Oxford Business Group - Paupa New Guinea 2012

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Oxford Business Group - Paupa New Guinea 2012

  1. 1. THE REPORTPapua New Guinea 2012ECONOMY ENERGY INDUSTRYBANKING MINING CAPITAL MARKETSINSURANCE TOURISM CONSTRUCTIONREAL ESTATE TELECOMS & IT INTERVIEWS 9 781907 065620
  2. 2. 7Country ProfileA nation of many cultures and thousands of languagesResource wealth is set to transform the countryAssertive policies engage international trade partnersThe regional focus builds cooperative agreements
  3. 3. 8 COUNTRY PROFILE SNAPSHOT The nation’s peoples and languages are as numerous as its islands Land of plenty History, tradition and a diverse range of natural resources Occupying the eastern half of the island of New Guinea Western and Eastern Highlands provinces. The highest and hundreds of adjacent smaller islands, Papua New mountain in the country is Mount Wilhelm, which stands Guinea is an important exporter of metals (particular- 4509 metres high. The country is located in the aptly ly gold and copper) and agricultural products such as named ring of fire, the Pacific rim’s belt of numerous coffee and palm oil. The country is also set to become active volcanoes. Among these are PNG’s Ulawun, a major exporter of gas, which expected to significant- Rabaul and Lamington. Earthquakes are relatively com- ly increase the size and strength of the economy. mon and sometimes accompanied by tsunamis. The primarily rural population is highly diversified, FEDERAL GOVERNMENT: PNG is a constitutional par- comprising thousands of distinct ethnic communities liamentary democracy. Reflecting the country’s colo- that together account for approximately one-tenth of nial past (it was long ruled by Australia), the British the world’s known languages, and PNG remains heav- monarch remains the official head of state and is rep- ily marked by the indigenous cultural traditions of its resented through a local governor elected by the par- peoples. Geographically, the interior of PNG is moun- liament, though the role is largely ceremonial. A prime tainous, while the country’s tropical rainforest is famous minister serves as head of the government, elected by for the diversity of its flora and fauna. the country’s 109-member unicameral parliament, GEOGRAPHY: Whilst the eastern half of the island of which is itself elected by popular vote every five years. New Guinea is the country’s mainland, PNG also includes The most recent elections were held in June 2012. three large islands (New Britain, New Ireland and LOCAL GOVERNMENT: The country is divided into 18 Bougainville), in addition to more than 600 small islands provinces, the autonomous region of Bougainville (made and archipelagos off New Guinea’s coast. It is located up of Bougainville Island and a number of other adja- approximately 160 km north of the north-eastern tip cent islands) and the National Capital District, where of Australia, and several hundred kilometres south of Port Moresby is located. Each province has an elected the equator, with the Solomon Sea to the east and the assembly and local government, headed by a provin- Coral Sea to the south and south-east. cial prime minister as well as a system of local gover- The country has a geographical surface area of nors. In addition, the country has around 160 elected 462,840 sq km and a coastline of 5152 sq km, as well councils at the local level of government. as an 820 km-long border with the Indonesian province POPULATION: As of July 2011 the country had an esti- of West Papua – formerly Irian Jaya – that makes up mated population of 6.2m. The populace is fairly young, the western half of New Guinea. The capital, Port Mores- with a median age of just under 22 years, and is esti- by, is located on the south-eastern coast of the main- mated to be growing at a rate of just under 2% a year. land, and as of 2009 was home to 314,000 people. The PNG remains a largely rural country, with only 13% of country’s population is largely rural, though other main the population living in towns as of 2010. Moreover, towns include Lae, which has a population of around Papua New Guinean society is extremely diverse, thanks 200,000 and Mount Hagen, with about 40,000 people. in part to the long-standing isolation of many local PNG is geographically diverse, with terrain ranging communities in the hard-to-reach mountain areas of from high interior mountains to jungle lowlands, in the country’s highlands region (and the Southern High- addition to tiny island archipelagos. Rainforest covers lands province in particular), where around 40% of the approximately 75% of the country. The highlands region population lives. Some isolated communities did not is located in the north and is made up of five provinces, have contact with the outside world until as late as the namely Enga and Simbu provinces, and the Southern, 1970s. Among the major ethnic groups are the Papuan, www.oxfordbusinessgroup.com/country/Papua New Guinea
  4. 4. COUNTRY PROFILE SNAPSHOT 9Melanesian, Micronesian and Polynesian peoples, how-ever, the country is thought to host several thousandsmaller ethnic communities whose members mostlynumber in the hundreds, giving rise to the local saying“for each village, a different culture”.RELIGION: Christianity was introduced to PNG in thelate 19th century by missionaries, and just under 97%of Papua New Guineans identified themselves as Chris-tian in the national census in 2000. Yet the country ishighly diverse in terms of denominational adherenceand many Papua New Guineans combine elements ofindigenous religions with Christianity. The largest Chris-tian denomination is Roman Catholicism, to which 27%of the population subscribes, followed by EvangelicalLutheranism (20%), the United Church (12%) and Sev-enth-day Adventism (10%). All other denominationsaccount for less than 10% of adherents. The countryalso still has a small number of followers of the region’sindigenous belief systems, and Islam, Baha’ism and oth-er faiths are also practised. The constitution guaran- The traditional holidays are marked by indigenous festivals, competitions, music and feaststees freedom of religion and there is no state religion.LANGUAGE: The country has three official languages, Daily average lows remain steady at 23-24°C, whilenamely Tok Pisin (Melanesian Pidgin English), a creole daily average highs vary between 28°C in July and 32°Cthat is widely used as the lingua franca; English, which in December and January. Humidity levels in the capi-is the official language of business and government, tal are high for most of the year, with a slight respite inand widely spoken in urban areas; and Hiri Motu, a July and August. Average rainfall levels vary between atrade language spoken mainly on the southern coast. low of 18 mm in August, which on average sees aroundIn addition to these, more than 850 indigenous lan- two wet days, to 198 mm in February, with seven.guages – or by some estimates more than 1000 – and NATURAL RESOURCES: PNG is an important produc-amounting to around a tenth of all languages world- er and exporter of metals and minerals. Total mineralwide, are thought to be spoken in the country, many exports in 2009, excluding crude oil, were worth approx-by communities of just a few hundred people. imately $2.8bn, amounting to around 62% of all exports.CULTURE & HERITAGE: As an overwhelmingly Chris- Mineral exports were overwhelmingly dominated by cop-tian country, PNG observes Christian holidays such as per and gold, with gold exports alone amounting to justChristmas and Easter, though traditional indigenous over $2bn in value in 2009, and copper exports stand-festivals are often celebrated more intensely. Commu- ing at approximately $770m.nities often mark local holidays and special occasions The country will host the world’s first offshore met-with days-long feasts accompanied by music and danc- als mining project, which is being developed to mineing as well as the distribution of gifts such as pigs. copper, gold and other metals at a depth of 1600Important non-religious national festivals include the metres below sea level in the