Guyana’s Local Content Secretariat (LCS) will be setting up a new unit to address what is commonly referred to as ‘rent-a-citizen’, a practice where foreign investors use Guyanese nationals and/or businesses as mere fronts in order to circumvent provisions outlined in the Local Content legislation.
So announced the LCS Director, Dr. Martin Pertab, on August 10.
Dr. Pertab said the unit forms part of a rigorous framework being developed to address local content challenges seeking to undermine the law.
This legislation sets forth 40 sectors and sub-sectors for Guyanese businesses. Foreign investors wanting to operate within those areas can partner with Guyanese companies, with 51% Guyanese beneficial ownership in the joint venture, among other critical factors, to benefit from mandatory preference in the procurement of goods and services by companies in the sector.
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Verified Guyanese companies receive a Local Content Certificate from the Local Content Secretariat. Moving forward, before the Secretariat issues renewals, there will be an added layer of scrutiny of the information submitted by contractors, to ensure accuracy.
“We have put in so much for local content and if we have fronting or any other secret activities that will undermine our efforts or undermine overall the objective of local content, which is to ensure Guyanese benefit, because of that 51% ownership which should have gone to a Guyanese, going to the IOCs or foreign companies, it will result in capital flight,” the Director underscored.
Just recently, one of Guyana’s Infrastructure Ministers, Deodat Indar slammed the private sector for the practice.
Indar firmly addressed the issue, stating, “Our people in the private sector have to be true to that (the local content law) and not do the rent-a-citizen kind of arrangement that we hear reports about —because it hurts the local content fight, it hurts what we’re doing here as a private sector.”
The Georgetown Chamber of Commerce and Industry (GCCI) followed after, also expressing concern for the sham partnerships.
Its commitment to tackling this issue is unequivocal. They stressed the need for authenticity and genuine local participation. To combat the menace of ‘fronting’, the Chamber said it is lending its unyielding support to the LCS in their rigorous vetting process of companies seeking Local Content Certificates. They further advocate for placing the “burden of proof” regarding beneficial ownership on the applicant company itself, ensuring transparency and accountability.
