Government taking urgent steps to stimulate business

IN the World Bank’s 2020 “Ease of Doing Business” report, Guyana ranked 134th out of 190 countries. This standing, which has seen relatively little improvement over the past few years, has long been a sign of deeper a problem that has plagued investors and entrepreneurs: it’s hard to start or maintain a business in Guyana

But the government is taking steps to change that by lowering barriers to entry and investing in infrastructure that will benefit businesses long-term. As discussed last week, the new local content policy includes a number of hints at the government’s reform priorities that, if enacted, would make a real difference for businesses in Guyana.

The World Bank’s ease of doing business report accounts for 11 separate indicators that measure key inputs to successful businesses. These include permitting, infrastructure, property registration and financing. The higher the score, the easier it is for people to start, build and operate companies. On a regional level, Guyana currently lags well behind Trinidad and Tobago and Jamaica.

According to the World Bank’s index, Guyana currently scores lowest in a few specific sectors—infrastructure and access to reliable and inexpensive electricity. High barriers to entry for companies trying to access credit, obtain construction permits and register commercial properties also leave businesses unable to grow. All of these barriers cost time, jobs and revenues.

Increased access to credit and financing through banking reform could be one area where policy changes could have significant, positive impacts on new businesses. The government is already working on making these changes a reality through policies proposed in the new Local Content Plan, alongside items like industrial targets that led to debate during the initial stakeholder engagement. Banking reforms sketched out in this plan could prove highly beneficial to help businesses emerge and grow in Guyana, but more details will be needed.

Lowering taxes on businesses and reducing barriers to owning and registering property through permits for construction and expansion could also make doing business in Guyana significantly easier, according to the World Bank’s findings.

In addition to the need for updated financing policy and reduced barriers, infrastructure investment is greatly needed in Guyana. Cost and reliability of electricity is one of the biggest challenges cited by the World Bank. Guyana’s prices are some of the highest in a region — a common complaint heard from businesses currently operating in the country. Guyana currently has few energy-intensive industries in large part because the cost would be too prohibitive.

The World Bank also highlighted a broader lack of public infrastructure like roads and bridges that make moving goods across borders with Suriname and Brazil costly and slow.

While these challenges seem significant, the government has the opportunity to increase efforts to develop infrastructure and create long-term change for Guyana. The government is currently working to negotiate the start of a gas-to-power project, which could significantly reduce energy costs and improve reliability. Cheaper and more consistent power could spark a major expansion into more energy- intensive industries and lower costs more broadly for everyone.

The government is also planning a number of public works projects, funded largely by oil revenues, including the construction of a bridge to Suriname and modernised road systems. Should current higher oil prices be sustained, these projects are even more feasible.

As discussed last week, it’s more critical than ever to embrace the kinds of reforms that can support organic, sustainable growth for Guyana’s economy. In contrast to policies that could make the country over-reliant on one industry, broader reforms are important to make doing business easier and open up new opportunities across the entire economy.

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