Bismarck Sea, to the northMount Hagen cultural festival, begun by missionaries of the country. In 2009 the country had oil reserves ofin the 1950s, during which several dozen local tribes around 90m barrels, ranking it the 61st in the world,and communities congregate for competitions, music, and proven gas reserves of roughly 230bn cu metres,agricultural fairs and displays of traditional dress, often the world’s 40th-largest. A $15.7bn, 6.6m-tonnes-per-involving elaborate body and face painting. Since 1995 annum liquefied natural gas (LNG) facility is currentlythe country has also hosted an annual mask festival being constructed and is due to begin operations infocusing on the culture of mask-making that is found 2014. The LNG plant will allow the country to begin gasparticularly in the Gulf Province, Momase and New exports that are expected to increase national exportGuinea Islands regions of the country. revenues three-fold. While minerals and hydrocarbons Traditional food includes tropical fruits such as dominate exports, around 85% of the country’s popu-coconuts, mangos and a variety of bananas; vegeta- lation is employed in the agricultural sector, which com-bles such as sweet potatoes, yams and breadfruit; and prises approximately one-third of total GDP.meat such as pork, fowl and turtle, as well as seafood The country’s primary agricultural exports are cof-in the country’s coastal regions. fee, tea, cocoa, coconuts and palm oil. PNG ranked asCLIMATE: Climactic conditions are broadly tropical but the world’s 17th-largest producer of coffee in 2010,vary widely by region. While much of the country receives accounting for roughly 0.7% of global production. In addi-frequent and heavy rainfall, conditions in Port Mores- tion, the country was the world’s seventh-largest pro-by more closely resemble those of northern Australia, ducer and third-largest exporter of palm oil in 2008,being primarily dry during the year with a short rainy with its 395,000 tonnes of foreign sales – accountingseason. Given its proximity to the equator, annual tem- for 1.3% of global exports. Forestry is also a substan-peratures in Port Moresby do not vary substantially. tial sector, amounting to approximately 4% of GDP. THE REPORT Papua New Guinea 2012
  5. 5. 10 COUNTRY PROFILE OVERVIEW Tribal and Western political practices share common cause in PNG Coming together Ethnic diversity brings cultural richness and political challengesWith approximately 6.85m With its state motto, “Unity in Diversity”, Papua New related, with indigenous languages divided between thepeople, only 12.5% of Guinea is indeed a country with outstanding ethnic, lin- Austronesian and Papuan language families.whom reside in urban guistic and cultural variety, resulting from the rugged This fundamental linguistic difference underpins theareas, the population ofPNG is extremely varied and mountainous geography of the main island of New ethnic diversity of the country. The Papuan languageculturally and linguistically. Guinea, and the isolation of the smaller islands of the group is traced to people who came to the region archipelago. PNG is a young nation, and its diversity has approximately 20,000 years ago, and the Papuan eth- shaped efforts to address the challenges and oppor- nic group forms the majority of the country’s present tunities related to development. day citizens. The Austronesians likely arrived later – According to the World Bank, PNG had roughly 6.85m around 3500 years ago – settling in the offshore islands inhabitants in 2010. As a result of the diverse back- now known as New Britain and New Ireland. grounds and geographical spread of the people, the CIVIC ORGANISATION: Historically speaking, urbani- political culture is vibrant and at times unsettled. Fol- sation in PNG is a very recent development. Even in 2011 lowing the election outcome in July 2012, the hope the capital Port Moresby, PNG’s largest city, was home among many citizens and investors is that with the to only 318,128 people. Given the primarily rural and political impasse resolved, the country may begin traditional nature of the population, tribal political embarking on a legislative programme capable of match- organisation is common, demanding and receiving ing and carrying forward the extraordinary economic strong loyalties from adherents. Given the relatively growth experienced in recent years. recent development of urban centres such as Port DIVERSITY & CHOICES: Occupying the eastern half of Moresby, rural organisations tend to also have a pow- the island of New Guinea and a collection of islands to erful affect on city dwellers as well. PNG’s political cul- its east, PNG has some of the greatest environmental ture is thus highly influenced by these loyalties, which diversity of any place in the world – from savannah and often take precedence over political parties and oth- grasslands, to highland and lowland rain forests. er storms of political alignment. Geography has long had a major impact on the pol- Given this fundamental structure, PNG’s national pol- itics and peoples of the nation, too. The island of New itics has often displayed highly fluid and fragmented Guinea’s central mountain range was thrown up by a characteristics, with governments tending to comprise collision of tectonic plates, thrusting peaks high enough alliances of clans and tribes, centred around particu- into the air to allow glaciers to form in the Indonesian, lar leaders or figureheads, while deputies often move western half of the island. This range also created many across party lines. This is also reflected in the civil serv- steep and isolated valleys in the interior of PNG, where ice and other branches of the state. indigenous populations would reside, sometimes NATION CREATION: PNG became an independent unaware of neighbours living only a few kilometres state on September 16, 1975, making it one of the away. Some of these communities were also unknown Asia-Pacific region’s youngest nations. But its civilisa- to the outside world until the 20th century. tions are among humanity’s most ancient, likely dating PNG’s diversity is reflected in the astonishing num- back to around 60,000, when humans arrived by boatPNG achieved ber of languages spoken by its people. The ancient from South-east Asia. Little is clear about the ethnicindependence in 1975, roots of civilisation in PNG and the country’s mountain- history of the island of New Guinea, prior to the arrivalfollowing 61 years ofAustralian rule. It is one of ous terrain have contributed to a proliferation of of Europeans, although the cultural diversity that sur-the youngest nations in the tongues, with an average density of one language per vives today suggests a complex milieu of migration andAsia-Pacific region. 558 sq km. Approximately half of these languages are trade. The islands of modern-day PNG were probably www.oxfordbusinessgroup.com/country/Papua New Guinea
  6. 6. COUNTRY PROFILE OVERVIEW 11first sighted by Portuguese or Spanish navigators in theearly 16th century. They remained free from majorimperial interference, however, until the 19th century.The Netherlands laid claim to the western half of NewGuinea – modern day Indonesia – in 1828. In 1884, Ger-many made the north-east part of New Guinea thefirst colonial possession in the German Empire, whileBritain declared a protectorate over the south-east. During the First World War, Australian forces, as partof the British Empire, occupied the German territories.The eastern part of the island, along with the Germanand British possessions offshore in the WesternSolomons, was then run as an Australian external ter-ritory until the Second World War brought about par-tial Japanese occupation. A particularly long and bitter campaign was foughtin this region during the war, which left lasting markson the landscape of the country. Following the SecondWorld War and the Allied victory, the territory revert-ed to Australian control, with a UN mandate estab- The legal system draws heavily on English and Australian codes alongside local procedureslished to steer the nation through to independence. That independence was also