Published in 2013 by: The Georgetown Chamber of Commerce & Industry 156 Waterloo Street North Cummingsburg Georgetown, Guyana Tel: + 592 225-5846 or + 592 227-6441 Tele/Fax: + 592 226-3519 Email: gccicommerce2009@gmail.com Website: http://www.gccigy.org Š Copyright reserved. None of the contents in this publication can be reproduced or copied in any form without permission in writing from the publisher.
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
The Georgetown Chamber of Commerce & Industry recognizes that building a more productive, more internationally competitive economy represents an unprecedented collective project that involves virtually every network and stakeholder group in the country. It becomes the responsibility of business, parliamentarians, the educational sector, all levels of government, and even every Guyanese citizen. The Georgetown Chamber of Commerce has the strength, voice and willingness to bring all parties together to help Guyana develop its competitive edge as an emerging economic powerhouse. Agenda For Action: 20 Barriers to Guyana’s In order toAnbreak through the Top barriers to higher growthCompetitiveness levels and to meet the most urgent development challenges, the power of the private sector in Guyana needs to be unleashed so that the best practices of a well-coordinated knowledge-based, 21st century economy can be shared and implemented throughout every sector and aspect of the nation’s economy. The challenges of achieving and sustaining significantly higher economic growth, of reducing poverty, of creating good jobs for our labor force, of building strong businesses and a healthy private sector must be met initially by working through and resolving the issues associated with numerous current barriers to Guyana’s capacity and capabilities for global economic competitiveness.
Clinton Urling
President
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Contents Ensuring Political and Economic Stability
1
Enacting Local Government Reform and Administering Elections
2
Improving the Tax System
3
Encouraging Investments and the Use of Alternative Energy Sources
4
Transforming the University of Guyana (UG) and Expanding Training and Educational Opportunities
5
Implementing Comprehensive Security Sector Reform
6
Establishing A Development Bank
7
Ensuring More Transparency and Accountability in the Management of the Public and Private Sectors
8
Enacting Urgent Commencement of the Public Procurement Commission (PPC) and the Inclusion of Private Sector Concessions to the Mandate of the PPC
9
Resolving Guyana’s Skills Challenge
10
Providing A Balanced, Efficiently Managed Regulatory Protocol and Framework
11
Establishing a Culture of Market Innovation, Research and Development (R & D)
12
Accelerating the Process of Information and Communication Technology Liberalisation to Make Guyana Competitive
13
Building a Modern Infrastructure
14
Making Guyana a Magnet for Foreign Direct Investment
15
Building a Globally Competitive Manufacturing Sector
16
Enacting Modern Intellectual Property Laws
17
Accelerating the Implementation of the National Competitiveness Strategy (NSC)
18
Strengthening the Commercial Court
19
Strengthening Foreign Economic Diplomacy
20
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Ensuring Political and Economic Stability
In November 2011, the results of the General Elections created an unprecedented situation in our country’s history, where the governing party had minority standing in Parliament. This unusual political development demanded a new environment of compromise and cooperation in Parliament and in the relationships engaging the executive and the legislature. Achieving mutually satisfactory compromise is a formidable task and no single party alone can resolve and reconcile the political challenges by dogmatically defending its core tenets and by refusing to acknowledge the basic common principles that underscore economic development in a universal or global sense. Our political leaders should be encouraged to cultivate an overarching mindset of negotiating to build consensus, even if it is to be accomplished in incremental phases. Now is the decisive moment in Guyana’s history asking that politicians find and work on common ground to reach essential agreement for the economic challenges the nation bears collectively. The record of Guyana’s history has shown that political stability is a fundamental prerequisite for growth and prosperity; this makes it imperative that we all strive for building and maintaining stable political relations to the benefit of all of the country’s citizens and stakeholders.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Enacting Local Government Reform and Administering Elections Guyana has not held Local Government Elections in 17 years and this has fostered an ongoing situation where local public officials are not held accountable for the affairs of their respective municipalities through the regular process and cycle of elections. Additionally, the local government system is outdated and must be reformed in order to respond effectively to the concerns of dynamic, growing communities in a nation that is beginning to develop a sophisticated, diversified infrastructure for economic activity and development. The current systematic status quo has left a depressing effect upon the climate for encouraging investments and businesses. A few examples of this impact include inefficient garbage disposal systems; a protracted protocol for approving building plans, and antiquated rates, fees, and tax system. These inefficiencies have led to unflattering visible results, with the pileup of solid waste and the generally unsightly, unhygienic appearance of towns across the country, and extraordinary instances of neglect, procrastination, and undue delay in approving private sector building plans and other regulatory mechanisms. The Chamber supports the passage of the four legislative bills that are currently in Parliament and which work towards implementing a timely, responsive local government system that can eradicate effectively the most entrenched problems in Guyana’s local communities.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Improving the Tax System
Guyana’s current
tax
system
places
a significantly
disproportionate burden upon our businesses, especially with exceptionally high rates for corporate and income taxes. In order for our domestic firms to be competitive in the global economy and for the nation to be just as competitive in attracting foreign firms to Guyana, a new tax code is warranted that reflects these economically competitive realities. This should be accomplished in a comprehensive, holistic reform program as opposed to a disjointed or fractional piecemeal legislation.
