Bonds an attractive instrument - Khan
- Hopes Laparkan will blaze new trails
Stabroek News
February 27, 2004
Chairman of Laparkan Holdings Limited (LHL) Glen Khan views corporate bonds as an "attractive instrument" to raise funds and feels many businesses today could be viable to generate economic activities and employment at a rate of interest of 10% instead of the higher interest rates which loans attract.
LHL is seeking to raise $2.4 billion in a private placement but Khan is precluded from discussing that issue and was not in a position to discuss the financial position of the company or whether he had any plans of taking LHL public. Khan owns 100% of the group.
Khan also believes that the government should have allowed a gestation period of at least five years before it imposed higher withholding taxes on income from bonds for commercial banks. This, he said, would have facilitated the development of an active and vibrant bond market (trading in bonds on the stock exchange). The government from September 1, 2003, raised the withholding tax on bonds' interest for commercial banks from 20% to 45% to block the loophole being used by banks to offer cheaper credit to businesses. Khan says he understands the government's need for acting as it did, but felt the move could have been delayed.
However, Khan still expects the banks to take part in the private placement and says LHL successfully raised $400M in a bond issue three years ago, which was embraced by the financial community.
"We see this (bond issues) as the wave for the future," Khan said.
Khan was willing to talk in general terms about the future direction of the company. He said among new development plans were the cement bulk storage and bagging plant operations and the exclusive contract with the Chinese contractors for the Skeldon factory expansion project by Guysuco. The latter is to fabricate and transport material as well as to provide product support services during the operational stage.
On the international side, LHL continues to expand into new markets and plans to get into bigger markets in Central and South America over the next five years and to capitalise on relationships in the Far East, Europe and Africa.
The international service covers ocean and air cargo, private mailbox, express courier service, money transfer and customs brokerage. The company, Khan says, is the largest personal effects shipper in Guyana and the Caribbean markets and is the leading commercial shipper to various Caribbean markets including Guyana.
LHL, through its foreign arm, is the agent for Tropical Shipping Line, the largest line servicing the Caribbean from West Palm Beach, Florida and offers a fully integrated cargo service. Khan says the firm also recently pioneered the less than container load service to certain Caribbean markets to support its hub in Trinidad. He said the plan is to expand to more destinations and will add refrigeration ocean cargo service to this as well.
Plans on the air cargo scene include having an all cargo aircraft to service Caribbean markets on a daily basis as well as part of South America including Brazil, French Guiana and Suriname.
"We are in an advanced state of discussions with the Civil Aviation Authority and, once approval is given, this process will materialise," Khan says. The company also wants to expand its airport warehouse facility and install refrigeration to work with farming, fishing and beef producers to provide a medium for the exports.
As to the money transfer service, Khan says the firm is in discussions with a major player to jointly develop this business, including the expansion of the network of agents in the US and Canadian markets and the expansion of its distribution network in Guyana. It also hopes to focus on distribution arrangements in the Caribbean markets. Khan says the firm intends to be the leading money transfer service in Guyana.
As for Fogarty's, LHL's department store, Khan says the interior will be reconfigured and the cafeteria in the food court rehashed. Supplementary services including photography and a jewellery outlet will be added.
Additionally, Khan says the wharf operation of GNIC is being developed to make that dock the premier shipping company in Guyana. GNIC has also developed a good relationship with Chinese manufactures/exporters for engineering products and in-house programmes have seen the production of cane punts, irrigation pumps and drives for Guysuco, fuel tanks and reservoirs for Guyoil, reinforced concrete columns for the ongoing Mahaica-Rosignol bridges project and potable water well, pumping systems and accessories for the Guyana Water Inc under the Low Income Settlement project.
GNIC also intends to reduce the cost of inland transport by developing a barging programme using Georgetown as the hub for bagged cement, lumber, rice, sugar, sea foods and other products on a regular basis to Berbice, Linden and Essequibo.
"In essence, we are putting together a low cost and efficient logistics service that will help to simulate the development of our resources not only on the coast but in the hinterland, thus bringing considerable cost savings to the economy." Khan says, he sees substantial export revenue capabilities for inter-modal transport logistics for containerised cargo between the Georgetown harbour and the northern states of Brazil on the completion of the Lethem road and says GNIC intends to pursue this.
And commenting on the future of Guyana, Khan says the development of any country depends on the quality of its human resources, with education the key. Guyanese not only have to be provided with a vision for the future but tangible opportunities for employment and business, he said.
He is confident that with the support of all stakeholders LHL will blaze new trails, increase opportunities and help to improve the quality of Guyanese life.