marked by a secession- Island, Buka Island and a number of smaller islands, The nation’s unicameralist uprising on Bougainville Island, which lies offshore including the Carterets group. Elections for the parliament is made up of 109 members who areto the east of New Guinea. This was the first of a series autonomous government were first held in 2005, with elected for five-year terms,of uprisings on the island, ending only in 1997 with a the current president being John Momis. with 89 elected from singleNew Zealand-brokered peace deal, which gave LEGISLATURE: The National Parliament of PNG is also constituencies and 20 fromBougainville autonomy within PNG. a unicameral house. It currently has 109 members, all the provinces.PROVINCES & POWERS: The uprising on Bougainville elected for five-year terms. Since 2007, elections haveIsland in 1975 also led to a redrafting of the constitu- been organised under a limited preferential voting (LPV)tion for the newly independent state. In this, the restive system, in which voters choose their three favourite can-island and the 18 districts of PNG, as well as the Nation- didates, with votes transferring in order until one can-al Capital District (NCD), were all given a semi-federal didate wins 50% plus one vote. The 109 members arestatus. This federal-state balance has largely held since divided into two groups: 89 of the members are elect-independence, although the districts are now known ed from single constituencies, and 20 from the provinces,as provinces, and several have new names. one from each. These are the regional deputies that The original provinces have also recently been joined now act as provincial governors.by two more – Hela and Jiwaka – and are grouped with- After a general election, the leader of the majorityin four regions – the Highlands, which has the largest party or of the coalition of parties forms the govern-population, at around 3m; the Islands, which includes ment and becomes prime minister. The prime ministerBougainville; Momase; and Papua, which includes the then appoints a deputy and a cabinet of ministers toNCD. These regions command loyalty as well, with polit- head the various departments of national government.ical appointments sometimes characterised by an effort While there has been some historical variation, theto keep a balance between them. cabinet usually has 30 members and is known as the The province remains the key local government unit, National Executive Council (NEC). The government maywith each having its own assembly. Until 1995 these initiate legislation based on the Westminster model –also had cabinets led by premiers, operating on a uni- with bills proposed for debate in the chamber and forcameral, parliamentary model. The central government committees – although there is not a second chamberretains full power over the provincial governments, to further scrutinise proposed laws.however, via the right of suspension. This right was A key law governing parliament and the country’sexercised often until 1995, when the provincial premiers political parties is the Organic Law on Integrity of Polit-were abolished and a system of provincial governors ical Parties and Candidates (OLIPPAC), passed in 2001.was introduced. Since then, it has been used much less This imposed restrictions on no-confidence votes,frequently. The governors are the regional deputies deputies changing parties, party funding, breaking a par-from the national parliament, who simultaneously con- ty whip, and a number of other areas, with the aim oftinue to hold their national posts as well. strengthening government and party loyalty. Certain pro- Each province is divided into a number of districts, visions of this were then ruled unconstitutional by the Coalition government is theand each district is further split into local-level govern- Supreme Court in 2010, a move followed by some sig- norm in PNG, with parties coming together to build ament (LLG) areas. LLGs are then divided into wards. nificant realignments in parliament. government. The 2007 The mineral-rich Bougainville region, however, main- COALITIONS: Coalitions have generally been the rule elections saw 22 partiestains a different organisational pattern, given its when forming a government, as no one party has yet gain representation inautonomous status. The region includes Bougainville secured a majority on its own. The 2007 election saw the parliament. THE REPORT Papua New Guinea 2012
  7. 7. 12 COUNTRY PROFILE OVERVIEW change in PNGs recent history. The preliminary vote count suggests that O’Neill’s People’s National Con- gress party has won enough seats to form a coalition government. Somare conceded his defeat and relin- quished control of the National Alliance Party. After over a year of tensions between the two political lead- ers there is finally hope that the country can return to a period of relative political stability. CONSTITUTIONAL COURT: The Supreme Court is empowered with advising the government on consti- tutional issues and is the highest court in PNG. The court is headed by the Chief Justice – currently Salamo Injia – who is appointed by the GG following a recommen- dation to the post by the NEC. Two new laws concerning the relationship between the executive, parliament and the Supreme Court – the Judicial Conduct Act and the Supreme Court Amend- ment bill – are currently being hotly debated. Contro- versy surrounding the bills may be settled after the 2012 elections, in particular the ongoing ambiguityThe prime minister heads the government, while Queen Elizabeth II of the UK is PNG’s head of state with regard to the separation of powers. 22 parties gain representation in parliament, the largest The National Court, whose members also sit on the being the National Alliance Party (NAP) led by Michael Supreme Court, is present in all provincial centres and Somare, which won 27 seats. The second-largest group- has jurisdiction in hearing all serious criminal and civ- ing (20) were independents, with 13 subsequently il cases. It also hears appeals from the district courts, declaring for the NAP. The second-largest party was the which consist of juvenile, land and coroner’s courts. PNG Party (PNGP), which held eight seats and is led by There are also village courts, presided over by magis- Belden Namah, followed by the People’s Action Party trates who are elected by the village. These are usual- (PAP), with six seats led by Gabriel Kapris. Another sig- ly specially convened Customary Courts, which allow nificant grouping is the People’s National Congress, traditional laws more sway in many rural areas. which won four seats in the 2007 elections and is under PNG’s code of law thus consists of both the Consti- the leadership of Peter O’Neill. tution, the customary law of the island nation’s indige- HEADS OF STATE: While the prime minister heads the nous peoples, and English common law, in the form it government, as a Realm of the Commonwealth, the head took at the time of PNG’s independence in 1975. At of state in PNG is Queen Elizabeth II of the UK. Her the same time, much of the statutory law is derived from Majesty is represented in PNG by the governor-gener- the Australian system. The Criminal Code has been al (GG), whom she appoints, but who is nominated by adopted from Queensland, while the Rules of Court are parliament, via a majority vote. The GG can serve a from New South Wales, illustrating the effect of the long maximum of two terms (the second of which must be period of Australian control of PNG. after a two-thirds majority vote). Parliament, or the OUTLOOK: Recent years have seen PNG face the polit- NEC, may also remove the GG via a simple majority vote. ical challenges resulting from competing claims of In the absence of a GG, the parliamentary speaker authority, but it looks to be moving forward with the becomes acting GG. The powers of this post are large- creation of a unified government post-elections. ly ceremonial, and include the swearing-in of new gov- Indeed, the political landscape is bound to be a chal- ernments and the signing of new bills into law. lenging one given the enormous diversity within