Kaieteur News – The President wants to see a Guyana lane in every supermarket in Guyana. He said that some incentive could be offered to encourage this, including possibly the removal of VAT on local goods or some other measure.
It will have to be some other measure because by now, the President ought to know that the government is not allowed to discriminate in favour of local goods when it comes to the removal of taxes. If the President removes the VAT on locally-produced goods, he also has to do the same on similar imported items. And to do so defeats the whole purpose of giving local goods an advantage over similar imported items.
Some time ago, the Guyana Manufacturing and Services Association (GMSA) had made a suggestion that VAT be removed on locally-produced goods. When this column pointed out that this would be discriminatory and in violation of regional and international trade laws, the GMSA said that it was merely suggesting that the government expand the basket of VAT-free goods. But it hard to see how such a measure would benefit locally-produced goods vis-à-vis similar imported goods since very little protection would be forthcoming to the locally-produced goods under such a system. The absence of VAT on imported goods may actually create a greater demand for imports relative to similar locally-produced goods.
The President, therefore, has to get his act together and stop making these wild suggestions. A Guyana lane in every supermarket is an interesting idea but it is for the supermarket owners to decide whether this would result in greater sales of locally-produced goods. The supermarkets have to make a business decision and they will not want valuable shelf-space to be stocking slow moving locally-produced goods. Guyana has a store that deals almost exclusively with goods made in Guyana. That store is the Guyana Shop run by the Guyana Manufacturing Corporation. It provides a most valuable service to consumers. You can go in there and get your local goods at reasonable prices. But despite the good prices, the store does not enjoy anywhere near the traffic of local supermarkets that sell mainly imported items. And this is because many Guyanese still opt for imported items over local ones.
Guyanese should be encouraged to support locally manufactured goods. But we have become so foreign-minded that it will take some time before more Guyanese are willing to give up their foreign goods for local goods. Creating a Guyana lane in supermarket with incentives is not going to change the foreign mindset of many local consumers. You just have to look at what happens at Christmas to recognise how much work needs to be done to encourage consumers to buy local. Apples and grapes are sold in enormous quantities during Christmas. There are long lines to buy these items and long lines also to purchase imported ham and turkey. The situation is not helped because of the high cost of local fruits. And local goods are expensive because of low production.
Just yesterday, the Ministry of Agriculture was saying that some 94,000 kg of brackish water shrimp was produced for the month of January. But this increased production is not being reflected in the prices of the swamp shrimp in the market. And the Ministry is not saying just who is benefitting from this production: is it a handful of aquaculture farmers or is it many small-sized farmers, or if most of this shrimp is being exported. The government says also that it wants to establish a food terminal in Guyana. But to export what? The only items we can export in bulk are rum, sugar and rice. One of the reasons why importers in the United States and elsewhere do not take us seriously is because Guyana cannot supply the minimum demand needed by some major food chains. Try asking a Guyanese to fill a container with vegetables or some fruit and see if they can export one container a week. They cannot because we do not have the production. The President has announced that some investor is going to make refined sugar in Guyana. He says the facility will have a capacity of 180,000 metric tons per year. But Guyana only produced one third of that amount this year. We consume about 35,000 tons locally or about half of last year’s local sugar production. So where will Guyana obtain the sugar for refining?
The President says that it will happen even if it has to be imported. But will it be profitable to import sugar and refine it locally for the export market. The more you listen to the President, the more you understand why things are the way they are in Guyana. And why it is not likely to change in the immediate future.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)
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