Trade Winds

PAPUA NEW GUINEA has been chosen by the UK Government’s foreign aid investment arm, the Commonwealth Development Corpora tion (CDC), as the test site for its pilot pro ject into venture capital investment.

The wholly owned subsidiary of CDC, Venture Fund Pty Ltd, was set up in Port Moresby earlier this year with a start-up capital of £1 million.

Venture Fund is looking for PNG com panies in search of long-term finance on an equity rather than debt-servicing basis.

It can invest between K 100,000 and K 550,000 if this represents between 10 and 30 per cent of a company’s total share holding. Projections for a company’s pre tax profit within three to four years of in vestment should be between K 50,000 and K 100,000.

According to the Fund’s general man ager, lan Cardwell, criteria for investment are strong growth, profit potential, com petent and motivated management and willingness for the Fund to participate through consultation and nomination of a director to the company board.

The CDC, under whose auspices Ven ture Fund has been established, operates in 56 Third World countries, two-thirds of which are members of the Common wealth. Over 10 years it has invested some K7O million in PNG: Higaturu Oil Palm Pty Ltd, Milne Bay Estates Pty Ltd (also palm oil), the PNG Electricity Commis sion and Ramu Sugar Holdings Pty Ltd.

Elsewhere in the Pacific, CDC is partici pating in Fiji, the Solomons and Vanuatu.

But where CDC has £1.5 million com mitted around the world in a variety of fi nancial structures from majority equity to facilitation of loans from banks or other equity investors, PNG Venture Fund Pty Ltd is the Corporation’s first foray into venture capital.

“My own research showed there was a shortage of capital, especially venture capital, for small companies,” says Card well. “We don’t want to become actively involved in management. It’s rather a matter of backing good management already there, tweaking it at the edges, in sisting on certain controls and providing us with certain information as a condition of participation.

“We’ve chosen PNG to start with be cause it’s very exciting. In particular, there’s an active mining sector that will continue for at least another decade,”

Cardwell said some 60 inquiries had been made since Venture Fund had opened shop in mid-year. Twenty of these were now being followed up and he felt the Fund would eventually invest in between six and

10 companies. At the time of writing no commitments had been made.

“It’s clear there’s a lot of interest and it’s not confined to any particular sector,” he continued. “It varies from new ven tures to long-established companies, and from agriculture through light industry to helicopter transport to real estate and other service industries. There’s great diversity in size, ownership and style of management.”

Cardwell said the Fund’s requirement for detailed information had resulted in long intervals between the initial contact and the final decision on whether to com mit funds. PNG companies did not store and collate such data as a standard prac tice. “But I don’t see this as an insuperable difficulty,” he said. Chris Ashton

□ Australia-Nz-Canada Trade

THE NEW Zealand Minister for Over seas Trade told a visiting Canadian dele gation there will be a study of the viability of closer economic ties between their countries and Australia. Mr Mike Moore said the study would identify the benefits and costs of such a scheme. The liberal isation of trade barriers and other impe diments to free trade would be scrutinised.

Mr Moore said informal talks on closer trading and economic links had already started and the study would lead to further consultations. He said he expected to re ceive the report by the middle of next year.

□ Australia-Fiji Air Pact

AUSTRALIA and Fiji became partners in Fiji’s national airline, Air Pacific, despite tensions between the two Governments.

Qantas bought a 20 per cent interest in Air Pacific, which is 77 percent owned by the Fijian Government.

Air Pacific’s Chief Executive, Mr John Schaap, says the deal was a purely com mercial investment negotiated long before the first coup in Fiji last May. The other Air Pacific shareholders are Air New Zea land, Tonga, Solomon Islands, Nauru, Western Samoa and Kiribati.

□ Png Poultry Production Up

PAPUA NEW Guinea’s poultry industry is expected to further increase production by the end of this year. In 1980, the local industry could produce some 3700 tonnes of chickens less than half the country’s demand for poultry. The rest was imported.

By the end of 1987, however, local poul try production will have trebled to 10,300 tonnes; almost all the poultry meat con sumed in Papua New Guinea.

According to a report from Niugini Tablebirds, Lae, consumption is expected to increase over the next three years to reach 11,100 tonnes in 1989.

Deputy Prime Minister and Minister for Trade and Industry, Sir Julius Chan, says the increase in poultry meat produc tion will enable the country to become self sufficient.

