Business costs skyrocket

By ISAAC NICHOLAS

THE cost of doing business in Papua New Guinea is increasing rapidly and both businesses and consumers are feeling the pinch.
Businesses are passing on the additional cost burden to consumers, which is reflected in the increasing cost for goods and services being felt by people everywhere.
For example, PNG companies are now paying K27,500 to ship a 20-foot container from the northern coast of PNG to the Highlands. Three years ago they were paying K8000 and five years ago they were paying K2500 for that same container.
Chief Executive Officer of the Manufacturers Council of PNG Chey Scovell revealed this yesterday during the National Working Group meeting on improving business and investment climate in Port Moresby.
Mr Scovell said some areas had suffered significant damage with 35 per cent appreciation in the kina against the US dollar which had contributed to a surge in imports. Declining public infrastructure, law and order were other major constraints to doing business in PNG.
“For some manufacturers who are importing raw materials that reduces the costs of their imports, but there are a number of industries who have suffered significant damage in loss of market share despite growth,’’ Mr Scovell said.
“We have businesses in PNG who have, despite increasing their output, have lost market share, loss of output and the reduction of their gross profit overall. Those are the kind of businesses who are starting to feel the pinch and are more likely to increase (prices) in the coming years.’’
He said forestry, along with agriculture and fisheries, had been hit the hardest with a 40 per cent surge in volume of imports, again due primarily to the appreciation of the kina against the US dollar and the declining state of infrastructure.
Mr Scovell said the asset value and efficiency of the ports could not keep pace with the increase in volume that had contributed to the constraint.
“The maintenance of the Highlands Highway hasn’t been able to keep pace with the use of the road as there is deterioration of the road which has increased transportation costs, and also law and order has not helped the situation,” he said.
He said there were companies paying much more to run their businesses than they did previously.

PNG Post