Trade hampered by poor local manufacturing sector – Govt

With the economy and trade dominating recent foreign bilateral engagements, talks with Brazil to improve the Partial Scope Trade deal were the subject of recent talks. Progress in this regard has, however, been hampered by Guyana’s lacklustre manufacturing capacity.
Foreign Affairs Minister Carl Greenidge made this revelation during a press conference on Monday. The minister has long contended that Guyana is missing valuable opportunities to export more under the Partial Scope Agreement.
“The issue is this: If you have a partner and you are interested in doing trade with them, you have to have commodities that can be sold in that market. The situation we have with Brazil is that Brazil can offer us a wide range of products, 100 or more than we are able to offer to Brazil. Part of the reason has to do with the standards that are set by the Brazilians, as well as the types of things demanded by the Brazilians,” Greenidge explained.
According to the minister, there is no point in expecting that “we are going to be able to sell basic staples to a neighbour that has exactly the same ecology as you. If you want to sell plantain, eddoes, sweet potatoes, they grow both sides of the border. So you have to do something with them; add value, process them, deliver them as a different product. We are not able to do that to any significant extent.”
The importance of value added products and processing cannot be overstated. It is, however, an area in which Guyana has long lagged. In fact, Greenidge acknowledged that the manufacturing sector itself faces hurdles, having to contend with high energy prices, among other things.
Experts, for instance from the Global Green Growth Institute (GGGI), have pointed out that Guyanese are paying too much for energy. In Guyana, the Guyana Power and Light’s Demerara (GPL) interconnected system is fed with power by the Power Producers and Distributors Inc, itself powered by imported oil.
In the Finance Ministry’s 2017 Mid-Year Report, it was detailed that GPL’s expenditure increased from $9.3 billion in the first half of 2016 to $12.6 billion in the same period this year. Interestingly enough, this increase in expenditure was noted to be due to higher costs for heavy fuel oil, reinforcing the need for clean and renewable energy if the Government hopes to cut costs.

Manufacturing sector
The Finance Ministry’s latest end-of-year outcome report which covers the year 2016 had stated that the manufacturing sector contracted by 9.5 per cent and not the 7.1 per cent Finance Minister Winston Jordan had projected in November of last year.
The decline in the manufacturing sector was linked to the shrinking production in agriculture. The manufacturing sector is heavily dependent on sugar and rice production, a fact that Jordan had acknowledged last month at a press conference earlier this year.
“Very little manufacturing activity takes place in Guyana… the last number I looked at manufacturing, without sugar and rice milling, (it) contribute(s) a mere five per cent to GDP (Gross Domestic Product), which is very low,” Jordan had told journalists at the press conference.

COTED
Guyana hosted the Council for Trade and Economic Development (COTED) last year, and there are developments coming out of that. According to Greenidge, Guyana is in the process of organising talks between Caribbean sugar producers and other interested parties. These talks will be centred on rum production and the use of Plantation White Sugar in the region.
“You asked whether there is an expectation that as a result of the discussion there would be a drastic reduction in importation of refined white sugar. I don’t expect there will be any drastic reduction…but a region which commits itself to a single economic space cannot at the same time ask for those who are spending to spend on foreign products and expect that, regionally, it is going to have an advantageous effect on employment and income,” Greenidge explained.
“So you have, as a region, to recognise the (need) for consistent economic policies. Employment in the region is not dependent on foreigners; it’s first dependent on you and how you implement rules in establishing a single market; and whether you recognise that if you have to sell your products you must be able to afford a market to other members of the region. Otherwise, it can’t go forward,” the Minister pointed out.
He acknowledged that the imported sugar being cheaper is a major consideration for countries who import it, but he stressed that the region could not just operate on the basis of buying cheaper, because of the implications for those who do produce the product in the region.