Guyana Office for Investment

Overview

Guyana’s economy consists largely of industries dependent on the utilization of natural resources (e.g. agriculture, mining, fishing and timber). Agriculture—predominantly rice, sugar, fishing and forestry—accounted for nearly 35 percent of GDP in 2005, while mining made up an additional 10 percent. Most of these products are exported, such that economic performance relies heavily upon international market conditions, and weather, which can impact agriculture and access to mining and timber resources. As such, the Government has placed an emphasis on diversifying the economy and exploring new sources of income, employment and export growth. As a result, Guyana is undergoing an important shift from an agricultural and mining economy to one grounded in light manufacturing—including value-added wood products, agro-processing, and garments—and services. Indeed, in the services sector, Guyana is seeing growth in tourism, ICT and IT-enabled services (e.g. call centers).

As a result of its monetary and fiscal policies, and support from multilateral institutions, Guyana has successfully maintained a stable and predictable macroeconomic environment. Inflation has fallen significantly to single digits and is expected to remain as such for the foreseeable future. The Government has reduced the central government deficit, which was 7 percent in 2005. The country’s currency, the Guyanese dollar, has remained at a stable and fairly competitive rate for a number of years. More than 50 percent of the country’s US$2.1 billion debt burden has been paid, forgiven or written off.

The Government continues to work to further strengthen its economic policies, with a three-pronged strategy focused on i) stable macro-economic policies; ii) increased investment in public services; and iii) improving the business and investment climate to enhance national competitiveness.

At first glance, Guyana’s relatively small population and low per capita income creates the appearance of a small domestic market. The per capita purchasing power of the population (US$4,293)* however, is estimated to be almost four times its per capita income. Augmented in part by remittances, a central portion of this purchasing power is concentrated in the upper and middle classes that reside in the country’s capital, Georgetown. Consumption accounts for a large and increasing proportion of GDP. Together, the population’s purchasing power, remittance income and domestic consumption provide a substantial domestic market for the provision of goods and services.

* - Purchasing power parity (PPP) at 2004 prices

Country	Population (‘000)	GDP (PPP)	Goods Imports
Country	Population (‘000)	US$ millions (2004)
Antigua & Barbuda	80	872.6	462.8
Bahamas	320	5,291.2*	2,068.1
Barbados	271	4,253.6**	1,285.8
Belize	282.6	1,893.5	504.0
Dominica	71.46	400.6	143.5
Grenada	105.7	840.0	232.9
Haiti	8,591.7	14,474.7	1,300.8
Jamaica	2,664.7	10,530.7	3,641.0
St. Kitts & Nevis	46.9	599.1	205.0
St. Lucia	163.6	981.1	158.5
St. Vincent & the Grenadines	108.3	714.9	226.0
Suriname	442.97	2,490**	775.0
Trinidad & Tobago	1,323.4	15,761.4	5,483.7
CARICOM Total	14,473.4	49,558.8	16,487.4
Brasil	178,718.4	1,482,859.2	65,904.0
Colombia	45,300	322,582.0	16,529.9
Costa Rica	4,061.5	39,823.2	8,268.0
Dominican Republic	8,861.4	64,918.2	7,660.0
Venezuela, RB	26,127	155,790.4	17,299.5
Regional Total	277,541.7	2,115,532	132,148.9
Source: World Bank Development Indicators Online * Denotes 2002 data, **Denotes 2003 data

Market Access
Whatever Guyana lacks in domestic market size, it gains in remarkable access to strategic export markets. This is a result of its geographic location and participation in a number of bilateral, regional and multilateral trade agreements that allow over 75 percent of Guyana’s products to access export markets duty-free, with most of the remaining exports receiving reduced-duty treatment. Guyana’s unique geographic positioning and socio-political heritage put it at the gateway to South America and the Caribbean. On one hand, its Caribbean and English-speaking heritage enables Guyana to be part of the Caribbean Community (CARICOM), while on the other hand it is a South American country neighboring two of the most important economies on the continent – Brazil and Venezuela. As Table 1.1 shows, trade agreements with its neighbors provides access to over 277 million consumers, and an export market in excess of US$130 billion with an overall purchasing power of over US$2 trillion.

Guyana’s membership in CARICOM provides it with duty-free access to 14 other member countries, which are Antigua & Barbuda, Barbados, The Bahamas, Belize, Dominica, Grenada, Haiti, Jamaica, Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Suriname and Trinidad & Tobago. In addition to access to the CARICOM market, Guyana benefits from a number of bilateral agreements between CARICOM and Colombia, Costa Rica, Cuba, the Dominican Republic, and Venezuela. These agreements provide a range of duty free and preferential markets access, with varying levels of reciprocity. In addition, Brazil and Venezuela have signed partial scope agreements with Guyana allowing duty-free or preferential access for selected products.

Guyana also enjoys preferential duty-free or reduced duty access to major developed economies. These include 1) the U.S. Caribbean Trade Partnership (CTP, formerly the Caribbean Basin Initiative (CBI)), which, as a result of an agreement, extends “NAFTA Parity” to Caribbean countries; 2) CARIBCAN, which grants duty-free access for Caribbean exports to Canada, with some exceptions; and 3) the E.U.’s African, Caribbean and Pacific (ACP) trade and aid agreement, which provides preferential treatment to the region’s sugar, banana, rum and rice suppliers. While the value of this preferential access has diminished as a result of changes in EU trade policy, this trade partnership nevertheless remains important.

