In Opposition, the People’s National Congress (PNC) and the Alliance For Change embraced the neo-liberal paradigm and clamoured for a smaller, less intrusive government with businesses becoming the “engine of growth”. But in Government, they have failed to acknowledge the flip side of the argument. The Private Sector was supposed to fill the vacuum in investment occasioned by the withdrawal of the PNC-state from the “commanding heights of the economy”.
Government, in this model was supposed to be the “facilitator” of business: to create an environment that did not place too many constraints on business – especially in the financial and regulatory arenas. Over the previous two decades, under the People’s Progressive Party (PPP) almost all of the reforms demanded under the rubric of liberalisation, stabilisation and privatisation were completed with several bottlenecks also removed.
A massively marked improvement in investment rates from what had prevailed previously, resulted not just by those reforms but by the pro-active stance of the PPP Government in inducing foreign direct investment into our economy. There has been recent criticism of the PPP in the bauxite sector, but it was the PNC that had brought the industry to its knees and could not reverse its decline. The PPP, let it be remembered, brought in Bosai and RUSAL; two of the largest companies in the international bauxite business.
While the Skeldon factory turned out to be an albatross, no one can fault the PPP Government for the fundamentally sound, World Bank approved strategic plan for sugar. The present PNC Government pretends to forget that it was the PNC that brought in Booker Tate, to manage the industry and they were in change of executing the plan. Gold and forestry also became high flyers under the PPP. The five per cent average growth rate achieved by the PPP in their last decade at the helm still has not been matched by the PNC after four years.
This PNC Government cannot escape the logic that more investment is needed, and the country cannot just depend on oil revenues which, every expert has warned, will guarantee a fatal case of “Dutch Disease”. But Guyana is a very small country and our markets are too small to justify significant investment just to satisfy our needs. A repeat of the “import substitution strategy” is not the way to go. We have to invest in products that can be exported and from the foreign currency earned use that to import other goods to satisfy a higher standard of living. Our investment, then, must be export oriented. To support this, we will have to broaden our export base by both product and market diversification.
But none of this is new. The million-dollar question is how do we achieve this investment and diversification in the face of the high-risk factor for businesses in Guyana? We return to the proposal floated in this space – public-private partnerships. Malaysia, Singapore and South Korea, etc, forged ahead of us even though we were on par back in the sixties because their governments were not mere bystanders like the PNC, but active participants. Their successes were built on the concrete support their governments provided to targeted export-oriented businesses.
They created a virtuous cycle: business risks were lessened, investment encouraged, exports increased, quality improved (because of world competition), employment created, Government collected more taxes and more companies could be supported. The specialty hospital identified by the PPP was a good example of diversifying exports: medical tourism brings in substantial foreign exchange. But Government hospitals have rarely provided the service demanded for success in this field: a public-private partnership would be best. The PNC killed this initiative.
Agro-processing in support of the Government’s “agri-expansion” campaign is another fertile area for the concept. The abandoned Guyana Sugar Corporation land that is reverting to bush should be leased to ex-sugar workers and new crops introduced that have international markets in this age of food insecurity. The processing and marketing facilities that are needed cannot be left to the newly created farmers; the Government will have to be induced from abroad.