Stable political environment is essential for business development – GMSA President
…says there should not be a prolonging of current unease
The Guyana Marketing and Services Association (GMSA) has joined the Georgetown Chamber of Commerce and Industry (GCCI) and other Private Sector bodies, calling for an end to the political turmoil since the passage of the No-confidence Motion, asserting that it has played a negative role in the business sector.
These sentiments were shared by President of the GMSA, Shyam Nokta, during his address at the Association’s Annual General Meeting on Thursday at the Marriott Hotel.
“In recent weeks, we have heard concerns expressed by leading Private Sector institutions – the Georgetown Chamber of Commerce and Industry and the Private Sector Commission as the umbrella body – as it regards to investor confidence and a decline in commercial activity, while calling for adherence to the Constitution of Guyana. The GMSA’s wish is to align with these views and to also share the perspective that there should not be a prolonging of the current uncertainty and unease… What is most critical is a stable political environment and one which is conducive for doing business,” he asserted.
The GGCI had recently stated that 64 per cent of respondents (or about two in every three businesses) experienced some form of decline due to uncertainty over the state of political affairs in Guyana.
For those businesses which registered a decline in activity, approximately 85 per cent experienced a 25 to 50 per cent drop in the level of commercial activity. The remaining 15 per cent experienced a 75 to 100 per cent decline.
The passage of the December 21, 2018 motion saw the toppling of the coalition Government after receiving a 33 majority vote, as a result of former AFC MP Charrandas Persaud defecting in a vote of conscience in favour of the motion.
It has been over 65 days since the resolution was carried and no move has been made by the Government to have elections held within the constitutionally mandated 90 days.
Meanwhile, Nokta was also at the time presenting on sections of his annual report which played a critical role in the manufacturing and services sector. It was noted that there has been a decline in the performance of traditional sectors, nothing that the tendency has not ceased nor declined. This trend, he says, is owing to the diminishing rice and sugar industry – which were once Guyana’s chief harvests.
“The performance in many of our traditional sectors have been showing signs of decline. When we look at the midyear report from the Ministry of Finance, it alludes to this. At present, there are indications that this trend has neither slowed nor reversed. Some of this can also be held true for the manufacturing sector as well, which contracted during the first half of 2018 by about 2.4 per cent when compared to the 9.9 per cent growth that we had for the same period in 2017, much of this primarily to the decline in rice and sugar sector,” the GMSA President stated.
Regardless of this, the manufacturing sector contributes between six to eight per cent of the total Gross Domestic Product (GDP).
As mentioned previously, one of the main challenges continued to be the high cost of energy, in addition to its reliability that has caused many manufacturers to self-generate their own power. It was mentioned that efforts were initiated to have a tax relief on fuel for these producers.
“The high cost coupled with issues of stability and reliability had pushed many manufacturers off the grid and to self-generate. In fact, energy has been the principle limiting factor in adding value to primary production across many sectors of our economy. Tax measures introduced in Budget 2017, such as the VAT on electricity, further compounded this issue and continued to affect manufacturers in 2018. We have made a strong case for tax relief on fuel for manufacturers similar to what other sectors benefit from.”
Meanwhile, adjustments to the Value Added Tax (VAT) regime has resulted in stakeholders being unable to reclaim this type of taxation on their exported goods.
“While there has been a continued call for value adding the primary productive sectors and for more exports, adjustments to the VAT regime in 2018 resulted in some manufacturers unable to reclaim vat on inputs for exported items,” Nokta added.
Delivering her remarks, IDB representative Sophie Makonnen gave an insight of economic diversification ideas which Guyana can embark on, while embracing technology and innovation. According to her, these are some of the important factors in building a resilient economy.
“Competitiveness and economic diversification are essential to building a resilient economy, capable of resisting price or production related shock. We have seen this in Guyana to some extent in 2017, when the mining sector fell by almost nine per cent,” Makonnen explained.
She added, “Further development of more economic sectors can strengthen economic resilience and allow the country to face and adapt to changing global trends in price, technology and politics.”
As customary, Guyana’s booming oil sectors was also discussed. But the IDB representative sought to point out that while this will impact the economy, provisions must be made for other sectors to be strengthened by enhancing policies, since oil is not a lifetime resource.
“Productivity in enhancing policies will also be important to strengthen the non-oil economy. They are key in the diversification…There are multiple policy fronts to strengthen the Private Sector competitiveness,” the IDB representative ascertained.
The IDB has been supporting Government recently through the electronic single window for trade, facilitating trade while reducing time and costs.
Her advice to the Private Sector was, “Be innovative and embrace technology. Make sure you’re providing goods and services that meet international standards. In order to be competitive, you need to meet those standards and I do think the oil and gas economy is pushing and showing that if you’re not competitive and do not make those standards, you won’t make it.”
She noted that the trend of non-traditional sectors making its mark in the economy is one which will continue to increase.