Guyana’s local content law is likely to achieve the opposite of what was intended – Letter by Andre Brandli

Dear Editor, — Letter by Andre Brandli

National news outlets, including this distinguished newspaper, have been documenting problems that are emerging as a consequence of the Local Content Act, which was passed by Parliament in late December 2021. Companies, such as Ramps Logistics Guyana, the largest logistics company servicing the oil and gas sector has apparently been denied access to the local content register.

Timothy Tucker, President of the Georgetown Chamber of Commerce and Industry (GCCI) has been quoted saying that “rent-a-citizen” tactics run counter to the local content law. Finally, Vice President Bharrat Jagdeo has recently voiced that the government is having difficulties with companies trying to circumvent the Local Content Act.       

For me as a non-partisan observer in the Guyanese diaspora, these negative developments were foreseeable from the beginning. Similar laws might work in countries like Ghana with a population of 32 million people. However, implementing a stringent local content legislation in a country with less than 800’000 people was calling for trouble. “Renting-a-Guyanese” schemes and fronting tactics were about to happen sooner or later in my humble opinion. As a reminder, here are the central provisions to be considered a Guyanese company as defined in the Local Content Act 2021:

1) A Guyanese company is defined in the Local Content Act as a company incorporated under the Companies Act, and cedes ownership of at least 51% of it to Guyanese nationals.
2) The company must have Guyanese nationals holding at least 75% of executive and senior management positions and at least 90% holding non-managerial and other positions.

Given the already existing shortages on the Guyanese labour market, the above cited provisions force companies to become “creative” in order to meet the stringent rules of the local content law. The primary intent of the law was to give Guyanese priority in filling new job opportunities in the rapidly expanding oil and gas industry.

Making sure that Guyanese people get jobs, irrespective whether it is with a locally owned or foreign company is however done much more effectively by regulating access to work permits and visas for foreign staff. For example, companies (local or foreign) would only be allowed to obtain those, if they can prove that they could not find a Guyanese to take the job within a period of 30 or 60 days. Job openings would have to be advertised on a government run website.

Promoting local entrepreneurship was a further goal of the legislation. Rather than setting up protective fences to lock out unwanted foreign competition, local entrepreneurship can be boosted by granting better access to low interest loans, by favourable taxation rules (e.g. taxing only company profits), and by removing bureaucratic hurdles to register and incorporate new companies. Furthermore, the government could provide low-rent incubator space for start-up companies in technology parks that offer access to fast internet connections as a first measure to foster a start-up ecosystem in Guyana. These are just to mention a few ideas to promote local entrepreneurship, many other measures are possible.

Importantly, the Government should however not get into the business of financing local companies. This typically leads to nepotism, corruption, and bad business decisions. Government bureaucrats are bad investors, as they do not have skin in the game. These activities should be left to the private sector. Private investors and business angels will do proper due-diligence as their own money is at stake and hence they balance their risks better. Furthermore, Guyana may want to consider developing the fledging Georgetown Stock Exchange towards becoming the primary stock exchange for the CARICOM region. This would require introducing stringent regulations that prevents insider trading and ensures that companies disclose financial information according to the best standards in the international finance industry. Collectively, this would ensure that private and institutional investors gain confidence to invest local and regionally via the Georgetown Stock Exchange.

In my opinion, the current local content law was crafted in reality to protect local business people in the private sector from foreign competition. Insulating the domestic market from completion by erecting high barriers for foreign competition invariantly leads to bad services, inflated pricing, loss of choice for consumers, and lack of technological innovation as entrepreneurs become lazy and complacent in absence of foreign competition. This has been demonstrated over and over again in the past in other countries, such as Argentina, Venezuela, and India. Is this really what the Government of Guyana wants to happen in Guyana, too? By contrast, let’s have a look at the success stories, such as Singapore, Taiwan, Switzerland, Denmark, and the UAE. These countries have small domestic markets, harbour export-oriented innovative industries and services, and function as open economies.

