238 companies set up Feb. 2002 - Nov. 2003
--- Government conscientiously working to boost private sector development
A GINA feature by Michael Gordon
Guyana Chronicle
November 14, 2003
A total of 238 new companies have been established and registered at the Deeds Registry of the Supreme Court over the last 21 months, this figure reflecting new investment initiatives for the period February 19, 2002 to November 10, 2003.
This is in contrast to allegations made by leader of the Reform component of the PNCR, Stanley Ming. Ming and the main opposition party charge that the PPP has brought the private sector to its knees, whilst citing the bankruptcy of 21 companies in the past 21 months. However, the registry's figures prove otherwise.
Contrary to Ming's claims, the Guyana Office for Investment has facilitated significant new investments. So far, for 2003, GO-INVEST, in addition to facilitating many foreign investment projects, over 130 local investment projects were facilitated by that agency, valued at US$48M. Remarkably, that reflects figures for 2003 thus far. It also reflects only what was facilitated by the Government's investment facilitating agency.
Ming is quoted in one section of the media as saying that "Government's hostility to private sector investment in Guyana and the debilitating structure of the economy were not independent phenomena."
However, the Government in the last ten years introduced a number of tax and fiscal incentives in its efforts to ensure that the private sector becomes the engine of Guyana's economic growth. This includes the removal of the withholding tax from local investors and an increase in export allowances.
The Government, as part of its prudent fiscal and monetary stance, has ensured that there is macro economic stability over the years. A consistent positive growth rate (achieved only by Guyana and Jamaica in the region, in the past two years, in 2001 and 2002), low inflation, low interest rates and a relatively stable exchange rate are some of its attributes.
Improved infrastructure in the form of the construction of roads and bridges, and improvements in the telecommunications sector, have significantly contributed to the national drive to alleviate poverty, by creating jobs and ultimately earning and spending power.
All of this has been consistently addressed, whilst at the same time an enabling investment environment was assured by modernizing the legislative framework in which the private sector can operate. Some legislative initiatives include a new Bank of Guyana Act, a Securities Act that allowed for the eventual establishment of a local Stock Exchange, a Financial Institutions Act and a Companies Act, providing the impetus for private sector development and growth. The maintenance of the Free Trade Regime has also benefited the private sector.
The 1999 Presidential Summit held between the private sector and the Government, led by none other than President Bharrat Jagdeo himself, is evidence of Government's conscientious efforts to boost the private sector. This is consistent with business incentives such as tax exemptions for manufacturing and industrial activities and the removal of withholding taxes on dividends.
Government has also fostered the establishment of several new industrial estates and exclusive economic zones, one of which is Linden.
It is noteworthy that the financial management of private companies is totally outside the ambit of any Government's control. Government's input into the management of companies comes in the form of the Companies Act.
The mere fact that Ming himself is operating a viable company refutes his own claim that Government is responsible for poor financial management practices by individual companies.
In fact, many companies in crisis outlined by Ming received significant Government support and concessions in efforts to make them viable again. Duty free concessions and tax write offs are just two of the measures undertaken by Government to assist those companies. Companies in distress have nothing to do with Government's policy.
It is a reality that the global environment is not entirely conducive to business, but good financial practices will suffice. With escalating tensions in both the middle and Far East, and in the face of war that has prolonged beyond many expectations, the world market for oil has increased dramatically in the second half of the year.
In addition, equity markets in developed countries ended 2002 in an ultra-cautious mood, having been severely wounded by billion dollar losses in market capitalization as a result of a series of high profile corporate scandals and failures.
Enron and WorldCom are two prime examples of such occurrences. This is coupled with rapid contraction in previously booming sectors, which reduced consumer confidence globally, contracting world demand, depressed commodity prices for many developing countries' exports and reduced investment, even in the strongest of economies.
Two thousand and two, in the United States, home of the world's largest economy, saw record levels of financial distress, with some 1.58 million individuals and companies, filing for bankruptcy, a 5.7 percent increase from the previous year.
Germany has also not escaped the pressures of the international environment. In 2002, the German economy grew by a mere 0.2 percent as compared with a 0.6 percent growth the previous year. A recent business survey revealed that the German business confidence is at its lowest since 1993, with 40 percent of polled businesses reporting a negative outlook for 2003, relative to 2002. In Japan, there is no difference.
Coming closer to home, a World Bank Report on Brazil has shown that 29 percent of that country's population lives in extreme poverty.
Companies in Guyana will be hard hit by those global realities but shrewd financial practices could see them through, the official opined. Many of the companies cited by Ming were given significant financial concessions since their start-up.
Ming's reference to the perceived paucity of investments can be dispelled with GO-INVEST's facilitation of a projected figure of $17.9B in new investments in 2003. This is a significant increase over a final figure of $11.2B in 2002, an achievement hailed by the United States Agency for International Development (USAID)-funded Valerie Voss Report.
That report, in the form of a client satisfaction survey, stated that 97 percent of Go-Invest clients are satisfied with concessions received and service given by the Agency.
This is complemented by Guyana's ascension to 17th place on the World Investment Report by the United Nations Conference on Trade and Development (UNCTAD), a jump of 41 places, from 58th previously.
Ming's argument bears no value if the macro economic situation is taken into account. In fact, his figure of businesses in distress is merely 8 - 9percent of new ones that have been registered in the same period to which he refers. Or, putting it the other way, there has been over 90 percent more businesses registered than those that are depressed.
This shows that companies are not afraid to launch out into new investments in Guyana. More over, there are more companies in existence today than there ever was in Guyana's history.