Great expectations for presidential private sector retreat
Business Page
By Christopher Ram
Stabroek News
October 10, 1999
Introduction
When President Bharrat Jagdeo rises to speak to some three hundred invitees including the captains of industry and commerce tomorrow at a Retreat at the Le Meridien Pegasus every word, nuance and signal will be analysed for the message of his Government's policy to the private sector. Whilst the format and duration of the proceedings suggest that the occasion is more a consultation than a Retreat the initiative is both timely and
welcome: businesses are having real difficulties trying to succeed and some of them are on the ropes struggling to remain in the black and on their feet. It is an important initiative and could be the litmus test for the new President who is in the unique position of President and Minister of Finance.
In the era of globalisation, liberalisation and privatisation the Government's capacity to boost the economy is indirect but still very critical. It possesses influence and powers which no other player in the economy has a claim to and can use those powers in a manner to move the economy in any given direction. If President Jagdeo uses this opportunity to consult with the private sector on the direction in which they collectively think the economy ought to go and identify the long, medium and short- term measures for reaching the goals then the Retreat will be considered a real success.
The Retreat must however be seen more than President Jagdeo's initiative and rather as a commitment of his entire Government. In this regard he must ensure that his Ministers attend not only the opening session but remain during the entire Retreat to listen to and seek to understand the concerns of the private sector by participating in the appropriate workshops.
President Jagdeo needs to make it clear to the private sector however that the role of the Government is that of a facilitator and that it is up to business managers to run their operations in a profitable manner. Government policies are only one of and not a major cause of business failure. Mismanagement on the other hand is almost ubiquitous.
Businesses rely far too much on copying someone else's idea rather than pursuing their own strengths, too much on short term bank credit rather than an equity base that allows weathering short term business shocks, too much on tax driven financial systems rather than timely financial and management information which provides management with relevant information for proper decision making, too much on low cost professional
assistance providing a corresponding quality of service.
There have been significant changes in the decade of the nineties and some of our businesses have done well. In the Ernst & Young/Republic Bank Entrepreneur of the Year 1999 Guyana has six finalists ahead of Grenada and Trinidad and Tobago.(The winners will be announced next week in Trinidad and the odds are in favour of a
Guyanese entrepreneur coming out on top.) It surely is not impertinent to ask why these companies are successful in the same economy in which others are struggling.
Business Page today offers its own thoughts of what the Retreat should address fully aware that the time earmarked is not enough to deal exhaustively with all of them. Since the Retreat is designed to identify measures which the Government should address this article seeks to emphasise political, legislative and social structures necessary to achieve economic development. This article like the Retreat cannot be exhaustive and focuses on
some issues only.
The border controversy
Last weekend marked the hundredth anniversary of the final settlement of the border issue with Venezuela. Always confident of both the legality and morality of our case we have become so complacent that the majority of our youths seem blissfully ignorant of the threat posed by the much larger and stronger neighbour which has offered not a shred of evidence to support its claim that the award was null and void. Prospective investment
in the mineral rich region covering about two-thirds of our country will always be under threat and the Government must mobilise nationally and internationally to have Venezuela's claim dismissed once and for all.
President Jagdeo must give the clear lead for this issue.
Law and order
Tourism must surely be pretty close to the top of this country's agenda for rapid enhancement. Visitors to a country want to feel that they can explore fairly freely and be assured of protection in times of need. Our Police Force is hopelessly undermanned to deal even with the harassment of both locals and tourists and the robberies which are committed on them so very often. We need to strengthen the Police Force and take measures to make visitors and locals alike feel safe and welcome as they move around the city and the country.
Government policies to deal with white collar crimes, drugs and money laundering all of which have the potential to distort and destroy the economy must be put in place.
Political structures
President Jagdeo needs to spend some time addressing the limitations of the Constitution and the inadequate attempts to rectify them. Guyanese have lost faith in the process of reform which offered the best hope for political reconciliation in the country. Clearly this is not an issue which the Retreat can address in any detail but there is nothing preventing the President reassuring the business community that he too regards the issue as critical and will step in as necessary.
His task of course is certainly not helped by the positions being taken by the PNC but Mr. Jagdeo should show confidence in the ordinary Guyanese who is tired of a political culture in which elections are seen as a war with the spoils going to the winner and the loser left licking wounds in bitterness.
Spreading the workload
The two toughest jobs in Guyana today must be that of the Executive President and that of the Minister of Finance. No matter how capable a person may be time is not unlimited and the two jobs were never designed to nor are capable of being done by one person. Even as Finance Minister President Jagdeo had spoken publicly of his demanding workload and was reported as having asked for a Junior Minister. Following the public
sector strike and the wage settlement the task of the Finance Ministry must have increased enormously and demands considerably more Ministerial time.
If the President is not careful he will run the risk of performing two of the country's most critical jobs only half well much to the cost of his own personal reputation and esteem.
