Our tomorrow depends on what choices we make today

May 15, 2011 AFC Column, Features / Columnists

---

This week we feature the final installation of Mr. Khemraj Ramjattan’s speech delivered on the 26th April 2011, at the luncheon hosted by the Manufacturing and Services Association.
***
There are certain specifics central to the AFC’s economic plan for an environment for investment and the creation of a robust private sector which can grow and compete in CARICOM and further afield. This will require coordinating several policies that must be implemented together. These points are taken from the AFC’s Action Plan.
· Cut the VAT to 12% so as to benefit consumers and release more disposable incomes to be spent on goods and services made by the private sector.
· Cut manufacturing corporate tax from 30% to 25% at the end of the first year. By the end of the first term this tax will be reduced to 20%.
· Reduce commercial corporate tax from 40% to 35%.
· Clamp down on smuggling which makes it difficult for legitimate businesses to compete.
· Cut borrowing cost. This will be accomplished through the following: (i) a state development bank; (ii) creation of a liquid and broader stock market; (iii) promotion of a market for commercial papers so business can seek short-term financing; and (iv) promotion of a corporate bond market for long-term business financing.
· Cut energy cost. This will be done by implementing a portfolio of renewable energies such as small/medium scale hydroelectric plants, ethanol from sugar, bio-diesel from coconut and bagasse electricity from the increased sugar production for ethanol (both by GuySuCo and foreign investors who will produce in the Canje Basin). May I take this opportunity to congratulate DDL on this score for setting up a methanisation plant. Though there must be encouragement for large hydro schemes, we are not optimistic that the Amaila Falls hydro will reduce business energy cost.
There will be serious cost overruns, and the dubious nature of the contract awarded to Fip Motilall will have serious cost implications that will have to be billed into the unit price of electricity. This project must be thoroughly re-examined.
· Cutting a top-heavy Government. This will lead to a series of cost savings as the AFC scale back payments to super-super salaried consultants (some paid US$225,000 per year). By reducing questionable advisorial positions at the Office of the President, and reducing the number of Ministries, there will be huge savings. Cutting government spending will allow for market credibility and good rating for Guyana government bonds.
I have been advised that a corporate bond market cannot exist in isolation of the government bond market.
This is why we have to do many things at the same time. So if government does not have the credibility it becomes difficult to have a secondary corporate bond market.
· Encouraging Foreign investments. This must involve several large corporations and Diaspora investments, preferably in pioneering areas. We need large corporations that can form business linkages with Guyanese investors and suppliers.
We need the technology transfer and a superior management discipline that come from large multinationals.
An AFC administration will not allow, however, these foreign investors to simply make us hewers of wood and drawers of water. They must be involved in tertiary and value-added production.
. Sustaining Macroeconomic Stability. In addition to rapid growth policies, we will maintain the independence of the Bank of Guyana which will be tasked with maintaining a stable exchange rate and inflation. Businesses will not have to worry about exchange rate risks and price risks.
But there is a challenge the AFC will have to address frontally, which matters fundamentally to our demographic circumstance.
A Guyanese peace, lest we forget, will not be built upon empty and half-empty stomachs or human misery or marginalization of any section of her population, or even a perception thereof.
Hence, businessmen and politicians must do everything in their power to create a more enduring trust between all our ethnicities and classes, and for the provisioning of opportunities for all to earn a living wage, and the education and training that lead to such jobs, and a combined commercial and political will to enforce our labour laws and tax laws that will restore a balance of the distribution of the nation’s wealth after a successful generation of that wealth.
This is the alternative the AFC presents. An alternative which will see its young population blurring all boundaries of race and ethnicity as we know them today, and this still young nation being comfortable in its diversity and even stronger for it.
Our tomorrow depends on what choices we make today. 2012 will depend on what we do in 2011.It is that simple!
We must change to move forward! So honourable men of business and industry, I plead that you make the right turn and get on board this Alliance train that will take you there.
Thank you.

---

---