6. Trade Regulations and
Standards
Tariff Regimes
Guyana continues to take steps to liberalize trade
regimes; however, the
current tariff and tax burden on imports is high. In
1999, in accordance with
the Common External Tariff of the Caribbean Community (CARICOM),
the external
tariff was reduced from 25 percent to 20 percent. In
addition to the tariff,
most imports are subject to a consumption tax, which is
determined on a
product-specific basis.
The tariff system is based on the Customs Cooperation
Council Nomenclature
(CCCN) and tariffs are in accordance with the Common
External Tariff of
CARICOM. Duties are levied on an ad valorem basis. The
consumption tax is
levied on the total CIF (Cost, Insurance, and Freight)
cost of the goods plus
the import duty. In other words, the government levies
taxes on the money that
the importer pays the government in tariffs. To
encourage development, the
government has exempted certain capital goods from
consumption taxes. The list
of exceptions is available through local customs brokers
or at the U.S.
Embassy's Commercial Information Center. Other investors
may apply to have
exemptions granted for capital goods not specifically
included on the list but
such exceptions require the Minister of Finance's direct
approval. Customs
duties remain a primary source of government revenue.
All shipments are inspected, both imports and exports.
Since the Customs
Department (like many government agencies) is extremely
understaffed, the
mandatory inspection often results in extended waits on
the wharf. There are
special provisions for perishable goods.
Customs procedures present problems relating to
inconsistent valuations of
imports by customs officials and delays in customs
clearance. Some businesses
have alleged that customs officers may delay processing
in hopes of attaining
inducements to expedite clearances. The Embassy is not
in a position to
confirm or deny these allegations. Guyana's Customs and
Excise Department has
been subsumed into a new Revenue Authority, with
technical advice and
assistance from the international donor community. The
new agency features a
variety of civil service reforms and procedural changes,
to encourage greater
transparency and efficiency in the customs process. This
long-awaited
reorganization began in earnest in January 2000.
However, the new
organization’s influence in reforming Guyana’s customs
systems remains to be
seen.
Customs Valuation
Customs valuation is based on invoice purchase price.
Importers must provide
Customs with one original and two copies of the
commercial invoice and an
original and one copy of the bill of lading. When
requested, importers must
also produce one original and three copies of the
certificate of origin. A
committee conducts valuations on a somewhat arbitrary
basis and many exporters
have complained about the ad hoc manner in which
valuations are decided. In
October 2001, the Customs valuation rate was adjusted to
G$189.25 per US$1.
Since most customs duties are percentage based, this
move immediately increased
duties on most goods, which are normally valued in US
dollar terms.
Import Licenses
There is limited use of import licenses for certain
categories of goods,
including firearms and pharmaceuticals.
Export Controls
There are restrictions on exporting wildlife, seafood,
and gold. Export taxes
range from 0.5 percent of value to 10 percent. All
shipments are inspected
prior to export. Often exporters are required to pay
agents overtime for
inspections in order to avoid lengthy delays. In some
cases, on-site
inspection is available.
Import/Export Documentation
In April 1996, Guyana introduced a computerized customs
system, ASYCUDA. Local
customs brokers are available to assist with document
preparation. Many are
still unfamiliar with the new system, sometimes making
mistakes that cause
lengthy delays.
Prohibited Imports
There are restrictions on importing firearms,
pharmaceuticals, chemicals,
wheat, and flour.
Standards, Labeling, and Marking Requirements
Labeling, marking, and other consumer protection
requirements are in their
infancy in Guyana. The National Bureau of Standards sets
those that do exist.
Free Trade Zones
There are currently no free trade zones in Guyana
although many proposals are
under consideration and interest remains high.
Special Import Provisions
Goods are required to be cleared within 10 days. Goods
not claimed within 30
days are forwarded to a government warehouse and sold at
public auction after
90 days. Goods may be warehoused for three months upon
deposit of 100 percent
of the duty applicable to guarantee re-exportation.
Membership in Free Trade Agreements
Guyana is a member of CARICOM. Goods traded with fellow
CARICOM countries are
duty free as long as they satisfy origin rules criteria
set out in the Treaty
of Chaguaramas. Guyana is a signatory to the Summit of
the Americas and is
participating in talks regarding a Free Trade Area of
the Americas. Guyana
also enjoys preferential market access to the United
States under the Caribbean
Basin Initiative, to Canada under CaribCan, and to the
European Union under a
partnership agreement that provides continuation of Lome
IV trade provisions
until 2007. Guyana also has several nonreciprocal
preferential agreements with
Venezuela and Colombia.
