The private sector were cheerleaders for foreign investment

Oct 06, 2024 Peeping Tom

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Peeping Tom…

“The private sector were cheerleaders for foreign investment”

Kaieteur News – The cries from sections of Guyana’s private sector about Chinese nationals “circumventing regulatory permits” in the retail commercial sector reek of desperation, or worse, is disingenuous. The issue is not so much about breaches of bureaucratic rules, but about the undeniable fact that Chinese businesses, particularly supermarkets and hardware stores, are out-competing and overshadowing local businesses.  Yet instead of addressing their own failings, the private sector cloaks its grievances in the language of legality, conveniently avoiding the real issue at hand: Chinese retail dominance.

Let’s not mince words. The notion that Chinese businesses are somehow skirting regulatory frameworks and thus creating an uneven playing field is nothing short of laughable. The local private sector might feign concern about rule-breaking, but no one really believes that the success of Chinese supermarkets stems from a lack of permits.

If a business doesn’t have a specific license, does that suddenly give them the power to sell goods at prices that crush local competition? Of course not. The reality is much more uncomfortable for these local business owners to admit. The Chinese, through sheer ingenuity, efficiency, and yes, capital, have managed to penetrate and dominate the market, where local businesses have failed.

But let’s entertain, for a moment, the claim that the problem is regulatory in nature. Suppose these Chinese businesses, as accused, have failed to file the appropriate paperwork or circumvented some obscure local bylaw. If that were true, it might warrant the issuance of a few fines. However, what it would not explain is why these Chinese supermarkets are thriving, while many local businesses continue to stagnate or even shutter their doors. Something else is at play, and it’s clearly not a question of whether or not a specific form has been filed at the local agency.

What the private sector is really upset about, but too timid to say outright, is that the Chinese are doing better and selling cheaper than the private sector were doing.  They offer more competitive prices, they stock a wide range of items and they run their operations that are far more efficient despite having to pay hefty rents.

The real grievance here is not legal at all; it’s economic. Local retailers simply cannot match the Chinese model of supply chain efficiency, bulk purchasing power, or customer service. But of course, it’s easier to cry foul over supposed regulatory breaches than to acknowledge that your business model is outdated and uncompetitive.

Jagdeo reminds the disgruntled business community that discrimination based on nationality would run afoul of World Trade Organization (WTO) rules and violate Guyana’s own Constitution, which prevents discrimination on the grounds of place of origin. The Office of the High Commissioner for Human Rights (OCHR) interprets this discrimination clause to include nationality, making it legally impossible for the government to proscribe Chinese involvement in the retail sector without risking serious international legal consequences. Jagdeo’s message is clear: if you’re upset about competition, fight it fairly in the marketplace.

But here’s where Jagdeo’s defense falls short. Guyana’s own local content laws — the same ones designed to ensure that Guyanese businesses benefit from the country’s burgeoning oil and gas sector — are, on their face, discriminatory. These laws privilege local businesses over foreign ones, in direct violation of WTO rules and the Revised Treaty of Chaguaramas, which governs the economic relations of CARICOM member states. So, while the Constitution may protect against discrimination based on nationality in the retail sector, the oil sector happily operates under a different set of discriminatory rules. It’s a contradiction that the private sector would do well to point out, but of course, their objections would not serve them here, since local content laws favor them in the largest local industry: the oil sector.

The hypocrisy of the private sector doesn’t stop at their selective outrage. Where are the protests against illegal vending and without having to carry overheads, national insurance,  and possibly not paying  collectively their fair share of taxes,  presents a far more existential threat to local businesses than the handful of regulatory violations they accuse Chinese businesses of? Unregulated vendors have turned the heart of Georgetown into a chaotic free-for-all, and yet the local business community remains largely silent. Why? Because the illegal vendors are not Chinese. It seems easier to rail against the foreign other than to confront the complexities of the local market, particularly when doing so might alienate a sizable portion of your customer base.

Let’s also not forget the deep irony embedded in this entire argument. The same private sector that now cries foul over Chinese dominance once celebrated the government’s push to open up Guyana to foreign investment. They cheered for policies that lowered tariffs, streamlined foreign business operations, and attracted international capital. But now, faced with the consequences of these policies, they’re retreating into the protectionist rhetoric they once scorned. The very forces they helped unleash are now drowning them, and they don’t know how to swim.

At its core, the issue isn’t regulatory, nor is it even about nationality. It’s about competition, plain and simple. The Chinese have entered Guyana’s retail market and succeeded. Local businesses, many of which have long relied on government protection and favorable policies, are simply unable to keep up. Rather than evolving, they’ve chosen to scapegoat. Rather than improving their efficiency, lowering prices, or improving customer service, they’ve turned to the government to bail them out, under the pretense of fairness and regulatory adherence.

If Guyana’s private sector is serious about its future, it needs to abandon this charade. The answer to their problems is not more regulations, nor is it protectionism. They need to learn from the Chinese rather than condemn them. Until they recognize that, the cries of regulatory breaches will remain as hollow as their fast-dwindling market share.

(The private sector were cheerleaders for foreign investment)

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• businesses, Chaguaramas, conveniently, dominance, Jagdeo’s, uncomfortable

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