Govt attitude has US$50M investment at standstill - Hamley Case By Andrew Richards Stabroek News July 9, 2000 Procrastination and unwillingness on the part of the government to facilitate private investment has led to the US$50 million undertaking by Case Timbers Ltd (CTL)/Unamco being left at a standstill, former managing director Hamley Case has stated. Case, who has resigned his position with the company, told Stabroek News in an interview that the Malaysian backers of the investment had refused to inject more funds into the venture because of government's ambivalence towards the investment. "When the Malaysian investors realised they were dealing with a political dinosaur in the PPP, they also recognised an administration which does not understand nor appreciate the need to maintain Guyana's global competitiveness in the forestry sector. It was then that they decided to cut their losses and get out of Guyana," Case said. Malaysian Villupillai Kanagalingam had bought 80% equity of CTL and owned 85% of Unamco. A plymill and a sawmill were to be set up opposite Kwakwani on the west bank of the Berbice River but are lying dormant at the location. The plymill was said to be still packed in about 450 crates and the sawmill, too, is yet to be assembled. Case said Unamco was currently cutting logs and selling to sawmills, which was not the purpose of such a large investment. Case said the investment ran into major problems a few years ago. The crux of the problem was that government showed little willingness to assist the company to enter into value-added production, he said. The complex at Kwakwani could have been the most modern and efficient in Guyana, creating some 2,000 jobs, he stated. He noted that this number did not take into consideration the multiplier effects of this such as the spending on products and services which would support employment in the supplier chain and the local retail markets. Case believes if CTL/Unamco had been treated like Beal Aerospace in terms of the urgency and preferential conditions that that investment enjoyed, a significant part of Region Ten would have been transformed by now. "It's a disgrace that this region of Guyana, which government declared an area of serious economic hardship and decline in need of special attention and treatment, has been systematically deprived of an investment which could have brought a ray of sunshine into the lives of so many," he lamented. He sought to remove the blame from Minister responsible for Forestry, Satyadeow Sawh, stating that the minister always tried to maintain the investor's interest in completing the investment. However, he condemned the system the investors had to deal with: "The PPP's entrenched ideological backwardness is at odds with modern progressive attitudes to inward investment and sustainable economic growth in the twenty-first century," he stated. CTL/Unamco's investment included a US$36 million brand new plywood factory, a US$3 million sawmill and a wide range of river transportation, road building and harvesting equipment as well as infrastructural work. "Naturally, to this day the Malaysians are bitter and feel that the PPP misrepresented itself when it said it welcomes foreign investment into Guyana," Case said. Case opined that the current administration has been paying "lip service" to private capital investment and the free market system over the years it has been in office. "There is no real evidence of investment here except for the Beal deal which I think was a rush to give credibility to their claim to be in favour of private capital investment," he said. The initial impression given by the government was that they were not accustomed to dealing with an investment of the magnitude of CTL/Unamco coming from a private source, he said. "To some extent we got caught in a sort of time warp when there was a lot a indecision from the government decision-makers regarding the ideological direction the government wanted to take. I am still not sure whether they are keen on private capital investment for Guyana," Case stated. He surmised that one way forward was for another investor to take over the investment; government might choose to enter into a new relationship with that investor to get the two factories going. Case had applied for a forest concession for CTL during the Hoyte administration, which was approved by the PPP administration after the party got into power in 1992. Case then brought in Malaysian partners who purchased 80% equity in CTL and he became managing director of the company. The CTL 721,000-acre concession was located in the North-West District and it was found that the forest there was more suitable for plywood manufacture but was too small to sustain a plywood factory. He pointed out that this occurred at a time when government was not in a position to allocate more forest so the investors sought out local companies who had concessions but needed financing for their development. Unamco was chosen. This company had a concession 40 miles south of Kwakwani. The timber species there were more suitable for sawmill purposes. Then the Guyana Forestry Commission informed CTL that 155,000 acres of the concession in the North-West was part of Amerindian land and had to be deducted. A request was made by CTL/Unamco to relocate the concession closer to Unamco so that the companies could centre their business in one area. Case complained that it took about 18 months to get through to the government and that the investors had to go through a lot of red tape before what was thought to be a straightforward decision could be made. "We never expected that that would have been so difficult to get over to government. The problem was that the people we dealt with had no business sense," he said. The government eventually agreed to relocation but reduced the size of the concession to 155,000 under a Timber Sales Agreement. "All of this made the Malaysians very unhappy and very bitter. Those people travelled half-way around the world to put millions of dollars into Guyana which needs this type of investment and the attitude we got from the people who are handling the investment was outrageous," Case stated. "It is an investment but an incomplete one. In the investment world what is important are completions. The problem is with the institution itself. People are reluctant to make decisions, they are not business oriented so they take a very long time to make decisions. They never seem to be sure of what they want to do and how they want to do it," he declared. Follow the goings-on in Guyana in Guyana Today