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Guyana Foreign Investment
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
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