Warnings mount over PNG rice monopoly plan

1:30 pm on 8 September 2016

Papua New Guinea's opposition leader is urging the World Trade Organisation to intervene to nullify the government's proposed rice import quota.

Don Polye is the latest to raise a note of concern over the government's new rice policy which would grant a monopoly in the local rice sector to a company linked to an international fugitive.

PNG's Department of Agriculture and Livestock last month laid out plans to provide an 80 percent quota of the local rice market to rice importer Naima Agro-Industry Ltd.

Food production in Papua New Guinea

PNG's government wants to boost local food production under the policy. Photo: RNZ / Johnny Blades

The policy was billed as being part of efforts by Prime Minister Peter O'Neill and his Trade Minister Richard Maru to boost local rice production and foster investment in the local industry.

However Australia's Trade Minister Steven Ciobo warned that a quota system was inconsistent with PNG's obligations under the WTO, something which PNG's opposition leader also warned about.

This followed concern voiced by a major player in the local rice sector, Australian-majority owned company Trukai, which fears the new policy could jeopardise its PNG business.

Mr Polye said the government's import quota plan was anti-competitive and unfair for companies which have been done business and employed people in PNG for many years.

Papua New Guinea opposition leader Don Polye.

Papua New Guinea opposition leader Don Polye. Photo: Supplied

He said it was not a sound economic decision, explaining that competition encourages businesses to flourish and gives people the liberty to choose among goods and services.

Furthermore, a paper by PNG's National Research Institute cautioned that the emergence of a monopoly trader in the rice industry was a dangerous prospect, especially with rice fast becoming a staple food in PNG.

It warned that "the cost of survival for many households will increase" and said the import quota arrangements should be disclosed to the public.

PNG Trade Minister, Richard Maru.

PNG Trade Minister, Richard Maru. Photo: Fiji Government

Amid signs that even elements within PNG's cabinet oppose the policy, the Trade Minister has signalled a re-think, saying a formal letter of advice would be given to the Prime Minister on the issue for deliberation.

Mr Maru said there were other options the government could take, such as tax-free tariff protections to safeguard companies investing in the country.

However, the minister is a staunch advocate of building local industry and, based on his recent threat of a trade war with Fiji over a dispute about tinned beef, is unlikely to back down totally.

Meanwhile, Mr Polye has questioned the capacity of the planned monopoly holder Naima Agro-Industry Ltd to meet the demand of supplying PNG's rice needs.

The principal of Naima is Djoko Tjandra, a former Indonesian who remains wanted by authorities in PNG's neighbouring country after being sentenced to two years prison in a corruption case.

Mr Tjandra, who is known in PNG as Joe Chan, fled to PNG from Indonesia several years ago and despite requests by Jakarta for his extradition, has been granted PNG citizenship.

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