TUESDAY's meeting with President Jagdeo and corporate leaders from across the country was yet another demonstration of Government's policy defining relations between government and business.
The limitations of time and the scope of their discussions didn't allow for the ventilation of, or decision-making on, every burning issue affecting the private sector. But by their own account, the nine leaders who represented their Chambers of Commerce and Industry appreciated the timing of the discussions and the wide range of topics addressed. And with enthusiastic anticipation, they successfully recommended the institutionalization of a quarterly discourse with the President; their next meeting has been scheduled for January 2004.
Given that the rules of logic are central to argument, debate between government and opposition has been rife over the relations between government and business and the role each plays in spurring economic growth.
The PNC/Reform in particular contends that the government isn't business friendly, doesn't have a business agenda, and is incapable of attracting foreign investments. REFORM leader Stanley Ming reportedly said only a few days back that "Government's hostility to private sector investment in Guyana and the debilitating structure of the economy were not independent phenomena."
If, as it is written, an argument proceeds logically from facts to conclusions, then the records should speak for themselves.
A Commonwealth Advisory Group reported in August of 1989, following a study on Guyana it began here in April of 1988, that for more than a decade the economy of Guyana had experienced "steady deterioration."
"The volumes of total output and exports are now estimated at 20 percent below their level in the mid-1970s. The country's infrastructure and productive assets are in a state of disrepair. Nutrition and health standards have fallen sharply. Since 1980 the pace of deterioration has accelerated with real GDP estimated to be declining by 6 percent per annum.
"Guyana is now ranked below Haiti as the poorest country in the Western Hemisphere."
Opposition arguments are that the Economic Recovery Program (ERP), launched in March of 1989 by the Hoyte administration, changed all that.
Not so, according to the World Bank and the International Monetary Fund!
A World Bank study on Guyana (GUYANA - Private Sector Development, 1993) found private enterprise to be weak in 1993, three years after the launch of the ERP.
Manufacturing accounted for less than 10 percent of GDP, and "most activities" were "characterized by low levels of technology and/or relatively low value added," for example operations that assembled imported components of garments for re-export, production of furniture which relied heavily on manual rather than machine processes, and metalworking shops that served the local industry.
Guyana has come a long way since then. From being ranked 58th in the world for indirect foreign investments between 1988 and 1990, the World Investment Report of the United Nations Development Programme (UNDP) has recorded Guyana as moving up 41 places to rank 17th in the world for direct foreign investments 1999-2001 and "among the 44 frontrunners of the 140 countries that were surveyed."
In monetary terms, Guyana accumulated US$44 million in foreign direct investments and another US$42 million in local investments last year. The countries from which the foreign investors originate include France, Philippines, St. Vincent and the Grenadines, the United States, Trinidad and Tobago, China, Canada, Holland, Israel, Brazil, Malaysia, Barbados and India.
This, of course, isn't the end of the story. As a GINA feature in our today's issue points out, the investments referred to above apply only to those revealed by GO-INVEST.
What the story implies is that all of these investments could not have materialized if the Government had not been investor-friendly, if the Government had not created and sustained an environment conducive to business, and if the foreign and local investors who are operating here did not have confidence in the nation's economy and in the Government's business facilitating role.
A article from American Political Economy in Comparative Perspective
Richard Lehne
Richard Lehne offers a comprehensive overview of government-business relations, comparing institutions and practices in the United States with those in the European Union and other major industrial nations. He argues that present-day policies defining arrangements between government and business are not inevitable but result from the societal judgments of various eras. Recognizing diverse traditions and previous policy decisions helps guide the process of reform and renewal that nations throughout the world are now experiencing.
