Developing countries always try to attract investors by offering incentives. Sometimes these incentives defy logic. There are tax concessions, duty free imports, and tax holidays.
BaiShanLin got concessions to the extent that Guyanese began to count how much money the country surrendered at a time when money was not at a premium.
In the end, BaiShanLin got the boot from the Guyana Forestry Commission. But it made money from the shipments of timber, some harvested under questionable circumstances. The company was buying timber from small loggers.
Kaieteur News secured a shopping list submitted by BaiShanLin. The volume of paints required could have painted all of Georgetown, and that was just one item. For all the concessions, Guyana got little or no revenue.
There were other companies that enjoyed huge concessions. They brought in huge vehicles duty-free and some tried to sell some of these vehicles on the local market.
One foreign entity that has come under focus is the Russian company operating in the bauxite industry. It came when Guyana’s bauxite industry had collapsed. The Russian company, Rusal, tool control of the Berbice operations.
It turned out that despite being a shareholder in the operations, Guyana never got a cent. It got the PAYE that the employees paid, but no dividends. The workers complained about conditions and the company ceased operations.
Just last week it began to ship equipment from the mining area at Aroaima. This did not go unnoticed. The Guyana Revenue Authority decided to take a look. If the equipment were being disposed of then Guyana was going to collect every penny of the duty free concession that allowed these huge trucks and graders to enter Guyana.
The man in the street calculated that Guyana surrendered millions of dollars and except for a few jobs that Guyanese secured, the country got nothing. This raises the question of the proposals that are submitted by the foreign company and the decision to grant the concessions.
One is often left to wonder whether companies do not target Guyana for exploitation. When a company opts to invest in a developed country, there may be some concessions, but nothing as huge as what Guyana offers.
Tax holidays are almost out of the question. The United States does not joke with its taxes.
Of course, most of what happens outside of the oil sector scarcely attracts national attention. The contract signed with ExxonMobil was made public, something that has not been done with any contract signed with the previous administration.
In fact, this contract had a confidentiality clause. It meant that the government had to persuade ExxonMobil to agree to the release of the contract. When the release came, people began to find all kinds of shortcomings. They questioned the extent of the royalty; they questioned the advance payments made by the oil company; they questioned the local content provisions. And all the while, there were other foreign companies that were doing more than fleece Guyana.
One argument is that the foreign companies create job opportunities for locals, but the cost seems astronomical.
There is the belief that with oil, Guyana will be sailing on top of the world as far as employment is concerned. The truth is that the oil sector does not offer many jobs. There will be jobs on the production ships. Most of the jobs would be found in the support sector.
Those Guyanese seeking to invest in the sector will be offered concessions, but nothing like the concessions being offered to the foreign companies. The Guyana Revenue Authority says that concessions would be offered on a case by case arrangement.
The people in the gold sector enjoy certain concessions. Because that sector is heavily dependent on fuel, there are duty free concessions for fuel imports. There are also foreign exchange concessions. These companies employ many Guyanese.
In fact, at one time just about everyone headed for the gold bush—men, women and in many cases, children. The influx of foreigners helped the situation somewhat. The laws precludes any foreigner from owning claims for medium scale mining.
The foreigners were up to the challenge because they allowed Guyanese to front for them. And we seem to be good at that. So we owned the claims, but the foreigners pumped the money into the operations.
Guyana, however, gained because of the taxes paid and the royalties collected from the sale of the gold. This is more than could be said for Rusal, which enjoys all the concessions and pays nothing.
It could be that the company is headed by people from a developed country and who have come with the mindset that Guyanese are lesser people. There have been reports of the Russians assaulting the local workers. That happens when people feel superior to others.
The trade union operating in the system supported the workers but at the same time, it sought to pacify the foreign company.
But one big problem was monitoring the operations. There are reports that the bauxite company under-reported output. Sometimes, I wonder at our ability to monitor and to enforce regulations. This is what has people looking at the operations in the oil sector with gimlet eyes.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
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