A commentary By CYRIL GARE – Freelance Journalist
PORT MORESBY || Journalists and media houses in PNG are reminded once again of its ethical responsibilities and journalism impartiality, with no dint of political inferences or affiliation in the parlance.
Also, social media trolls and commentators be also reminded of their call of duty to national unity (in diversity), nation building and efforts of national cohesion rather than setting fire on the beds we sleep on.
Further more, reporters working on big stories like inflation must be sensitive and possess some kind of credentials in field of economics to add weight. They may need expert consultation as required.
WHY?
Because inflation is multi faceted, any news reporting must provide these facets as opportunity before readers to digest oneself rather than imposing on them recklessly. Reporting merely on face value about “Expect More Price Increase” with raw pictures of food items on the shelves is not good enough a work of art. It only denigrates essence of the subject reported, and installs fear and increase anxiety, hostility, prejudice, apathy and ignorance on the country instead. Lack of which in the news could be regarded as ‘politically motivated with ulterior motive’ and detrimental to impartiality and society at large.
Front page Post Courier news yesterday – Aug 15, 2024 “Expect More Price Increase” is highly provocative and inciteful, something that makes public or people want to do something, especially something bad.
We can not afford a repetition of ‘Black Wednesday’ again all because of one such reporting by ‘the heart beat of PNG’ Post Courier. That mayhem has cost us more than K1 bill in GDP, loss of 15 or more lives, millions of kina worth of property burnt and destroyed, and more than 2,000 job losses meaning added poverty on PNG families. Business and investor confidence also plummeted while our international image was severely tarnished. Only God knows how these perpetrators should be punished. And we are in the midst of restoration and rebuilding businesses and individual lives who suffered in this dark veil.
Criminal investigations into the police force (RPNGC) via a Commission of Inquiry (CoI) for their part in the Black Wednesday mayhem is underway and the Post Courier should be made wary of inciting such dangerous trend on psychology in a situation that has high potency for violence.
It is eerie when media takes this pathway to the bandwagon of ‘incited-loyal-subjects of doom’. Instead, media must strive to achieve national-common and national cohesion.
Providing suggestions and alternative solutions is encouraged but importantly, educating our people, remove hostility, prejudice, apathy, and ignorance so there is understanding and public enlightenment and make PNG a safer as well as better place for all.
KNOWN FACT
Inflation in PNG is already a known fact and therefore no news. Does it deserve the front page? What was the intent, motive of such a headline? We know it, we feel it, we live with it daily. Inflation is a human phenomenon felt across the globe living no country out.
Compare COVID – 19. Despite experts’ projections that 200,000 plus humans will perish, PNG survived the scourges for reasons only individual Papua New Guineans hold at heart.
Over recent times, I have visited supermarkets and posted videos and pictures of shopping trolleys filled with groceries. And the long queues behind the till machines speak volumes about strength, upbeat, and resilience of PNG families in surviving tough times. Who says we can not survive high cost of living today and into the future? Let’s be proud and celebrate our 50th Anniversary with pride despite odds.
UNKNOWN
What is unknown and should make news instead is;
- what causes inflation,
- What needs to be done?
- Whose tasks?
- how can it be treated without compromising national security, investor confidence and promotes peace and stability.
MITIGATION
Yesterday during a media conference , Prime Minister, James Marape said his Government remains sensitive to issues pertaining to high cost of living “not that we’re detached…”, he told NBC news.
Mitigation initiatives by Government so far include:
- Employees earning K20,000 per annum and below are exempted from paying personal income tax (PIT), a savings of around K60 take home pay.
- Project fees in schools removed.
- Higher Education Contribution Assistance Scheme (HECAS) continues with more students benefitting as parents are relieved of tertiary institution school fee burdens.
- Science, Technology, Engineering and Mathematics (STEM) scholarships is gaining momentum. This week the Prime Minister officially sent off 76 young brilliant PNG brains to the United States for specialist education and training.
