Corruption is staunching the existence of a manufacturing industry in Guyana

May 03, 2016 News

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…..with oil on the horizon corruption will start seeping in again—Dr. Thomas Singh

By Jeanna Pearson
Once corruption is present, Guyana’s development will be stagnant. So too will the hope of the existence of a manufacturing industry in the country, Economist Dr. Thomas Singh has said.

Dr. Singh, who is a professor at the University of Guyana, stated that the reason for there being no viable manufacturing industry in Guyana, is the rampant, barefaced corruption.
Corruption is defined as the abuse or misuse of public power for private gain. It is in corruption that the public’s interest is forfeited in favour of private gain.
He stated that the skullduggery that occurred in the previous administration will continue to rear its ugly head in the present government since corruption does lie with a political party but with governments. “Governments are highly inefficient…people in governments are self-interested,” he opined, indicating that according to the public choice theory in economics, Governments are deemed as the beast and not as the “good guy”.
“When governments become dysfunctional it is usually the officials who are corrupt and corruption undermines development. So the problem is not that we are importing too much and corruption is in one political party…No, it’s the fact that we do not manufacture goods and corruption is in governments,” he said.
He stated that with oil on the horizon, corruption will eventually start to kick in again, if it has not already begun.
At present, Guyana is ranked among the most corrupt in the Transparency International’s (TI) latest Corruption Perceptions Index (CPI), with a ranking of 119 and a score of 29. A country’s score indicates the apparent level of public sector corruption on a scale of 0 (highly corrupt) to 100 (very clean).
Meanwhile, Guyana’s economy grew by less than two percent per annum between 1960 and 2014, according to UN statistician Ramesh Gampat.
Singh asserted that corruption—especially mass corruption—is like a disease that destroys the regulatory system of a country and its chances of working together to build its economy.
Singh stated that mass corruption is the abuse of power that benefits a select at the expense of many, ending in extensive damage to the society. He said it also benefits those with strong political connections or those that are favoured.
Once corruption has overtaken a society then that society, he explained, will begin to operate as if its chief concern is to acquire stuff illegally. Singh hails this as “rent seeking” behaviour.
He said, too often this rent seeking phenomenon occurs in Guyana, where officialdom bypasses the regulatory system and earns rent through bribes. He said if people are rewarded for corrupt behavior then the system will fail.
“If people are awarded for their productivity as opposed to their corrupt behaviour the economy will grow,” he said, adding that once there is corruption there would be a deficit of productivity.
He said the problem does not rest solely on the shoulders of BaiShanLin but rather on the officials who did not uphold the system. He also mentioned that it was not only the BaiShanLin Company that raped the country’s natural resources but others, including local investors.
According to a GRA report, during the period 2012 to 2015, the People’s Progressive Party/Civic government granted BaiShanLin monetary concessions on a range of machinery, equipment and construction materials, valuing some $7.5 billion (US$37.3 million).
The report further indicated that GRA said that it was unable to provide information relating to the earlier years because of computer problems.
“If those systems which were set up to ensure that our natural resources are not fritted away were upheld, then we wouldn’t have this problem. We would be manufacturing and our economy would be growing.
“There is no reward for productivity. Productivity enhancement is key to economic performance so corruption undermines that entire and fundamental process because you can get rich now just because of your position,” he said passionately.
He stated that Guyana should not be satisfied with its economic growth, and the fact that there is no viable manufacturing industry in the country since independence. He said the measure of a country’s development is linked to education, human capital, technological capacity and the quality of the country’s institutions.
No trust = stagnant economy
Singh said that the degree of interpersonal trust in a society is crucial for the development of a country’s economy. However, he stated that no one wants to work together because it is not a level playing field, so businessmen would not want to invest in manufacturing products.
He indicated that high cost of electricity, high tax rates, difficulty in accessing finance, high cost of transportation and crime are all impediments to the existence of a manufacturing industry—corruption being the key factor.
“It undermines trust in the society. We no longer trust each other. Businessmen are left to think they have to offer a bribe to get something. The bank person is saying how big the bribe should be and the loan officer is asking, ‘Can I use this as an opportunity to extract a bribe?’
“With considerations like that we don’t even bother to pursue the matter of investment and manufacturing. Transactions lock up,” he said, reiterating that widespread corruption is connected to why the country has so little manufacturing.
“Our electricity tariff is higher than any other country in the Caribbean,” he argued.
He said it is unfair that companies like BaiShanLin receive duty free concessions while local companies have to face the legal framework and in some cases do not receive any concession. “Take Massy, for example, it receives heavy concessions and it will squeeze the daylight out of the local supermarkets that do not get those concessions,” he lamented.
“Other persons who want to come to Guyana and invest know that they can only do so if they get special privileges and concessions and they know the only way to get those privileges and concessions in a corrupt society is to begin bribing,” he added.
Singh posited that strong regulatory institutions and working together will eliminate the high instances of corruption in the country.
Chairman of Transparency International, José Ugaz, had stated earlier this year that, “Corruption can be beaten if we work together. To stamp out the abuse of power, bribery and shed light on secret deals, citizens must together tell their governments they have had enough”

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