Moreover, tax incentives should be reviewed
and updated as needed to make them more attractive to manufacturers; potential investors in creative, innovative and high technology sectors, and for parties engaged in long-term foreign direct investments (FDI). Furthermore, The Chamber awaits the results of the ternary committee established by his Excellency President Ramotar to recommend the desired comprehensive, holistic reform of our tax system.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Encouraging Investments and the Use of Alternative Energy Sources It is an incontrovertible fact that high electricity and other energy utility costs represent major constraints and impediments to Guyana’s private sector development. Hence, we fully endorse efforts that support innovation and investment in the infrastructure required to develop and deploy renewable energy sources, which ultimately could mitigate the costs of electricity and other conventional energy sources. Thus, Guyana should enlarge its efforts to develop hydropower, bio fuels, wind, solar, and other economically viable, eco-friendly and sustainable energy sources. Additionally, we encourage our private sector companies to adopt formal strategies and implementation plans to incorporate a mix of diversified energy sources to improve energy efficiency and, in the process, to mitigate the high costs of conventional energy sources. For the longer term, we must sustain supporting innovation and investing in the infrastructure essential for developing and integrating renewable energy into our utility infrastructure.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Transforming the University of Guyana (UG) and Expanding Training and Educational Opportunities The University of Guyana is the nation’s main institution of higher education and should be recognized as a hub for national research and development and as a center for producing a competent and qualified skilled labor force that meets the needs of our rapidly evolving private sector. In order to achieve this, UG must incorporate a well-managed, well-financed, dynamic professional organisational structure free from undue political and partisan interference.
We
welcome the recent announcement of President Ramotar, at the 2012 Convocation Ceremony, to make UG into a “world class institution” and the corresponding objective of UG to make “quantum leaps because Guyana’s development is at the stage where we will now increasingly be reliant on more highly educated workers…[and] our integration into the interconnected global marketplace will demand a variety of skills and multi-skilled persons who can only be produced by educational institutions of the highest quality.”
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Implementing Comprehensive Security Sector Reform The security of all citizens should be of the highest priority. That duty along with the  obligation  to preserve the integrity, security and authority of the nation comprise the cornerstones for a competitive, confident, equitable Guyana. The incidence of crime and its related perceptions among the public serve to depress and suppress the economic climate and that impact consequently affects consumer and business confidence as well as serves to deter investments and magnify cost burdens for business. Recognizing these factors, the Chamber supports the review of our entire national security sector with the aim of restructuring, upgrading and enhancing our security apparatus, including the police force, the prison system, fire service, and the military. The Government already has taken a major step in this direction with its Public Safety and Security Strategy and the presentation of Strategic Plans for the Guyana Police Force, the Ministry of Home Affairs, and the Guyana Prison Service, announced in early 2013.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Establishing A Development Bank Even though commercial lending interest rates reduced significantly over the recent period, these rates still are prohibitively high for many businesses and, in connection, the conservative nature of commercial banks often leads to the exclusion of a vast number of business proposals from prospective financing. Micro-, small-, and medium-sized businesses along with ventures led by young people and, innovative economic projects in new relatively untested areas are, for example, considered risky by traditional commercial lending institutions and thus face the most challenges when attempting to access capital. We need a development bank, preferably structured in the public-private partnership model that offers longer term lending, lower interest rates and economically feasible collateral requirements.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Ensuring More Transparency and Accountability in the Management of the Public and Private Sectors This should be one of the highest priorities for our national public and business leaders as this climate of transparency and accountability builds trust with the public. That trust is achieved in the public sector by providing accurate and complete information on expenditures, projects and other transactions. Good
corporate
acknowledged
responsibility
ethical
based
principles
and
on
universally
standards
of
accountability also are critical to ensuring Guyana’s capacity for global competitiveness. Companies must ensure that their internal systems can withstand strong and strict scrutiny that document practices of the utmost financial propriety, that accurate taxes due are remitted, that no bribing or corrupting of public officials are condoned, and that all activities and business practices are conducted within a well-articulated ethical framework. Without such systems, the country loses out, among other things, on tax revenues, and if improprieties lead to business failure or collapse, we are destined to erode our overall edge in productivity and competitiveness.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Enacting Urgent Commencement of the Public Procurement Commission (PPC) and the Inclusion of Private Sector Concessions to the Mandate of the PPC Firm and companies execute public projects, both small and large, that are critical to Guyana’s capacity for competitiveness and long-term economic development. It is imperative that the awarding of such projects is made through
peer-review
processes
that
are
competitive,
transparent and nondiscriminatory and which would lead to the most qualified and competent companies being awarded contracts. Additionally, the procurement of public goods and services should be administered in a similar manner. Strong public procurement rules mean more competition, stronger safeguards against corruption, and better service and value for money on behalf of the taxpayers. The PPC aims to accomplish this precisely. Legislation amending the Constitution to establish the PPC was enacted in 2002. However, the PPC has yet to commence its operations and fulfill its constitutionally legislated mandate. This failing must be corrected with the urgent commissioning of the PPC. The Chamber further recommends the inclusion of the granting of private sector concessions to the mandate of the PPC, making it the Public Procurement and Concessions Commission, as both require similar scrutiny and examination.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Resolving Guyana’s Skills Challenge Guyana has a growing shortage of skilled workers and strategies should articulate the objectives and programmes to equip and retain more people with the right skills that enhance the nation’s capabilities for competing and prospering in a global knowledge-based economy.