- Other such mitigating measures that are in the radar.
It may sound small but aggregate gains in long term is guaranteed. Faith and hope is of essence.
FOREX
Meanwhile, waiting times on foreign exchange orders have been falling substantially on central bank interventions and other factors, senior representatives of BSP Financial Group, Kina Bank and Westpac Papua New Guinea reveal to Business Advantage PNG – 15 Aug, 2024 edition.
BSP Financial Group has seen waiting times on essential orders fall to two-to-four weeks from a peak of six-to-eight weeks, according to Rohan George, Group General Manager Treasury and Markets.
All three bankers give the same two reasons for the improved waiting times: increased interventions in the forex market by the Bank of Papua New Guinea (BPNG), and increased forex inflows from PNG’s exporters.
“Central is making more regular FX market interventions … that is helping to ease pressure in the market and ensure the backlog is contained,” Kina’s Deepak Gupta told BAPNG.
Central Bank (BPNG) is responsible for managing the GoPNG’s Monetary and Fiscal Policies in collaboration with Finance and Treasury departments.
CREDENTIALS
University of Papua New Guinea (UPNG) used to have Foundation Year courses. There were Science Foundation Year (SFY) and Arts Foundation Year (AFY) respectively. In these programmes undergraduates under go drilling in Intro to economics, mathematics (calculus inclusive), intro to law, intro to political science, philosophy (including logical argument – statement, premise and conclusion formats), history of science and technology, language and literature, and other such base line training before undergraduates branch out to their respective fields of professional studies. An added bonus was that UPNG ensures PhD level lecturers teach First Years and again Final Years to refine graduates.
Foundation Year courses had now been phased out, for good or otherwise let industries be the judge of UPNG graduates past and present.
In Intro to Economics, I was taught (in 1988) that causes of Inflation can be categorized in three (3) groups:
- Demand – pull
- Cost – push
- Inflation Expectations or Inflation Psychology.
DEMAND -PULL
Demand-pull inflation is when there is an increase in aggregate demand but the supply is less or remains the same or decreases. When supply cannot meet growing demand, prices for goods and services increase.
In PNG inevitably, there is overwhelming demand exerted by a growing population at a rate of around 2.7% annually creating growing need for everything including merchandize, public facilities or amenities, better health care, education, business opportunities, employment, etc.
The imbalance to the contrary is that we do not produce everything to meet these pressures. No country does anyway. So we trade. We import what we do not produce and export what we have as raw commodities such as timber, fishery, gold, copper, oil and gas, among others. There we receive foreign exchange in US dollars that is used to expedite our annual budget activities such repairing and building roads, funding education, buying medicines, import fuel, etc.
PNG does not make enough money from sale of our commodities so we are forced into borrowing to fill the deficit gap. Unfair pricing, rigid competition, and violatile market forces sanctioned at World Trade Organization (WTO) level affect Third World countries like PNG. World hegemonies like the USA and China borrow too regardless. The issue is managing debt levels while investing in money-generating schemes to sustain budget and maintain economy afloat rather than stagnation.
PNG is heavily trade – dependent hence, vulnerable to greater pressures. For example, rice is staple food in PNG but we do not grow rice or enough of it. So we import around K750 million worth of rice annually to feed our population. Imaging walking in with no rice on dinner table tonight?
Noodles is same. One of world’s biggest supplier of wheat is Ukraine, who is at war with Russia currently. When Goodman Fielder in Port Moresby imports wheat to make noodles, imported inflation is added on price of noodles on the shelves. The story is same for lamb flaps and other food imports.
Solution: Import Substitution.
Nonetheless, we will still depend on imports of items such industrial machineries and heavy equipment, biotech, ICT, multi national corporation investment projects in mining, oil and gas, ICT, etc. and so this will bear on our demand – pull and ripple effects of inflation in the economy.