the Michael Ogio was appointed GG by the Queen in country, alongside the tensions of urbanisation and 2010, although parliamentary speaker Jeffery Nape globalisation faced by a largely rural, traditional socie- was declared acting GG in late 2011, as the political ty. While the level of poverty remains high in some impasse took hold. This had seen Michael Somare areas, the country has made a great deal of progress replaced as prime minister by a government led by since independence, as the economic indicators sug- Peter O’Neill, with Belden Namah serving as deputy gests. The country is also continuing on a path of ongo- prime minister. This change was not recognised by ing democratisation, with general elections seen as the Somare, however, who continued to claim status as preferred mechanism for change. As of July 2012, it premier. The changes to the government in 2011 were appeared that even in spite of considerable political con-The legal code incorporates also not recognised by the Supreme Court, and in late troversy, the nation’s commitment to democratic changeelements from indigenous May 2012 the Supreme Court again stepped into the remained. Bringing together the disparate communi-customary laws and the fray in support of Somare. O’Neill rejected the court’s ties, clans and loyalties of this diverse country will con-English common law ruling that Somare’s government be reinstated, and tinue to be a major undertaking of national politics. Thesystem, while the criminalcode and rules of court are the impasse continued until the elections. challenges that will be faced by the new governmentadapted from those used in At the time of going to print it appears that the 2012 are considerable, and the priorities of reconciliation andAustralia. election has delivered the most profound political reducing corruption are expected to top the agenda. www.oxfordbusinessgroup.com/country/Papua New Guinea
  8. 8. COUNTRY PROFILE VIEWPOINT 13 Prime Minister Peter O’NeillThe wealth of a nationPrime Minister Peter O’Neill on the importance of investing exportrevenues wiselyPapua New Guinea is at a crossroads today: the coun- PGK6bn ($2.9bn), because of very high commoditytry is poised to enter a period of unprecedented eco- prices. Unfortunately, there is little to show for all thisnomic prosperity, led by the PNG liquefied natural gas wealth. Look around PNG, and everywhere the story(LNG) project that is being developed by ExxonMo- is the same: dilapidated hospitals and classrooms,bil. Revenue from this project is expected to double deteriorating roads and ports, airstrips rendered unus-PNG’s GDP growth, and a second LNG project in the able due to a lack of maintenance, and so on.Gulf province, being developed by InterOil, is also pro- Heading a government with only 10 months to gov-gressing well. While these developments are under ern, but so much to do, was not easy. However, I believeway, production is expected to commence soon at a we have begun to lay the foundation for growth,number of mines nationwide, including the Ramu improved services, and better education and healthnickel, Yandera, Wafi and Hidden Valley mines. In the for all. We have introduced free education, which wecoming years, the revenue inflows from the export of are funding with PGK700m ($333m) in 2012, and wegas and minerals will be phenomenal and radically have also allocated PGK350m ($166.6m) to fund a freechange the level of prosperity in PNG. health care programme. We have also begun talks However, as I have travelled the length and breadth with the Exim Bank of China for a loan of PGK7bnof this country in the past nine months I have been ($3.33bn) to roll out a comprehensive infrastructureshocked by the neglect that our educational and development programme, central to which is the reha-health facilities face, and the poor state of our key bilitation of the highlands highway.infrastructure, like roads and wharves. These have The Lae-Nadzab section of the highway will bebeen allowed to deteriorate to a level where rebuild- expanded to four lanes, to complement the PGK700ming them will require herculean effort. ($333m) upgrade of the busy Lae Port. Once complet- Our roads are in such bad shape that potholes are ed, the improved infrastructure will ensure business-common and accepted. Meanwhile, the ports in many es can be more efficient and expand, and this growthof our towns are no longer used, making sea travel will bring more revenue to government.risky. Hospitals are run down, lack the proper staff and Tackling corruption and improving law and ordercannot provide the right drugs or treatments for cer- remain key goals as well. The recent graduation of 600tain ailments. Finally, our schools are overcrowded police recruits demonstrates our commitment tobecause of classroom and teacher shortages, and increasing police manpower to an acceptable level.many of the nation’s airstrips have been closed due The new Task Force Sweep will identify and prosecuteto lack of proper maintenance. perpetrators of corruption in government, and sets PNG’s economy has changed. The coffee and tea us on a path toward eradicating this cancer eating theplantations in the Eastern and Western Highlands nation’s resources and denying our people their rights.provinces, and the cocoa and copra estates in East The LNG and minerals beneath PNG are non-renew-and West New Britain, New Ireland and Bougainville, able resources, and revenue from their export has towere all once strong contributors to the economy, but be invested wisely to support the nation’s long-termthese have been neglected and fallen to ruin. In the economic growth and safeguard its future. We havepast nine years, the country enjoyed a period contin- passed legislation to establish a sovereign wealth funduous economic growth. Over PGK70bn ($33.3bn) that will manage these earnings. If we do not wiselyflowed into the state’s coffers and five consecutive protect and invest these revenues, we will leave behindnational budgets have recorded surpluses of over a future with little for which our children can be proud. THE REPORT Papua New Guinea 2012
  9. 9. 14 COUNTRY PROFILE ANALYSIS For this nation of islands, seafaring and ports are the keys to trade Lasting bonds Shared historical, economic and political ties with AustraliaThe Australian government Separated only by the Torres Strait – a distance of 150 eration treaty, which is expected to be wider rangingestimates that during the km – Papua New Guinea and Australia have translated than the current Agreement on Trade and Commercial2011-12 period, combined their geographic ties into political and economic coop- Relations, which was put into place in 1991. Both coun-trade between Australiaand PNG amounted to eration. Indeed, Australia has long been PNG’s largest tries are also signatories to the 1981 South Pacificroughly $6.95bn. export market, while also being its biggest source of Regional Trade and Cooperation Agreement, which imports. Australian companies are also heavily repre- provides duty-free access to the Australian and New sented in PNG and around 10,000 Australian expatri- Zealand markets for South Pacific nations. ates currently live and work in the country. PNG is also involved in a number of political and HISTORICAL TIES: The relationship between the coun- security-based agreements with Australia. These include tries began in 1902, when what was then British New Australian aid to the PNG police force and armed forces Guinea – the southern half of modern-day PNG – was – some $20.9m in aid has been earmarked to the lat- placed under the authority of the Commonwealth of ter for 2012-13. Additionally, both countries are mem- Australia. Formal Australian administration began in bers of the Commonwealth and regularly cooperate on 1906. When the First World War broke out in 1914, Aus- international matters via the UN. tralian forces then occupied German New Guinea – the TRADE: According to Australian government figures, northern half of what is now PNG – retaining this under exports to PNG stood at $2.19bn during 2010-11, while military rule and a League of Nations mandate until 