Jan 18, 2016 News
The A Partnership for National Unity and the Alliance for Change (APNU+AFC) had promised that once it assumes office, it would release many of the concession agreements which were signed between the PPP regime and certain foreign investors.
This campaign promise is yet to be fulfilled.
Kaieteur News had asked the Minister with some responsibility for the Natural Resources Sector, Raphael Trotman when government will release these concession agreements, specifically those signed with Chinese logging company, Bai Shan Lin Forest Development Inc.
Trotman said that the possibility does exist for this to happen but he would have to speak with the Finance Minister, Winston Jordan for guidance on that matter, since the subject of concessions falls under his portfolio.
But when contacted, Jordan said that his office is not in possession of those agreements and the respective sectors would have those documents, given the manner in which such deals were done under the previous government.
He said that in any case, while the Government promised to make those contracts public, they may be subject to confidentiality clauses. As a result of this, he noted that this would inhibit the move by Government to expose the agreements.
Another Government official explained, “Based on some of the information we already have, some of the concession deals brokered with some foreign investors border on illegality. We will have to renegotiate some of these deals and ensure that they fall in line with the law because as it is, it creates an unhealthy and an unlevel playing field for others who were not allowed such lavish concessions and tax breaks.”
Also sharing his views on the matter yesterday was University Professor, Dr. David Hinds. He said that he agrees that there must be the renegotiation of the extravagant concession packages which were granted to certain companies under the PPP rule.
“But in doing so, you have to have a bottom line. The first bottom line should be that concessions must fall within the ambit of the law; they must not violate Guyanese law in letter or spirit. Second, our negotiators must always ensure that there is a fair balance between the conditions under which we seek to attract capital investments and the protection of our workers. In other words we must never negotiate away from the adherence to best practices in labour relations.
“We must ensure at all cost that Guyanese workers are utilized if those skills exist in Guyana and that they are paid living wages and assured work safety and adequate conditions. Third, in instances where investments are in areas of our natural resources our negotiators must ensure that the concessions are not so liberal that the country does not get adequate returns in the form of taxes etc. We must not in the haste to attract investments negotiate away ownership and control. One of the things, for example, we must insist on is re-investment of some of the profits in the country. There is no guarantee that one gets everything one asks for. But there must be clear bottom lines and we must always pose to ourselves the primary question—how in the first and last instance does this investment benefit Guyana and its working people?”
The University Professor also stated that it is very important to know who will be negotiators.
“We have to have at all times negotiators who are nationalists and not simply advocates of trickle-down economics. And we have to make sure that our negotiators are people of integrity who would not negotiate away our patrimony in exchange for their personal enrichment,” asserted Dr. Hinds.
Chinese logging giant, BaiShanLin is one of the foreign companies which has benefited from millions of dollars worth in concessions under the PPP. But after 10 years, this company is yet to deliver on its promise of a wood processing facility in Guyana.
And its Indian counterpart, Vaitarna Holding Private Incorporated (VHPI), after three years, is still to get the ball rolling on its promise of significant value added operations of a similar nature.
Presidential Advisor on Sustainable Development, Dr. Clive Thomas says that such behaviour from companies which have benefitted significantly from Guyana’s forest resources is absolutely “unacceptable”. He had said that he would be recommending to the David Granger-led administration for some of their concessions to be taken away.
“Guyana cannot continue to be giving out hundreds of millions of dollars worth in these tax breaks or concessions and we aren’t benefitting from value added operations. If companies make a commitment to do so then the ethical thing to do is to deliver what was promised. If not, their concessions should be taken away. They need to face sanctions of that nature or probably something stronger. Bai Shan Lin and Vaitarna have become logging giants in this country and by its own actions, it is clear that we should review all of their concessions. I would be advising the President of taking such actions. My position on this is clear; they need to cut off some of their benefits,” the economist said.
“This is obviously not part of how one promotes the suitability of an economy and an industry and we cannot continue to go this route. Allowing this sort of behaviour to continue sends a dangerous message to other potential investors and local companies. What has the Guyana Forestry Commission done regarding such infractions? Is this not important?
“We really need to change the landscape of the way business is done in the logging industry and eliminate this kind of slackness we allow these companies to get away with. This is not about whether you are foreign or not. At the end of the day it is what is right for the development of the country and quite frankly these two companies have just been taking and taking and not fulfilling their promises of considerable value added operations. It has been years now, so what can possibly be their excuse? They need to face serious sanctions.”
In 2014, BaiShanLin blamed the Guyana Office for Investment (GO-Invest) for delaying its application for its wood processing factory. In one of its advertisements, the company stated that in 2008, it applied to the “Government of Guyana, through the Guyana Office for Investment (GO-Invest) and other agencies, to lease lands to set up a factory to process logs and engage in value-added production, such as the making of furniture, craft and hardwood flooring.”
It had said then that it was experiencing delays.
Kaieteur News later reported that GO-Invest had had no such application. BaiShanLin had nothing to say when this was revealed. This caused many, including the then opposition, to challenge the previous government to make public the investment agreement it signed onto with the Chinese logging company. This was never done.
In April, last, the company then blamed the “hostile” media reports during 2014 for dispiriting financiers.
In a statement, the Chinese company had said that it is concerned about the apparent “misrepresentations and false reports” being carried by some sections of the media on its operations in Guyana. It identified this publication as the leader of the “hostile” campaign and even cited a KN article with the headline: ‘BaiShanLin delays US$70M wood processing factory for gold, housing, logging.’
But in its statement, it did not deny that it was approved ‘US$70M’ for certain activities.
With regard to the wood processing plant in the Linden area that was to be constructed, BaiShanLin, one of the largest exporters of the country’s prime species of wood, had complained that it has indeed suffered major setbacks in completing its wood processing facility that will create hundreds of jobs for Guyanese.
It claimed that these “setbacks” directly relate to lack of adequate funding from its financiers, who, since last year “when these sustained attacks began,” became concerned about the “soundness of investing further in what appeared to be a hostile environment.”
Amidst harsh criticisms of its operations during 2014 and earlier this year in several quarters, BaiShanLin insisted that it has consistently remained well within the law/regulations governing the forestry sector.
It has been reported on extensively, by insiders and other well-informed critics, including Dr. Janette Bulkan, a forestry specialist, that BaiShanLin practices landlordism.
The Timber Sales Agreement (TSAs) which governs logging does not allow that.
In fact, the company has become the third largest holder of state forests in the country.
Additionally, Transparency Institute Guyana Inc. (TIGI) had said that given the conflicting reports on whether BaiShanLin and Vaitarna operations are in conformity with our laws, specifically the Guyana Forestry Commission Act and the Environmental Protection Act , their contracts should be made public. It had issued this call to the past administration, but this was also ignored.
In view of the public outrage at the extent to which these two companies were said to be exploiting the forests resources, TIGI also called on the past administration to place a halt on their operations. But this was as the old adage goes; “throwing water on duck’s back.” Instead, the Donald Ramotar Government chose to defend the two companies.
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