2009 Investment Climate Statement - Guyana

2009 Investment Climate Statement
Bureau of Economic, Energy and Business Affairs
February 2009

The Government of Guyana publicly encourages foreign direct investment in almost all sectors, although its record of actually facilitating such investment is spotty.

Billed as a "one-stop shop" for investors, the Guyana Office for Investment (GO-INVEST) is charged with leading government efforts to attract foreign and domestic investment. GO-INVEST focuses primarily on the agro-processing, tourism, manufacturing, information technology, fishing, and wood processing sectors. Potential investors should note that GO-INVEST serves as the first in a long line of bureaucratic hurdles required to obtain the permits and tax concessions necessary to do business in Guyana. Major foreign investments receive intense political attention in an economy still dominated by the state. The government has enacted new laws and amended existing ones to encourage foreign direct investment, with mixed levels of success.

The Investment Act of 2004 was designed to stimulate socio-economic development by attracting and facilitating foreign investment. Other important laws pertaining to investment include the Income Tax Act, the Customs Act, the Procurement Act of 2003, the Companies Act of 1991, the Securities Act of 1998, and the Small Business Act. However, several outstanding actions are still required for much of this legislation, such as the Procurement Act, to be effectively implemented. More recently, the Value-Added Tax (VAT) Act of 2005 and Excise Tax Act of 2005 went into effect January 1, 2007. The VAT is 16 percent across-the-board tax on selected goods and services and replaces six previous taxes.

Although the judicial system is responsible for upholding the sanctity of contracts, it is ineffective in upholding its legal mandate. Suspected corrupt practices and long delays make the courts an unattractive option for settling investment or contractual disputes, particularly for foreign investors unfamiliar with Guyana's political scene. However, with support from the Inter-American Development Bank (IDB), Guyana established a Commercial Court in June 2006 that is exclusively dedicated to addressing commercial disputes. This court has the potential to improve the quality of services provided to the business community by sidestepping delays due to backlogs in other areas of the court system.

Foreign ownership of companies is permitted. There is no mandatory screening of foreign investment; however, the government conducts a de facto screening of most investments to determine which businesses are eligible for special tax treatment, access to licenses, availability of land, and approval for investment incentives. In spite of recent efforts to remove discretionary power from the various ministries, ministers still retain significant authority to determine how relevant laws, such as the Investment Act, Small Business Act and Procurement Act, are interpreted.

In general, foreign investors receive the same treatment as local investors in Guyana. One exception is the special approval required for local financing. Foreign borrowers applying for a loan of more than G$2 million (US$10,000) must request permission from the Minister of Finance. This requirement reflects Guyana's preference for foreign investors to bring capital into the country. In most cases, foreign investors seek credit abroad to avoid Guyana's high interest rates.

Another exception exists in the mining sector, in which ownership of small- and medium-scale mining property titles is restricted to Guyanese ownership. Foreigners may enter into joint-venture arrangements under which the two parties agree to jointly develop a mining property. There are no restrictions on the percentage of the investment shouldered by the foreign investor; these arrangements are strictly by private contract. Such relationships are highly risky, however, and the US Embassy strongly encourages US investors to exercise caution when exploring possible joint ventures with Guyanese companies.

Foreign investors have equal access to privatization opportunities. For some larger operations, foreign investment is openly preferred. Since 1992, the government has privatized 16 of 18 government entities originally targeted for privatization; Guyana Water Incorporated (GWI) and Guyana Power & Light (GPL) remain the only major state-owned enterprises. In 1999, the government entered into a joint agreement with Americas & Caribbean Power Limited (ACP) to privatize GPL, with each party holding 50% of the company's shares. Four years later, ACP sold its shares back to the government for $1 and withdrew from the deal. The government is not seeking to re-privatize GPL.

Most large-scale investments in Guyana's infrastructure are government projects financed by international lending institutions, with the IDB as the largest donor. U.S. firms are generally given equal access to these projects, though many are too small to interest U.S. bidders.

