Doing Business in Guyana
EXECUTIVE SUMMARY
Guyana is an emerging economy with enormous untapped potential. The country’s geographic position at the gateway to the Caribbean and South America, combined with its natural resources, access to key export markets, English-speaking population and affordable labor present investors with profitable opportunities to do business in Guyana. Supported by stable macroeconomic policies, attractive investment incentives, and a regulatory environment and corporate tax regime that do not discriminate against foreign investors, Guyana also provides investors favorable conditions to do business.In the recent past, Guyana has achieved remarkable progress in its efforts to open its economy through market-oriented reforms and improvements in the investment climate, while at the same time stabilizing inflation, reducing fiscal and balance of payments deficits, and strengthening infrastructure, health services and the education system. Guyana’s home-grown National Development Strategy (NDS) and Poverty Reduction Strategy Program (PRSP) drive these initiatives with support from a number of bilateral and multilateral development agencies.
Despite these achievements, both private and public sector leaders understand that continued progress depends on Guyana’s ability to adjust to the ever-changing global economy by responding to new challenges and taking advantage of new opportunities. As part of the NDS, Guyana is implementing a National Competitiveness Strategy (NCS) designed to further improve the investment climate and support the emergence of non-traditional export sectors, while continuing to fortify the mining, sugar and rice sectors for which Guyana is so well known.
Through its participation in the Caribbean Single Market Economy (CSME), bilateral and regional trade agreements with Brazil, Colombia, Costa Rica, the Dominican Republic, Venezuela and other countries, and preferential treatment from the U.S., Canada and European Union, about 75 percent of Guyana’s exports receive duty-free treatment, with much of the remaining balance enjoying reduced duties.
Opportunities
Guyana offers potential investors—foreign and domestic alike—a broad spectrum of investment choices, ranging from more traditional industries (such as mining, sugar, rice and timber), to non-traditional export sectors (such as aquaculture, agro processing, fresh fruits and vegetables, light manufacturing, value-added forest products), to services exports (such as tourism and Information Technology (IT)-enabled services). Many products receive duty-free or reduced-duty treatment in destination markets. Specific opportunities include:Agriculture and Agro-processing – Guyana enjoys a number of comparative advantages—diverse agricultural environments, organic cropland, widespread irrigation, drainage and sea defenses, and trainable farmers—that support a range of market opportunities for investment and export. Lucrative markets exist for producing fresh fruits and vegetables for local markets (e.g. domestic consumption, hotels and restaurants) as well as for export. There is also high demand for processed and semi-processed foods (for sale to processors), especially within the Caribbean. Promising opportunities exist in Guyana’s savannahs to produce and export meat, particularly since Guyana has been declared free of foot and mouth disease. Guyana’s virgin lands provide further opportunities for high-value certified organic products. Beyond Guyana’s regional markets, the Guyanese and Caribbean diasporas in the U.S. and Europe provide a niche market for a number of food products. The wider U.S. and European markets present opportunities for exporters able to meet the tough, uncompromising standards of consumers. While global pricing pressures exist in the traditional sugar and rice industries, opportunities exist for investors able to improve productivity.Seafood and Aquaculture – Guyana’s 459 km Atlantic coastal zone and extensive network of rivers provide the ideal conditions for a dynamic marine fisheries and aquaculture industry. Already shrimp, prawn and finfish exports account for approximately 12 percent of total exports. While the shrimp and prawn sector is relatively consolidated, there are opportunities for investors able to add to the value of catches through processing and quality upgrades. Some experts suggest that virtually untapped, high-value opportunities exist among pelagic and deep-sea species further offshore on the continental slope (deepwater snapper and prawns) and in the Atlantic Ocean (swordfish and tuna). Finally, recent investments show enormous opportunities in fresh-water fish (i.e. tilapia) and shrimp farming for export, with annual income per acre exceeding US$3,400. At present, shrimp and fish are exported primarily to the U.S., but in 2004 Guyana was certified for fisheries exports to the lucrative E.U. market.Forest Products – Guyana’s forests cover about three quarters of the country’s land mass and contain over 1,000 tree varieties, which provide vast opportunities for the harvest and export of wood products. Forest products exports accounted for nearly 10 percent of total exports in 2005. In the past, most forestry exports consisted of processed plywood and raw or semi-processed greenheart and other valuable species (e.g. purple heart, mora, locust). There is, however, a growing interest in expanding value-added wood processing industries (e.g. furniture, flooring, doors, molding, fencing, veneer, etc) targeting the Caribbean and U.S. markets. Further opportunities exist for investors able to obtain Forest Stewardship Council (FSC) certification and develop products for niche markets.IT-enabled services – Recently, Guyana has experienced the emergence of a small, but growing IT-Enabled Services industry with both domestic and foreign investment (e.g. Canada, Mexico) in call centre and back-office processing operations. Some investors have included Guyana as part of their networks of business process outsourcing (BPO) centers located in Latin America. Although not widely known as a location for BPO, Guyana provides a number of advantages that make it an ideal location for IT-enabled services, including a fluent English-speaking workforce, skilled and trainable workers, and reasonable telecommunication costs.Light Manufacturing – There is growing interest in expanding the country’s light manufacturing sector. In particular, access to natural resources provides opportunities in agro processing and wood processing (see above). Low cost labor, proximity to markets, a track record for quality, and preferential trade access, also make Guyana a good place to source apparel manufacturing, particularly production targeting the U.S. market. Other opportunities exist in the areas of pharmaceuticals, jewelry, leather and wooden craft, basketry, and ceramics, to name a few, for both exports and domestic consumption.
