SAFE AND SECURE FROM CHALLENGE

Oct 06, 2009 Features / Columnists, Peeping Tom

In yesterday’s column there was a grammatical error in the use of the third person singular pronoun rather than the third person plural pronoun. In commenting on why persons may desire a third term for our President, this column made the point that the only persons who would be interested in such a scenario would be those persons who have made a lot of money and may be fearful for their investments.

In print however, it emerged in the singular pronoun, instead of “their.” The Peeper regrets this grammatical error.

There is always in Guyana that disincentive that all investors face: the possibility that a new government will not respect deals made by the previous administration. While laws have been passed to protect investors, the reality on the ground is that there remains this fear as to whether a new government will honour agreements reached in the past.

When the PPP came to power they were expected to review the controversial deals made by the PNC Government. While in opposition the PPP was critical of the privatisation deals made by the then PNC administration and while they never threatened to overturn these, it was expected that when they did win political office that these deals would be scrutinised.

The PPP did not however overturn these deals. They did not because I think they understood the dangers inherent in this approach. It would have caused serious concerns to potential investors had the PPP insisted on renegotiating the PNC deals.

In the run up to the last election he contested, Mr. Desmond Hoyte made some unfortunate statements against a potential investor in the electricity sector. During the course of the government’s negotiations with these investors, he warned the investors not to come to Guyana.

Now this is the sort of statement that would cause serious apprehensions in investors and force them to think twice about investing in Guyana.

This is not to say that any new government should not question any investment made by the previous government. No incoming administration would cede this right because to do so would allow any sitting government to sign whatever deal they wished.

Thus an incoming government has a right to review any agreement signed by the previous administration and in fact to have such deals renegotiated once these are not in the national interest.

The obvious dangers are to the investors who are not given any security against renegotiation. While there may be laws preventing the unlawful forfeiture of their assets, the problem is that these investors will need to go to court and engage in lengthy and costly litigation in order to secure the enforcement of their rights.

And this is why there is a need to strengthen the commercial courts in Guyana, to place more judges within their courts so that matters can be expedited. Unless we have an efficient functioning judiciary capable of protecting the rights of investors, this situation will be a disincentive to investors who may wish to make investments in Guyana.

It has also been argued that no government should sign any major investment agreement during the last six months of their term. Now this is a convention that really should not be encouraged because it is not as if we have a million and one investors lining up to make investments.

Guyana is competing with a great many other countries for investment. Delay in getting an agreement signed will be to someone else’s benefit. Thus, this limitation will act as a disincentive towards investments and needs to be removed.

Right now, there are some major investments being lined up with Brazil. At least one commentator has called for the government to move swiftly to seal agreements with the Brazilians for the building of the proposed hydroelectric plant before the moment passes.

These agreements take time to be negotiated.

They cannot be done overnight. The investors are also wary about political risk and therefore may wish to wait and see what will be the outcome of any elections or in fact whether there may be constitutional changes for a third term. This will invariably mean that the investments may not be finalised until close to the next elections.

So should the deal be put on hold until those elections are concluded? Definitely not!

We need to move forward with investments. But the investor must be forewarned that any incoming administration has the right to review previous deals and thus that investor needs to ensure that any agreement reached in foolproof and secure from challenge.

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