Contents
Introduction: New Spotlight on an Enduring Topic I: ENVIRONMENT FOR GOVERNMENT-BUSINESS RELATIONS Origins of Government and Business Colonial Times to 1860: Legal Foundations of Business The Rise of Modern Industry: 1860-1929 1929-2000: The Emergence of Positive Government Paths to Industrial Development Further Reading Creating Government-Business Relations The Role of Government Models of Business and Government Government and Business: International Perspectives Further Reading Advocacy Environment: Public Opinion, Labor Unions, and Groups Public Attitudes toward Business Labor Unions The Interest Group Universe Further Reading The Stakes in Governmental Systems Government Activities Patterns of American Governance Governmental Institutions in Comparative Perspective Further Reading Globalization of Business Activity Emergence of the Global Marketplace Multinational Corporations in the Global Economy Carving Up the Global Pie: Models of Capitalism Responses to the Global Economy Further Reading II: CORPORATE ACTIVITIES IN THE POLITICAL ARENA Corporations and the Public Space Who Controls Corporations in the United States? Corporate Governance in Comparative Perspective Corporate Public Affairs Programs Further Reading Corporations and Business Associations in the Political Arena Business Involvement in Politics Business Associations in the United States Business Associations: A Comparative Perspective Further Reading Lobbying Connections What Do Business Lobbyists Do? Lobbying: A Case Study Corporate Lobbying: Pluralism or Hegemony? Further Reading Lobbying the Executive Branch-Invoking the Law Lobbying Administrative Agencies Litigation as a Business Tactic Governmental Relations in Comparative Perspective Further Reading Why Does Business Win and Lose in Politics? Business and Political Parties: A Comparative Perspective Winning and Losing in Politics Hallmarks of Business in American Politics Further Reading III: GOVERNMENT POLICIES AND BUISINESS Business and Economic Policy Fiscal Policy Monetary Policy Revenues and Expenditures Further Reading Understanding Regulation in a Deregulatory Age Theories of Regulation Dimensions of Federal Regulation Contest Among Reform, Deregulation, and Reregulation Further Reading Global Trade Policies Features of the International Trading System The International Trade System Under Stress Can the International Trade System Be Salvaged? Further Reading Antitrust and Competition Policy in the New Economy American Antitrust Policy Comparative Antitrust Policies Further Reading Industrial Policy and High-Tech Industries American Industrial Policies and Proposals Industrial Policy: International Experiences Technology Policies Further Reading Business as Social Actor Policies to Achieve Societal Goals Policies to Protect Society from Business Policies to Protect Workers Further Reading
328 pp pages, 6" x 9", September 2001
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paper, 1 889119 38 5, $31.95
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Published by Chatham House Publishers
1998/99 OPENING BUDGET
[FACILITATING GROWTH]
The central objective of the Government's overall economic strategy is to achieve a sustainable level of economic growth and employment creation as a basis for improving the living standards of the population. I have already outlined the overall programme which will guide the Government's activities,, not only in fiscal year 1997/98, but also for the medium term.
Critical elements of this programme are low and stable inflation and interest rates, as well as a stable exchange rate and a strengthened financial sector. In certain instances there will be need for assistance to specific economic sectors to facilitate their recovery from unforeseen setbacks or to "prime the pump" in periods when private sector investment levels are reduced for whatever reasons.
Also vital in the process of facilitating increased economic activity is a tax system which is sound and accepted by all taxpayers as efficient and equitable.
Whenever the question of growth is raised, invariably the answer is that there is a need for a sharp reduction in the interest rates. As I have already said explicitly, there is a need to reduce general interest rates but this reduction must be credible and any unilateral action which is not based on underlying economic conditions is bound to backfire. At the same time the Government has recognized the need to reduce the cost of money to the productive sector and this was the rationale for us proposing last year, significant reductions in the cost of funds made available through the two development banks, the Agricultural Credit Bank(ACB) and the National Development Bank (NDB).
Economic Ministers' Meeting, Chairman's Statement
Makuhari, Japan, 27-28 September 1997
Introduction
1. The first ASEM Economic Ministers' Meeting (EMM) was held in Makuhari, Japan, on 27-28 September and attended by the Ministers responsible for economic affairs from ten Asian and fifteen European nations, with the Luxembourg Minister of Economy acting also as Presidency of the Council of the European Union, and the Vice-President of the European Commission. The meeting was chaired by the Minister of International Trade and Industry Mitsuo Horiuchi of Japan. The list of participants is attached. Prime Minister Ryutaro Hashimoto, an original advocate of the ASEM Economic Ministers' Meeting, opened the meeting with a comment on the importance of inter-regional economic cooperation, noting that this occasion signaled the opening of a new chapter in ASEM economic cooperation.
