Manufacturing output continues to dwindle –Central Bank
Minister of Business, Dominic Gaskin
By Kiana Wilburg
The manufacturing sector has once again, displayed a dismal performance in the first half of the year. According to Central Bank, the sector’s output fell by 14.1 percent compared with a 7.1 percent growth for the same period last year.
Based on its analysis, the Bank said that the decline was primarily due to lower value added production in sugar and rice by 30.3 percent and 26.2 percent respectively.
It noted that other manufacturing goods also declined by 3.0 percent, on account of lower production of liquid pharmaceuticals and non-alcoholic beverages by 11.7 percent and 0.5 percent respectively.
Additionally, electricity generation expanded by 7.0 percent compared with the 4.0 percent increase at the end of June 2015.
GOOD NEWS
In spite of this performance, it appears that a “meaningful booster” is on the way for the sector. It is being formulated by the Ministries of Business and Finance. Both agencies have a number of initiatives planned for the sector.
According to Finance Minister, Winston Jordan, Government is prepared to play its role in helping the sector make greater strides.
The economist addressed a number of the complaints and challenges facing the manufacturing sector as well as how the government intends to attend to them.
Addressing the complaint of high electricity costs to local manufacturers, the economist said that it was indeed a legitimate constraint.
He, however, reminded that the government had made conscious efforts to alleviate the situation. It provided fiscal concessions on the acquisition of generators and increased the rebate granted by the Guyana Power and Light Company from 10 percent to 15 percent, with effect from April 1, 2016.
Jordan said that the Government has also completed an energy matrix, with assistance from the Inter American Development Bank, and will be pursuing cheaper and cleaner energy through the provision of hydropower.
The Finance Minister said, too, that since the Government assumed office, there have been two reductions to the electricity costs for consumers.
PROTECTIONISM
Some members of the manufacturing sector have advocated over the past few months that the Government should move swiftly to implement some barriers, to provide a level of protectionism against foreign products which benefit from a far more enabling environment and fiscal regime.
Minister Jordan made it clear that this is just not possible. He said that there are certain agreements which fall under the World Trade Organization (WTO) partnership and the Common External Tariff (CET) arrangement which Guyana has signed on to, which speak to non-discriminatory treatment in the application of tariffs on imports and domestic production.
He said that very little can be done in terms of a level of protectionism through that mechanism.
By way of a specific example, he made direct reference to the discriminatory application of the environmental tax on imported bottles.
A bottling company successfully prosecuted its case before the Caribbean Court of Justice (CCJ), and cost the government in excess of $1.5 billion. Other bottling companies have since approached the CCJ for similar remedies.
The Finance Minister said, however, that there are other measures that can and will be considered by the administration.
ACCESS TO FINANCING
The Minister also made it clear that he understands the complaint by some manufacturers that access to cheap financing is difficult. He agrees that this needs to be improved, but reminded that institutions, such as Guyana Cooperative Agricultural and Industrial Development Bank (GAIBANK), which were established to make available this type of financing to the manufacturing and other sectors, were closed by the PPP/C government.
Jordan said that his Government is presently pursuing technical assistance from the Caribbean Development Bank to assess the feasibility of re-establishing a financial development institution.
RED TAPE
As for Minister of Business, Dominic Gaskin, he said that his Ministry is currently engaging various State agencies with a view to reducing bureaucratic red tape and making official procedures easier to navigate.
It is currently seeking financing to implement the Single Window Automated Processing System (SWAPS). When established, the SWAPS will link licencing bodies along with the Customs and Trade Administration to facilitate the sharing of information and to enhance the efficiency with which trade transactions are carried out.
These improved procedures will not only reduce the length of time that private businesses spend mired in paperwork, but also increase government accountability, reduce corruption, and make data and information more accessible.
The Ministry of Business has already established a Help Desk for businesses, which acts as a single point of contact for information and advice for businesses, traders, and the Government.
Furthermore, while consumers and large businesses can access loans, Gaskin said that the government is very much aware that small businesses commonly face a financing gap. He emphasized that this is being addressed by the Government through the implementation of the Micro and Small Enterprise Development (MSED) initiative which will be implemented by the Small Business Bureau of the Ministry of Business.
To build both generic and sector specific skills, the Business Minister said that training opportunities for small businesses will be expanded to cover all 10 administrative regions.
The politician said that this year, 400 individuals are targeted to benefit from training.
He noted, too, that a newly appointed Small Business Council chaired by Commonwealth Woman Entrepreneur of the Year (2015) awardee, Ms. Valerie Grant, is now in place and tasked with significantly improving the work and expanding the reach of the Small Business Bureau over the next few years.
REVAMPED GOINVEST
It has also been noted by the administration that efforts must be geared towards enhancing Guyana’s brand and visibility as an investment destination. As such, it is expected that GO-Invest would work towards improving agency websites and develop partnerships with other investment promotion agencies worldwide.
Gaskin said that GO-Invest is now overseen by a competent Board of Directors and headed by a competent and energetic new Chief Executive Officer. He said that the Ministry of Business’ Strategic Plan calls for the development of a national export strategy and the design of a sustainable national investment strategy.
The Business Minister said, too, that GO-Invest will play a key role in the implementation of these initiatives. He explained that the national export strategy will also be supported by enhanced quality infrastructure made possible by the upgrading of the national laboratory network to allow for testing and certification of products by accredited facilities, thereby assisting manufacturers to meet the requirements of foreign markets.