COST – PUSH
We produce or manufacture some goods and services onshore, production of raw materials. However, higher costs of production can decrease or bear brunt on the aggregate supply in the economy.
For example, machines that produce Ox & Palm corned beef, its spare parts, the tin/can that contains the processed meat, the imported beef (from New Zealand and Australia), and other such equipment and materials are taxed. All these contribute to high cost of production and cost-push inflation.
Cost-push is also known as wage-push inflation due to increase in cost of wages.
INFLATION EXPECTATION
Inflation expectations are simply the rate at which people (consumer households), businesses, investors expect prices to rise in the future. It matters because actual inflation depends, in part, on what we expect it to be. If everyone expects prices to rise, say, 3 percent over the next year, businesses will want to raise prices by (at least) 3 percent, and workers and their unions will want similar-sized rises.
The front page Post Courier report yesterday is a clear example of ‘Inflation expectation’ but greatly lack a wider score on inflation in totality. That qualifies what I have stated earlier that such reporting is shallow, provocative and inciteful, its dangerous to national peace and stability.
Port Moresby Chamber of Commerce and Industry (POMCCI) President, Mr. Rio Fiocco’s alarm on ‘bleak future’ due to expected increase on prices of consumer goods is one but not all issues kowtow under inflation matrix. While POMCCI reserves its right to express anxiety, again it is the duty of the Post Courier (media) who is responsible to provide the balance with reporting on actions (interventions and mitigation measures) taken by GoPNG under its Monetary and Fiscal Policies that are ‘work in progress’.
It is therefore safe to say that reporters who are working on such sensitive stories must possess credentials on the subject matter. In event where groups like POMCCI speaks, verifying facts from other sources including further research are handy rather than reporting from the limited face value. Not everything said by POMCCI, trolls and social media exhibitionist is gospel truth. Always verify truth, accuracy, and validity of information before reporting.
Quality journalism is earned when reporters quote more than one source in their reporting. Sad reality today see reporters write stories straight from media conferences or press releases without verifications.
How Long Will It Take to Control Inflation?
The amount of time it takes to control inflation will vary depending on many factors. Generally, it is estimated that there is a two-year lag for changes in monetary policy to alter inflation to take full effect.
Who Prevents Inflation?
It is the responsibility of a nation’s central bank to prevent inflation through monetary policy. Monetary policy primarily involves changing interest rates to control inflation.
Fiscal policy enacted through legislative action also helps. Governments may reduce spending and increase taxes as a way to help reduce inflation.
The Bottom Line
In modern times, the preferred method of controlling inflation is through contractionary monetary policies imposed by the country’s central bank. The alternative is a cap on prices, which usually do not have a great record of success.
CONCLUSION
As real as it presents itself on humanity, there really is no quick fix schemes for inflation. More so, no one Government is responsible. It is a world wide human phenomenon like crime and corruption. Individual governments need effective monetary and fiscal policies in place to address it nonetheless, no overnight solutions should be promised nor should peoples’ psychology usurped by political stooges and miscreants.
According to BPNG, Kina will find its rightful spot in open basket by 2026 and settles.
In long term:
- PNG needs to diversify its production base instead of relying on traditional commodities which are being exported in crude or raw forms for far too long;
- Compel PNG base big corporations such as Barrick, Newmont, ExxonMobil, Puma, BSP (its business account is held at tax haven in Tonga), etc. to open onshore bank accounts so to assist increase earnings of USD and support FOREX;
- Red light Capital Flight to stop large-scale exodus of financial assets and capital from PNG due to events such as political or economic instability, currency devaluation or the imposition of capital controls.
