Economy in terrible shape, says businessman Chow

The National Business
Lae Biscuit Company Limited chairman Ian Chow highlights the economic challenges the company is facing since the Coronavirus pandemic. He said in the 52-year history of the company, the past two years had been the worst. However, the firm invested K15 million on a new biscuit line and is ready to export.
Ian Chow

By PETER ESILA
DESPITE what the Government is saying, the economy has been in terrible shape since the Coronavirus (Covid-19) pandemic came five years ago, according to a businessman.
Lae Biscuit Company Limited chairman Ian Chow said in the 52-year history of the company, the past two years had been the worst.
But the company invested K15 million on a new biscuit line, and is ready to export.
“We just put in a new biscuit line with a total investment of K15 million. It should have finished around February last year but because of no foreign exchange (forex) to pay, the project was delayed,” Chow said.
“It is in production now. We can make sweet biscuits and other snack for export, especially to Australia, New Zealand and the Pacific.”
He said Lae Biscuit “100 per cent supports PNG but the Government did not support us local manufacturers”.
In the last national budget, Chow said the Government “threw in some duty free on some input products but not enough to make the big difference”.
He told the PNG Customs Consultation Forum in Lae last week that his message was “simple and reflective of most long-term PNG manufacturers”.
“I can quickly give my comments on customs and trade related issues,” he said.
“PNG Customs is undoubtedly the best-run government entity that Lae Biscuit deals with. We do have problems and arguments but at least there are people in place to talk to and discuss.
“Customs does its best in collecting revenue for the Government. This is a good thing for the Government but for businesses, we don’t get much back for our taxes.”
He said the company’s 52 years of manufacturing, “not once did we receive any Government help or subsidies”.
A recent duty reduction did not cover “our packaging”.
“Fiji’s biscuit/noodle manufacturing competitors have established themselves as valued exporters to Australia, New Zealand, USA and all Pacific Island countries,” Chow said.
“I am the biggest complainer about how an island in the middle of Pacific can produce the same products as us, and then send it back to PNG to sell at the same price.
“Something is very wrong here!
“In early 2023, I was very vocal on the crashed PNG economy, and some great changes happened for some PNG manufacturers. Unfortunately not enough.
“In 2022, we imported over K58 million of raw materials and packaging. In 2023, it dropped to K31 million. This is not because we are incompetent at running our business. Lae Biscuit is a barometer of the PNG economy. We sell the cheapest food products in biscuit and noodles. We use to produce over 100-plus tonnes biscuits a day.”
He called it “absolute garbage” a recent story in a magazine claiming that PNG had become a “manufacturing success”.
“I don’t know who the PNG Manufacturers chairman has been talking to, but go talk to real manufacturers. We are all suffering and in pain. I am talking about real longtime established manufacturers and not the ones who import bulk products and
repack and then claim it as PNG made.”
Chow said for manufacturers to be successful, something must be done to guarantee a reliable power supply, saying his worst monthly fuel bill was K1.2 million.
He said either issues included “no water, no forex, a depreciating Kina value, no spare parts, no Government support or subsidies, high cost of raw materials, high cost of shipping and logistics, security, labour problems (uneducated, not motivated), taxes, cheap imports, law and order problems, Nadzab airport travel and delays, immigration and work permit problems”.
“The whole PNG manufacturing industry is flawed because the Government has ignored and done nothing in the past to assist (us),” he said.
He said one multinational food manufacturer told him that PNG had the distinction of having the “highest cost of manufacturing in the world”.
“I can also add to that too. We have two of the best and latest biscuit manufacturing lines you can buy.
“They are made by laser in Italy. They are computer-controlled and the laser can come online to check and fix the machines. But not in PNG.”
He said most manufacturers were forced to use power generators because of the unreliable power supply.
“When we do use PNG Power, we get power surges which damage our equipment. Currently, I have over K5 million to pay for spare parts for damaged packing machines and others.”
Chow said he could go to China, “outsource my production and make more profits without the headaches and problems (in PNG)”.
He said good manufacturers “welcome honest competition”.
“It keeps us sharp and focused,” he said.
He said manufacturers aired all their concerns to International Trade and Investment Minister Richard Maru on his visit to Lae.
When Australian High Commissioner to PNG John Feakes visited Lae Biscuit recently, he told Chow that was optimistic by reinvesting despite all the problems and challenges.
“I said PNG has been home to the Chow family for five generations and we will live and support our home,” he said.
“We always look in the long-term and plan for the next generation and hope that the Government will take note and give assistance to the truly patriotic and long-time manufacturers.”
Chow suggests that the Government in partnership the PNG Customs can help manufacturers by:

  • PROVIDING tax relief on import of raw materials for manufacturing;
  • IMPOSING higher duties on importation of finished goods which are locally produced;
  • PROVIDING tax incentive for manufacturers to export;
  • ADDRESSING PNG Power issues; and,
  • PROVIDING low interest loans to build new factories.