Migration and
globalisation, structural changes in the labour market, and lack of adequate and appropriate educational and training opportunities are contributing factors that must be addressed in any policy making programme.
The presence of skills
deficits are particularly ominous for economic development as it inhibits the nation’s business community from expanding and broadening its commercial activities, which, in turn, deters both domestic and foreign investments, decreases quality of goods and services, and stymies technological progress, and suppresses other measures of economic activity. Officials and representatives from the government, private sector, community groups and leaders, and academia must address this barrier with considerable attention and analytical care in order to identify and implement solutions both in the immediate and short term as well as the medium and long term cycles.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Providing A Balanced, Efficiently Managed Regulatory Protocol and Framework Guyana’s private sector continues to expand and grow in promising ways. This reality underscores the imperative that all companies should be properly regulated through systems that are fair, transparent and applicable to all. However, to ensure that businesses are not bogged down by excessive regulatory red tape and that the public health, safety and welfare is protected and secure, a review of our current regulatory institutions is strongly recommended along with provisions of allocating more resources required to ensure that we reform the structure of our regulatory institutions in order to reflect ever-increasing and ever-changing needs of a sophisticated modernised economy. We also have to make it easier for anyone to start a business in Guyana and receive the appropriate and proper regulatory requirements in a timely manner, such as land title, building permits, work permits, licenses, and other items. We must find the proper regulatory balance to allow prospective businesses to register, grow and prosper while ensuring the public health,
safety, and welfare are always vigorously
protected.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Establishing a Culture of Market Innovation, Research and Development (R & D) For the Guyana economy to sustain its growth and to diversify, we must encourage the development of a knowledge-based and innovation-driven economy. Apart from the University of Guyana being a hub for research and development (R&D), we have to inculcate a pervasive culture of knowledge and technological innovation in all of our educational institutions, starting from the junior school level. Such a focus will enhance Guyana’s key industrial strengths to produce world-class and high value exports. Similar emphasis must be placed on business innovation and commercialisation of R&D through the strengthening of the Institute of Applied Science and Technology (IAST). Additionally, the government should create an incubating enterprise platform that provides incentives and tax breaks for businesses that develop innovative solutions. Similarly, these incentives should be extended to multinational corporations (MNCs) to collaborate with domestic firms to develop innovative products and services, helping local companies build credible track records in their respective industries, support and broaden innovation activities and practices, and accumulate knowledge capital.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Accelerating the Process of Information and Communication Technology Liberalisation to Make Guyana Competitive Guyana
must
accelerate
telecommunications sector.
