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2013 Investment Climate Statement - Guyana


2013 Investment Climate Statement
Bureau of Economic and Business Affairs
February 2013
Report
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Openness to, and Restrictions Upon, Foreign Investment

The Government of Guyana actively encourages foreign direct investment (FDI). While maintaining a strong track record in attracting government-to-government development assistance, its record in attracting private sector investment has been inconsistent, though increased activity in extractive industries and energy could lead to large investments in coming years, driven by development in the hydroelectric, mining and oil and gas sectors. Overall, Guyana is open for investment, and poses few legal impediments to foreign investors, but needs to do more to facilitate investment and implement more transparent and accountable procedures.

The main investment agency, the Guyana Office for Investment (GO-INVEST), focuses primarily on agriculture and agro-processing, tourism, manufacturing, information and communication technology, seafood and aquaculture, as well as wood processing sectors. Potential investors should note that GO-INVEST is the starting point for those seeking necessary permits and tax concessions, but often time-consuming engagement with other offices is likely to be required. Permits will vary by the nature of the investment. For example when purchasing land it is often necessary to obtain approval from Guyana Lands and Survey, while mining or forestry projects require approval from Ministry of Natural Resources. GO-INVEST assesses whether a prospective investor’s proposals have sufficient capital backing, and, if not, inquiries generally do not progress further. Due to the state’s central role in the domestic economy and the Government of Guyana’s tendency to centralize decision-making, potentially large foreign investments receive intense political attention, often from the highest political level. Over the past decade, the government enacted new laws or amended existing ones to encourage foreign direct investment, with mixed levels of success.

Guyana offers an adequate legal framework for foreign investment, but implementation of relevant legislation remains inconsistent and sometimes deficient. The Investment Act of 2004 seeks to stimulate socioeconomic development by attracting and facilitating foreign investment. Other relevant laws include the Income Tax Act, the Customs Act, the Procurement Act of 2003, the Companies Act of 1991, the Securities Act of 1998, and the Small Business Act. Regulatory and administrative actions are still required for much of this legislation to be effectively implemented.

The judicial system is generally perceived to be slow and ineffective in enforcing contracts or resolving disputes. Perceptions of corruption and long delays make the courts an unattractive option for settling investment or contractual disputes, particularly for foreign investors unfamiliar with Guyana. To redress this obstacle to investment, the Government of Guyana, with support from the Inter-American Development Bank (IDB), established a Commercial Court in June 2006. While the Commercial Court started off with some promise, it has failed to make any appreciable impact on the timely settlement of business disputes.

Guyanese law permits foreign ownership of companies, and there is no mandatory screening of foreign investment. However, the government conducts de facto screenings of most investments to determine which businesses are eligible for special tax treatment, access to licenses, land, and approval for investment incentives. In spite of recent efforts to remove discretionary power from various ministries, ministers still retain significant authority to determine how relevant laws, such as the Investment Act, Small Business Act, and Procurement Act, are applied.

In general, foreign investors receive the same treatment as local investors in Guyana. One key exception exists: the special approval required for local financing. Foreign borrowers applying for a local loan of more than GY$2 Million (US$10,000) must request permission from the Minister of Finance. This requirement is intended to encourage foreign investors to bring capital into the country.

Another exception – in the mining sector -- restricts ownership of property for small and medium-scale mining to citizens of Guyana. Foreigners may enter into joint-venture arrangements under which the two parties agree to jointly develop a mining property. There are no restrictions on the percentage of the investment shouldered by the foreign investor, and these arrangements are strictly by private contract. However, such relationships carry a high degree of risk, and the U.S. Embassy strongly encourages U.S. investors to exercise due diligence when exploring possible joint ventures with Guyanese mining entities.

Foreign investors generally have equal access to privatization opportunities. For some larger operations, the government explicitly seeks to attract foreign investment. Most large-scale investments in Guyana's infrastructure are government projects financed by international lending institutions, with the IDB being one of the largest lenders. The Government of Guyana generally grants U.S. firms equal opportunity to compete for these projects, though many remain unattractive to U.S. bidders. China and India have recently emerged as significant non-traditional lenders.

