and gas sector, as the only revenues will be from royalties.
And the PSC Chairman warned Government that “carpetbaggers” can easily be confused as risk-takers. He charged that investors should be thoroughly vetted before any deal is sealed, as many carpetbaggers would be coming under the guise of investing in the emerging oil and gas industry locally.
Risk and Rewards
Economist Sasenarine Singh has also contended that businesses will not pump money into an economy if the investment climate is not favourable.
Singh explained that it all comes back to the ‘risks and rewards’ balance, and if the risks outweigh the rewards, then businessmen will not be encouraged to invest.
“No businessman is going to invest if he is not going to make returns. Who is going to make investments in Guyana when the risks are so high and the returns are so low?” he questioned.
He also highlighted that there are other countries with greater risks involved, but businesses opt to make investments there because of the attractive rates of return.
Minister Jordan had explained to this publication that he wants a new breed of private sector players who are willing and prepared to think outside of the proverbial box and be creative and innovative, using cutting edge technology to improve productivity, thereby increasing competitiveness.
“My new ‘breed’ of private sector players would be seizing the many opportunities that are available for expansion, especially with oil on the horizon. They will try to form partnerships and alliances with the private sector in the Caribbean and further afield to overcome some of the barriers they face, such as financing and human resources,” Jordan had stated. (Devina Samaroo)