CPA called to join in probe of rising consumer prices

Four months into a probe on the high consumer prices on the island, government agencies tasked to investigate have yet to break ground which could explain the spiraling cost of living in the CNMI.

And now, Rep. Melvin Faisao, who initiated the probe, said he would ask the Commonwealth Ports Authority to help shed light whether port fees, wharfage and other charges the agency imposes have contributed to the rising prices of goods being sold on the island.

The move follows findings by the Department of Commerce that it’s not only the shipping rates which eventually dictate retail value of imported goods, but also other factors that importers pay before they can unload their products.

Commerce Sec. Frankie B. Villanueva disclosed shipping companies serving the domestic ocean route file their respective tariffs with Surface Transportation Board of the U.S. Department of Transportation.

Acknowledging that his department would not be able to undertake comprehensive study on their rates given the limited resources, the DOC chief said the tariffs are “reasonable,” otherwise such fillings would have been disapproved.

But he noted that existing tax laws in the Commonwealth also provide additional expenses to the shipping industry which may realize a tax liability of up to 150 percent, depending on the level of revenue.

“The reason behind prices being lower in Guam than in the CNMI should be openly visible — the CNMI is an additional portion of a shipment if originating from the U.S. mainland,” Villanueva wrote to Faisao.

Alarmed by the disparity of consumer prices between the NMI and the neighboring island, the representative last May called on administration officials to investigate shipping companies, wholesalers and retailers who may be responsible for jacking up the cost of goods being sold here.

Faisao said he has received complaints on the expensive products that have pushed the cost of living in the CNMI as one of the highest in the nation.

Aside from the DOC, other agencies called for the task included the Attorney General’s Office and the Department of Finance, both of which have yet to fully assess the situation.

CPA has to answer: Faisao said CPA should also be involved in the probe in view of its decision to hike the ports fees by an average of 30 percent last July to service the $30 million debt it owed to finance expansion of the Saipan seaport.

Noting the garment industry has shipped apparel to the mainland, the legislator asked whether this is not enough incentive to shippers to lower its rates.

“Guam doesn’t have any export products, why are its shipping rates different from ours,” Faisao asked. “Maybe CPA has a lot of explaining to do on the impact of the higher port fees on the consumer prices.”

Villanueva cited several factors other than the shipping rates that are passed on to consumers and determine retail prices, including prevailing CNMI taxes imposed on imported goods as well as volume of the imports and currency exchange rate.

For instance, wharfage fees being charged by CPA for inbound cargo have shot up more than 50 percent compared with the rates four years ago. At present, it stands at $4.25 per revenue ton.

“Granted that the rate may appear minimal in terms of total charges for every revenue ton, importers who are consistent and stable in the volume of imports would, similarly, be confronted with a wharfage expense approximating the percentage increase of the rate,” he said.

Villanueva admitted, however, others factors may also affect prices which his department would not be able to investigate. “We did not attempt to gauge probability profit margins of shipping companies, wholesalers and retailers as the information of such review is not readily available,” he explained.