The Low Carbon Development Strategy (LCDS), launched on June 8, 2009, informs Guyana’s long-term development plan, outlining objectives to transform Guyana’s economy, conserve its forests, and adapt to global warming while reducing carbon emissions. Initially relying on donor assistance, with plans to eventually draw on private investment in a global market for carbon credits, the Government of Guyana intends to channel forest conservation payments into human capital development, climate change adaptation, and strategic investments in low-carbon economic sectors. The LCDS, launched in May 2010 by the Government of Guyana, identifies business process outsourcing, hydropower, sustainable forestry and wood products processing, ecotourism, biofuels, aquaculture, and other high-value, export-oriented agriculture as potential areas for growth. The Government of Guyana established a Project Management Office within the Office of the President tasked to attract and vet potential foreign investors in sectors complementary to the LCDS.

Following the launch of the LCDS, the Government of Norway (GoN) entered into an agreement under which the Government of Guyana would protect Guyana’s tropical forest for its carbon storage and other ecological services. Norway agreed to contribute up to $250 million over five years if Guyana meets benchmarks for low rates of deforestation and forest degradation. To date, Norway has paid more than $70 million into the Guyana REDD+ Investment Fund established to implement the agreement. The Government of Guyana views this financial commitment and inclusion of incentives for forest conservation in the 2009 Copenhagen Accord as part of a framework that will lead to higher levels of LCDS investment in coming years.

In evaluating the ease of doing business in Guyana, a World Bank and International Finance Corporation report, "Doing Business 2013" ranked Guyana 114 out of 185 countries. According to the report, starting a business in Guyana is challenging. For example, the report asserts that an entrepreneur can expect to go through eight procedures requiring an average of 20 working days total in order to launch a business. To enforce a contract, the report cites 36 procedures that take an expected timeline of 581 days to complete. Registering property requires six procedures with an expected timeline of 75 days. (http://doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Annual-Reports/English/DB13-full-report.pdf)

In assessing Guyana's competitiveness, the World Economic Forum's publication, "The Global Competitiveness Report 2012 - 2013," ranked Guyana 109 out of 144. The report identified crime and theft, corruption, tax rates, access to financing, a poor work ethic within national labor force, an inadequately educated workforce, inefficient government bureaucracy, and inadequate infrastructure as the most problematic factors for doing business in Guyana. (http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf)

According to the Heritage Foundation’s 2013 Index of Economic Freedom, Guyana’s performance in terms of economic freedom has steadily improved since 2009; however the country still underperformed its global and regional counterparts. The Index of Economic Freedom notes that while Guyana registered the second-largest score improvement in the 2013 index, economic growth is limited by structural and policy inadequacies. The report ranked Guyana 129th out of 177 countries globally and 22nd out of 29 countries in the South and Central America/Caribbean region. Its overall economic freedom score of 53.8 remains below the world average of 59.6 and the regional average of 59.4. The economic indicators used to determine Guyana's economic freedom were business freedom (66.3), trade freedom (71.2), fiscal freedom (67.9), government spending (61.1), monetary freedom (75.9), investment freedom (35.0), financial freedom (30.0), property rights (30.0), freedom from corruption (25.0), and labor freedom (75.4). Guyana's overall score is 2.5 points higher than in the 2012 index. (http://www.heritage.org/index/download)


Table 1: Guyana’s International Index Rankings and Millennium Challenge Corporation Scorecard Percentiles* for 2013 - http://www.mcc.gov/documents/scorecards/score-fy13-guyana.pdf


Year

Measure

Index, Ranking, and Percentiles

2012

TI Corruption Index

133/176

2013

Heritage Economic Freedom

129/177

2013

World Bank Doing Business

114/185

2013

MCC Government Effectiveness

75th

2013

MCC Rule of Law

50th

2013

MCC Control on Corruption

44th

2013

MCC Fiscal Policy

53th

2013

MCC Trade Policy

31th

2013

MCC Regulatory Quality

31th

2013

MCC Business Start-Up

56th

2013

MCC Land Rights and Access

75th

2013

MCC Natural Resource Protection

44th

Source: Transparency International (TI), Millennium Challenge Corporation (MCC), Heritage Economic Freedom, World Bank Doing Business Report

