Eccles investors hobbled by financing
Stabroek News
March 26, 2004
Though some businesses are operating at the Eccles Industrial Site, many lots remain empty mainly because financing remains a key obstacle for investors.
Of the 84 lots at Eccles Industrial estate only 19 actually have businesses operating on them.
The great advantage to investors of situating in an industrial estate is the avoidance of expenditure on land. Time spent in locating, acquiring and then obtaining titles is also an avoided cost both in time and money.
For the government, estates help in organising manufacturers in one location away from residential neighbourhoods.
Investors also want the freedom to operate at any hour in a relatively secure location and with adequate supplies of electricity and water. Many of the companies now establishing at the Eccles Industrial Estate formerly had manufacturing concerns in their bottom houses and the estate will now give them room to expand operations.
The estate on the East Bank Demerara covers 55 acres and according to Bridget Morrison, Head of the Industrial Division in the Ministry of Trade, Tourism and Industry, the government developed the site at a cost of $400M; that includes drains, roads, pipelines and utility poles. She said the site was never officially opened but lots were being distributed since 2000-2001.
The lots range from 12,000 to 30,000 square feet. Of these, 56 are occupied though only 19 have operating businesses on them. This is despite an investor being given a time limit of 12 months to get his business started. If they do not, their lot may be repossessed. Some lots have indeed been repossessed and there are now vacancies.
A major difficulty manufacturers face has to do with accessing loans. The ministry has assisted businessmen in this regard by granting them 99-year leases on their industrial lots.
Morrison said the 99-year lease would allow businessmen to access funding from the banks. However, there are additional factors that the banks will take into consideration such as, the feasibility of the proposed business. She added that the accessing of loans is now a complex process.
An official from a major bank confirmed Morrison's statement, noting that, "Though we have an open door policy where a lease of 99 years can be used as security, an applicant must have a business plan. They must have done a feasibility study, which focuses on the future possibilities of the business, the cost of production and the available market." The bank also looks at the ability of the applicant to manage the business, as well as his/her relevant experience. The bottom line is that the venture must show the possibility of servicing the debt.
Sunil Singh is among those who have not taken up their lots at the Eccles site, and are still in the process of determining avenues in which to invest. Singh formerly played an integral role in IDS Holdings, a manufacturer of poly sac bags. He says businessmen are not sure about investing in Guyana and many of them are involved in speculation.
He adds also that businessmen need more support from the government in terms of regulations on imports. Singh notes that talk about Guyana's economy being one of the most open in the Caribbean was not assisting local businessmen. He says one obstacle is that he has not received electricity after applying 18 months ago.
A ministry official says Guyana Power and Light (GPL) has said that they cannot guarantee power to the industrial site because of the amount of energy required by the industry. The official mentions that during the initial planning stages of the site the power company had proposed a sub-station to supply the site with power.
But most businessmen are self-generating because the power is not reliable or fluctuates too much. He says a transformer can cost up to $900,000 and this alone can act as a deterrent.
Stabroek Business spoke with four businesses located at the Eccles site. The businessmen, who have made significant investments, are all hoping for an increase in the level of transactions done there.
Davo Pooran, owner of Davo's Lumber Yard was recently subjected to an injunction order filed by the Guyana Forestry Commission (GFC) because of his original location on the Railway Embankment. He says business is not as good as he would like but the place is well built up. His investment amounted to several million dollars, which, includes the wiring of the building, putting a transformer in place and developing the land.
Pooran has been there for one and a half years and is satisfied with the utility services provided including phones, water and electricity.
Sewchand Jafar, the manager of American Standard Designer Blocks (ASDB) says the owner, Allan Soman, wanted to produce California split face blocks at that location. The designer blocks were intended for export. However this has not yet become a reality, but they are keeping the machines active by producing regular hollow blocks.
Jafar says they were provided with the necessary infrastructure at the site, though they had to erect a fence. Drainage, roads, electricity and water were all in place at the time they started to develop. ASDB generates its own power, since it does not want to be hampered by sudden power outages.
