PNG Government Protects Local Industries

By: Andrew A
4th December 2017

The PNG Government has take a bold stand in protecting the local industries with an increase in tax for competing products.

These ‘Protectionary Measures” by Government will ensure that the local industries will thrive and be abel to have an upper-hand in competing with similar products from overseas.

Similar protection is offered to local beef suppliers and other agriculture based companies operating in Papua New Guinea which are partly owned by locals.

The revived Ilimo Farm which has seen an investment of K128m will employ over 150 fulltime staff and produced 13 million litres of dairy products. The dairy farm will produce a range of products from milk, yogurt, ice cream and other dairy snacks.

A similar farm will be setup in Lae

 

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The National

7th September 2017

THE Ilimo Dairy Farm in Central will cost about US$41 million (about K128m)  to complete, says National Planning Minister Richard Maru.
He recently visited the farm to see the progress.
The project is being developed by Innovative Agro Industry Ltd.
Ilimo Dairy Farm is located in the Kairuku-Hiri district of Central.
The shareholders equity partners of the project include IAI at 50 per cent, the government at 20 per cent and Central government owns 30 per cent.
Further financing, facilitated by IAI, is provided by Bank Leumi, of Israel. The farm is expected to create employment for more than 150 fulltime employees.
It is estimated that Papua New Guinea imports around 13 million litres of dairy products annually.
At full capacity, the Ilimo dairy farm will produce five million liters of dairy products annually, including fresh milk, flavoured milk, yogurts, icecream and other dairy snacks.
By replacing imports, the farm is expected to slash consumer prices by at least 40 per cent.
Maru was briefed about the construction phase, which is expected to be completed by November, with products on the shelves by next January.
The dairy cows have arrived from New Zealand and are at the facility.
“Putting cash into the people’s hard work is starting a programme of finalised inclusion,” he said.
“We need to engage our people now and stop the rhetoric of the inclusion slogan of ordinary hard working Papua New Guineans and inject much-needed cash into local economies.”
“llimo Dairy is scheduled to be completed within a short 12-month period, is yet another example of the government’s public-private partnership programme, which continues to create a wealth of opportunities for our people.
“We are helping our people to spend money locally while creating opportunities at the village level. In this particular partnership, IAI have proven once more that they are serious about developing the agriculture industry in Papua New Guinea.
“The government is deliberately investing in the dairy farm to reduce the importation of over K400 million in dairy products that Papua New Guinea imports
annually, which we can produce locally.
“Papua New Guinea will need a further three to four dairy farms of the same size as lllimo to produce enough volumes of dairy products to meet our needs.
“The government will be working with the Morobe provincial government to identify suitable land for the setting up of our second dairy farm in Lae depending on the success of the farm and processing plant at IIlimo.”

http://www.thenational.com.pg/ilimo-farm-ready-milk-opportunities-cut-imports-pleasing-says-minister-maru/

 

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Abel’s 100 DAY PLAN explained

100 DAY PLAN EXPLAINED IN PARLIAMENT

1st December 2017

The 100 Day, 25 Point Plan expires on the 2nd of December, and in the light of prevailing circumstances was and is intended to demonstrate proactive and inspire confidence and kick start the Alotau Accord II by understanding specific activities around.

  • MAINTAINING FISCAL DISAPLINE AND BOOSTING FOREIGN EXCHANGE
  • GROWING OUR REVENUES
  • STRENGHTENING OUR ECONOMIC BASE AND IMPROVING OUR GOVERNANCE and
  • ACTING STRATEGICALLY

 

These activities obviously roll into point 1 and 2of the 25 Point Plan which are the 2017 Supplementary and 2018 Budgets.

The intention of points 1 and 2 was to maintain fiscal discipline in the light of the prevailing difficult circumstances in terms of our budget parameters of 2.5 % fiscal deficit and debt to GDP of 30% so as not to put more stress on government financing and the economy.

A number of measures were undertaken to maintain the discipline but primarily as per Point 4, and thanks to the understanding of Honourable Members of this Parliament, the Service Improvement Program was reduced in 2017.

Pont 3 was related to payroll strengthening and the Ospeac (Organisation, Staffing and Personal Emoluments Committee) has been reactivates and is progressing a payroll audit and cleansing exercise and the NID registration requirements as explained by the Minister for Public service in Parliament. This is response to the primary cost escalation factor of Government which is the unsustainable growth in personal emoluments.

Point 5 was for;

  1. The drawdown of the balance of the Credit Suisse loan of which two technical requirements will have been met following the budget session enabling the final balance to be drawn.
  2. To access World Bank and ADB Budget support funding for the 2018 budget. This has been achieved following my trip to Washington where the world Bank will provide US$100m for debt restructuring in 2018 and another $100m in both 2019 and 2020. The ADB is also providing budget support commencing in 2018 for the health sector for up to US$300m commencing in 2018.

These measures provide financial resources at good terms and bring in foreign exchange.

 

Point 6 was for ;

  1. Oil search to provide a minimum of 50% of the crude oil needs to the Napanapa Refinery and in Kina terms. This has been achieved through an agreement and is happening.
  2. Transition to gas powered electricity – The Pom Gas 58MW electricity project has been approved by Cabinet and has commenced construction to provide the cheapest in the country power source using our own gas and all sales dominated in Kina. The power plant will be owned d by oil search and Kumul Petroleum with shares to be taken up by MRDC. The availability of domestic gas can catalyse other gas powered initiatives.
  • Rice production – the lrice quota scheme has been delayed and 3 large scale rice projects are being developed with 3 separate private sector partners and potential support in the 20187 budget through the Agriculture Commercialisation Fund.
  1. The Bank of Papua New Guinea intervention into the forex market was US$100m is done. The BPNG is now conducting a review on all foreign currency accounts and the oligations od those account holders, particularly resource companies to remit excess funds back to PNG.

