The opening ceremony of the GMA's exhibition Friday-- President Bharrat Jagdeo's address

Guyana Chronicle
September 17, 2001

COLLEAGUES of the head table, Prime Minster Samuel Hinds and other colleagues of the Cabinet, members of the Diplomatic Corps; special invitees; ladies and gentlemen.

Mr McLean pointed out to you the integrated nature of our economy with the rest of the world, and he spoke about problems in North America affecting our economy.

But we are linked to North America and the United States of America not in economic ways. Many Guyanese reside in that country; we've had strong historical ties; we share many values together.

Earlier today at another function, I made some remarks, which I want to repeat here because the Ambassador was not there. I want to say to you that all Guyana condemns the senseless acts of terrorism that took place in your country.

And I want you to know and I wish that you communicate to your government that in whatever way we can - because we're not a world power; we don't have much influence on the global political scene - but we will support your government in the fight against international terrorism.

I have instructed that on Monday that all the flags in Guyana be flown at half-mast as a sign of respect and sign of solidarity and sympathy with the people of the United States of America.

And I also would like to express that sympathy to all those countries that had their nationals affected, including many Guyanese.

We have a very challenging time ahead, and in our country, we have travelled a very long road; we have travelled a road from which this economy was practically controlled in every aspect by the State.

And today, we have one of the freest economies in the Western Hemisphere, and I'm willing to sit with anyone and debate that point; a very, very difficult road. And it took a lot of courage to make many of the policy decisions; and it took a lot of courage to implement it in a situation that has not always been conducive.

And sometimes I can understand - not that I agree with - the political difficulties; because that's also a relic of the past. But what bothers me a lot is that in spite of the years, and years, and years of collaboration between the government and the private sector, unmatched by collaboration in many of the countries that Mr McLean mentioned - Barbados and Trinidad & Tobago, because I talk to people there in the Private Sector and in the government, and sometimes they don't see the minister some months. They have to make appointments there.

Here, it's just a phone call away. But in spite of that collaboration and years of explaining to each other what are the difficulties associated with developing our country, that in Mr McLean's speech - and I know he personally doesn't feel this but he is mandated to say this - we until today do not understand each other.

A long time ago we agreed that this country has to be export-oriented; our economy is too small to focus only on domestic production. That's why we have been speaking so much about economies of scales. Our manufacturers will never be able to compete in the global economy if they only produce for the domestic economy.

And while I support strongly a ‘Buy Local' campaign, but buy local stuff must be done on the basis of quality and price; they must match quality and price from abroad and not by the insulation of our markets from competition.

Because, if we want people to buy local alone, based on any quality and any price, when we go to develop our garment manufacturing industry, people from abroad will not give the garment manufacturers work. Why should they send their contracts here, so that the women in the manufacturing sector would have employment? And why should the United States of America or other countries send their information technology business to Guyana to be processed etc?

We have seen what a policy of isolation has done to consumers in this country. For a number of years, I remember, when we had monopolies in this country and we were shut out from the rest of the world, we were buying soft drinks and the bottles were chipped. And up to today, if you look at some of the caps, they're rusting; they have rust under the caps.

And you're telling me about government needing to support the industries, but we have two of our largest manufacturers of soft drink buying each other's bottles and destroying them, whilst a foreign company is taking more and more market share because they think they are winning the competition between each other.

I hope that you can speak to the manufacturers about that, too; how you're going to capture the market with that attitude. And people say: What about the poultry industry? Are you willing to raise taxes? And I said the taxes are already high for imports; and if I raise taxes like we did in the past and prohibit some items - what about the consumers? Because we know, as soon as we - and this is from hard experience - increase the taxes, not that the Private Sector expands in many cases to fill that void, but the prices go up and it cuts off demand at that level, and consumers suffer.

So, I am going to pledge tonight - I know about the hardship that our manufacturers face, but I am not going to take this country back to the past, and I am not going to have our country be insulated from the rest of the world, whilst aggressively urging people to buy and consume what we produce.

There are many things that we have to talk about, but let me clarify some other things. There is schizophrenia, in many cases in the position by many of these representative organisations. Sometimes they urge you to open a sector; and other times they urge you to close a sector. Often, it's not based on industry position, or what is good for the country, but what is good for an individual company. That cannot happen, too; governments don't operate that way. You have to look at the good of the country and the industry, and not sometimes individuals. And this happens every single day.

Mr McLean said that the Consumption Tax makes Guyanese products uncompetitive with imports. But how could this be? The rates are the same. If you have some sector, say furniture, it's 30 per cent C-Tax for imported products; it's 30 per cent C-Tax for the domestic product.

But, the imports are at a greater disadvantage. Why is this so? Because, the tax on domestic production is levied on an ex-factory basis. That's cost of production, plus a manufacturer's margin. That's the basis. For the import, it's levied on CIF (Cost/Insurance/Freight) value, plus duty. So it has a manufacturer's margin; it has insurance; it has freight; and it has duty. And then on that base, the 30 per cent is levied.

