Corruption versus Investment

Oct 01, 2008 Peeping Tom

By Peter R. Ramsaroop, MBA

INTRODUCTION
The Guyana Government this week once again got the same marks as previous years: “The second most corrupt country in the Region” outside of Haiti. The spin doctors immediately tried to discredit the report. There are two sets of people that know about the corruption: the people that get the special contracts that put money in officials’ pockets and the officials that take the money.

The report is a deterrent to foreign investment in our nation. Most foreign companies will use this report as a benchmark in their investment strategy. This also affects Guyana’s place in the hunt for global capital and the jobs that may follow.

Instead of our nation becoming competitive in an increasingly fierce battle for foreign investment, sadly, instead it seems that all too often we are trying to keep an economy more akin to a mouse on IMF life-support. With all of our resources, how can this be? It seems that the government’s goal is to sustain poverty.

CORRUPTION
There are many examples of corruption all around us. Only certain persons enjoy the benefits of all the IDB and IMF money that is loaned or given to us for roads, bridges, healthcare and other activities.

Also, the excessive taxes that are collected from us the citizens are given to a select few again in contracts and concessions. That is one way the Transparency International Report data is derived in order to rank Guyana Government as one of the most corrupt in the world. I am sure no one that waves any of the opposition flags publicly got any of the contracts.

This week, the City tried to deliver Rates and Taxes on my Office Building which was purchased in 2005 from a very wealthy and prominent family. They had gotten full compliance from all the official agencies in order to sell the property and even got a private hearing at the Registrar’s Office to get the Transport passed.

The city now says the Building owes them almost $2M. I am in that building. I wonder how much that person paid in order to get their Compliance (all taxes paid) to sell me the property, and now the city wants to stick me with the bill.

MOVING AHEAD STILL
Our years of lobbying for the paving of the Guyana-Brazil Road are showing signs of moving ahead. There are also positive movements with the Brazilian interest in Guyana. In the early 90s, when Stanley Ming and Eric Phillips first presented the Guyana 21 plan to then President Jagan, he vowed to move ahead with the plans and turned it over to his ministers for implementation.

Nothing happened. Eric and I presented a research project that was included in a major Brazilian Government publication on the benefits of structural and economic connection between our two countries. Since then that research has found its way into the Brazilian congress and progress has been made in many key areas. Our cabinet has finally approved their portion, years late.

FOREIGN DIRECT INVESTMENTS (FDI)
Economists and policymakers around the world generally agree that an overall policy framework built on economic and political stability, with clear rules regarding the entry and operations of international businesses, a clear privatization policy, and the presence of bi- or multi-lateral agreements on FDI are the main components of the public sector’s responsibility for creating a positive climate for FDI.

Other concrete steps that have proven to attract investors are simplified administrative features, investment facilitation services, and incentives such as tax reduction/abatement or subsidies, and above all, less red tape.

Traditionally, foreign direct investment has also been built on a large number of purely economic factors such as the availability of raw materials, low cost of labour, and the capacity of physical infrastructure to get goods to market. Other factors such as market size, local growth, and regional integration play a part in determining the appeal for foreign investors.

Efficiency factors also need to be considered, such as the productivity of labour, the size and availability of sufficient skilled labour, the services sector’s capacity, the sophistication of local financial markets, and the market-friendliness of trade policy.

From this discussion it is clear that Guyana has opportunities and obstacles. The availability of raw materials, labour and the possibility of regional integration are all clear opportunities. Policies and a climate conducive to investment, sadly, are less clearly positive. We must fix areas of government corruption and the private sector must do their part in not fuelling this practice.

CONCLUSION
Stamping out corruption at all levels of government is very difficult. When concessions are given to friends, when key private sector businesses are harassed because executives expose corrupt practices, when television stations can be shut down, when only certain stories are carried in the state run paper, and he fact we have only one radio station to ensure control of the people all make it difficult to get our country on the right path for success where all people can benefit and prosper.

This can only be done when we get rid of corruption and government stops taking most of the hard earned dollars of our citizens and giving it to a few.

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