□ Small Business Boost

A STUDY into small business in Papua New Guinea has recommended the estab lishment of a Small Enterprise Centre of Excellence, which could be funded by in ternational aid and offer one-stop facili ties for small enterprise advice.

It could also offer its services to under take consultancy work for small busi nesses on a self-financing basis.

The proposal is one of seven action plans proposed to stimulate small busi ness enterprises in the country. The PNG Government has also been asked for a “more concerted commitment” to small enterprise development.

□ Indonesian Courts Fiji Trade

AN Indonesian trade mission has begun talks in Suva with Fiji Government and business leaders.

It is the first foreign mission to visit Fiji since the new Republican Government announced it would diversify its trading partners following the cooling of relations with Australia and New Zealand. A Fiji trade mission visited Indonesia twice be tween the military coups in May and September.

Fiji’s interim Foreign Minister, Filipe Bole, named Indonesia as one of three countries where Fiji was considering set ting up trade offices. The others are Ma laysia and China, which (unlike Indonesia) have diplomatic missions in Suva.

Talks between Fiji Government offi cials and a visiting Indonesian commer cial delegation have culminated in an agreement in principle for a study to es tablish an air service between the two countries.

A statement from the military Govern ment in Suva says Fiji also wanted to take advantage of an Indonesian offer of a loan of 25,000 tonnes of rice.

Fiji has agreed to buy from Indonesia petroleum products, maize, cooking oil, tea and spare parts for the sugar industry.

Discussions will begin soon on aircraft and ships that Fiji plans to buy from Indonesia.

For its part, Indonesia will buy sugar, molasses, canned fish and timber prod ucts from Fiji. ►

<4 Meanwhile, the spokesman for the In donesian trade mission said Australia and New Zealand should have been prepared for changes in Fiji trade under the mili tary-backed Government of Brigadier Rabuka.

Mr Asghar Mehdi, general manager of an Indonesian trading company, said Australia and New Zealand should have been more economically astute. They should have anticipated that Fiji would want to develop more trade directly with Southeast Asia, which itself was a major supplier to Australia.

Fiji ministers have said they will seek new trade agreements with countries in Southeast Asia and elsewhere because of the cooling of relations between Fiji and its traditional trading partners, Australia and New Zealand.

Mr Mehdi said he hoped Indonesia would become a major trading partner of Fiji. It could, for instance, supply oil and petroleum products direct and at a lower cost than those at present shipped from Australia to Fiji.

□ Vanuatu’S New Wharf

THE Asian Development Bank has ap

proved a loan of nearly SA6 million for construction of a new overseas wharf at Santo, Vanuatu. The loan is repayable over 40 years at an interest rate of one per cent per annum.

The port at Santo is located in Vanu atu’s main copper-producing area and handles most of the country’s copper ex ports of 40,000 tonnes a year.

The new project includes the building of a new earthquake-resistant wharf, ad ditional work in the port area and consul tancy services. The existing overseas wharf s poor condition is mainly due to earthquake damage.

□ Cocoa Slump Talks

LEADING exporters of cocoa met in No vember in the Nigerian capital of Lagos to seek ways of reducing the massive cocoa surplus on the international market.

Ivory Coast’s chief delegate at the meeting of the 11-member Cocoa Produc ers’ Alliance, Mr Goffa Jacob, told the opening session immediate action was needed to cut the oversupply. He warned that the alliance, despite accounting for about 85 per cent of world output, no

longer influenced the world market.

Mr Goffa said his country favoured a system of production quotas for the Alli ance members and suggested tough meas ures, including destruction of poor quality cocoa, to secure higher prices.

Cocoa prices are currently at their low est level for four years because of the sur plus and the suspension of buffer stock operations following the failure of produc ers and consumers to reach agreement at talks in London in September.

□ Stock Crash Impact

AUSTRALIA and Western Samoa have discussed the impact of the international stock market crash on South Pacific is land states.

Australia’s Foreign Affairs Minister Bill Hayden covered the issue during talks in Canberra with Western Samoa’s Deputy Prime Minister, Tupua Tamasese Efi.

After the talks, Tupuola Efi told reporters he felt the international crash would even tually hurt the South Pacific.

