Business and Development

Battle Against Inflation Means

Tighter Belts In The Islands...

From SEONA MARTIN in Suva

A strike by sugar workers f<pr higher pay and a slight increase in the cost of living are causing specula tion about the effectiveness of Fiji’s anti-inflation measures.

A Prices and Incomes Board, advised by a National Economic Council, is supposed to be in control of the country’s economic situation.

New legislation to prevent price and profit increases and wage rises of more than eight per cent is designed to slow inflation.

While the new moves are effective to some extent, they have also pro duced some unwanted side-effects including a damaging strike, a rise in the consumer prices index and a food shortage, The consumer prices index is probably the best indication of what is happening. The Fiji Government quotes the index as support for its control policies. In a recent statement a government spokesman claimed the policies might not be popular but

that they were working.

He said: "There is no doubt that the consumer prices index would have been much higher and the value of money correspondingly lower but for the measures the government has taken. In July the index was 136.9, a drop of 1.5 since February when the index reached a peak of 138.4.”

What he did not say was that the index rose 0.6 of a point during July.

The most significant factor pushing up the index was the cost of local produce. The chairman of the PIB, Dr Norman Ross, said this was pro bably because people made heavier demands on local foods and vendors had begun charging more.

The reason for the greater demand for local foods is widespread shortages of several basic imported essentials such as oil, sharps, flour and rice.

Shopkeepers and importers claim the reasons for the shortages include restrictive PIB controls on profits.

The president of Nadi Chamber of Commerce. Mr Mannu Patel, claimed price control effectively killed the concept of free enterprise, making the consumer suffer.

The president of Suva Chamber of Commerce, Mr Ken Roberts, pointed to increasing import and insurance costs on flour and warned that unless the PIB allowed a small profit, people would be reluctant to bring in flour and sharps to Fiji.

But only the week previously the PIB had approved a one cent a pound increase in the retail price of wheat, flour and sharps, and a two cents a pound increase for long grained rice.

Other reasons for the shortages include a shortage of wheat in Aus tralia. expected to last until after the November harvest, and union bans on French goods and ships which have resulted in loads of sharps and flour being sold elsewhere.

Lack of these particular com

modities has meant the appearance of dalo, cassava and other island root vegetables on the tables of the Fiji Indian community, instead of the traditional rice, roti and puri.

The arrival of several shipments last month saw the shortage begin ning to ease. However, some shoppers remained sceptical. They watched prices continue to creep up, even if more slowly, and voiced the suspicion that the PIB controls could lead to permanent shortages of commodities which merchants claim they cannot sell at a profit. . . . and a tightrope

in W. Samoa

Prom PELISE VA’A in Apia Caught in the same cleft stick of rising prices cancelling out wage rises, Western Samoa has also tried to peg living costs, but with little success.

The Price Control Board is doing its best but is assailed on the one hand by the public clamouring for lower prices and the merchants claim

ing higher mark-ups and lower penalties for infringements of the Prices Order, pointing out that landed costs of imports frequently exceed the fixed retail price and the government is slow in readjusting the price, so that they must walk a legal tightrope.

According to a Samoa Times re port, all the merchants except one have chosen to ignore the first Price Order for 1973. The surprising thing is that this could be done in clear violation of the law and in spite of the provisions of the recently passed Price Control Amendment which pro vides for some very heavy penalties for those who violate price control legislation.

Strangely enough, very few mer chants are being prosecuted, mainly because customers are not complain ing most of them are taking goods on credit and it is a choice of taking the shopkeeper to court and doing without meat, or buying the meat and letting the merchant do what he likes with his prices.

Another reason could be that the Price Control Board is finding it hard to implement a law which the local

press and many leading citizens have described as harsh.

For instance, the latest price con trol amendment provides for the court to impose penalties on those found guilty of violations and this can be followed by the Price Control Board revoking the firm’s business licence. Critics maintain no one should be penalised twice for the same offence.

Under the amendment, a business licence could be cancelled on the first offence, and if so cancelled, the mer chant cannot even sell his stock, further adding to the merchant’s misery which would rub off on the public. Early in August, however, the Price Control Board came out with a new price order, which was generally favourable to the public in as much as many items remained constant; a few items received minor increases; and a few major increases.

Mutton flaps, Pacific corned beef and bread were severely affected. Bread went up by as much as 40 per cent, from 10 sene to 14 sene per 17 oz bread.

Mutton flaps have gone up from 15s lb wholesale, 17s lb retail in

Apia, 19s lb retail elsewhere to 22s tb wholesale, 25s lb retail in Apia and 27s lb retail elsewhere.

Some merchants are still dissatis fied, fearing that landed costs will *oon overtake the current maximum Drices.

Balance sheet

for Solomons

Chillies, coconuts, cocoa, oil palms, :attle, fish, beche-de-mer, timber, handicrafts, tourism, and possibly Timing, not necessarily in that order Df importance, are key factors in the future of the economy of the British Solomon Islands Protectorate. Some Tf those industries are fairly well ;stablished, while others are still in ;heir infancy or the feasibility study >tate.

The High Commissioner for the Western Pacific, Sir Michael Gass, in his address to the first meeting of Jie reconstituted BSIP Governing Council, surveyed what was happen ng on the economic front.

