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Even with attractive incentives… Guyana’s record in attracting private-sector investment remains poor-US State Department
Even though numerous incentives are offered to investors, Guyana’s long-term record in attracting private-sector investment remains poor. This was recently noted by the US Department, specifically its Bureau of Economic and Business Affairs.
According to the Department, the Government supports a traditional investment facilitation agency called the Guyana Office for Investment (GO-Invest). It was noted that GO-Invest focuses primarily on agriculture and agro-processing, tourism, manufacturing, information and communication technology (ICT), seafood and aquaculture, and wood processing.
The US Department pointed out that GO-Invest is the first point of contact to obtain necessary permits and tax concessions. It said, too, that GO-Invest has been asked by Guyana’s Ministry of Business to help improve operations within the organization in support of interested potential investors.
Over the past decade, the Department said that the Government enacted new laws or amended existing ones to encourage FDI with mixed levels of success. Due to the state’s significant role in the domestic economy and the preference for centralized decision-making, the US Department said that relatively large foreign investments often receive intense political attention. In this regard, the Department noted that the current administration has been criticized by civil society for Guyana’s challenges in attracting new FDI, even though this has been a long-term trend. The Department noted that the Government has nonetheless expressed its intention to promote FDI through its various Embassies and Missions abroad.
SCREENING OF FDI
The US Department noted that there is no mandatory screening process for FDI.
It said that the Government, however, conducts de facto screenings of many investments in order to determine which businesses are eligible for special tax treatment and access to licenses, land, and approval for investment incentives. Despite recent efforts to remove discretionary power from the various ministries, the Department said that ministers retain significant authority to determine how relevant laws, such as the Investment Act, Small Business Act, and Procurement Act, are applied.
In general, the Department highlighted that international investors receive the same treatment as local investors in Guyana. It said that one exception is in the special approval required for local financing. The Department said that foreign borrowers applying for a local loan of more than $2M must request permission from the Minister of Finance. The Department said that this requirement reflects Guyana’s preference for foreign investors to bring capital into the country.
Further to this, the US Department said that another exception exists in the mining sector, where ownership of property for small-and-medium-scale mining is restricted to citizens of Guyana. The Department said that foreigners may enter into joint venture arrangements under which the two parties agree to jointly develop a mining property.
The Department said, too, that there are no restrictions on the percentage of the investment shouldered by the foreign investor; these arrangements are strictly by private contract. It noted however that such relationships are highly risky, and appropriate due diligence of any potential joint venture partners is highly encouraged and should be completed by any company hoping to do business in Guyana. The Department said that this exception does not exist for large-scale mining operations.
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