Survey finds optimism over global recovery, LCDS
THE 2010 Guyana Business Outlook Survey, made public yesterday, said the prospects for global economic recovery and the Low Carbon Development Strategy (LCDS) drew much optimism from the business community.

Prepared by the accounting firm Ram and McRae, it surveyed 59 entities in the business community with operations in all 10 Administrative Regions in the country.

The annual study, begun in 1995, was done electronically, using specialised web-based software, which also facilitated the analysis of responses to a questionnaire with 36 questions.

The results were released at a media briefing in the Ram and McRae, Lot 157 Waterloo Street, Georgetown office.

Partner in the firm, Mr. Rakesh Latchana pointed out that Government won overwhelming support for its pursuit of the LCDS.

He noted that respondents were asked their view on Government’s handling of 17 issues which arose or were considered critical in 2009 and the new Anti-Money Laundering and Counter Terrorism Act also received support.

However, Latchana said the Government’s handling of the CLICO failure and the continuation of the radio monopoly were tied for the highest levels of disagreement.

He explained that, in addition to those positions, the business community provided views on operations in 2010 against the backdrop of Guyana’s G$84 billion domestic debt.

“Locally, the Minister of Finance (Dr. Ashni Singh) recently presented his 2009 Mid-Year Report, in which he reported decline in all the major sectors of the economy and, consequently, overall contraction by some 1.4 per cent. From his report, the weak absorptive capacity of the economy and the ever increasing level of debt are causes for concern,” Latchana said.

KEY SECTORS
He said the Finance Minister’s compilation also underscored the fact that key sectors could only spend 34.6 per cent of budgetary allocations while the stock of outstanding external public and public guaranteed debt stands at US$862M.

“This,” Latchana said, “is the backdrop against which the business community looked forward to 2010 as they completed the questionnaire.”

The responses to the same reflected an improvement in confidence levels as compared to one year ago but also saw “slightly over half” of the respondents unsure of improvements in the economy in 2010, he found.

Latchana said: “Respondents from the manufacturing sector reported more confidence than non-manufacturing respondents and, similarly, exporters reported more confidence than non-exporters.”

He noted that the service sector displayed the lowest levels of confidence. overall.

Relative to projected increasing turnover, Latchana said some 29 per cent of the respondents are reporting that performance was worse than expected while 61 per cent are in line with expectations and 10 per cent reported performance exceeding expectations.

“In the 2009 Business Outlook Survey, 66 per cent of respondents had projected increase in turnover for that year and 64 per cent projected increase in profitability,” he recalled.

Additionally, Latchana said 32 per cent of the respondents reported a decline in the workforce while 26 per cent reported an increase.

OVERWHELMING MARGIN
On a different note, he said that, by an overwhelming margin, the issue considered as having the most impact on business operations is consumer spending power.

This was followed by the price of fuel, finding new customers/markets, direct tax rates and electricity supply and rates.

“Inflation and crime, although driving pessimism, were not ranked in the top five issues to affect respondents’ businesses in 2010,” he said.

Latchana highlighted the issues identified as having the least impact as availability of financing, technology, corruption in Government departments, prospects for international recovery and the global financial crisis.

According to him, 46 per cent of the respondents project no change in the level of their operations while 54 per cent forecast an increase and none reported a decrease.

Latchana said: “The principal reason given by those not expecting a change in their level of operations were the performance of the economy, the global financial crises and tax policies of the Government. The principal strategies for those expecting an increase are new product and services development, upgrading of technology and improvements to existing products.”

In light of no expectations for changes in operation, he said 83 per cent of respondents expect turnover to increase in 2010 while 76 per cent expect profitability to be better.

DECREASES
Latchana said nine and seven per cent, respectively, reported decreases in turnover and profitability.

He added that, similar to the results of the 2009 survey, 56 per cent of the respondents do not plan to raise any capital in 2010.

“For those who plan to raise capital, the main reasons given were to embark on a capital expenditure or expansion programmes; to fund new products and services and to fund current operations such as working capital and to expand into new geographic markets,” Latchana said.

Switching the focus to the public sector and Government efforts, the study found respondents calling for actions, foremostly, for acceleration of tax reform.

Other areas of demanded action include dealing with corruption and tackling crime, while removal of the link between the Guyana and U.S. dollar was ranked the lowest.

Latchana said the survey, for the first time, asked respondents to rate 21 public sector entities which affect their business operations, with ratings ranging from poor or ineffective to excellent or very effective.

They were also asked to assess several private sector entities.

Reflecting of the areas covered by the report, Latchana said: “The survey was conducted in a year which began with the world confronted by fear of another Great Depression. It ends with attention focused on the climate change summit taking place in Copenhagen. Once the decisions have been made, the business community will be looking forward to the Budget in 2010.”

Copies of the report have been circulated to various stakeholders in the business community.

Chartered accountants, Ram and McRae provide a full range of integrated services which include accounting, audit and review engagements, taxation, payroll, computer services, business planning, business valuation, corporate services and personnel and management consultancy.