IN THE prevailing global dispensation, foreign direct investments (FDI) are a major pillar in funding economic ventures and projects.
Most countries are therefore working towards implementing policies and strategies to attract such investments, particularly those like Guyana which have an abundance of untapped natural resources. The United Nations Conference on Trade and Development (UNCTAD) notes that international investment agreements (IIAs) are a key instrument in the strategies of most countries, in particular developing countries, to attract foreign investment.
Accordingly, policymakers need to know what role these treaties actually play and to what extent they can contribute to receiving more investments from abroad.
Equally important is the question of whether the impact of IIAs on investment inflows also depends on the specific type of investment treaty concluded.
A better understanding can help prepare the ground for more effective systemic host country policies that give IIAs their proper place in an overall strategy of attracting foreign investment and making it work for development.
The World Bank had projected that FDI into developing countries would increase by 17 per cent in 2010. However, with the onset of the global financial crisis it is uncertain if this projection was achieved.
Guyana, despite the financial crisis, has not been seriously affected and has attracted a relatively high level of investments, both foreign and local, in many sectors, including mining, tourism, agriculture, construction, forestry, commerce and services such as telecommunications and Information Technology (IT).
The World Bank has noted that economic recovery in Guyana, since a 2005 flood-related contraction, was buoyed by increases in remittances and foreign direct investments in the sugar and rice industries as well as the mining sector.
Last year was historic for the Guyana Office for Investment (Go-Invest) because, for the first time it facilitated more than 300 investment agreements and dealt with 681 companies.
A total of 228 companies, both foreign and local, were given concessions, waivers of duties and taxes and other incentives with the collaborative intervention of Go-Invest and the Guyana Revenue Authority (GRA).
The inflow of investments significantly helped economic diversification which is crucial for making Guyana’s economy sustainable and robust so that it can withstand any global fluctuations without significant decline in the country’s economic activities.
Head of the Go-Invest, Geoff Da Silva, confirmed this achievement in a review of 2010, noting that the Guyanese economy has diversified considerably in terms of GDP over the last four to five years.
“If you take the traditional sectors, rice, sugar, fisheries, timber and gold — and those are considerable sectors in the Guyanese economy — they now comprise about 39 percent of total GDP; actually about 31 percent of GDP; (while) the non-traditional is nearly 70 percent of GDP.
“The Guyanese economy is still growing and we have not experienced a decline in the whole country and this shows that the diversity is happening,” Mr. Da Silva said.
Guyana has focused heavily on promoting a mixture of local and foreign investments of various magnitudes as this is the key to developing a sustainable economy.
Go-invest said that last year Go-Invest dealt with about 470 projects which indicate an expansion in investments.
But there are still continuous unsubstantiated statements from certain quarters about economic stagnation and no investment.
However, it is clear from the statistics and facts that this is not true and the only conclusion that could be drawn is that this is a poor attempt by opponents of the government to downplay the achievements under its stewardship.