Featured Address delivered by Hon Winston Jordan
Minister of Finance
March 15, 2019
Hon Carl Greenidge, Acting Prime Minister, Vice President and Minister of Foreign Affairs
Hon Dominic Gaskin, Minister of Business
Members of the Diplomatic Corp
Executive Chairman and Members of the Board of Directors of DDL
Management and staff of DDL
Members of the Media
Distinguished Ladies and Gentlemen
I am extremely pleased to be able to deliver the feature address at the opening of this new, state-of-the-art warehouse. As you know, I am doing so in the absence of HE President David Granger, who was originally invited, but who is unavoidably absent. He has asked me to deputise for him, which I consider an honour in so doing.
Please allow me to extend congratulations to the Board of Directors, Management and staff of DDL for being the visionary that is required to propel growth in Guyana. I, especially, want to recognize Mr. Komal Samaroo, one of the country’s leading businessmen, a man with a vision, following resolutely in the footsteps of his mentor, the legendary Dr Yesu Persaud, whose name is synonymous with DDL.
Komal and I go way back to our school days at Cummings Lodge Government Secondary School, a little known Junior High School nestled in the Cummings Lodge/Industry area – a stone’s throw from the University of Guyana – but which has produced the likes of myself and Komal. Both of us, indeed the thousands who have entered into, and passed through, the doors of that school, learnt the values of excellence, discipline, hard work and sacrifice. I can these values on display in today’s achievement that is being celebrated.
I believe it was last year, at the Pegasus Hotel, when I was invited by the Private Sector to one of their activities. Prior speakers were all lamenting the state of the economy, how bad things were, etc. That is, until they called upon Komal to speak. Modestly, he claimed to be not much of a speaker. But when he spoke, and what he spoke not only evoked rapt attention, but also prolonged applause. What he spoke should be guiding lessons to the private sector: where there is a will, there is an opportunity; where there is a challenge, there is a profit. If we see the glass as only being half empty, others will exploit the other full half.
Mr. Chairman, it goes without saying that our economy cannot realize its full potential without the presence of domestic companies like yours, because domestic private companies are a major driver of job creation and economic growth in any economy. I am sure that this warehouse will provide a more spacious and conducive environment for you to conduct business, as your company expands and continues to enhance the image of its products on the domestic and international markets.
Distinguished ladies and gentlemen, this investment is evidence of the improvement in the investment climate in Guyana. This is one of several large investments that are taking place in the country, and it is an indicator of how confident private businesses are about the state of our economy. Last year, at the time of reporting, in November, our growth rate was pegged at 3.4 percent, leading the region’s premier development bank, the Caribbean Development Bank (CDB) to recognize Guyana as having one of the fastest growing economies. Our latest estimate of 2018’s real growth in the economy, with the benefit of near final numbers, is between 3.6 percent and 3.9 percent. The final figure will be known when the End of Year Outcome Report is completed by mid-April. Importantly, since this Government has acceded to Office, we have managed to keep the economy growing in an increasingly hostile international (de-risking, AML/CFT) and domestic (political instability, challenges experienced by the traditional growth sectors) environment. That growth has been achieved in the context of low inflation, and a manageable fiscal deficit and debt/GDP ratio.
Guyana is increasingly being seen as the “go to” destination. My recent experience at the Prospectors and Developers Association of Canada (PDAC) Convention, the largest mining convention in the world, attests to this growing recognition. There, at the Guyana Day, over 270 investors were attendance – several of whom had to be accommodated in an overflow room – expressing a deep interest in Guyana and its investment climate. Many of them were well-known names in the industry. Guyanese Ministers (2 were in attendance) and technical officials were sought after.
But let me hasten to say that this government will continue to put in place, enhanced measures to ensure adequate public infrastructure, favorable macroeconomic conditions, strengthen institutions and reduce bureaucratic red tape because we understand that these are critical conditions for a positive and dynamic business and investment climate, and we are making every effort to attract investors for investment in the different sectors of the economy. Only this morning, I was reading a report done by the IDB, which mentioned that high taxes ranks among the top detriments to private sector growth in Guyana. I am pleased to indicate that in its nearly four years, this Government has implemented a slew of tax reforms that have been comprehensive in scope and unparalleled in the history of this country for a Government at a similar stage of its political life.
Infrastructure is often cited, too, as another obstacle that stymies competitiveness in Guyana. Komal mentioned, in passing, the proposed by-pass road to be built between Ogle and Diamond. I am pleased to indicate that the Government has taken a decision to undertake a phase II, which will see a study being done to extend this road all the way to the Cheddi Jagan International Airport. The current bilateral donor of phase I is being approached to finance this second stage. The Kuwaiti Arab Fund for Economic Development (KAFED) has been approached to finance the Parika/Goshen Road. This road will eventually be extended to Monkey Jump and all the way to Bartica, thereby providing an alternative route to that important, new town. Already, KAFED recently approved a US$1.65 million grant to finance a study for the road widening between Belfield and Rosignol. And, if we need reminding, Government has already secured financing to finance the first leg of the Linden/Lethem Road, in particular, from Linden to Mabura and a bridge across the Essequibo River at Kurupakari. These are just some of the exciting infrastructural developments that are in the formative or gestation stage.