2. Recalling that their Leaders had forged "a new comprehensive Asia-Europe Partnership for Greater Growth" and recognizing that the growing economic links between the two regions form the basis for a strong partnership, Ministers discussed a wide range of economic issues under the EMM agenda toward developing a common vision for economic cooperation in ASEM.
I. The Economic Relationship between Asia and Europe in General
3. Ministers welcomed the studies on economic synergy undertaken by Japan with a view to providing a solid basis for developing effective policy measures and valuable input for this meeting, and asked that such studies be further deepened.
4. Ministers recognized that there was enormous potential in the economically dynamic and diverse Asian and European regions to create synergy through enhanced inter-regional linkages, spurring the further economic growth of both regions. Taking into account the Discussion Paper on ASEM Economic Cooperation prepared by Japan and ASEAN, Ministers agreed that Asia and Europe should work together to develop priorities, policies and measures for economic cooperation in ASEM and thus maximize inter-regional synergy, based on the following principles:
a. Common commitment to the market economy and to necessary reform;
b. Closer cooperation and dialogue between government and the business sector, with the business sector as the engine of growth;
c. Non-discriminatory liberalization, transparency and open regionalism;
d. Consistency and compliance with applicable international rules, particularly those of the WTO; and
e. Mutual respect and equal partnership, with recognition of the economic diversity within and between Asia and Europe.
5. In the same context, Ministers agreed that policy objectives should include:
a. Greater economic interaction between enterprises;
b. Improvement of the business environment toward increased trade and investment; and
c. Sustained and stable economic growth.
5. In regard to areas for economic cooperation, Ministers recognized the importance of specific fields such as the promotion of business interaction and the liberalization and facilitation of trade and investment; as well as infrastructure development; energy and environment issues; the promotion of small and medium enterprises (SMEs); human resources development; strategic partnerships in third country markets and others; and other high potential areas.
6. Ministers shared the view that ASEM economic cooperation such as the above, which would reinforce the underlying sound economic structures, would also contribute to the robustness of ASEM economies through the active exchange of views on effective policies and concrete measures to enhance the environment in trade and investment and to strengthen economic competitiveness. In this context, Ministers expressed the view that transient economic difficulties, export slowdown and exchange rate fluctuations observed in some ASEM partners would not harm the significant long-term potential of these economies. Ministers affirmed their confidence in the strong future prospects of these economies in an era of globalization, taking into account positive factors such as sound economic fundamentals, abundant investment opportunities and high savings ratios, and based on the consistent application of sound, market-oriented and outward-looking policies.
7. Preparations for European Monetary Union and its effect on the global economy were discussed. Ministers noted the role which the euro will assume as a world currency and recognized its prospects for enhancing trade and investment between Europe and Asia. Ministers also noted that the evolution of the ASEAN Free Trade Area (AFTA) should serve to encourage enhanced trade and investment flows between Asia and Europe, together with greater opportunities for business linkages.
8. Ministers recognized the need to further discuss and develop ASEM economic cooperation according to the principles and objectives agreed to at this EMM, drawing on further studies as appropriate. Ministers also shared the view that business views should be reflected in this discussion.
II. Interaction with Business
9. Ministers underscored the significance of enhancing interaction among business people, the main agents of market activities, so as to expand trade and investment between Asia and Europe, and discussed the role of government in facilitating business interaction. Ministers agreed that the emphasis should be on enhancing mutual understanding, improving information access and strengthening human resources, recognizing the importance of SMEs in achieving the above.
10. Ministers welcomed the attendance of Mr. Ortoli, chairman of the first Business Forum, and Mr. Sarasin, chairman of the second Business Forum, as guests of the Chair. The chair of the first Business Forum reported on its results, providing a basis for further discussion on economic cooperation. Ministers also welcomed the results of the Business Conference in Jakarta as valuable input which complements and reinforces the work of the Business Forum. Ministers expressed their expectation that the second Business Forum will develop discussion on the role of the business sector in the ASEM framework after the EMM. The chair of the second Business Forum affirmed the strong contribution to be made by the business sector particularly in the field of trade and investment.
