Pacific Commerce and Produce

Warning Of New Caledonian Cost Problems

From Fred Dunn, in Noumea Noumea enjoyed itself over the New Year, and there seemed to be money about. But with the festivities at an end there soon came a stern warning of economic problems to come.

THE warning was issued in the first edition for 1965 of the conservative bi-weekly newspaper Bulletin du Commerce. The paper said rising prices were alarming and that two other recent measures would aggravate the situation.

Rise in the price of meat was one and the other was the introduction of a housing fund consisting of an extra 2 per cent, of a worker’s salary, to be added to the social services cost.

It has been estimated that social services, which include family allowance, old age or rather old worker’s pensions, pre-natal care, etc., are at present nearly 36 per cent, of salaries. This percentage is paid into a special fund administrated by a Government supervised service continually growing within itself and thus cost ing more and more to run—which controls and distributes the money for the various social services.

Prices Go Up Practically all the money is paid by the employer over and above the worker’s salary. As the employers do not take this sum from their profits but tack it on to their cost prices, one wonders if the social services really benefit any body. A great deal of the money paid to native workers goes away in the purchase of drink.

Meat, mediocre meat, for there is little super quality here, costs now about 9/- lb. This is some thing extraordinary for a country which, with rational operation of cattle stations, should be producing meat at a competitive export price.

The local wags now claim that unless you snatch your meat pur chases off the scales quickly the price has gone up.

The Bulletin says little has been done over the years to try to force prices down, although 15 years ago the Government had warned that spiralling costs could bring disaster.

The paper says the only real way to raise living standards is to reduce the cost of living. It sees only one solution to the problem—that New Caledonia should be allowed to buy more goods in nearby countries, where prices and transport costs are reasonable. It suggests New Zealand, Australia and Japan. It is pointed out that Japan bought huge quantities of nickel from New Cale donia sending down empty ships from Japan to pick it up.

The Bulletin is aware that this procedure would have to be approved by the Metropolitan Gov ernment which would have to pro vide the foreign exchange. But since all New Caledonia’s foreign exchange earnings are taken by France it seems only fair that a slice should be accorded to the earner.

The Bulletin stresses that it should only be necessary to import essential goods from local sources, instead of bringing them from France but it suggested that this should be given a fair trial.

Many people think the scheme and the proposal is more likely to get short shrift from the Metropolitan Government.

NG Hotels Out Of

Receivership

THE highly complex situation involving the ownership and management of three New Guinea hotels—the Lae (Cecil), Goroka and Wau Hotels (grouped together as Morobe Hotels Ltd. and Cecil Hotel Ltd.) —and which was out lined in some detail in December PIM (page 144), was developed a stage further in January.

The indications are that the hotels will be released from the receiver ship at an early date, and revert to the control of the two companies named.

When the McEachern interests formed or acquired a number of companies in Papua and New Guinea several years ago, they were grouped under the general control of Hamac Holdings Ltd. Among them were the two hotel companies.

The Hamac organisation got into financial difficulties. One result was that the two hotel companies were forced into the hands of a receiver ship in 1962, by a group called “the dissenting creditors”, who were owed £58,000.

By the end of 1964, the hotels had made enough profit to pay the creditors the £58,000. But a liability for interest (no less than £17,000) had developed. What was to be done?

During the receivership, there were changes in the ownership of the two hotel companies. By the end of 1964, it was claimed that Sangara Ltd. had a controlling interest in the hotel companies, and that Mr.

Stanley Eskell controlled a majority of Sangara shares. But any con sequential move in that direction seemed likely to meet a legal challenge from the McEachern interests.

To whom were the hotels to be handed over? What was to be done about the claim for interest?

Attempts were made in January to answer these questions.

By now, the directors of Morobe Hotels Ltd. were Messrs. Lawford Richardson, FCA, Sydney, (a director of many public companies); Stanley Eskell, MLC, Sydney (executive director of Sangara Holdings Ltd.); and S. Fox, of Goroka, who also is secretary.

Mr. Leonard Francis McEachern, at present manager of the Cosmo politan Hotel, Rabaul, in December obtained a temporary injunction against the Morobe Hotels directors, restraining them from holding any meetings or transferring any shares.

But by mid-January the injunction “time lapsed”, and the directors went on with their plans.

Mr, Eskell visited New Guinea about mid-January for a meeting of certain “dissenting creditors” whose interests were protected by a Deed of Trust. The trustees are Mr. James Irwin Cromie, a leading Port Moresby solicitor, and Mr. B. C.

Goodsell, general manager of Burns Philp in Papua-New Guinea.

The trustees had, until then, con trolled the hotels through the Receiver, who is Mr. A. H. Carter, general manager of PMF Co. Ltd., Port Moresby.

The trustees agreed at the January

meeting to hand back the hotels to Morobe Hotels Ltd. and Hotel Cecil Ltd. as at January 31, on the under standing that all the “dissenting creditors” would receive payment of all debts, and also half the interest to which they were entitled under the Deed of Trust. The “dissenting creditors” agreed to waive the re maining interest.

Mr. Eskell told PIM that the meeting discussed matters relating to money owing to pre-receivership creditors. An agreement was reached in principle, to be confirmed in writing by himself, and a meeting to be called by creditors at an early date. . A , , , Morobe Hotels 7 Improvements Mr. Eskell said the two companies would now operate the hotels and would improve them. There was a building plan already approved for Goroka, envisaging additional first class accommodation. Mr. Eskell said this additional accommodation, to be ready this year, would cater for a further 20 occupants, and was being provided to keep up with the increasing tourism demand and the normal requirements of people of the Territory.

