Author: Christopher Ram

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Business and Economic Commentary by Christopher Ram Part 11

September 21, 2024

The deadweight of bureaucracy

The bureaucracy in Guyana can at times – and in different places – be stifling, overbearing, frustrating and totally unproductive. No place is spared as I recently learnt in an indirect encounter with the Guyana Police Force, concerning a recommendation to an individual who was applying for a firearm licence. It was with a mixture of amusement and bewilderment that I was requested to produce both a Tax Compliance Certificate and an NIS Compliance. I should have asked  whether the latter was for me as an employer or an NIS pensioner, or the relevance of my tax compliance to my recommendation!

This episode reminded me of two Letters to the Editor last year complaining about the processes in both arms of the Deeds and Commercial Registry last year. What appears to be happening is that arbitrary rules are put into use not only with little or no statutory authority or rationale by persons who see systems from only one side of the counter. Most of them have no experience in the private sector and have not had to be on the other side – except trying to open a bank account, which is itself a nightmare.

In the case of the Commercial Registry the issue was about a declaration of the ultimate ownership of companies by individuals controlling 25% or more of the issued shares in a company. What the Registry was requesting was a statement that includes every shareholder, information that is completely useless and which in any case is supplied with the Annual Return which must be made by every company. It took the intervention of the Attorney General to have the requirement set aside.

More recently, a request for a Tax Compliance Certificate for a property owner wishing to sell his property was met with a request for the buyer to produce a Taxpayer Identification Number. Worse, since the buyer was a company, the officer of the GRA insisted that a TIN was required for each of the directors. When I pointed out that directors can change at any time, the overenthusiastic officer said that the GRA would have to be notified on each occasion! Again, and to his credit, the Commissioner General addressed and resolved the issue immediately.

Then there is the case where an application for a Work Permit on behalf of a company was made to the Ministry of Home Affairs for an expatriate. The Ministry’s immediate response was that in order to process the application, they required copies of GRA and NIS compliance certificates for both the employer and the employee. They seem unaware that part of the wider process, the GRA has to be satisfied that the tax laws are complied with. The Ministry it seems is totally unmindful that requesting superfluous, unnecessary add cost, not value.

Then there is the NIS which is expected to deliver from a system which has been historically defective and deficient. The number of new employees has increased significantly but with no corresponding increase in human, physical or technological resources. There is indeed significant bureaucracy which the Government and the Scheme’s Administration seem unwilling to do anything about. Lots of the frustration which the public experience is derived from old, outdated laws, inadequate processes and a Board that seems incapable of appreciating the frustrations of the public.

I am not targeting these entities but only using examples of which I have personal experience. No doubt, others have similar experiences with other agencies, and it would be interesting to learn about these and how the public cope with and overcome them. And it would be unfair to suggest that the staff at these entities are unsympathetic or unhelpful. In fact, while some of them exploit the bureaucracy for less than honourable ends, there are others who are themselves hobbled by the bureaucracy.

As the country continues its unprecedented growth across all sectors, regions, agencies and activities, administrative reform and the elimination of bureaucracy is an absolute necessity. The path forward demands not just technical solutions but a fundamental shift in governmental culture to a results-based solution. I have conveyed my experiences and frustration to persons in authority but have met with another problem – inertia, at the political level. Of course, a process and culture which was birthed under colonialism will not be easy to root out and any solution requires a paradigm shift – an examination of the nature and purpose of systems and controls which are sometimes conflated with bureaucracy.

I have suggested the establishment of a dedicated Task Force under the aegis of the Minister of Business, or the Minister of Public Service, charged with the systematic identification and elimination of processes that serve no purpose beyond their own perpetuation. This Task Force should have terms of reference, timelines and be representative of key stakeholders without being too cumbersome.

The challenge is formidable, requiring a confrontation with inertia and entrenched interests, thus requiring courage and authority. It is hard not to be cynical whether those in authority are willing to break free from the tyranny of bureaucracy for bureaucracy’s sake. Fortunately, responsibility for the public service falls under the President himself. He has at his command the resources including the advisers, ministers, consultants and staff to lift the deadweight of bureaucracy hanging over and impeding an efficient public service.

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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 137 – September 20, 2024

Reclaiming Guyana’s Oil Wealth: Confronting Political Cowardice and the Surrender of Sovereignty Part 2

Introduction

Last week I called out the political leaders for their cowardice and dishonesty for hiding behind “sanctity of contract”. Someone pointed out that I seem to have spared Shuman’s Liberty and Justice Party and the United Force (if it exists). That was an oversight.

