GO-Invest contradicts itself on due diligence capability

Sep 06, 2014 News

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While Chief Executive Officer of the Guyana Office for Investment (GO-Invest), Keith Burrowes in several interviews with this publication, expressed that his company lacks the capacity to carry out due diligence reports on local and foreign investors, one of its senior officials tried to persuade investors and forestry officials otherwise.

Yesterday, the Ministry of Natural Resources and the Environment in collaboration with the Forest Products Development and Marketing Council, held a seminar which focused on the incentives and investment opportunities for value added processing within the forestry sector.

Several persons attached to various agencies such as Clinton Williams of the Guyana Manufacturers and Services Association and Naresha Bobb-Semple of the Guyana Revenue Authority (GRA) gave presentations and brief remarks.

One of the deliveries which held the attention of the investors from start to finish was given by a senior official of GO-Invest, Shawn Doris. Doris awakened the appetite of the investors as he spoke about the profitable investment opportunities of the forestry sector and the critical role GO-Invest plays in helping them to get started

This publication asked the presenter whether GO-Invest would conduct investigations or background checks on companies, whether foreign or local. His oral presentation and handouts did not speak to this. The official answered in the affirmative and noted that, “every company is given a background check when they come to GO-Invest.”

The question was then repeated to the official but he maintained his position that every company undergoes due diligence.

This is in stark contrast to what his boss, Keith Burrowes had told this publication in several instances. He had maintained that his entity lacks the capacity to carry out background checks on foreign and local companies.

Burrowes had said, “It is important for viewers to understand what is a due diligence report. At Go-Invest, the due diligence report is an investigation or audit of a potential investment, which serves to confirm all material facts. So what we basically look for is accessing the company’s financial statements, the liabilities they have and if they are involved in any illegalities.

But to check for all these things you need the physical and human resources to do so and we don’t have that. If a company comes from overseas and they want to invest in Guyana, they would first have to bring their financial statements before us and we would investigate but the truth is for all the companies coming into Guyana, and they come to us, we don’t have the capacity to identify the high risk companies or the corrupt ones because these complex things require financial analysts and you can’t do these things with only two or three financial officers. We lack the capacity to carry out the economic analysis on companies to determine what they are really coming with.”

The “too-good-to-be-true” deals highlighted by Doris during his presentation attracted many raised eyebrows and suspicions on the part of some investors.

The investment facilitation officer explained the role of the investment agency, noting that it is tasked with export promotion, policy advocacy and investment facilitation and generation. He added that the role of the entity is to contribute to Guyana’s economic competitiveness by promoting and facilitating more local and foreign private sector investments and more Guyanese exports. He also identified some of the priority sectors which GO-Invest also deals with and these include; Agriculture and Agro processing, Light manufacturing, Tourism and Wood products.

Turning his attention to downstream wood processing, Doris said that thisinvolves the recycling of salvageable components and the proper treatment and disposal of waste. Examples of this process include; shingles, plywood and veneers.

As it relates to incentives to encourage growth, he noted that Guyana offers investors a range of general, specific and sector-specific incentives. The general incentives include zero-rated customs duty and VAT on most machinery and equipment, and raw materials and packaging materials used in the production of goods by manufacturers and small businesses. He said that all investors would benefit from an unlimited carryover of losses from previous years, accelerated depreciation on plant and equipment, full and unrestricted repatriation of capital, profits and dividends, and benefits of double taxation treaties with the United Kingdom, Canada and CARICOM countries.

As it relates to special incentives, which are provided in addition to general incentives, the GO-Invest official stated that firms producing non-traditional products for export would be granted export allowances to markets outside of CARICOM. For sector incentives, he said that investors would benefit from exemptions from duty and VAT on machinery and equipment used in logging, land development and sawmilling.

While the fruits of going through GO-Invest appear to be quite attractive, to access it is not easy. In acquiring these incentives, Doris explained that his company would have to liaise on behalf of the investors with agencies such as the GRA, the Guyana Lands and Surveys Commission, the Ministries of Agriculture, Home Affairs and Housing and Water as well as the Environmental Protection Agency and the controversial National Industrial and Commercial Investments Limited (NICIL).

He then provided the company’s investment process in six easy steps. Doris explained that when Go-Invest is contacted by the investor, it would respond and an officer is then assigned so that an initial meeting can be arranged between the two in order to review the business plan. The next stage would see the company collecting the necessary documents from the investor and an Investment Agreement is prepared and sent to GRA.

In the meantime, GO-Invest would provide letters of support and recommendation to banks and other financial lending institutions pending approval of business proposals. Once GRA reviews the Agreement, it then makes recommendations to the Minister of Finance. However, the Finance Minister can reject the agreement. But once all goes well, an approved investment agreement is sent back to the GRA and copies would be sent to GO-Invest.

Following his presentation, investors and other participants expressed their concerns. One businessman questioned whether the Finance Minister would send a “feedback” on what went wrong, if he disapproves of the investment agreement, and how long such a process takes.

Doris explained that the investment process at GO-Invest takes about one month and rarely would the Minister not approve. However if he does, he is almost certain that providing reasons for his decision would not be a problem.

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