–Guyana records highest foreign direct investments in the Caribbean
–ECLAC says country accounted for 50 per cent of inflows to the region in 2021
GUYANA has positioned itself, for the first time, as the leading foreign direct investment (FDI) destination in the Caribbean, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
According to ECLAC, in its recent report on Foreign Direct Investment in Latin America and the Caribbean, FDI inflows into the Caribbean in 2021 totalled US$8.9 billion, a 19.4 per cent increase when juxtaposed with 2020.
“[This was] accounted for mainly by capital inflows in Guyana’s hydrocarbon sector, and increased FDI in the Dominican Republic,” the Commission said, adding: “Guyana has positioned itself for the first time as the leading FDI destination in the sub-region, accounting for 50 per cent of inflows, followed by the Dominican Republic at 35 per cent.”
Guyana, which has been showing exponential growth in FDI inflows since 2018, consolidated its position as the leading recipient of inward investment in the Caribbean in 2021, reporting an inflow of US$4.4 billion, some 116 per cent more than in 2020.
According to the Bank of Guyana, this growth was mainly due to the hydrocarbon sector and the oil exploration project in the Liza field.
The sector is expected to continue to attract FDI in the coming years. One of the main players in oil production in the country, ExxonMobil of the United States, announced that it planned a US$10 billion increase in its oil investment in the Stabroek Block off the Guyanese coast, which is to include six drilling centres and 26 production wells.
The dynamism of the hydrocarbon sector was also responsible for announcements in other related sectors.
“In 2021, new FDI projects worth US$180 million were announced, an increase of 397 per cent over 2020. The sector with the largest share was telecommunications, owing to an announcement by Digicel of a project to lay a submarine cable to provide the country with high-technology telephone and Internet services, with an estimated value of US$137 million.
“The project, however, is associated with oil-and-gas exploration in the area, as the intention is to connect oil platforms off the coast of Guyana with other territories and countries in the region, such as French Guiana, Suriname and Trinidad and Tobago,” ECLAC said.
It was reported, however, that even as the economy continues to grow, President Dr. Irfaan Ali, and by extension the government, is committed to having Guyanese benefit from the investment opportunities that are available locally.
As part of this commitment, the government, in December 2021, introduced the Local Content Act.
The law identifies 40 sectors or services, and requires oil firms and their subcontractors to purchase a minimum percentage of their total expenditure on those services from Guyanese vendors.
As a result, the Act creates an enabling environment for the growth and expansion of Guyanese businesses, as well as business and job opportunities for Guyanese nationals.
“When we were considering the Local Content Act, one of the recurring issues that arose was the question of ensuring that Guyanese businesses are not in a disadvantageous position relative to their international counterparts in competing for contracts with the oil-and-gas sector.
“This could arise, for example, where the sector is procuring a service, and the international companies tendering to supply that service enjoy a particular tax treatment on the importation of their capital equipment to provide that service that Guyanese companies might not enjoy,” Senior Minister in the Office of the President with responsibility for Finance Dr. Ashni Singh said during his presentation of Budget 2022 to the National Assembly on January 26.
He went on to say that in the interest of ensuring that Guyanese businesses could compete successfully under the new local content framework, the government will take steps, wherever practicable, to minimise disparities arising from the tax system that will disadvantage Guyanese businesses.