$64m export boost to trade

Samoa’s exports could inject a further $64 million per year into the public purse – with Prime Minister, Tuilaepa Sa’ilele Malielegaoi, lending his support to the association that could make this happen.

Earlier this year, the Samoa Association of Manufacturers and Exporters (S.A.M.E.) approached the government with a concept paper titled Concessionary Line of Fund/Support ‘Samoa Import Substitution and Exports Development (S.I.S.E.D.)’.

At present, Samoa’s domestic exports, excluding re-exports, currently make $11 million tala per year, based figures produced by the Central Bank of Samoa (C.B.S.).

However, according to the Association, Samoa’s manufacturers have the capacity to increase this output three fold, if they can get a little help from the government.

Furthermore, S.A.M.E. wants to undertake activities to increase import substitution to the value of $65 million tala per year – all while generating 1300 more jobs for the country. “The objectives of improved export development and raising the level of import substitution are consistent with Government of Samoa policies as set out in the Samoa Development Strategies (S.D.S),” the concept paper reads.

“Namely increased investment in the productive sectors of the economy, transforming manufacturing sector to boost agricultural production through higher value added processes for export development (and) encouraging investment in import substitution.”

So what do they need to do this?

“Namely increased investment in the productive sectors of the economy, transforming manufacturing sector to boost agricultural production through higher value added processes for export development (and) encouraging investment in import substitution.”

So what do they need to do this?

S.A.M.E. President Tagaloa Wilson said they are asking the government for $32 million in the form of a low interest loan scheme to be run through the Development Bank - similar to the one offered to the tourism industry in the aftermath of the cyclone.

The $32 million figure was worked out after the Association surveyed 29 of its members at this year’s Buy Samoa Made exhibition in New Zealand, to see what they needed to increase their export capability.

“So what we have done is we have met with the Central Bank and the Central Bank is excited about it because they are looking for export initiatives and import substitution for exchange savings,” he said.

“The Ministry of Finance is excited because they can see that the country is not going anywhere with the increasing debt.

“The Development Bank whom we hope will implement it is now reviewing it - it was discussed at their board meeting earlier this month they have a board meeting in January to officially finalise their decision.

“What we are asking is for $32 million (using the) Development Bank’s own process - we are not asking them to give us any special favours.”

And it appears that the project is closer to being green lit, with Tuilaepa throwing his weight behind it. At S.A.M.E.’s end of year function on Friday night, the Prime Minister voiced his support in the speech he delivered.

“When Government was progressing Samoa’s accession to W.T.O. (World Trade Organisation), Tagaloa and S.A.M.E. asked for my advice- on what Samoan Manufacturers and Exporters should do to prepare for this - my advice was simple - get our manufacturers and exporters to ‘pull their socks up’,” he said.

“I am pleased to note that S.A.M.E. has risen to the challenge - and in so doing – enable our Private Sector to enhance its competitiveness.

“The attainment of International Certification is a great start to improve the quality and international recognition of our Samoa made goods and services – both for the local and export markets.”

Tuilaepa said increasing both import substitution and exports were key development strategies that his government gives priority to.

“This is why Government has provided strong support for the Buy Samoa Made export Drive in New Zealand –that started last yearas well as the planned Buy Samoa Made export drive for Australia- which is to be launched in March 2015,” he said.

“The Government reaffirms its commitment in working together with S.A.M.E. and the Private Sector in pushing Samoa’s Export Drive and the ‘Buy Samoa Made’ brand both in export markets as well as in Samoa itself.

“The success of this – depends on your ability to deliver consistent, quality assured products and services.

“I challenge the nine companies that have now completed their international certification - to aim high - and focus on providing high quality products and services for your customers on a consistent basis.”

To get to this point of approaching government, S.A.M.E. enlisted the help of consultant Colin Stringer who admitted that Association members agreed that the industry is not what it could be.

“Everybody knows that we need to increase exports,” he said. “But how do we do it? Various schemes have been tried and various schemes have failed.

“So why is it that? It is not sort of rocket science to say that you need to increase exports. “But at the same time if we can improve the level of production here to substitute stuff that is coming into the country that is also going to contribute by way of reducing import costs.”

He said this is why both export development and import substitution must work together if this is to succeed.

“It is not just exporters - but also manufacturers,” he said.

“If you look at the balance of payments in order to improve government revenue one is if you can reduce your level of imports by making more domestically and secondly export more.

“If you are working on both fronts than you have got a better show.”

Mr. Stringer said S.A.M.E. was not saying to export for the sake of export – he said that businesses just need a little help transitioning from domestic sales to complying with the requirements of export sales.

This is why, he said, the Association and its members need financial help – not a hand out, but by having access to lower cost finance. “Then you have got a better chance of actually making the transition,” he said.

Mr. Stringer said that the challenge then is, which the government has been “quite rightly” saying, is why would this scheme work compared to any other scheme that haven’t been very successful.

“What is it that we think can make it work?” he said. “Well I guess from my perspective as a consultant that has been around a bit any project depends on the quality of the person driving it.

“If you have got the right project manager and you have got the right project champion then you have got a better show of it actually happening than if you have got someone who is only doing it because it is nice to do.

“So my argument has been in S.A.M.E.

Tagaloa has demonstrated his commitment to improving exports, he has demonstrated his commitment to making things happen so … in S.A.M.E. you have got a product champion that has got the potential to make it work.”

He said allied to this is that public money will be used for the project.

“In the sense that it is coming from government - whether it is concessionary loans or what, it is still public money,” Mr Stringer said.

“So you need governance structures in place to make sure that…the use of the funds is transparent and that there is proper reporting.” Tagaloa said most of the companies who want to participate in this scheme were all established, well-to-do businesses, who had paid off their loans.

“The problem with them looking at exporting is that it is a lot of red tape a lot of pain-in-the-neck trying to readjust with new labeling, going to the market, all the shipping issue,” he said. “So what we are saying to our members, our country needs exports they are saying we can export but the problem is your interest rates are too high your red tape is too much.

“S.A.M.E. is addressing the red tape building the capacity and it is now saying to government, these people do not to export to survive in business, they are doing quite well.

“But who the exports - the country needs the exports - and we are not asking for this $32 million as a hand out, it is actually a loan a proper loan.”

If the government does approve this scheme, according to the concept paper it could net $20 million tala clear from the loans alone - on top of what it would make from the exports.

At the end of the paper, S.A.M.E. makes several recommendations on how to move forward.

“Approval is given for the establishment of a concessionary fund to the value of 30 million for the express purpose of increasing exports of Samoan made goods and increasing the level of import substitution,” the paper reads.

“(That) the fund is to be accessed by members S.A.M.E. (and) funding to be payable in tranches to be agreed between government and S.A.M.E. executive.

“(The) project to be implemented in stages as set out in the project timetable and (the) Project (is) to report quarterly to government.”

Tagaloa said the reason why this scheme will work, where others have failed is that the industry members have taken ownership of it.

“This is the industry saying we will do it – (that is) a big difference,” he said. “S.A.M.E. is not telling the industry to do this, the government is not telling the industry.

“The industry is telling us, give us the $32 million and we will do it - a big difference.”