The response to last week’s column was silence from the political parties, no doubt hoping that this too will pass. I will not let up or let them off the hook. So, what I have done is compiled a Survey Questionnaire which I am sending not only to the political parties but to business organisations, including the PSC, to trade unions and to other CSO’s in the country.

Before going into the Survey, I want to address some of the simple options available to our political leaders in righting some of the wrongs. Here are a few.

Independent Petroleum Commission. The establishment of an Independent Petroleum Commission, free from political interference and empowered to stand up to multinational corporations, is not just desirable – it is absolutely necessary to reassure Guyanese that everything possible is being done, and is seen to be done, in protecting the country’s sovereignty over its natural resources. Such a Commission must be independent of the politicians rather than their conduits, as is the case of so many state entities, commissions and other bodies. A united national front is crucial, but it must be one that places Guyana’s interests first. Such a Commission should include economists, petroleum specialists, legal and financial experts who can match the expertise of the oil companies at the negotiating table.

OECD/G20 Tax Framework. Another important option available to the country is the ability to leverage international agreements, like the OECD/G 20 Framework for a 15% minimum global tax, to our advantage. Guyana is in the unfortunate and undesirable position in which it is among a minority of countries not to have ratified the Framework. This omission can be corrected in the shortest possible time, making the tax regime of the country compatible with international norms. Once done this is done, it would be hard to see Exxon crying foul and a breach of the 2016 Agreement. Instead of hiding behind the shield of “sanctity of contract,” this tool will provide Guyana the opportunity to collect billions in taxes for which it can issue legitimate receipts instead of what now takes place. Equally importantly, it does no harm to the country’s reputation for following international norms.

Ringfencing: This is probably the easiest of all. All the Minister of Petroleum has to do is set a simple condition in a Production Licence that exploration costs in looking for petroleum outside of the Production area are not recoverable expenses against revenue from production. It is the ultimate in dereliction that this condition has NEVER been applied.

The betrayed citizens

It is against this background that citizens must demand that all political parties publicly declare their positions and strategies on the 2016 Agreement and hold them accountable for any stance that compromises our national sovereignty. This should include a commitment to full transparency in all dealings with oil companies, regular public updates on the state of our oil resources and revenues, and a clear plan for how to increase our take and how oil revenue will be used to benefit all Guyanese.

As Guyanese look towards the 2025 elections, they deserve more than empty rhetoric and vague promises, or the repetition of broken promises. They also need leaders who understand that true sanctity lies in protecting the interests of the Guyanese people, not in defending a flawed contract and protecting the oil companies to the detriment of the country. We need comprehensive, expert-backed proposals for renegotiation that reassert our sovereign rights over our resources.

The upcoming elections are probably the last chance for the country to correct the misdeed of the APNU +AFC Coalition and the broken promises of the PPP/C. What is staggering is that the Agreement allows for its modification by mutual consent which both major parties use as a scare-mongering bogeyman, accusing critics of calling for an abrogation of the Agreement. To use Jagdeo’s words, “they have sold us out,” but the only thing is that he has now become part of the “they.”  The tools are available, and the opportunities exist to level the playing field with oil companies.

What does not exist is the political will and courage to face up to the evil brought upon the country, led by politicians who cower in the face of this challenge and who willingly cede our sovereignty to foreign interests.

The Survey

Here is a brief overview of the survey questionnaire.

First and foremost, the Questionnaire seeks to understand awareness of Article 31.2 of the Petroleum Agreement, which allows for amendments with the contractor’s consent. The survey highlights several contentious issues within the agreement:

  1. The meagre 2% royalty rate
  2. Lack of ring-fencing provisions
  3. Guyana paying taxes on behalf of oil companies
  4. Oil companies receiving tax certificates for credits in their home countries for taxes which they have not paid.
  5. Guyana only being guaranteed 12.5% of gross revenue, in addition to the royalty.

Perhaps most alarming is the 40-year stabilization clause, which prevents new legislation that could affect oil companies’ interests. This clause effectively surrenders Guyana’s sovereignty and ability to adapt its laws to changing circumstances for decades to come.

Another critical issue is the Natural Resource Fund (NRF) and its withdrawal rules. The current arrangement, which allows the government to withdraw US$3,700 million of the first US$4,000 million the country earns per year, raises serious concerns about intergenerational equity and long-term resource management.

It’s worth noting that the petroleum world has numerous examples of countries successfully renegotiating oil contracts when circumstances change or when original terms are found to be against national interests. Our leaders’ failure to even consider this option is a dereliction of their duty to protect Guyana’s interests.

