Thursday, June 19, 2008

QA11 investment will resuscitate dilapidated complex –Finance Ministry

QA11 investment will resuscitate dilapidated complex –Finance Ministry
-criticises SN report
Stabroek News news item. Wednesday 17 June 2008

The Guyana Government says it is firmly of the view that the planned investment of US$30M by QAII will result in new industries that will revive the previously dilapidated Sanata complex and will create over 600 jobs.

Its latest defence of the deal was contained in statement which criticized yesterday’s report in Stabroek News (SN) on the deal which was derived from a four-page statement that the Ministry issued on Sunday.

The statement yesterday took issue with the SN report for repeating the query by Sunday Stabroek business columnist Christopher Ram on whether a Cabinet paper had been submitted.

The Finance Ministry statement yesterday said that this was clearly addressed in the Sunday statement where it was said that the recommendation made by the Privatisation Board and approved by Cabinet contained the following language: “tax incentives being allowed by the Guyana Revenue Authority and Go-Invest provided they are allowed in law and subject to an Investment Development Agreement and in accordance with applicable practice”.

Yesterday’s statement said that under the institutional framework for privatization, the Privatisation Unit prepares papers and following endorsement by the board these are submitted to Cabinet for approval under the signature of the Minister of Finance, Ashni Singh who is also the Chairman of the Privatisation Board.

It pointed out that the approval arose from a meeting of Cabinet from which President Bharrat Jagdeo voluntarily excused himself, citing his friendship with one of the principals of QAII.

The statement yesterday also said that the SN report attempts to suggest that the need to amend the law arose solely to facilitate the concessions to QAII and sweeps aside the current deficiencies in the law by failing to publish what was in the Sunday press release as if to suggest that those shortcomings were unimportant.

The Sunday statement had said:
“Furthermore, Government has noted that the 2003 Amendment to Section 2 of the Income Tax (In Aid of Industry) Act contains a number of obvious deficiencies including:

* With respect to regions, specifically in section 21, paragraph (1)(a), subparagraphs (iv) (v), and (vi) are omitted [see above extract];
* With respect to economic sectors, specifically in section 21, paragraph (1)(b), subparagraphs (v) (vi) and (vii) are omitted [see above extract].

* Incorrect description and omission of regions, in section 21, paragraph (1)(a)(ii), Region 8 is described as Cuyuni-Mazaruni, which geographical description actually corresponds with Region 7, while Region 7 is omitted from the list [see above extract].

“The current Fiscal Enactments (Amendment) Act 2003, therefore, contains various inaccuracies and omissions in relation to both the sectors and regions identified. It was Government’s intent when the Act was amended in 2003 to maintain the element of pioneer industries. While the law sought to make this specific in terms of geography and sector, on both scores the law contains omissions and inaccuracies, and the lists articulated in the Act should have been illustrative and not exhaustive.

“Additionally, the current wording in the law does not provide for tax holidays for infrastructure projects (eg. the Berbice Bridge tax concessions which had to be provided for via special legislation, and the upcoming Amaila Falls Hydro project which would also very likely require concessions similar to the Berbice Bridge). “

Yesterday’s statement also notes that the issue of the cost of the lease which was previously raised by Ram was referred to again in the SN report. The Ministry said that on numerous occasions in the press the government had stated that the rent for Sanata was denominated in US dollars and is indexed for US inflation. It said that the Privatisation Unit had also provided examples from other privatizations and made it clear that the QAII rent was attractive when compared with other privatizations. It said that SN was still to acknowledge publicly the misleading assertions it had made on the rental issue.

It said that ultimately the question that has to be asked is whether these investments are a positive development for the country.

“Regrettably, Stabroek News has chosen not to discuss the merits of the investment, but instead to preoccupy itself with other issues. One would certainly hope that this apparent bias is not as a result of the launching of a new competitor newspaper which, incidentally, received no fiscal concessions”, the Ministry of Finance statement said yesterday.

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