Le Meridien Hotel, Monday October 11th.1999

Posted October 12th. 1999

Mr. Chairman, Prime Minister Hinds, former President Janet Jagan, Cabinet colleagues, distinguished guests, ladies and gentlemen:

When I called for this summit about a month ago, it was with the intention of engaging the private sector in a frank and open discussion in charting the future course of our country. I am very encouraged to see so many of you here today. My expectation is that we can emerge from here today with concrete proposals for economic renewal and advancement.

The need for us to work together has never been more urgent. Factors both internal and external to Guyana present enormous challenges which, we must confront. Collectively, Government and the private sector must sit down and chart a course for Guyana’s entry into the 21st century.

Experience has shown that where government and the private sector have worked well together, the potential of economies has been unleashed and opportunities created. Consistent with our abiding faith in the private sector, we have been redefining our role, moving away from involvement in productive activities to providing an enabling environment for the development of the private sector. That is why in the last seven years, PPP/Civic Administrations have accelerated the privatisation of public sector entities, improved infrastructure and the regulatory and incentive framework.

Although, we continue to attract investments in some key sectors of the economy, much more remains to be done. This summit demonstrates my Government’s desire to work in partnership with the private sector to define pragmatic policies to speed up investment.

And this is for very good reasons. Today, globalisation and liberalisation are sweeping across the face of the world breaking trade barriers, unraveling preferential market arrangements, flooding countries with cheaper products and making it easy for the transfer of labour skills across national frontiers. For us here in Guyana, the costs are real. About two thirds of our exports and foreign exchange earnings, and a third of our labour force benefit from existing preferential trade arrangements.

Additionally, we have not been helped much by developments in commodity markets. As producers and exporters of primary commodities, we have no control over the prices of our exports. Rapid decline in commodity prices in the last two years has greatly exposed the vulnerability of our economy. Overnight, established businesses and employment were lost and the economy has not since recovered. It is necessary that we take steps to reduce our exposure to international shocks and thereby cushion our real sector from any adverse international climate.

At the domestic level, many of our companies are distressed, the cost of capital is high, quality standards of our products and packaging are oftentimes poor, and because of poor planning some of our companies have not able to meet their supply quotas. In addition, the culture of family business is very deep-seated, robbing potentially successful companies from the acquisition of much needed technology transfer, foreign capital and potentially lucrative markets.

How best we put together the appropriate mix of policies to meet these challenges is what I hope will emerge from this Summit.

Our Guyana is a land that is blessed with abundant resources. We must therefore find a way in which we can use these resources in a sustainable manner for the benefit of our people. This requires a vision; a vision of development; a new way of thinking; and a change in attitudes. We need to ask ourselves where we want our country to be in the next ten years? What would be the role of government in development? What kind of economy are we planning for, an agrarian, an industrial or service economy? Are we envisaging an economy where we would build on our current strengths, that is, the utilisation of our primary commodities? And what would be the lead sectors that would put us on a higher development path? The National Development Strategy addresses some of these issues. Nevertheless, I would urge you to think through these questions as we attempt to define a framework to accelerate our country’s development.

Mr. Chairman, permit me to share with this distinguished audience some of the ideas that my administration believes would transform our economy and make our country attractive to both local and foreign investors.

First, we believe that a sustainable macroeconomic framework is essential in our quest to attract and sustain investment. Low inflation maintains the real value of assets; lower interest rates make the cost of capital affordable, and competitive exchange rates and unrestricted repatriation of capital provide confidence to local and foreign investment. My administration will continue to pursue inflation reducing policies, the safeguarding of our external reserve position, and the generation of public sector savings. We will also continue to pursue initiatives that would further reduce our external debt.

Second, we also believe in the revamping - a complete transformation -- of our economy and change in attitudes towards work and wealth creation. The elimination of tax and non-tax disincentives such as the lack of appropriate infrastructure, weak legal systems and a non-responsive public sector would have to be addressed vigorously. This is crucial for investment decisions. For example infrastructure deficiencies and regulatory regimes in Mexico and Pakistan and the tariff regime in Malaysia were seen as serious barriers to capital formation and particularly in attracting foreign direct investment.

On infrastructure, my administration proposes to give impetus to our strategic investment projects. This consists of the construction of the Guyana-Brazil Road, the construction of a deep port and container harbours, the bridging of the Berbice River, the development of the Inter-mediate Savannahs and the development of the Canje Reservoir Scheme.

The road to Brazil and the Deep Water Harbor can consolidate our position as the bridgehead to South America, opening up a range of economic opportunities, not the least of which will be the continental movement of goods and services. These in turn would feed into our local service sector, generating huge benefits. There is also the opening of markets for our goods.

The Berbice Bridge will foster easier transportation and communication links with that county and open up opportunities for the people of that region. It will also facilitate the development of the East Canje Reservoir Scheme. This scheme which is situated between the Berbice and Corentyne Rivers consists of the damming of the Canje River in order to provide gravitational irrigation for approximately 350,000 acres and improved flood control for another 150,000 acres of land.

Then, there is the Intermediate Savannah Project which, can become one of the “new frontiers” in Guyana and one that would yield immeasurable benefits. More importantly, this project would be integrated into a wider scheme for Region 10 in order to make that Region the industrial corridor of Guyana. A few weeks ago on my visit to Linden I spoke about this vision. These projects will create tens of thousands of job opportunities for our youth and lay the basis for the industrialisation of our country.

