-Ram and McRae 2009 Survey finds

For many local businesses 2008 was a difficult year and while many are not optimistic that this year will be any better, the majority see higher turnover and profitability, the annual survey conducted by accounting firm Ram & McRae has revealed.

During a similar survey conducted for 2008, 73% of the respondents had projected an increase in turnover for 2008, 67% an increase in profitability and only 10% ad 16% expected turnover and profit respectively, to decrease.

Based on the results of the recent survey, only 56% of the respondents indicated that their 2008 performance was in keeping with expectations, 32% of the respondents indicated that their performance was worse than expected, while 12% reported that they had exceeded expectations.  In the 2009 survey 66% project that turnover will increase and 64% expect profits to grow.

Based on the experiences of these businesses over the past year, 60% of the respondents said that they were not confident that the economy will improve during the year. According to the survey, the issues which have led to the widespread pessimism among the entrepreneurs were the high level of crime, the crisis in the world credit market, inflation, the value of the Guyana dollar and the level of consumer confidence which they have experienced during 2008.

According to the findings of the survey, the issue of consumer spending power is the one that businesspersons feel will be of the greatest impact to them during this year.  Other issues of concern highlighted were the price for fuel, inflation, crime and finding new customers/markets. However, the price for fuel may be less of a concern after the rapid drop in prices in recent months.

In the survey, 62% of the respondents indicated that they do not plan to raise capital.

The respondents were asked for their views on government’s handling of a number of issues. The government won wide support for its offer to the international community to preserve forests, hosting of Carifesta and the opening up of the flour market. It scored poorly on wiretapping legislation, its position on torture and the handling of appointments to the judiciary.

Importantly, the issue of the Value Added Tax (VAT) was identified as a major concern for the respondents. The primary concern for the respondents was the rate of VAT, the inflationary effect, the impact on consumer spending, the absence of a corresponding adjustment to rates of other taxes and the insufficient number of zero-rated items. According to the survey, 47% have reported that VAT has made it difficult to compete with other businesses, 46% saying that it had made no difference with 6% saying that VAT has made it easier. It was noted that often the main difficultly businesses faced was from those who do not charge VAT on their products or services.

Meanwhile, the survey revealed that many respondents did not regard the controversial Economic Partnership Agreement (EPA) with the EU which Guyana belatedly signed, as being significant. 52% of them did not see the EPA as having any impact on their optimism or pessimism about the economy.

The survey highlighted that over 70% of the respondents indicated that they would be keen to benefit from lower direct and indirect taxation this year. Meantime about 60% of them said that they wanted a formal plan to be implemented to tackle crime locally.

The survey titled Guyana Business Outlook Survey 2009 was derived from the responses of fifty businesses that were chosen from all ten regions in the country.  Those businesses selected were of different sizes, organizational cultures and who offered products in different sectors of the economy. The survey was done during the latter part of last year, via electronic means, where Survey Monkey, a specialized web-based survey software was used.  This is the 14th such survey that has been published by the firm.

Meanwhile, in a statement from Ram & Mc Rae, the firm made reference to the Minister of Finance’s 2008 Mid-Year Report. The Finance Minister, Dr. Ashni Singh said that the economy had recorded a 3.8 percent GDP growth during the first half of 2008, which had been driven by improved performances in agriculture, mining, engineering and construction, and services. However, the survey noted this was a sharp decline from the 5.8 percent growth in the corresponding period of 2007. Recently President Bharrat Jagdeo in his New Year Message announced that for the full year the economy grew by 3 per cent, indicating that the economy deteriorated in the second half of 2008, the survey pointed out.

The survey introduction also charged that the Mid-Year report dealt inadequately with the external debt and omitted completely any information on the domestic debt. The introduction cited the Bank of Guyana report which showed that the stock of domestic debt had jumped by 7.6% while the external public and public guaranteed debt had leapt by 16.8% from the end of June, 2007.

The introduction also argued that the Mid-Year report showed at the end of June only 38% of the full year budget was expended in what had been described as key sectors.