President Ali does not spare any opportunity to call for Guyanese companies to grow and become players on the world market. I dare to predict that this will not happen as long as the current local content law is in place.

Sincerely,
Andre Brandli, PhD
Professor
Ludwig-Maximilians-University of Munich
Munich, Germany

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Comments

  • Age  On 06/30/2022 at 2:23 am

    We need new blood like Andre to get involved with politics and change it from the binary system of PPP vs PNC

    • Andre Brandli  On 07/04/2022 at 4:34 pm

      You are very kind, but you definitely overestimate my abilities!

      • Age  On 12/04/2022 at 5:16 pm

        You are beginning to pose a threat to the status quo. When that madsick chap Frederick Kissoon writes about you, it’s someone in the political elite pulling the strings.

        The political elite want no foreign competition, not even allowing the Trinis and the diaspora to invest under Local Content laws.

        The politicians and the business elite are a cancer against progress for sure.

  • wally n  On 06/30/2022 at 11:00 am

    It is unfortunate, but Guyanese tend to be hostile to fellow overseas Guyanese, regardless how brilliant they might be. In the doctors case he grew up in a country that has shown leadership in all facets that are only now blossoming in Guyana. No reason to doubt his sincerity, he has the knowledge, and a willingness to help. Guyanese must accept the big difference between living there,and just studied there, it is huge.

    • Dennis Albert  On 07/01/2022 at 2:09 pm

      The letter writer is a frequent poster here, I argue with him a lot! I thought his name was fictitious! Didn’t know that he was a Phd doctor!

      • Brother Man  On 07/01/2022 at 11:43 pm

        Some folk easily fall victim to fakery and quackery. The proof is in the pudding.

        You cannot advertise ‘impressive’ credentials, as a prop, when you incredibly don’t know the difference between Santo Domingo and the Dominican Republic, something every grade school child knows, for example.

        You can’t pull wool over everyone’s eyes, except, of course, the gullible and the willfully blind.

      • Dennis Albert  On 07/02/2022 at 7:27 am

        Why does Andre have to have a higher standard of journalistic integrity for a blog comment, as compared to a journal article or published letter in Glen Lall’s newspaper?

        Andre has more to offer than the Guyanese taxpayer helping to subsidise the import of the latest Italian sportscar for a certain Guyanese businessman.

  • Dennis Albert  On 07/01/2022 at 2:13 pm

    Regarding the home-based Guyanese being hostile towards members of the Diaspora, that is mainly concentrated in the badmind rural communities. If you ever visit GT, you’d be surprised if you can find one person that you know or knew. It’s a city buzzing with foreigners. No hatred or animosity in GT.

    While the rural communities fight down their diaspora relatives, Su just got a concession larger than the size of Trinidad, and Exxon just discovered 10 billion barrel more oil.

  • Andre Brandli  On 07/04/2022 at 4:32 pm

    @Brother Man: You are making a fuss about a lastly irrelevant detail. In that correction, I had overseen that the original article was mentioned Santa Domingo, instead of Dominican Republic. My correction was never the less correct, as the article put Haiti to the north and Santa Domingo/Dominican Republic to the south of the island of Hispaniola. In fact, Haiti occupies the Western portion, where as Santa Domingo is located in the Eastern portion of the island.

    • wally n  On 07/04/2022 at 10:02 pm

      you sure you don’t owe the bro a couple of bucks??? coming down…hard.

    • Brother Man  On 07/05/2022 at 12:26 am

      Your ignorance is embarrassing. Santo Domingo is in the south of the Island of Hispaniola (in the Dominican Republic), not the east.

      Punts Cana (a popular tourist resort) is in the east. Most grade-school children can tell you that.

      • Brother Man  On 07/05/2022 at 12:46 am

        Autocorrect:

        That should read Punta Cana.

