THE WOOD PRODUCTS SECTOR IS GROWING AND DIVERSIFYING
Guyana Chronicle, 3 August 2007
From January 2006 to June 2007 63 Investment Projects 34 Local
Investors and 29 Foreign Investors G$8,882,000,000 (US$44,410,000)
Invested1,346 New Direct Jobs
Foreign Exchange Earnings
In 2005 = US$48 Million
In 2006 = US$62 million
In 2007 = US$72 Million
This article is in response to Mr. Peter Ramsaroop’s column in the
Stabroek Business of Friday July 27, 2007 about the business climate in
Guyana, especially in the wood products sector.
Mr. Ramsaroop got it wrong again – on two counts.
Guyana is open for business and it is developing a competitive business
environment.
But there is also a lot of room for improvements. That is why the
Government of Guyana and the Private Sector Commission, supported by
the Inter-American Development Bank (IDB), are implementing the
National Competitiveness Strategy.
THE 5-YEAR NATIONAL COMPETITIVENESS STRATEGY
The Action Plan for Enhancing Guyana’s Competitiveness has two hundred
and forty (240) main tasks that have to be implemented by public and
private sector agencies.
Areas to be improved include:
The Macro-economic Framework
Trade Policies
Competition and Consumer Protection Policies
Taxation Policies (including a review of incentives for attracting
investment)
Investment Promotion and Facilitation (including the expansion of the
mandate for GO-Invest)
Export Promotion and Facilitation
Access to Financing (including the encouragement of an active and
competitive Banking Marketplace and a Credit Bureau)
Upgrading of Human Resources and Addressing the Brain Drain (including
technical and vocational training)
Growth of Business Development Services
Infrastructure Development (roads, bridges, air transport,
telecommunications, the generation and distribution of electricity,
maritime services, water services, a deep water berth in Berbice)
Bureaucratic Procedures (land and property matters, business
registration, IT development of government services)
Judicial Reform for the Efficient Resolution of Commercial Disputes
(the Commercial Court and the Alternative Dispute Resolution Mechanism)
Tasks to Enhance Competitiveness in the following Sectors:
Tourism, Manufacturing, Non-Traditional Agriculture, Forestry,
Information and Communications Technology (ICT), Fisheries, Mining,
Sugar and Rice
Special Tasks to Target Strategic Sub-Sectors
Aquaculture; fruits, vegetables and beef; contract manufacturing
(including garments); Services Exports (including BPO – Business
Processes Outsourcing); Organic Food Products; Business Tourism and
Forest Products.
Of the 240 tasks, thirteen have been done, one hundred and eleven are
being implemented on an ongoing basis and one hundred and sixteen are
to be done.
Mr. Ramsaroop asserts that his weekly column is about exploring
initiatives “to improve the business climate and make Guyana Open for
Business”.
Yet, he has dismissed the main priority of the Government and the
Private Sector – the National Competitiveness Strategy.
Peter, you cannot fool us. In your column, you use text-book solutions
to denigrate the serious initiatives of the government and you are one
of the major proponents of negativity – all in the pursuit of your
political agenda and ego.
Now I understand what Editor-in-Chief of the Stabroek News Mr. David De
Caires meant, when he told me in a conversation about negativity, that
this is “a game”. I will illustrate that integrity, honesty and
sincerity are not part of the “negativity game”.
Instead of his ‘broken record’ of negativities, Peter should be
critically pointing out the strengths and opportunities in the Guyanese
economy and the weaknesses and threats (the SWOT analysis). This is the
international best practice that a credible business advisor must
employ if their advice is to be worthwhile.
Is Ramsaroop shying away from a SWOT analysis because he would have to
admit that the Government and many private sector companies are
implementing numerous positive initiatives? The IMF, the World Bank and
the IDB talk about the positives and the challenges. What about you,
Peter?
GO-Invest, with assistance from the USAID/GTIS programme, produced a
new Investment Guide for investors titled “Doing Business in Guyana”.
It points out the strengths, weaknesses, opportunities and threats in
the Guyanese economy. {See our website (230 visitors a day) for the
Guide www.goinvest.gov.gy or call us at 225-0653, 227-0653 to get a
printed copy}.
With regards to Mr. Ramsaroop’s “major US investor” and his comments on
the level of foreign and domestic investment in the wood products
sector, it is clear that he has a deep ignorance of what is happening.