If you remove it from both sides - from the import and the domestic production - then you give the foreign product that's coming in even a greater market share. And I don't know if this doesn't get over, because we've discussed this issue a hundred million times.

There are many other things, but let's get on with the programme. I agree that our manufacturers face a lot of difficulties; they face the cost of capital, which is higher than the rest of the world. But in 1995, the cross-border equity flow was about $265bln. In 2000, it was $1.1 trillion. Yet we do not have a stock exchange to capitalise on that form of financing. All of our manufacturers have to go for loan financing; they can't capitalise on a cross-border equity flow of $1.1 trillion.

Why is this so? In spite of our encouragement, many companies still don't want to go public. I would urge the GMA to work along with the government to make sure more companies can go public so that they can have other ways of raising capital, if they cannot handle loan financing.

Our electricity is another problem. And it's not just the cost, because cost I can understand; you can match that with your imput. But unreliability…And let me say one thing: People have asked me about my position on this and I am very upset, and recently I spoke to one of the shareholders, because we pay for a service; we ask people to manage this company for a fee. And my test about power and this company's management - I don't want to know what is going on in the company - all I want to know is that when I turn the switch on, there must be power there; not to have blackout 30 times a day. And that adds to our manufacturers' costs, too.

Political stability has affected our manufacturers, but let's talk about concessions. I'm willing to sit with the GMA once again and compare the concessions that people receive around the Caribbean to those of our manufacturers here, who're exporting. And you will see - even a World Bank study, which was funded from USAID, concluded that we have an incentive regime here that is as competitive as any in the region.

Sometimes it bothers me, because its either people don't know, or there is a deliberate attempt to mislead. Notwithstanding that, I'm willing to work to make sure that the regime becomes even more favourable. And we have been doing this; we sat down with the garment manufacturers, and if you talk to them today, you'll find that they're very happy with the incentive regime that we've put in place.

Today, I had discussion with some IT (Information Technology) firms, and they're saying to me that, yes, even around the Caribbean, we would not get this regime. For tourism, for sector-leading investment, we said we're willing to deal with all the concessions in the book. But I will work with people who are willing to move; not complain all the time; but move forward.

And let me tell you, there're wonderful examples of this happening in our country today. I visited the protein plant and that's going to be competitive. Recently, a stockfeed mill was opened up and that's going to transform the way we do poultry rearing. And just yesterday, Mr DaSilva told me that a firm starting a 500-acre aquaculture project has just completed two bonds in Parika.

There are serious people who are willing to move forward; work within the incentive regime that the government has to offer and not complain all the time.

I can promise you Mr McLean that I will work with the serious firms. But one thing I cannot do, is to pass on to taxpayers the cost associated with bad management. I cannot pass on that to taxpayers of this country. Sometimes people feel I am too harsh when I say this.

If you look at the US, you don't hear AT&T complaining about whether the government is Private Sector oriented or not when they lost the $3.bln that they invested last year into At Home, a cable company. The value of the company today is zero.

Goldman Sachs invested $850M into WebVan, a firm that delivers groceries in the US through the Internet. You know what's the value of that company today? Zero. But they don't complain, because the essence of being in a private sector is that you take risks. If you don't judge the sector well, you make losses. Sometimes I think, from the statements that you've made, that the Private Sector is even more conservative than the government. And that does not augur well for the future.

I can promise you some things; I can promise you bold concessions if it's matched by risk taking. I can promise you good education for our people - we're spending $11.3bln now on education - we'll spend more so that we can develop good, top-trained people to work in factories and offices here. I can promise an expansion of infrastructure; competition in telecommunications; better water and housing. I can promise some macro-economic management, which is important for investments. All of these things I can promise to sit with you and work on. But I hope also that the GMA will promise me a few things; I was hoping that you would dwell a bit more on the role GMA will be playing in the future in terms of servicing its members and what are the commitments you can give me, too.

You're going to go around today, and you're going to see a wonderful example of Guyanese entrepreneurship, and I salute those people who're here today and who're exhibiting, many of them have braved many odds. And, yes; there're many odds. And many of them have not complained. Many of them have stood there - it's a tough sector to be in - and they're doing well. Many of them have some difficulties, and I am willing to work with them. But these difficulties are associated, not with bad management, but because of changed market conditions.

I've been here and visited these exhibitions over the years, and I am truly impressed with the range of products and the quality of products, and I too believe Mr McLean, that we can compete not just here at home - and we do not need to lock our borders to compete. We can compete with our manufacturers anywhere in the world; I'm sure of that.

I want to promise all of you here today who are with us - I was supposed to make a very short address - that I will work with you. I want to promise the GMA that I will work with you to dispel some of these negative perceptions that the government is not supportive in one way or another.

I want to pledge again the support of my government to all of these manufacturers.

I now declare the GMA exhibition open. Thank you very much.