split the difference
p. 55 · Read in the full issue
Burns Philp and PNG split the difference
The big Australian-based group Burns Philp, threatened with a compulsory takeover of one of its Pacific island plan tations, has reached a settle ment with the PNG Govern ment.
The company has agreed to sell to the government for $7B 000 part of Karu planta tion, a long-established and productive cocoa and copra property on New Ireland. But the government is not in terested in the agricultural value of the 73.4 ha of land it will use the site for a fur niture venture involving Japanese capital and New Irelander shareholders.
The largely Australian plantation investment indus try in PNG still regards the deal as amounting to a com pulsory change in ownership, but at least on market terms.
The price Burns Philp had on the piece of land and its
improvements, including
buildings and plantings, was $l2O 000, but the govern ment’s original offer which would have been the com pensation price under com pulsory acquisition was only $lB 000.
Agreement at what was call ed “a compromise purchase price” was announced late in January by the company and the government following talks in Port Moresby.
In an inter-departmental
memo disclosed earlier in January, the Deputy Prime Minister and Primary Indus try Minister, Mr Julius Chan, accused Burns Philp of hold ing PNG to ransom. He re commended compulsory ac quisition without delay and accused the company of in dulging in whims which were interfering with national development.
The government gave itself the power three years ago to
acquire foreign-controlled
agricultural properties where it saw valid reason for ac quisition. Provision for com pensation at the government’s price is written into the legislation, but so far the government has shown a willingness for fair negotia tion.
The main exercise of the government’s powers so far has been to acquire agricultural land for Papua New Guinean farmers in areas where land is genuinely short.
The Karu negotiations cre ated some money market con cern because of the low price initially offered and because of the purpose of the acquisi tion. Australian investors believe it is short-sighted to partly close down a viable plantation which is con tributing to taxes, replacing it with an untested industry in volving a new brand of foreign capital.