7. Investment Climate
Openness to Foreign Investment
The present administration recognizes the need for
foreign investment to create
jobs, enhance technical capabilities and generate goods
for export. The shift
from a mostly state-controlled economy to a primarily
free market system began
under former President Hoyte (1985-1992). In 1988, the
government announced
that it would permit foreign ownership of businesses
operating in Guyana.
Several large foreign investments were subsequently
made, primarily in the
mining, timber and telecommunication sectors.
After years of a state-dominated economy, however, the
mechanisms for private
investment, both domestic and foreign, are still
evolving. Much crucial
legislation is outdated and is currently being revised,
including laws
pertaining to resource use, mining, and the formation of
private companies and
capital markets. This circumstance, combined with a
small developing country's
concerns that it may be taken advantage of by
sophisticated multinationals, has
produced extreme caution in approving new investment.
The current
administration has demonstrated this discomfort through
its stated preference
for joint ventures between private investors and the
government. While there
is no "screening" of investment, the centralized process
of decision-making and
lack of transparency can result in delays and
frustration for foreign investors.
Since mid-1993, Guyana has been considering a Bilateral
Investment Treaty (BIT)
with the U.S. Despite the delay in agreeing to formal
investment rules, in
practice, with very few minor exceptions, foreign and
domestic investors are
treated the same. Beginning with the Hoyte government,
major foreign investors
in export-oriented sectors were given preferential
treatment in the form of tax
holidays, duty-free status and other fiscal incentives.
Investors who import
certain capital goods are granted concessions on the
local consumption tax.
There are significant incentives available for investors
willing to open
businesses in the economically depressed area of Linden
and its surrounding
communities — the site of the ailing government-owned
Linmine bauxite
operations. Manufacturing and agricultural entities
which choose to locate in
Linden will receive consumption tax and duty-free
concessions on all plant,
machinery, equipment, and spare parts, and tax
concessions for vehicles
imported for business purposes.
In general, foreign investors are treated equitably in
Guyana. One exception
is the special approval required for local financing.
Any foreign borrower
applying for a loan of over G$2M must be granted
permission by the Minister of
Finance. This requirement reflects the government's
stated preference for
foreign investors to bring capital into the country. In
most cases foreign
investors prefer to seek credit abroad in any case,
since interest rates in
Guyana are typically higher.
One negative aspect has been the experience of Guyana
Telephone & Telegraph
with rate regulations. The company has had an ongoing
series of disputes with
the Public Utilities Commission (PUC). Although the
company has had good
success in eventually resolving many of these issues,
the continual
confrontations have been quite costly for the company.
There is still no final
agreement on rates, while the issues remain tied up in
the courts. With
international accounting rates due to drop in 2002, the
resolution of telephone
service-related issues is imperative to the future life
of the utility.
The government has made good progress in recent years
with privatization
initiatives, and other state enterprises are slated to
be sold. Foreign
investors have equal access to privatization
opportunities and, for some of the
larger operations, foreign investment is openly
preferred. Privatization is
generally viewed favorably by those outside of
government. Employees of
state-owned firms are anxious that their jobs be
protected, although the
empirical evidence in the case of the phone company
(privatized since 1992) has
been that of increased employment opportunities.
Visa, residence, and work permit requirements do not
pose undue burdens on
foreign investors.
Most large-scale government projects are financed by
international lending
institutions, with the IDB as the largest donor. U.S.
firms are generally
given equal access to these projects. Unfortunately, the
projects are very
often too small in scale to interest U.S. bidders.
By and large, foreign investment is viewed favorably by
nongovernmental
groups. Most Guyanese recognize the significant
contributions made by foreign
firms to the Guyanese economy in terms of jobs, taxes,
and social services.
There is some concern that Guyana is not adequately
equipped to monitor the
environmental impact of operations by either domestic or
foreign firms in the
mining and timber sectors. Presently, most of these
firms are self-monitoring
with little government oversight, although Guyana's
fledgling Environmental
Protection Agency is building its capacity toward an
appropriate level of
regulation. Some Guyanese have also expressed the view
that Guyana's resources
should be reserved for Guyanese.
Right to Private Ownership and Establishment
Foreign and domestic firms have the right to establish
and own business
enterprises and engage in all forms of remunerative
activity. However, in some
cases, licenses are required. Private entities may
freely acquire and dispose
of interests in business enterprises, although some
newly privatized entities
have limits on the number of shares that may be acquired
by any one individual
or entity (domestic or foreign). Similarly, the articles
of association of
some firms prohibit the issuance of more than a certain
number of share
transfer forms to any one individual or company in an
effort to prevent
attempts to gain control of such companies in the
secondary market. In theory,
the government can limit competition with state-owned
companies by denying
private firms the required licenses to operate.
