August 22,2016
Dear Editor
There are several factors that contributed to the demise of Guyana’s once thriving manufacturing sector. Smuggling is the number one killer of Guyana’s manufacturing industry; as well as the high cost of financing, poor legal service, high cost of electricity and water (in the land of many waters), untrained workers, high turnover of workers due to poor wages and immigration; business owners’ stinginess with investment in training, workers’ welfare, aesthetic packaging, new efficient machinery and equipment, and facilities maintenance. Government support for local manufacturers is negligible and discriminating; the service from local public servants and bureaucrats is like the movement of molasses unless they are bribed. Here are a few scenarios that are destructive to local manufacturing.
Guyana had a shoe factory named Guyana Footwear Ltd owned by Bata Shoe Co Ltd, that manufactured canvas boots, leather and synthetic slippers and sandals for local and export markets. The factory was operating 24 hours per day seven days a week. It used to charter GAC planes to export footwear to the Caribbean. Guyana footwear was forced to scale down production due to the then government’s import policy. Bata Shoe Co Ltd and Guyana Footwear Ltd were two separate companies that applied and obtained separate import licences for footwear and raw materials respectively. However, a former PNC minister communicated to Bata Shoe Co Ltd that the two companies were not entitled to separate import licences because Bata Shoe Co Ltd owned Guyana Footwear Ltd. Thus, the import licence restriction resulted in the slow and gradual loss of production and export sales which forced Guyana Footwear into decline and closure. It will be remiss of me to not mention that there was also an internal management dispute and egos due to the sharing of import licences between sales and production.
While we cursed the minister silently, we assumed the minister was a messenger for cabinet revenge decisions against Bata Shoe Co in retaliation for the tax case Bata Shoe Co v Commissioner of Inland Revenue and by extension the Government of Guyana which Bata Shoe Co won.
Because of a government import licence restriction hundreds of workers lost their jobs and income, but most importantly, a factory that was constructed to supply footwear to the Caribbean, Central and South America was forced into closure. Can you quantify how big a loss that was to Guyana?
After Bata Shoe Co I worked for a few years with Demerara Tobacco Co. The Demtoco factory operating two shifts was also forced into closure due to government policy and very high taxes on tobacco and cigarettes. I know many will rightly argue that tobacco and cigarettes are an unhealthy product and it is good riddance, but cigarettes are still imported and smuggled into Guyana, while the domino effect caused the closure of tobacco farms at Laluni, Moblissa and Kibilibiri. I do not know the full details on the Demtoco closure, but maybe someone like Mr V O Patrick may be contacted.
In the mid ʼ90s I registered Gripwell Fasteners and Closures Inc with the sole purpose of manufacturing packaging for the local and Caribbean manufacturing industry. I completed a short certificate course in packaging technology at the Indian Institute of Technology to understand and get firsthand knowledge of my packaging venture; I also had a feasibility study for my project conducted by the Caribbean Development Bank (CDB). My intention was to start small by producing crown corks for the soft drinks companies and ROPP corks for the alcohol bottlers, and then expand to Tetra Pak.
The dream project died a stillbirth because of public servants’ greed. I was using my savings and investment from a business colleague to purchase an offset press and machinery for my start-up operation from a company in Gujarat, India. While I studied in Bombay I visited the manufacturer and negotiated a 20% deposit and incremental payments as the machinery is produced with final 25% payment in Guyana after successful installation and dry run. I could not negotiate similarly in Guyana; land application at Lands & Surveys for a plot at Yawrowkabra was being processed at a snail’s pace, and after several months I was requested to survey the plot which was done and then the snail went to sleep. Several months later my surveyor told me he overheard in a bar that I will not get the lease for the land because I did not retain Lands & Surveys’ surveyors to survey the land as a private job.
My colleague suggested I apply through the Ministry of Trade for a plot at Coldingen Industrial Estate which I did. With an application form and supporting documents I was interviewed by a Ministry of Trade officer who was impressed with the project and boldly requested a 20% stake in the business in return for processing my application. I walked out a dejected man, called my colleague and indulged in El Dorado stress relief. We concluded that the unforeseen cost to the start-up is only a mirage and there is bigger corruption to encounter once we are in operation. I dumped the feasibility and communicated to the Indian suppliers my decision to scrap the project.
Thereafter, I ventured into the production of precast concrete pipes and valve chambers at Land of Canaan until thieves forced me to close the operation and migrate. I am encouraged by present day engineers/consultants to resuscitate the operation. I have a few small project ideas that can save Guyana money and create jobs if the business climate is right, but it is too late for me and many others I guess.
Yours faithfully, Hemwant Persaud