In evaluating the ease of doing business in Guyana, a World Bank and International Finance Corporation Report "Doing Business 2009" ranked Guyana 105 out of 181 countries. The indicators that were used to compute Guyana's overall ranking were starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. As an example, the process to start a business in Guyana is challenging. An entrepreneur can expect to go through eight procedures requiring an average of 40 working days total in order to launch a business. Similarly, the time to build a warehouse involves 11 procedures (including obtaining licenses and permits) and 144 days. To enforce a contract, some 36 steps are required with an expected timeline of 581 days to complete the process.

In assessing Guyana's competitiveness, the World Economic Forum publication, "The Global Competitiveness Report 2008 - 2009" ranked Guyana 115 out of 134. The report identified the following as the most problematic factors for doing business in Guyana: crime and theft, corruption, tax rates, inefficient government bureaucracy, inadequately educated workforce, tax regulations, access to affordable financing, among others.

Guyana's economy is 48.4 percent free, according to the 2009 Index of Economic Freedom, which makes Guyana the world's 155th freest economy out of 179 countries. The indicators used to determined Guyana's economic freedom were business freedom (60.9%), trade freedom (72.6%), fiscal freedom (66.6%), government size (3.2%), monetary freedom (69.6%), investment freedom (40.0%), financial freedom (40.0%), property rights (40.0%), freedom from corruption (26.0%), and labor freedom (65.2%). Guyana's overall score is 0.5 percentage points lower than last year, because improvements in four of the 10 economic freedoms were offset by a large decline in government size score. Guyana is ranked 27th out of 29 countries in the South and Central America/Caribbean region, and its overall score of 48.4% is well below the world average of 59.5% and the region average of 60.1%.

Conversion and Transfer Policies

The Guyana dollar is fully convertible and transferable into foreign currency associated with foreign investment in Guyana. This is done at the prevailing clearing rate. The exchange rate is US$1 to G$203 (December 2008) - www.bankofguyana.org.gy/. There are no limits on inflows or repatriation of funds, although there are spot shortages of foreign currency. Regulations also require that all persons leaving and entering Guyana declare all currency in excess of US$10,000 to Customs authorities at the airport or other ports. There is no limit 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 eased restrictions on the establishment of foreign currency bank accounts in Guyana, a step that has 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, many large foreign investors in Guyana use subsidiaries outside Guyana to handle earnings generated by the export of primary products, including timber, gold, and bauxite. Those companies then advance funds to their local entities to cover operating costs.

The exchange rate is commercially determined according to market supply and demand using telegraphic transfers for the three largest commercial banks. Political uncertainty and economic instability have eroded consumer and investor confidence. The government has intervened in support of the Guyana dollar with some success. The government announced that it will continue to intervene in defense of the Guyana dollar and its international reserves.

Expropriation and Compensation

On August 16, 2001, the National Assembly approved the Acquisition of Lands for Public Purposes (Amendment) Bill 2001. This act cleared the way for the government to acquire a private parcel of land at a price below market value. Since its inception, the government has exercised the act in a limited capacity, mainly for development purposes deemed to be of national interest (i.e., clearing the way to build the Berbice River Bridge) and in cases of contract breach.

Certain companies and individuals within the forestry sector have been subject to action under the act, due to breach of contracts with the government, non-utilization of their concessions and/or owing payment to the government.

There has been no evidence of discrimination against U.S. investments, companies, or representatives in the application of expropriation laws. This act has not had any direct impact on foreign direct investment (FDI).

Dispute Settlement

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 the Arbitration Act of 1931. Guyana is also a member of the International Center for the Settlement of Investment Disputes (ICSID).

There have been several high profile investment disputes in recent years involving U.S. and other investors in Guyana. Presently, U.S.-based Atlantic TeleNetwork (ATN), which owns 80% of Guyana Telephone and Telegraph (GT&T), is involved in a dispute with the Government of Guyana, the outcome of which will have significant implications on the future of the telecommunications industry. Under an exclusive contract signed with the government in 1991, ATN is the sole provider of line telephony in Guyana. Guyana's President, Bharrat Jagdeo, has repeatedly stated his intentions to open up the market prior to conclusion of its contract with ATN in 2011. Negotiations between ATN and the government began in 2008, but thus far have been slow and not borne fruit.

Performance Requirements & Incentives

Although there is no set policy regarding performance requirements, they are often written into contracts with foreign investors. Some contracts require a certain minimum level of investment. Investors are not required to source locally, nor do they have to export a certain percentage of output. Foreign exchange is not rationed in proportion to exports, and there is no national ownership or technology transfer requirements.

