There are signs of optimism in the Papua New Guinea business community, according to a survey of market conditions by the Business Council of Papua New Guinea. It suggests that, while the pandemic has exacted a severe financial toll, businesses have now ‘settled’ and are navigating the challenges of the new environment.

Revenue expectations of PNG businesses during Q1, Q2 and Q4 2020. Credit: Business Council of PNG

The Business Council of Papua New Guinea (BCPNG)’s Markets Survey found that, despite a continued trend of financial decline, ‘business leaders in PNG are showing a hint of optimism when it comes to their short-term business prospects.’

Although 60 per cent of businesses did not meet their projected results in the last quarter of 2020, 44 per cent are expecting revenue growth in the next six months, while only 25 per cent are expecting revenue decline.

‘This is a significant improvement from the previous quarter when only nine per cent anticipated revenue growth in the next six months and 74 per cent anticipated a revenue decrease,’ the survey says.

The survey detected signs of optimism amongst business leaders, with 32 per cent expecting their companies to grow this year and 70 per cent of respondents saying they will be able to operate in the current environment for at least a year.

‘This could indicate that after a year into the pandemic, PNG businesses have now settled and have put in place frameworks and structures to help them navigate the challenges of the current environment,’ the survey says.

Challenges

The survey says that reduced consumption and market demand are the top challenges that businesses face. The lack of foreign currency and the inability to get the right skills in-country at the right time are also consistently nominated as obstacles.

Employee management strategies to retain staff during COVID-19. Credit: BCPNG

Employment trends seem to have stabilised. More than half (53 per cent) of the respondents say their current headcount is the same as their September 2020 headcount. Eighty two per cent of respondents do not intend to reduce their employee headcount in the next three to six months.

In the fourth quarter of 2020 the sectors hardest hit were:

• Tourism and hospitality
• Professional services
• Transport and logistics
• Manufacturing
• Real estate and property

Stimulus package?

The survey says that close to a year after the announcement of the Government’s stimulus package, it is yet to create a positive impact on respondents’ businesses.

‘Fifty nine per cent of the respondents rate the stimulus package as “not effective at all”, citing reasons such as lack of action and clear direction to implement the stimulus package, lack of positive outcomes that would have come from the stimulus package, and the package not being accessible to SMEs and MSMEs.’

Survey respondents say that the Government should focus on accelerating resource projects, restoring investor confidence, resolving foreign investment issues and settling debts with the private sector.

In a negative indicator for government revenue collection, 37 per cent of respondents say that their actual 2020 tax bill is below their projected tax bill, while 12 per cent say that their actual tax bill is 21-50 per cent lower than their forecast.

The eight priority areas that the survey respondents suggested to the BCPNG as a way forward. Credit: BCPNG