Man­u­fac­tur­ers seek level-play­ing field on cheap im­ports

Made in PNG - - CONTENTS -

Cheap im­ports into Pa­pua New Guinea are pos­ing an in­creas­ing threat to lo­cal pro­duc­ers, with re­ports of for­eign com­pa­nies ‘dump­ing’ goods in PNG or un­der-declar­ing the value of im­ports.

Cheap im­ports into Pa­pua New Guinea are pos­ing an in­creas­ing threat to lo­cal pro­duc­ers, with re­ports of for­eign com­pa­nies ‘dump­ing’ goods in PNG or un­der-declar­ing the value of im­ports.

Im­ports are es­sen­tial for any econ­omy to func­tion prop­erly, but dump­ing—the im­por­ta­tion of goods at or below their cost of pro­duc­tion—is caus­ing headaches for some of PNG’s pro­duc­ers.

The Gen­eral Man­ager of Goodman Fielder’s op­er­a­tion in PNG, Peter Tan­nahill, es­ti­mates the com­pany loses sig­nif­i­cant sales vol­ume as a re­sult of cheap and in­fe­rior flour im­ports.

When flour is trans­ported in con­tain­ers across the oceans and then sits on wharves for an ex­tended pe­riod of time, it starts to de­te­ri­o­rate, he says.

‘We have a lot of flour that comes in, and quite hon­estly peo­ple get lured into buy­ing it at very, very cheap prices. Of­ten it’s be­cause over­seas sup­pli­ers are try­ing to clear it be­cause they’ve car­ried it for a cou­ple of weeks or a cou­ple of months and its start­ing to de­te­ri­o­rate. So, they start dump­ing it in the mar­ket, and it causes ab­so­lute chaos.’

Rice pro­ducer Greg Wor­thing­ton-Eyre from Trukai In­dus­tries sees blended va­ri­eties, ‘bro­ken’ rice used in desserts, and the threat of cheap rice from Thai­land as chang­ing the dy­nam­ics in the lower end of the mar­ket.

He says the Thai gov­ern­ment has been buy­ing and stor­ing rice worth about US$ 25 bil­lion, ex­pect­ing prices to rise.

Im­pact on live­stock

While he does not re­gard it as dump­ing, Phil Leahy, Man­ag­ing Di­rec­tor of Ze­nag Chicken, says the im­por­ta­tion of cheap poul­try has meant Ze­nag will be wind­ing down its chicken farm­ing and pro­cess­ing sec­tion.

An­other chicken pro­ducer, Main­land Hold­ings-owned Tablebirds, is also af­fected by cheap im­ports, ac­cord­ing to its Cor­po­rate Af­fairs and Re­search Man­ager, Dr Keith Gal­gal (see box above).

Michael Kingston, Gen­eral Man­ager of in­dus­trial sup­plies man­u­fac­turer K K Kingston, says cheap im­ported toi­let pa­per is the main prod­uct cat­e­gory af­fect­ing his business.

‘Toi­let pa­per is also used by some com­pa­nies to top up a con­tainer, they are then happy to dis­trib­ute it in the mar­ket very cheaply,’ he says.

Mean­while, Stan Joyce, Gen­eral Man­ager of S P Brew­ery—PNG’s only ma­jor brewer—points out that ex­cis­able prod­ucts such as beer are pro­tected from cheap im­ports or dump­ing. Nev­er­the­less, he is adopt­ing a wait-and-see at­ti­tude to­wards its re­cently-launched Heineken brew ‘as to whether or not peo­ple try to do that to us.’

Fall­ing tar­iffs threaten sec­tor

While he ac­knowl­edges that im­ports are an in­evitable part of the com­pet­i­tive land­scape—and, in many in­stances, in the best in­ter­ests of con­sumers—Murray Woo, Chair­man of the Man­u­fac­tur­ers Coun­cil of PNG, says his mem­bers want a level play­ing field, so they can com­pete ef­fec­tively and to con­tinue to pro­vide em­ploy­ment to Pa­pua New Guineans.

The high cost of do­ing business makes things hard enough for man­u­fac­tur­ers as it is, but an area of par­tic­u­lar con­cern is fall­ing tar­iffs. Un­der APEC, of which PNG is a mem­ber, tar­iffs are due to dis­ap­pear al­to­gether by 2020.

‘We don’t want tar­iffs to come down any fur­ther. They’ve al­ready dropped by about 80% since the 1990s,’ says Woo.

‘Even with tar­iffs av­er­ag­ing 20%, im­ports are still typ­i­cally 15% cheaper as it is.’

Woo be­lieves a com­pro­mise would be to re­duce tar­iffs on those goods PNG doesn ot pro­duce, which would de­liver lower prices on many im­ported goods, while still sup­port­ing lo­cal in­dus­try.

Port Moresby docks

Credit: PNG Ports

Port Moresby docks

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