There are increasing reports that the Solomon Islands Port Authority is setting up new businesses. Some of this information comes from SIPA itself. The CEO of SIPA has stated that SIPA intends to run businesses on ‘land, sea and air’.
Mr Yeo has stated that SIPA will use busses to take tourists from incoming cruise ships. Until now, this has been done by local businesses. There is also news that SIPA intends to import rice and other consumer goods. Also that it plans to run its own trucking businesses, domestic shipping, and more.
Where will this stop? And where is the money coming from?
The Solomon Islands Chamber of Commerce and Industry (SICCI) supports reform of Solomon Islands ports, and competition in the marketplace. But competition must be fair and reasonable.
SICCI is concerned that SIPA may exploit its monopoly on ports. Because it holds a monopoly, it can charge whatever it likes. There are no alternatives.
The effect of this may in the short term be appealing. More money to government coffers. This might seem good for SIPA, but is it good for Solomon Islands?
If the cost of using Solomon Island ports rises above international levels, there will be less economic activity here. We will not immediately see it – but ships will be less likely to come to Honiara to offload and tranship. Our standard of living will decline because we will not be able to afford what our neighbours in other countries can.
This is already happening – it is more expensive to import cars to Solomon Islands than nearby countries.
Transport costs also matter for our exports. The lower the cost of loading and processing exports, the more attractive are our exports on international markets. How much does this matter? Enormously – studies have found that if a country’s transport costs double, then trade can drop 80% or more. And already, SIPA’s costs have gone up around 240%, according to the CEO of SIPA.
If it was a good thing for ports to increase their charges, give money to the government, and set up businesses to destroy local markets – then other countries in the world would have thought of this a long time ago. Everyone would be doing it.
The reason why government businesses should stick to their core business is to avoid this sort of smoke and mirrors trick. It does not create wealth. It destroys it.
Every dollar that SIPA makes is a dollar taken from a local business. In some cases, every dollar that SIPA makes may be much more than that – it may make a local business go broke. It could put people out of work.
We will all be poorer. But SIPA will appear as though they are doing a good thing.
Solomon Islanders have a choice. Do we want an efficient port? – in SICCI’s view, Yes. Do we want a monopoly operator that overcharges, only to undercut local businesses? – in SICCI’s view, No.
SICCI supports reform of ports – it is long overdue. It also supports fair economic competition. It reiterates its commitment to cooperating with SIPA to achieve these ends – in a fair and transparent manner.
By Chantel Oppenheimer
Solomon Islands Chamber of Commerce and Industry