Jafar has been there for the last three years and feels that the place is good for business. There are still some nagging details to be worked out including security and the dumping of garbage in the compound.
Dalip Mahendra owner of Dalip's Trading is also satisfied with the site. Mahendra's venture specialises in steel fabrication including planing engine heads, bore blocks, thread bolts, roll steel, thread steel pipes and constructing gears for engines. It also stocks various steel products such as steel plates, angle irons and steel rods.
Mahendra has made a major investment in the property and says he chose to locate there because that is where the business is.
Lloyd Rose, owner of Dynamic Engineering, says the most an investor is required to do at the site is individual property development.
Dynamic Engineering is involved in commercial and industrial contracting, such as construction work, civil work, electrical repair and electrical consultancy. The company has done work for GPL and GT&T, and is presently working along with Dywidag on some aspects of their road and bridge construction project.
Rose says Eccles is the only area just outside the city to suit his purposes. He has been there for two and a half years, and feels the site needs adequate management and upkeep.
He is a member of a temporary committee set up to monitor the day-to-day administration. This committee's life of one year is almost coming to an end.
The committee has been meeting on a bi-monthly basis but its work has been stymied in part by contentious issues of drainage, security and the non-payment of management fees. The following business ventures are presently operating at the Eccles Industrial Site: Khemraj Budglall Technical Services, Readymix Concrete Ltd, American Standard Designer Blocks, Sheik Hassan Designing and Printing, Samuel's Wicker Works, Dalip's Trading, Dynamic Engineering, Yasco Seafood and Davo's Lumber yard.
The Division of Industry has listed these existing businesses with those that have proposed to start operating and these are; six warehouses, six engineering firms, four chemical/pharmaceutical companies and three garment manufacturers.
The largest sector of investments at the site is in furniture manufacturing.
On site as well are six electronic businesses including printing, four fish processing investments and four other light manufacturers, which produce items such as animal feed.
Though some businesses are operating at the Eccles Industrial Site, many lots remain empty mainly because financing remains a key obstacle for investors.
Of the 84 lots at Eccles Industrial estate only 19 actually have businesses operating on them.
The great advantage to investors of situating in an industrial estate is the avoidance of expenditure on land. Time spent in locating, acquiring and then obtaining titles is also an avoided cost both in time and money.
For the government, estates help in organising manufacturers in one location away from residential neighbourhoods.
Investors also want the freedom to operate at any hour in a relatively secure location and with adequate supplies of electricity and water. Many of the companies now establishing at the Eccles Industrial Estate formerly had manufacturing concerns in their bottom houses and the estate will now give them room to expand operations.
The estate on the East Bank Demerara covers 55 acres and according to Bridget Morrison, Head of the Industrial Division in the Ministry of Trade, Tourism and Industry, the government developed the site at a cost of $400M; that includes drains, roads, pipelines and utility poles. She said the site was never officially opened but lots were being distributed since 2000-2001.
The lots range from 12,000 to 30,000 square feet. Of these, 56 are occupied though only 19 have operating businesses on them. This is despite an investor being given a time limit of 12 months to get his business started. If they do not, their lot may be repossessed. Some lots have indeed been repossessed and there are now vacancies.
A major difficulty manufacturers face has to do with accessing loans. The ministry has assisted businessmen in this regard by granting them 99-year leases on their industrial lots.
Morrison said the 99-year lease would allow businessmen to access funding from the banks. However, there are additional factors that the banks will take into consideration such as, the feasibility of the proposed business. She added that the accessing of loans is now a complex process.
An official from a major bank confirmed Morrison's statement, noting that, "Though we have an open door policy where a lease of 99 years can be used as security, an applicant must have a business plan. They must have done a feasibility study, which focuses on the future possibilities of the business, the cost of production and the available market." The bank also looks at the ability of the applicant to manage the business, as well as his/her relevant experience. The bottom line is that the venture must show the possibility of servicing the debt.