1921. imports from PNG reached $3.45bn. These Australian In the Second World War, the island of New Guinea government’s sources indicate that year-on-year, faced Japanese invasion, with Australian and Papua exports and imports grew 12.3% and 18.6%, respec- New Guinean troops engaged in a particularly hard- tively, and it is expected that this trend will have con- fought campaign for the island from 1941 to 1945. One tinued during 2011-12. Indeed, Australian government important testimony to this is the Kokoda Trail, still hon- officials estimated in March 2012 that combined trade oured today by many Australian visitors and veterans. stood at approximately $6.95bn for that year. Following the war, Australia again administered the The main goods exported by Australia to PNG are territory. In 1972 the name was changed to PNG in crude petroleum ($449.8m in 2010-11), civil engineer- preparation for independence, which followed in 1975. ing equipment and parts ($110.2m) and goods vehi- Nowadays, the relationship is regularly overseen by the cles ($85.4m). Meanwhile, the biggest exports from Australia-PNG Ministerial Forum, which has reached PNG to Australia include gold ($2.13bn), crude petro- agreements on a raft of bilateral treaties over the years. leum ($1.01bn), and silver and platinum ($209m). This TODAY’S RELATIONSHIP: The Partnership for Devel- establishes Australia as PNG’s top export destination opment has seen Canberra’s aid to PNG – which totals by a very high margin – the country received 27.9% of just over $500m for 2011-12 alone – focused on edu- all PNG’s overseas sales in 2010-11, while Japan, which cation, health, transport, and law and justice. In 2011 took the second-highest amount, received only 9.1%. the Australian prime minister, Julia Gillard, agreed to help Australian firms are active in PNG’s resource extrac- PNG reach its goal of producing 52,000 higher educa- tion sectors in particular, including Oil Search, Santos, tion graduates by 2015 and making significant improve- Newcrest Mining, Sun Engineering and Highlands Pacif- ments in basic education enrolment. Canberra also ic. In 37 years since independence, PNG and Australia funded a project worth some $985,000 to bring more have periodically looked to shift their foreign policy women into PNG politics. At the same time, negotia- focuses elsewhere, but given the strength of geograph- tions have also been under way for an economic coop- ic and economic ties, the two will likely remain close. www.oxfordbusinessgroup.com/country/Papua New Guinea
  10. 10. COUNTRY PROFILE ANALYSIS 15 China is PNG’s second-largest trading partner behind AustraliaChina comes to marketTrade reveals the symbiosis between mineral-rich PNG and theresource-hungry Asian giantThe People’s Republic of China (PRC) has become an FINANCIAL SUPPORT: China has also funded someactive partner of Papua New Guinea in recent years, major aid and development projects in PNG, includingand the close ties have risen each to prominence in the the construction of the Usino-Yamagi road with a grantother’s homeland. PNG is China’s largest trading part- aid investment of some PGK22m ($10.5m). This is locat-ner among South Pacific nations, while the Asian pow- ed in Madang, where China also provided a soft loanerhouse has climbed to second place, behind Australia, to back up the Pacific Marine Industrial Zone (PMIZ).in terms of trade volume with PNG. As a result, politi- This $300m regional tuna fish trans-shipment and pro-cal relations between Beijing and Port Moresby have cessing plant is financed in part by a $71m concession-taken on new strategic significance. al loan from Exim Bank of China (see Industry chapter).A CLOSER FIT: Behind much of this is the global surge China has also been behind aid projects such asin Chinese overseas investment and interest that has accommodation expansion at Goroka and Vudal uni-followed the country’s growing appetite for minerals versities, the Sir John Guise Stadium, the Wawin Nation-and energy. This rise in demand has coincided with al High School, the Wewak Sports Stadium, the PapaPNG’s opening to wider and more diverse internation- Lealea road upgrade and the Hagen Agriculture Tech-al trade and diplomatic relationships in Asia-Pacific as nical cooperation project. Many local students havea whole. PNG was among the first countries to recog- also been awarded scholarships to study in China, whilenise the PRC, and the two nations exchanged embassies many PNG civil servants have also been provided within 1976. Other milestones include a 1996 trade agree- training by Beijing. As both countries face many simi-ment, followed by a Memorandum of Understanding lar challenges in development, the two have oftenon the Promotion for Economic and Trade Cooperation, found areas where experiences can be exchanged andan Agreement on Fisheries Cooperation, and an Agree- programmes improved upon.ment on the Promotion and Protection of Investment. STRATEGIC COOPERATION: There has also been someThere are also agreements on double taxation and tax military cooperation in recent times, with the Chineseevasion. More recently, in 2010, a treaty on economic People’s Liberation Army providing some training forand technical cooperation was signed. the PNG Defence Force. From PNG’s point of view then, Within the framework of these agreements, Chinese China has much to offer, and Port Moresby views rela-investment in PNG has rapidly expanded. The flagship tions with Beijing as an important part of its wideningproject for cooperation is the $1.5bn Ramu nickel and out perspective in its overseas relations.cobalt mine in Madang Province, which is due to hit max- In this context, PNG has tried to improve its relationsimum capacity in mid-2013. At that point, the mine with others in the region as well, courting the Associ-should be producing some 31,150 tonnes of nickel and ation of South-East Asian Nations (ASEAN), for exam-3300 tonnes of cobalt per year, for a 20-year term. The ple. PNG gained observer status in 1976, and 10 yearsMetallurgical Corp of China holds an 85% stake in the later signed a Treaty of Amity and Cooperation. Yet,project (see Mining chapter). with ASEAN concentrating on consolidation as it tries Meanwhile, following a 2009 contract between Chi- to move towards a single internal market, combined As a result of the economicnese energy firm SINOPEC and ExxonMobil, the coun- with the troubled relationship with Indonesia over West agreements between China and PNG, the Chinesetry has purchased 2m tonnes of PNG’s natural gas every Papua – expansion to include PNG, and Timor Leste, ambassador told localyear. Indeed, at the end of 2010, the Chinese ambas- has languished. Going forward, PNG may pursue clos- press in 2011 that tradesador to PNG told the local press that trade between er ties with China, benefitting from the countries ongo- between the two nationsthe two countries had reached over $900m per year. ing expansion of economic and diplomatic influence. was over $900m per year. THE REPORT Papua New Guinea 2012
