All public discussion of the Pacific Marine Industrial Zone proposed for Madang (scant that it be) has ignored some of the local political implications in favour of the economic benefits of what are called 'Special Economic Zones.' Clearly, the cost-benefit analaysis is about local versus national interests in the eyes of the PMIZ supporters, but this elides the fact that there are national political implications to these industrial zones as well.
In this post, the first piece here is an argument about the absence of political discussion in the annual World Bank Report for 2009, which specifically promotes the SEZ concept as it has been realized in China. China's model city for SEZ's is Shenzen, images of which we include below.
The second piece in this post is distilled from a power point prsentation by Fisheries expert Dr Claire Slatter, who questions the social implications for the PMIz---among its other impacts.
Where Is the Geography?
World Bank’s WDR 2009
Anant Maringanti, Eric Sheppard, Jun Zhang
Economic & Political Weekly EPW july 18, 2009 vol xliv no 29
Anant Maringanti ([email protected]) is with the Department of Geography, National University of Singapore, Singapore, Eric Sheppard ([email protected]) is with the Department of Geography, University of Minnesota, Minneapolis, MN, USA and Jun Zhang ([email protected]) is with the Department of Geography, National University of Singapore, Singapore.
P1:
For each of the last 31 years, the World Bank has commissioned a World Development Report (hereafter the Report), which sums up its considered position on a particular developmental theme.
…To the extent that it signals the World Bank’s public relations and intents, it is a marker of ideological shifts within the multilayered international institution – as ort of weathercock.
Reports
To discerning academics, however, the Report is riddled with inconsistencies and omissions. Increasingly, it appears that the inconsistencies and omissions in the Report are not incidental but effectively constitute a strategy to draw in academics and practitioners into broadening circles of engagement year after year. …
The 2009 report is titled Reshaping Economic Geography, whereas the 2010 Report, Development in a Changing Climate, will ask how unexpected physical geographic changes may attenuate development.
Pp58-50:
The Report is enthusiastic about China’s special economic zone (SEZ) strategy as a successful, spatially targeted intervention, speaks warmly of the fluidity of Chinese labour markets, and suggests that rural-urban and rural-SEZ migration is a win-win for migrants, places of origin and places of destination. Further it suggests that liberalised land markets and institutionalised private property will catalyse the eradication of slums and urban poverty. In India, by contrast, it highlights two important barriers to labour mobility, and recommends targeted interventions to deal with urban inequalities.
…Even along their different developmental trajectories, India and China share many common features in their reform experience; a comparison that yields quite different lessons from those espoused in the Report. In both cases, during the past two decades and a half, the devolution of fiscal responsibility has financialised highly politicised processes of spatial competition, in which local elites have enhanced their power in cities that are increasingly hostile to rural migrants. This has undermined the ability of rural migrants to claim rights to urban residence, and to decently paid employment, negatively impacting both their well-being and that of the places they have left.
Fiscal Reform in China
The 1994 fiscal reform in China centralised much of the revenue collection, yet kept expenditure responsibilities decentralised.9 The main sources of revenue remaining under local governments’ command are land leasing and discretionary control over the hukou regime for migration.10
Over the last two decades, market-oriented reforms and economic growth have dramatically intensified faction-based political struggle in the party, enhancing the role of money in political power. At the individual level, party leaders perceive strong incentives to boost short-term local revenues and to produce visible “image projects” such as the development of infrastructure, often at the cost of the weak and marginalised groups. Such projects enable local party leaders to accumulate some “hard evidence” of political performance, enrich themselves, and accumulate funds to bribe higher level leaders and lubricate political ties. ..
If we recall in this context that the party state in China has generally been biased against the rural over the last three decades, but for episodic interventions to improve living conditions in the rural areas and attempts to integrate rural migrants better into cities, it would appear that pro-market reforms in China have only gone to reinforce that bias...
Relative Location
…Development depends on spatial strategies that keep large numbers of people perennially on the move, and underpaid .Let us now see how the Report addresses this reality. Shenzhen is featured as the most successful SEZ and city in China. Propelled by the forces of agglomeration, migration, and specialisation, and helped by its nearness to Hong Kong, China, Shenzhen has grown the fastest of all cities in China since 1979, when it was designated a special economic zone.