The Status of Aliens Act allows a non-resident of Guyana to acquire and dispose of assets and moveable and immoveable property in the same manner as a citizen of Guyana. The government treats domestic and foreign investors alike with regard to investment incentives. There are incentives offered to all investors equally, as well as incentives available based on specific criteria such as location of an investment or investment in specific government-targeted sectors.

The Fiscal Enactments (Amendment) (No.2) Act of 2003 allows the Minister of Finance to grant exemptions from Corporate Taxes for a period of five years to an investor if the activity demonstrably creates new employment in certain regions of the country (Regions 1, 8, 9, and 10). In the case of new economic activity, the minister may grant a tax holiday of up to ten years if the activity falls under the following categories: non-traditional agro processing (excludes sugar refinery, rice milling and chicken farming); tourist hotels or eco-tourist hotels; information and communications technology (excluding retail and distribution); petroleum exploration, extraction, or refining and; mineral exploration, extraction, or refining. The minister maintains final discretion over which investors receive corporate tax exemptions.

The Income Tax (In Aid of Industry) Act of 1998 provides for accelerated depreciation of plant and equipment on applicable trades outlined in the act; export tax allowances for manufacturing or processing of non-traditional products exported to countries outside of the Caribbean Community; and research and development tax allowances.

The authority to approve exemptions and waivers from customs duty, excise tax and value added tax on plant, equipment, machinery and spare parts lies with the Minister of Finance. Investors are expected (though not required) to submit business proposals to GO-INVEST that outline the proposed project, the value of the investment, and employment to be generated from the economic activity. GO-INVEST reviews the proposal and makes a recommendation to the GRA in accordance with the Customs Duties (Amendment) (No.2) Order of 2003 Act of 2004. Each project is reviewed on a case-by-case basis and recommendations are made accordingly. The GRA determines whether imported materials are being imported for the reasons stated by the investor and whether those materials are eligible for tax relief under the law. If the project is deemed eligible for relief, GRA makes the final recommendation to the Minister of Finance that approval for exemptions and waivers from customs duty, excise tax and value added tax be granted.

Similarly, a tax allowance is granted for non-traditional exports outside of CARICOM. Traditional products ineligible for the allowance include rice, sugar, bauxite, gold, diamonds, timber, petroleum, lumber, shrimp, molasses, and rum. The allowance ranges between 25% and 75% and at least 10% of sales must be exported to qualify.

In certain circumstances, Guyana also offers duty-free imports and tax holidays to investors on request. A key factor in the determination of duty-free status and value added tax waiver is the creation of value added. The authorities note that blanket approvals are not given, but that each import consignment is reviewed individually. When granted, the duty and value added tax is often waived completely or lowered, based on the industry and item. The authorities note that tax holidays are less likely to be granted than duty-free status or a value added tax waiver.

Right to Private Ownership and Establishment

The right of foreigners to own property or land in Guyana is specifically protected under the Constitution. 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.

Foreign and domestic firms have the right to establish and own business enterprises and engage in all forms of remunerative activity. However, licenses are required in the mining, telecommunications, forestry, banking, and tourism sectors. Getting all the licenses required to operate in Guyana can be a time-consuming task. Even according to GO-INVEST's optimistic Investor's Roadmap, the estimated processing time to obtain the approvals to lease state or government lands may take one year, though some investors report much longer delays.

Protection of Intellectual Property Rights

Upon independence, Guyana adopted British law on patents and copyrights. This outdated legislation currently is being revised piecemeal to conform to global norms. For instance, Guyana passed the Geographic Indication Act in July 2005, giving protection to local products that are uniquely Guyanese in origin. Guyana joined the World Intellectual Property Organization (WIPO) and acceded to the Bern and Paris Conventions in late 1994. However, registering a patent or trademark can take six months or longer and there is no enforcement mechanism to protect intellectual property rights. Patent and trademark infringement are common. Local television stations pirate and re-broadcast TV satellite signals with impunity. Most music, videos and software for sale is pirated. Book piracy is also rampant, especially foreign textbooks; some estimates say illegally copied textbooks account for nearly one-third of local sales. Guyana has not ratified an intellectual property rights agreement with the U.S. Trade Related Intellectual Property Rights (TRIPS) draft legislation was prepared by the Ministry of Foreign Trade and International Cooperation and Ministry of Legal Affairs in 2001, but the government shelved it.