      • Andre Brandli  On 07/05/2022 at 3:47 am

        I believe it’s hopeless to argue with you. For those readers who care about the facts:

        The 76,192-square-kilometre (29,418 sq mi) island of Hispaniola is divided into two separate nations: the Spanish-speaking Dominican Republic (48,445 km2, 18,705 sq mi) to the east and the French / Haitian Creole-speaking Haiti (27,750 km2, 10,710 sq mi) to the west.

        https://en.wikipedia.org/wiki/Hispaniola

      • Brother Man  On 07/05/2022 at 4:15 am

        The world is replete with quacks, fakes and charlatans.

        Similarly, a diverse audience’s perception of reality will always be divided.

  • Dennis Albert  On 12/04/2022 at 3:10 am

    Andre Brandlii,

    Freddie Kissoon has now got you on his list. Just wait for the following few days where he might write endless rants about you.

    https://www.kaieteurnewsonline.com/2022/12/04/professor-brandli-qualifications-do-not-prevent-one-from-writing-nonsense/

    • Andre Brandli  On 12/04/2022 at 7:51 am

      OMG, I have received now the royal ointments….

      • Dennis Albert  On 12/04/2022 at 11:16 am

        Freddie Kissoon wrote personal attacks on female doctorates such as Dr. Alissa Trotz and Dr. Janette Bulkan. Published their names and their workplaces in his article like doxxing them.

        But I think the straw that broke the camel’s back is the speech that Minister of Natural Resources at a conference.

        Diaspora Guyanese send money through Western Union, they visit and donate to charities, and yet the PPP government and Freddie Kissoon don’t want Guyanese living abroad to return to their own country of birth.

        You have great ideas but unfortunately the way Guyana is run is that after the oil reserves are exhausted, Guyanese will continue to flee to the developed countries hungry belly and emaciated.

      • Andre Brandli  On 12/04/2022 at 2:22 pm

        Dennis, as you know we had frequently clashed on Guyanese Online, but with regard to Vickram Bharrat recent comments about the Guyanese diaspora I am fully on your page. In fact, I was appalled! Most of you guys left Guyana in the past not out of choice but lack of opportunities. As you had pointed out, the Guyanese diaspora had supported the relatives back in Guyana for decades with remittances, trips back home, and sponsorships to have family members get green cards for the US and Canada in time of need. His comments were hurtful and disrespectful. I think the diaspora needs to respond fiercely against attempts of Minister Bharrat and others trying to defined 1st and 2nd class Guyanese. This also violates President Ali’s narrative of “One Guyana”. Interestingly enough, I did not bother to rein in Minister Bharrat. In my opinion, One Guyana is a mirage.

      • Dennis Albert  On 12/04/2022 at 4:42 pm

        Dr. Andre Brandlii, the nasty and vile garbage is coming from the PPP Leaders. The Attorney-General wants to retain the voter’s list because many in the Diaspora are PPP voters. So when election time comes, they visit Guyana and cast their votes.

        But what Vickram Bharrat did backfired, because the Diaspora will now ask why are they voting for the PPP when the government, media and politicians are against anyone who is a “foreigner”.

        The Trinidadian citizens are wondering why there is a staunch nationalist fervour, when Guyanese used to work in Trinidad as street vendors and merchants.

        Peeping Tom once wrote that old age Guyanese whose bones ache in the Winter cold should visit Guyana, and not live in Guyana.

        Their own relatives are saying, while they are in Guyana in the warm weather, that Guyana is good to send money to them, but not good to live in. Meanwhile, they beg for money to send to them.

        They even go scheming that they will pretend that they are selling their property, and there they can assess how much money the Diaspora Guyanese has. They will then start asking for money to send for large sums for emergencies that seem to happen every month.

  • Jim  On 12/04/2022 at 5:35 am

    Ramps Logistics Guyana contested the decision of the certificate to the Caribbean Court of Justice and won.

    This led to the Guyanese Minister of Natural Resources going on a divisive rant that foreign contractors to the oil companies are hiring foreign citizens with Guyanese citizenship instead of hiring local Guyanese.

    What baffled me was that the Minister started accusing oil contractors like Ramps of not paying taxes, and that Guyanese born abroad are not real Guyanese who paid their taxes and lived under caveman-era conditions.

