Local industry feels pinch, sends SOS to govt


Papua New Guinea’s Prime Minister Peter O’Neill is upbeat about creating thousands of new jobs for Papua New Guineans in the coming years.He, according to the PNG’s private sector, seems think he has the right recipe to create more jobs for young Papua New Guineans leaving the school system.

But the engine for growth—the private sector—is not so sure about the claim.
Top private sector chiefs say the lack of government action to protect the local industry is posing a serious threat to thousands of jobs now held by Papua New Guineans in the private sector.
Furthermore, it is stopping the creation of many new jobs for young Papua New Guineans leaving school and preparing to enter the work force.

This is despite all the hype about the Papua New Guinea economy growing at a rapid pace and creating new jobs as a result of the billion dollar-kina liquefied natural gas project in the Hela Province.
The reality is that many companies are finding it difficult to do business in PNG because of the high costs involved.

Certain industries in the manufacturing sector are now facing difficulty against an avalanche of imports which are being retailed at much cheaper prices in the PNG market.

For example, Papua New Guinea’s largest soft drink manufacturer Coca-Cola Amatil (CCA) has appealed to the government to help the local soft drink industry, which it says, is being seriously affected by the onslaught of imported soft drinks from Asia. CCA employs around 900 workers throughout PNG.

The poultry industry, which directly employs around 4,000 people, is also feeling the effects of imports of Australian poultry products which are being retailed at much lower prices than the local product.
PNG’s only sugar producer Ramu Agri-Industry which employs 4,000 Papua New Guineans is also facing stiff competition after the O’Neill Government decided to slash tariffs for imported sugar. Ramu Agri-Indusry says it lost 31.5 percent of sales since the government slashed import tariffs on foreign sugar.

The local industry has already informed the government of the serious threats it is now facing and warned it could start laying off workers unless the government addresses the issues it raised with Waigani.
PNG Minister for Trade, Commerce and Industry Richard Maru has already informed his cabinet colleagues and especially the Economic Ministerial Committee of the dire consequences of not acting swiftly to ensure the local industry survives and thrives.

PNG governments since 1995 have liberalised import tariffs, allowing imports into the country and being retailed at much cheaper rates than the local industry, which employs thousands of Papua new Guineans.
Whilst allowing imports to flood the local market, PNG governments have made no improvements to help established local industry.

This failure to help reduce the cost of doing business is taking its toll on some leading PNG companies.
Coca-Cola Amatil (PNG) some time ago announced a K300 million plan to improve its manufacturing facilities in PNG over the next three years.

Its general manager Peter Carey said the company remains committed to the plan but will continue to assess current developments in the PNG soft drink market.

CCA, which has already raised its concerns with O’Neill, says with the way the soft drink ‘war’ is going, it is finding it increasingly difficult to compete against the pricing of imported soft drinks.
Carey said while importers of soft drink pay the 12.5% tariff on the sugar content in its products, CCA pays 35% tariff for the sugar it imports for the manufacture of Coke and its other soft drinks.

Stanley Leahy, president of the Poultry Industry Association, said the effect of dumped poultry products on PNG’s commercial poultry producers has been harsh.
He said all major producers are operating well below capacity.

“ The consequence has been job losses and the shelving of major investment projects. Tablebirds recently laid off 200 out-growers and shelved an K80 million investment project in Port Moresby.”
At least one politician is concerned about what is happening to the industry in PNG.

The Member for Goroka in the Eastern Highlands Province, Bire Kimisopa has called on the government to immediately establish a parliamentary bi-partisan committee on business impediments and begin the process of identifying the high cost structure that is prevalent in Papua New Guinea.

“It must propose on behalf of our businesses the way forward in terms of the types of exemptions and concessions they need, relevant taxation issues, and review all the statutory regulations pertaining to business, determine appropriate legislative support and more importantly, suggest types of reform that will assist the manufacturing sector so that it remains competitive in this country,” said Kimisopa.

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