Transparency of the Regulatory System

Guyana has no anti-trust legislation. In April 2006, Parliament passed a Competition and Fair Trading Act, which targets offenses such as price fixing, conspiracy, bid-rigging, misleading advertisements, anti-competitiveness, abuse of dominant position, and resale price maintenance. But the act's provision for the establishment of a Competition Commission - which would have the authority to review anti-competitive business practices - has not been implemented, thereby hindering the law's impact.

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 a well-organized market. Bureaucratic procedures are cumbersome and often necessitate the involvement of multiple ministries. Investors often receive conflicting 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. An extraordinary number of issues are resolved in Cabinet or in the Office of the President, a process that is not open to public scrutiny and which often results in long delays. Attempts to reform Guyana's many bureaucratic procedures have not succeeded in limiting red tape.

Efficient Capital Markets and Portfolio Investment

Guyana's banking system is still not 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. Because Guyana has yet to develop an effective inter-bank trading system, some banks may be short of foreign exchange while others have currency available.

The Financial Institutions (Amendment) Act of 2004 gave the Central Bank the power to take temporary control of financial institutions in trouble, giving the Central Bank greater responsibility for licensed financial institutions. Prior to the implementation of this law, the Central Bank had been criticized for not taking a more proactive role in helping local banks in dire financial straits.

Interest rates on capital loans typically range from 10% to 20%. The Minister of Finance must give permission for a foreign investor to borrow over US$10,000 (G$2 million) from local banks. The government sells treasury bills at auction to finance the public debt, and other government-controlled rates move with the Treasury Bill rate. Past private attempts at bond financing have been unsuccessful, and no private companies have made large bond offers in recent years.

The banking system in Guyana is liquid. Local bank statements reveal that deposits continue to increase even as loans remain flat; a trend that suggests the existence of a large underground economy. Local analysts estimate that the underground economic activity accounts for 50 percent or more of Guyana's total economic activity. Eager to lend money, but skeptical of Guyana's legal system, banks claim that they are unable to find suitable local candidates for loans at the interest rates being charged.

Although large and well-established companies sometimes use equity financing, the government encourages companies to finance new operations by offering shares on Guyana's stock market. In 2003 the Guyana Association of Securities Companies and Intermediaries Inc. (GASCI) http://www.gasci.com/index.htm registered with the Guyana Securities Council to carry on the business of a stock exchange and an association of securities companies and intermediaries. Its members, the stockbrokers who compete against each other in share trading, own GASCI. GASCI relies on trades to support the exchange's operations. However, the small volumes traded have been insufficient to meet organizational expenses. Consequently, the association has struggled to maintain adequate staffing levels.

The Guyana Securities Council (GSC), the regulatory body for the securities industry, has been the target of two high-profile lawsuits by two of the largest local conglomerates (DDL and Banks DIH) over disclosure issues and the interpretation of the Act governing the operations of the Guyana Securities Council. The GSC has also struggled to garner the support of listed firms that are unwilling to disclose relevant information. Individual investors generally prefer to utilize the banking sector to finance investments, although one Canadian company reported that it was able to successfully finance its operations using the stock market in late 2004.

Political Violence

Crime is a major problem in Guyana. In 2007, an increase in the incidence of robberies affected the business sector, the public sector, and private homes. The business community continues to call on the government to increase its efforts to stem the crime problem because of its deleterious effect on the economy, investment and the safety of citizens. U.S. companies and individuals have not been singled out as targets of politically-motivated violence.


Allegations of corruption are common. Transparency International's 2008 Corruption Perceptions Index (CPI) ranked Guyana 126 out of 180 countries surveyed, assigning the country a CPI Score of 2.6 (with 10 being highly clean and 0 being highly corrupt). In the Americas, Guyana is ranked 26 out 32 countries/territories. Although the government passed legislation in 1998 that requires public officials to disclose their assets to an Integrity Commission prior to assuming office, the Integrity Commission has still not been constituted ten years later.