*MCC percentiles range from 0 to 100. A country’s percentile ranking in its respective income group means that it outperformed x percentile of its grouping (0 percent is the worst; 50 percent is the median: 100 percent is the best)

Conversion and Transfer Policies

The Guyana dollar is fully convertible and transferable. According to the Bank of Guyana Half Year Report 2012, the average exchange rate is US$1 to GY$204 at the end of June 2012 (www.bankofguyana.org.gy/). There are no limits on inflows or repatriation of funds, although spot shortages of foreign currency occur. Regulations require that all persons leaving and entering Guyana declare all currency in excess of US$10,000 to customs authorities at the port of entry. There is no limit on the acquisition of foreign currency, although the government limits the amount that a number of state-owned firms may keep for their own purchases. Regulations on foreign currency denominated bank accounts in Guyana allow funds to be wired in and out of the country electronically without having to go through cumbersome exchange procedures. Foreign companies operating in Guyana did not report any government induced difficulties in repatriating earnings in recent years.

In practice, many large foreign investors in Guyana use subsidiaries outside Guyana to handle earnings generated by the export of primary products, including timber, gold, and bauxite. Those companies then advance funds to their local entities to cover operating costs.

Guyana has a floating exchange rate determined by supply and demand, predominantly driven by activities of Guyana’s three largest commercial banks. The government has previously intervened in support of the Guyana dollar with some success. The government will likely continue to intervene in defense of the Guyana dollar and its international reserves.

The Guyana dollar remained stable, depreciating marginally by 0.25 percent against the U.S. dollar. Sufficient flow of foreign exchange to the market underpins the relative stability of the currency. There is more than an adequate supply of foreign exchange in the system to meet balance of payments needs, creating an economic environment in which the exchange rate should remain relatively stable for 2013.

Guyana is neither an important regional or offshore financial center, nor does it maintain any free trade zones. Money laundering continues to be perceived as a serious problem, and has been linked to drug trafficking (principally cocaine), firearms trafficking, other illegal smuggling, corruption, and fraud, as well as to the influx of foreign currency. Guyana boasts a large informal economy in which cash is preferred by both buyers and sellers for most transactions, making it highly vulnerable to money laundering. The Financial Intelligence Unit (FIU) is mandated to request, receive, and share information on financial crime in accordance with the implementation of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act. However, the FIU lacks clear mechanisms for supporting an interagency law enforcement response to AML/CFT. The U.S. Embassy is working with the FIU and other stakeholders under the Caribbean Basin Security Initiative (CBSI) to strengthen Guyana’s response to financial crime.

Expropriation and Compensation

On August 16, 2001, the National Assembly approved the Acquisition of Lands for Public Purposes Bill 2001. This Act cleared the way for the government to acquire private parcels of land at prices below market value. Since its inception, the government has exercised the Act in a limited capacity, mainly for development purposes deemed to be in the national interest (e.g., clearing the way to build the Berbice River Bridge) and to terminate contracts.

Presently no evidence of discrimination against U.S. investments, companies, or representatives in the application of expropriation laws exists. However, some U.S. investors exploring business opportunities in Guyana have complained that their business plans, along with information from their preliminary studies, are not always held in confidence when shared with government officials.

The forestry sector remains at greater risk for expropriation or similar actions. Some forestry companies and individuals have been subject to action under the aforementioned 2001 Act, due to alleged breach of contracts with the government, non-use of their concessions and/or owing debts to the government.

Dispute Settlement

Guyana is a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. International arbitration decisions are enforceable under the Arbitration Act of 1931. Guyana is also a member of the International Center for the Settlement of Investment Disputes (ICSID).

Currently there is one major investment dispute involving a U.S. company, Atlantic Tele Network (ATN), which owns 80 percent of Guyana Telephone and Telegraph (GT&T). The dispute involves the company’s claim to exclusivity on land-based telephony. The company asserts that its contract signed with the government in 1991, grants ATN the exclusive right to provide such service in Guyana for 20 years, with an option to extend the contract for a further 20 years. ATN and the Government of Guyana began negotiations in 2008, and are currently still pursuing a definitive settlement.