Respondents have been given fourteen days in which to respond and the results will be highlighted in future columns. It will be a good measure of who deserve the support of the Guyana electorate in 2025. The results will be published.

Please note that the questionnaire is available on chrisram.net and I invite everyone to participate.

https://docs.google.com/forms/d/e/1FAIpQLSflDY4pKOVQ7FQbMbnI98lrTveGIgDkd2pMgxoJj8GD0tSTYQ/viewform?usp=sf_link

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Business and Economic Commentary by Christopher Ram Part 10

September 14, 2024

The Overgenerous Investment Act: 20 Years Later

Recently, in a discussion with some businesspersons, the issue of foreign ownership of land in Guyana came up for discussion. Surprisingly, many felt Guyana needs to consider some form of control over real property. Views will differ, but it’s hard to blame foreigners for taking advantage of the ease with which they can acquire property in Guyana. As Caribbean businesses come and “eat our lunch,” it’s time to reassess our two-decade-old Investment Act.

Historical Context and Regional Comparison

Beginning in the 1990s and through the first decade of this century, Caribbean countries introduced Investment Acts, reflecting a gradual shift towards formalizing foreign investment frameworks. Trinidad and Tobago led in 1990, followed by Barbados in 1992. Belize and St. Lucia introduced theirs in 2000, Jamaica in 2002, and others followed, with Grenada being the most recent in 2014.

Guyana’s Investment Act, passed in 2004, was part of this regional trend but stood out for its particularly generous provisions. The Act formalized practices that had previously been subject to ministerial discretion, marking a significant shift towards transparency and consistency in investment policies.

Key Provisions and Unique Aspects

The Guyana Investment Act pledges that any compulsory acquisition would only occur under specific, non-discriminatory conditions, with due process and prompt, adequate compensation including interest. This stands in stark contrast to the often-challenging process faced by Guyanese whose lands are compulsorily acquired.

Unlike many Caribbean nations with restrictive alien landholding policies, Guyana’s Act grants investors the freedom to lease or purchase land with minimal restrictions. It also provides operational freedoms such as minimal government intervention in management and pricing, and the right to import and export products freely, with some exceptions.

Other key provisions include:

  • Right to determine profit distribution
  • Employment of skilled foreign personnel when necessary
  • Facilitated immigration processes for investors and their families
  • Financial flexibility, including opening bank accounts in local and foreign currencies
  • Freedom to transfer funds abroad, subject to tax obligations.

As the market for foreign exchange faces challenges, one wonders whether this last item is simply too generous.

Implementation and Economic Impact

Over the past two decades, the impact of this Act has been profound and visible. Our high streets, forests, mines, and commercial and financial sectors are increasingly dominated by non-Guyanese entities. While this has brought in foreign investment, it has also raised concerns about the control of key economic sectors.

The Act’s implementation has faced challenges, particularly in balancing the need for foreign investment with the protection of local interests. The absence of restrictions on activities that arguably should be controlled by Guyanese has led to a situation where foreign businesses can easily operate as registered business names, partnerships, companies, or cooperative societies.

Public Reaction and Debate

When first introduced, the Act was met with mixed reactions. Proponents argued it would boost foreign investment and economic growth, while critics worried about the potential for exploitation of Guyana’s resources. The parliamentary debate highlighted concerns about the timing of the Act, with some arguing it should have been introduced earlier to capitalize on investment opportunities.

The opposition, though absent for the final debate due to other political issues, had initially raised concerns about the broad powers granted to foreign investors and the potential impact on local businesses.

Need for Review and Amendment

After more than twenty years, and particularly in light of Guyana’s recent oil discoveries, the Investment Act cries out for amendments and stronger obligations on foreign investors. Key areas for potential revision include:

  1. Introducing some restrictions on foreign ownership in strategic sectors
  2. Strengthening requirements for technology transfer and local content
  3. Enhancing environmental protection clauses
  4. Updating dispute resolution mechanisms to reflect current international best practices
  5. Revising the role and powers of Go-Invest to better serve Guyana’s current economic realities

Conclusion

While the Investment Act of 2004 played a crucial role in formalizing Guyana’s investment framework and attracting foreign capital, it’s clear that the economic landscape has changed dramatically. As we witness the transformation of our economy, particularly with the advent of oil production, it’s imperative that we revisit this legislation.

The challenge now is to strike a balance between maintaining an attractive investment climate and ensuring that Guyana’s resources and opportunities benefit its citizens first and foremost. This requires not just amendments to the Act, but a comprehensive review of our economic policies and a national conversation about the kind of development we want for our country.