The Procurement Act of 2003 provides for the establishment of a National Procurement and Tender Administration Board (NPTAB), which is responsible for exercising jurisdiction over procurement matters; the members of this board are appointed by the Minister of Finance. The Constitution of Guyana provides for the establishment of a Public Procurement Commission, which would oversee responsibility for the NPTAB in order to ensure that the procurement of goods and services and the execution of works are done in a fair, transparent, competitive and cost-effective manner. However, the Public Procurement Commission has not yet been established by Parliament.

Bilateral Investment Agreements

Guyana has not signed a Bilateral Investment Treaty with the United States. Negotiations began in 1993, but broke down in 1995 due to disagreements on formal investment rules. There have been no continuing negotiations. Guyana has bilateral investment treaties with Germany, the United Kingdom, Switzerland, South Korea, China, Russia, Cuba, Spain, and India. Guyana has double taxation treaties with Canada, the United Kingdom, and CARICOM countries.

OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) renewed its support for U.S. investors in Guyana in 2000 following the settlement of a long-standing dispute between an OPIC client, Green Mining, Inc., and Guyana. The EX-IM Bank resumed limited coverage in Guyana, offering insurance and short-term loans for the private sector at the beginning of 1994.


According to the Bank of Guyana Annual Report 2007, Guyana's labor force comprises approximately 280,200 persons of which 20% or 56,040 workers are unionized. Approximately 31,900 persons are unemployed, resulting in an unemployment rate of 11.4 percent for 2007. In Guyana unionized workers are represented by eighteen (18) unions of which 13 fall under the umbrella Guyana Trade Union Congress and the other five are break away unions. Four of the five break away union fall under a new umbrella organization, Federation of Independent Trade Unions of Guyana.

Education and skills development are provided in primary, secondary, and technical schools, as well as at the University of Guyana and privately-owned institutions of learning. Individual companies mount various programs to develop human resources specific to their needs. The Trade Union Recognition Act of 1997 requires businesses operating in Guyana to 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.

Emigration, particularly of skilled labor, poses a serious problem to employers in Guyana. An International Monetary Fund study in late 2005 revealed that 89% of university-educated Guyanese leave the country due to better employment options abroad; this represents the highest percentage of "brain drain" in the world. Large private sector companies report a turnover of about 20% to 25% of their workforce and experience difficulty in recruiting and retaining qualified employees. Skilled workers migrate to the United States, Canada, the Caribbean, and Europe.

Foreign Direct Investment Statistics

Total FDI in Guyana increased 18.6% to $152.5 million in 2007. The mining and quarrying sector benefited from approximately 28% of Guyana's FDI in 2007, and the Transport and Telecoms sectors received 34%.

Following is a list of foreign direct investment compiled by the Bank of Guyana for:

Foreign Direct Investment by Sector 2005, 2006, 2007
Values in US$ Millions

Mining & Quarrying27.592.942.1
Tourism & Industry13.56.05.4
Transport & Telecoms38.010.551.2

Foreign Direct Investment by Country 2005, 2006, 2007 (January to June)
Values in US$ Millions

Country200520062007 (January - June)
St. Vincent-1.7-
Trinidad & Tobago-7.38.4
United Kingdom-0.10.1
United States25.56.419.4

Current FDI Stock and Inflows as a Percentage of GDP

200520062007 (January - June)
Current FDI Stock (%)
FDI Inflows (%)

The following are the major investors in 2006, 2007 (January to June)

* Samling Global Limited (a Malaysian Company) is the foreign investors for Barama Company Limited.

* BOSAI Minerals Group Co. Ltd. (a Chinese Company) is the foreign investor for BOSAI Minerals (Guyana) Inc. which acquired Omai Bauxite Mining Inc. (OBMI)

* United Company RUSAL (a Russian company) is the foreign investor for Bauxite Company of Guyana Inc. (subsidiary) which acquired Aroaima Mining Company

* Atlantic Tele Network (a U.S. company) is the foreign investor for Guyana Telephone & Telegraph.

* Digicel Group Ltd. (an Irish Company) is the foreign investor for Digicel Guyana

The following is a reflection of total actual investment in Guyana compiled by the Bank of Guyana for 2005, 2006, and 2007.


(Values in US$ Millions)

2007 (January-June)420.2