On August 4, 2011, the government tabled in the National Assembly a new Telecommunications Bill that seeks to provide for an open, liberalized and competitive telecommunications sector that will be attractive to new market entrants and investors, while preserving the activities of the current sector participants. The new Telecommunication Bill intends to repeal the Telecommunications Act 1990 and repeal the provisions of the Post and Telegraph Act governing wireless telegraphy. Opposition parties have drafted a different version, and both bills remain pending in the National Assembly.

Performance Requirements & Incentives

Although there is no explicit government policy regarding performance requirements, some are written into contracts with foreign investors and could include the requirement of a performance bond. Some contracts require a certain minimum level of investment. Investors are not required to source locally, nor must they export a certain percentage of output. Foreign exchange is not rationed in proportion to exports, and there are no national ownership or technology transfer requirements.

The Status of Aliens Act allows a non-resident of Guyana to acquire and dispose of assets and moveable and immoveable property in the same manner as a citizen of Guyana. The government treats domestic and foreign investors alike with regard to investment incentives. The Government of Guyana offers incentives to all investors equally, as well as incentives available based on specific criteria such as location of an investment or investment in specific government-targeted sectors.

The Fiscal Enactments Act of 2003 allows the Minister of Finance to grant exemptions from corporate tax for a period of five years to an investor if the activity demonstrably creates new employment in certain regions of the country (primarily hinterland regions one, eight, nine, and ten). In the case of new economic activity, the Minister may grant a tax holiday of up to ten years if the activity falls under the following categories: non-traditional agro processing (excluding sugar refining, rice milling and chicken farming); tourist hotels or eco-tourist hotels; information and communications technology (excluding retailing and distributing); petroleum exploration, extraction, or refining; and mineral exploration, extraction, or refining. The Minister of Finance maintains final discretion over which investors receive corporate tax exemptions.

The Income Tax Act of 1998 provides for accelerated depreciation of plant and equipment, pending approval of the Minister of Finance on a case specific basis. The government previously used the act to provide export tax allowances for manufacturing or processing of non-traditional products exported to countries outside of the Caribbean Community; and for tax allowances for research and development.

The Minister of Finance holds authority to approve exemptions and waivers from customs duty, excise tax and value added tax on plant, equipment, machinery and spare parts. Though not required, the government expects investors to submit business proposals to GO-INVEST that outline the proposed project, the value of the investment, and employment to be generated from the investment. GO-INVEST reviews proposals and makes recommendations to the Guyana Revenue Authority (GRA) in accordance with the Customs Duties Order of 2003. The GRA determines whether imports comply with regulation and whether those materials are eligible for tax relief. GRA makes the final recommendation to the Minister of Finance on whether to grant exemptions and waivers from customs duty, excise tax, and value added tax.

Similarly, the policy provides for a tax allowance for non-traditional exports to non-CARICOM countries. Traditional products include rice, sugar, bauxite, gold, diamonds, timber, petroleum, lumber, shrimp, molasses, and rum. The allowance ranges between 25% and 75%, and at least 10% of sales must be exported to qualify.

In certain circumstances, Guyana also offers duty-free imports and tax holidays to investors on request. The creation of value added is a key factor in the determination of duty-free status and value added tax waivers. Authorities note that blanket approvals are not given; instead they review each import consignment individually. When granted, GRA lowers or waives the duty and value added tax completely, based on the industry and item. The authorities note that tax holidays remain less likely to be granted than duty-free status or a value added tax waiver.

A number of companies/businesses, both foreign and domestic, benefited from investment incentives such as corporate tax exemption, income tax (In Aid of Industry) exemption, export tax exemption on non-traditional exports and, exemption from customs duty, excise tax and value added tax.

Right to Private Ownership and Establishment

The right of foreigners to own property or land in Guyana is specifically protected under the Constitution. Private entities may freely acquire and dispose of interests in business enterprises, although some newly privatized entities have limits on the number of shares that may be acquired by any one individual or entity (domestic or foreign). Similarly, the articles of association of some firms prohibit the issuance of more than a certain number of share transfers to any one individual or company in an effort to prevent attempts to gain control of such companies in the secondary market.