Peter, why did you not ask for the current public information on the
wood products sector from the Guyana Forestry Commission, the new
Forest Products Marketing Council, the Guyana Office for Investment,
the Bureau of Statistics and the Bank of Guyana? As our old folks say,
“make sure bettah than cocksure”.
A good business advisor must possess a deep knowledge of the sectors if
his/her advice is to make a difference for any business to compete
effectively.
Peter, do you not know that foreign exchange earnings (US$) in the wood
products sector has increased fifty percent (50%) in the last two
years? Most importantly, a significant and growing percentage of the
US$ earnings are coming from the export of finished products.
Before I provide an overview of investment in the forest products
sector, I do not want to avoid the issue of Peter’s “major US
investor”.
In fact, this is a new company with no proven track record. A few years
ago, the company informed GO-Invest and the Guyana Forestry Commission
(GFC) that they had done regular business in Guyana, over the last
seven years, as a buyer of wood products. When we asked for the names
of the companies that they were buying the wood products from, we were
told by this “major US investor” that, actually, they are occasional
buyers. We checked with companies in the sector. This US buyer/investor
is not well known. [Red lights started to flash but we gave them the
benefit of the doubt.]
The company in question has had unbelievable access to the Prime
Minister, Ministers and Agencies, including a meeting with the Board of
Directors of the Guyana Forestry Commission, at the company’s request.
Many Guyanese wood companies attended that meeting. Concerns were
raised about the feasibility of the project.
The original business proposal, submitted by the company, outlined a
plan to build a modern state-of-the-art sawmill in the Linden area.
Logs for processing would be bought from the large companies as well as
small chain-saw companies and the community groups that have small
forest concessions. The business plan projected that, after a few years
of operation, the company would apply for a forest concession.
The Government enthusiastically supported the project and began to
facilitate (1) the issuance of a land lease to construct the sawmill in
the Linden area, and (2) the granting of fiscal concessions (exemption
of Customs Duty and Taxes), including corporate tax breaks.
Then, the company informed us that they could not move ahead with the
project unless they got a large forest concession, between 500,000
acres and 1,000,000 acres. [Red lights flashed again but once more we
gave them the benefit of the doubt and facilitated their request for a
forest concession].
Peter is wrong when he stated in his column that the company was
“initially approved for a forest concession”. The company had only
applied for a concession, after their change to the original plan. The
Guyana Forestry Commission then had begun the due diligence on the
company.
During that process, the company raised a major concern. They believed
that the confidentiality of their financial records would not be
protected. Correctly, they did not want their finances to be shared
with potential competitors, especially the logging companies.
GO-Invest facilitated a meeting for the company to discuss their
concern with the Chairman of the GFC Board and the Commissioner of
Forests. The company was assured, in writing, that their financial
records would not be shared with representatives of the logging
companies on the GFC Board. Only senior technical staff at the GFC
would review the financial information and then they would make a
report to the GFC Board.
Finally, what was submitted by the company was not impressive.
This potential investor then claimed that they had “major investors”
who were backing their project.
On numerous occasions, GO-Invest communicated to the company that they
should arrange for their “major investors” to visit Guyana. [This is
what happens with other projects - all the time. Every month, in all
the major sectors, there are inward missions of potential investors to
Guyana].
To this day, we have not been able to meet or communicate (by e-mail or
phone) with that company’s “major investors”.
By the way, the Barama Company is presently operating a modern sawmill
at Buckhall and, by 2008, there will be at least four more modern mills
(including veneer and flooring plants) operating in Guyana.
Mr. Ramsaroop, in his column of July 27th, tells the US Ambassador that
American investors should be informed about the bad business climate in
Guyana “so as not to have them waste their resources”.
Actually, the Foreign Embassies in Guyana correctly advise investors
that Guyana is serious about due process and due diligence. We are not
to be perceived as a “backwater banana republic”. Similarly, we are not
the 127th most corrupt country in the world, according to the
ridiculous survey done by Transparency International. That survey was
based on the perceptions of four (yes 4) individuals and they were all
members of the private sector! Is Transparency International not
interested in hearing from leading officials in the public sector about
corruption? We need a solid analysis on corruption in Guyana that both
the private and public sectors could use to effectively tackle this
threat to Guyana’s development.
