Latest update November 13th, 2024 1:00 AM
Govt. vows crackdown on Guyanese aiding foreign companies to flout Local Content law
Vice President (VP) Bharrat Jagdeo (Govt. vows crackdown on Guyanese aiding foreign companies)
Kaieteur News- Vice President (VP) Bharrat Jagdeo has issued a stern warning to Guyanese firms enabling foreign companies to bypass Guyana’s Local Content Act, stating that violators will face penalties.
The Local Content Act currently features 40 areas for services carved out for Guyanese businesses including rentals, supply of goods, accounting, catering and welding. Foreign companies wanting to operate within those areas are required to partner with local firms. However, the law stipulates that the Guyanese partner must have 51% or more beneficial ownership, among other benefits. The Local Content Secretariat has observed foreign companies finding new ways to flout this law in order to gain access to the 40 areas of services set aside for Guyanese businesses.
At his last press conference, Jagdeo made it clear that the government is committed to enforcing the law to ensure that benefits set aside for Guyanese go to locals, not foreign firms. “Let me just reiterate that all of those who are violating now the Local Content Act, they have a lot to worry about,” Jagdeo said.
“We intend to crack down on it. This Act was designed to give benefits to our people, Guyanese, and if there are a few people here who are using it to confer the benefits so that the foreign companies can get these benefits that are set aside for our people, and they are collaborating with the foreigners, then they run the risks of not just losing the certification but also facing the fines in accordance with the Act,” the Vice President added.
Jagdeo emphasized the seriousness of the government’s stance on the issue and noted that the Local Content Secretariat have already started acting on the evidence they have.
On November 5, 2024, Kaieteur News reported that Minister of Natural Resources Vickram Bharrat disclosed that foreign companies operating in the oil and gas sector continue to find new ways to sidestep Guyana’s Local Content law. The minister was speaking at the Private Sector Commission’s second annual Local Content Forum. He addressed the escalating tactics some companies are employing to meet local content requirements on paper while continuing to channel the benefits outside Guyana, through deceptive practices. The minister talked about how certain companies use strategies such as “rent-a-citizen” or “fronting,” where foreign entities rely on locals as superficial fronts to comply with local ownership laws. Minister Bharrat said that while his ministry, through the Local Content Secretariat always get feedback and/ complaints about new mechanisms foreign companies use to flout the local content requirements – the foreign companies have grown more sophisticated in their methods.
According to him, the companies are evolving from the “blatant” use of front men to tactics like creating shell companies and partnerships with newly naturalised citizens. “So, there are different methods now, naturalization of people who’ve been in Guyana and making them partners, establishment of shell companies with no assets or no liquidity,” Minister Bharrat said.
(Govt. vows crackdown on Guyanese aiding foreign companies to flout Local Content law)
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