Australian companies are optimistic about investing in Papua New Guinea, says Philip Franklin, Head of the PNG branch of the Australia Papua New Guinea Business Council. But Peter Taylor, President of the Council, tells Business Advantage PNG that proposed changes to the Investment Reserve List are a concern for foreign investors.

The APNGBC’s Phil Franklin. Source: APNGBC

Franklin, who is also Deputy Chair of the Investment Promotion Authority in Papua New Guinea, says patience is necessary to succeed in Papua New Guinea.

‘To be successful, Australian companies must be prepared to invest for the long-term.’

Taking the time to research the relevant market in Papua New Guinea, and develop relationships with local stakeholders is critical for success, Franklin explains. He advises establishing a local base.

‘It’s important to have an office somewhere in the country,’ he adds. ‘You need to have your feet under a table here.

‘There is a tendency for Australian companies to invest as a method of propping up their revenue, particularly during a downturn in the Australian economy.

‘The Reserve List has been expanded to include business activities that I am not convinced local companies are capable of providing right now.’

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‘However, these companies often find themselves struggling to establish their business in Papua New Guinea, due to limited knowledge of the local landscape.’

Reserve list

Peter Taylor, President of the Australia–Papua New Guinea Business Council, identifies some looming domestic concerns. He says proposed changes to Papua New Guinea’s investment Reserve List represent a concern for foreign investors.

The Reserve List is intended to protect local businesses by reserving particular types of activity for locals only. Taylor says a recent review of the List has led to a proposed expansion.

‘A lot of existing businesses in the country will not qualify.’

‘The updated list will include a broader range of types of goods and services that foreign companies cannot provide, and the value thresholds for foreign business have been raised significantly, putting at risk their future in the country,’ Taylor adds.

‘We support local business growth and greater involvement of Papua New Guineans in the economy, but the Reserve List has been expanded to include business activities that I am not convinced local companies are capable of providing right now.’

Qualification

The APNGBC’s Peter Taylor. Source: APNGBC

Taylor says many existing businesses in the country will not qualify if the amount of revenue turnover is increased.

‘Foreign businesses providing maintenance services are really important to the country’s economy, but they are often small in size.

‘If they are shut down, it would be a shame to lose the expertise and services that these companies provide the local economy,’ Taylor explains.

‘While Papua New Guinea boasts substantial potential, particularly in its underdeveloped industries—such as agriculture and resources—the country is competing for foreign investment at a global level.’

Coordination

Franklin says the government could better coordinate the promotion of the country’s investment opportunities internationally.

‘Although there has been a lot more Chinese activity, the mainstream investors remain Australian.’

‘You don’t have to sell Papua New Guinea as a good place to invest to those of us who have been here a long time. It has its challenges, of course, but the government could improve and expand its showcasing of the country’s potential to foreign investors.

‘Papua New Guinea is growing at a great rate, but there are a lot of people in Australia and elsewhere who don’t understand the place.’

Franklin says the success of many Australian companies in Papua New Guinea occurs as a result of applying a long-term investment plan and taking the time to overcome barriers that arise when doing business in a developing economy.

Taylor says Asian companies are increasingly involved in the country’s construction sector. But Australia remains a key player in the business sector, and particularly in the resources industry.

‘Although there has been a lot more Chinese activity, the mainstream investors remain Australian.’

‘I think it’s always been that way, and I don’t think there will be a change in the rankings in the foreseeable future.’