Guyana grants $$B in concessions, but unable to track benefits

Jul 30, 2014 News

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Billions of dollars in concessions have been granted over the last two decades, but there are very few mechanisms in place by the various agencies and ministries to gauge how the country has been benefitting.

Keith Burrowes, Head of the Guyana Office for Investment (GO-Invest), the one-stop Government agency to help facilitate a smooth process for investors, admitted that the entity is guilty of failing to document and analyze the direct and indirect benefits. He assured that steps are now being taken to rectify this situation.
Responding to questions, Burrowes said that it is important for investment agencies to go beyond the basic tracing of taxes paid and examine how companies, both foreign and local, contribute to the Gross Domestic Product (GDP) when contrasted against the concessions and tax breaks given. GDP is like a price tag on a country’s output, and it measures the size of the economy.
Burrowes explained that a concession is a preferential allowance or rate given by an organization. While various ministries would grant concessions, the government investment agency acts as an entity which makes a recommendation on the part of the interested company for certain tax breaks and other concessions that would be needed for the business to start.
It is the Guyana Revenue Authority that would have to approve the recommendation for the company to get certain tax breaks and other concessions.
Once it is approved, the agreement between GO-Invest and the company is inked.
He said that it is important to keep in mind that GO-Invest would normally examine the company’s proposal and ensure that it is economically viable before making the recommendation in the first place.
When asked if the total value of the number of concessions granted to the interested company is even calculated, Burrowes answered in the negative. He reassured that this is one area that requires attention.
In the case of GO-Invest, it may very well be because of a lack of resources, including human personnel. Benefits must go beyond the realm of taxes paid and employment.
“What is their actual contribution to our Gross Domestic Product? That is the big question,” said Burrowes.
GO-Invest has started the process to conduct a comprehensive analysis on the concessions granted and the benefits received.
Member of Parliament and Shadow Finance Minister for A Partnership For National Unity (APNU), Carl Greenidge, argued that it is the responsibility of GO-Invest to monitor the benefits to Guyana versus the billions in concessions granted.
“After all, they are making the recommendation for the company to receive the concessions, so it is only logical and acceptable that they at least track the benefits Guyana is getting, both in a direct and indirect manner,” the MP said.
He was highly critical of the fact that there are no proper mechanisms in place, even though GO-Invest was established since 1994.
The GO-Invest head himself says that the Ministries, too, should be held accountable for failing to ensure that this is done as they would be directly involved in the granting of concessions for certain investments.

Burrowes pointed to the Ministry of Natural Resources and the Environment, which is in charge of the mining and logging sectors, saying that it grants concessions for investments to some of Guyana’s richest sectors and therefore should be able to ascertain that the country benefits.
Commissioner of the Guyana Geology and Mines Commission, Rickford Vieira, also admitted that the Commission, since its inception, does not immediately have strong systems to trace the benefits against the concessions granted.
However, while it is not done in terms of the indirect and direct benefits, GGMC still has the capability of determining the benefits for recent years, if the need arises. It will be an exercise that requires a lot of “manpower”, something that GGMC cannot afford at the moment.
Greenidge had made the point that the Finance Minister, Dr. Ashni Singh, is supposed to show the benefits alongside the concessions granted in an organized manner but it seems for the moment, that an ad hoc approach to such important statistics is taken.
When this publication made contact with the Minister within the Ministry of Finance, Bishop Juan Edghill, to ascertain whether the Ministry keeps a record of such statistics, he said, “I would refer you to the Government’s Investment Agency which would have that information and is mandated to do such.”
Some of the concessions granted would include tax and fuel breaks, duty free concessions on vehicles, spare parts and even on building materials.

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