I was very pleased to have read in the Chairman’s Annual Report for 2018, that the company had recorded its highest revenue ever, in 2018, and that local and international revenue continued to show encouraging growth. Your achievement is not singular, in this regard: your main local competitor has also recorded tremendous sales and after-tax profits. I was also happy to learn that DDL’s after tax profits were 26 percent higher than the previous year. Congratulations for your astute management of this dynamic company. Your shareholders should be pleased with the growing value of their shares and the receipt of higher dividends. But, Mr. Chairman, you will agree with me that the reduction in the corporation tax rate, from 30 percent to 27.5 percent; the reduction in the VAT rate and the other fiscal measures in support of the private sector impacted on the company’s profitability. And this is great news, because it is being peddled by the purveyors of doom and gloom in our country that the tax burden has become excessive and business activities are declining. Once again, I want to congratulate DDL on this sterling performance and assure you that this Government will continue to do what is necessary to promote the expansion and sustainability of local private businesses in Guyana.
I am optimistic that the Chairman’s annual report for 2019 will also highlight super profits, in light of the reduction in the corporate, capital gains and property tax rates for private sector businesses that the government has granted in the 2019 budget, as well as the new wear and tear allowance for Service and Warehouse buildings. I would also like to proudly state that as the Minister of Finance, the tax burden for both businesses and individuals has reduced under my watch. More importantly, in the 2019 Budget, our Government has fulfilled a promise that was made in its manifesto, that is, to reduce the manufacturing tax rate to 25 percent during its first term in office. And, today, I announce to you that during our second term in office, you can expect the corporate tax rate for manufacturing entities to be reduced to at least 20 percent, consistent with our recognition that manufacturing and industry has to drive the oil and gas economy. This is just one of the many positive reforms that can be expected during our second term in government.
DDL has a great privilege, you are operating the last of many distilleries that were present in Guyana during the days of king sugar. And so, at this juncture when the government was forced to make a realistic decision about some of the sugar estates in Guyana, I am happy to see that one of our traditional sugar estates has been transformed into a very profitable private sector business. This will serve as evidence that the decision to privatize some of the sugar estates, in our effort to restructure the industry, should not be perceived as a doomsday outcome – especially peddled by the very people who bankrupted the industry with a costly, ill-advised and inefficient US$200 million Skeldon Modernisation Project, for which our taxpayers are being forced to repay – but it can be properly administered and bring significant benefits to our country and people.
Distinguished ladies and gentlemen, this is not to say that the Government is unmindful of the immediate impact of this decision on the livelihood of displaced workers. We understand, and we are working assiduously to find appropriate solutions to the problems. In this regard, the Government has already secured a $30 billion loan to invest into the sugar industry, while we have met all payment of severance to the sugar workers. Many of them have invested in small businesses, including the planting of fruits and vegetables, which can fuel DDL’s tropical juices factory.
It was just a few months ago that I visited the Diamond facility to get a firsthand look at the investment and expansion that the company is undertaking. I was impressed by the level of expansion taking place at the facility – all $10 billion of it – and the value added products that DDL is producing and contemplates to produce. During that visit, I encouraged DDL to expand its juice manufacturing business by utilizing more of the traditional types of fruits. I am confident, that given the track record of this company, more farmers will soon find markets for their fruits.
Mr. Chairman, this Government is putting the necessary infrastructure in place to facilitate sustainable growth and development that will be guided by the Green State Development Strategy. This Strategy is in keeping with HE President Granger’s vision of a green Guyana. DDL has established a CO2 Plant, to utilize waste products from the distillery into other aspects of business. I am happy to see that this company is positioning itself to align with the government’s green agenda, and we applaud you because, going forward the process will require the full support of the private sector, specifically in terms of the manner in which they do business, and the use and adaptation of green technologies. Let me also add that in an effort to ease the country’s fiscal constraints on investment and efficiency, a Public- Private Partnership Framework was established as a delivery model to overcome some of the challenges that hinder the execution of development projects. The framework prioritizes core projects for collaboration between the Government and the local and external private sector, and we expect local businesses and investors in the Diaspora will respond to this opportunity to actively participate in the development process. While not collaborating in the physical infrastructure, DDL has been making efforts to partner with the Government in the manufacture of milk and dairy products. Both of these command a sizeable component of our import bill for consumption goods.
This is a defining moment for Guyana, we are anxiously awaiting first oil as early as the last quarter of 2019, and we want to ensure that all Guyanese benefit from these new resources. The legislation for the establishment of a Sovereign Wealth Fund (SWF) was assented to by President Granger on January 23, 2019. The SWF will ensure that petroleum revenues are efficiently managed and utilized. You are also aware that the government is in the process of developing a local content policy to ensure that Guyanese individuals and businesses get a fair piece of the pie. But, Mr. Chairman, this will not materialize unless our private sector gets its act together. On a recent visit to the operations of First Bauxite Corporation, at Sandhills, up the Demerara River, I was horrified that 5,000 tonnes of stone being offloaded from a barge was imported from St. Lucia. This, in a country with at least four quarries. When I enquired, I was told that Guyana does not produce stone of the quality, quantity and dimensions required. I have had the displeasure of learning of similar occurrences in respect of the airport expansion and a number of road building projects that are financed by international donors. First Bauxite Corporation expects to import another 10,000 tonnes for their operations, a drain of valuable export earnings and a loss of jobs and value added.
There is no doubt that investments like what we are witnessing today are geared towards the expectation of greater demand for the goods and services you offer. This is a positive step for Guyana and your company, and I am sure that there are other businesses that are also in the preparation mode. The government is also putting measures in place to diversify the economy and modernize the traditional sectors to ensure that we do not fall into the trap of other oil producing countries where oil becomes a curse rather than a blessing, because they became heavily dependent on petroleum and neglected the traditional sector.
In closing, let me once again congratulate the Board of Directors and management of DDL for undertaking this significant investment which will no doubt impact on the performance of our economy, and assure you that this government will continue to support private sector businesses because we are serious about developing a strong and dynamic private sector for sustained poverty reduction in Guyana. The Good Life beckons!