Wednesday, February 8, 2023

More investors flocking to Guyana since local content law enacted – Economist

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The provisions outlined in Guyana’s Local Content Act – a critical piece of legislation for the country’s booming oil sector took centre stage during Episode V of the Guyana Business Journal’s Transforming Guyana webinar on Wednesday.

Since the law’s December 2021 passing, it faced some criticism, chief among which is that it hampers foreign investors from doing business in Guyana. But Economist and Executive Director of local business body, the Georgetown Chamber of Commerce and Industry (GCCI), Richard Rambarran, pointed out that what has been happening is quite the opposite.

“I have not seen a deterrence of investors and I have not seen persons not coming to Guyana and I have not seen Local Content chase any company out of Guyana yet. Since the implementation of the Local Content Act, we have actually seen more persons coming and investing here,” he noted, while fielding questions during the webinar.

Rambarran highlighted that this is owed to the fact the Act leaves “no uncertainty” to Guyana’s framework for the oil and gas sector.

A main feature of the Act is the 40 schedules for services outlined to ensure Guyanese participation in the sector. And those areas include catering services to accounting and welding.

The Act was crafted to ensure that Guyanese companies are considered first and foremost to provide the services outlined. And for any foreign investor wanting to operate within those 40 areas, with preferential treatment in procurement awards, it would be required to partner with a Guyanese company with the Guyanese having 51% or more beneficial ownership among other critical factors.

This specific provision has been the topic of discourse since the Act was implemented.

It is no secret that Guyanese businesses still have to build capacity to do the heftier tasks like oil platform construction etc. but for low-hanging fruit, many outlined in the Act’s first schedule, some capacity exists. The partnerships allow locals to learn.

“What is it about a Guyanese owning 51% of a company that does surveying or food supply or immigration support services, or insurance services – what is it about that that cannot be done by a Guyanese?” Rambarran questioned. “When you look at the schedule of the law and the 40 areas highlighted, there are things like rental of office space, construction for buildings, pipe welding, catering, and janitorial services. Guyana has not been existing in a vacuum, we have not been existing without business operations. We have Guyanese here who have been supplying international companies for decades with many of these same services.”

What the Act does, according to Rambarran, is create a situation where every party involved benefits in a “win-win” scenario.

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