Guyana’s FDI surges by 64 per cent in 2023

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–ECLAC points to tax incentives, streamlined regulatory processes, investment in critical infrastructure as impetus for growing interest

IN a year when many of its sister nations grappled with dwindling Foreign Direct Investments (FDI), Guyana stood out as a pillar of hope for the region, drawing the eyes of investors worldwide and recording a staggering 64 per cent increase in Foreign Direct Investment (FDI) in 2023.

This was according to the 2024 edition of the “Foreign Direct Investment in Latin America and the Caribbean” report by the Economic Commission for Latin America and the Caribbean (ECLAC), which shows Guyana bucking the regional trend of decline. “Guyana has attracted large FDI inflows since 2017 when resources related to the discovery of the Stabroek Oil Block started flowing into the country. In 2023, there were inflows of US$7.198 billion, a 64 per cent increase over 2022, positioning Guyana as the sixth-largest inward FDI recipient country in Latin America and the Caribbean that year. Guyana’s FDI inflows now represent a significant portion of the overall increase in the Caribbean, which saw a 28 per cent rise in FDI, largely attributable to the booming investments in Guyana and the Dominican Republic. Contrasting Guyana’s growth, the broader Latin American and Caribbean region experienced a challenging year for FDI. The region saw a 9.9 per cent decline in FDI inflows, amounting to US$184.3 billion. This decrease was mainly driven by substantial drops in Brazil and Mexico, the largest recipients of FDI in the region. However, Brazil experienced a 14 per cent decline, while Mexico saw a 22.8 per cent reduction in FDI inflows, primarily due to the extraordinary inflows from large corporate mergers and restructurings in the previous year.

NATURAL RESOURCES DRIVE GUYANA’S FDI RUSH Guyana’s impressive FDI growth could be largely attributed to its burgeoning oil and gas sector. The country’s vast reserves have positioned it as a critical player in the global energy market, attracting significant investments from multinational corporations. The report found that these investments are not only boosting the local economy, but also enhancing the country’s infrastructure and technological capabilities. The natural resources sector also continues to be a magnet for foreign investment in Guyana, with the country capitalising on its rich oil and gas deposits. The influx of capital into this sector has been pivotal in driving the overall increase in FDI inflows, reinforcing Guyana’s status as a key destination for energy-related investments. While the natural resources sector remains dominant, there has been a notable increase in investments in the local manufacturing industry.

The ECLAC report highlighted that manufacturing FDI in the region grew by nine per cent in 2023, reflecting a strategic shift towards building local production capacities and integrating into global supply chains. Guyana’s manufacturing sector, although still developing, is beginning to attract foreign investors looking to capitalise on the country’s favourable investment climate and lower labour costs. This trend aligns with broader regional patterns, where nearshoring and friendshoring are becoming increasingly attractive strategies for multinational companies. According to the report, Guyana’s success in attracting FDI can be attributed to several strategic factors. The People’s Progressive Party/Civic (PPP/C) government has implemented policies aimed at creating a conducive environment for foreign investors. The report found that policies such as tax incentives, streamlined regulatory processes, investment in critical infrastructure, and establishment of special economic zones has provided an added impetus for investment, particularly in sectors such as manufacturing and services.

The positive trajectory of FDI in Guyana also reflects the country’s proactive approach to international engagement. By participating in regional and global economic forums, Guyana has successfully positioned itself as a viable investment destination. This has been complemented by efforts to enhance transparency and governance, thereby boosting investor confidence.

SUSTAINING MOMENTUM Looking ahead, sustaining the momentum in FDI inflows will require continued focus on policy innovation and economic diversification. While the natural resources sector will remain a cornerstone of Guyana’s FDI strategy, there is significant potential for growth in other areas. The government is keen on developing the renewable energy sector, leveraging the country’s vast natural resources to attract green investments.

The report said that it aligns with global trends towards sustainability and could position Guyana as a leader in renewable energy within the region. Enhancing the skills and capabilities of the local workforce will also be critical in attracting high-value investments. By investing in education and technical training, Guyana could build a robust talent pool that meets the needs of foreign investors, particularly in advanced manufacturing and technology industries. Since the discovery of oil, Guyana has attracted significant attention from the international community, and the government is harnessing this interest to showcase the country’s capabilities of addressing pressing global challenges. With an impressive average economic growth rate over the past three years, Guyana stands out as one of the fastest-growing economies globally. In 2023, Guyana recorded a Gross Domestic Product (GDP) growth rate of 33 per cent, making it one of the fastest-growing economies globally. The heart of Guyana’s economic success lies in its strategic management of its burgeoning oil industry.

President, Dr. Irfaan Ali has said that Guyana’s intention is to leverage its oil discoveries to foster strong global leadership in these critical areas. Of particular importance is Guyana’s commitment to forest conservation and its role in combating climate change. In February, Parliament approved the historic $1.146 trillion budget which aims to accelerate the improvement of the lives of Guyanese. It was the third budget that would benefit from financing from the proceeds of Guyana’s growing oil and gas sector. The National Assembly had approved the Fiscal Enactments Bill which balances immediate withdrawals and long-term savings from the National Resource Fund (NRF) which will support public infrastructure and social services development.

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