With the government facing a barrage of criticism over the exportation of high value logs by Chinese and Indian companies, Minister of Natural Resources and the Environment Robert Persaud said yesterday that a major humbug to value-added products taking off is the high cost of energy.
“… We can talk from here to the top of Mount Roraima about value added in any area of our economy, but unless and until we definitively address the matter of energy we would just be having a good talk,” Persaud said.
Contending that the government has been insisting that foreign companies investing in Guyana include value-added products as a major feature of their investment, Persaud said if timelines are not met they would examine the laws to see what steps could be taken.
The minister was at the time addressing a seminar on issues that “are beneficial to stakeholders in the value-added sub-sector” held at the Guyana Forestry Commission Multiplex. The seminar was scheduled after Chinese company Baishanlin and Indian company Vaitarna were criticised for exporting large amounts of logs even though years-old promises for value-added forestry have gone unfulfilled.
According to Persaud, the concept of value-added produce is something the administration has been pursuing for a number of years in all sectors of the country’s economy.
The minister said while it makes economic sense that value-added products are produced there is need for an enabling environment.
He said there are incentives for all categories of investors to take advantage of and while all aspects are not covered, a very comprehensive and attractive incentive regime supports value-added in the forestry sector.
“From time to time you see the commentary that there is no incentive for small and medium scale forestry operators to get involved in value added when in fact there is this… incentive regime, when in fact there are opportunities… to cover all elements of value added,” the minister said.
He said his ministry has created an enabling environment but 60% of the operating cost of forestry operators especially when it comes to value-added products is attributable to energy.
Grapples
He said the “same individuals” who talk about value added are the same ones “holding the key to value added taking off in our country and that is energy.” It was clear that the minister was referring to the opposition voting down funds for the Amaila Falls Hydropower project, which the government has highlighted as being the answer to the need for a cheap and reliable energy supply.
The minister said that unless, as a nation, Guyana grapples with the reality of energy, value-added would just be a good conversation and aspiration.
“And in this country we have aspired forever, we talk forever about our potential but we need to start doing things that would realise [that potential]. The potential in value-added in the forestry sector is tremendous…, but until and unless we deal with the issue of energy in a significant way we will be moving in small steps.”
According to the minister, the operators have been taking steps in this regard as there has been a consistent increase in the last six years in the export of value-added products in different categories to the tune of about US$9 million per annum.
And he said that when new Timber Sales Agreements (TSAs) are signed and applications for new state forest exploratory permits are made the government insists that value added be a major feature of those operations. The minister said that in recent times the new TSA and exploratory permits that were awarded were premised on a plan to develop value-added operations in a significant way.
“So any large scale timber related activity…is premised and in fact conditioned on a value-added component…”
Critics however point out that in relation to Vaitarna and Baishanlin, neither the ministry nor the Guyana Forestry Commission held them accountable for the failed promises of value added.
Persaud said that his ministry has also worked with local producers of value added and went on to cite what he said were two examples where they gave priority access to forestry resources because the companies were complaining that they could not get reliable supplies of the materials they wanted and pricing. He named Guyana Furniture Manufacturing and Precision Woodworking and Farfan & Mendes.
The minister said the reality is that India and China have, in recent times, developed huge demands particularly for logs. The fact is that there are companies from those countries operating in Guyana and the administration has insisted that they not only be involved in extraction and export but they also be producers of value-added products.
“We made that a firm requirement in this regard…,” the minister said, while adding that it is hoped that the commitments made by those and other companies would be met and be honoured.
He said there is need to have investors embrace value added as their primary focus and not just to extract the raw produce – an issue that has been repeatedly raised by many as regards businesses operating, especially in the forestry sector.
With the forestry sector coming under tremendous pressure for allowing foreign companies to export raw material but by the same token lagging on value-added products, the Forest Products Development and Marketing Council in Guyana Inc (FPDMC) convened the seminar.
The seminar, which was well attended, saw various presentations from entities such as the Guyana Revenue Authority (GRA), Go-Invest and the National Insurance Scheme among others. The GRA focused on the tax concessions that are available to stakeholders involved in value added.
Go-Invest highlighted investment incentives and opportunities, while the NIS focused on the need to be compliant with NIS regulations in order to access benefits offered by other government agencies as well as worker protection.