11. Ministers emphasized the importance of opportunities for informal dialogue with senior business leaders, and urged the early realization of such dialogue. Ministers encouraged greater business sector participation in ASEM economic cooperation, with business views reflected through the Business Forum. In this context, Ministers welcomed Korea's offer to host a Business Forum in 1999 and Singapore's offer to host a Business Forum in 2001.
III. Trade and Investment
12. Ministers reaffirmed the significance of promoting the facilitation of trade and investment and improving the environment for investment and for trade in goods and services, including the reduction of trade barriers and other impediments to trade flows, so that the business sector will be able to increase two-way, market-driven trade and investment flows between Asia and Europe, a pivotal element in enhancing economic dynamism in the two regions. The importance of transparency in trade policies was also emphasized.
13. Ministers welcomed the completion of the Investment Promotion Action Plan (IPAP) and endorsed it, with much appreciation expressed at the initiative taken by Thailand. To further develop discussion in this area, Ministers agreed to the establishment of an Investment Experts Group (IEG) under SOMTI in which government officials could discuss investment-related issues in a balanced manner from both the promotion aspect and the aspect of policies and regulations, interfacing with the business sector through the Business Forum. The IEG shall assist the SOMTI in following up on the initiatives of the IPAP.
14. Ministers endorsed the framework elaborated by shepherds for the Trade Facilitation Action Plan (TFAP) to be adopted by Leaders at the second ASEM as a tangible achievement in the ASEM process. The TFAP should aim at reducing non-tariff barriers (NTBs) and transaction costs, as well as promoting trade opportunities between the two regions, while complementing work being carried out in other fora. Ministers instructed shepherds to continue their work, with particular reference to the further elaboration of mechanisms for implementation as well as concrete goals to be attained by the third ASEM. They also asked SOMTI to complete the TFAP at its meeting in Brussels next February and to supervise TFAP implementation.
IV. WTO-Related Issues
15. Having due regard to the 1998 WTO Ministerial Conference and the 50th anniversary of the multilateral trading system, Ministers reaffirmed their commitment to the primacy of the multilateral trading system and emphasized its importance in realizing the joint objectives of ASEM business and economic dialogue and cooperation.
16. Ministers confirmed their support for the universality of WTO membership and the early accession, through negotiations, of applicants among ASEM partners based on effective market access commitments, while preserving the integrity of WTO rules.
17. The importance was underlined of attaining agreement in the WTO on financial services, with commitments including significantly improved market access from the broadest possible number of participants by the agreed deadline of December 1997.
18. Ministers endorsed the efforts being made to integrate the least developed countries (LDCs) into the global trading system, in particular by improving their capacity to take advantage of the opportunities such integration creates. While the primary role of developed countries in such efforts was emphasized, substantial involvement of advanced developing countries with higher national income was in particular encouraged. For this purpose, Ministers reaffirmed the importance of the High-Level Meeting on LDCs in October 1997.
19. With a view to maintaining the momentum of global trade and investment liberalization, as endorsed at the SMC, Ministers reaffirmed their commitment to further contributions to the WTO, including further tariff liberalization, new issues (such as trade and investment, trade and competition policy, and transparency in government procurement), standards, intellectual property rights, rules of origin and all other aspects of trade facilitation and expeditious review of regional trade agreements, and forthcoming important negotiations and reviews of the built-in-agenda issues at the end of century.
V . Infrastructure Development
20. Ministers noted with great interest the enormous demand in Asia in particular over the coming decade for the development of infrastructure such as electricity, gas, transportation, telecommunications and water, and agreed that such development was a vital task in terms of laying the ground for further economic development. It was also felt that infrastructure development would be effectively approached by facilitating business sector initiatives, and, from this viewpoint, Ministers welcomed the report by Mr. Ortoli on the ongoing study conducted by the Infrastructure Task Force established by the Business Forum, as well as the report on the Symposium on Financing Infrastructure Development in Frankfurt.
