Monday, July 4, 2022

Resolutions and solutions

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Another year has come to an end, and we are now in two days into 2022. As is customary, the last few days for many would have been spent reflecting on 2021 and whether or not goals were achieved and mulling over resolutions for the new year. The local private sector has been celebrating a win—the Local Content Bill was brought to the National Assembly, passed and assented to by the President. That effectively means that Guyana now has enforceable local content laws.

During the deliberation of the Bill, Minister of Natural Resources, Vickram Bharrat provided a synopsis of its content. It was outlined that for a business to be considered local, a Guyanese must have, not just majority shares, but at least 51 percent voting rights. It was also pointed out that 75 percent of the managerial staff in the company must be Guyanese, while 90 percent of the remaining staff must be Guyanese. That Bill, which is now an Act, also stipulates a schedule of targets which must be achieved by Operators and service companies operating in Guyana. That is, a minimum level of local content under each category which they must achieve. The Minister also pointed out that provisions were made in the legislation to ensure that Guyanese are paid equally to their expatriate counterparts as long as their skillsets and qualifications are on equal ground.

In highlighting these aspects of the Bill, the Minister also conceded that local businesses have some challenges as it relates to competitiveness. “…we…need to be honest and straight up because we need to recognize too that we have challenges of our own, we lack capacity in many areas in the oil and gas sector There are certain services that we cannot offer now as a country, so we need to recognize our limitations and we need to accept it and we need to build capacity,” he stated. Added to that, he said that the Local Content legislation and the schedule of targets will not be used as a tool to allow for local businesses to supply mediocre services to the industry. He said, “We want our people to be competitive. Our businesses must be competitive regionally and internationally and also, our people must be trained and qualified and have the requisite skillset to function effectively and efficiently in the oil and gas sector. That is our intention as a government and that is the only way we see it.”

So, now that that the much-demanded Local Content laws are here, what is the next step for local businesses to utilise the provisions of the legislation? Now that the solution to getting our ‘slice of the pie’ is here in the form of Local Content legislation, what are our resolutions in accessing the advantages of this Act? What I was keen to note is that an important aspect of the legislation is that local businesses must be able to meet the requirements and standards of the industry.  Businesses must now position themselves to be qualified to capitalise on these contracts, and it will take more than just Guyanese ownership to do so.

This was recognised by President Irfaan Ali, who—in addressing local manufacturers and service providers in early December—encouraged local businesses to form partnerships among themselves and strategic partnerships with foreign entities where necessary. The President called for locals to recognize the needs that exist in the sector and examine how these can be met. The President went on record as saying, “Yes, the family businesses are good, but times are changing, circumstances are changing and if 10 small businesses can come together and take away 35 percent or 30 percent share in that market, aren’t they better off?” He pressed for local companies to have greater ambitions and form corporations to achieve a competitive advantage. He said, “We have to build one common theme in this country, we are all winners, we are in this to win, we have to develop a winning culture…Do we see ourselves as competitors or members of a manufacturing industry who know they will have to come together…if we want to win, we have to come together and build the capacity and industry.”

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