The Government of Guyana grants foreign and domestic firms the right to establish and own business enterprises and engage in all forms of remunerative activity. Licenses are required in the mining, telecommunications, forestry, banking, and tourism sectors. Getting all of the licenses needed to operate in Guyana tends to be a time-consuming task. Even according to GO-INVEST's optimistic Investor's Roadmap, the estimated processing time to obtain the approvals to lease state or government-owned lands may take one year; some investors report much longer processing times.

Protection of Property Rights

Upon independence in 1966, Guyana adopted British law on intellectual property rights (IPR). The Government of Government took some piecemeal steps to modernize IPR laws, including the Geographic Indication Act of July 2005 protecting products of uniquely Guyanese origin, however, overall legislation remains outdated and does not meet international norms. Guyana joined the World Intellectual Property Organization (WIPO) and acceded to the Bern and Paris Conventions in late 1994. Registering a patent or trademark can take six months or longer, and there are virtually no effective enforcement mechanisms protecting intellectual property rights. It follows that patent and trademark infringement is common. Local television stations, including the state-owned and operated National Communication Network (NCN), pirate and rebroadcast TV satellite signals with impunity. Most music, videos, and software for sale are pirated. Book piracy is also rampant, especially foreign textbooks; some estimates say illegally photocopied textbooks account for nearly one-third of local sales. As recently as September 2012, both local and international media reported that the Education Ministry invited seven pre-selected local firms to supply copies of primary and secondary-level textbooks, prompting a bid by the Trinidad and Tobago-based Royards Publishing Company, which holds the copyright for many of the books. Following threats of legal action by the copyright holder, the Government came to terms to purchase the textbooks legally. However, the government's initial willingness to sanction textbook piracy generated international and local criticism for its apparent indifference to IPR. Guyana does not have a ratified intellectual property rights agreement with the United States. The Ministry of Foreign Trade and International Cooperation and the Ministry of Legal Affairs drafted Trade Related Intellectual Property Rights (TRIPS) legislation in 2001, but the draft still lies dormant and unused.

Transparency of the Regulatory System

Guyana does not have any form of anti-trust legislation. In April 2006, Parliament passed a Competition and Fair Trading Act, which targets offenses such as price fixing, conspiracy, bid-rigging, misleading advertisements, anti-competitiveness, abuse of dominant position, and resale price maintenance. The Act provides for a Competition Commission to have authority to review anti-competitive business practices, but the Commission is not fully functional. The Government of Guyana appointed members to the Competition Commission and the Commission receives complaints, however, it remains inadequately staffed.

Historical factors and Guyana's small population and economy led to many sectors being dominated by one or two firms. Bureaucratic procedures are cumbersome and often require the involvement of multiple ministries. Investors often receive conflicting messages from officials, creating difficulty in determining where the authority for decision-making lies. In the current absence of adequate legislation, much decision-making is centralized, with the Cabinet or the Office of the President resolving an extraordinary number of issues in a non-transparent process that often results in delays.

The Parliament Library generally maintains draft legislation for public review.

Efficient Capital Markets and Portfolio Investment

Guyana's capital markets remain underdeveloped. Inefficiencies and delays periodically plague the foreign currency market. Businesses report that currency shortages sometimes result in delays in converting Guyana dollars to U.S. dollars at some banks. Because Guyana has not developed an effective interbank trading system, some banks may be short of foreign exchange while others have currency available.

The Financial Institutions Act of 2004 gives the Central Bank the power to take temporary control of financial institutions in trouble. Prior to the implementation of this law, the Central Bank faced criticism for not taking a more proactive role in helping insolvent local banks.

Interest rates on capital loans typically range from 10 percent to 20 percent. The Minister of Finance must grant permission for a foreign investor to borrow more than US$10,000 (GY$2 million) from local banks. The Government of Guyana sells government treasury bills at auction to finance the public debt and as its primary monetary policy tool. Other government-controlled rates move with the Treasury bill rate. Past private attempts at bond financing failed and no private companies have announced large bond offerings in recent years.

The banking system in Guyana is liquid. Local bank statements reveal that deposits continue to increase even as loans remain flat; a trend that suggests the existence of a large underground, cash-only economy. Local analysts estimate that the underground economic activity accounts for 50 percent or more of Guyana's total economic activity. Eager to lend money, but skeptical of Guyana's legal system, banks claim that they are unable to find suitable local applicants for loans at prevailing interest rates.

