Guyana: General Business Law Practice Area Overview for Chambers Global 2020
Economic UnderdevelopmentIn order to understand the current state of business in Guyana, and by extension, the legal framework applicable, it is necessary to consider some aspects of economic development.
Guyana, occupying an area of approximately 215,000 sq. kilometres on the northern coast of South America, is larger in area than Great Britain. With a population of approximately 750,000 people, however, there is limited scope for the exploitation of the potential or resources available.
Guyana’s access to the Atlantic Ocean has the potential to facilitate significant movement of goods from the northern states of Brazil, via the Atlantic, and back into Brazil, offering the potential for development of massive tracts of northern Brazil and southern Guyana.
The available arable land in Guyana could, as has been mooted for decades, offer a breadbasket for the entire Caribbean.
Recently, Guyana has entered the world stage as one of the newest and most promising producers of petroleum, with known reserves of light sweet crude oil with an estimated production value of 6 billion barrels.
All of this potential, estimated and ascertained, requires significant capital and human resources to exploit, both of which are limited.
Guyana additionally has in the past been hampered by an unstable political system fraught with ethnic insecurities and rigged elections.
The consequence of the foregoing is the significant economic underdevelopment of the country. Capital investment has been restricted because of the risk involved to external investors. The cycle of underdevelopment cannot be broken as a result of the underutilization of resources and the risk involved in capital investment.
Limited development opportunities result also in significant brain drain, which has historically hampered human resource development.
Discovery of Oil
Approximately a decade ago, the Guyana-Suriname Basin, the offshore economic zone north of the Atlantic Coast of Guyana and Suriname, was identified by the US Geological Survey as having significant potential recoverable petroleum and gas reserves.
In 2015, a consortium of international oil and gas companies, including Exxon, Hess and CNOC announced the successful discovery of a reserve of petroleum in the Stabroek Block offshore Guyana that they had been exploring.
To date, there have been several viable wells discovered, totalling a reserve of 6 billion barrels.
The high value of petroleum reserves offers the possibility, both directly and indirectly, of economic development on a scale that is beyond any conceivable projections prior to discovery.
Direct income projected as a result of exploitation of petroleum resources is estimated to push Guyana’s GDP growth in excess of 30% within the next 5 years. An influx of capital both to the government directly from oil income and resulting from taxes on services to the industry and to local service providers. This will increase the potential for exploitation of other natural resources.
The increased value of the economy as projected will also attract the desperately needed human resources necessary to provide the backbone of economic development in Guyana.
Economic Development and the Business Environment
Guyana’s current legislative framework consists of a mix of newer legislation along with legislation inherited from the British prior to Guyana’s independence in 1966.
Acts such as the Bills of Sale Act can be traced back to the UK act of the same name first passed in 1878! Changes since then have been minor.
Our Companies Act has a somewhat newer vintage, dating to 1991.
In our experience, the mix of ancient and (relatively) modern legislation can present a few difficulties. For example, the Consumer Affairs Act introduces the concept of protection of data in very limited fashion, but we have no comprehensive legislation that recognizes a modern electronics and data driven world.
Another difficulty that faces many businesses is the lack of available analysis of labour laws and regulatory rules for various businesses such as food handling or manufacturing, or guidelines for accessing services.
We at Cameron & Shepherd have provided guidance to our clients in many of these areas, specific to their needs. However, the lack of coherent policy documents and resources hamper the development of business opportunities.
The laws applicable to the development of business run the gamut from income and corporation tax laws, banking (which concern, in some respects, the external flow of income generated in Guyana), incorporation and business practices, competition and fair trading and labour laws.As noted previously, some of the newer laws, such as the Competition and Fair Trading Act and Consumer Affairs Act, do deal in some measure with newer concepts applicable in a more connected and electronically driven world.
However, we have issues from time to time in advising clients where there are significant lacunae in legislation. The licensing of software across borders, for example. What are the taxation issues that arise? Or games of chance where there is a non-monetary prize.
While the existing legislative framework is functional at this time with respect to businesses, it is clear that a deeper consideration of the issues that will arise as development progresses swiftly in Guyana is critical for the passage of new legislation in the business law arena.