- Tap into commercialisation of new billion kina R&D driven innovative industries in medicinal drug, food flavor, and flagrance (perfumery) such as the one tabled by UPNG. Following findings and discovery, a submission is already made before the Research, Science and Technology Secretariat (RSTS). Copies already cleared by Central Agency Coordination Committee (CACC) and Office of Chief Secretary and ready for NEC deliberation. This proposal features years of research work and pilot scale trials by PNG’s very owned natural – product Chemist, Prof. Topul Rali, PhD. He has discovered hopeaphenol, a medicinal drug from a native PNG plant (Anisopthera turifera) that treated 12 variants of Covid viruses, and also killed the HIV AIDS virus completely. Further work has been done at his UPNG Chemistry lab with his 4th Chemistry students who have created hopeaphenol crystals ready for pills and capsules for clinical trial. Unfortunately, UPNG administration intervened and halted progress. R&D innovative industries such as those developed at UPNG School of Natural & Physical Sciences (SNPS) led by Prof. Rali is the way to go to create niche markets and bring in needed foreign exchange, create jobs for thousands, if not millions of rural families who own land where anisopthera thurifera is present in abundance. Massoia, another native plant, has C-10 and C-12 lactones (sugar) which when processed is used in butter, cheese, peach, apricot, and other such food flavors eaten everywhere in the world. In the perfumery world, vetiver, patchouli, tuberose, rose flower, and such plants are ready for setting the course for establishment of an Essential Oil and Fine Chemical Industry in PNG. The world market value of essential oils stands at US$27 billion as of 2022 (K108 bill). It grew from US$17 billion (K68 bill) in 2017 – (Essential Oils Market Worldwide – Statistics & Facts | Statista). This is attributed to the increasing demand from major end-use industries such as food & beverage, personal care & cosmetics, and aromatherapy. Essential oils refer to the nice scented oils derived from flowers, bark, wood, seeds of plants. The industry is yet to be developed in PNG whereas Indonesia, our neighbor has a well-developed industry exporting essential oils worth over USD 215.8 mill (K263.5 mill) per year. Essential oils contain complex, volatile chemical compounds, which are known for their antifungal, antibacterial, anti-inflammatory, and antiviral properties. Unlike most of the conventional medicines and drugs, these oils have no major side effects.
We can survive inflation just as we survived Covid. We are upbeat if we increase conscience and denounce blurting and resort to collaboration for national progress. Be wary that they are looting, sucking every nickel out of our collective riches as we continue to indulge in self inflicted thoughts, destructive to our collective gain and prosperity. Stop this non-sense now because our children will curse us forever for our inaction today.
Photo captions:
# PC 15 08 24: The front page Post Courier report yesterday – Aug 15 is a clear example of ‘Inflation expectation’ but greatly lack a wider score on inflation in totality.
# cover page: Setting the course for establishment of an Essential Oil and Fine Chemical Industry in PNG will create niche markets that can bring in billions in foreign exchange. The world market value of essential oils stands at US$27 bill (K108 bill) as of 2022. It grew from US$17 billion (K68 bill) in 2017, attributing to increasing demand from major end-use industries such as food & beverage, personal care & cosmetics, and aromatherapy. Source: Essential Oils Market Worldwide – Statistics & Facts|Statista. Cyril Gare file pic.
# massoy 2 wild: Massoia (Cryptocarya massoy) tree is endemic to the island of New Guinea, shared between Indonesia (West Papua) and Papua New Guinea. The composition of massoia oil is absolutely unique in the world of essential oils, and its uniqueness lead to its rapid development in the early 1980’s. Indeed, massoia essential oil is characterized by its high content (in excess of 60%) of aliphatic lactones based on PNG massoia trees collected from Central Province. Massoia C-10 and C-12 lactones (sugar) found in the oil is used in butter, cheese, peach, apricot, coconut, strawberry, raspberry, mango and tea. PNG has great potential for massoia oil to be further downstream processed in PNG and sold to flavor companies globally. Cyril Gare file pic.
# massoy 1: A snippet of pilot research work accomplished on the value of PNG massoia oil by massoia expert, Prof. Topul Rali, PhD. Cyril Gare file pic.
# cananga 1: Pilot test distillation of Cananga flowers collected near Brown river. Cyril Gare file pic.
