Policies Towards Foreign Direct Investment
There are no significant laws and practices that discriminate against foreign investors. Foreign direct investment (FDI) into Guyana is actively encouraged and seen by the GoG as critical to Guyana’s economic development. Numerous incentives are offered to investors. Despite these incentives, Guyana’s long-term record in attracting private-sector investment remains poor.
The GoG supports a traditional investment facilitation agency, the Guyana Office for Investment (GO-Invest). GO-Invest focuses primarily on agriculture and agro-processing, tourism, manufacturing, information and communication technology (ICT), seafood and aquaculture, and wood processing. Potential investors should note that GO-Invest is the first point of contact to obtain necessary permits and tax concessions. GO-Invest has been tasked by Guyana’s Ministry of Business to help improve operations within the organization in support of interested potential investors.
Over the past decade, the GoG enacted new laws or amended existing ones to encourage FDI with mixed levels of success. Due to the state’s significant role in the domestic economy and the preference for centralized decision-making, relatively large foreign investments often receive intense political attention. The current administration has been criticized by civil society for Guyana’s challenges in attracting new FDI, even though this has been a long-term trend and leadership has signaled its intention to promote FDI through its various Embassies and Missions abroad.
In 2016, the GoG launched its new Green State Development Strategy (GSDS), a template for greening the economy by transitioning Guyana towards renewable, clean, and cheaper sources of energy. The GSDS also includes a comprehensive Coastal Zone Management Plan to protect human habitation, coastal economic sectors, and coastal ecosystems. Finally, the GSDS encourages ‘green’ enterprises and jobs, and an educational curriculum that incentivizes ‘green’ (or STEM-focused) education in schools. The Ministry of the Presidency and Ministry of Natural Resources are two of the critical agencies in this process.
Additionally, the Government of Norway entered into an agreement to reward Guyana for the protection of its tropical forest, carbon storage, and other ecological services. Depending on Guyana’s performance, Norway had pledged to contribute up to USD 250 million if Guyana demonstrated continued low rates of deforestation and forest degradation. However, as of April 2015, Norway had only contributed USD 120 million. The GoG has recently indicated that it is optimistic that it will receive the last tranche of funds. Furthermore, the GoG hopes this financial commitment, and the inclusion of incentives for forest conservation in the 2009 Copenhagen Accord, will lead to higher levels of eco-services payments in the coming years. Thus far, however, no other international donors have stepped forward in any substantial way to pay for Guyana’s ecosystem services.
Screening of FDI
There is no mandatory screening process for FDI. The GoG, however, conducts de facto screenings of many investments in order to determine which businesses are eligible for special tax treatment and access to licenses, land, and approval for investment incentives. Despite recent efforts to remove discretionary power from the various ministries, ministers retain significant authority to determine how relevant laws, such as the Investment Act, Small Business Act, and Procurement Act, are applied.
In general, international investors receive the same treatment as local investors in Guyana. One exception is in the special approval required for local financing. Foreign borrowers applying for a local loan of more than GYD2 million (USD 10,000) must request permission from the Minister of Finance. This requirement reflects Guyana's preference for foreign investors to bring capital into the country.
Another exception exists in the mining sector, where ownership of property for small-and-medium-scale mining is restricted 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; these arrangements are strictly by private contract. However, such relationships are highly risky, and appropriate due diligence of any potential joint venture partners is highly encouraged and should be completed by any company hoping to do business in Guyana. This exception does not exist for large-scale mining operations.
Limits on Foreign Control and Right to Private Ownership and Establishment
Guyana’s constitution specifically protects the rights of foreigners to own property or land in Guyana. 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.
Foreign and domestic firms possess the right to establish and own business enterprises and engage in all forms of remunerative activity. Enterprises in mining, telecommunications, forestry, banking, and tourism sectors require licenses. Obtaining necessary licenses can be a time-consuming task. According to GO-Invest’s “Investor's Roadmap,” the estimated processing time to obtain the approvals to lease state or government-owned lands is about one year. Some investors report much longer processing times.
