Business leaders are not quite ready to call it, but there are promising signs as Papua New Guinea celebrates its 50th anniversary of independence. Business Advantage PNG spoke with the country’s top CEOs to learn more about current business conditions.

PNG’s state-of-the-art new National Court Complex will house PNG’s Supreme and National Courts when it opens this year. Credit: David Kirkland

The year 2025 is a big one for Papua New Guinea, home to the Pacific Islands’ largest economy. It will mark 50 years as an independent democracy on 16 September 2025, a genuine cause for celebration.

Moreover, while PNG’s economic growth has not always been consistent over its 50 years, the country enters this special anniversary year with reassuring signs that a much-anticipated era of growth is finally commencing.

The years since the coronavirus pandemic have not been easy ones for businesses in PNG. They have been characterised by sluggish economic activity, foreign exchange and related fuel shortages, as well as unwanted shocks such as the January 2024 riots in Port Moresby, and the May 2024 landslide in Enga Province, which affected the recently reopened Porgera gold mine and surrounding communities.

Looking ahead, however, some encouraging developments are spurring business confidence.

First, strong agricultural commodity prices over 2024 provided a much-needed stimulus to PNG’s rural areas, where the bulk of its population reside.

This year, PNG’s Department of Treasury expects coffee prices to remain high, while palm oil, cocoa and copra oil prices will stabilise.

“Once a final investment decision on Papua LNG – or a special mining lease for Wafi-Golpu copper-gold project – is announced, then all the ancillary activities will take place and we will start getting into a boom phase.” – Rajeev Sharma, CEO, Nasfund

Second, there has been progress with PNG’s long-awaited next wave of resources projects.

A gas agreement, stalled since 2021, has finally been signed for PNG’s first offshore gas project, Twinza’s US$1.5 billion Pasca A.

There have also been reassurances that a final investment decision (FID) for TotalEnergies’ major Papua LNG project is close. “We are very confident in delivering FID within 2025,” TotalEnergies E&P PNG Managing Director Arnaud Berthet tells Business Advantage PNG.

There has also been the unexpected announcement by ExxonMobil that pre-FEED work on its US$11 billion P’nyang gas project will commence in the first half of 2025, years ahead of schedule.

Preparing for growth

Many in business have been taking the opportunity to prepare for growth. The diversified Steamships Trading Company is developing the Portside Business Park adjacent to Port Moresby’s international port, and upgrading its logistics and hospitality businesses.

“Over the next three years, we will have invested K500 million in getting the business park ready and open for business,” Chris Daniells, Managing Director of Steamships, tells Business Advantage PNG.

Close to Portside, state-owned Kumul Petroleum Holdings (KPHL) is developing an aviation fuel storage facility, which will open in the second half of 2025 and address some of the country’s aviation fuel shortages. KPHL is also building a large fabrication facility close to ExxonMobil’s LNG plant at Caution Bay, ideally placed for the future gas projects.

Meanwhile, the Mineral Resources Development Company – a venture partner in the Pasca A project – is pressing forward with more stages of its premium Star Mountain Plaza development, while commercial and residential developments such as Paga Hill (the site of a planned Radisson Blu resort), Tuhava Town and Synergy Park are being built in anticipation of greater demand.

In infrastructure, state-owned PNG Ports Corporation is embarking on major upgrades of the country’s ports, including an expansion and new business park for the country’s busiest in Lae. The National Airport Commission has a similar modernisation program for the country’s airports under way, while national airline Air Niugini is investing in a new fleet.

From left: Motu Koita Assembly Chairman Dadi Toka and Deputy
Prime Minister John Rosso join Steamships’ Managing Director Chris
Daniells and GM Corporate Affairs Vele Rupa in breaking ground at the
new Portside Business Park near Motukea, October 2024. Credit: Steamships.

Like the government’s ambitious Connect PNG roadbuilding program, these state investments are being supporting by development finance from such entities as the Asian Development Bank and the Australian Infrastructure Finance Facility for the Pacific. They are beginning to bear fruit.

“The Highlands Highway has improved immensely,” John Byrne, President of the Lae Chamber of Commerce, tells Business Advantage PNG. “It’s so much easier to drive all the way to Highlands centres such as Goroka and Mt Hagen now.”

Along with improvements to the Madang and Bulolo highways, Byrne’s members would also like to see improvements to the country’s power supply.

While PNG has seen significant private investment in gas- and hydro-powered generation in the past five years, power transmission and distribution are still often unreliable, causing most businesses to run expensive back-up systems.

Many will be hoping that the National Executive Council’s December 2024 decision to partly privatise state-owned utility PNG Power will be the circuit breaker that’s needed.

“The government’s decision to privatise is welcome news,” says Ian Tarutia, President of the PNG Chamber of Commerce and Industry. “Power is a big issue around the country.”