  11. 11. 16 COUNTRY PROFILE VIEWPOINT Julie Bishop, Australia’s Shadow Minister for Foreign Affairs Warm relations Julie Bishop, Australia’s Shadow Minister for Foreign Affairs and Deputy Leader of the Opposition, on bilateral relations Australia’s relationship with Papua New Guinea must number of young people in PNG and the region more be one of the government’s highest foreign policy pri- widely with Australian-standard trade qualifications. orities. It is long past time for the relationship to This creates an opportunity for qualified people to mature and transition from aid donor and aid recipi- work not only in the Southern Highlands, but also on ent status. Australia and PNG must now engage as full mining and resource projects in Queensland and in economic partners. Western Australia. The projected benefits from this There is enormous good will between our two mining and resource development is a once in a gen- nations which I have observed during my extended eration opportunity for PNG. visits and in regular meetings with officials. These vis- While there are current demands for health, edu- its have allowed me to see some of the challenges cation and infrastructure spending, it is vital that the and opportunities in PNG and for our relationship. government invest part of the revenues for the ben- As brothers and sisters in the Pacific region it is time efit of future generations. Australia has assisted in this for us to broaden, deepen and diversify our relation- effort by providing advice through the Treasury. The ship. We must take it to a level that better reflects the former head of our Future Fund, David Murray, recent- contemporary reality of our nations. ly visited PNG and spoke about the potential for a sov- One impediment to building closer links has been ereign wealth fund. the difficulty faced by PNG businesspeople in obtain- This is an important issue and I am greatly encour- ing visas to travel to Australia. This should be reme- aged by the discussions that I have held with officials died. These unacceptable bureaucratic hurdles are about their plans for the future. standing in the way of greater trade and investment Australia and PNG share a passion for sport and this and need to be resolved immediately. is an area where great strides can be taken in build- PNG is on the cusp of an economic transformation ing closer relations. Australia’s National Rugby League due to development of mining and resource projects, (NRL) competition is particularly of interest to many and particularly large liquefied natural gas projects Papua New Guineans. I have held initial discussions currently either under way or on the drawing board. with sports administrators in Australia about how to These projects will increase the role that PNG will take build closer links through sport. in the global economy, as its exports from the South- Many people in PNG would love to have a team in ern Highland – and the Hides natural gas fields in the NRL competition. That is, of course, a long-term particular – will be used to drive the engines of Asia’s goal worth striving for, but there is much that can done industrial heartland. in the interim. There are school team competitions and One of the challenges for PNG will be to foster a the Queensland Cup which may provide a launching skilled workforce to support these massive develop- pad for an eventual national PNG team in the NRL. ments. Australia can play a role in providing educa- Another area of great potential is in the empower- tion and training as we have faced a similar challenge ment of women in PNG. There are many outstanding for many years. We should explore the opportunities women located within the country. Their contribution for greater workforce mobility between PNG and Aus- will undoubtedly increase in the coming years as more tralia as we support each other’s need for both skilled of them take leadership roles. and unskilled labour in our respective workforces. Australia and PNG enjoy warm relations. There are Recently I visited the Australia Pacific Technical Col- strong foundations from which to build a closer rela- lege in Port Moresby. It has the potential to train a tionship and a true economic and social partnership. www.oxfordbusinessgroup.com/country/Papua New Guinea
  12. 12. COUNTRY PROFILE ANALYSIS 17 Regional engagement is key to the nation’s trading capabilitiesA regional playerBuilding relations with neighbours in the PacificHaving enjoyed prolonged and positive relations, the the Solomon Islands and Vanuatu. This establisheddominant international powers in the South Pacific preferential trading between the nations, while alsoregion – traditional allies like Australia, the US, the UK drawing in the independence movement in New Cale-and France – influenced PNG’s policy throughout the donia, an issue over which PNG has received praise20th century. However, recent years have also seen from Paris for its moderation.an increasing recognition of the importance of Asian The country is also a member of the Pacific Islandsand South-east Asian states to PNG’s development. Forum (PIF), which includes Australia and New Zealand.This geopolitical shift is occurring in tandem with a The forum’s island countries (FICs) have begun oper-renewed interest from PNG’s traditional allies. West- ating more as a distinct group, however, particularlyern powers, led by the US, are currently working to within the UN, where they are members of the organ-rejuvenate their influence in Asia-Pacific. isation of Pacific Small Islands Developing StatesFORCE OF MODERATION: Since achieving inde- (PSIDS), a grouping that does not include Australia orpendence in 1975, PNG has earned a reputation on New Zealand. At the same time, PNG has been increas-the international stage for exercising moderation in ing its contacts in mainland Asia. The country is anits approach to bilateral and multilateral issues. The observer at the Association of South-East Asiancountry has also signed up to a wide variety of inter- Nations (ASEAN) and a member of the ASEAN Region-national treaties and organisations, a policy that has al Forum (ARF), while also being a member of the Asiahelped the country to establish itself as a bridge Pacific Economic Cooperation (APEC).between Asia and the south-east Pacific. MARKET TIES: Companies from ASEAN nations have However, since the foundation of PNG’s Ministry of also become important partners in PNG’s economy.Foreign Affairs – now the Ministry of Foreign Affairs Malaysia’s Rimbunan Hijau, for example, is PNG’sand Immigration – the Australian legacy has also been largest logging operator, and also owns the country’sstrong, tending to orientate PNG towards its neigh- English language newspaper, The National.bours in ways that have often been influenced by the Relations with China have also been growing, as hasoutlook from Canberra. PNG has thus traditionally been evidenced by Chinese investment in PNG’s min-looked to Europe and the US, rather than to Asia or ing, engineering and infrastructure sectors. The mil-other Pacific nations, for partners and models. itary has also taken part in training activities with the As a result, PNG’s connections to its neighbour Chinese army, in an effort to improve their defensiveIndonesia, and northern Asian states such as China capabilities. Other countries neglected in Cold Warand Japan, have traditionally been weak. times have also seen relations strengthen. Cuba now In recent times, however, there have been signs provides medical aid to PNG, while Russia has reen-that a greater fluidity in global affairs is also motivat- gaged with the Pacific states in recent years, planninging a reassessment of PNG’s wider foreign relations. investment in the oil and gas sector in particular.This is not entirely new – in the mid-1980s, for exam- The PNG government has, however, been anxiousple, the government discussed a “Look North” policy to stress that these new engagements are not being PNG has been assertive inthat would strengthen relations with Asia. undertaken at the expense of longer-standing friend- setting a foreign policy of engaging regional players,ISLAND LIFE: PNG’s relations with other Pacific island ships. This greater diversification in foreign policy is, and the list of groups withnations have been growing in recent years. The coun- rather, to be taken as a sign of the openness of the which it is involved includestry became a member of the Melanesian Spearhead country to foreign investment and assistance, along the MSG, PIF, ASEAN andGroup (MSG) – formalised in 2007 – along with Fiji, with a growing maturity in pursuing its own interests. APEC. THE REPORT Papua New Guinea 2012