The Government of Guyana encourages companies to finance new operations by offering shares on Guyana's Stock Exchange. In 2003, the Guyana Association of Securities Companies and Intermediaries Inc. (GASCI) http://www.gasci.com/index.htm, registered with the Guyana Securities Council to operate a stock exchange and an association of securities companies and intermediaries. Its members, the stockbrokers who compete against each other in share trading, own GASCI. GASCI relies on trades to support the exchange's operations. The small volumes traded, however, remain insufficient to meet organizational expenses. Consequently, the association struggles to maintain adequate staffing levels.

Two of the largest local conglomerates (DDL and Banks DIH) targeted the Guyana Securities Council (GSC), the regulatory body for the securities industry, in two high profile lawsuits over disclosure issues and the interpretation of the act governing GSC operations. The GSC also struggles to garner the support of listed firms that appear unwilling to disclose relevant information. Individual investors generally prefer to utilize the banking sector to finance investments, and most of the small and medium enterprises (SMEs) in Guyana are family-owned businesses.

Competition from State-Owned Enterprises (SOE)

According to the World Bank Country Assistance Strategy for Guyana 2009-2012, Guyana’s public sector investment represents approximately 60 percent of gross domestic investment. Private enterprises compete with public enterprises under the same terms and conditions of market access, credit and other business operations, and licenses. State-Owned Enterprises (SOEs) include Guyana Sugar Corporation (GUYSUCO), Guyana Gold Board, Guyana Oil Company Limited, National Communications Network, Guyana Power and Light Inc., and the Guyana National Printers. The corporate governance structure of Guyanese SOEs requires that senior management report to the chief executive officer, who reports to the board of directors, who in turn report to a government minister. The government does intervene at least indirectly in the management of SOEs, since the Office of the President appoints members of the SOEs’ boards of directors.

The National Industrial and Commercial Investments Limited (NICIL), a semi-private limited company acts as subscriber and manager of the government's shares, stocks, and debentures of any company, cooperative societies or other corporate body. It also manages government-owned real estate properties, including their acquisition, disposal or rental. NICIL has been criticized for conducting its affairs in a less than transparent manner and for being controlled by a closed circle politically-affiliated officials. NICIL’s revenue and profits, unlike significant portions of government financial activities, are not processed through the government’s Consolidated Fund, subject to parliamentary oversight, but are controlled directly by a board appointed by the executive branch.

Guyana underwent a significant privatization process during the 1990s, divesting many of its holdings in the banking, telecommunications, agriculture, and manufacturing sectors. Thereafter, the pace of privatization slowed. Since 2003, the Government of Guyana has privatized only two entities: National Bank for Industry and Commerce, which now does business as Republic Bank; and National Edible Oil Company, acquired by a biofuels company. In addition, the state reduced its participation in two of Guyana's leading bauxite mining companies, the Aroaima Mining Company and Linmine Bauxite.

The Public Corporation Act requires public corporations to publish an annual report no later than six months after the expiry of each calendar year. However, many corporations operate in breach of this regulation. Until recently, NICIL's financial reporting was up to date only to 2004. Under pressure from the National Assembly, NICIL has now released updated annual reports and accounting data though 2011. The Public Corporations Act also requires that an independent auditor annually audit the accounts of a public corporation. These audits reveal a multiplicity of recurring problems.

Corporate Social Responsibility

Compared to corporate social responsibility (CSR) norms in North America and Europe, Guyana- based businesses lag in adopting CSR policies and activities. Though many businesses engage in charitable acts, the totality of these acts does not constitute good CSR practices. Guyanese consumers generally are not aware of CSR principles and do not demand them from local businesses they patronize.

Political Violence

Crime is a major problem in Guyana, and it has deleterious effect on the economy and investment. U.S. companies and individuals do not appear to be singled out as targets of violence. In the past, violence has increased around elections. However, the recent national election of November 2011 marked the second consecutive largely peaceful election. The failure to hold long-overdue local government elections (last held in 1994) contributes to political uncertainty and diminishes overall governance capacity. In July 2012 a group of residents in Kwakwani, a mining community, staged protests when the Minister of Local Government dissolved the Neighborhood Democratic Council (elected in 1994) and appointed an Interim Management Committee to oversee the affairs of the community. The community resisted a centrally imposed local government authority and, following the protest, elected its own local community management body, the Kwakwani Development Committee – “The People’s Choice”.