National Development Strategy
For reasons partly outside the control of the Government the National Development Strategy has not been finalised and it is regrettable that at this stage we are yet to decide on the economic policies and strategies which we will pursue to achieve our social and political goals.
This Strategy is an essential blueprint for taking the country forward and needs to be completed as soon as possible for public discussion and approval. The President must announce the steps he proposes to take in this regard.
National Economic Council
This Government has demonstrated a willingness to consult particularly with the leaders of the private sector but those consultations have not been always sufficiently structured to produce the desired results. The team of capable and committed Guyanese who have worked so diligently on the National Development Strategy could become the nucleus of a National Economic Council whose task would be entirely advisory. It should be
charged with the responsibility for reviewing performance against target and proposing measures and policies to the Government in a manner that allows consistency and continuity.
Public sector reform
President Jagdeo has committed his Government to making the payout recommended by the Wages Tribunal headed by Dr. Aubrey Armstrong. It is now time for the Government and the public to expect a much higher level of efficiency and standard of service from public servants.
The Tribunal made a number of recommendations on public sector reform which ought to be embraced and implemented as a matter of urgency. An efficient private sector does not operate in isolation but must be facilitated by an equally effective public sector free from political control and honest in its dealings with the public and the Government.
The Government should put in place an Implementation Team to oversee the execution of the recommendations of the Tribunal, amended as necessary.
Capital market
We have referred earlier to the high cost of capital which businesses have to bear. It is true that too many businesses start with inadequate capital and operate with a debt to equity ratio that is dangerously high. Part of the problem lies in our financial system in which we do not have a capital market in the modern sense of the word. A Securities Industries Act has been passed but the Government and the Private Sector need to demonstrate commitment to the Act by promoting it and ensuring its enforcement and success.
A sound financial market produces and distributes efficiently information on risks and returns through the prices of securities. Savers and investors can then make rational decisions on competing investment alternative and entrepreneurs can have ready access to the means of acquiring capital at an appropriate price.
To give meaning to the capital market the Government can play a lead role by using the market to offer its own securities, and the sale of shares becoming available during the privatisation process.
Infrastructural issues
The privatisation of the Guyana Electricity Corporation has removed one of the major drags and irritants to the entire country. Despite the obvious scarcity of resources and the large scale road reconstruction programme however there are still a number of other issues which have to be addressed. These include sea defence, upgrading of port facilities, drainage, water and sewage, and the perennial difficulties of river crossing.
The President should invite the Private Sector not only to contribute to the discussion on resolving these issues but to seek their active financial participation in their implementation.
Tax reform
No doubt the President will hear requests for further tax relief. Tax relief cannot be a substitute for inadequate profits. Taxes from employment are discouragingly high and if anything relief is needed. The problems with our tax system is the number of persons who manage to evade their obligations with apparent impunity, a tax system which has essentially remained unchanged for decades, a complicated and overlapping range of taxes and high rates as a result of evasion and a narrow base.
Business Page must sound rather like a stuck record but must argue against further tinkering at the expense of meaningful reform. The President should seek the Private Sector's view on and participation in this long overdue exercise.
Productivity
The Retreat should spend some time addressing the issue of productivity which is critical to economic development. Increased productivity is largely dependent on the quality of human resources available. The world is replete with cases where vast mounts of physical and financial capital have been squandered because the development of human capital failed to keep pace. Despite the return of democracy the brain drain continues at great cost to the country and the business community. The government must lead the charge and try to channel investments in the area of human capital with emphasis on nursery and primary education as the basis of an educated workforce, technical skills, training, poverty, housing and health care.
The President may also wish to use the opportunity to establish an annual awards for business excellence carrying with them prestige and some financial rewards.
Law reform
A number of significant pieces of legislation have been introduced to accompany the new economic policies. The time appears appropriate for a review of these legislation, including for example the Companies Act 1991, which in practice has been found to have several limitations and the Dealers in Foreign Exchange Act which does not even impose an audit requirement on Cambio operators.
Other areas such as bankruptcy, environmental standards, the Factories Act also warrant attention.
Conclusion
The implementation of policies that foster the enabling environment for improved resource mobilisation and investment requires sustained political stability. The correlation between economic wellbeing and social and political stability is indisputable. Proper constitutional arrangements, responsible governance through the equitable implementation of sound policies, a civilised political culture and ethical business practices can create that environment.
Economic development will ultimately depend on the commitment, dedication and support of all Guyanese. It therefore follows that the policies formulated should recognise this fact and ensure that they do not create the impression that the interests of one section of the populace, no matter how critical, is considered in isolation of any other.
Not only must this Retreat be seen as the beginning of a formalised process of consultation with the Private Sector but as the beginning of a wider process of consultation with all social partners of which labour and consumers are a major part.
Time for the next retreat.
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