    Dr. Andre Brandli, as an academic, you should understand that the first steps to the road to totalitarianism is to attack the educated academics, close off the economy like North Korea, and then start nationalizing the foreign companies.

    This is where Guyana is seemed to be headed after that rant from the Minister, along with government-aligned writers.

    We have great dreams of the oil finds in Guyana, but the intentions of the Guyanese government is to seize the assets, ban the academics and placate the citizens living in Guyana with a few checks here and there.

    • Dennis Albert  On 12/04/2022 at 11:27 am

      The reason why that tax thing struck a nerve with many Guyanese living in foreign lands is because that type of thinking is used to attack and dehumanise immigrants and non-Whites. It’s a xenophobic trope.

      The same PPP government published in a newspaper that Haitians were spreading diseases into Guyana, which is entirely false.

      Now it’s the Diaspora returning to Guyana as illegal immigrants.

      • Age  On 12/04/2022 at 5:09 pm

        Nobody who is a Guyanese living abroad is returning as an illegal. Most who want to return are coming with money to invest. What the deal involved was to retire on the company pension and Social Security because Guyana was more low cost.
        But the corporations are buying up the food supply and land. The Guyanese will get their free house lots or subsidized acreages for political reasons ,but we the Guyanese living abroad will have to pay American corporation prices for land.

      • Brother Man  On 12/06/2022 at 4:37 pm

        When you become an old man and approaching the end of life, why on earth would you be concerned about buying land and building a house?

        Find an affordable country and rent by the beach and enjoy your final years and retirement. You ain’t gonna be here forever!!

      • Age  On 12/07/2022 at 3:18 am

        Fair point. But I still have a decade or more to live after retirement.

        And what will I leave my children and grandchildren?
        The oil industry is pricing up rents that the expats are painting US$3500 a month for the average home in Providence.

    • Jim  On 12/06/2022 at 3:50 am

      I believe that the lesson to be learned is that no matter how much you help people in need, they may not appreciate your self-sacrifice.

      The relatives and friends whom you helped in Guyana have no right to treat you as person non grata because they have discovered large reserves of crude oil and believe that they will obtain oil rents from the government.

      Therefore, you have to be very careful when sending money to Guyana and determine whether it’s a mutual benefit or whether it’s the same outcome as wasting it on vices such as losing the lottery.

      A Trinidadian told me that their government forgave hundreds of millions of US dollars in oil vouchers because the government claimed that they had no money.

      Now this same government which begged for loan forgiveness is now being ungrateful to the citizens of the country which helped them in times of need.

  • Jim  On 12/06/2022 at 4:03 am

    “but with regard to Vickram Bharrat recent comments about the Guyanese diaspora I am fully on your page. In fact, I was appalled! Most of you guys left Guyana in the past not out of choice but lack of opportunities. As you had pointed out, the Guyanese diaspora had supported the relatives back in Guyana for decades with remittances, trips back home, and sponsorships”

    My response: Every cent that was remitted to Guyana might have been money that was better off spent on vices or lit on fire. The sacrifices that Guyanese in New York or Toronto gave to send money back home is now met with a hostile attitude and animosity.

    Now that it’s Guyana’s time to become a high-income nation, the Guyanese diaspora are no longer welcomed by the people whom they had helped for years and decades. The oil depletion is rather quick, so in a 15 years from now, don’t be surprised when the Guyanese start pleading for assistance again.

    • Age  On 12/06/2022 at 9:36 am

      I’ve never seen a very fast oil production target in my years working in the Alberta tar sands.

      Exxon sent a bulletin for shareholders that they plan to produce as much as 800,000 barrels of oil daily by the end if 2026.

      • Jim  On 12/08/2022 at 6:20 am

        The target is 1.2 million barrels of oil a day, about 450 million barrels of oil a year. Something tells me that the Guyana-Suriname basin may be large as the Orinoco Basin in terms of oil quantity.

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