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Oil Palm Industry Opposes New Tax
by PNG Business News - April 16, 2021
The oil palm industry has opposed the government's directive to levy a high tax on fertiliser, agriculture's most basic input because it will bring the industry out of business.
Robert Nilkare, chairman of the PNG Palm Oil Producers Association and PNG country manager of New Britain Palm Oil Ltd (NBPOL), said the oil palm industry was heavily dependent on fertiliser to preserve soil fertility.
“Without it, production will decline and soil fertility will degrade,” he said.
According to Nilkare, agriculture, which supports a significant number of smallholders and is one of the country's largest industries, would suffer greatly as a result of this.
“This is particularly the case for PNG’s smallholder farmers whose palms are almost universally deficient in nutrients.”
Both regulatory bodies, including the Department of Environment and Climate Change, received financial instruction from the Department of Finance on January 21.
This was to put in place the current fees and charges that the government had authorised in gazette notice G673.
The PNG government has now imposed a fee on all fertiliser imports, especially nitrogen-containing fertilisers, in addition to many other fee rises levied on companies and communities, such as petrol.
“Decades of research has gone into this to find ways to increase fertiliser uptake by smallholders,” Nilkare said.
“This new tax on fertiliser will immediately increase the cost of fertiliser to smallholders, this will reduce their usage and so reduce their production, income and livelihoods.
“This is particularly the case in areas where increasing rural population is creating significant land pressure and so finding ways to improve production from existing farms is paramount.”
Nilkare said that the experts who approached the government with the suggestion and rationale for a tax on nitrogen synthetic fertilizer had not done their homework and hence provided inadequate advice to the climate change and development authority (CCDA).
“The justification is seriously flawed technically, clearly no agricultural expertise was involved, and there was no prior consultation with the agriculture sector,” he said.
“In fact, the CCDA’s own awareness presentations stated that consultation over the synthetic fertiliser levy was with the chamber of mining and petroleum!”
He said that the key reason for the agricultural fertiliser tax was to reduce greenhouse gas (GHG) emissions, but that the CCDA's own analyses had shown that deforestation and habitat destruction were the biggest drivers of GHG emissions.
Just 30% of the estimated tax revenue will go to climate change assistance, according to Nilkare, implying that the proposed tax was for feeding the consolidated revenue.
According to him, the oil palm industry is expected to pay the government K10 million a year from the current fertiliser levy, with smallholders paying K4 million as their share of the fertiliser tax.
“This issue could have been better managed if there had been some consultation with the agriculture sector stakeholders before a tax on agriculture was introduced,” he said.
The imposition of such taxes, according to Nilkare, undermines the government's argument that agriculture is the country's "backbone."
PNG Business News - April 16, 2021
Salaries and Wages Tax May Be Reduced
The Internal Revenue Commission's (IRC) Commissioner General, Sam Koim, said that the IRC will advise the government on lowering the Salaries and Wages Tax (SWT) if they raise enough revenue through the successful collection, especially through the Goods and Services Tax (GST). Koim said that they would make the recommendation until the National Government has adequate fiscal room. This was mentioned by Koim at the start of the GST Act's Section 65A Merger with the Integrated Financial Management System. He said that there is currently a large tax gap, particularly in GST collection, and that by concentrating on GST, they feel they can generate enough revenue for the government. Unlike SWT, which is only charged by a limited portion of the population, GST, according to Koim, is paid by all. “GST is a tax that is broad-based and everybody in this country participates in contributing one way or the other. And if we set up effective collection mechanisms and we collect all the GST areas that we collected, I believe we can create enough fiscal space, we can generate enough money,” said Koim. He claimed that by effectively collecting GST, the government would be able to build fiscal space and consider tax reductions in other areas, such as SWT. “We can offer suggestions to the Government that now we’ve taken ownership of the existing size of the pie, you can now explore reducing the salaries and wages taxes. At the moment we can’t offer that because, at this time, the Government is also facing financial stresses. And so it would be suicidal for us to offer that,” said Koim. SWT continued to be the leading source of tax revenue. The IRC wanted GST to be the highest-earning levy.
