May 24, 2015 News
– accuses BaiShanLin, Barama of breaching agreements, failing to honor commitments
Overly generous concessions and other suspicious benefits granted by the People’s Progressive Party/
Civic-led (PPP/C) administrations to mainly Asian logging companies have one forestry expert now urging the new Government to launch an investigation to ensure that there is no repeat of these “sweetheart” deals.
There have been increasing accusations, both locally and internationally, that blatant examples of companies like Chinese-owned BaiShanLin and Malaysian-owned Barama Company Limited, are evidence that the previous companies failed to perform their duties and ensured that Guyana benefitted from foreign investments.
Experts like Girwar Lalaram, who has spent decades in the logging industry serving for several years as Chairman of Malaysian-owned Barama, believe that immediate action should be taken against these companies.
Lalaram, the economist, is also calling for a forensic audit to be done on both BaiShanLin and Barama.
Barama has the biggest concession in the country of over 1.6M hectares while BaiShanLin reportedly controls more than 700,000.
Lalaram, who resigned last year from BaiShanLin after serving one year as Deputy General Manager, is contending that the reliefs/concessions that have been obtained by these Foreign Direct Investments (FDIs) has more than compensated for the level of investment that they have made in Guyana.
Lalaram said that the previous Governments said they brought in foreign investors to create employment
for locals but no actions have been taken to ensure that commitments are kept.
He said that from observation, the companies continue to do as they so desire without adapting to procedures and laws of the country.
“If you are not fulfilling obligations, you should be given a time frame to do it. If you cannot do it then you, as the country, should review the FDI agreement. What they are doing is totally wrong.”
Explaining the current modus operandi of these FDIs in Guyana, the forestry expert said that foreign companies have for one been given benefits not afforded local loggers. He said that what is not known widely is that BaiShanLin has only been exporting mainly one species of wood and in so doing has been underselling other species in the local market.
Coupled with this have been the outrageous duty free concessions, tax holidays and fiscal concessions that have been granted to them as against little for local operators. Lalaram was also critical of the fact that BaiShanLin has now entered the trucking business, edging out locals who operated between Linden and Kwakwani, in Region Ten.
Such a situation has been allowed to threaten the livelihoods of Guyanese who took loans and paid taxes but who are yet feeling the squeeze.
“So far no investment agreement between the Government of Guyana and
BaiShanLin has been made public,” Lalaram noted.
“In normal circumstances, tax holiday and fiscal concessions throughout the world by way of Foreign Direct Investments are not awarded for more than ten years. Yet we have some of these agreements that give the time frame of more than 20 years. Essentially, the Guyanese public is at loss in terms of the nature of the agreement.”
Lalaram explained that by policy, there is not supposed to be more than 18 percent of foreigners employed at these firms. At present, 90 percent of BaiShanLin employees are Chinese. These positions include cleaners, field and general labourers.
Comparatively, Malaysian company Barama was given an initial 10 years tax holiday and fiscal concessions, which include total exemption from duty and taxes for all imports including fuel. That has been extended, Lalaram claims.
He says the concessions and taxi holidays given to these companies are “quite unique.”
“At the start of operations, Barama employed more than 2,000 Guyanese but today, fewer than 100 locals are employed there yet this company is benefitting from concessions and tax holidays.”
He said that between 1993 and 2007, Barama’s foreign exchange income into Guyana was approximately US$23M but today, it is less than US$1M.
“The consequences of such are the loss of employment for locals, loss of revenue to the Guyana Forestry Commission (GFC) and high prices in the local market for produce that came from local resources.”
Lalaram is convinced that Guyanese loggers have been overlooked by the past administration and this needs to be rectified urgently. He pointed out that the small number of locals that are employed at these Asian companies are not being offered the protection associated with normal FDIs.
As a matter of fact, he accused the companies of not adhering to local safety laws. “Guyanese work barefooted, without helmet, without safety gear,” he said.
The economist said that over the years, the Ministry of Labour has done nothing to ensure compliance even with the Laws of Guyana in terms of safety and the general labour laws.
The workers, he said, “Are given a flat pay without any tax, NIS. They are not even given a pay slip.”
Lalaram pointed to significant differences between wages and salaries of expatriates and Guyanese. At present the Chinese workers get paid twice as much for the same tasks that Guyanese would perform, he said.
Expats are covered by life and accident insurance and medical benefits, There is little for the locals. He insists that both Asian companies have failed to fulfill their obligations to the Guyanese government and people.
“Their focus has always been on exploiting the resources and making money. It’s a sad situation for Guyana.”
Lalaram has also taken Go-Invest to task. He explained that while Go-Invest is the architect of these investment agreements, it has failed to monitor these operations to ensure that the obligations by the FDIs are fulfilled.
He said that Go-Invest is a failed institution – by way of performance, monitoring and giving away the resources of this country which local investors have been denied.
“Research has shown that nowhere in the world where FDIs have been attracted to countries are they given concessions for periods extending beyond 10 years. This is the only country where one company is given a 28-year tax holiday,” Lalaram contended.
“The point is if one is to do the Maths, the relief that has been obtained by the FDIs more than compensates for the investment that they have made in Guyana.”
The executive even accused the two companies of acquiring lands by paying off persons.
“We should take note of the former Canadian Prime Minister who said that natural resources of his country belong to the people and the children of Canada and are not for sale or exploitation. Henceforth, you cannot build a nation by giving away its natural resources. You cannot create jobs for the young if there are no resources.”
Lalaram said that with the change in administration, he expects that there will be changes with a level playing field being established.
Lands given under concessions and not used should be seized.
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