the
liberalisation
of
its
The Chamber supports the
tabling in Parliament of the Telecommunications Bill 2011 and the Public Utilities Commission (Amendment) Bill 2011. This would allow for greater market competition in the sector, which would result in reduced costs of digital connectivity for both consumers and businesses, increased domestic and international bandwidth,
lower costs associated
with international services, improved investment climate in telecommunications, support sector expansion and growth through the development of new ICT products and services, enhanced business processes, and reliable and fast performance and service, just to name a few examples.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Building a Modern Infrastructure Adequate and modern infrastructure goes hand in hand with the capabilities of our firms and our national economy to achieve favorable export diversification and attract higher levels of foreign direct investment (FDI). Investment in infrastructure has to be scaled up to broaden Guyana’s socioeconomic activities and support the development of social infrastructure in the country’s rural and urban areas. Moreover, Guyana needs a multi-stakeholder mechanism (involving government, community and political leaders, private sector, and academia) for prioritising infrastructural projects, cultivating ideal environments for private sector investment that includes promoting and fortifying local financial markets, and for strengthening the tools of corporate governance and managerial capabilities of local authorities to conduct urban and community planning and to promote a culture of transparency along with incorporating anticorruption safeguards.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Competitiveness Manifesto: Top 20toBarriers to Guyana’s Competitiveness Top 20 Barriers Guyana’s Competitiveness
Making Guyana a Magnet for Foreign Direct Investment
Guyana should strive to position itself as a location of choice for the world’s leading companies and MNCs must be recognised and welcomed as key players in our economic development, as they represent a valuable source of capital, industry and market knowledge, and new technologies. Likewise, they can facilitate Guyana’s access and entry into the markets of the world’s most advanced economies. Guyana already has taken steps to establish a welcoming foreign investment climate, but some hurdles persist. Guyana must broaden the opportunities for foreign direct investment, by actively promoting these initiatives and by consolidating and improving the regulatory regimes to enable such investment. Go-Invest is an ideal candidate to become a one-stop shop for the nation’s best investment opportunities. President Ramotar has echoed these sentiments, calling for a greater role for GO-Invest which would start by assessing the agency’s work to date and recommending ways in which the organisation’s objectives could involve more proactive strategies and tactics.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Building a Globally Competitive Manufacturing Sector Our manufacturing sector holds some of the most promising possibilities for Guyana to diversify its economy and compete globally. High value and complex manufacturing generates good jobs with diverse skill requirements, provides opportunities for continuous improvement and upgrading, and stimulates demand for sophisticated services. We must pay particular attention to manufacturing and incentivise our manufacturers through tax breaks and cost effective measures such as lower electricity charges. Additionally, customised financing arrangements should be made available to manufacturers that would include, for example, tax exemptions for banks and commercial lending institutions that approve financing for such ventures. Moreover, government should make funds available to provide seed capital to cofund manufacturing projects with high potential.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Enacting Modern Intellectual Property Laws In acknowledging the significance of research and development in strengthening Guyana’s capabilities for diversifying its economy and attracting more international investors, our policy makers will have to craft a modern, progressive system of intellectual property (IP) laws. Current IP legislation dates to the 1930s and the most recent amendments were made only in the 1970s. One pernicious consequence is that our laws are insufficient to deal with legal issues surrounding the use of digital and cyber content. New IP laws will be a fundamental driver especially in developing Guyana’s creative industries. It will also encourage greater FDI, increase trade, and expand licensing flows from other nations. Likewise, additional IP protections will stimulate innovative enterprises because originators can confidently reap legally merited benefits of economic incentives.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Accelerating the Implementation of the National Competitiveness Strategy (NSC) Guyana’s NSC came into being in 2006 shortly after extensive consultations at the Presidential Summit. The NCS represents a comprehensive strategy for making Guyana a highly competitive global economic power, In fact, many of the recommendations contained in this document forms part of the NSC. However, while some initiatives have been implemented, many still have not been operationalised. We urge the National Competitiveness Council to ensure that the goals of the strategy are fast tracked and implemented.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Strengthening the Commercial Court Since its establishment, the commercial court has helped significantly to address issues and disputes that potentially could hamper and constrain Guyana’s fundamental objective of fortifying its position of economic competitiveness. However, the court’s current capacity should be expanded and upgraded to adjudicate efficiently and effectively the diverse spectrum of commercial disputes. More judges, support staff, physical infrastructure, and technology improvement (including teleconferencing capabilities) are among some of the issues that should be addressed.
The Georgetown Chamber of Commerce & Industry
Competitiveness Manifesto: Top 20 Barriers to Guyana’s Competitiveness
Strengthening Foreign Economic Diplomacy
Guyana’s foreign policy and international relations institutions should be strengthened to become an effective tool in the country’s ongoing economic development and competitiveness programmes. The most critical primary attention should be made in the area of international economic relations to foster the opening of markets to Guyanese products; attracting investments to economic sectors of national interest; improving access to information, science and technology, as well as preserving biodiversity and the environment. Our foreign policy should seek to consolidate economic ties with our main trade partners while diversifying the destination and composition of Guyana’s exports, along with the sources of foreign direct investment. This would require additional resource allocations for hiring more foreign service officers; upgrading staff competencies through regular training; opening new diplomatic missions and consular offices internationally; improving communication and information sharing with private sector; incorporating new information technologies in order to buttress the foreign policy’s communication strategy; creating institutional mechanisms that allow the permanent linkage of the Ministry of Foreign Affairs with political parties, civil society, productive sectors and academic centers, to ensure the follow-up of changes in the international system that affect the interests and expectations of Guyana.
The Georgetown Chamber of Commerce & Industry
notes
The Georgetown Chamber of Commerce & Industry