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Bureaucracy a deterrent to investment – report

…but foreigners find climate more attractive

The World Bank's 2006 Index of Economic Freedom has reported that some sectors of the Guyana economy, such as utilities and other State-owned industries, are highly regulated, and the bureaucracy is extensive.

It referred to a US Department of Commerce report which stated: “Bureaucratic procedures are cumbersome and time-consuming.

“Decision-making is centralised and businesspersons, both Guyanese and foreigners, say it is often difficult to know who the decision-makers are on a given issue or what the rationale was for decisions made. One of the biggest obstacles in establishing a business is navigating land deeds and title registries. Getting clear title to land is one of the most frequent administrative difficulties for prospective businesses.”

In addition, businessmen complain that “Government officials have solicited bribes as a prerequisite for the granting of licenses and permits needed to operate their businesses.”

The report said Guyana 's fiscal burden of government score is 0.3 point worse in 2006 on a scale of one to five which, as a result, has made the country's overall score to be 0.03 point worse this year.

According to the Economist Intelligence Unit, the ruling PPP/C and main opposition PNCR remain suspicious of each other and have been unable to reach compromise even on minor issues.

The country still depends heavily on foreign aid, the report said.

It was noted that the government has implemented some structural reforms in the fiscal and procurement process under an agreement with the World Bank and the International Monetary Fund (IMF) and plans to use more aid funds on infrastructure and social spending aimed at alleviating poverty.

Severe flooding of coastal areas in 2005 led to extensive crop losses and major infrastructure damage and is also bound to have a profound impact on fiscal restraint, the report said.

Guyana 's trade policy score is rated at 4.0 by the Index of Economic Freedom.

The World Trade Organisation reports that “ Guyana applies import licensing requirements on a relatively large number of products [including] some important products of national industries, such as rice and cane sugar, and some of the most significant imports.”

The US Department of Commerce reports delays and accusations of corruption in customs. Based on the revised trade factor methodology, Guyana 's trade policy score is unchanged.

Guyana 's foreign investment policy garnered a score of 3.0 on the scale of one to five.

The report said that although Guyana 's investment regime can be bureaucratic, non-transparent, and slow, it is becoming more attractive to foreign investors.

According to the US Department of Commerce, although Guyana has been moving toward a more welcoming environment for foreign investors, the government remains cautious about approving new foreign investment and encourages joint ventures with the government.

The IMF reports that both residents involved in exporting activities and non-residents may hold foreign exchange accounts. Payments and transfers are not restricted.

The IMF reports that, while most capital transactions are unrestricted, all credit operations are controlled.

Guyana 's Constitution guarantees the right of foreigners to own property or land.

Banking and finance received a score of 2.0.

The report said Guyana 's banking system is becoming more competitive but remains underdeveloped and hindered by few sound lending opportunities.

According to the Economist Intelligence Unit, non-performing loans have fallen sharply as a percent of total lending, from 37 per cent in 2002 to 18 percent in 2004.

However, the improvement is largely due to debt write-offs and some banks remain burdened by bad debt.

The IMF reports that banks must obtain approval from the Ministry of Finance before lending to non-resident enterprises.

The report stated that Guyana 's judicial system is often slow, inefficient, and subject to corruption.

Quoting from the US Department of State, it stated: “The Constitution provides for an independent judiciary, but law enforcement officials and prominent lawyers questioned the independence of the judiciary and accused the government of intervening in certain cases.”

In addition: “Delays in judicial proceedings are caused by shortages of trained court personnel and magistrates, inadequate resources…occasional alleged acts of bribery, poor tracking of cases, and slowness of police preparing cases for trial.”

The Index of Economic Freedom stated that Guyana has a large informal market.

It was noted that the US Department of State's International Narcotics Control Strategy report indicated that the informal economy, driven largely by drug proceeds, could be equivalent to from 50 per cent to 60 per cent of formal sector economic activity.

Kaieteur News