VZCZCXRO4244
RR RUEHGR
DE RUEHGE #0405/01 1241451
ZNR UUUUU ZZH
R 041451Z MAY 06
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC 3445
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0295
RUEHDG/AMEMBASSY SANTO DOMINGO 1021
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 GEORGETOWN 000405 
 
SIPDIS 
 
SANTO DOMINGO FOR FCS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EMIN ELAB EFIN EAID BBSR BEXP GY
SUBJECT:  GUYANA ECONOMIC & COMMERCIAL ROUND-UP APRIL 2006 
 
Refs:  A. Georgetown 329 
 
Contents of April 2006 Guyana Economic/Commercial 
Highlights: 
 
¶1. Mining: Diamond, Bauxite Production Increase 
¶2. Trade: Guyanese Companies to Participate in Orlando Trade 
Fair 
¶3. Agriculture: Exports of Non-Traditional Crops High 
Despite 2006 Flood 
¶4. Financial system: Excess Liquidity, Declining Interest 
Rates 
¶5. Investment: Financing Deal for Teperu Quarry 
¶6. Transportation: Three New Airlines for Guyana by June 
¶7. Investment Climate: Parliament Passes Competition and 
Fair Trading Bill 
¶8. Legal Framework: Consumer Protection, Income Tax 
Legislation 
¶9. Statistic of the Month: Tax Evasion 
 
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Diamond, Bauxite Production Increase 
--------------------------------------------- ------ 
 
¶1. The Guyana Geology and Mines Commission (GGMC) recorded a 
significant increase in diamond and bauxite production for 
2006 compared to the corresponding period last year. The 
bauxite sector declared a production of 435,519 tonnes at 
the end of the first quarter when compared to 341,868 tonnes 
produced up to March 2005, an increase of 27 percent. The 
figures represent increased mining activity at Omai Bauxite 
Mining Inc. (OBMI) at Linden and the Bauxite Company of 
Guyana Inc. (BCGI) on the Berbice River. The GGMC also 
reported that 107,150 karats of diamond were produced for 
the first quarter, while 89,132 karats were produced for the 
corresponding period in 2005, an increase of just over 20 
percent. Gold production, however, declined from 41,390 
ounces in the first quarter 2005 to 40,224 ounces for the 
first quarter in 2006. However, GGMC expects production to 
increase, as several companies are currently conducting 
advanced exploratory studies to recover reserves. Guyana 
Goldfields in the Cuyuni River, Region Seven, and Strata 
Gold which operates at Tassawini in Region One have both 
projected reserves in excess of 1,000,000 ounces each. 
 
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Guyanese Companies to participate in Orlando trade fair 
--------------------------------------------- ------ 
 
¶2. Guyanese companies are expected to participate in the 1st 
Caribbean American Business Expo and Conference from June 1 
to 3 in Orlando, Florida. The Guyana Office for Investment 
(GOINVEST) is coordinating companies' participation as part 
of its efforts to showcase Guyana's products and promote 
investment. The Expo will take place at the Central Florida 
Fair and Exposition Park, and twenty-seven companies are 
expected to participate. Products to be exhibited include 
nibbi and wooden furniture, pharmaceuticals, leather and 
wooden craft, fresh and processed foods, gold and silver 
jewellery, basketry and leather footwear. In 2005, GOINVEST 
hosted and/or attended trade fairs in St. Lucia, Canada, the 
United States and Suriname. 
 
--------------------------------------------- ------ 
Export of Non-Traditional Crops high despite 2006 flood 
--------------------------------------------- ------ 
 
¶3. The New Guyana Marketing Corporation (New GMC) reported 
that approximately 861,198 kilograms of non-traditional 
crops were exported during January and February 2006 as 
compared to 519,842 kilograms for the corresponding period 
in 2005, an increase of 66 percent despite the floods of 
early 2006. Although traditional cultivating areas, 
including Crabwood Creek, Corentyne, Mahaica, Mahaicony, 
were affected by the flood, sourcing from other areas such 
as Linden and the Berbice River region facilitated the 
increase. Non-traditional export produce promoted by the New 
GMC includes watermelons, pumpkins, plantains, pineapples, 
eddoes, limes and dry coconut bound for markets in CARICOM, 
North America and Europe. The General Manager of New GMC, 
Nizam Hassan, also cited his agency's focus on farmers' 
training. One-hundred fifty farmers recently participated in 
a post-harvest training program coordinated by the New GMC 
and USAID's Guyana Trade and Investment Support (GTIS) 
project. 
 