Restrictions on foreign ownership of property exist in the mining sector for small-and-medium-scale mining concessions. Foreign investors interested in participating in the industry at those levels may enter into joint venture arrangements with Guyanese nationals, under which the two parties agree to jointly develop a mining property. However, these arrangements are strictly governed by private contracts, and there is no oversight of them by the sector’s regulatory agency, the Guyana Geology and Mines Commission. This type of relationship carries a high level of risk. The U.S. Embassy strongly encourages investors to exercise proper due diligence when exploring their options.
Other Investment Policy Reviews
Guyana has been a World Trade Organization (WTO) member since 1995. Guyana underwent a WTO Trade Policy Review in September of 2015. According to the report, since its previous Review in 2009, Guyana's economic performance has improved, supported in particular by FDI and the expansion of private sector credit.
Gross domestic product (GDP) over the last several years has been robust compared to several countries in the region. However, according to Bank of Guyana figures, real GDP grew at 2.9 percent in 2017, a lower rate than the expected 4 percent for the year. Guyana was still one of the better-performing countries in the Caribbean, but after a second-year of slower growth, the International Monetary Fund adjusted its expected growth rate for 2018 to 3.6 percent. Guyana's per capita GDP reached approximately USD 4,315 in 2016, up from around USD 2,360 in 2009. The annual inflation rate for 2017 was 1.4 percent.
Government policy is to encourage inward FDI. National treatment is applied to all economic activities, except for certain mining operations. During the review period, the GoG took actions to improve the business environment, such as lowering corporate income tax rates, restructuring property registration fees, and establishing a credit reporting system. Incentives for FDI include income tax holidays, and tariff and value-added tax (VAT) exemptions.
All companies operating in Guyana must register with the Registrar of Companies. Registration fees are lower for companies incorporated in Guyana than those incorporated abroad. Locally-incorporated companies are subject to a flat fee of GYD60,000 (roughly USD 300), and a company incorporated abroad is subject to a fee of GYD80,000 (USD 400) if its capitalization is below GYD1 million (USD 4,950); GYD150,000 (USD 742) if its capitalization is between GYD1 million (USD 4,950) and GYD3 million (USD 14,851); and, GYD300,000 (USD 1,485) if it is greater than GYD3 million (USD 14,851). Businesses in the sectors requiring specific licenses, such as mining, telecommunications, forestry, and banking, must obtain operation licenses from the relevant competent authorities before commencing operations.
As mentioned earlier, GO-Invest is the GoG’s investment facilitation agency responsible for the promotion of foreign and local investment. GO-Invest also advises the GoG on the formulation and implementation of national investment policies and provides facilitation services to domestic and foreign investors, particularly in completing administrative formalities, such as commercial registration and applications for land purchases or leases. Under the Status of Aliens Act, foreign and domestic investors have the same rights to purchase and lease land. The Investment Act specifies that there should be no discrimination between private foreign and domestic investors, or among foreign investors from different countries. The authorities maintain that foreign investors have equal access to opportunities arising from privatization of state-owned companies.
Guyana launched its "Micro-and-Small-Enterprise Development and Building Alternative Livelihoods for Vulnerable Groups" (MSED) project on October 14, 2013. The MSED project provides interest subsidies (up to 5 percent) and credit guarantee (equivalent to 40 percent) of a loan for micro and small enterprises. Under the MSED project, the maximum amount of loan facilitation available to each borrower is USD 150,000. Additionally, small grant funds (USD 1,500) were offered to small businesses in 17 sectors deemed as "low carbon sectors." The low carbon sectors are identified in the Guyana Low Carbon Development Strategy and include fruits and vegetables agriculture, aquaculture, business processing and outsourcing services, and ecotourism.
The GoG is focused on attracting inward investment into Guyana. However, GO-Invest is also the agency that supports Guyanese investors and exporters looking to operate overseas. There are no particular restrictions keeping domestic Guyanese investors from investing abroad.