Forestry contracts
What is clear from the eruptions over the activities of Bai Shan Lin, Vaitarna and similar logging and extractive companies, is that the PPP/C government has been engaged in drawing up agreements which either do not reflect the best interests of the nation or are not being properly enforced.
This administration would have be totally blind and deaf not to have grasped the fact that vulnerable countries like Guyana have to be alive to concerns that the Asian behemoths, China and India are assiduously sucking up timber and a variety resources to fuel the expansion of their economies. They are completely uninterested in purchasing finished goods from economies such as Guyana’s even if they were available. Pledges for the creation of processing plants here also have to be viewed with much skepticism since Guyana’s internal economy isn’t much to speak about, infrastructural problems and high energy costs mean goods are being produced uncompetitively and access to markets outside of Guyana and transportation for such are difficult propositions.
Therefore any Timber Sales Agreement with any investor should be tightly framed at the level of the investment agency to severely limit the export of unprocessed commodities in favour of creating jobs and adding value here for export. The agreement should contain time-bound and penalty incurring stipulations leading ultimately to the termination of the contract for continuing breaches. Can the agreements with Bai Shan Lin and Vaitarna withstand this scrutiny?
It raises the issue again as to who is negotiating Guyana’s position in these agreements and whether Georgetown is just signing on to agreements mainly drawn by the investors. This is an important matter as for many years now Go-Invest was intended to be a one-stop agency where investment agreements would be finalized. This appears to have been honoured more in the breach and perhaps the new directorate at Go-Invest can say loudly and clearly whether it was involved in the crafting of the two contracts and whether it is fully in charge of the process.
Reports from various parts of the government suggest that investment agreements are being addressed via individual ministries. This inevitably would lead to badly crafted agreements and the risk of them being unduly weighted in favour of the investors who can rely on a wealth of expertise to fashion agreements to their benefit. Given all that has transpired in recent weeks, the Government of Guyana should clearly state the process through which these investment agreements are fashioned and whether or not they benefit from expert input.
Given that both Bai Shan Lin and Vaitarna have exported large amounts of logs without having been held accountable to time frames for downstream investment, the government should immediately release those contracts and table them in Parliament at the end of the recess so that the public and its representatives can judge for themselves whether the government was judicious in its undertaking on behalf of the state and diligent in robustly following up with the investors. The fiscal concessions would also be of great interest. Have these been accorded with the objective of fuelling value-added operations? With the export of logs being its primary business should Bai Shan Lin have been granted duty-free concessions?
The Vaitarna experience, which was exposed by Stabroek News, makes it evident that there was no follow-up by the authorities with the Indian company. Neither the Ministry of Natural Resources nor the Guyana Forestry Commission can yet explain why the failure of a solemn commitment to begin the construction of a processing plant at Wineperu did not attract a host of warnings that the undertakings given by the company were being flagrantly breached.
What has also been made clear by the recent stories on the exploits of the forest companies is that opposition has a lot more to do to make the government accountable. Considering that the opposition controls the legislature, it would have been the height of absurdity for the government to refuse requests for detailed information on these contracts. However, it doesn’t seem that at the level of the two relevant parliamentary committees: natural resources and economic services there was an intention by the committee members to take these matters to the hilt. There was no sign of a visit to any of these companies and there had not been any sustained focus on their failure to commence value added operations.
Both of the agreements with Bai Shan Lin and Vaitarna must be examined to determine whether they are satisfactory, affix suitable timeframes for the start of processing operations, inscribe penalties for the failure to meet deadlines and are not unduly generous in the conferral of duty-free concessions and exemptions from corporation and other taxes.
The government has not presented the kind of leadership on foreign investment that assures the public. To the contrary, it presents a weak and beggarly outlook which encourages exploitive investors. Guyana must no longer put up with this kind of backwardness.