Cost of doing business still too high - Jagdeo
Written by Kwesi Isles
Thursday, 29 September 2011 13:07
Source
President Bharrat Jagdeo has highlighted the cost of capital, electricity, telecommunications and a more effective judiciary as variables that need to be addressed if the still too high cost of doing business in Guyana is to be lowered.
He made the remarks on Thursday at the opening of the National Competitiveness Summit 2011 which was attended by members of the private sector, government and the diplomatic community at the Guyana International Conference Centre, Liliendaal.
The president said they have been unable to fully address the cost of doing business.
Cost of capital
“The cost of capital although it has come down is still too high. It has come down dramatically from 37 percent at one time to maybe 10, 12 percent now for people who have good track records. That’s a huge fall but it’s still too costly and we need to continue working to ensure this falls even further,” he said.
He noted that there have been changes in mortgage and commercial financing but they still require much more work. According to Jagdeo, it is hoped that the recently established Credit Bureau could improve the quality of credit with lower interest rates by sharing information with the banks.
He pointed out that interest rates would also be dependent on inflation which goes back to the macroeconomic policies of the government. He had earlier stated that the future will have to be about maintaining sound and stable macroeconomic policies.
Electricity
Turning to electricity, the president noted that the state has intervened aggressively to buttress the financial viability of the electricity company and to keep prices stable but the long term solution, he added, has to be different, hence the move to set up the Amaila Hydropower plant.
Telecommunications
“And then reform of telecommunications, very vital for us. The cost of bandwidth was too high; it came down, still too high. That infrastructure that could be used to enhance productivity in every sector is still absent but is being created aggressively by the government and this is why we’ve made significant investments in bringing in a new (fibre optic) cable …,” Jagdeo said.
He added that the intention was not to displace the private sector since it needs to be a partnership, but stated that Guyana’s development could not await their investment schedules.
Court system
The president said focusing on those three areas and the predictability of court decisions could see the cost of business being lowered.
“Not predictability in the sense that we expect a particular outcome from every case but predictable in terms of it being dealt with based on general principles that are acceptable or established and predictable in terms of timeframe.
If we improve the court system, if we tackle these three areas, I think we can see significant boost in the environment in which we do business,” Jagdeo stated.
Corporate governance
The president also called on the private sector to manage its affairs in a more transparent manner saying more companies should go public.
“We have been trying to encourage more companies to go public because public companies have to be more transparent in the conduct of their affairs but we have not been able to see major changes in this direction.”
He added that even some of the public companies are operating like private entities, something that cannot continue in a modern environment. Good corporate governance, Jagdeo said, is important to lending confidence to the national economic system.
Foreign capital
Jagdeo, who chairs the National Competitiveness Council, also called on the private sector to be open to foreign capital.
“I ask you to see this country with its infinite resources and possibilities as ours and that we need to benefit from it but we cannot unlock all of these possibilities, resources, potential with our capital base, it’s just too shallow, or with our own expertise,” he stated.
According to the president, Guyana depends on the rest of the world for prosperity and at some stage in the future may also have to bring in people to unlock its potential. He urged the gathering not to become xenophobic since Guyanese have sought their fortunes in other countries too.
“In a larger economy they’re not going to displace us; they’ll create value for us and our children because the more value that’s created in this country the more we all benefit from it.”
Following the opening ceremony the participants broke into groups to consider eight areas identified as key to national competitiveness. They are agriculture and agro-processing, seafood and aquaculture, forest products, information technology, light manufacturing services and tourism.
Written by Kwesi Isles
Thursday, 29 September 2011 13:07
Source
President Bharrat Jagdeo has highlighted the cost of capital, electricity, telecommunications and a more effective judiciary as variables that need to be addressed if the still too high cost of doing business in Guyana is to be lowered.He made the remarks on Thursday at the opening of the National Competitiveness Summit 2011 which was attended by members of the private sector, government and the diplomatic community at the Guyana International Conference Centre, Liliendaal.
The president said they have been unable to fully address the cost of doing business.
Cost of capital
“The cost of capital although it has come down is still too high. It has come down dramatically from 37 percent at one time to maybe 10, 12 percent now for people who have good track records. That’s a huge fall but it’s still too costly and we need to continue working to ensure this falls even further,” he said.
He noted that there have been changes in mortgage and commercial financing but they still require much more work. According to Jagdeo, it is hoped that the recently established Credit Bureau could improve the quality of credit with lower interest rates by sharing information with the banks.
He pointed out that interest rates would also be dependent on inflation which goes back to the macroeconomic policies of the government. He had earlier stated that the future will have to be about maintaining sound and stable macroeconomic policies.
Electricity
Turning to electricity, the president noted that the state has intervened aggressively to buttress the financial viability of the electricity company and to keep prices stable but the long term solution, he added, has to be different, hence the move to set up the Amaila Hydropower plant.
Telecommunications
“And then reform of telecommunications, very vital for us. The cost of bandwidth was too high; it came down, still too high. That infrastructure that could be used to enhance productivity in every sector is still absent but is being created aggressively by the government and this is why we’ve made significant investments in bringing in a new (fibre optic) cable …,” Jagdeo said.
He added that the intention was not to displace the private sector since it needs to be a partnership, but stated that Guyana’s development could not await their investment schedules.
Court system
The president said focusing on those three areas and the predictability of court decisions could see the cost of business being lowered.
“Not predictability in the sense that we expect a particular outcome from every case but predictable in terms of it being dealt with based on general principles that are acceptable or established and predictable in terms of timeframe.
If we improve the court system, if we tackle these three areas, I think we can see significant boost in the environment in which we do business,” Jagdeo stated.
Corporate governance
The president also called on the private sector to manage its affairs in a more transparent manner saying more companies should go public.
“We have been trying to encourage more companies to go public because public companies have to be more transparent in the conduct of their affairs but we have not been able to see major changes in this direction.”
He added that even some of the public companies are operating like private entities, something that cannot continue in a modern environment. Good corporate governance, Jagdeo said, is important to lending confidence to the national economic system.
Foreign capital
Jagdeo, who chairs the National Competitiveness Council, also called on the private sector to be open to foreign capital.
“I ask you to see this country with its infinite resources and possibilities as ours and that we need to benefit from it but we cannot unlock all of these possibilities, resources, potential with our capital base, it’s just too shallow, or with our own expertise,” he stated.
According to the president, Guyana depends on the rest of the world for prosperity and at some stage in the future may also have to bring in people to unlock its potential. He urged the gathering not to become xenophobic since Guyanese have sought their fortunes in other countries too.
“In a larger economy they’re not going to displace us; they’ll create value for us and our children because the more value that’s created in this country the more we all benefit from it.”
Following the opening ceremony the participants broke into groups to consider eight areas identified as key to national competitiveness. They are agriculture and agro-processing, seafood and aquaculture, forest products, information technology, light manufacturing services and tourism.