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Wednesday, June 12, 2024

Weah’s Last Decision That May Step on Uncle Sam’s Toes

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By  Festus Poquie

President George Weah has issued an eleventh hour Executive Order that may significantly impact the operation of US Company Firestone Liberia LLC, a subunit of Bridgestone Americas.

In a presidential decree Weah banned the exports of unprocessed rubber from Liberia to tackle graft and abuse in the industry.

The measure aims to boost domestic economic activities through local processing of the commodity and development of the sector that could see new jobs created, the outgoing President said in Executive Order 124 signed Nov. 23 but made public late Tuesday night.

“All customs officers and law enforcement authorities at points of entry and exit to and from the Republic of Liberia, whether by land, sea, or air, shall stop and prohibit the exportation of all consignments of unprocessed natural rubber from the Republic of Liberia.

“That transporting or moving unprocessed natural rubber outside of rubber plantations between the hours of 8:00 p.m. and 6:00 a.m. shall be prohibited.

Individuals found transporting or moving unprocessed natural rubber during those hours shall be stopped by the plant protection force or law enforcement authorities.

Any person found to be in violation of this Executive Order shall be prosecuted by the Ministry of Justice, the Executive Order said.”

New guidelines will be promulgated to manage the sector while government agencies like the ministry of commerce and Finance will create avenue for smallholder farmers to trade locally, the President said.

What at Stake?

These farmers lack the capacity to process their yield in a manner that suits the government’s regulation and would offten sell to big actors like Firestone.

Rubber is Liberia’s largest export, worth just under $200 million a year, or roughly 40 percent of total annual exports, according to IMF figures.

Firestone, which signed a 99-year contract with the Liberian government in 1926, operates the world’s largest single natural rubber plantation in Liberia, covering almost 200 square miles.

It exports one shipload of processed latex from the port of Monrovia each month and has spent $573 million purchasing rubber from domestic farmers since the end of the country’s second civil war in 2003 according to the company’s website.

Production from its plantation is used in the manufacture of tires by its parent company Bridgestone, as well as in the manufacture of medical components, adhesives and condoms.

Other major companies include Salala rubber company and SIFCA, part owned by Singapore’s Olam International and Wilmar International.

“We can’t continue to have people exporting rubber. It is depriving the government of the needed revenues and income generation for local processors,” Jelius Sele, Executive Director of the Rubber Development Fund told the Liberian Daily Observer.

“This policy will not only allow Firestone to buy rubber from farmers as perceived, but other concessions will have the opportunity for purchase.”

Indian Businessman Upjit Singh Sachdeva alias Jeety has built a $30 million Rubber processing plant in Weala, Margibi County with the capacity to process more than 60 tons per hour.

The Indian man’s factory is exposed to low supply risk as it does not have the quality of uncrossed rubber to match the investment target. Farmers favor during business with old players like Firestone to trade.

The idea of the Executive Order is for new players like Jeety to leverage the ban by beating industry price level to attract demand, according to people with knowledge of the presidential law.

More farmers trooping to the new Indian player will disadvantaged the Americans. The United States is keen about the health of its oversea companies since it has direct relationship with economic and security interests.

 

 

 

 

 

 

 

 

 

 

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