OBG talks to Pedro Celso, Managing Director, RD Tuna; and Chairman, Fishing Industry Association PNG

Interview: Pedro Celso

What challenges is the fishing industry experiencing and how do you assess the impact of PNG’s new Pacific Maritime Industrial Zone (PMIZ)?

PEDRO CELSO: A major issue in PNG is the high cost of doing business due to the many obstacles that have arisen caused by a lack of economies of scale, inadequate and inefficient infrastructure, as well as the need for basic logistics and utilities. Though there are other constraints, I consider these issues to be temporary and easier to remedy in the short run. With the infusion of major infrastructure investments by the government in PMIZ, coupled with a well-planned development programme that should be implemented by a highly capable set of professionals for the fisheries sector, the project’s goal is to ultimately maximise the socioeconomic benefits of the country’s rich marine resources through value adding and onshore processing. If other countries can achieve this by exploiting PNG’s fisheries resources, I do not see any reason why we cannot do the same thing internally.

If the project is successfully implemented along side other similar projects, it is possible for PNG to become the tuna capital of the world, as currently almost 18% of the world’s tuna comes from PNG, according to catch statistics from 2010. Combined with the catch of surrounding South Pacific countries, the region’s volume of tuna could account for as much as 30-35% of the global tuna supply in the coming years.

In your opinion, what are the likely repercussions of the PNG-EU trade agreement on onshore processing and export potential of tuna?

CELSO: The Interim Economic Partnership Agreement (IEPA) is a breakthrough agreement for PNG as it attempts to streamline and improve the export potential of processed tuna. The agreement has already sparked more onshore investments in the country’s tuna segment. However, single-handedly, the IEPA is not enough to see investors rushing to set up canneries and processing plants in PNG. Crucial reforms and other initiatives, as I mentioned previously, need to occur as well. This is because the benefits of the IEPA are not expected to last for long due to trade liberalisation, which is currently happening across the globe. Moreover, investors are not just looking at the EU but also the entire world, especially countries with economies that are doing well.

What are the barriers to entry to PNG’s tuna industry for large-scale investments?

CELSO: Other than the high cost of doing business and the lack of basic infrastructure and other facilities, the tuna segment faces the usual challenges that most industries encounter in PNG. First of all, bureaucracy and red tape can cause delays for the private sector, meaning companies are often unable to get things done quickly and efficiently. Second, the incentives offered by PNG are uncompetitive in comparison to those that are being offered by other countries, for example, tax holidays. Third, the existence of monopolies in the country is translating into higher costs of goods and services. Finally, the complicated land ownership structure is creating insecurities and additional costs for business. At the same time, a greater supply of skilled labour is needed to meet the demands of the industry.

Why has there been little progress on duty-free concessions to US markets?

CELSO: The lack of progress that has been made is caused by a combination of factors on both sides. From PNG’s side, we would perhaps like to see more political will and better trade negotiations that would ultimately put PNG’s interests first. Unfortunately, politics is playing too much of a role and the country is certainly not pushing hard enough. From the other side, there is possible resistance from US-vested groups and investors, which may be resisting the efforts to enable PNG to export duty free to the US. Finally, the US may not be as sympathetic to PNG compared to the EU.