Businesses in Papua New Guinea are already operating in unfavourable conditions, such as constant power outages that directly impact operational costs.
Chief executive officer of the Lae Biscuit Company, Ian Chow, said another barrier was added when Papua New Guinea Customs recently changed the coding of certain goods.
LBC was affected when the coding on shortening was changed and duty was added. On top of that, the charges were backdated to five years earlier, meaning companies have to pay the new rate for the previous financial years.
“I was here, arguing with the Customs people and said, ‘Listen, if you change the coding, you’re going to affect the 9 million people in this country because I’m going to increase my price’,” Chow said.
“You have the decision in your hand to say ‘No, I won’t change the coding, I’ll keep the price the same’. But they changed it. Not just on me but on all other businesses so the prices have gone up and people are complaining. It’s gone up 50-100 percent; not just biscuits, everything because a lot of the coding were changed.
“It was easy to come to us to collect money then to do it the hard way and slash your budget, try not to spend so much – I’m talking about the government – spend less, spend more efficiently and look at what you can do to get the jobs and get the money into people’s hands.”
In terms of back charge, Chow questioned the rationale of fining companies for the past financial years.
“You’ve already ordered us every year since then and you’ve checked us already and it’s not our fault,” he expressed.
“If you want to put the new duty, you put it from today onwards, not put it back in arrears.
“So these companies who are fighting these arrears are saying, ‘If I have to pay that K20 million, I’m going to close my door because I sold that product already. My accounts have been closed on those already. If you’re giving me a K20 million tax bill, well, I can’t possibly pay it.’”
Another company hard hit by the change is Panamex, who import soap noodles for their products like Was-was soap.
Panamex Pacific (PNG) general manager, Erich Illemann, said the business has been operating in PNG for 50 years, “has always been compliant” with “previous clear audits” yet somehow, Customs changed the codes and put a 20 percent duty on soap noodles.
He said the back charge of five years is putting companies at risk of closing.