He was enthusiastic about cattle.

The industry promised well provided there was a balance between the local md export markets. The government would encourage the Solomon Is landers to go in more for cattle ■anching than small family herds.

Lhe possibility of exporting meat was worthy of greater attention. Farmers were clearing land, planting pastures md erecting fences in a major effort ;o develop the cattle industry. The 1972 cattle census showed a national ierd of more than 15,700 head.

Chillies received good support from smallholders as the intensive style production gave a large and rapid turnover. In 1972, 16 tons of chillies were prepared for export.

While cattle and chillies showed promise, there were unfortunate de velopments in copra, with declining aroduction. Three cyclones early in 1972 helped to cut production back ?y about 20 per cent, and there was a sharp drop in world prices. An mcouraging feature, however, was Eat farmers were making good use 3f grant-in-aid schemes to consolidate :oconut holdings and diversify into ather crops. In 1972, a further 5,000 acres were planted in new coconuts, mostly by Solomon Islanders. Recent high prices for copra should give planters incentive to cut more nuts.

Cocoa also suffered in the 1972 :yclones. But here, too, high world prices were encouraging to producers, and production could be expected to pick up.

The timber industry, in the early part of 1973, was well on the way

to recovery from cyclone damage and a depressed log market in Japan.

New areas are expected to be pro ducing timber by the end of 1973 and 1974, while a number of fast growing areas have been restocked.

Expert advice has been given that seme new stands should be market able in 20 years.

A "fair go"

tor PNG companies

Private enterprise will be given every encouragement to expand in Papua New Guinea because the government realises the benefits it will provide. Policies will be framed to create a climate in which private enterprise will flourish. Mr Julius Chan, the PNG Finance Minister, made these points in a recent address to the Port Moresby Insurance Institute.

At the same time, he was not altogether satisfied that private enter prise, in the past, had made the fullest use of opportunities. Oppor tunities would expand as PNG developed its own separate identity and separate national policies. Busi nesses which welcomed new oppor tunities would benefit from them.

Those which grumbled, or looked back, or showed timidity, would lose out.

“There is no need for uncertainty,”

Mr Chan said. “Our policies are clear. In addition to myself, the Chief Minister and my other colleagues in the government have repeatedly stated that we want private enterprise and will give it a fair go.”

Mr Chan said there seemed to be very little “creative” thinking about how best the business sector could help PNG. It was time to re-examine positions. Large industries, which flourished in the past, had been look ing to the government for assistance, the very minute profits were not up to expectations.

“This is not on—such industries are not only becoming too dependent on the government but are creating problems for us,” he said. “The time is now ripe to ask ourselves what we are doing for Papua New Guinea.

The answers are in your hands.”

Stronger words came from Mr Chan speaking to Waigani Lions Club members when he underlined the need to build up the economy.

Private enterprise had a role to play in offering the people expanded op portunities, he said. Standing still and resting on modest achievements was not one of the options of business.

The harsh rule of life in business was “get on or get out”.

Coconut, King

of the Islands

What the coconut meant to the Pacific Islands was explained by the Fiji Prime Minister, Ratu Sir Kamisese Mara, at a conference in Brussels in July between the Euro pean Economic Community and associated and associable countries.

Speaking on behalf of Fiji, Tonga and Western Samoa, he said they were dependent on the export of copra and coconut products. For Western Samoa and Tonga, even more so than Fiji, the coconut was of paramount importance.

The coconut crop was subject to wide variation in production through climatic factors, such as hurricane and drought, and to severe fluctua tions in price on the open market, where it had to be sold. The Pacific states were disappointed that the EEC Commission had not included copra and coconut products in its list of products which should receive special treatment.

Ratu Sir Kamisese said that in trade the EEC should not seek reciprocal free entry into the asso ciating countries in any future arrangements. It was in the spirit of the many discussions of relations between developed and developing countries that developed countries should not ask developing countries for reciprocal trade concessions.

To reintroduce reciprocal require ments would be to revert to the trade patterns of the imperial and colonial era. The developing Pacific countries in recent years had been trying to adjust to their own concept of regional and economic requirements.

“We must therefore insist that the community’s position should be made clear on this basis,” he said.

He said that whatever form of relationship might emerge Pacific countries expected it would not place them in a position of jeopardising natural geographic relationships.

Cooks builds for

tourist invasion

The Cook Islands has several hotel projects under way or on the draw ing boards to prepare for the influx of tourists once the airstrip at Raro tonga is open. The accommodation demand is expected to start in December.

This is what tourists may eventually see: • A 40-room 80-bed hotel on Rarotonga. This was started in January, 1973, by Trailways Motels,

of Palmerston North, NZ, and is nearly finished; ® A new hotel to operate as a joint venture by the government of NZ and the Cook Islands on Raro tonga, with work on a second to start at an opportune time; • A hotel on Aitutaki, 140 miles north of Rarotonga. This project is being considered by the NZ and Cl governments; • Visitor accommodation, at Arorangi. This is a Brahne and Cook Islands Motels Ltd project. The first stage will be 10 double-unit build ings, to be completed before the international airport opens in December. Stage 11, which will start early in 1974, comprises a two-storey motel of 72 rooms and a big swim ming pool.