Mining – Guyana’s mineral deposits have attracted international interest from the largest companies in the world. While the industry is relatively mature, lucrative opportunities still exist in the extraction of bauxite, gold, diamonds and other minerals. With recent investments, bauxite production is expected to grow by nearly 78 percent in coming years. In the gold sector, recent exploration suggests deposits of at least 1 million ounces in new resources, while the tendency for higher world prices encourages the extraction of gold deposits that previously would have been uneconomical.Tourism – While Guyana’s tourism sector has focused primarily on business visitors or the Guyanese diaspora, Guyana’s natural beauty and attractions, including Kaieteur Falls (the tallest single drop water fall in the world), Orinduik Falls, the Rupununi savannahs and the Essequibo River have been drawing increasing attention from tourists and tour operators alike. With the worldwide growth in the eco-, adventure and cultural tourism segments and narrow market niches such as bird watching, a variety of opportunities exist for the industry to develop Guyana’s tourism product through investments in tourism operations/services, facilities, hotels and lodges. In the short term, there are opportunities for hospitality (hotels, restaurants and related services) as Guyana prepares to host matches during the Cricket World Cup in 2007. Up to 25,000 cricket fans from all over the world are expected to visit Guyana, providing a large boon for the industry. Other opportunities exist for business tourism, especially with the recent construction of a large conference centre in Georgetown.Investment Incentives – In order to facilitate investment and expansion in these sectors, Guyana provides an array of across-the-board investment incentives, including a flat business tax rate, tax holidays, waivers of customs duties, export tax allowances, and unrestricted repatriation of capital, dividends and profits, as well as additional incentives in the sectors listed above. Furthermore, the Government of Guyana (GoG) has tasked GO-Invest as 1) the prime contact for investors to facilitate the investment process and expedite applications for investment concessions and government support; and 2) Guyana’s main export promotion agency. GO-Invest’s activities, complemented by those of sector-specific agencies and organizations, provide investors with the information, support and advocacy needed to capitalize on Guyana’s opportunities.
Trade Trends
Guyana is one of the most open economies in the Caribbean and has enjoyed steady export growth since 2000. CARICOM, E.U., Canada and the U.S. continue to be Guyana’s primary export markets; however, regional and bilateral trade agreements—including those involving CARICOM—with countries such as Argentina, Brazil, People’s Republic of China, Colombia, Costa Rica, Cuba, the Dominican Republic, and Venezuela, present opportunities to diversify markets. Through these trade agreements and geographic proximity, Guyana enjoys easy access to 277 million consumers, and an export market in excess of US$130 billion with an overall purchasing power of over US$2 trillion.While Guyana’s traditional export products (e.g. sugar, rice, bauxite, gold and timber) continue to enjoy robust growth, Guyana’s non-traditional exports (e.g. value-added wood products, non-traditional agricultural products, seafood and light manufacturing) are becoming an increasingly important source of export earnings, with their share of total exports growing consistently. This reflects progress in the country’s increased emphasis towards diversifying the economy.
Investment Trends
After a period of decline, Guyana has experienced an upsurge in investment—both foreign and domestic—in recent years. In 2005, for example, investment facilitated by GO-Invest exceeded US$340 million. Of the 141 projects, approximately one-third involved foreign investors (including joint ventures), primarily from Asia, the Caribbean and North America. According to GO-Invest, foreign direct investment exceeded US$250 million, or 73 percent of the total investments. The food products (including agriculture, seafood and aquaculture), mining and wood products sectors dominated, receiving nearly 70 percent of total investment. At the same time, Guyana enjoyed investment growth in Information and Communications Technology (ICT) and IT-enabled services, tourism and manufacturing.Prospects and Challenges
Alongside Guyana’s opportunities come challenges for investors. Despite ongoing progress, Guyana faces problems common in many developing countries. The country’s economic infrastructure—transport, energy, telecommunications and access to finance—is still developing, and this impacts profitability. The emigration of professionals often reduces the availability of management and technical skills critical for a competitive economy. Limited institutional capacity affects the implementation of legislation, policies and administrative procedures. Levels of crime, though comparable to those in other countries in the region, periodically cause concern.These challenges do not go unnoticed by Guyana’s leadership. Guyana’s government, private sector and development partners have stated their common objective to do what is necessary to build upon past progress to further improve the investment environment and enhance Guyana’s competitiveness. Within this respect, every major political party in the National Assembly has committed to the creation of a business climate conducive to investment.
“Why would anyone invest in a less-developed country?” a presumably hardheaded investor might ask. “Aren’t the risks too high and the profits precarious?”
Source: UNCTADThe Government is aggressively pursuing its objectives under the country’s NDS, with activities focusing on sound macroeconomic policies and economic management, strengthening investment promotion activities through GO-Invest, improving the transport infrastructure, enhancing the role of ICT in the economy, and strengthening social capital. As part of a recent initiative the Government has worked in partnership with the private sector to develop a NCS aimed at designing and executing action plans to improve the environment for investment, strengthen enterprise competitiveness for export development, facilitate fast-track development in priority sectors, and strengthen public-private cooperation in efforts to enhance Guyana’s competitiveness. As part of these activities, GO-Invest’s capacity to promote Guyana and attract investment will be strengthened, and priority bureaucratic processes will be streamlined, starting with business registration and customs import and export procedures. These initiatives, coupled with recent legislative accomplishments such as the introduction of a Value-added Tax (VAT) and the passing of an Investment Act, Small Business Act and Competition and Fair Trading Bill, will likely present an opportunity for Guyana to accelerate investment, trade and economic growth.
Many of Guyana’s opportunities for investment and business development are only now being realized. With ongoing efforts to address competitiveness issues, the conditions for investment are constantly improving. As a result, new investors can benefit from ‘first mover’ status and choose the most promising projects, while at the same time establishing a platform for long-term growth and profitability.
(7.61MB)
