OPIC-SUPPORTED INVESTMENT FUND IN THE REGION:

UNCLAS GEORGETOWN 000374

SIPDIS

PASS TO OPIC - JENNIFER RENEE DOHERTY, INVESTMENT FUNDS
OFFICER AND/OR JAMES F. HANSLEY, DIRECTOR, PRIVATE EQUITY

SIPDIS

E.O. 12958: N/A
TAGS: EINV OTRA OPIC GY
SUBJECT: OPIC-SUPPORTED INVESTMENT FUND IN THE REGION:
GUYANA'S RESPONSE

REF: STATE 57353


1. As requested in Reftel, Post has reviewed AIC
International Investments Limited's proposal and offers the
following feedback.


2. There is a need for capital in almost all sectors in
Guyana. Commercial banks are the main source for capital
funds. During 2005, the average lending rates at commercial
banks was 14.54%. There are no development banks for large
scale- investments. There are two small sources of
development financing for small to medium sized enterprises.
However, we do not see any particularly noteworthy
development impact.


3. Telecoms, power and tourism are areas where Post feels
that the AIC funds are in sync with the economic development
plans in Guyana. Currently, two American investors dominate
the Telecoms sector in Guyana. Guyana Telephone & Telegraph
Co., owned by Atlantic-Tele Network, has an exclusive
license to provide line telephone service and also has a
cellular license to operate in Guyana. Cel*Star, a new
entrant into the telecoms sector, operates another cellular
service. Both companies have publicly stated plans for
expansion in their telecom networks.


4. The power company, Guyana Power and Light, although owned
by the Government of Guyana, has recently announced its
plans to purchase power from independent power producers,
opening the window of opportunity for private firms to
become involved in this sector.


5. Currently tourism entities in Guyana are small family run
resorts and hotels. However, a number of these entities are
upgrading facilities to meet the needs of tourists and
sports enthusiasts visiting the Caribbean for World Cup
Cricket in 2007. In addition, the head of Guyana Office of
Investment recently mentioned the possibility of attracting
casino/hotels to the country, a suggestion that has prompted
some debate. This may be an area where foreign financing
will be sought in the future.


6. The "buy out strategy" proposed by AIC may be difficult
for the business class in Guyana to accept. In late November
2004, Trinidad conglomerate ANSA MCAL announced its
consideration of the possible acquisition of an interest in
Guyanese-owned distillery Banks DIH. From the time the
announcement was made, Banks DIH employees staged picketing
exercises outside the corporate offices of ANSA MCAL and the
Guyana Stock Exchange in Georgetown, citing the possible
loss of jobs as a consequence of the take over. Banners were
placed at strategic locations in the city imploring the
populace to support the company and encourage shareholders
to reject any moves for a take-over. The business
associations, including the Private Sector Commission and
the Guyana Manufacturers Association, issued statements to
the media with calls for the shareholders to be patriotic
and act in the national interest. However, some sections of
the Guyanese business community openly criticized actions of
Banks employees, positing that such actions create an
environment that discourages foreign investment in Guyana.


7. To Post's knowledge, neither the fund nor its principals
have been involved in any transactions in Guyana to date.

BULLEN