But, even as the West ponders its options, Guyanese must figure out the value of China’s money to them for something has gone wrong that is causing well-meaning actions to create a portentous situation.
After five years of being released for operation, the sugar factory at Skeldon is still a sore issue. Quite recently, the residents of Region 10 were rubbed the wrong way by Bai Shan Lin, a major investor enterprise from China. This is after the region had a confrontation at an earlier time with Bosai, another investor enterprise from China. The deal for the construction of the Marriott Hotel, like other capital projects, did not bring much employment for Guyanese labour.
A prominent columnist has been highly critical of the burdens placed on Guyanese taxpayers by the deal for the expansion of the airport; and Professor Clive Thomas has identified, among other things, the obscure nature of the financing of the Amaila Falls Hydropower project in dissecting its anatomy. Other concerns about Amaila are linked to the pricing of its output, something which has not been settled yet.
At one time, the hydro project was estimated to cost US$350, but in short order the cost jumped to US$850. The size of the benefits at US$350 has certainly shrunk significantly at the new cost of US$850.
Many products with the “Made in China” tag that are sold at bargain prices in stores in Guyana have frustrated the consuming public. All these events and things conspire to put a black eye on the money from China and to dull its intended sheen.
China’s penetration
Benefits from that and the other projects, including the hydro, it would seem, are not coming from the front-end of the investments. Instead, it appears as if the benefits are to be gotten only on the back end, from using the infrastructure. But use depends on the capacity of Guyanese to invest to take advantage of the infrastructure, and research is beginning to show that there are no incentives available to stimulate and support long-term investments, especially by small and medium-size enterprises. Guyanese entrepreneurs have very little motivation to go beyond the basics since the entire risk of the investment stays with them, unlike in the case of the commercial banks and foreign investors who enjoy myriad ways to speed up the recovery of their investment.
Loss in goodwill
When an assessment of the relationship between investors from China and the Guyanese people is completed, China will have to bear some of the blame for the apparent loss in goodwill among Guyanese. While China might have cultivated an understanding with the government, it has failed to achieve a similar goal among Guyanese. Despite the popularity of its food among Guyanese, its economic posture, though gargantuan, appears rather partisan and exclusionary and is not being embraced in the same way as its food. This disposition is disappointing, especially from a country that has had a permanent presence in Guyana for most of Guyana’s independent life and whose kith and kin are an integral part of the nation’s history, its racial identity and its destiny. China ought to be familiar with the evolution of Guyana and the life of Guyanese. It is failing to show a sufficiently broad enough understanding.
Further, China seems rather unmoved by the intolerance shown by the administration to Guyanese. Unlike other countries, it remains rather mum about corruption and other behaviours that make doing business in Guyana difficult, and life for Guyanese frustrating, and in some cases intolerable. This stance contrasts with the disposition that the current leadership of China is displaying towards corruption. Within the last three months, China has turned up the heat on a number of public and private institutions, including its military which has been allowing military personnel to use military number plates on personal luxury vehicles. The conspicuous consumption by the military has upset many in China and the authorities have decided to crack down on this practice. It is clear that China understands the negative impact that corruption has on its image and its ability to gain the confidence of global economic partners.
Aggressive and blind pursuit
Analysts who have followed the money from China contend that its interest in Guyana, as it is elsewhere, is in the natural resources that the country has to offer. The aggressive and blind pursuit of those resources has left the companies from China looking like irresponsible corporate citizens as the recent behaviour of Bai Shan Lin revealed. Even with access to the natural resources, China is not parting with the money in ways that make the majority of Guyanese feel as if they were beneficiaries of its investments. China wants virtually all the inputs for infrastructure projects to be sourced from its own suppliers.
China is therefore using the leverage that it has from financing the projects to boost its own exports. This practice is not unlike other donors or creditors who take advantage of the privilege that this type of controlled economic relationship offers. As a result, Guyana is forced to set aside many rules, including rules of procurement that are intended to foster competition and fairness. China has even gone so far as to insist that most, if not all of the labour for any of the jobs that it does come from China.
The millstone
But, the millstone around China’s neck might be its partner in this relationship, the Government of Guyana. The administration has shown scant regard for the Guyanese public and often behaves as if it has no obligation to account to them. This and the immediate past administration have been virtually secretive about every deal of which China is or was a part. For example, Guyanese had to wait for the annual report of Atlantic Tele-Network to be published to find out that it was Hong Kong Golden Telecom Company that had bought the taxpayers’ share of GT&T that was held by the government on their behalf. To this day, the administration has not shown the courtesy to inform Guyanese of the decision that it ostensibly made on their behalf. In reading Professor Thomas’ description of the financing of the Amaila Falls project, the obfuscation around the financing of the deal leaps out at the reader. It is the same with the Marriott project. Guyanese have not been given a full disclosure of their stake in the investment and with whom they are partnering to make the investment. It is as if the giving up of tax dollars by Guyanese carries with it an equivalent obligation to give up their rights for accountability. It is not surprising that, as a result of the refusal to account openly and fully to the Guyanese, the scope of work and the financing of the expansion of the airport have been open to the interpretation of one’s choice.
Asymmetric
The weakness in the financial relationship might be that it is not tied to any of the critical macroeconomic goals. Remittances and gold have done a good job of keeping the exchange rate stable and households under control. The bilateral flows from China therefore are not about their value to job creation and consumption spending, but about friendship between governments, one of whose interests appear asymmetric to that of its people.
Lucas Stock Index
The Lucas Stock Index (LSI) rose 2.84 per cent during the fourth week of trading in July 2013. With a very small trading volume among seven companies, a total of 8,700 shares in the index changed hands this week. There were four Climbers, no Tumblers, and no movement for the stocks of three companies. The Climbers were Banks DIH (DIH) which rose 11.11 per cent on trade of 2,000 shares, Sterling Products Limited (SPL) which rose 7.69 per cent on the sale of 100 shares, Demerara Distillers Limited (DDL) which rose 4.52 per cent on the sale of 2,300 shares and Republic Bank Limited (RBL) which rose 4.00 per cent on the sale of 1,500 shares. Guyana Bank for Trade and Industry (BTI), Demerara Bank Limited (DBL) and Demerara Tobacco Company (DTC) recorded no change in value on the sale of 1,300, 1,000 and 500 shares respectively.