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Report lends to exporting services, widening sector

Stabroek News, Guyana

Report lends to exporting services, widening sector

22 March 2007

A report on the services sector released on Monday, revealed that computer-related and environmental services have high export potential, while communication, road transportation and tourism-related services are best reserved for domestic supply.

The study, entitled ’Guyanese Services: Opportunities for Increased Economic Growth and Trade Liberalization’ was conducted by USAID, through Carana Corporation the implementing body of the Guyana Trade Investment Support (GTIS) project, in collaboration with the Ministry of Foreign Trade and International Cooperation (MOFTIC). The final report was presented at the Foreign Services Institute on Monday.

MOFTIC Minister Dr Henry Jeffrey told those gathered that the country needs to diversify from agriculture and to only remain in areas where it is competitive.

He said this in the light of eroding preferences, where agriculture producing regions are being given transitional periods to diversify or become competitive as trade preferences are removed.

"We need to move into the services sector," the minister said, and to find areas to be competitive. He said the study will provide a framework as the country moves into trade liberalization negotiations, such as the Economic Partnership Agreement negotiations with the European Union, with Caricom and the Dominican Republic and with Central America

Ann Casanova, of GTIS/Carana, who presented the report’s principal findings said the services sector was bigger than official estimates show, since business services not captured - are the largest contributors to the services trade.

Casanova also noted that the services sector is already engaged in international trade, but it is not "labeled" as international services trades.

According to the report, the services sector is creating jobs and in 2005 recorded 2,201 jobs, but this job creation was not classified as services. Services are probably be closer to 50% of GDP and 50% of all new jobs, the report said.

Although Guyana was said to be already open to services trade, the country lacks legislation in some key areas such as architecture and engineering.

The mandate given to those carrying out the study was to provide focused and technical support to inform and guide the participation of the Guyana government in external negotiations in services. It also had to review the extent to which services could be liberalized.

According to the report, services with high export potential needing foreign investment include research and development, communication - audiovisual, environmental - energy, financial - insurance and insurance-related and banking.

Other areas with high potential for export needing foreign investment include health - social - hospitals; recreational; cultural and sporting - entertainment; news agency; libraries; archives; museums and transportation - maritime, internal waterway, air and all modes of transport.

The report also noted some non-sensitive areas with low export potential such as rental/leasing without operators; courier; construction and related engineering; retailing and franchising in distribution; and primary, secondary and higher education.

The areas which were termed sensitive and best for local supply included postal (state-owned corporations); telecommunications; audiovisual; tourist guides and road transportation; along with professional, real estate and other business services.

In May 2006, GTIS received a request from the government and the MOFTIC to undertake the study against the backdrop of Guyana’s active participation in the current external trade negotiations. These negotiations are the World trade Organization (WTO), the CARIFORUM-EU Economic Partnership Agreement and the Caricom-Dominican Republic Free Trade Agreement.

It was noted during consultations for the project that it was apparent that many service providers did not even know that they are in fact engaged in exporting or importing services.

It was further noted that there is much confusion as to what is services trade and there is limited recognition of the critical role services plays in the economy.

Companies operating in professional services, especially legal, accounting, architectural, engineering and nursing have the largest share of service providers.

GTIS is a joint Guyana government-United States government project launched in July 2004 through USAID to help non-traditional export producers access markets. There is a grant component of GTIS and a technical component and the project is expected to run a little over four years.

Over the years GTIS was actively involved with non-traditional agriculture products, woods, aquaculture and tourism. The report is expected to stimulate additional growth for these service providers.