Report on the Implementation of the derogation to ... - Trade Websites

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
The Lae (Malahang Industrial Estate) situation presents a different perspective. There are currently
no plans to make this an SEZ, and development is proceeding mostly with the support of the Morobe
Provincial Government and local landowners who are making the necessary land available under
long-term lease. As the site is adjacent to the Lae urban area, basic infrastructure is in place and
utilities available. As mentioned in Section 3.2.2, plans for the construction of three plants are well
advanced (one with construction over 75% complete), the plans for the expansion of two existing
plants (Frabelle and Frescomar), plus construction of ancillary developments (i.e. can making plant,
new wharf in Lae).
Whilst there are no additional project proposals tabled at this point, interest has been shown by
DongWon of Korea in the construction of a processing facility, but no details are currently available.
According to recent information, this is likely to go ahead at the expense of the PMIZ proposal. It
should be noted that DongWon also has a proposal in place to establish a processing facility in the
Solomon Islands.
No other projects at any stage of development are known to the review team, but scope for
additional development certainly is available at Malahang Industrial Estate, and as current projects
come on line, it is possible that this could catalyse additional development. There has, for example,
been reported interest from two of the large tuna trading companies (e.g. Itochu (Japan), FCF
(Taiwan).
In summary, at present there are few additional projects in the pipeline for tuna processing in PNG,
and the publicity given to the possibility of rapid large scale expansion seems not be based on the
reality of existing development plans.
3.2.4 Competitiveness of PNG processors
Advantages
The most significant competitive advantages associated with establishing canned tuna processing
operations in PNG relate to access to tuna resources, in some cases at discounted access rates.
• PNG has highly productive waters with abundant canning-grade tuna resources; accounting for
50 % of total PNA catch, 20 % of total WCPO catch, and 11 % of global catch in 2009. 49
• As processing facilities are located in close proximity to fishing grounds, savings in freight costs
are enjoyed for raw material delivery (i.e. the cost of transhipping raw material from vessels
operating in WCPO waters to Thailand-based processors is around US $150-200/mt).
• Fishing licences issued in association with onshore processing facilities are discounted.
Potential exists for vessels to qualify for licences under the FSM Arrangement, which provides
access to all eight PNA members’ EEZs; some vessels (i.e. PNG-flag, some locally-based foreign
chartered vessels) are also permitted to fish in PNG’s archipelagic waters.
PNG is well known for being a high-cost tuna processing location due to a range of disadvantages
relative to other more competitive sites of production such as Thailand, Philippines and Ecuador
(discussed below). Hence, the primary impetus for investment in onshore processing facilities in
PNG has stemmed from the availability of discounted fishing licences granted in association with the
investment. New and future potential investments in tuna processing facilities will continue to be
driven by the desire to maintain or gain access to the resource, given PNG is actively seeking to link
49 Usu 2011.
Linpico s.a.r.l. Page 38