Address by Canadian High Commissioner David Devine at Guyana Investment Forum June 27, 2013
Globally, the demand for investment dollars is becoming increasingly limited and competitive. This is true even for countries like Guyana that are blessed with extraordinary natural wealth. Investment decisions are made in dollars and cents. Countries that are successful in securing investment funds from reputable lenders understand that they have to take the necessary steps to create an investment climate that is conducive to attract investors.
When investors are pondering investment destinations they will ask critical questions such as why should investment funds be channelled to Guyana as opposed to some other place in the Caribbean or South America? The answer really depends not only on the attractiveness of Guyana as an investment destination but also on the fairness and balance of the country’s regulatory environment.
It is the hope that this forum will be the catalyst that would bring together partners and stakeholders invested in Guyana to work together to identify the best practices and viable solutions that would improve Guyana’s investment climate for the benefit of all of Guyana.
It is important to understand that the simple promotion of Guyana as an investment destination will not in itself result in the levels of investment required to effectively develop the country. Guyana, even with its impressive prospects, must satisfy certain key requirement of global lenders in order successfully raise required capital in international markets. Guyana’s investment potential hinges on the confidence of investors in the country’s security and governance.
Understanding the investment practices of global investors and International Financial institutional (IFIs) is important, not just for companies, but also for governments. Everyone recognizes that there will always be a certain amount of red tape and bureaucracy in every potential investment destination. However, old archaic laws and regulations often hinder the efficient use of investment funds and can result in loss of valuable investments.
In an environment where time is money a deal may not even be considered by a potential investor because of the restrictive rules. However, the lack of good transparent regulations and laws can also act as a deterrent to solid investment opportunities. Investors will look at what exists within a country – such as copyright laws and intellectual property protection laws as indicators of how their investments will fare in international jurisdictions.
Attracting and maintaining Investment
The ability to continuously reinvent, to be flexible and to respond positively to economic shifts is particularly important in today’s volatile global economy. Investment funds will flow to places where it gets the best rate of return in relation to the risk. Reducing that risk must be top of mind for Guyana. Government also has in its toolbox of policies bilateral investment treaties, double taxation agreements, intellectual property protection, development banks and sovereign wealth funds to name a few. How these will apply to Guyana, is a decision that only Guyana can make.
Guyana’s ability to evolve with the global changes is one of the essential conditions for becoming an attractive location for companies, to conduct business. Growing economies such as Guyana need to pay attention to the conditions that are necessary for success. These include sound economic fundamentals, combined with a solid regulatory environment that facilitates the conduct of business, built around the cornerstones of free enterprise, free trade and free markets.
When it comes to investment dollars the world does not stand still. Countries across the globe are engaged in the continuous process of stripping away red tape that can affect the vibrancy of their investment potentials. There are over five thousand investment promotion agencies all over the world each one in hot pursuit of those same dollars. What will make Guyana different and stand out among the crowd? Will gold or oil or anything else really sustain the economy in the long-term if the regulations are not right? It is hard to say but one thing is for sure… If there is lax enforcement and transparency of the rules and little done to update them it will make it more difficult to attract needed investment.
Fairness, transparency and security
Investors pursue investment opportunities in locations where there are established ethical and transparent business practices. Firms work in countries where their investment dollars are managed efficiently and where practices such as child labour, bribery and corrupt practices are seen as social ills that have no place in business dealings.
International firms are often beholden to the laws of their countries and the expectations of their investors. Canadian, US and UK firms can be prosecuted in their own countries under their domestic law for engaging in bribery or corrupting any public official in another country. Companies understand that these practices threaten the very lifeblood of their existence.
Shareholders would not risk investing in companies whose business practices would put their investments at risk. The insecurity that is created by the unwillingness or inability to enforce laws and regulations is considered by many investors to be the single greatest impediment to their decision to invest.
Countries that condone or do not have effective preventive measures in place to stop corruption will find that the investors who are ethical and conscious of their global image will choose not to invest. There still may be investment deals; however these deals may be accompanied by uncertain terms that will not offer the same integrity and commitment to the country and its peoples.
(Edited for length)
