The_Open_Door_deel1

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sion, and sales to affiliates made at prices lower than the
Singapore price (26). The Government, therefore, rejected the request
and, instead, demanded additional information (documents,
copies of sales contracts etc.) from the management in order to
determine whether the company had violated, and, if so, to what
extent, the provision of Article VII of the concession agreement
regarding the invoicing of the plantation's produce. However,__by
late 1978, and despite repeated requests, the management of LAC
had still not provided the Concession Secretariat/Ministry of
Finance with the relevant information.
With respect to inter-company interest payments, LAC's debtequity
ratio is relevant. In 1976, total investments amounted to
$ 25.7 million and had been financed with only $ 0.7 million
equity capital. During the years 1965 - 1977 LAC's debt-equity
ratio varied from a high of 35 : 1 and a (relative) low of 9 : 1.
It should be noted that a 2 : 1 ratio characterizes the other
rubber producing companies.
Retained earnings fell from $ 2.8 million in 1970 to only $ 0.6
million in 1976, the latest year for which data were found, and
after the company had reported a cumulative net loss of $ 1 million
(in the preceding year, 1975, when its tax-holiday expired).
Year
1970
1971
1972
1973
1974
1975
1976
1977
S ource:
TABLE 5
EQUITY CAPITAL, RETAINED EARNINGS
AND TOTAL INVESTMENTS OF
LAC/UNIROYAL 1970 - 1977
(in millions of U.S. dollars)
Equity
Capital
$ 0.1
0.1
0.1
0.1
0.1
0,1
0.1
0.1
Retained
Earnings
1 2.8
1.7
1.7
1.4
1.6
1.0
0,6
n.a.
Total
Investments
$ 20.0
22.0
22.8
24.0
25.2
24.0
25.7
31.1
- Concession Secretariat, Ministry of Finance, Monrovia.
In 1973 UNIROYAL Directors had shown interest in extending the
LAC rubber plantation by 10,000 acres. Although the U.S. company
owns plantations in Malaysia, Indonesia, and Liberia, the latter
was considered the most preferential place for extension activities
because of the liberal tax privileges, the controlled wages,
and the country's political stability (27).
The Government, however, when requested to grant an extension of
the period of income tax exemption until 1985, before even
considering this proposal, wanted to review the concession