Serious crime, including murder and armed robbery, continues to be a major problem. According to the United Nations Office of Drugs and Crime, the murder rate in Guyana is three-times higher than the murder rate in the United States. The United States Embassy encourages U.S. citizens to maintain a high level of vigilance, consider security issues when planning activities throughout Guyana, and avoid traveling at night, especially on foot, when possible. More information for business travelers visiting Guyana is available at: http://travel.state.gov.

Some acts of violence appeared to be politically motivated. On July 18, 2012, three people were fatally shot during an attempt by the police riot squad police to disperse residents of Linden – an opposition stronghold -- on the first day of a planned five-day protest against the government’s planned electricity rate hikes. This resulted in the planned a five-day protest extending to one month of roadblocks along a key highway leading to Guyana’s interior. A Commission of Inquiry was established to investigate the deaths.

A police killing of a 17-year-old boy on September 11, 2012, that appeared to be an execution set off noisy street demonstrations and roadblocks on the country’s only main road leading to its international airport. The ruling party claimed that the demonstration was politically motivated and accused the opposition of orchestrating the event for political gain. Though these violent acts did not destabilize the Government of Guyana, they raised concerns about the underlying potential for wider unrest.

Corruption

Allegations of government corruption are common, though the government often disputes such allegations. According to Transparency International's 2012 Corruption Perceptions Index (CPI), Guyana ranks 133rd out of 174 countries for its level of corruption. Guyana’s position on the scale has not improved – the CPI ranked Guyana 134th out of 183 countries in 2011. Although the government passed legislation in 1998 that requires public officials to disclose their assets to an Integrity Commission prior to assuming office, the Integrity Commission has never been fully operational.

The Procurement Act of 2003 provides for the establishment of a National Procurement and Tender Administration Board (NPTAB). The Minister of Finance appoints the members of this board. Widespread concerns about inefficiencies and corruption at the ministerial, local, regional, or national level in awarding of contracts persists with rampant allegations of cronyism and nepotism. The Auditor General notes continuous disregard for the procedures, rules, and the laws that govern public procurement systems. The Constitution of Guyana provides for the establishment of a Public Procurement Commission (PPC) to provide oversight to government procurement of goods and services and the execution of works, but no agreement has yet been reached on the nomination of members to the PPC. The absence of a functioning PPC will make it more difficult for the government to overcome allegations from the private sector of corruption and favoritism in the government procurement process.

The Criminal Law Act classifies both corruption and bribery as illegal. Offences carry a penalty of GY$390,000 (about US$1,950) and three to seven years imprisonment.

On April 16, 2008, Guyana ratified the United Nations Convention against Corruption. Guyana is neither a member of the Organization for Economic Cooperation and Development (OECD) nor a signatory to OECD Anti-Bribery Convention. Guyana, a member of the Organization of American States, ratified the Inter-American Convention against Corruption on December 11, 2000.

The World Economic Forum, “Global Competitiveness Report 2012-2013,” identified corruption as the second largest obstacle, following crime and theft, for doing business in Guyana. It noted that corruption discourages potential foreign direct investments and foreign investors, and undermines Guyana’s economic development and growth.

Bilateral Investment Agreements

Guyana does not have a Bilateral Investment Treaty with the United States. Negotiations began in 1993, but broke down in 1995 due to disagreements on formal investment rules. There have been no subsequent negotiations.

Double taxation treaties are in force with Canada (1987), the United Kingdom and Northern Ireland (1992), and CARICOM (1995). Other double taxation agreements are under negotiation with India, Kuwait, and the Seychelles. The CARICOM-Dominican Republic Free Trade Agreement provides for the negotiation of a double taxation agreement, but no new developments in this regard occurred since March 2009.