  13. 13. 18 COUNTRY PROFILE VIEWPOINT William Hague, UK Secretary of State for Foreign & Commonwealth Affairs Bound together William Hague, UK Secretary of State for Foreign and Commonwealth Affairs, on UK-ASEAN relations in the 21st Century Today the idea of the “developed West and developing region are strongest with our Commonwealth part- rest” is all but irrelevant. The world has changed and ners, Singapore and Malaysia. But while strengthening so must the UK if we are to prevent our role and influ- these we should be looking for opportunities else- ence in international affairs from declining. Key to this where as well. We also need to continue to work along- will be making the most of opportunities presented by side EU partners to secure free trade agreements with a new international paradigm in which economic pow- ASEAN countries to open markets and boost trade. Fur- er and influence is moving east and south. We are doing thermore, we need to do more to promote two-way this by shifting our diplomatic weight to reflect these investment. International institutions rate the UK as changes and by building our relationships with emerg- the easiest place to do business in Europe, with the ing powers. These relationships will be increasingly vital strongest business environment on the continent and for forging agreements on the international stage and the lowest barriers to entrepreneurship in the world. for boosting trade and investment that support the UK. But our relationship is about more than trade and South-east Asia epitomises the rationale for this investment. We have interests in maintaining security approach. The ASEAN countries are already more pop- in a region that straddles some of the world’s most ulous than the EU and the Arab world, have a larger important shipping routes and in tackling common economy than India and absorb more UK exports than threats, such as terrorism, nuclear proliferation, cyber- China. They hold substantial geopolitical significance, crime and climate change. There are a number of sep- with influence on neighbouring major powers. They aratist or other conflicts within ASEAN, and tensions should be, and are, key partners for the UK. remain in the South China Sea. The UK has a wealth of The region deserves serious attention from global experience and we are keen to share our knowledge partners. The UK is fortunate to draw on a foundation to promote stability. We form part of a small group of of existing relationships, and we already enjoy multi- countries formally supporting efforts by the Filipino Gov- billion pound trade and investment links with ASEAN. ernment and rebel groups to end their conflict. Our largest businesses in finance, energy, life sciences The voices of ASEAN leaders will be increasingly influ- and food and drink are establishing a regional foothold ential, both regionally and globally, in the future. Indone- and more of our retailers are becoming household sia’s impressive democratisation and Malaysia’s strong names, especially in Thailand. Furthermore, every year stand against violent extremism can serve as examples over 30,000 ASEAN students study in the UK, often for the entire international community. returning to positions of influence. They form part of We also want to work with ASEAN members on cli- the rich people-to-people links between our countries. mate change. They are among the heaviest emitters of We build on these links all the time. On his visit to greenhouse gases, but could also be among those most Indonesia last month the business secretary, Vince seriously affected by the consequences of changing Cable, launched the new UK-ASEAN Business Council temperatures. Any durable solutions will therefore to strengthen commercial engagement with the region. require commitment and close coordination with ASEAN. The government’s public-private partnership body, Thus, our approach will be to build up our relations Infrastructure UK, is already in the Philippines sharing with ASEAN, to share expertise and knowledge, to pro- expertise, and we aim to do this more widely across the mote increased and freer trade and to work together region. Moreover, we continue to support develop- in a wide range of areas, from security to climate change. ment, democratic freedoms and transparency. But there We will continue to look east, toward the tremendous is more we can do. Our commercial relationships in the wealth of opportunity to be found in South-east Asia. www.oxfordbusinessgroup.com/country/Papua New Guinea
  14. 14. CONTENTS PAPUA NEW GUINEA 2012 30 Interview: David Cox, Managing Director, ISBN 978-1-907065-62-0 Steamships Trading Company Editor-in-Chief: Andrew Jeffreys 31 Looking ahead: The government launches a Editorial Director: Peter Grimsditch Regional Editor: Paulius Kuncinas far-reaching national development strategy Editorial Manager: Edward Gregory 33 Interview: Caleb Jarvis, Trade Commissioner, Chief Sub-editor: Alistair Taylor Deputy Chief Sub-editor: Jennie Pacific Islands Trade and Invest Patterson 34 Interview: Surin Pitsuwan, Secretary-General, Web Editor: Barbara Isenberg Sub-editors: Sam Inglis, Sean Cox, ASEAN Elyse Franko-Filipasic, Esther Parker, William Zeman, Elise Laker, Danya BANKING Chudacoff Contributing Sub-editor: Miia 36 Steady on: Increased domestic involvement and Bogdanoff solid oversight point towards future growth Analysts: Nick Anderman, Oliver Fall, 41 Interview: Loi M Bakani, Governor, Bank of Jon Gorvett, Joe Wilcox Trickling down Papua New Guinea 42 Planning for expansion: A new development Senior Editorial Researcher: Susan Manoğlu Page 20 strategy lays out the central bank’s goals Editorial Researchers: Souhir Mzali, Owen Barron, Thomas Bacon, Adeline through the end of 2015 Oka Reporting 8.9% growth in 2011, Papua New 43 Roundtable: Vishnu Mohan, CEO (PNG), ANZ Art Director: Yonca Ergin Guinea has experienced rapid economic Banking Group; Ian Clyne, CEO, Bank South Deputy Art Director: Cemre Strugo Art Editor: Meltem Muzmuz expansion in recent years on the back of prepa- Pacific (BSP); and Ashleigh Matheson, Illustrations: Shi-Ji Liang rations for ExxonMobils LNG project, which Managing Director, Wespac Bank (PNG) Photographer: Mark Hammami Additional photographs provided by is expected to begin production in 2014. Min- 46 On the line: Delivering microfinance products Nautlilus Minerals ing – which accounts for 25% of GDP – has via mobile networks Production Manager: Selin Bolu also played a large role in generating wealth, Operations Manager: Yasemin Dirice while agricultural products, especially palm CAPITAL MARKETS Logistics & Distribution Coordinator: Esen Barin oil, are prominent in the nation’s export base. 48 Attracting attention: Economic growth and Operations Assistant: Oznur Usta steadily rising incomes could translate into new OBG would like to thank its local market activity partners for their assistance and COUNTRY PROFILE 54 Building capacity: The market regulator is support in the research of this project.8 Land of plenty: History, tradition and a expected to benefit from a number of new diverse range of natural resources initiatives10 Coming together: Ethnic diversity brings 55 Interview: Geoff Mason, General Manager, Port cultural richness and political challenges Moresby Stock Exchange (POMSoX)13 Viewpoint: Prime Minister Peter O’Neill 56 Interview: Ian Mason, General Manager, BSP14 Lasting bonds: Australia and PNG share Capital historic economic and political ties15 China comes to market: Trade reveals the Share analysis & data provided by BSP Capital symbiosis between mineral-rich PNG and 57 Oil Search: Hydrocarbons resource-hungry China 58 Bank South Pacific: Banking16 Viewpoint: Julie Bishop, Australia’s Shadow 59 Credit Corporation: Finance Minister for Foreign Affairs and Deputy Leader 60 City Pharmacy: Pharmaceuticals of the Opposition 61 New Britain Palm Oil: Agriculture17 A regional player: Building relations with 62 Highlands Pacific: Minerals neighbours in the Pacific18 Viewpoint: William Hague, UK Secretary of State for Foreign and Commonwealth Affairs Steady on Page 36 ECONOMY20 Trickling down: Revenues from large-scale PNG’s population is highly under-banked, energy and mining projects to fund long-term with penetration of only 15%. Corpo- national development strategy rate clients make up the overwhelming26 Interview: Ivan Pomaleu, Managing Director, majority of banks’ revenues, but the ris- Investment Promotion Authority ing middle class is seen as a growth mar-27 Starting small: New support for SMEs could lead ket. Penetrating rural areas via mobile to widespread expansion microfinance solutions is also being tar-28 Funding the future: A planned SWF will geted. In late 2011 the central bank help the government manage a jump in adopted a five-year development plan revenues to guide the sector through what is29 Interview: Karel De Gucht, EU Trade forecast to be a period of strong growth. Commissioner