The Report attributes Shenzhen’s success to residents who are “the best-trained professionals in the country, attracted by high salaries, better housing, and education opportunities for their children” (p 224), going on to stress that it was helped along the way by its proximity to Hong Kong. Such a reading of Shenzhen’s success is consistent with the Report’s general observation that “[l]ocation is the key: poor location is the main obstacle to success” (p 254), implying that “spatially directed interventions” must “exploit geographic advantages rather than try to offset them” (p 254).
More Complex Story
However, even a cursory examination of official statistics reveals a different, more complex story. Shenzhen’s 8.77 million permanent residents in 2008 included 2.28 million hukou-residents (26%).12
A census on 15 April 2008, by the Shenzhen Floating Population and Rental Housing Management Office, revealed that Shenzhen had12.3 million floating population, 11.5 million of whom had stayed over six months, and 88% of whom came to Shenzhen seeking a job. Over 87.5% of these workers are between 16 and 44 years old, with 99.8% lacking professional qualification of any kind. Of the workers, 88.5% agricultural-hukou holders; only 1.79% held a bachelor degree or above, and 73.2% held a degree of middle school or below.
Conforming to national patterns, only 3%of Shenzhen’s floating population resided in purchased houses, 36% in dorms, and others in rental units. Only 32% were living with family members. Contrary to the impression created by the Report, Shenzhen’s competitiveness stems largely from this high percentage of floating, temporary population. This workforce is not participating in a liberalised, fluid labour market, but is subject to a cautiously manipulated hukou system that channels temporary migration and maintains a state of “incomplete urbanisation”(Chan 2009).
The hukou reforms in China thus, do not signal abolition of restrictions on migration and the emergence of a “fluid” labour market (contra pp 153-54 in the Report). Rather, they mainly devolve responsibility for hukou policies to local governments, giving them new tools to keep people from becoming permanent migrants in cities. Such restrictions help keep labour costs low. Even with the recent “labour shortage” before the economic crisis, the estimated average manufacturing wage in China in 2007 was only $0.76/hour, about 3% of the US wage and 25% of Mexico’s (Standard Chartered Bank 2008).
Similarly, Shanghai, praised in the Report for its land market institutions, has in fact been the remarkable leader of what may be called the Chinese “land enclosure” movement. With revenue from land leasing now the single-most important source of local extra-budget revenue, especially fees from commercial and residential land leasing, (e g, Lin and Ho 2005; Yang and Wang 2008), land-related issues arising from state expropriations or acquisitions have become the top cause of rural grievances and protests (Zhu and Prosterman2007).
A large number of farmers, uprooted by such land grabs, have flooded the labour market, further reducing labour’s bargaining power. Low compensation costs enable local governments to offer land to industrial investors (such as General Motors) at extremely low prices, as part of a “race to the bottom” regional competition (Tao and Yang 2008).
…In short, increased labour mobility in China is due to a system whose fluidity and flexibility is primarily for powerful local politicians and investors. For migrant workers and their places of origin, and for the majority of ordinary urban residents, its inflexibility is a lose-lose situation. This state of affairs may be represented by the Report as temporary, but this is hardly any consolation for those enduring forced mobility and impermanent residence. The economic crisis has triggered the “deportation” of some 20 million migrant workers back to their rural homes, having lost their jobs and without access to their pension contributions– few qualify for the latter, under the rule that pensions are payable only after 15 years of contributions (Bradsher 2009).
Notes
9 Local governments can claim about 50% of the revenue of commoditised housing development (65% in Shanghai) through both land and tax revenues.
10 The hukou system refers to the household registration system in China which circumscribes rights to individuals to specific places. Rights to services, etc, in this system are not portable. This means, once you leave the area in which you are registered, you are both illegally residing in other places and are denied any entitlements.