The Government, Go-Invest, and private sector bodies need to take this Act and its potential revision seriously. Only through thoughtful, inclusive dialogue and careful policymaking can we ensure that Guyana’s economic growth is both robust and equitable, benefiting all Guyanese for generations to come.

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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 136 – September 13, 2024

Reclaiming Guyana’s Oil Wealth: Confronting Political Cowardice and the Surrender of Sovereignty

Introduction

Over the past three weeks, this Column has shown how the PPP/C has reversed its pre-election promise to review and renegotiate the 2016 Petroleum Agreement. But it actually did worse – reversed its commitment to an independent Petroleum Commission, failed to provide elementary conditions on ringfencing, and is one of the minority of countries refusing to sign the OECD Framework on a minimum corporate tax on major companies. As Guyana gears up for general and regional elections in 2025, thoughts should turn on whether the PPP/C will pay a political price: they should but that is unlikely because none of the political parties is any better.

From all of them – the PNC -R, the AFC, ANUG and the WPA – there is a silence that is not only disappointing and deafening but amounts to a collective surrender of our sovereignty by the entire political establishment. The PPP’s dramatic shift from promising to “review and renegotiate” to now parroting “sanctity of contract” is like a stab in the back of our country. This phrase has become their shield, a convenient excuse for inaction, a dereliction of duty and a betrayal of the national interest. But let us be clear: there is no sanctity in an agreement that fails to protect the interests of the Guyanese people. The only thing sacred should be our nation’s right to benefit fully from its natural resources.

Exxon over Guyana 

This misplaced reverence for a flawed contract is not just misguided – it’s a dangerous ceding of our national sovereignty. By treating the 2016 Agreement as untouchable, our leaders have effectively handed over control of our resources to foreign corporations. They have prioritised the interests of ExxonMobil and its partners over the wellbeing of the Guyanese people.

The stability represents a surrender of our right to adapt our laws and regulations to changing circumstances and national needs. This seems more like subjugation rather than sanctity. It ignores the fundamental principle of fairness in international law. After all, the petroleum world is replete with cases in which countries have successfully renegotiated oil contracts when circumstances have changed, or when the original terms were found to be against their national interest. Our leaders’ failure to even consider this option is a dereliction of their duty to protect Guyana’s interests.

The other Parties

The PPP/C’s reversal and culpability in no way exonerate the PNC -R whose leader has literally been all over the place when it comes to taking a position. That its former leader President David Granger reportedly pressured his Minister into signing the lopsided agreement is hardly an excuse for its cowardly silence. The Party seems bankrupt of ideas, bankrupt of expertise and bankrupt of courage in what is clearly the most important issue facing the country now and for the next thirty years. Their current leader’s apparent ignorance of the agreement’s details is an indictment of the Party’s fitness to govern. Such willful ignorance is not just embarrassing; it’s a dangerous abdication of their role as the opposition, failing to provide the necessary checks and balances our democracy requires.

The WPA, once a party of principled struggle, has been reduced to debating how to distribute crumbs while our nation’s wealth is carried offshore. Their myopic focus on cash transfers without addressing the fundamental inequities of the agreement is a betrayal of their revolutionary heritage and a sad spectacle of a party that once fought for true independence now acquiescing to what amounts to modern-day economic colonialism.

And the AFC’s claim of studying the issue without producing any tangible output is political procrastination at its worst. While the signature of its General Secretary Raphael Trotman brought the illegal Agreement into force, he has written a book calling for  a Commission of Inquiry into the Agreement, implicitly suggesting that there are good grounds for serious concern. The Party seems hamstrung by the election as its Leader Mr. Nigel Hughes  who is in another role, the Attorney-at-Law for all three of the contractors – Exxon, Hess and CNOOC. Hughes has made it clear that he has no intention to give up his professional relationship, adding that he would not seek to influence the Party’s position. While barely acceptable, it is surely unfortunate that the Leader is unable to lead in such in critical sector of the economy.

The other Party of some note is the ANUG, also led by an attorney-at-law but which has been the most silent of all.

Conclusion

This collective failure to challenge the 2016 Agreement is a de facto endorsement of the surrender of our sovereignty. By their silence and inaction, every major political party in Guyana has become complicit in this grand ceding of our national rights and resources. They have collectively failed to uphold the fundamental principle that a government’s primary duty is to protect the country’s resources and to advance the interests of its citizens. The citizens are faced with not a single party providing leadership, guidance, opportunities for debate or any other form of assistance, information or direction on our oil economy and our Government’s subservient role in the sector.

