Guyana Table of Contents
Foreign investment was a key element in the Hoyte government's plan to revitalize Guyana's economy. After two decades during which virtually all foreign companies were nationalized, the government was taking great pains in the early 1990s to convince foreign companies that investments in Guyana would be safe and lucrative. According to a government statement, investments were safe because, "The objective circumstances which led to nationalizations during the 1970s no longer exist and the present government has no plans whatsoever to nationalize investment or property." The government allowed investors to enter any sector of the economy, repatriate their profits, and own 100 percent of companies operating in Guyana. To make investment attractive to foreigners, the government introduced a number of incentives (negotiated on a case-by-case basis), including tax holidays of up to ten years, exemption from consumption and capital gains taxes, duty-free import privileges, and support for investment and tax treaties with foreign countries (to avoid double taxation, for example). The government established the Guyana Manufacturing and Industrial Development Agency (Guymida) to streamline the foreign investment process.
The government encouraged foreign investment in a broad range of activities, including agricultural production, agro-industries, fishing and shrimping (including aquaculture), forestry and sawmilling, mining, petroleum, manufacturing, fabrication and assembly industries, tourism and hotel development, construction, electrical power generation (including hydropower), telecommunications, air transport and airport services, shipping and port facilities, and banking and financial services. By 1991 foreign investors were active in a number of these areas. Several companies from the United States, Canada, and other countries were active in bauxite and gold mining as well as infrastructure projects. British companies had invested in the sugar sector, pharmaceutical products, and airport services, among other areas. Brazilian companies were involved in pharmaceuticals, agriculture, and mining.
Some of the most promising investments were in nontraditional areas. A French company, Amazon Caribbean Guyana Limited, was exporting heart-of-palm to Europe. The company employed 100 people. Six European companies were considering investments in engineering or garment manufacturing. A Trinidadian firm, Colonial Life Insurance Company, purchased the assets of the state-owned logging company, Guyana Timbers. The Japanese Nisshan Suissan company bought another state-owned company, Guyana Fisheries Limited. A United States company, Sahlman Seafoods, operated a shrimp-fishing company.
One activity receiving considerable foreign attention was petroleum exploration. Because fuel was Guyana's costliest import during most of the 1980s, there was great interest in finding domestic sources of oil. An exploration study was completed in 1986, and the results were promising enough to attract a Trinidadian company and a British oil company. Nine petroleum companies were reportedly searching for oil in Guyana's coastal waters by 1990. These companies included Hunt Oil of the United States, the London and Scottish Marine Oil Company of Britain, Broken Hill Proprietary of Australia, and Total from France. The latter company had entered into a joint venture agreement with two small United States companies and was expected to begin drilling test wells in late 1990.
Though foreign investment had begun to flow into Guyana by 1991, many potential investors remained hesitant. One concern was that a change in government could reverse the favorable policies that the Hoyte government had introduced. The Hoyte government maintained that it was planning to change the constitution to remove sections that discouraged potential investors. Other concerns for investors were the lack of infrastructure, the shortage of skilled labor (even though wages were low), and the politicized and strike-prone unions.
Of particular interest to investors from the United States was the possibility that Guyana would become eligible for Internal Revenue Service (IRS) Code, Section 936 funds from United States businesses in Puerto Rico. Under IRS Code, Section 936 United States businesses with branches in Puerto Rico were effectively exempt from income tax on income derived from their Puerto Rican subsidiaries as long as those funds remained in Puerto Rico. In 1986 this tax exemption was expanded to include funds made in Puerto Rico but invested in certain countries of the Caribbean Basin Initiative. The Overseas Private Investment Corporation (OPIC), a United States government organization that provided political risk insurance and loans to United States companies, organized a fact-finding trip to Guyana in 1990.
Data as of January 1992
Guyana Table of Contents