Sunil Singh is among those who have not taken up their lots at the Eccles site, and are still in the process of determining avenues in which to invest. Singh formerly played an integral role in IDS Holdings, a manufacturer of poly sac bags. He says businessmen are not sure about investing in Guyana and many of them are involved in speculation.
He adds also that businessmen need more support from the government in terms of regulations on imports. Singh notes that talk about Guyana's economy being one of the most open in the Caribbean was not assisting local businessmen. He says one obstacle is that he has not received electricity after applying 18 months ago.
A ministry official says Guyana Power and Light (GPL) has said that they cannot guarantee power to the industrial site because of the amount of energy required by the industry. The official mentions that during the initial planning stages of the site the power company had proposed a sub-station to supply the site with power.
But most businessmen are self-generating because the power is not reliable or fluctuates too much. He says a transformer can cost up to $900,000 and this alone can act as a deterrent.
Stabroek Business spoke with four businesses located at the Eccles site. The businessmen, who have made significant investments, are all hoping for an increase in the level of transactions done there.
Davo Pooran, owner of Davo's Lumber Yard was recently subjected to an injunction order filed by the Guyana Forestry Commission (GFC) because of his original location on the Railway Embankment. He says business is not as good as he would like but the place is well built up. His investment amounted to several million dollars, which, includes the wiring of the building, putting a transformer in place and developing the land.
Pooran has been there for one and a half years and is satisfied with the utility services provided including phones, water and electricity.
Sewchand Jafar, the manager of American Standard Designer Blocks (ASDB) says the owner, Allan Soman, wanted to produce California split face blocks at that location. The designer blocks were intended for export. However this has not yet become a reality, but they are keeping the machines active by producing regular hollow blocks.
Jafar says they were provided with the necessary infrastructure at the site, though they had to erect a fence. Drainage, roads, electricity and water were all in place at the time they started to develop. ASDB generates its own power, since it does not want to be hampered by sudden power outages.
Jafar has been there for the last three years and feels that the place is good for business. There are still some nagging details to be worked out including security and the dumping of garbage in the compound.
Dalip Mahendra owner of Dalip's Trading is also satisfied with the site. Mahendra's venture specialises in steel fabrication including planing engine heads, bore blocks, thread bolts, roll steel, thread steel pipes and constructing gears for engines. It also stocks various steel products such as steel plates, angle irons and steel rods.
Mahendra has made a major investment in the property and says he chose to locate there because that is where the business is.
Lloyd Rose, owner of Dynamic Engineering, says the most an investor is required to do at the site is individual property development.
Dynamic Engineering is involved in commercial and industrial contracting, such as construction work, civil work, electrical repair and electrical consultancy. The company has done work for GPL and GT&T, and is presently working along with Dywidag on some aspects of their road and bridge construction project.
Rose says Eccles is the only area just outside the city to suit his purposes. He has been there for two and a half years, and feels the site needs adequate management and upkeep.
He is a member of a temporary committee set up to monitor the day-to-day administration. This committee's life of one year is almost coming to an end.
The committee has been meeting on a bi-monthly basis but its work has been stymied in part by contentious issues of drainage, security and the non-payment of management fees. The following business ventures are presently operating at the Eccles Industrial Site: Khemraj Budglall Technical Services, Readymix Concrete Ltd, American Standard Designer Blocks, Sheik Hassan Designing and Printing, Samuel's Wicker Works, Dalip's Trading, Dynamic Engineering, Yasco Seafood and Davo's Lumber yard.
The Division of Industry has listed these existing businesses with those that have proposed to start operating and these are; six warehouses, six engineering firms, four chemical/pharmaceutical companies and three garment manufacturers.
The largest sector of investments at the site is in furniture manufacturing.
On site as well are six electronic businesses including printing, four fish processing investments and four other light manufacturers, which produce items such as animal feed.