Table 2: Guyana’s bilateral investment treaties:

Partner

Date of Signature

Entry into Force

United Kingdom

27 October 1989

11 April 1990

Germany

06 December 1989

08 March 1994

Cuba

22 October 1999

 

China

27 March 2003

26 October 2004

Switzerland

13 December 2005

 

South Korea

31 July 2006

 

Indonesia

30 January 2008

 

Source: Organization of American States’ Foreign Trade Information System and Ministry of Foreign Trade and International Cooperation

OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) renewed its coverage for U.S. investors in Guyana in 2000 following the settlement of a long-standing dispute between an OPIC client, Green Mining, Inc., and the Government of Guyana.

The U.S. EX-IM Bank offers insurance and short-term loans for the private sector, though there has been no recent activity.

Labor

The Bank of Guyana’s Annual Report of 2010, estimates Guyana's labor force comprises 285,600 persons, of which approximately 22%, or 56,109 workers, are unionized. Approximately 30,559 persons remain unemployed, resulting in an unemployment rate of 10.7 percent for 2010. The Bank of Guyana Annual Report for 2011 states that unemployment data from the private sector data is unavailable.

Unionized workers are represented by 18 unions, of which 13 fall under the umbrella Guyana Trade Union Congress; five others are breakaway unions. Four of these breakaway unions fall under a new umbrella organization, Federation of Independent Trade Unions of Guyana. Most unions have a strong political affiliation. The Trade Union Recognition Act of 1997 requires businesses operating in Guyana to recognize and collectively bargain with the trade union selected by a majority of its workers. Guyana adheres to the International Labor Organization (ILO) Convention protecting worker rights.

Education and skills development are provided in primary, secondary, and technical schools, as well as at the University of Guyana and privately-owned institutions of higher learning. Individual companies mount various programs to develop human resources specific to their needs. There appears to be a mismatch of skills produced by these institutions and those required by local industry.

Emigration, particularly of skilled labor, poses a serious problem to employers in Guyana. An Organization for Economic Cooperation and Development (OECD) International Monetary Fund study in 2005 found that 89% of university-educated Guyanese eventually leave the country due to better employment options abroad; this represents one of the highest percentages of "brain drain" in the world. Large private sector companies report a turnover of about 20 percent to 25 percent of their workforce annually, and experience difficulty in recruiting and retaining qualified employees. Skilled workers migrate to the United States, Canada, the Caribbean, and Europe. The Ministry of Foreign Affairs and International Organization of Migration (IOM) actively explored mechanisms of sourcing scarce skills from Guyana’s Diaspora.

Foreign Trade Zones/Free Trade Zones

There are currently no duty-free zones, although the Government of Guyana states it is considering the possibility of establishing free zones in the Lethem area, near the border with Brazil.

Foreign Direct Investment Statistics

In 2011 Foreign Direct Investment inflows increased by 24.6 percent to US$246.8 million on the back of strong investment in the telecommunication, energy and mining sectors. Other sectors, such as hotel and hospitality, and entertainment also saw increased investment activity.

Following is a list of foreign direct investment compiled by the Guyana Office for Investment for 2008-2011.

Table 3: Foreign Direct Investment by Sector 2008-2011 (Value in US$ Million)

Sector

2007

2008

2009

2010

2011

Agro, Forestry, Fishing

22.6

18.0

15.0

17.2

19.9

Energy

7.0

15.0

8.2

13.0

13.8

Mining and Quarrying

42.1

54.0

42.1

64.0

74.6

Manufacturing

5.0

12.2

7.8

15.5

29.7

Tourism and Hospitality

5.4

14.0

12.5

16.0

24.6

Transport and Telecommunication

51.2

48.0

64.0

54.0

67.0

Others

19.2

16.8

14.4

18.3

17.3

Total

152.5

178.0

164.0

198.0

246.8

Source: Bank of Guyana

Table 4: Total Investment 2000-2011

Years

Private

(Local & FDI)

Public

(Government)

Total Investment

 

Value in US$ Million

2000

152.0

98.5

250.5

2001

166.0

91.0

257.0

2002

162.0

101.5

263.5

2003

155.5

97.0

252.5

2004

152.5

98.0

250.5

2005

157.0

109.5

266.5

2006

205.0

209.0

414.0

2007

222.5

211.5

434.0

2008

259.5

209.0

468.5

2009

285.5

265.0

550.5

2010

281.5

303.0

584.5

2011

316.0

301.9

617.9

Source: Bureau of Statistics



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