	Box 1.1: Market Access: Brazil
	The partial scope agreement with Brazil helps Guyana gain duty-free access to a very large next-door market for a number of export products, including: - Agriculture: fruits and vegetables, beef/cattle, poultry, spices, rice, peanuts, and sugar - Seafood: frozen fish, shrimp and prawns - Wood Products: sawn wood, plywood, joinery - Construction: stone, fencing, metal sheets - Mining: Bauxite and related products - Paper/Consumer products: tissue, cardboard
	Guyana’s ability to realize this potential has recently improved with the ratification of a transport and cargo agreement with Brazil that will streamline customs and border processes. With current and planned improvements on road linkages between Brazil and Guyana, this development is likely to facilitate an increase in Guyana-Brazilian trade.

Beyond these regional trade agreements, Guyana is a member of the WTO, and benefits from the market access rights and most-favored nation status thereof. Guyana also has bilateral trade agreements with various preferential regimes with Argentina, People’s Republic of China and Turkey. Negotiations with other countries are under way for agreements on trade and economic cooperation.

Market access opportunities are not only limited to Guyana’s products. As a result of the launch of the Caribbean Single Market and Economy (CSME), Guyanese professionals, journalists, artists, and university graduates benefit from free movement throughout CARICOM. This creates opportunities for the export of services and allows businesses to mobilize their technical and administrative personnel among member states without limitations.

Export Products	2001	2002		2003		2004		2005+
Traditional Exports
Sugar	110.8	122.4		132.3		140.5		118.0
Rice	50.2	45.5		45.3		55.1		46.2
Bauxite	61.0	35.2		40.4		44.7		62.8
Gold	127.0	136.2		130.9		145.1		111.9
Timber (Raw & Sawn)	16.1	24.3		19.7		30.3		39.9
Total Traditional Exports	365.1	363.6		368.5		415.7		382.8
Non-Traditional Exports
Seafood	49.3		52.6		53.9		58.3	62.02
Wood Products	21.0		11.7		11.9		16.7	12.5
Plywood	16.9		11.1		11.0		14.6	9.7
Other Wood Products	4.1		0.6		0.9		2.1	2.8
Non-Traditional Agriculture	13.9		15.8		15.8		16.6	14.9
Rum and Spirits	7.9		9.0		7.9		6.2	5.3
Processed Foods	5.3		5.6		5.5		6.0	7.3
Fresh Fruits & Vegetables	0.7		1.2		2.4		4.4	2.3
Light Industry	15.5		17.2		11.0		11.4	7.4
Diamonds	13.3		20.0		29.9		48.8	43.6
Other	9.0		10.5		10.4		10.5	12.6
Total Non-Traditional Exports	122.0		127.8		132.8		162.2	153.0
Total Exports*	487.1		491.5		501.4		577.9	535.8
Share of Non-Traditional Exports	25%		26%		26.5%		28%	28.5%
Source: Bank of Guyana, Statistical Bulletin 2005 *Does not include Re-exports +2005 data is provisional

Trade
Guyana is one of the most open economies in the Caribbean, and exports, amounting to over 90 percent of GDP, play a large role in the economy. Primary export markets include CARICOM (33 percent), Europe (19 percent), Canada (17 percent) and the U.S. (15 percent). In 2005, exports amounted to US$535 million (excluding re-exports). While slightly lower than 2004—which involved a significant increase—2005 exports maintained the overall export growth trend observed since 2001. During that time, many sectors enjoyed robust growth, with higher market prices contributing to export values. Table 1.2 reflects Guyana’s shift away from its traditional sectors (e.g. sugar, rice, bauxite, gold and timber) as a source of income and export earnings. While most traditional export sectors continue to grow, their contribution, as a share of total exports, is slowly declining. Table 1.2 also shows an increase in value-added exports such as manufactured wood products (e.g. flooring, molding, furniture, etc.) and processed foods. Although export performance in the manufacturing industry has been lackluster, recent investments to expand garment production promise significantly increased exports. Seafood has experienced solid export growth. With ongoing national initiatives to strengthen the value-added manufacturing and non-traditional agriculture sectors, it is likely that the trend towards export diversification will continue.

Investment
Guyana has recently experienced a dramatic increase in both foreign and domestic investment. Records from GO-Invest, which is responsible for tracking both foreign and domestic investment, show that investment listed by the agency exceeded US$340 million in 2005, a seven-fold jump from investments in 2004 and 2002, and a four-fold increase from investments in 2003. Foreign direct investment facilitated by GO-Invest exceeded US$250 million or 73 percent of total investment in 2005, led by investments in the food products (agriculture and seafood/fisheries), wood products, mining and ICT sectors.

Figures 1.2 and 1.3 show these investments by the value and number of projects per sector. Of the 141 projects, approximately two-thirds consisted of new activities. About one-third of these projects involved foreign investors (including joint ventures), primarily from Asia, the Caribbean and North America. By value, the food products, mining and wood products sectors attracted the most investment. It should be noted that investments in food products focused on a range of product groups including sugar and rice processing, seafood, fruits and vegetables, poultry, meat, dairy and animal feed.

Across the board all sectors experienced a large increase over 2004 investment totals. For example, total food products investment increased 15 fold compared to 2004, while wood products investment jumped more than 23 times. While relatively small in comparison to other sectors, the investment in ICT (US$27 million in 2005) reflects an ongoing trend in IT-enabled services, with a more than two-fold increase in ICT investment over the previous year ($12 million). Although some jumps in investment represent one-off or cyclical projects, the across the board increase suggests that Guyana may be entering a period of growing investment in the short to intermediate term. This increase in investment shows the fruits of recent improvements in the operating environment, economic stability, investment promotion efforts on the part of GO-Invest, and the realization on the part of investors that investing in Guyana can be rewarding.