21. Ministers noted the view expressed in these reports that risks outside the usual commercial and political risks are one major obstacle to infrastructure development by the business sector, and that an effective way to mitigate such risks, reduce transaction costs and establish proper regulatory frameworks would be to engage in joint work on launching appropriate tools, using such means as model contracts/standard bidding and contractual guidelines with possible instruments for encouraging contract observance. Ministers agreed to further enhance dialogue between the business sector and the relevant government authorities to promote the development of a study on appropriate tools. In this context, Ministers expressed their expectations that the Business Forum will accelerate this study and invite high-level officials from relevant government authorities to a working group at the next Business Forum so as to deepen such dialogue.
VI. Sustainable Economic Growth; including Technological Cooperation, Energy and Environmental Issues
22. Ministers recognized that energy security, environmental protection and the achievement of sustainable economic growth were common issues to all ASEM partners, and in order to maintain the stability of economic growth in Asia, Europe and the world economy at large, it was important that all three march hand in hand. In pursuit of the above, Ministers also recognized the importance of efficient use of energy through the development and dissemination of technologies. Ministers stressed the importance of rising to the critical challenges posed by climate change issues, in particular through a successful Third Conference of the Parties to the FCCC in Kyoto. Ministers also stressed the importance of inter-regional cooperation and solidarity in preventing and mitigating the effects of major environmental phenomena such as forest fires and floods.
23. Ministers therefore urged officials to launch the necessary work as soon as possible toward the sharing of relevant experiences, overcoming constraints and increasing the synergy effect between the two regions. Energy sector deregulation was noted as one example of an area in which Asia and Europe may work together and share their experiences. Ministers also recognized that the promotion of economic and technological cooperation based on equal partnership between Asia and Europe would be effective not only in overcoming these constraints but also in providing trade and investment opportunities, contributing to the development of the world economy. Ministers welcomed the report on the Asia-Europe Experts Meeting on Technological Cooperation in Beijing and called for further considerations.
Next Steps
24. Ministers agreed that the second EMM would be held in Berlin, Germany, in October 1999. Ministers also agreed to report the results of the EMM to Leaders at the second Asia-Europe Meeting in April 1998 in London, affirming their strong commitment to making the maximum contribution to the development of ASEM economic cooperation.
Minister of Foreign Trade and Economic Cooperation
6. The Kingdom of Denmark
Mr Gunnar Ortmann
State Secretary, Ministry of Foreign Affairs
7. The European Commission
Sir Leon Brittan
Vice-President of the European Commission
8. The Republic of Finland
Mr. Ole Norrback
Minister for European Affairs and Foreign Trade
9. The French Republic
Mr. Jacques Dondoux
Minister for Foreign Trade, Ministry of Economy, Finance, and Industry
10. The Federal Republic of Germany
Dr. Gunter Rexrodt
Federal Minister of Economic
11. The Hellenic Republic of Greece
Mr. George Sioris
Ambassador of Greece
12. The Republic of Indonesia
H.E. Mr. Hartarto
Coordinating Minister for Production and Distribution
13. Ireland
Mr. Tom Kitt
Minister of State at the Department of Enterprise, Trade and Employment
14. The Italian Republic
Mr. Giovanni Domineḍ
Ambassador of Italy
15. The Republic of Korea
Mr. Lim, Chang-Yuel
Minister of Trade, Industry and Energy
16. The Grand Duchy of Luxembourg
Mr. Robert Goebbels
Minister of the Economy acting also as Presidency of the Council of European Union
17. Malaysia
Mme. Rafidah Aziz
Minister of International Trade and Industry
18. The Kingdom of the Netherlands
Mr. Hans Wijers
Minister of Economic Affairs
19. The Republic of the Philippines
Mr. Cesar B. Bautista
Secretary of Trade and Industry
20. The Portuguese Republic
Mr. Augusto Mateus
Minister of Economy
21. The Republic of Singapore
Mr. Lee Yock Suan
Minister for Trade and Industry
22. Spanish State
H.E. Mr. Santiago Salas
Ambassador of Spain
23. The Kingdom of Sweden
Mr. Leif Pagrotsky
Minister for Trade, Ministry for Industry and Trade
24. The Kingdom of Thailand
Mr. Narongchai Akrasanee
Minister of Commerce
25. The United Kingdom
Lord Clinton-Davis
Minister for Trade at the Department of Trade and Industry
26. The Socialist Republic of Vietnam
H.E. Mr. Mai Van Dau
Vice Minister of Trade
Mr Keith Croker, who heads the federal Department of Industry, Science and Tourism's resource processing industries branch, provided a perspective on issues the government is addressing and gave a commitment to work with the sector in the future.
