The Philippines-based company wanting to invest some $100 million in a food processing plant in the territory is vetting several interested third parties to operate the plant, which is now expected to be constructed this Fall.

However, the Chamber of Commerce says details of the proposed plant have not been discussed with the private sector, “with a view to encouraging some form of local participation.”

There has been much anticipation of such new investment into the local economy after the Lolo Administration made the official announcement early last year about AVM Bernardo Engineering’s proposed $106 million investment to set up a “multi-line food processing plant” focusing first on frozen fish-based sausage, ham, nuggets and patties.

It was also hoped construction would begin this year for the plant that is to provide some 700 new jobs in the territory, with a struggling economy dependent mostly on the canned tuna industry.

Responding to Samoa News inquiries on AVM Bernado’s proposed plant, Commerce Department director Keniseli Lafaele said it has taken time to vet several interested third parties to operate the local plant. Additionally there are viable contenders who will visit the territory separately — starting the first week of July — for due diligence visitations.

“Once the operator has been determined — and it is possible that all three or two of the three companies would form a consortium to be the operator — construction of the plant would begin,” he explained. “Targeted month to start construction is September 2015 if not earlier.”

He also confirmed that space has been allocated at the Tafuna Industrial Park for the proposed multi-food processing plant.

Sen. Galeai Tu’ufuli is among several lawmakers who have questioned whether the territorial government is a financial partner in the proposed operations. Lafaele told Samoa News that the local government “will have no role in operating the plant, [and] no equity position in the business.”

Asked if AVM is seeking local partners from the private sector, Lafaele said efforts were made to reach out to certain local people, but none has shown real interest in this endeavor.

“Perhaps when the prospective plant operators visit in July, that would be a good time to hold discussions with prospective local investors; and local equity participation is encouraged,” he said.

At last month’s general membership meeting of the Chamber of Commerce the status of AVM’s proposed plant was raised, to which Chamber chairman David Robinson noted that there have been no new developments made public. He also said there was a similar proposal presented to the previous Togiola Administration but nothing came of it.

Samoa News informed Robinson yesterday about the latest development from the DOC director and sought comments, because some members of the Chamber as well as others in the private sector, have also inquired with Samoa News as to the status of the proposed food processing plant.

In response, Robinson first pointed out that the Chamber is supportive of initiatives to encourage the establishment of new businesses that will provide employment.

However, he said details surrounding the proposed multi-food processing plant by a company or companies from the Philippines “have not been specifically discussed with many companies in our private sector with a view to encouraging some form of local participation.”

“There is a certain amount of skepticism surrounding the costs of a proposal to import considerable amounts of raw materials to process into a finished product for overseas markets as these costs could severely affect the price competitiveness of the range of the final products,” he said.

According to the Chamber chairman, there is no doubt about the federal tax credit Headnote 3A being a valuable component in encouraging the processing of products for the US market.

“But there are other less attractive influences such as our tax system as it affects non US companies, the cost of utilities, local labor costs, transportation costs to the mainland and a lack of available land close to our port,” he said.

Presumably the potential investors have carried out a feasibility study and produced a business plan for the project, and perhaps these documents could be shared with some of the potential local business investors during the forthcoming visit in July, he said.

“The Administration will no doubt be putting together some sort of attractive incentive package for the investors to factor into their planning to try and ensure that the project proceeds,” he said.

Additionally, the Chamber looks forward to being part of the July discussions and to be able to provide some commercial input to help the investors.

“We recall a similar project being proposed to the previous Administration several years ago and it failed to materialize so let us hope that this time round a deal can be consummated so much needed value can be added to our local economy,” he said.

BACKGROUND

Last December, Lt. Gov. Lemanu Peleti Mauga, along with Fono leaders led the local delegation for a site visit of AVM’s operation in the Philippines, where they conducted a “due diligence” review, as requested by the governor.

The governor told lawmakers in January this year, that a detailed report of the due diligence visit has been presented to him for review and final decision. And he said the Due Diligence Report affirmed that AVM Bernardo Engineering is a legitimate company of good repute in the Philippines. (See Jan. 15, 2015 edition for details.)