Here is the way forward for GuySuco

Nov 27, 2016 Letters

Dear Editor,
Editor’s note; this concludes Mr. Kissoon’s submission which was carried in our Thursday edition under the caption, “GuySuco’s closure would be a recipe for economic disaster.”
GUYSUCO’s ability to employ is far from its only economic benefit. GUYSUCO has always been a main source of foreign revenue and still earns a significant portion of Guyana’s foreign exchanges despite its recent struggles. Anyone with basic knowledge of economics would tell you that a decrease in foreign currency earning would mean a depreciation in our currency.
This is particularly important since Guyana is a small open, merchandizing economy. We export most of what we produce (rice, sugar and gold) and import most of what we consume, including food products and everyday items. Any significant drop in foreign exchange earnings would seriously affect the average Guyanese since a bulk of Guyanese consumption are imported goods (food, clothing and oil included).
The main argument by GUYSUCO detractors is that the subsidy places immense burden on central government’s spending. Mr. Editor, the GUYSUCO subsidy as of 2015 was 5.21% of total government spending. It is not a gigantic burden on the state as we are led to believe. However, even the subsidy is being misrepresented to the masses. The revenue gained by central government from GUYSUCO is being overlooked with great convenience.
GUYSUCO has 28,000 workers, while no accurate data is (publicly) available on the issue, 28,000 workers would be paying at least TWO BILLION in income taxes if we were to assume income tax at 30%, the threshold at 50,000 and the average salary of a GUYSUCO employee at 75,000 per month. If one was to factor in the income taxes and other revenues streams central government gain from GUYSUCO, it would be clear that the real subsidy is significantly less that the government is claiming.
When one considers the real subsidy, it would be less than 4% of total government spending, or less. The APNU+AFC coalition must surely know they cannot receive this stream of income if GUYSUCO was to no longer exist. Mr. Editor, it does not take a genius to see that any brash and crude move against GUYSUCO will translate in to employment, currency, revenue and a general cost of living shock. This is an impact therefore in all sectors of the economy- financial, real, monetary etc.
Here is the way forward. The road to GUYSUCO making a financial profit would be long and hard, it cannot be achieved overnight or without hard work. But there exist alternatives, contrary to the assertion by the APNU+AFC government. For GUYSUCO to make a financial profit, recapitalization the industry is the only way forward. Further industrial investment into value added goods and production is the only way forward for this Guyanese economic giant. This process of recapitalization will also allow for sufficient time to improve the absorptive capacity of other existing sectors and the creation of new sectors, to cushion the effects of the inevitable structural displacement of labour arising from this project.
GUYSUCO must move into the production of corn syrup, canned sugar cane juice (which is imported and sold next to Parliament building), ethanol and other products that are sophisticated to produce. These products would maintain the need for the raw sugar and the existing jobs, while creating additional jobs and income for the company, allowing it to break even in the medium-term. Additionally, research must be done to increase yield per acre, overall production and inevitably cost of production. Research must also be done to improve agricultural and managerial practices to reduce theft. Better agricultural practice has the potential to ease many of the financial burdens.
Mr. Editor, this is a simple example of the usefulness of the industry. A multiplicity of suggestions of such sort can be rendered for the argument of the maintenance of GUYSUCO. What is certain however is that the closure of GUYSUCO spells economic disaster for Guyana. Keeping the industry alive is a necessity, ensuring that GUYSUCO makes a financial profit is also, imperative. The only way to achieve both is through prudent management on the part of both, the State and the company as well as additional industrial investments.
Stephen Kissoon

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