He said it could result in further down ward pressure on commodity prices, which were already low. Discussions with Mr Hayden also covered New Caledonia and Fiji. He said the South Pacific was ready to help Fiji deal with its problems. But it was up to Suva to take the first step and to define what it wanted from the region.

□ Americans Flock To Tonga

NORTH Americans have become the largest tourist group visiting Tonga, re placing Australians and New Zealanders.

According to the Tonga Visitors’ Bu reau, nearly 1700 Americans and Cana dians visited the country during the year ended June 30: a 17 per cent rise on the previous year.

In the same period, the number of Aus tralian and New Zealand tourists in creased by just over nine per cent.

Tonga’s tourism marketing officer, Mr Sakapo Lolohea, says there is now increas ing awareness in Canada and the United States of the cultural, social and environ mental attractions offered by Pacific is land countries.

□ Fiji Economic Outlook Brightens

THE FIJI Sugar Corporation has re corded a record profit for the year ended March 31 by declaring its first dividend for five years. The corporation, 80 per cent owned by the Fiji Government, produced 501,800 tonnes of raw sugar for a pre-tax profit of more than SFI9 million.

It recommended a dividend of 8.75 cents per share, saying this met its objec tive of giving investors a fair return and showed a degree of cautious optimism on the prospects for continued profitability in the near future.

A delegation representing the Fiji sugar industry left Suva on a mission to Asia and Britain to reassure buyers of Fiji’s ability to maintain supplies. ►

◄ The delegation includes the managing director of the Fiji Sugar Corporation, Mr Rasheed Ali, the managing director of the Fiji Sugar Marketing Company, Mr John May, and the chairman of the Fiji Sugar Commission, Mr Gerald Barrack.

The delegation held discussions in Ku ala Lumpur and Hong Kong before going to London.

Malaysia buys 80,000 tonnes of Fiji sugar a year under a three-year contract ending in 1989. Britain is Fiji’s biggest sugar customer, taking 165,348 tonnes a year under a five-year contract due to ex pire in 1992.

Correspondents say Fiji’s sugar pro duction will drop from more than 500,000 tonnes to about 400,000 tonnes this year due to a late harvest following the first military coup in May and a six-month drought.

Meanwhile companies mining or ex ploring for minerals in Fiji were assured that the present policy on mining invest ments will continue. The Minister for Mineral Resources, Mr Sakeasi Butadr roka, gave the assurance in a meeting in Suva with representatives of 17 com panies holding mineral exploration licences.

, The Ministry of Information said the meeting followed concern by the mining companies of possible changes in legislation, covering the mining sector and that Mr Butadroka emphasised there would not be changes.

He said, however, the Government now required a percentage of royalties from minerals covered by the present legislation to be transferred to native Fijians.

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Ptc Under Review

THE West German Corporation Deutsche Telepost has been awarded a contract to conduct a major review of Papua New Guinea’s Post and Telecommunications Corporation (PTC).

The review, funded by the World Bank at a cost of around $A650,000, will cover all PTC network development plans and management areas; Deutsche Telepost will draw up an expansion plan between 1989 and 1993, and will make an independent assessment of the corporation’s management efficiency.

Communications Minister Gabriel Ramoi says the national Government hopes the review will provide improved objectives to meet the needs of customers in Papua New Guinea.

□ Air Niugini Expands

AIR Niugini made its inaugural flight to the Vanuatu capital of Port Vila on Octo ber 27. The service the first direct air link between Port Moresby, Port Vila and the Solomon Islands capital, Honiara will be a joint operation with the Solomon Islands Airways.

Both airlines have agreed to share prof its or losses on the routes between the three island capitals.

Air Niugini also made its inaugural flight to Singapore from Port Moresby on October 28, in a service in joint partner ship with Singapore Airlines.

This flight will be the second weekly service between the two capitals, which Air Niugini is contracted to operate on behalf of the two carriers.

□ Tonga Freighter Furore

THE PACIFIC Forum Line has denied re ports from Tonga that it plans to end its charter of two vessels, the Fua Kavenga and the Forum Samoa.

The King of Tonga in a statement said that the vessels were to be released from the Forum Line fleet to be run independently.

However, the manager of the line, Mr John MacLennan, said in Auckland the King had been given information based on a misunderstanding of the situation. Mr MacLennan says negotiations are in prog ress for the line to retain the two freighters.