  15. 15. 4 CONTENTS PAPUA NEW GUINEA 2012Chairman: Michael Benson-Colpi 99 The long haul: Exploration activity speeds up asDirector of Field Operations: Elizabeth new developers move inBoissevainRegional Director: Laura Herrero TELECOMS & ITCountry Director: Annie Michailidou 102 On it grows: Little sign of a slowdown asField Operations Executive: Meltem providers diversify products and services in lineOkur with market demandField Operations Coordinator: ZeynepAkdamar 109 Interview: Jim Miringtoro, Minister for Communication and Information TechnologyProject Coordinator: Seri Baru 110 Interview: Charles Punaha, CEO, NationalFor all editorial and advertising Information and Communications Technologyenquiries please contact us at:enquiries@oxfordbusinessgroup.com. Authority (NICTA)To order a copy of this publication 111 Banking on mobiles: Operators are rolling outor to enquire about your subscriptionplease contact us at: new services, but may face a shallow marketbooksales@oxfordbusinessgroup.com. 114 Interview: John Mangos, CEO, Digicel (PNG)All rights reserved. No part of this What lies beneathpublication may be reproduced, stored INDUSTRY & MANUFACTURINGin a retrieval system or transmitted in Page 71 116 Advantages ahead: Strong core segments andany form by any means, without theprior written permission of Oxford burgeoning new ones present opportunitiesBusiness Group. With the start of the PNG LNG initiative, pro- 121 Interview: Charles Abel, Minister of Trade,Whilst every effort has been made to jected to bring in up to an estimated $150bn Commerce and Industryensure the accuracy of the informa- over the course of its lifetime, the energy sec- 122 Interview: Murray Woo, Chairman,tion contained in this book, theauthors and publisher accept no tor looks set for massive expansion. Apart Manufacturers Council of Papua New Guinearesponsibility for any errors it may from this new mainstay of the economy, 123 Angling for a raise: The fishing industry lookscontain, or for any loss, financial orotherwise, sustained by any person other projects are continuing as well, includ- set for a hefty catchusing this publication. ing extension of the energy grid to rural 124 Building the brand: Efforts are under way toUpdates for the areas and a revamping of the power segment. boost production and local consumptioninformation provided in thisvolume can be found in Oxford 125 Interview: Michael Kingston, General Manager,Business Group’s ‘Economic Updates’ INSURANCE K. K. Kingstonservice available via email or atwww.oxfordbusinessgroup.com 64 Underwriting profits: The sector has expanded 126 Keeping pace: As income levels increase, the on the back of increased economic activity and retail sector prepares for growth rising incomes TRANSPORT ENERGY 130 Paving the way: Transforming the nation’s land, 71 What lies beneath: New exploration and sea and air infrastructure production to bring the sector back to the fore 139 Interview: Wasantha Kumarasiri, CEO, Air Niugini 75 Interview: Peter M Graham, Managing Director, 140 Interview: Stanley Alphonse, CEO, PNG Ports Esso Highlands, subsidiary of ExxonMobil Corporation (PNG Ports) 76 Interview: Phil E Mulacek, Chairman and CEO, 141 High-cost highways: Logistics firms are trying to InterOil overcome operational challenges 77 A bright idea: Plans to extend the national grid 144 Interview: Joseph Kintau, Managing Director, and provide power to every province are National Airports Corporation under way 79 Interview: Tony Koiri, CEO, PNG Power CONSTRUCTION & REAL ESTATE 80 Game changer: A new LNG project is expected 146 Gas-fired growth: Despite constraints, to have a huge impact on the economy expansion is expected to continue through 2014 MINING 151 Interview: Keith Fletcher, Managing Director, 84 A key earner: With numerous new projects Fletcher Morobe Construction coming on-line the sector is poised for large increases in production 91 Interview: Byron Chan, Minister of Mining 92 Interview: Greg Anderson, Executive Director, Papua New Guinea Chamber of Mines and Petroleum 93 Into the deep: An increasing number of operations are starting to move offshore 95 Interview: Peter Aitsi, Country Manager, Newcrest Mining 97 Under review: A new regulatory framework will clarify legislation www.oxfordbusinessgroup.com/country/Papua New Guinea
  16. 16. CONTENTS PAPUA NEW GUINEA 2012 5152 Labour crunch: A shortage of skilled workers constrains expansion153 At last: Inroads are finally being made on land A key earner reform and ownership155 Hot, hotter, hottest: Correction seems likely, Page 84 although opportunities remain in mid-market With resources in mature markets declin- and affordable segments ing, emerging mining markets like PNG’s are on the rise. Mining and petroleum AGRICULTURE & PLANTATIONS extraction represented two-thirds of163 From the roots up: Niche markets are helping national revenue in 2011, and new devel- make the most of production opments promise hefty gains. A surge of169 Catching on: The fishing industry is maturing mining contracts and extraction projects171 Interview: James Lau, Managing Director, are well under way to explore the vast Rimbunan Hijau PNG potential of what still lies unearthed in PNG.172 Interview: Pedro Celso, Managing Director, RD Tuna; and Chairman, Fishing Industry Association PNG173 On the rise: Very active palm oil production earns a spot among top exporters Advantages ahead175 Knock on wood: Logging is a key industry Page 116 TOURISM The country is well placed to develop its178 Untapped potential: Efforts to raise nascent industrial base into a strong eco- international awareness for lasting growth nomic contributor. Several initiatives look183 A sustainable model: Drive for new investment set to boost production and capacity, requires adept community relations such as the development of a new marine184 Taking to the seas: An increasingly popular port industrial zone. New opportunities, par- of call for the global cruise line industry ticularly in downstream industries like185 Interview: Peter Vincent, CEO, Papua New tuna processing and wood manufactur- Guinea Tourism Promotion Authority (PNG TPA) ing, have accompanied economic growth. EDUCATION188 Seas of change: Improvement agenda focuses on reviving the sector Gas-fired growth192 Building up: Improving access to schools and rehabilitating existing facilities Page 146193 Interview: David Arore, Minister of Higher The sector has faced higher labour costs Education, Research, Science and Technology and materials shortages, slowing construc-194 Gender gap: Working to address disparities tion developments while the LNG project saps the market. However, the Mid-Term TAX Development Plans has a $17.7bn budget DFK Hill Mayberry to target 39 niche sectors, in addition to a195 Facts and figures: An overview of the tax laws $9.5bn plan to invest in road, maritime and204 Viewpoint: Tony Canning, Partner, DFK Hill airport infrastructure. These projects are Mayberry expected to underpin steady future growth. LEGAL FRAMEWORK Leahy Lewin Nutley Sullivan Lawyers206 Conducting business: An overview of the present legal environment From the roots up213 Viewpoint: John Leahy, Partner, Leahy Lewin Page 163 Nutley Sullivan Lawyers214 Viewpoint: Gibson Geroro, Associate, Leahy Agriculture remains a mainstay of the Lewin Nutley Sullivan Lawyers economy, with 85% of the population involved in semi-subsistence agricultur- THE GUIDE al work. PNG exported around $1.31bn216 The Kokoda Trail: Into the jungle in agricultural products in 2010. Trans-217 Hotels: Stylish accommodations port challenges are high, driving up219 Important telephone numbers: Contact production costs, but a focus on high- information for foreign missions and services end products helps to compensate.220 Facts for visitors: Tips for first-time travellers THE REPORT Papua New Guinea 2012

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