There will be improvements at Wau this year.

Improved facilities and better staff facilities are planned for the Cecil Hotel, Lae.

Mr. Eskell said he did not regard the new hotel at Lae, planned by Steamships Trading Co. Ltd. as competition for the Hotel Cecil. It was not possible to expand the Hotel Cecil to give the accommoda tion a new hotel could provide.

The new hotel would cater for the luxury tourist trade, while the Hotel Cecil would continue to meet the normal essential commercial requirements of the Territory and cater for the moderate-priced tourist trade.

He said he expected Morobe Hotels Ltd. and Hotel Cecil Ltd. to invest a substantial amount of new capital in the Territory through the planned expansions.

Biscuits For Apia

THE Apia Biscuit Company has begun biscuit production at a new £NZIO,OOO factory in Western Samoa, competing abainst biscuits ex ported from Fiji. Present production covers local consumption only, but the factory plans to export to nearby American Samoa later. Director of the company is Mr. von Reiche,

Better Result From

Sugar Likely

FIJI should do better financially under the British Commonwealth Sugar Agreement in 1965 than she did in 1964 even though, apparently, the tonnage price is £Stg.4/0/10 lower. The end result will be that the final price is higher.

The lower tonnage price is offset by a special payment, plus a change in assessing the method of payment, plus another 8,000 tons in the quota.

In 1964 Fiji had a quota of 132,000 tons at £Stg.46/0/10 a ton, CIF in bags, London, plus £Stg. 1/6/6 a ton, representing the benefits which accrued to colonial sugar exporters through the opera tion of the colonial certificated pre ference.

For 1965 Fiji has a quota of 140,000 tons at £Stg.42 a ton FOB and stowed in bulk. This naturally represents a big saving compared with the CIF in bag system, plus the £l/6/6, plus a special payment of £3/5/- FOB and stowed, for sugar bought from the less developed countries.

The British Commonwealth Sugar Agreement has been extended for another year—to 1972.

The return to Fiji under the BCSA for 1965 should be more than £6i million, which is a more than useful cushion against depressed world prices, at present less than £3O a ton.

Fiji’s Customs revenue has been increasing rapidly in the last two years because of high sugar prices.

The slump in sugar prices in the second half of 1964 came too late to affect orders already placed for imports.

The lower world prices for sugar are likely to be reflected in the 1965 Customs revenue, which is expected to be much lower than the record £6,306,141 of 1964.

The 1964 figure was about 20 per cent, higher than the 1963 revenue of £4,889,657. In 1962 Customs revenue was £4,150,920.

Kiwi Interest In

Fiji Venture

THE giant Kiwi complex has a 50 per cent, interest in a paper company which will set up a fac tory in Suva. The other 50 per cent, is held by C. Sullivan (Pacific Islands) Ltd.

According to Mr. C. S. Israel, managing director of C. Sullivan (PI) Ltd. the company will manu facture various types of paper pro ducts, including bags, toilet paper, cardboard cartons and packaging.

It has secured land in the in dustrial area of Walu Bay and will erect a factory covering more than 12,000 sq. ft.

Mr. Israel expects the output to be sufficient to cater for Fiji’s needs, and to leave enough over for export to other island groups,

January Report On

Copra Market

A T the beginning of February, copra prices were continuing very firm, and the chairman of the P-NG Copra Marketing Board, Mr. lan McDonald, believed the level was likely to continue in February.

He said it was anticipated that the January Philippines FM price for copra would be £Stg.76/12/6.

Reasons for the firm prices are a shortage of other edible oils, in cluding whale oil, plus adverse seasonal conditions in the Philip pines. The political situation in Malaysia is also having its effect.

Fiji Copra Output

Island Industries Ltd., Who

operate a crushing mill in Suva, have estimated the Fiji-Rotuma copra output for 1964 at 40,803 tons, of which local crushers bought 34,065 tons.

Of the remaining 6,738 tons, 5,067 were exported to Japan and 1,671 to South America.

Unofficial assessments of the value of the crop were about £2,500,000.

Pago Coconut Plant

To Start Soon

FINAL shipment of machinery for the Pacific Coconut Processing plant at Pago Pago was now under way and test runs would be made in the near future, said Prince Tungi, Tonga’s Premier, after returning from a Honolulu meeting of the corpora tion in January.

Tonga shares an interest in the company with an American group.

The corporation plans to export pro cessed nuts to the US.

Prince Tungi added that the Gov ernment-owned Tonga Construction Company also hoped to win a con tract to construct a $1 million build ing o n Palmyra Island, south of Honolulu, involving a motel, offices and a convention hall.

£l2m Building

Contract For NG

CLEMENTSONS (New Guinea) Pty.

Limited, a wholly-owned sub sidiary of Sydney contractor Project Development Limited, in January was awarded a £l2 million contract for construction of Army establishments in Port Moresby and Wewak, to be completed in 1967.

General manager of Project De velopment Corporation Limited, Mr.

B. G. Hely, said the contract would increase the company’s uncompleted contract work in hand from £7 million to £l9 million. It was the largest contract ever awarded to an Australian contractor.

He said particularly attractive features were the taxation rate in Papua-New Guinea (about half the mainland rate) and the possibility that several aspects of the project could qualify for a tax “holiday” under provisions announced by the Federal Government to encourage pioneer industries in P-NG. (see P- 10).