 

Pont 7-  For non-tax revenue collecting agencies to remit 90%  of their revenues to CRF has commenced and with some immediate action with specific agencies and will be reinforced by the Public Money Management Regularisation Bill 2017approved by Cabinet and to be tables in conjunction with this budget.

 

Pont 8 and 10 – Relate to tax regime reform and this is being managed through the new Medium Term Revenue Strategy, developed in conjunction with the IMF and a new tax Administration Bill which I will bring shortly. Measures will commence in the Budget to tidy up the tax code and the BPNG, IRC, IPA and commercial banks and cooperating to enforce compulsory Tax Identification Number requirement for opening bank accounts. The commercial banks have agreed to provide information to the IRC regarding bank accounts. The commercial banks have agreed to provide information to IRC regarding bank account being operated in a business manner for further scrutiny. Significant funding support is provided in the 2018 budget for both the IRC and the Customs to boost capacity against quantified additional revenue collection

 

 

Point 9 – The establishment of the task force for IRC, Lands, Customs and Illicit Trade. Funding has been provided in the Supplementary Budget and the Attorney General, Labour and Immigration Ministers are leading the Customs and Illicit Trade, Lands Minister- the Lands task force and Treasurer – the IRC task force.

 

Point 11 – Progress of some significant resource development projects and Wafi Golpu, PNG LNG expansions, Papua LNG are all on track for early works, pre FEED or FEED in 2018. Western LNG has announced pre FEED works last month.

 

Point 12 – The launch of the new Australian DEFAT grant funded project, the PNG- Australia Economic and Social Infrastructure Program and ANGAU Hospital re-development design and still pending, and the TB project co-funded with the World Bank has had the financing documents executed already.

 

Point 13 – The power projects;

  1. The 58MW Pom Gas project construction has began
  2. The 30MW PNG Bio Mass project with Oil Search is in progress
  • The Ramu 2 180MW Project has had commercial close via a Cabinet decision but is pending financial close due to certain conditions precedent.
  1. Naoro Brown River Hydro Project is progressing with funding from the World Bank
  2. Hela Gas power solution is being negotiated with Exxon Mobil and Oil Search. In the meantime funding is provided in this budget to pull the powerlines from Mendi to Hides to provide the missing power and NBN telecommunications link to access power to communities from the Ramu Grid and surplus from the Tari existing generator.

 

Point 14 – Certain High Impact Projects

  1. The international submarine cable from the Australian Government has now offered to fund from Sydney to Port Moresby and Port Moresby to Honiara, PNG will own these 100% and 50% respectively and will substantially increase reliability and lower cost of data in PNG some 25 times.
  2. The Pacific Maritime Industrial Project has had a few financing agreements signed with the China EXIM Bank.
  • The Sepik Plains agriculture Project together with Baya Valley and the Central Plains are identified for large scale rice production as described earlier.

Point 15 – The commercial of the US$1 billion upgrade of the Highlands Highway of which the Project Management Unit has been established at Works and contracts have been advertised for supervisory contractors. Work will commence in 2018.

 

Point 16 – The Gerehu 3B Affordable Housing Pilot Project where 1762 allotments have been made available free to qualifying citizens. The earthwork has been completed and power and water services are being constructed. Together with the concessional funding at BSP, this will make housing accessible to ordinary Papua New Guineans and drive construction and employment. It can provide an example to duplicate in other centres.

 

Pont 17 – Commencement of the New Enga Provincial Hospital construction and Mount Hagen Hospital PPP redevelopment plan in 2018.

 

Point 18 – The ceasing of closed tender financing which Cabinet has approved and the bringing forward of the National Procurement Authority Bill which is ready to come back to Cabinet after changes were requested by Cabinet.

 

Point 19 – Requires audited accounts for SOEs and Statutory Authorities by Mid-2018.As treasurer it will be tabling all the reports for the Agencies under my responsibility as soon as they are cleared by Cabinet.

 

Point 20 – Have all prescribed Boards appointed. This is underway, particularly under the State Enterprise Minister and Agriculture Minister.

 

Point 21 refers to thr freeing up resource land owner benefits;

  1. The PNG LNG Land owners vetting issues are ongoing but royalty payments to the plant site land owners have commenced and it is anticipated to shortly resolve the pipeline first payments and the progress to conclusion the clan vetting at the gas fields.
  2. The Ok Tedi land owners CMCA and non-CMCA have funds held in trust that have been cleared by the courts and I am waiting on advice from the Justice Department to authorise some of the pending contracted works against those funds.

Point 22 – Proposed to suspend proposed amendments to the Lands Act, In the IPA Act, the Agriculture Investment Act, the Agriculture Administration Adjustment Act and the Mineral resource Authority and the Mining Act to allow further consultation. This has been done.

 

Point 23 – Refers to the National Energy Authority Bill. This should refer to the Petroleum Authority Bill which is being finalised in Parliament.

 

Point 24 – Refers to progressing the Population Policy and finding has been provided in the 2018 Budget under the Sustainable Development Program at Planning for this.

Point 25 – Refers to Medium Term Development Plan 3 to be published in 2018. This is a 5 year development plan and indicator targets for the government of the day which will incorporate the United Nations sustainable Development Goals.