12 Statistical Communiqué of Shenzhen Economic and Social Development 2008; http://www.sztj.com/main/xxgk/tjsj/tjgb/gmjjhshfzgb/200903243520.shtml
References
Bradsher, K (2009): “China’s Unemployment Swells as Exports Falter”, The New York Times, 6 February.
Chan, K W (2009): “The Chinese Hukou System at 50”, Eurasian Geography and Economics, 50(2), 197-221, No 2, pp 197-221.
Lin, G C S and S P S Ho (2005): “The State, Land System, and Land Development Processes in Contemporary China”, Annals of the Association of American Geographers, 95: 411-36.
Tao, R and D L Yang (2008): “The Revenue Imperative and the Role of Local Government in China’s Transition and Growth”, Paper prepared for presentation at conference on China’s Reforms, University of Chicago, July.
Yang, D Y and H K Wang (2008): “Dilemmas of Local Governance under the Development Zone Fever in China: A Case Study of the Suzhou Region”, Urban Studies, 45, 1037-54.
Zhu, K and R Prosterman (2007): “Securing Land Rights for Chinese Farmers: A Leap Forward for Stability and Growth”, Cato Development Policy Analysis Series, No 3, October 15.
The Pacific Marine Industrial Zone (PMIZ):
Social (including gender) Implications
Dr Claire Slatter
Fiji National University
IPMEN 2010 Conference, Outrigger Hotel, Fiji
What is the PMIZ?
A mega industrial fisheries project, to be based in Madang, PNG, comprising
l 10 tuna canneries
l Dock and storage facilities to service foreign fisheries vessels
l Round the clock cannery production and vessel servicing
PMIZ is expected to
l be a major, tax-free fisheries processing hub
l Retain a larger portion of the tuna caught in Pacific waters for local processing
l earn PNG $2 billion a year in tuna revenue
l create between 30,000 and 40,000 new jobs (mostly for women?)
l generate spin-off businesses (e.g. transportation of workers to and from factories)
Background to the PMIZ
o 1996 – first cannery (RD Tuna) established at Siar, Madang
o 1999 –corporatization of PNG Fisheries Dept –> creation of the National Fisheries Authority
o NFA commercially develops PNG fisheries sector & targets K1 billion for fisheries revenue in 5 to 10 years
o 28th May 2003 - EU granted PNG duty free access to EU markets under LOMÉ
o 2004 - PNG’s tuna fishing effort = 10% of total recorded tuna catch in WCPFC waters
o 2006 – second cannery (Frabelle) set up in Lae
o 300,000 tonnes of fish processed by PNG’s two canneries (in Madang and Lae) and three loining plants (Madang, Lae and Wewak) in 2007.
o PNG’s fishing effort in 2007 accounted for 11% of the overall 4.3 million MT that was globally harvested that year (totaling US$6.1 billion in value)
o PNG’s canned & processed fish exports enjoyed preferential access to EU markets until December 2007 (Cotonou)
o Mid-2007, PNG began soliciting support from PNA states for a proposed ‘Marine Park’ project (later re-named PMIZ)
o PNG initialed an EPA with EU in December 2007 primarily to secure changes in EU’s ROOs and development support for the PMIZ initiative
Who is Supporting the PMIZ
Chinese interests
o EXIM Bank of China (loan of US $71m)
o Shenyang International Economic and Technical Cooperation Co Ltd (developers of the PMIZ)
o Two other obscure Chinese fisheries companies were earlier named in connection with the PMIZ
o The Chinese Government
PNG Government
o Ministry of Commerce & Industry
o National Fisheries Authority
o The Provincial Government in Madang?
The private sector in PNG
o Chambers of Commerce, RD Tuna
World Bank
o International Finance Corporation (IFC)
PNA states
o Which ??
EU??
ADB?
Who else?