Investors should be aware that
getting all the licenses required to operate in Guyana
can be a time-consuming
task.
The right of foreigners to own property or land in
Guyana is specifically
protected under the Constitution.
Protection of Property Rights
Guyana adopted British law on patents and copyrights
upon independence. This
outdated legislation is now being revised to conform to
global norms. Guyana
joined the World Intellectual Property Organization (WIPO)
and acceded to the
Bern and Paris Conventions in late 1994. WIPO officials
visited Guyana in
early 1995 and conducted a seminar on intellectual
property rights. At
present, there is no enforcement mechanism to protect
intellectual property
rights. Patent and trademark infringement is also
common. Pirating of TV
satellite signals is widespread and takes place with
impunity. Guyana has not
ratified an intellectual property rights agreement with
the U.S., and
negotiations are proceeding very slowly.
Performance Requirements/Incentives
While there is no set policy regarding performance
requirements, they are, in
some cases, written into contracts with foreign
investors. Some contracts
require a certain minimum level of investment, as in the
case of the U.S.-owned
telephone company. Investors are not required to source
locally. They do not
have to export a certain percentage of output. Foreign
exchange is not
rationed in proportion to exports. There are no national
ownership or
technology transfer requirements.
Transparency of the Regulatory System
Guyana has no antitrust legislation. Historical factors,
Guyana's small
population, and economies of scale have led many sectors
to be dominated by one
or two firms. Capital markets are still evolving and the
allocation of
investment takes place without any well-organized
market. Bureaucratic
procedures are cumbersome. Investors often
receiveconflicting messages from
various officials and have difficulty determining where
the authority for
decision-making lies. In the current absence of adequate
legislation, much
decision-making is centralized and an extraordinary
number of issues are
resolved in Cabinet, a process that is not open to
public scrutiny and which
often results in long delays. Attempts at reform of
bureaucratic procedures
have not succeeded in limiting red tape.
Corruption
Despite the paucity of documented corruption,
allegations of corruption are
common. The government has recently acted to address
this problem with
legislation requiring public officials to disclose their
assets prior to
assuming office. Current tender procedures for many
government contracts do
not offer transparency, resulting in an environment with
a high potential for
corruption.
Offering or receiving a bribe is a criminal offense in
Guyana, punishable by
incarceration. The law is not applied
extraterritorially. The government has
periodically prosecuted officials for corruption, with
mixed success.
The Commercial Section at the U.S. Embassy has received
complaints in the past
from business people that government officials have
solicited bribes as a
prerequisite for the granting of licenses and permits
needed to operate their
businesses.
Labor
Guyana has a plentiful supply of low-skilled labor.
However, years of
emigration have produced a severe shortage of skilled
workers. Many U.S.
businesses have experienced difficulty in finding and
retaining skilled
employees. Union representation and recognition battles
are a major cause of
labor strife. In recent years, only a few large
companies have successfully
resisted the unionization of its work force. Parliament
passed the Trade Union
Recognition Bill in 1997, and as a result all businesses
operating in Guyana
must recognize and collectively bargain with the trade
union selected by a
majority of its workers. Guyana adheres to the
International Labor
Organization (ILO) Convention protecting worker rights.
Efficient Capital Markets and Portfolio Investment
Until 1994, Guyana had only one private bank. Since
then, through
privatization of state-owned banks and the issuance of
new licenses, Guyana's
roster of private commercial banks has expanded to
seven, with both foreign and
domestic ownership. The introduction of private banks
has provided much-needed
competition and helped to bring down interest rates
which are prohibitively
high for many borrowers.
Notwithstanding this improvement, Guyana's banking
system is still far from
fully developed. Inefficiencies and delays periodically
plague the foreign
currency exchange market. Businesses report that
currency shortages can result
in significant delays in converting Guyana dollars to
U.S. dollars at some
banks. Since Guyana has yet to develop an effective
inter-bank trading system,
some banks may be short of foreign exchange while others
have currency
available.
While foreign investors have some access to local
capital markets (in local
currency only), the cost of capital in Guyana is not
attractive. The Minister
of Finance must give permission for a foreign investor
to borrow over G$2
million in Guyana (approximately US$10,638 at current
exchange rates).
Hopefully, the establishment of the new merchant bank
should help to improve
the situation by providing additional capital at
attractive rates.
