Why the franchise’s not working

Waqa Ledua... one of the major problems of the scheme is lack of operators and suitable vessels.

If Waqa Ledua’s Fiji Shipping Corporation has its way, each route under the government’s shipping franchise scheme would be serviced twice a month.

But due to budget cuts this year which saw Fiji Shipping Corporation’s budget slashed from $1.9 million to $1.5 million, its services to the outer islands have also been slashed.

From two trips a month since it started operation in 2006, boats now visit the islands only once a month. And that is if they’re lucky.

For most of these islands, the shipping service is critical as it not only brings in supplies but is also the only transport link to the outside world.

Ledua, who is Fiji Shipping Corporation’s chief executive, says one of the major problems of the scheme is the lack of operators and suitable ships for the franchise routes.

With the termination of Kadavu Shipping Company’s contract last year due to non-performance, there are now only five operators for the eight franchise routes.

“There have been a lot of complaints from passengers and provincial councils about the conditions of the franchise ships.

“Admittedly, there is a lot of truth in these complaints because the ships are indeed old and nearing the end of their seaworthy life.

“However, what is not appreciated by the complainants is that the scheme cannot find better ships.

“To add to the difficulty, the shipping companies cannot afford to invest in upgrading their ships or buy new replacements.

“Even with the subsidy given by the scheme, these companies are still struggling financially,” Ledua says.

He adds the scheme also did not have the funds to approach the big and better ships currently serving other sea routes.

Because the franchise routes are uneconomical, Ledua says most of the operators are likely to buy and refit, old ex-fishing boats that are readily available than find capital to buy new ones from overseas.

They require government assistance or bank guarantees to enable them to purchase new ships.

In addition, there is no local ship building facility that can build ships according to local designs and specifications to suit local conditions.

This, he says, is an area that should be addressed by the government and that the Fiji Ships and Heavy Industries should be encouraged to re-establish its ship-building capabilities of the past.

However, this will take a few years and in the meantime the only other solution for shipowners is to purchase ships from overseas.

Financial institutions, on the other hand, are reluctant to finance local shipping companies to buy new ships because of the poor state of the companies and the high risk associated with the local shipping trade.

The FSC however has recommended that the government establish a soft loan scheme through the Fiji Development Bank to enable local ship owners to purchase ships.

All ships in the franchise scheme have been certified by the Fiji islands Maritime Safety Administration, which has set a very low acceptance level in order to keep the local shipping industry literally afloat.

“Any lifting of the standard baseline will render most of the local ships unfit for service and drive local shipping companies out of service,” Ledua says.

The lack of navigational aids such as lighthouses, beacons, mooring buoys to enable night sailing and safety of passage in the islands has also been a problem for shipping companies.

A constant problem during peak periods is the overloading of passengers.

‘For the passenger, who has to go because it is the only trip available and there is no promise of another trip for a long time, the inconvenience of overcrowding is a tolerable alternative to being stuck in the island,” Ledua says.

“This poses a great problem for the ship’s captain who can’t be able to do anything if the passengers are determined to get on board.

“Although checks are carried out by marine checkers on outbound and inbound ships, the problem of overcrowding still persists and will continue unless heavy fines are imposed on the crew and passengers as well.”

—By Elenoa Baselala

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PNG wants minimum wages review

The PNG Department of Labour and Industrial Relations is pushing for the establishment of a minimum wages board to review the country’s minimum wages currently paid to unskilled workers.

Porche Enterprise accommodation for its workers... a canvas tent which was condemned by the Labour and Industrial Relations officers. The logging company has been ordered to comply with PNG laws and provide suitable accommodation for its workers.

The department wants a review because it has discovered that many employers were not complying with the minimum wage rate and were abusing it.

It also wants the minimum wage currently set at K74.40 per fortnight be reviewed because it says it has not kept pace with the increase in the cost of living.

Secretary for the Department of Labour and Industrial Relations, David Tibu, said Papua New Guineans being paid the minimum wage were struggling to survive. Those earning the minimum wage were non-skilled workers such as plantation labourers.

“What can you buy with K74 these days?” Tibu asked.

He said a submission would be presented to cabinet to request for K600, 000 to establish the board.

In 2000, the workers’ unions in PNG through the Trade Union Congress pushed for the minimum wage to be reviewed and was increased from K49.36 a fortnight to K120. However, the employers through their Rural Industries Council and the Employers Federation claimed that K120 a fortnight was too much and  estimated that 15,000 to 20,000 jobs would be lost. Instead, a new minimum wage of K74.40 per fortnight was agreed upon and has been in force since.

The Department of Labour and Industrial Relations has however, found that many employers in PNG were still not complying with the law and paying below the minimum wage. Others were paying the minimum wage across the board and did not take into consideration qualifications, skills and experience of employees.

Tibu said many companies were continuing to breach the laws on terms and conditions which was a major concern for them.

He said people are devising ways to avoid paying taxes by employing people on casual basis. He said the law specifically states that casuals can only be employed for six days in a month. However, the department was aware that many employers were avoiding this responsibility by taking on workers and laying them off.

He said a company in Madang was found to have been employing a worker on a casual basis for two years. The company has been ordered to backdate all entitlements owed to the worker, however, the company queried the department’s direction and referred it to the Employers Federation.

“Why make it so difficult for the little people to get their legally due entitlements?” Tibu asked.

He said these companies were taking advantage of  the people’s ignorance and thought they could get away with it.

Meanwhile, the department has found some serious cases of non compliance by companies in Madang province and organisations and individuals responsible have been dealt with.

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Getting visitors to the Cooks a challenge

Getting tourists from source markets to the Cooks will be the main challenge for its tourism body as it works to maintain a year-round visitor flow.

Tourism chief Chris Wong said while it works hard to lure visitors to its shores, the main challenge in achieving this would be accessibility from long-haul markets.

It has had a few successes. “The country successfully negotiated with Air New Zealand for non-stop services between Rarotonga and Los Angeles when the current Rarotonga/Papeete/Los Angeles services ended in April.

“Air Rarotonga will also commence twice-weekly services between Rarotonga and Tahiti (French Polynesia) in conjunction with Air Tahiti using an ATR 72 aircraft.

Tourism is booming in the Cooks. Last year it experienced another record year. Provisional figures for 2006 showed a four percent increase for the year at 92,082 visitors.

The country’s visitors mostly came from New Zealand accounting for 47 percent of the total visitor numbers.

Cook Islands tourism chief executive Chris Wong, however, said Australian arrivals were marginally down at - 2 percent compared to the year before at 9291 whilst the US arrivals were up 23 percent to 5445.

Arrivals from Canada increased by 12 percent for the same period at 2277 while European arrivals remained static at 18,195 arrivals for 2006.

“The Cook Islands has seen visitor arrivals increase by 26.5% over the last five years from 72,781 arrivals in 2002 to last year’s record of 92,082,” says Wong.

Estimated revenue from tourism is placed at $147 million for 2006, accounting for approximately 50 percent of the country’s GDP.

“During this period, the industry has seen an expansion and refurbishment of existing properties, development of up-market boutique resorts and approximately 200 rooms in private rental accommodation for visitors.

“A Tourism Master plan was completed last year based on a geo-tourism strategy for sustainable tourism development. This plan maps the course for tourism to 2015.

“This plan will be meshed into the country’s national development plan, which is nearing completion,” says Wong.

A key recommendation of the plan called for the re-branding of the destination, which Wong says was completed last year and launched in New Zealand, Australia, and North America.

The new brand “Cook Islands...Live Differently” was launched in Europe recently.