Regulatory reforms to enable greater deployment of solar power, still in its infancy in PNG, are also seen as desirable.

Business impediments

According to this year’s PNG 100 CEO Survey, which Business Advantage PNG runs with Westpac, foreign exchange shortages remain the number one issue facing business this year, followed by security and law and order issues, and unreliable utilities.

PNG’s forex shortages go back to 2016. While it can still take weeks for businesses to obtain the foreign exchange they need to pay overseas suppliers, there has been some progress in the past year, partly due to more forex being made available by the central bank, supported by the International Monetary Fund (IMF), and continued triaging of forex orders.

“We’ve seen some better interventions from the Bank of PNG, very focused on essential orders,” notes Brett Hooker, departing Managing Director of Westpac PNG.

PNG is about halfway through a 38-month IMF program focused on addressing foreign exchange, government debt and improving governance.

“Our policy reform has always been in ensuring the kina is more reflective of its market condition,” the IMF’s Resident Representative in PNG, Sohrab Rafiq, tells Business Advantage PNG.

“The IMF has never called for an explicit devaluation or depreciation. The IMF advised, ‘let the market decide where it is, and that will help deal with the foreign exchange issues’. Hence the Bank of PNG’s introduction of a crawling peg in January 2024 to do this in a controlled manner.”

In the short term, that means a depreciation. The kina fell in value against the US dollar by some 6.7 per cent in the 12 months to February 2025, falling by 3.1 per cent against another of its key trading currencies, the Australian dollar. More depreciation is expected.

“The kina is still by our assessment over-valued on a tradeweighted basis,” says Rafiq. How long before the kina reaches its true value can’t be predicted but, as Mark Robinson, CEO of the country’s largest bank, BSP Financial Group, observes, “the sooner we get to a market clearing price for the kina, the healthier it will be for everybody.”

Trading through quieter times

There has also been some notable success in getting government debt under control.

“On PNG’s external borrowings, all the quantitative targets have basically been met. The fiscal deficit continues to narrow. The challenge now is to maintain that momentum,” says Rafiq.

Government debt in 2025 is projected to be K70.8 billion, or 52.6 per cent of GDP, down from 53.7 per cent in 2023. Buoyed by record projected revenues this year, Treasurer Ian Ling-Stuckey’s sights are set on a budget surplus by 2027.

Meanwhile, improving law and order in the country remains a work in progress. The government has committed itself to a nine per cent increase in funds for police, defence and the judiciary in 2025, but challenges persist and many Port Moresby businesses are still recovering from the January 2024 riots.

A kina with lower buying power has seen some inflation in PNG’s economy, set to run at around 3.9 per cent this year.

While many larger businesses are expecting to trade through the quieter times, smaller and regional businesses have proved more sensitive to such factors.

Geopolitics and sport can mix: a Port Moresby-based team will join Australia’s National Rugby League competition in 2028. PNG’s Prime Minister James Marape (centre) joined Australia’s Prime Minister Anthony Albanese (left) and the Australian Rugby League Commission’s Peter V’landys for the December 2024 announcement many Papua New Guineans had been hoping for. Credit: Australian Government

“It’s still a challenge just keeping the doors open and maintaining operations,” observes Ian Tarutia, whose membership comes from across the country. “A lot of them are still heavily import-reliant. The cost of doing business has increased and the opportunities for growth are not on the board as yet.”

“For smaller employers, our payment default rates are going up,” confirms Rajeev Sharma, CEO of superannuation fund, Nasfund. “We have also seen a four per cent increase in unemployment benefit payments to our members in the past year.”

Sharma expects the first half of 2025 will be quiet, with a likelihood that business activity will pick up in the second half.

“Once a final investment decision on Papua LNG – or a special mining lease for Wafi-Golpu copper-gold project – is announced, then all the ancillary activities will take place and we will start getting into a boom phase,” Sharma tells Business Advantage PNG.

While the wish list for business is inevitably long, the removal of legal barriers preventing the entrance of satellite-based internet provider Starlink into the country could also be a quick win for the government.

“We want to get our digital economy really fired up,” says John Byrne. “Without a network like Starlink, it’s very hard to do that.”

Anticipating the boom

With major projects still ahead, most business leaders expect 2025 to be another tough year but one they are well capable of navigating.

“Resilient, resourceful, optimistic and engaged,” – these are words that come to Mark Robinson’s mind when thinking of the qualities of PNG’s business leaders.

He observes that many of the country’s most successful companies have been operating in PNG for many decades.

“They have an institutional knowledge – a level of knowledge that may also be reflected in their senior management, their ownership and their board,” he tells Business Advantage PNG. “Over time, I think the returns are very attractive in this part of the world.”

This article was first published in the annual Business Advantage Papua New Guinea 2025 Edition.