Was there substance in Gary Juffa’s claim in Parliament on tax exemptions and holidays? Part One: RD Tuna

Part One: RD Tuna Cannery

Exact quotes, televised by EMTV yesterday evening (02/05/19) are as follows:

“[on resources] …we must own tuna canneries….. [on taxes]…Meanwhile we have given too much tax exemptions and tax holidays to all types of criminal pirates and cartels that have come here to enrich themselves at our cost.” Gary Juffa.

I was working on a piece for NRI on how Bougainville can increase it’s internal revenues from tuna, and came across something that makes me think GJ’s right. RD Cannery [tuna manufacturing company] in Madang received the land parcel at the ‘discounted price’ of US$2.19 million, a 10-year tax holiday, and domestic-class fishing licenses that grant RD vessels fishing rights in PNG’s archipelagic waters and exempt them from paying fees on all fish captured. Tax holidays means they did not pay tax for manufacturing and exporting tuna to EU (where we don’t pay tariff, so they retained all profits), plus discounted or no fees at all for access and licenses, which are the two main revenue generators in tuna industry in the Pacific.

So what have we received in return? It did provide employment, but if you watched the documentary “Canning Paradise” you know how low the wages are.

Furthermore, RD’s processing capacity in Madang (tuna canning facility) is not sufficient to process all the tuna that RD vessels catch. What happens to the excess catch? The excess is send to RD Canneries in the Philippines. 

Why Philippines? Because tuna stock in their waters are very low due to unsustainable fishing. RD keeps its canning facility in Madang low, but we gave them more liscenses to their vessels to fish, logically they catch more than the facility in Madang. They then export the access to their facilities in the Philippines that don’t have enough raw tuna stock. RD is here to exploit tuna for its facilities in Philippines. 70% of Skipjack tuna population of the world, the stock of tuna commonly canned, is found in the Pacific, and 50% of that is within PNG waters. 

What is the grand result? Such exemptions resulted in a loss of K300 million (USD 88.74 million) in direct incomes, K1 billion in taxes (USD 294 million) and about 15,000 jobs between 2008 and 2018 (Post Courier, 4th January 2018). 

To know more, watch for National Research Institute’s publication titled: 

“Generating Internal Revenues and Employment from the Tuna Industry for Bougainville” 

I wrote it specifically for Bougainville, on how tuna can contribute to fiscal autonomy, whether it becomes independent or not. It will be published soon. You can also read:

Havic, E., Reed, K. (2012). Fishing for Development? Tuna Resource Access and Industrial Change in Papua New Guinea. Journal of Agrarian Change, Vol. 12 Nos. 2 and 3, April and July 2012, pp. 413–435.

Update: Since I posted this 6 hours ago, it got shared 80 times (and counting). If it’s useful, I’ll write something similar on Other Sectors/Industries later, as Part 2, 3 etc.