President urges business community to remain confident in Guyana’s future

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PRESIDENT Bharrat Jagdeo has expressed the view that while costs of doing business in Guyana have come down significantly over the years, they are still too high, and he emphasised his Government’s commitment to ensure that these costs are further reduced. He also implored the business community to remain confident in the future that Guyana is forging. He was speaking at the opening ceremony of the National Competitiveness Summit, held yesterday at the Guyana International Conference Centre.
“The cost of doing business in Guyana has been another major issue and we have been unable to address this fully. Our private sector still finds it expensive to do business here. I will look at three areas. The cost of capital, even though this has come down, it is still too high,” he said.
“The second thing is electricity. While we have intervened aggressively through large sums of money to replace the capital stock of the company and to keep prices stable during upswing in prices of oil, the long term solution has to be different and hence the hydro power,” he said.

“I can assure you that work is being pursued vigorously…don’t follow the headlines,” the President said. Speaking about the revelations of higher prices for the hydro project, Mr. Jagdeo said that the prices now being revealed are what the cost was at the beginning of the project.
The third issue he said was the cost of bandwidth and the liberalisation of the telecommunications sector as the third important inhibitor to doing business in Guyana.
He spoke of investments in the fibre-optic. “I think that if we focus on these three areas and predictability surrounding decisions of the court, I think we can see a significant boost in the environment in which we do business,” he said.
The President challenged the private sector to pay more attention to the governance of their affairs.
“We have been trying to encourage more companies going public because public companies have to be more transparent in the conduct of their affairs but we have not been able to see major changes in this direction.
Even some of the public companies we have managed their affairs like private companies. In a modern environment, this cannot continue,” President Jagdeo posited.  “It’s not just good governance in Government but good corporate governance that is important to lend confidence to the system that we are trying to build in Guyana,” he said.

He asked the local private sector to remain open to capital from abroad and not to adopt a xenophobic stance against foreigners wishing to invest. “Some of the most negative positions on foreign investment come from the private sector,” he said.
The President also lashed out at the fact that Guyana scores poorly on indices whose credibility he questioned.

“You know my views on those indices. I think we all have a fetish for this sort of thing…to see where we stand. But if you look at the same two indices that were mentioned – Doing Business Guide and the Global Competitive Index – you will see some of the most dynamic economies in today’s world ranked significantly lower than some basket cases now. Let us be careful about indices and ranking ourselves based on things that often don’t have any relevance to what actually happens on the ground,” the President told the large gathering.
Mr. Jagdeo noted that on visits to the U.S., he had the opportunity to speak to a number of major CEOs from US companies. “So I asked them about these indices and some of them didn’t even know that they existed. They said that they never make investment decisions based on what the World Bank say, or some Global Competitive Index. They actually come to the country, do their due-diligence, examine the possibility of making money and they invest their resources,” he said.

“So whilst we have to be cognizant of an overall improvement, there are things that we need to work on that are part of these indices; we must never manage for these indices and let them become a fetish as if they are the goal. The goal is a more competitive Guyana,” he declared.
“Most of us will recognise that since the last time we met, the world has changed significantly and the environment within which we do business has changed even more.”

At that time, there was some enthusiasm regarding trade negotiations that were going on at the time. “We thought that, for the first time ever, we were going to have a round of trade negotiations that would be sympathetic to the developing world,” the President said.

STALLED TRADE NEGOTIATIONS

The President said that since the 1940s, in all of the negotiations that took place in the General Agreement on Tariffs and Trade (GATT) and in the World Trade Organisation, most of them served the interests of the developed world. They focused largely on industrial goods and cutting tariffs on industrial goods. We thought that, for the first time, this round would be our round. In fact it was branded the Doha Development Round. But what has happened since? Negotiations have stalled and I think that they have stalled largely because the industrialised world is still unprepared to take those decisions that would lead to greater prosperity in the developing world,” President Jagdeo said.

UNFAIR SUBSIDIES

He spoke of the subsidy to agriculture in the developed world being in the region of US$300 billion. “But whilst we get lectured about not violating the flow of the market, there is a huge movement to preserve these subsidies, and subsidies were an important part of those trade negotiations,” he said. “In the Caribbean itself, we have seen not only a stalling of the WTO negotiations but the negotiations of a new agreement which changed decades-old trade arrangements with Europe that were based on non-reciprocity. They have now been changed to a reciprocal trade agreement through the Economic Partnership Agreement. This has signalled an end to the period in which we will have preferential markets,” he said.
Even the negotiations ongoing with Canada in the region seem to be on the basis of reciprocity, President Jagdeo said.
The President decried what he referred to as the arrogance displayed by the International Financial Institutions about six years ago. He said that they gave the impression that they had the answer to everything and that they can give advice to every country which would result in that country’s prosperity.
“There has been a shattering of that confidence now because the global financial crisis caught everyone flat-footed and what we have today is not just one of the worst economic crises since the 1930s, but with very little hope of it changing anytime in the near future.
In fact, with the latest round of instability in Europe, it may worsen,” he said. “And this is the environment in which we will have to trade,” he said. The President explained that to counter high prices, the countries in crisis will lower their demand for products from the region, and despite how competitive Guyana eventually becomes, it means nothing without buyers for Guyana’s goods, since the local market is too small to be effective.
“We still have a global situation where demand has shrunk in the developed world, the markets are very volatile, we have so much money pumped into economies to avert crises that it would take a long time to work out the inflationary expectations that this may bring. So whatever strategy we build for the future will have to take into consideration these changes at the global level,” the President said.
With the impact of the crises on developing countries very real, the President said Government is committed to ensuring the country’s economy is managed responsibly. He said that, in terms of fiscal and monetary management, there has been tremendous progress in Guyana. “A lot of work has been done in strengthening the management capability of the agencies that are responsible for the management of our financial affairs,” he said, adding that these changes are lost on some media houses.
“We made it clear from the beginning that we wanted to send a strong signal to the private sector that the state will manage its resources well,” he said. “It is because we made it a priority that today our macro-economic environment is stable,” he said.

HIGH CONFIDENCE

The President said it is a testimony to the confidence in the investment climate that two months before elections the people are busy investing. “They have confidence that our politics have matured, that we have moved beyond zero sum game, that our elections will come and we will have a new president and things will continue to go on. And that is the way that it should be,” he said.