 --------------------------------------------- ------ 
Excess Liquidity, declining interest rates 
 
GEORGETOWN 00000405  002 OF 003 
 
 
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¶4. Moen McDoom, chairman of The New Building Society (NBS), 
Guyana's leading mortgage bank, observed that the decline in 
the economy has contributed to a reduced demand for credit 
and has resulted in excess liquidity in the banking system 
at the bank's annual general meeting on April 24. According 
to McDoom, this has forced financial institutions to reduce 
interest rates on deposits. NBS interest rates have declined 
by 1 percent over the past three years while commercial 
banks have had a decline of approximately 0.08 percent. The 
chairman said this could lead depositors to seek other forms 
of security in foreign currency. Despite this however, NBS 
announced another successful year with a profit of G$365M 
(US$1.8M), while maintaining the lowest interest rate for 
housing loans in the financial sector. Maurice Arjoon, 
another NBS executive, also expressed concern over the 
liquidity situation and said that this is due to the sharp 
decline in private sector credit, coupled with cautious and 
conservative lending policy adopted by the commercial banks. 
He also cited an increased demand for GOG Treasury bills. 
NBS' mortgage lending reportedly peaked at $2.72 billion 
(US$13.6M) in 2005, which was described as a record 
achievement despite the floods earlier in the year, which 
had a negative impact on the housing sector. NBS anticipates 
that with the infrastructure development in new housing 
schemes, there is likely to be a greater level of activity 
in the establishment of new homes. 
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Financing deal for Teperu quarry 
--------------------------------------------- ------ 
 
¶5. The Guyana Bank for Trade and Industry (GBTI) provided a 
letter of credit valued at US$5.25M to BK International for 
the recommencement of quarrying operations in Teperu, Region 
Ten. According to media reports, in addition to the US$5.25M 
provided by GBTI, the company was contributing $350M 
(US$1.75M) and another US$5M is slated for the purchase of 
equipment. The number of staff on site is expected to 
increase from 40-plus to 110 persons. Mazaruni Granite 
Products Limited (MGPL), which previously operated the 
Teperu and Itabu sites, went into receivership in May 2003 
and thus removed competition from the sector, causing the 
remaining supplier to increase prices. At the handover 
ceremony, Prime Minister Samuel Hinds acknowledged 
unsuccessful attempts by other companies at quarrying but 
said ". that with efficient management and expertise the 
venture can be a successful one." The investment by BK 
International comes at a time when public and civil works 
are being tremendously hindered as a result of the shortage 
of cement and stones on the local market. 
 
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Three new airlines for Guyana by June 
--------------------------------------------- ------ 
 
¶6. More details have emerged about the three new airlines 
that received approval last month to begin operations in 
Guyana by June 2006 (Reftel). Caribbean Air Systems will 
provide a regional service connecting Guyana to Belem, 
Cayenne, Paramaribo, Port of Spain, Curacao, St Maarten and 
Santo Domingo. Travel Span Guyana Inc. will offer a direct 
service from Georgetown to New York. Meanwhile, E-Jet will 
service the Georgetown to New York and Georgetown to Toronto 
routes. The new airlines now have to process their 
permissions for the foreign destinations and develop their 
markets. 
 
 
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Parliament passes Competition and Fair Trading Bill 
--------------------------------------------- ------ 
 
¶7. The National Assembly approved the Competition and Fair 
Trading Bill on April 10 following consensus by a Special 
Select Committee set up in December 2005. The Bill is based 
on CARICOM model legislation developed in 2003 to ensure 
that there is harmonization of national competition laws 
within the context of CARICOM Single Market and Economy 
(CSME). Among main provisions and features of Bill are to: 
promote, maintain, and encourage competition and enhanced 
economic efficiency; prohibit anti-competitive business 
conduct which restricts competition or constitutes the abuse 
of a dominant position; and promote the welfare and 
interests of consumers. Although supported by the main 
opposition party, People's National Congress Reform, some 
opposition legislators argues that a few clauses could allow 
for abuse of the dominant market power. 
 
 
GEORGETOWN 00000405  003 OF 003 
 
 
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Consumer Protection and Income Tax Legislation 
--------------------------------------------- ------ 
 
¶8. The National Assembly passed the Consumer Protection Bill 
and the Income Tax Amendment Bill on April 20. The former 
aims to promote and protect consumers' interests in relation 
to the supply of goods and services and creates a Consumer 
Affairs Commission and a Consumer Protection Tribunal. The 
latter implements a Taxpayer Identification Number for use 
on all documents in the transaction of business with the 
Central Bank, the Guyana Revenue Authority and any other 
public agency. This is a part of a program that Crown Agents 
of the United Kingdom is implementing for the more efficient 
running of customs and income tax administration. 
 
--------------------------------------------- ------ 
Statistic of the Month: Tax Evasion 
--------------------------------------------- ------ 
¶9. On March 30 the Office of the Auditor General released 
its Report on the Public Accounts of Guyana for the Fiscal 
Year Ended 31 December 2004. Among the key findings: "In 
relation to the Internal Revenue Department, there were 
4,431 registered companies. However, only 468 submitted tax 
returns". 
BULLEN