City Chamber slams Guyanese businesses involved in “sham partnerships” with foreigners to bypass local content law

Aug 06, 2023 News

Kaieteur News – In an official statement released yesterday, the Georgetown Chamber of Commerce and Industry (GCCI) addressed a growing concern within Guyana’s private sector and citizenry – the emergence of sham partnerships, better known as fronting or rent-a-citizen schemes.

The GCCI expressed its consternation about this trend, which it believes contradicts the principles of genuine local participation and the Local Content Legislation (LCL).

Its statement comes after the Minister within the Ministry of Public Works, Deodat Indar, expressed his concern about the practice, during his keynote speech at the Guyana Manufacturing and Services Association’s mid-year dinner on Thursday.

He noted that the trend whereby foreign investors exploit partnerships with local companies to sidestep the rigorous mandates outlined in the 2021 Local Content Act, impedes the efforts made by the government to secure benefits for the Guyanese private sector.

The Local Content Act, enacted in December 2021, designates 40 sectors and sub-sectors for exclusive priority to Guyanese businesses. Foreign investors desiring to operate within these domains are legally required to collaborate with local companies, maintaining a controlling beneficial ownership stake of 51% or more.

The Chamber in its statement said, “As the leading advocate for local content in Guyana, the GCCI has always posited that local participation must be done in a manner that engenders meaningful and genuine partnerships.” It echoed Indar’s position, emphasising that sham partnerships stand in direct opposition to the spirit and intent of the local content legislation.

It said one of the main objectives of the rigorous act is to ensure the retention of in-country value, fostering economic growth and development. As such, it warned that the deceptive practice could jeopardize that very objective, stating, “Such rent extraction creates a gamut of problems for a country, including, the inability to realize its full growth potential.”

The Chamber of Commerce further underscored its commitment to combating these practices, asserting, “The Chamber of Commerce will continue to be intolerable of individuals and companies who ‘front’ for circumvention of the LCL.” It also expressed concern about private sector entities attempting to normalize this behaviour stating, “The GCCI also notes private sector members who attempt to justify this practice, and lobby for its normalization, as being complicit in this dangerous act.”

The GCCI called for stringent measures to be enforced by the government to address this issue by encouraging the Ministry of Natural Resource’s Local Content Secretariat to continue its vetting of companies applying for a Local Content Certificate, or its renewal, in a thorough fashion. It, therefore, pledged to continue supporting the Secretariat’s efforts in curbing such behaviour, emphasising the significance of a collective commitment to Guyana’s development.

According to the Chamber, eradicating these sham partnerships is the best way to pave the way for a prosperous future for Guyanese businesses looking to fairly participate in the sector.

Deodat Indar, emphasising, It echoed Indar's position, the Ministry of Public Works

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City Chamber slams Guyanese businesses involved in “sham partnerships” with foreigners to bypass local content law

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City Chamber slams Guyanese businesses involved in “sham partnerships” with foreigners to bypass local content law

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