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PNG Business News - May 13, 2021
National Airport Corporation to Focus on Redevelopment Projects
The National Airports Corporation plans to devote more resources to the redevelopment projects at Kavieng, Tari, and Mendi airports as part of the Civil Aviation Growth Investment Program. With the exception of three airports, all airports under the CADIP program are on a budget, according to NAC acting managing director Rex Kiponge. Apart from Jackson Airport in Port Moresby, Kiponge claims that the majority of the country's airports are unable to handle the newly launched F100 aircraft. “The introduction of F100 aircraft has deteriorated the condition of runways in PNG. Under CADIP, fencing and runway length deficiencies will now meet the F100 and ICAO requirements. CADIP was implemented to meet the minimum PNG Civil Aviation Rules (CARS) and the International Civil Aviation Organisation (ICAO) standards and recommended practices in all the 22 airports in the country. “The F100 aircraft require a minimum runway length of 1900 metres –– only three airports meet this requirement.” The F100 will be able to land at 12 airports thanks to a CADIP runway length upgrade. Port Moresby is now the only province that meets the operating criteria for F100 planes. Standby control, security fencing, apron parking, runway, taxiway, and apron strength, and a runway length suitable for takeoff at maximum payload are all part of the 22 airport upgrades. Kiponge recently visited the three airports and expressed his satisfaction with the development. Contractors have already finished construction on the security fence at Kavieng Airport, and work on the runway extension is going well. Once the runway extension is complete, the contractors can begin work on the terminal. He mentioned that the runway extension at Tari Airport is complete, and contractors are currently working on the apron, which will be finished until the runway extension is completed. Owing to the contractors' inability to obtain materials for the runway at Mendi Airport, NAC has requested that they redo the runway before moving on to the other areas. “Despite whatever issues within NAC, I will ensure that all 22 NAC’s airports undergoing upgrading will be completed and I will put in a lot of efforts and focus to makes certain work is done well and completed,” Kiponge said.
PNG Business News - May 13, 2021
Govt to Focus on Downstream Processing
The government is putting a lot of effort into encouraging downstream production in the region. This was said by Prime Minister James Marape during a visit to Paradise Foods Company Limited. “We are focused on downstream processing as far as going forward is concerned –– instead of exporting raw products,” said Marape. “We want to go downstream to satisfy our local markets as well as export to economies around us.” PNG is fortunate, according to Marape, to have access to 60% of the world's gross domestic product (GDP) through the APEC network. “As well as, not just the APEC network, but in the vicinity of PNG’s accessibility to markets, we have over 4 billion people from the Pacific, Northern Asia, Western Asia and Northeast Asia put together. “So to satisfy our local markets in PNG for our 8 million-plus people, as well as the opportunity of exporting to markets closest to us like our neighbouring countries.” Marape has stated that he supports downstream production and marketing of PNG's natural resources both locally and internationally. “Today, I am privileged to visit an industry that has been at work since 1945, and I’d like to thank Paradise Foods Company Limited for doing a wonderful job and feeding our country.” Marape promised that the government will help the industry and market.
PNG Business News - May 13, 2021
Mayur Discusses Power Plant Project in Lae
Mayur Resources Ltd says it has formed an ongoing relationship with the State negotiation team to discuss and finalize a power purchase agreement (PPA) for its planned power plant in Lae, Morobe. The organization was waiting for the State negotiation team's makeup to be finalized and signed off, according to managing director Paul Mulder. After that, he said, the Enviro Energy Park (EEP) project's final discussions and negotiations will begin. Mayur's planned 52.5-megawatt EEP project is an advanced power plant that will produce more efficient and cheaper electricity than current solutions by combining conventional thermal energy (sourced from the company's wholly-owned Depot Creek project), solar, and biomass woodchip, while also supplying co-generated steam to nearby industrial users who were burning diesel for their steam needs. The EEP, which is near Lae, will also have steam as a by-product for local industrial uses, and potential dual fuel systems will allow for the use of diesel. “The energy park would balance the need for new environmentally friendly technologies and reliable energy,” Mulder said.