Manufacturing sector needs to take stock of itself - Finance Minister

Manufacturing sector needs to take stock of itself – Finance Minister

Mar 05, 2017 News

-says more can be done, urges innovation
By Kiana Wilburg
When sugar cake and plantain chips from other islands can reach local shelves and be sold out in days, it signals that Guyana’s manufacturing sector really needs to take stock of itself.

Finance Minister, Winston Jordan

This perspective was proffered by Finance Minister Winston Jordan during a recent press conference.
There, the economist reflected on the times when the manufacturing sector was a 14 percent contributor to the economy. Today, the sector struggles to make a seven percent input. In fact, Jordan noted that sector is propped up by rice and sugar production.
Kaieteur News subsequently asked the Minister to state what is needed to get the sector back to its glory days.
He said that those in the sector will first and foremost claim that there are a number of reasons which are responsible for its sluggish performance – some will cite the environment as not being conducive enough or that the incentive framework is not right, among other troubles.
“But I think that when you check our incentive framework, you would notice that it is far healthier than even when it was in the 1970s period. Some issues that may affect them now are like bank loans,” Jordan said.
He continued, “Too many of our businesses don’t make use of the stock exchange, and tend to go to the banks for financing… and that can be expensive unless you have a development bank which would give you ‘cheap credit.’ But in the case of GAIBANK (Guyana Agricultural & Industrial Development Bank) that is what sunk it.”
The Finance Minister added, “Some would claim the infrastructure is not there; that we have poor facilities, that electricity is expensive, that there are water problems and they have to filter it. Labour force is also an issue. There is a labour force available, but the quality and skill set that the manufacturing sector requires is another issue.”
Jordan said that while his heart goes out to the small manufacturers who have emerged over the years, he is confident that the problems facing the sector can be overcome.
Turning his attention once again to the matter of incentives, Jordan said that the framework is there.
In this regard, he commented, “There is so much. Both on the income tax side, customs side, you name it. Even regional incentives are there, so that is not much of a major issue… But to me, we have to see things in a more modern light…Our manufacturing sector has to take stock of itself.”
He added, “We are here to help, but we have to be as innovative as the next person. When sugar cake and plantain chips can reach our shores and be sold out, it signals that we need to take stock of ourselves and ask whether it is things like infrastructure that are really barriers to our success or whether there are other underlying issues.”
With regard to Government’s vision for the sector, Jordan made it clear in a previous interview that Guyana needs to attain higher levels of sustained economic growth in the medium term, to significantly impact prevailing unemployment and poverty.
In order to facilitate investment and higher economic growth in the productive sectors of the economy, he said that the Government has set itself the goal of accelerating the process of diversifying and transforming the economy over the medium term, away from its dependence on primary products, by expanding production of higher value-added goods and services.
The Finance Minister said that this process will be undertaken within the context of good governance and human safety in a green economy, taking account of the impacts of climate change and linking centres of economic development in the hinterland with those on the coastland.
Jordan said that government is, therefore, seeking to develop a policy framework for its priorities in relation to creating the climate that can attract and retain local and foreign direct investment (FDI) into the manufacturing and other sectors.
The economist said that an improved investment climate is viewed as a key component of fostering high levels of economic growth and reducing poverty.
Jordan asserted that high levels of economic growth can be attained on the basis of export expansion, through economic diversification of world class higher value–added production that are linked to Guyana’s natural resource base.
In this regard, he said that the development of a world class jewellery industry, for example, could be achieved from the processing of raw gold, diamonds, precious and semi-precious stones.
Jordan said that such an industry would require the engagement of global leaders and international experts to assist domestic stakeholders in shaping the industry, local and FDI investment in product design and production, promotion and marketing, specialised equipment and training, among other factors.
An industry of this nature, he said, can produce high end value-added products for the export market, creating significant foreign exchange earnings and job opportunities.
The Finance Minister said that a similar approach to the development of manufacturing industries and industry clusters producing value-added products will be pursued, including, but not limited to: wood products (plywood, furniture) agro-processing (refined and specialty sugars, ethanol, dairy products, corn, coconut, soya-bean products, rice and rice products, fruit juices, jams, jellies, pepper sauces, alcoholic beverages, meat and fish products) minerals (alumina and aluminium products, petroleum and petro-chemical products including fertilisers, ammonia and methanol.
Recognizing this, Jordan revealed that the Government has approached the Inter-American Development Bank (IDB) for technical assistance to develop an Industrial Policy for the next two decades.