Cost of black­outs, bribes in Guyana high­est in Caribbean

-IDB busi­ness sur­vey finds

Stabroek News Sunday - - REGIONAL NEWS -

Although the per­for­mance of lo­cal firms in Guyana, as mea­sured by sales growth, is the high­est in the Caribbean, power out­ages cost them more than their coun­ter­parts in the re­gion, while the per­cent­age paid in bribery is also the high­est in the re­gion, a new In­ter-Amer­i­can De­vel­op­ment Bank (IDB) study has found.

The study, ti­tled “Con­straints Af­fect­ing Guyana’s Pri­vate Sec­tor: Sur­vey Re­sults,” was uthored by Guyanese econ­o­mist Sukr­ish­nalall Pasha, along with El­ton Bollers and Mark Wen­ner of the IDB, who found that not only does it take longer for firms to ac­cess an elec­tri­cal con­nec­tion com­pared to their coun­ter­parts in the re­gion (104 days com­pared to an the av­er­age of 62 days) but lo­cal firms also are sub­jected to more power out­ages, with longer du­ra­tions.

Ad­di­tion­ally, the study said that while only a few firms in­di­cated that they were ex­pected to pay a bribe for var­i­ous gov­ern­ment ser­vices, those who said they did es­ti­mated the cost as 4% of their an­nual sales fig­ure.

This per­cent­age is “sig­nif­i­cantly higher than the re­gional av­er­age of 1.8 % and the high­est in the Caribbean,” the re­port ex­plains. It notes that the cost of bribes is rel­a­tively higher for busi­nesses in sec­tors such as ma­chin­ery and equip­ment (25 % of an­nual sales), fab­ri­cated metal prod­ucts (11.7% of an­nual sales), and whole­sale (10 % of an­nual sales)

The ser­vices to which bribes were at­tached in­cluded se­cur­ing an op­er­at­ing li­cence, elec­tri­cal con­nec­tion, tele­phone con­nec­tion, im­port li­cence, wa­ter con­nec­tion, and con­struc­tion per­mit.

Specif­i­cally, 1.9% of firms re­ported that they were ex­pected to pay a bribe to ob­tain an op­er­at­ing li­cence; 1.7% for an elec­tri­cal con­nec­tion; 1.7% for a tele­phone con­nec­tion; 1.7% for an im­port li­cence; 0.8% for a wa­ter con­nec­tion; and 0.8% for a con­struc­tion per­mit. Based on the sur­vey, ap­prox­i­mately 6.7% of the firms in­di­cated they were ex­pected to pay a bribe to ob­tain the con­tract, while 3.3% claimed they were ex­pected to pay a bribe to tax of­fi­cers.

Sig­nif­i­cantly, though few iden­ti­fied as having paid bribes them­selves, 34.45% of firms said they viewed cor­rup­tion as a ma­jor ob­sta­cle, while 43.7% con­sid­ered it a very se­vere ob­sta­cle.

Ad­di­tion­ally, lo­cal tax rates were ranked by lo­cal firms as a sig­nif­i­cant ob­sta­cle to their op­er­a­tions. The re­port posits that this is due to Guyana having one of the high­est cor­po­rate tax rates in Latin Amer­ica and the Caribbean and it notes that some stud­ies have found that the high tax rates mo­ti­vate busi­nesses to op­er­ate in the in­for­mal sec­tor.

Un­like with the sup­ply of power and cor­rup­tion, there is no com­par­i­son pre­sented of the tax rates in var­i­ous Caribbean coun­tries nor is there a com­par­i­son of the im­pact of tax rates as a con­straint.

Data for the study was sourced from the 2014 IDB Study of Pro­duc­tiv­ity, Tech­nol­ogy and In­no­va­tion (PROTEqIN) in the Caribbean.

The PROTEqIN sur­vey tar­geted 1,680 re­spon­dents drawn from Latin Amer­i­can and Caribbean Enterprise Sur­veys (LACES) 2011. It aimed to pro­vide feed­back from en­ter­prises that par­tic­i­pated in the pre­vi­ous round of sur­veys in 2011 and to cap­ture ad­di­tional in­for­ma­tion on firm per­for­mance, fi­nance, gen­der of own­er­ship and man­age­ment, use of pro­duc­tive de­vel­op­ment pro­grammes, and is­sues re­lated to man­age­ment style, in­no­va­tion, and crime.

How­ever, some of the Guyanese en­ter­prises in the PROTEqIN fi­nal sam­ple were not can­vassed for LACES 2011.

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