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FDI soars to tap unique potential

Article - May 13, 2015

Macroeconomic stability and predictability, uninterrupted growth, free movement of capital, and often overlooked natural advantages are catching international investors’ attentions

If Guyana has posted some of the best foreign direct investment (FDI) figures in the Latin American region in recent years, it is thanks not only to its wealth of natural resources and outstanding human capital, but also to a concerted effort by the private and public sector to create a favorable environment and welcome investors. Over the four-year period from 2010 to 2013, foreign direct investment in Guyana averaged 9% of the country’s GDP. This compares to less than 2% over the same period in the United States and India, and about 4% in China and Brazil. In Latin America, only Chile approached the same ratio of incoming foreign capital.

“Guyana offers a number of very obvious advantages as an investment destination,” says Dr. Ashni Singh, Guyana’s Minister of Finance. “First of all, I would highlight the issue of macroeconomic stability and predictability. The average international investor from any jurisdiction wants to know first of all that their investment destination is one that is safe and predictable, so that the value of their capital will not be eroded or depreciated and where they don’t concern themselves with issues like price volatility, exchange rates volatility, and interest rates volatilities. What we have been able to achieve is the reduction of unpredictability as an investment destination.”

So what would a potential investor discover? “An investor who comes to Guyana finds an economy that has been growing uninterruptedly for the past eight years, and whose exchange rate, interest rate and domestic consumable price indices are all strikingly stable,” the Finance Minister continues. “A place where the risk of asset expropriation is minimal or zero or has been eliminated and where there is free movement of capital, and you can bring your capital to Guyana and also take it back home from Guyana. You can repatriate the return to your investment without restrictions.”


In addition to this open and transparent regulatory framework, Guyana has a highly developed community of facilitators that go the extra mile to open its doors to trade and commerce. Established in 1994 under the direct purview of the President, the Guyana Office for Investment, or Go-Invest, has been critical to building these relationships. Go-Invest not only serves as a primary contact for investors, liaising with government agencies throughout the investment process, but it also provides investors with a comprehensive summary of the necessary steps to get their business going in Guyana and assists throughout this process.

Another part of Go-Invest’s mission is to help build up the country’s export sector with the cooperation of international investors. “It is all about the investor,” says Keith Burrowes, Chief Executive Officer of Go-Invest. “It is our job to ensure that the investor is able to implement his or her project in the least time and with the adequate knowledge.”

Go-Invest has focused in particular on establishing effective public-private partnerships (PPPs). “There is no doubt that while PPPs used to be considered more on the social side, their policies are very supportive to business,” Mr. Burrowes continues. “I have actually done a schedule of five other countries competing with Guyana and we are ahead in terms of the granting of concessions. We grant concessions in almost every area; in fact in many cases they are zero taxes. So, what I am finding now is that there has been tremendous interest in Guyana now because of the economic development. I believe that where we were behind in the game, we are now moving ahead very quickly, and people tell me that.”

Private sector confidence

Because of Guyana’s history of public sector intervention, recent leaders have focused on achieving the right balance to facilitate growth. “The private sector has been growing over that time and really beginning to contribute to the economy,” says Lance Hinds, President of the Georgetown Chamber Commerce and Industry. “What also happened is that because the unions had this liberalized environment as well, the return of foreign direct investment also improved. There would be large investments in gold in particular. Up to now, there is a Canadian presence, as well as Australian and some small American companies that are getting on board. We even have Asian companies involved in the forestry sector.”

Guyana Goldfields Inc. represents just one example of the kind of success fostered by public-private cooperation and foreign investment. Guyana Goldfields has been working in the country for 16 years and invested more than US$150 million on exploration during that time. The Aurora Gold Mine represents the next phase of its development, which is expected to be up and running by mid-2015.

“We have a team that has vast experience all over the world,” says Scott A. Caldwell, CEO of Guyana Goldfields Inc. “We like the business plan in Guyana. Obviously, I being American and the company being Canadian, it helps that it is an English-speaking country. But Guyana is open for business. We believe Guyana’s legal system functions and works well. There are systems and controls in this country that we know we can do business in. If we did not have confidence in the system, then we would not be investing US$250 million, in addition to historical investments.”

Because of its track record of cooperation and its extensive history with the country, Guyana Goldfields has been able to help move Guyana’s economy forward. “For every direct job, we create anywhere from five to eight indirect jobs,” says Mr. Caldwell. “They are sustained through supplying the running of our operation. The government of Guyana’s regulations and process in place here, we believe, is a fair process. We pay a royalty to the government and I believe the government considers us as a partner. In other words, we are both stakeholders in this and the arrangement is mutually beneficial. We make a fair profit to reward our shareholders and they receive a nice tax revenue stream to do what they or what the Guyanese people would like to do with those taxes, whether it be to build infrastructure, invest in education, etc. We believe it is a fair partnership.”

Emerging potential

While Guyana’s traditional strengths lie in its natural resources, its greatest potential may lie in its information and telecommunications sector. “It is the knowledge management-based industries that I believe will take us forward,” says Mr. Hinds. “The service industry generally is going to scale up, and the telecommunications industry as a cross-cutting component of all of those industries is going to be critical. I do not think we are going anywhere unless we have that kind of modern knowledge-based IT-driven economy.”

There has also been exciting news in the country’s untapped petroleum reserves, the Finance Minister highlights. “We recently witnessed a major U.S. company in ExxonMobile, a global oil and gas giant, coming to Guyana,” says Mr. Singh. “They are launching their US$200-million offshore exploration program, which is excellent news. But they are not the only international company in Guyana. An investor in Guyana is literally an investor in the whole of South America since he has geographical and physical access and has more market access because of our trade agreements.”

“Guyana is a place where you can definitely do business,” adds Mr. Caldwell. “Guyanese are hardworking, generous, honest, and good people that I enjoy spending time with. They are Guyanese maintenance, operations, and technical supervision personnel, who are second to none.”

Even though it has scored some recent successes, Guyana remains a relative unknown in the international investment space, a point that is not lost on its business community, and the public sector partners who work to promote its interests. “You have to continue to work on being that ideal investment destination,” says Mr. Hinds. “Because you can get the kind of investor who will come in and leave and there is no residual benefit left in the economy. Ideally what you want is the kind of investors who will come in and really begin to integrate themselves into the economy – with co-operation, collaboration, hire of local people and getting involved in social projects. In order to get that better, we are going to have to go work underground to make sure that they are welcome.”