Minister revamping MSG for Fair Trade

October 24, 2024 9:51 pm | Posted in Business News | Share now TwitterFacebook

By Len Garae.

Minister of Trade, Commerce, Cooperative, Tourism, and Industry, Samson Samsen, said he is committed to closing the gap by revitalising Trade Agreements for the Melanesian Spearhead Group (MSG) of countries for a brighter Vanuatu.

The Minister said the MSG Trade Agreement is no longer beneficial for Vanuatu, as the country’s trade is suffering, and his primary objective is to revisiting Vanuatu’s trade agreements with international partners to foster a more equitable trading environment.

In the coming days, a thorough review of the Melanesian Spearhead (MSG) Trade Agreement will be conducted. The Minister said recent observations have highlighted a concerning issue: Certain products are exploiting the Rules of Origin to circumvent Vanuatu’s customs regulations.

“This practice, known as Trade Circumvention (TC), undermines our economy by allowing goods to bypass anti-dumping regulations and restrictions designed to protect our local industries,”said the Minister. “Such tactics, often involving the rerouting of productions deceptive practices, must be addressed to safeguard Vanuatu’s economic interests.

“Statistics reveal a worrying trend between 2006 and 2018, the trade deficit between Vanuatu and other MSG countries nearly doubled, increasing from VT-2.423 billion to VT-4.128 billion. This alarming shift highlights the challenge we face.”

He blamed the following factors for contributing to this trade imbalance.

Higher Production Costs:Vanuatu experiences significantly higher production costs compared to other MSG countries. For instance, the cost of electricity for a business consuming 10,000 kWh per month with a demand of 100 kVA is VT192,528 in Fiji, while it stands at VT707,622 in Vanuatu.

Transaction costs:The cost of transport is markedly high in Vanuatu. A 20-foot container from Vanuatu to Australia costs VT39,000, compared to just VT120,000 from Fiji to Australia, despite Vanuatu being 1,000km closer. •

Reliance on imported raw materials:Vanuatu’s manufacturing sector heavily relies on imported raw materials, unlike other MSG countries, further straining the economy.

Labour costs and market size:The high cost of labour in Vanuatu, coupled with a smaller market size of approximately 330,000 people compared to Papua New Guinea’s 10.14 million, Fiji’s 930,000, and the Solomon Islands’ 720,000, translates to lower Gross Domestic Product (GDP) and reduced economic opportunities for ni-Vanuatu.

To address these challenges, the Minister stressed, “We must identify the production capacity of Vanuatu-made products against local consumption.

I propose allowing a percentage of imports for the same products, which would exempt existing local industries from MSG trade agreements, thereby applying duty tax to those imported goods.”

Staff terminated for alleged violation of VBS Act

Minister Samsen also spoke out on his recent termination of the Vanuatu Bureau of Standards (VBS) Board members.

“I want to address recent actions taken to strengthen the integrity of our public service. The terminations of the VBS Chief Executive Officer (CEO) and Board Chairman was based on evidence of alleged conflicts of interest and corrupt practices,” he said. “An internal audit revealed that they used their positions to allegedly award government contracts to a company they and their relative owned.

“The decision to terminate both officials was made based on violation of the Vanuatu Bureau of Standards Act and the Leadership Code Act, which explicitly prohibit leaders from engaging in conflicts of interest and benefiting improperly from Government contracts.

“The terminations of senior government officials were essential to uphold the integrity of our institutions. Such actions are necessary to combat the pervasive practices of corruption and conflict of interest that have unfortunately become commonplace in high-level corporate governance.

“It is crucial that other authorities follow suit, taking similar measures to restore integrity in government offices and ensure effective service delivery by collectively committing to transparency and accountability, we can foster a culture of integrity that enhances public trust and supports good governance.”

The Minister said a key reason for the termination of officials in this office is to allow the VBS to perform its primary duty ensuring conformity assessment of products.

“This plays a vital role in monitoring import and export products, thereby safeguarding the integrity of our trade practices,” he said. “Additionally, investigations are currently underway by the Ombudsman and the Public Service Commission to address these serious issues. I understand that a report is expected soon.

“The Government is committed to strengthening public service delivery by ensuring integrity, accountability, and competitiveness. Terminating individuals involved in corrupt practices is essential to creating a fair and transparent environment,” the Minister emphasised.

“Finally but not least, I encourage all citizens of Vanuatu to engage in business and contribute to our nation’s trade development while adhering to the law and conducting business ethically.”