What makes the whole situation so very bad is that they show no interest in the provision in the Agreement which allows Guyana to ask for any amendment or modification which Article 31.2 of the Petroleum Agreement. They ought to be ashamed to place “sanctity of contract” over permanent sovereignty over our natural resources and ousting the role of the Parliament and the Constitution.

This column acknowledges the consistent role played by Mr. Glenn Lall and the Kaieteur News and the column which this newspaper has carried since June 2017. Unfortunately, our politicians seem oblivious of all that is being said and written, immune from both direct and indirect criticisms of their disservice and the cost of their inaction and disinterest to our country.

Next week’s column will identify opportunities and make recommendations which they are likely to ignore. What a shame!

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An Eventful Life by Dr. Maurice Odle

A book review by Christopher Ram – Part 4

This is the fourth and final part of Maurice Odle’s autobiography narrated in a reflective writing style, in which personal experiences, political analysis, and broader reflections on global issues are interwoven to give a comprehensive view of his life’s work and the contexts in which it unfolded. At the national level, Odle discusses the persistent racial and ethnic divisions in Guyana’s politics and society; the factors that led to the coalition government’s loss in the 2020 election; and the challenges of governance in a deeply divided society. His proposed remedy is for more inclusive governance, which also addresses the economic disparities between different ethnic groups.

Regarding regional issues, Odle reflects on the Caribbean integration process, discussing both its achievements and shortcomings. With his several years within the CARICOM Secretariat, Odle is critical of the Caricom integration experience, citing as examples, the issues of production integration and the establishment of an oil refinery by Guyana rather than utilising the virtually idle refinery plant in Trinidad and Tobago. He is also extremely critical of CARICOM’s tepid approach to helping Haiti, a failing member state, comparing this neglect to the Region’s approach to Guyana during its economic decline during the 70s and 80s.

Noting the rise in violent crimes in the Region, Odle, ever the economist, draws attention to its detrimental effect on the viability of a vibrant social tourism industry and partly related to the drug trade and the easy access to guns from the USA. In that regard Odle suggested that the Caribbean needs to demand a USA contribution to a security fund.

On the international front, Odle provides a critical analysis of global economic governance and security developments. He traces the evolution of international relations from the Cold War era to the present, discussing the rise of China, the resurgence of Russia, and the continued militaristic role of the United States. He critiques what he calls the “New Imperialism,” arguing that it operates through both hard and soft power, including military, economic, and informational means.

Odle’s reflections on global economic governance are particularly insightful. He critiques the imbalances in global rules, the skewed implementation of international agreements, and the limitations of promoting development through global conference declarations. His call for a more democratic and accountable system of global economic management resonates strongly in today’s interconnected world.

Odle also has his fulsome say on the very one-sided nature of the 2016 petroleum contract with Exxon, and the PPP/C’s reversal of “review and renegotiate” while in opposition, to sanctity of contract on gaining power. Odle attributes this to the PPP/C’s visceral fear of alienating America’s interest which he attributes to the US’s role in the PPP’s removal from government in 1953 and 1964. He suggests that the Americans were happy to see it lose office in 2015,  partly owing to corruption and criminalisation of the state. Odle sums up the PPP by saying that remaining in office is more important to the Party than the effective maximisation of benefits according to the people of Guyana.

At a personal level, Odle’s reflects on his personal life, expressing his regrets about not spending enough time with family, and his hopes for the future of Guyana and the Caribbean region. Odle has not been shy to discuss his private life and to the contrast between his three wives (bracket not all at the same time), the even-tempered Margaret Hutson, Brenda Do Harris, the political activist and his current wife Valerie who he describes as the consummate social animal.

An Eventful Life is not just a personal history; it constitutes a crucial historical document that provides invaluable insights into the economic and political dynamics of the Caribbean region and its place in the global economy. For policymakers, academics, and anyone interested in international development or Caribbean affairs, this book offers both historical context and forward-looking analysis from one of the region’s most experienced economic minds.

I will give the final say to two individuals who have known Odle for decades. The first, a literary giant, expressed the hope that what he describes as a compelling narrative should have wide appeal which deserves a very wide readership. The other, a fellow academic described the book as  an “insightful and entertaining memoir.” The latter applauds Odle’s courage and honesty in talking about your family life and other close relationships, and describes Odle’s “reflections, especially at the international level’ as compulsory reading for politicians, scholars and commentators. 

In closing, let me say a word for the London publishers Hansib of Guianese heritage. The quality of the production is excellent and even the list price compares favourably with low-cost publishing countries like China and India. An Eventful Life will be launched at Moray House next Wednesday (Sept. 11) at 5 PM where you will be able to obtain an autographed copy.