AN OVERVIEW OF INVESTMENT IN THE WOOD PRODUCTS SECTOR
It has been a very good year and a half!
From January 2006 to June 2007, the Guyana Office for Investment
(GO-Invest), the Guyana Forestry Commission and the Forest Products
Marketing Council promoted and facilitated sixty-three investment
projects in the Wood Products Sector.
Thirty-four are local investors. Twenty-two are foreign investors.
Seven e joint ventures.
FDI (Foreign Direct Investment – foreign investors) and JVs (Joint
Ventures – Guyanese and foreign investors) amounted to thirty-six
million, six hundred and eighty-five thousand United States Dollars –
that is eighty-three percent of the total forty-four million, four
hundred and ten thousand United States Dollars (US$44.410) invested in
the sector. Over one thousand three hundred (1,300) new direct jobs
were created.
Most of the new FDI and JV projects are or will be manufacturing
finished products (including from the lesser used species) – shingles,
flooring, mouldings, decking and dimensional kiln-dried lumber.
The twenty-nine foreign investors (included in that number are six
Overseas Guyanese) come from the United States of America, Holland,
Canada, Malaysia, China, Trinidad and Tobago, Brazil and the United
Kingdom.
Mr. Ramsaroop please note that there are seven FDI and JV companies,
from the United States, - a carbon credits and reforestation project; a
forest conservation project; a Paulownia Tree project; two small
sawmills with Overseas Guyanese; another small sawmill with an American
investor; and a shingles factory.
Of equal importance, the thirty-four domestic investors are
manufacturing finished products , increasingly from the lesser used
species, for the Guyanese and export markets – doors, outdoor
furniture, flooring, dressed and kiln-dried lumber, office furniture,
shingles, pre-fabricated wooden homes, spacers, bedroom furniture,
nibbi furniture, crane mats, joinery lumber and mouldings.
A very exciting new trend in this sector is the establishment of
offices in Guyana by internationally renowned companies that are buying
downstream tropical hardwood products (including from the lesser used
species) from Guyanese companies. They are McCorry Limited (from
Malaysia/United Kingdom), DLH Nordisk (from Denmark), KM Trading (from
Venezuela), ATC (from Holland) and Totem Forest Products (from the
United States). (Yes Mr. Ramsaroop, this is a real buyer from the
United States).
Forty of the projects are expansions/re-investments and the other
twenty-three {36%} are new investments. This is better than the
international average where, usually, twenty percent of the total
annual number of investment projects are new.
Forty-seven projects are presently operating. Fourteen are in the
“Pipeline”/pre-operation phase. Two small projects have stopped their
operations.
Fourteen local companies and ten FDI (Foreign Direct Investment) and JV
(Joint Venture) companies applied for and were granted, through
Investment Agreements (IAs), significant fiscal concessions (waivers of
Customs Duty, Value Added Tax and Excise Tax on equipment, machinery
and vehicles) amounting to hundreds of millions of Guyana dollars.
The Investment Agreements (IAs) for another nine companies are being
processed. Thirty companies did not apply for fiscal concessions
because they were seeking land or they are buyer companies.
In terms of size, 5 are large projects, 22 are medium, 35 are small and
one is micro.
In terms of geographic locations, 24 are in Region Ten, 20 are in
Region Four, 3 are in Region Three, 3 are in Region Nine, 2 are in
Region One, 2 are in Region Two, 2 in Region Six, one is in Region Five
and one in Region Seven. Five Companies are operating in more than one
Region.
The full details on the 63 projects, including the names of the
companies, will be published shortly in newspapers.
At a later date, I will outline the assistance that GO-Invest rendered
to Mr. Ramsaroop. So far, all of his highly-touted projects have,
literally, “not gotten off the ground”. They never went beyond the
pre-operation phase.
However, if we only look at the wood products sector, Overseas Guyanese
from Canada (Mr. Grenville, Mr. Jaigobin, Mr. Jaikarran and Mr.
Persaud); from the United States (Mr. Ameerally, Mr. Hamilton, Mr.
Moonasar and Mr De France); and from the United Kingdom (Mr. London)
are operating and, in some cases, expanding their businesses. There are
other Overseas Guyanese who are operating and expanding their
businesses in the following sectors: Information and Communications
Technology, Mining, Tourism, Light Manufacturing, Services and
Agro-processing.
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