EPA (MFPA) & PMIZ
o Private sector supporters of PMIZ involved in EPA negotiations
o Change in ROOs secured - allowing fish caught by any vessel in Pacific waters to be exported to EU markets
o Proposed MFPA
o EU to be offered 5% of total allowable effort allocated through the VDS for 20 yrs
o EU to provide ‘financial contribution’ of €100 per tonne, plus financial assistance in developing the PMIZ
o To allow PACP crew on EU vessels
Implementation of PMIZ
o 19th June 2009 - PMIZ ground-breaking takes place at Vidar
o No real consultation with people in Madang Province on PMIZ
o No SIA undertaken as yet
o No protective/regulatory framework in place
o October 19, 2009 – a major protest march held in Madang
“This PMIZ arrangement is a fishy deal, orchestrated by individuals driven by selfish interest and evil intent”
Sumkar MP, Hon. Ken Fairweather,
cited in Mining Monitor, July 25, 2009.
Potential for social conflict
1. Disputed land on which PMIZ is being constructed
l 20 year struggle by people of Rempi, Sek, Kanaman, Midiba and Haven over 860 hectares of Maiwara and Vidar land
l In 1996, the Catholic Mission returned the land to the Madang Provincial Government, assuming that it would be used to develop projects to benefit the people
l Madang Provincial Government subsequently sold the land to RD Tuna
l RD Tuna has since resold the land to the national Government (Madang Governor, Sir Arnold Amet, has promised to assist get the land returned to landowners).
2. Law and order problems & industrial conflict
· Massive influx of ‘outsiders’ into Madang province in search of employment in the PMIZ – Madang already has a law and order problem
· 80% of RD Tuna workers = non-Madang; PMIZ intended to see other Pacific Islands sending in workers
· Industrial conflicts resulting from poor wages and conditions (12 hour shifts; no holidays) and weak enforcement of labour standards
3. Social and Health Problems
• Upsurge in the sex trade (to supplement poor wages)
• “Sex for by-catch” trade
• Upsurge in HIV infections
4. Environmental Concerns
l Madang Lagoon is PNG’s richest marine area & home to 11% of the world’s reef fish, and to 17% of PNG’s endemic fish species (Jenkins 2003). The Lagoon covers 4,000 hectares of reef.
l Independent studies show substantial environmental destruction from the existing cannery and associated fishing operations in Madang - e.g. Seg Harbour – site of RD Tuna’s cannery – half the reef is dead at three metres depth
l Implications for subsistence fisheries and food security – villagers report a decline in fish sticks
l Parts of the Lagoon area, extending from Madang town to Sek and Vidar, have already been declared a conservation area by the Bel people
l Risk of over-exploiting/depleting the tuna fishery – ref. Barclay & Cartwright 2006 ( WCPFC Scientific Committee warned of over-fishing of yellow-fin and big eye and recommended reducing fish mortality. How safe are skipjack tuna stocks?)
Other environmental problems
o Oil spills
o Ammonium gas spill at Vidar Harbour (2003)
o Toxic acid spill
o Waste disposal problems
o Stench from the cannery
o Unauthorised fishing of other species using nets
o (hidden extraction/illegal exports of fish by RD Tuna)
o Likely impact of 10 canneries on Madang’s water supply
Implications for women
o Cannery workforce – almost exclusively female
o impacts on both supplying areas and Madang of recruiting/employing up to 30,000 women workers
o Impacts on gender relations of round the clock production
o Security/safety dimensions
o Surreptitious trade aboard fishing vessels (sex for by-catch) by non-industrial workers
o Risk of increased child prostitution
o Risks of increased HIV/AIDS (7% of PNG population likely to be infected by 2015?).
Locally-registered RD Tuna vessel – pays no license fees to fish in PNG’s waters
Children paddle around the RD Tuna vessels
RD Tuna women workers sort fish at the company’s wharf
RD Tuna woman fork-lift driver (not paid the skilled wage of her male counterpart)
RD Tuna’s gendered advertising pitch
Foreign NGOs misleading the people? Or outside interests
seeking to profit ?
The Challenge: what to do?
o Very little official information available about this controversial project.
o So far, protests against the PMIZ have been locally-based
o Which PNA (and other Pacific) states are supporting the PMIZ?
o Other Pacific states and their citizens stand to benefit from this major project at the expense of the people of Madang & PNG
o Madang NGOs struggling to stop this high risk industrial development urgently need support from other Pacific based organizations.