These are important projects that would literally transform our economy and I ask the private sector to work with us to clarify the concept; mobilise capital; and oversee the successful implementation of these projects.

Equally important is the question of land policy. Land is a pre-requisite for investment and there is no shortage of land for development in Guyana. From Crabwood Creek to the Rupununi Savannahs, thousands of acres of land are available. We would seek to tap this abundant natural resource to bring benefits to our people. While we are mindful of the dangers of land concentration in few hands, we would still have to ensure its sustainable exploitation. We would explore new ways with the private sector in opening up and developing new lands.

Mr. Chairman, our success in attracting investment will also depend on the speed with which we reform the institutions that support the private sector. Clearly, we have not achieved the objectives for which Guyana Office of Investment (Go-invest) and the Guyana Export Promotion Council (GEPC) were set up. Additionally, the Private Sector Commission also performs functions, some of which, duplicate the role of these two agencies. We would like to see the streamlining of these agencies to better serve the needs of investors. However, two questions need to be addressed: what institutional structure do we want to create and what authority do we want to vest in this structure?

Mr. Chairman, in tandem with reforming the institutional structures that support the private sector, we would also seek to minimise bureaucratic inertia in the public sector. The public sector must not only be modernised but the pace at which decisions are made and action taken must be increased exponentially. There can be no place in today’s competitive world for red tape. These are major hindrances to the business community and which result in added costs. I challenge the private sector to work with us in not only documenting a compendium of red tape but also to eliminate them.

In addition, we would work to demystify the bureaucracy. Once we demystify the business of government, then the public and business community will be better aware of what are the procedures and requirements for a particular service. All government agencies will be required to make these procedures known. For example, what are the requirements to register a company, apply for land, clear goods from off the wharves, obtain certain licenses etc. Not only will we publicise the procedures and requirements, but also government agencies will be required to give firm commitments on the delivery of these services as regards time frames. This I believe will force government agencies to become more accountable to the public.

Mr. Chairman, as I announced in my address to the nation in August, my government intends to pursue strong foreign policy initiatives to bring trade and economic benefits to our country and to protect our national interest. Presently unfolding international trade negotiations are Post Lome IV, second phase of WTO, and the establishment of the FTAA. These negotiations have implications for our private sector, and we are proposing to involve you in articulating a national policy regarding these negotiations.

Mr. Chairman, it will be remiss of me if I do not address-- or should I say --throw some ideas on fiscal incentives.

Gold prices have fallen from over US400 to US$260 per ounce over the last three years. Although, the price of gold is now beginning to go up, it has already caused havoc and devastation to many entrepreneurs in that sector. My administration is proposing to reduce royalties to 4 percent if gold prices fall to below US$280, and to 3 percent if prices go below US$265 per ounce. This will apply only to local companies and producers.

We live in an electronic era. Business transactions are not only multiplying rapidly, but they are taking place with blinding speed. Use of information technology has markedly increased productivity across sectors and my government will give impetus to this transformation. Consistent with this, all information technology items will be imported free of duties and taxes. Spin-off industries or services in information technology, excepting those that buy and sell these items, will enjoy a five-year tax holiday.

I would like to now address my mind to the other sectors. Over the past year many of these sectors have suffered as a result of both internal and external factors. I wish to assure our entrepreneurs in these sectors that we would like to assist them as much as possible. I will be meeting later in the day with representatives of these sectors and I hope to discuss with them more fully their problems and examine possible solutions. Let me, however, comment on some areas.

In the forestry sector, we would like to propose for discussion an incentive regime that would firstly, act as an incentive to boost the sector and secondly, act as a disincentive against persons holding large tract of unutilised land .

The poultry sector has been experiencing some difficulties in recent times, especially in relation to the alleged “dumping” of chicken on our markets. Recently, we gave additional concessions to this sector. I would like at this summit for us to examine ways in which we can address this problem. At the same time, let me hasten to add that important as the internal market is, I would like to see greater strides being made by our local poultry industry to reduce costs and to become export oriented.

The fisheries sector has also been affected by the fall in international prices. I am willing to sit and discuss what we can do as a government to stimulate more value added production in this sector which has so much potential for generating employment.

Another industry that has been severely affected by exogenous factors has been the garment industry. This is an industry that has historically provided large-scale employment for many persons, especially women. Today it is in real problems as a result of the emergence of the North American Free Trade Association that has led to the loss of important markets.

We cannot allow this sector to go under especially since it employs so many persons. Thus, we would be willing to consider some form of tax incentives to stimulate this once vibrant industry. I feel that with the necessary incentives the industry can quickly take off since many of our local companies already have their plant and machinery in place. We can either offer a tax holiday or waive the consumption tax on local sales.

Tourism which, is one the fastest growing sectors in the world also deserves special attention. The potential of this industry is great. Let us agree during this summit on measures that would unleash the potential of this sector.

Mr. Chairman, I want to be clear. I do not want this summit to degenerate into an incentive summit. But I would encourage this summit to look deeper and arrive at policies and programmes that would be mutually beneficial to the treasury and the private sector.

Today we begin a rendezvous with destiny. The decisions we take will determine whether we survive in the new century or not. Let us remember that our responsibility is not only to our particular interests, but to our people as well. Let us therefore bring together at this summit our collective wisdom, reasonableness, our sense of social responsibility, and the common hopes we all share for a peaceful and prosperous Guyana.

Thank you.