Financial Secretary Office News

Financial Secretary Office News

Media Release: Review of the Los Angeles and Sydney underwritten flights

As part of the process for the tendering of underwritten air services, the Cook Islands Government (CIG) commissioned an independent assessment of the underwritten, direct, flights from Los Angeles (LAX-RAR) and Sydney (SYD-RAR). The assessment looked at the contracts for those routes, as well as the financial and economic performance of the underwritten flights.

The lead reviewer was Market Economics, a leading New Zealand (NZ) economic research consulting firm, in partnership with the Hillhouse Group and Astral Aviation.

As a whole, the two underwritten flights are estimated to have a positive effect for the Cook Islands economy, with the additional spending by overseas visitors outweighing the cost to the taxpayer, particularly for the direct to Los Angeles service.

  • The underwrite for the Los Angeles service is estimated to deliver approximately $11.5 million to the national economy, and have a positive impact on job creation for local workers.
  • The economic effects of the Sydney underwrite are smaller. The average economic outcome over the 2014-15 period showed a net negative effect of 1.1 million in GDP terms, although 2016 and 2017 are expected to be better due to strong tourism arrivals and low fuel prices.

The expected replacement of the Boeing 767 aircraft with the larger Boeing 777-200 aircraft (B772) by Air New Zealand on both routes will improve service levels and make the flights to the Cook Islands more attractive to visitors, with increased numbers of premium economy and business class seating. However, changing to the B772 will greatly increase costs in the short term.

Going forward, the costs of the larger aircraft will be reduced if visitor numbers remain strong. The NZ, Australia, USA and Asia markets have shown strong growth over the 2010-2016 period, and the B772 service is expected to have a positive effect on visitor numbers from these markets as they continue to grow.

In addition to the generally positive effects on the economy, the reviewers felt that there are important strategic reasons for keeping the direct services from Los Angeles and Sydney:

  1. Direct flights with key tourist markets, especially the USA and the Northern Hemisphere markets through the Los Angeles service;
  2. Market security and diversification by making it easier for visitors from Australia and the Northern Hemisphere to visit the country; and
  3. Broadening the visitor base by attracting more higher-end visitors via the B772.

The reviewers conclude that the underwrites are delivering positive benefits to the country but there is room for improvement. Over the medium term, the focus should be on limiting the costs and increasing revenue. The reviewers recommend CIG and Air New Zealand engage in joint marketing programs to help achieve this.

Additionally, strengthening the governance arrangements of the contract and increasing the ability of the CIG to actively manage the relationship is also a key factor that will help the success of the underwrite in the future.

[END]

30 August 2016


Press Release: E-Government Procurement Portal

Cook Islands Government is working with ADB to develop a new E-Government Procurement portal for the Cook Islands. The system will improve transparency and access to Government Contracts for supply and works for suppliers both in the Cook Islands and wider into other Pacific Island Countries. The Portal is now live, albeit that we are still testing its capabilities and features, and is being developed in Cook Islands, Samoa, Tuvalu, Tonga and Vanuatu as well as being open development in other Pacific Island countries.

At this stage there are no plans to move 100% onto the Portal and so suppliers will still be free to submit bids manually or to our current electronic tender account via email, but we invite local suppliers and contractors to register in the system as soon as possible to take advantage of the benefits of the Portal. The benefits are:

  • Secure electronic expressions of interest, communication, and submission of tenders
  • Automatic notification of any request for supply and works tenders, and quotes, for any projects that are relevant to your business
  • Expansion of services you provide across the Pacific

The link for the supplier portal is: in-tendhost.co.uk/adbprocurementnetwork

For further information contact Russell Hynd on phone 29511 ext. 8307 or email russell.hynd@cookislands.gov.ck

[END]
26 August 2016

Press Release: Import Entry Fees Explained

From 1 July 2016 it was necessary for Customs to start charging for the import entry processing service it provides.  As explained to importers and Customs agents prior to the fee introduction, an electronic import entry processing fee of $10 plus VAT applies for all goods entered and cleared online.  Manual import entry clearances will incur a $20 plus VAT transaction fee.  Obvious price differences are to encourage importers towards using the automated goods entry system as it is more cost efficient for both importers and Customs as administrators.

The fee is being used to partly cover the cost of maintenance of the goods entry processing system which has proved hugely successful for importers reducing the clearance times for their import entries.  Prior to the introduction of the automated goods entry system clearance times for goods entries averaged 145 hours for sea freight and 27 hours average for air freight.  According to a Time Release Study conducted here last year by New Zealand Customs after the automated goods entry system was implemented, the clearance times are down to 25 hours average for sea cargo, and 13 hours for air cargo.

In response to the recent Cook Islands News article concerning the fee, Customs would like to point out that the automated system can be used by individual importers, as well as brokers, at reduced costs.  Importers still have the option to file manual entries, incurring higher fees, as well as using a Customs broker and incurring their fees, but these decisions are optional.  If any importer is concerned about costs, they may wish to try using the automated system, which is proven to be quicker, and will reduce costs.  If importers would like to start using the automated goods entry system or hear more about it, please feel free to contact Senior Customs Officer, Walter Tangata on telephone 29365, or via email walter.tangata@cookislands.gov.ck.

[END]
23 August 2016