The government sells treasury bills at auction to
finance the public debt, and
other government-controlled rates move with the treasury
bill rate. Private
attempts at bond financing have not proven successful.
One large Guyanese
company offered a bond issue in early 1995 in an attempt
to raise US$10M. The
issue was not successful and no subsequent large bond
offers have been made.
Equity financing is sometimes used by large and
well-established companies.
Offering shares is also the government's preferred
privatization strategy,
therebybringing more stock onto the market. However,
this method of raising
capital is extremely limited due to the absence of an
active secondary market.
A call exchange existed at one time, but shares are
generally not traded
publicly and prices are not easily identified, limiting
the ability to
recognize capital gains. The government has announced
plans to set up a
securities exchange in the near future, but concrete
plans are not yet
available. While Guyana has no antitrust legislation,
the government has
intervened in share markets previously to prevent
certain groups from gaining
control of firms. Legislation was passed in 1996 to
limit the ability of banks
to expand and develop an oligarchy in the banking
system. Privatization deals
sometimes attempt to limit the number of shares
purchased both in the initial
offer and in the secondary market.
Regulations regarding mergers and acquisitions do not
discriminate against
foreigners.
Conversion and Transfer Policies
The Guyana dollar is fully convertible and there are no
limits on inflows or
outflows of funds, although there are spot shortages of
foreign currency. The
exchange rate rose from G$181.75 in March 2000 to
G$186.25 in March 2001.
There is no bar to the acquisition of foreign currency,
although the government
limits the percentage that a number of state-owned firms
may keep for their own
purchases. The government recently eased restrictions on
the establishment of
foreign currency bank accounts in Guyana, a step which
has significantly
simplified the process of moving money. Funds can now be
wired in and out of
the country electronically without having to go through
cumbersome exchange
procedures.
In practice, however, many large foreign investors in
Guyana export primary
products--timber, gold, or bauxite--the sale of which is
handled by
subsidiaries outside of Guyana who retain the hard
currency earnings offshore.
Their local entities are then advanced funds to cover
operating expenses.
The exchange rate is commercially determined according
to market demand.
Political uncertainty and poor economic performance by
the Guyanese economy
have put pressure on the currency and eroded consumer
and investor confidence.
The government has intervened in support of the Guyana
dollar with some success.
Expropriation and Compensation
On August 16, 2001 the National Assembly approved the
amendment - Acquisition
of Lands for Public Purposes (Amendment) Bill 2001. This
Bill cleared the way
for the government to acquire a private parcel of land
at a price the owner
contended was less than fair market value. The
opposition political party
accused the government of bias and heavy handedness. The
government argued
that the bill is not anti-investment or anti-business.
Rather, it is designed
to benefit the vendors, storeowners and the country as a
whole. The precedent
set by this legislation, however, is unsettling.
Dispute Settlement
In July 2000, the government of Guyana settled a
long-standing dispute with
Green Mining, Inc., a U.S. company that did business
with the now-defunct
state-owned bauxite industry Guyana Mining Enterprise
Ltd. (Guymine) in the
1980s and 1990s. The government dissolved Guymine in
1992, and assumed
approximately US$30M in debts from Guymine's operations,
including US$14M owed
to Green Mining, Inc. The government provided for
repayment through 12-year
government bonds issued to Green and Guymine's other
creditors. Green had
objected to the bond payment mechanism and filed
lawsuits against the
government of Guyana in the Guyanese courts, challenging
the constitutionality
of the bonds. It also entered into arbitration before
the International
Chamber of Commerce against Guymine, the Bauxite
Industry Development Co. Ltd.
(BIDCO), Linden Mining Enterprise Ltd. (Linmine) and
Berbice Mining Enterprise
Ltd. (Bermine). In 1996, the ICC arbitrators denied
Green's claims against
BIDCO, Linmine, Bermine, and Guymine, but the lawsuits
against the government
remained pending. In the resolution reached in July
2000, Green agreed to drop
its lawsuits against the government of Guyana and
accepted the bond payment
mechanism, in exchange for the government's payment of
accrued interest on the
bonds. This settlement marked the resolution of all
matters pending between
Green and the government of Guyana.
In addition, the U.S. firm which owns 80 percent of the
local telephone company
is in dispute with the Public Utilities Commission (PUC)
over the
interpretation of a number of provisions in its purchase
agreement. Areas of
dispute include service and use rates and implementation
of a previously agreed
upon expansion plan. The Government of Guyana has also
entered into
discussions to break the 25-year monopoly granted to the
Guyana Telephone &
Telegraph Company (GT&T) and to open the
telecommunications market. However,
if the government starts negotiating a break in the
monopoly license, GT&T says
its expansion program might have to be put on hold.
