Guyana has lost over US$65M in investment

Sep 05, 2019 Letters

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DEAR EDITOR,

It is with great pleasure that I come to you from Florida. I’m a Guyanese by birth and a proud Lindener. I’ve been living in the U.S. for just over 25 years. Like any other bold and shrewd businessman, I’ve managed to make a name for myself. Today, my business of steel and welding fabrications is operating in six states throughout the US. My other venture, which is that of construction, is also rapidly proliferating in my home state.
A few weeks ago, at a social event, I ran into a good friend who also happens to be Guyanese. He is in the business of selling and distributing heavy-duty construction equipment. Like any other like-minded Guyanese businessman, our conversation was centred on the future prospect of our economy (thanks to oil, this is now a common topic amongst businessmen).
One thing we discussed is the construction sector. There is no doubt, given the network of deplorable roads in Guyana, investment in public infrastructure by the next government would likely reach unprecedented level. In fact, I think sometime last year, the Minister of Communities mentioned that the central housing and planning authority would need an additional $58B to fully pave all the roads in existing housing schemes. And note, this is just the housing sector. We are yet to include the Soesdyke/Linden highway, EBD to ECD road linkage, etc.
To make things even better, we have an abundance of labourer who are readily available. Based on reports by the media, Venezuelans are almost everywhere and are eager to find jobs. Economically, this is good. Because of the large supply of labour, an increase in demand would have a mild effect on wages; meaning the government could invest heavily without the fear of stoking inflation. By keeping inflation in-check, the economy wouldn’t run the risk of overheating which is great news for investors.
Another area we looked at is how the oil windfall might affect the current investment climate in Guyana. And here is where the discussion gets quite interesting. For any production to take place, we need land, labour, and capital. Guyana naturally is well endowed with an abundance of fertile land, and they are ubiquitous. And labour is also omnipresent. According to reports, over 30,000 sugar workers lost their jobs, and currently, there is an influx of immigrant (Venezuelans and other nationalities). So, the only problem is capital. To get this, we need investors; preferable foreign investors. At the macro level, there is no such thing as too much private investment. On the other hand, too much government spending could crowd-out private investment.
The question now becomes, as potential investors should we invest? The short answer to this is a resounding NO! It’s simply ludicrous. And I’m sure, hundreds of other foreign investors would share our view. First, political instability is any investor’s greatest nightmare. And in Guyana, the country is currently in political turmoil. However, what is quite interesting about this specific “political turmoil” is that it is self-induced by the government itself. When you have a government that fails blatantly to uphold the constitution of the land, like the David Granger-led administration, such gesture sends an obnoxious signal to investors. It tells us that that government cannot be trusted.
And lo and behold, we have already seen signs of such unscrupulous behaviour. Take for example the encounter with DIPCON. It is now public knowledge that the Minister of Finance singlehandedly blocked payments to DIPCON engineering company, a contracting firm, in the tune of billions of Guyana dollars. DIPCON moved to the courts, and the Minister was subsequently ordered to “pay up or face jail”. However, neither of the two materialised. The President instead intervened and issued a Grant of Respite in relation to the judgment, and the Minister walked free. Hence, we remain resolute that it would be insane on our part to invest our hard earn savings into a country where the constitution is trampled upon by the government.
The second major issue is the weak macroeconomic framework. Without a proper economic plan, our investment would be easily crowded-out or even obliterated due to the Dutch disease. There is ample empirical evidence that points to the positive correlation between appreciation of exchange rate and dwindling manufacturing sector. In Guyana, I doubt it would be any different.
Now, could the same be said for the PPP? I guess not! By all means, Irfaan Ali’s record as a statesman speaks for itself: he epitomizes progress with the transformational housing drive that unfolded under his tenure as Housing Minister. I could recall a visit to Guyana in 2012, two years after my last trip. I was astounded by the massive level of development that was taking place under the housing sector. Banks, fast-food outlets, supermarkets, malls were all scattered along the East Bank. Clearly, Guyana is in dire need for a leader of his calibre. And I say this with no reservation whatsoever; until a competent leader like Irfaan is in office, Guyana will never see our investment and countless others. The fact is we have no confidence in the Granger-led government. Their incompetence and backwardness are overwhelming. So, thanks to them Guyana just lost over $65M USD in investment. And that is a conservative number.
And remember, “manufacturing is the engine of growth”, not Government. Oil will come and go, but factories will remain. My advice is, get Granger out! He is not good for business.

Thank you,
Quincy Philips

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