The quest to attract more Foreign Direct Investment (FDIs) into the economy has brought up the need for the country to build a strong capacity in negotiating contracts that will protect the local interest.
The General Secretary of the Maritime and Dockworkers’ Union of the Trades Union Congress (TUC), Mr Daniel Owusu-Koranteng, said the global business environment was becoming very competitive and complex and the country must, therefore, learn from its past mistakes in negotiating contracts that have not benefited it in the long run, with particular emphasis on mining investments.
“Ghana is opening up the national economy for FDIs and we need to build strong capacity for contract negotiations in protecting our national interest as a sovereign nation,” he said.
He added that the gap between the negotiating capacity of investors and the country’s representatives helps investors to negotiate favourable agreements, including tax concessions which help multinationals recover their investments within a short time.
“There is a thin line between liberalisation and sell-out. Generous tax concessions do not benefit the nation in the long run and we should make respect for human rights, especially respect for labour rights, a strong condition in contract agreements,” he told the GRAPHIC BUSINESS on April 24.
Citing the mining sector, he said the country had similar situations in the sector which cost the nation.
“The legislators need more information on such issues. We need people with expertise on negotiating such contracts to share experiences with the legislators so we can have discussions based on knowledge.
“If you look at, for example, contracts in the mining sector, you will realise that the legislators were not adequately informed,” he observed.
Worrying trend
Industry players have expressed concern about the rate at which tax concessions are given out to foreign investors, which often inure to their benefit, much to the detriment of the country.
He said, for instance, the tax waiver on the Government of Ghana’s contract with the Meridian Port Services Limited to run the Tema Port on a 20-year concession agreement has been a source of concern to many industry players.
He said the project applied for a tax waiver of US$982 million and Parliament granted an US$832 million tax waiver.
“The source of the controversy is that you have an investment of about US$1.5 billion and then a tax break that will inure to the benefit of the company of about US$824 million. If we don’t take care, tax concessions will actually erode the benefits that we want to reap as a nation,” he said.
He explained that although there was a possible scenario of employment generation through FDIs, the fiscal regime of the contracts was very important.
“I wouldn’t say we are not getting value for money, but I am expressing worry about the tax concession being on the higher side.
“The public is not privy to the whole contract, especially when Parliament has passed it. But as a nation, we need to have very good negotiators who can look at these contracts going forward,” he asserted.
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