Guyana records “huge” economic decline– GCCI

Forestry sector

The President of the Georgetown Chamber of Commerce and Industry (GCCI), Deodat Indar, has reiterated the body’s call for removing the inclusion of Value Added Tax (VAT) on forestry products. He repeated the call during the 128th Annual Awards and Dinner at the Marriott Hotel.
The business community, especially those in the lumber industry, are still at odds

with Government’s move in implementing VAT on timber products.
Indar, during his address, highlighted the wide-reaching effects of the tax measure, reminding a gathering of business owners and stakeholders that the forestry sector continues to see reduced prospects.
“We have made representation in March 2017 via the Minister of Finance for the removal of VAT on all and sundry timber products; this has hurt the sector that is in a constant decline,” Indar noted.
The GCCI, the Guyana Manufacturing and Services Association Ltd (GMSA), and other civil society organisations have been engaging Government to remove the VAT from all the timber products. Indar indicated that 2016 and 2017 have seen steep decline for the sector.
“This sector, at half year June 2017, declined by 18.2% from a worst single year decline in year 2016, when the industry declined by 27%. So there is huge decline in economic activity in this sector,” observed the GCCI President.
Industry members have pointed out that the tax is affecting competitiveness. They note that imported substitutes have added to the challenges facing the wood processing sector.
Since February 1, 2017, forest products attracting VAT have included logs, shingles, staves, lumber (rough and dressed), piles, poles, posts, spars, veneers, plywood, charcoal, firewood, wattles and manicole palm. Government, however, gave some reprieve in the 2018 budget with exemption of VAT on logs and rough lumber.
It was only last week that GMSA President Shyam Nokta echoed sentiments similar to those of Indar where he observed that some measures from the 2017 budget impacted the country’s manufacturing sector by causing a reduction in cash flow for businesses. Nokta pointed out that measures such as the re-categorising of zero and standard rated items and the inclusion of VAT on forestry products and electricity have overall affected growth of the sector.
United Kingdom High Commissioner to Guyana, Greg Quinn, who commented on Guyana dropping two places on the World Bank’s Ease of Doing Business Index, suggested that less red tape is needed to facilitate smoother business operations.
Last month, it was reported that The World Bank highlighted a decline for conducting business in Guyana. The report for World Bank’s Ease of Doing Business ranking for 2018 showed that Guyana slipped two places – from 124 in 2017 to 126 for 2018. Doing Business measures regulations that affect various areas regarding the life of a business, or in setting up new businesses. Some of the categories considered to determine ‘the ease of doing businesses were “starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, and trading across borders. The assessment uses various indicators to analyse economic outcomes and identify the appropriate reforms for business regulation.