Guyana is a signatory to the Convention on the
Settlement of Investment
Disputes between States and Nationals of Other States.
International
arbitration decisions are enforceable under Guyana's
(then British Guiana)
Arbitration Act of 1931. The country is also a member of
the International
Center for the Settlement of Investment Disputes (ICSID).
Political Violence
The political climate in Guyana was once again disrupted
by street
demonstrations, violent protests and fires following the
March 19, 2001 general
elections. Demonstrations occurred mostly outside of
Georgetown, especially in
villages along the East Coast. Several businesses and
homes were destroyed by
fire during this period. Some of the violence was
specifically directed
against members of the Indo-Guyanese community. Meetings
between President
Bharrat Jagdeo and leader of the main opposition party,
Desmond Hoyte, eased
the street protests and demonstrations. However,
significant differences still
remain unresolved between the two major political
parties. During this period,
there were no reported incidents of violence directed
towards foreigners or
American-owned businesses.
Bilateral Investment Agreements
There has been discussion regarding a U.S.-Guyana
Bilateral Investment Treaty
since 1993. The initial round of negotiations took place
in October 1995. At
the end of 2000, there had not been any continuing
negotiations. Guyana has
similar treaties with Germany and the United Kingdom,
both negotiated during
the Hoyte Administration.
OPIC and Other Investment Insurance Programs
In July 2000, OPIC renewed its support for US investors
in Guyana following the
settlement of a long-standing dispute between an OPIC
client, Green Mining,
Inc., and Guyana. OPIC support for U.S. investments in
Guyana had been
withheld since mid-1992, and its restoration was linked
to the settlement that
was reached with Green Mining, Inc. This settlement
marked the resolution of
all matters pending between Green Mining and the
Government of Guyana. The
EXIM Bank resumed limited coverage in Guyana, offering
insurance and short-term
loans for the private sector at the beginning of 1994.
Foreign Direct Investment Statistics
There was a surge in foreign direct investment from 1989
to 1991 fueling
healthy growth figures in the early to mid-1990s. In
recent years there have
been a few large scale investments, most notably by
Pritipaul Singh Investment
and DIDCO. The former investing in the seafood industry
and the latter in the
poultry industry.
Following is a list of major foreign investors in
alphabetical order with dates
of agreements with the government in parentheses:
Barama Timber Company (1991) is a South Korean/Malaysian
joint venture that is
logging a 4.4 million acre concession in the northwest
region and exporting
plywood manufactured at their Georgetown plant. Barama
has invested US$88M in
Guyana and has announced plans for a massive new
infrastructure investment in
the near future.
Caribbean Resources Limited (1989) is a timber concern
owned by the
Trinidad-based Colonial Life Insurance Company (CLICO),
which bought the assets
of the state-owned Guyana Timbers. CRL's total
investment in Guyana is US$15M.
Cummings Group (1997) now controls the Teperu/Itabu
quarry under the name
Mazaruni Granite Company, which was previously Guyana
Granite Products Ltd.
Demerara Timbers Limited (1991) is owned by a consortium
of European banks
which took over the assets of the original purchaser of
the state-owned
Demerara Woods. The firm's total investment in Guyana is
US$20M.
Guyana Power & Light (1999) is a 50/50 joint venture
agreement between the
government of Guyana and the Commonwealth Development
Corporation and
Electricity Supply Board International of Ireland (CDC/ESBI)
consortium.
CDC/ESBI has paid US$23.5M for its 50 percent equity in
the new company.
The Guyana Telephone and Telegraph Company (GT&T) (1991)
is 80 percent owned by
the U.S. firm Atlantic Tele-Network (ATN) with the
remaining shares held by the
government. ATN has invested US$118 million in Guyana.
Omai Gold Mines Limited (1991) is 95 percent owned by
the Canadian firms
Cambior and Golden Star, with the remaining five percent
owned by the
government. Omai's mine is the largest open-pit gold
operation in Guyana. The
company has invested US$243 million in Guyana.
UNAMCO/Case Timbers (1997) is a Guyanese/Malaysian
plywood venture. It has
been granted timber concessions for 297,000 acres and
has invested
approximately US$49 million for its operations.
To the best of our knowledge, the information contained
in this report is
accurate as of the date published. However, the
Department of Commerce does not
take responsibility for actions readers may take based
on the information
contained herein. Readers should always conduct their
own due diligence before
entering into business ventures or other commercial
arrangements. The
Department of Commerce can assist companies in these
endeavors
Thank you--we value your
input!
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