The role for government in industry policy has been articulated by the Coalition in its Industry and Commerce Policy. This comprises three areas of focus: macroeconomic policy direction; microeconomic reform; and trade-regional, multilateral and bilateral. However, I would also add that industry policy encompasses an acknowledgement of the importance of technological development, innovation, training and skills development and other issues that enhance productivity and competitiveness.
On the macroeconomic front, business investment is forecast to rise by around 14 per cent, which will boost demand growth to more than 4 per cent a year. Although this will stimulate imports, particularly due to rapid growth in highly import-intensive areas of investment, continued strong growth in Australia's major trading partners will give another year of strengthening exports. This will result in only a modest improvement in the current account deficit for 1996-97, which will remain at a high 4 per cent of gross domestic product, reflecting a structural weakness that the fiscal consolidation program is designed to address over time.
Microeconomic reform, which has already brought financial deregulation, reduced tariffs and some movement away from centralised wage fixing, will progress with the banking sector inquiry and the industrial relations bill currently before parliament.
The central thrust of the Coalition policy on trade is to boost competitiveness of exports and import replacement industries through raising productivity across the economy. The multilateral focus is on maximising benefits from the Uruguay round of negotiations and establishment of the World Trade Organisation, while maintaining a commitment to removal of discriminatory trade practices. The government is pursuing open regionalism within APEC, specifically opposing the emergence of a preferential trade bloc. On the bilateral track, it will exploit where possible opportunities to open and improve access for Australian exporters.
In the five years to 1993, APEC export trade grew at 8.7 per cent a year, significantly ahead of the global average, 5.5 per cent, to give it fully 45 per cent of the share of world trade. The APEC agenda includes the dismantling of trade and investment barriers by 2020. Australia has agreed to review its remaining tariff barriers before 2000, but there is no commitment to reduce them further at this stage.
Turning to the chemicals industry, sales in 1993-94 reached $21.1 billion, accounting for 11.5 per cent of total manufacturing turnover. Chemicals turnover (including basic chemicals, other chemical products, rubber products and plastic products, but excluding petroleum products and refining) grew 5.5 per cent in the three years to 1993-94 - only just ahead of the 4.8 per cent consumer price index growth, meaning little real growth - while imports went up 39 per cent to $9.4 billion, and exports 70.1 per cent to $2.4 billion. Employment, at 83800, declined by 7 per cent.
In summary, exports of chemicals are growing faster than imports, but on a relatively low base, with the standout performers being inorganic chemicals, pigments and pharmaceuticals, targeted largely at Asian markets. The major imports were fertilisers, soaps, pharmaceuticals, organic chemicals, starches and glues. The challenge is to fathom the reasons behind these imports and to determine what we as industry, government and research providers can do to arrest their growth.
New investment in the industry has the potential both to cut imports and boost exports. In examining its current operations, industry should focus on taking advantage of emerging markets, which means achieving internationally competitive production and marketing. One element of this is a need to restructure, with the aim of improving the productivity of sub-optimal operations to meet world-scale production benchmarks.
As the major growth markets are overseas, a more outward orientation is crucial and this demands a greater commitment to exports and a stronger regional presence. The key to sustainable growth is innovation, leading to the development and commercialisation of new products and technology, supported by effective marketing.
The government is committed to helping industry achieve its potential, and is actively promoting chemicals sector investment. Australia's research infrastructure is among the best in Asia, and it is becoming more attuned to working with industry to achieve commercial outcomes. Emerging markets on the Pacific Rim and their demand for new products present opportunities for the industry. A strong partnership between the industry, government and the research sector is necessary to capture those opportunities.