"Price control enforcement not yet implemented by Economic Affairs"

April 28, 2010

By Bill Jaynes
The Kaselehlie Press

Pohnpei, FSM-In January of 2009 Pohnpei's Department of Economic Affairs hired a Consumer Protection Technician.

Peter Walter was hired for the position and immediately took part in a two week training program that was provided by Guam Tax and Revenue officers that was held in Pohnpei. He was trained how to calibrate scales and to properly measure consumables like gasoline delivered at pumps. He was also trained how to ensure that containers are accurate when they are used to deliver fuel at less technical fueling stations who store their fuel in barrels. Walter will be leaving Pohnpei for another two week training session with Guam Tax and Revenue officers beginning in Guam on April 26.

Vallerio Hallens said that vendors initially had a good number of questions about the program but once they had been informed what was expected of them the Department of Economic Affairs has had good cooperation from vendors.

He said that the department has found no major problems with weights and measures although he said they did find one gas station whose pumps were delivering a gallon and a half which registered on the pump as only one gallon. That fuel station had developed quite a loyal following but was costing the vendor a lot of money. "He was very grateful that we found out about it," said Hallens. Hallens said that Walter is "very strong and very straightforward." He said that Walter had reported several incidents when vendors tried to bribe him but didn't say if any charges had been filed in those matters.

The Consumer Protection Technician, a job whose title was changed from the initially proposed job title of Consumer Protection Officer, a title that might have connoted some law enforcement powers does check local fish market scales as well. Some vendors had been using one scale that registered weights as being lighter than they actually were when they bought fish from local fishermen, and an-other scale with the opposite problem when they sold the fish to customers. It has been much more difficult for vendors to do that since Walters assumed his position. Hallens went further emphatically saying, "That problem has stopped."

In addition to surprise inspections at local fish markets Walter does a thorough quarterly inspection of fuel pumps at commercial stations. When the inspection is completed he places an official seal on the pump. Each month he returns to each fuel station to verify that the seals have not been broken.

Walters also accompanies the Environmental Protection Agency to island stores to be certain that food and beverage products being sold are not already beyond expiration.

The job has become too large for just one person and Hallens has included in his budget submission for the next fiscal year, salaries for two additional employees. If the budget is approved, one of those employees would help Walter to effectively cover the island to enforce weights and measures. The other employee would perform the, as yet un-implemented portion of the proposed job description of nearly a year and half ago: enforcement of price control laws and regulation of repair shops that either overcharge or perform unnecessary or unauthorized work.

In an interview with The Kaselehlie Press that appeared in the November 26, 2008 issue, Hallens said that his office would set up a consumer hotline that people could call in order to register consumer complaints. During the 17 months the newspaper attempted to conduct a follow up interview on the matter it became clear that a hotline had not yet been established.

Hallens said the price control portion of the job description has not yet been implemented because of an uncertainty as to whether his office has jurisdiction in the matter. He said that Economic Affairs is mandated under the law to give assistance to the Pohnpei Price Control Commission but the Commission has not existed for a very long time. Even when it did exist, Hallens said, it wasn't very effective because most of the members of the commission were business people who may at least have been perceived to have had their own interests in keeping prices high.

He said that the Attorney General has not yet been consulted for a legal opinion on the matter but that he and Governor Ehsa have recently discussed the matter.

Whereas in larger population bases the economic effects of competition are effective at keeping prices as low as possible, Pohnpei does not have a large enough consumer base or competing business structure for those principals to be effective.

To combat that problem Pohnpei has, built into its code, a maximum legal allowable mark up for imported items bought and sold in the state. The vast majority of products sold in Pohnpei are imports. The law says that the first seller of a product landed in Pohnpei can add certain defined importation costs to the sale of that good plus a maximum mark-up of 50% beyond that cumulative price. A first seller can sell that product to a business for resale. That "second seller" can only mark up the item's price by a maximum of 20% beyond the price they paid for the item.

Some small village stores buy their products from a second seller rather than a first seller-a wholesaler, and so they markup the second seller's 20 percent markup price even further. There does not appear to be a law regarding third sellers but competition in villages does seem to function effectively as far as third sellers go.

During the long overdue follow up inter-view we provided three specific examples from personal experience in which second seller vendors had marked up their prices as much as 81%, 61% higher than the law allows.

Hallens said that he was aware that consumers and businesses alike are having a more difficult time making ends meet during this time of economic downturn and that his department is anxious to have someone on board to help protect consumers by enforcing the various applicable laws.