Papua New Guinea economy on the cusp of a mining boom, kina’s fair value ‘around US 23-25 cents’, and niche tourism could nearly triple tourism numbers in 10 years. Your weekly digest of the latest business news.

PNG is on the cusp of a ‘super cycle’ in gas, gold and copper mining investment, according to the latest ANZ Research Survey. Economist, Dr Kishti Sen, says growth in 2018 and 2019 will be subdued, with the 2018 APEC meeting and higher agriculture output the main economic drivers. He says the challenge for the government and business is to manage the next upturn so that a boom-bust cycle is minimised.

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The ANZ’s Dr Kishti Sen.

Sen also believes the kina remains overvalued, and ‘better macro balance could be achieved if faster depreciation occurred. ‘The currency’s fair value on our estimate is around US$0.23-0.25’.

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Ela Motors CEO, Keiichiro Kuwabara, has told the Post-Courier, the lack of foreign currency is affecting its business operations, despite measures by the government to alleviate the shortage.

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Research shows that the developing niche market tourism across the globe has the potential to increase annual visitor numbers to PNG from about 32,000 in 2016 to around 86,500 visitors by 2027, says John Vivian, the IFC’s Resident Representative. He says the idea would be to focus on the culture, soft adventure, historical, bird watching, and diving segments.

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An analysis of micro-finance usages in PNG concludes that it remains the only country in the region with a loan-to-deposit ratio of less than one, indicating there may be excessive liquidity in micro finance institutions (MFI). The ANU’s Dek Joe Sum says for every kina deposited in a PNG MFI, only 55 toea are lent out.

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A new 2000 square metre DHL Express facility has reportedly opened in Port Moresby. Country Manager, Mark Schell, said the K10 million facility is the first of several other expansion plans to be rolled out during 2018.

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The flare up in violent crimes in the Highlands ‘is likely to weigh on (earthquake) recovery efforts and could more than offset the early resumption of LNG production at the PNG LNG project, posing downside risks to our real GDP growth forecast of 2.7 per cent for 2018,’ according to BMI Research, a subsidiary of the Fitch ratings agency.

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The Cassowary Hotel

The K34.8 million brand new Cassowary Hotel in Kiunga has reportedly been officially handed over to Coral Sea Hotels to operate and manage. The Cassowary is the eighth major investment project to be delivered by the Ok Tedi Development Fund for eight local communities in the Ok Tedi mine region.

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The CEO of the Independent Consumer and Competition Commission, Paulus Ain, believes plans by PNG Power (PPL) to halve tariffs are ‘commercial suicide’.  Ain told The National that since a 2013 government freeze on tariffs, most of PPL’s core infrastructure around the country is in ‘intensive care’.  He said the ICCC will carry out electricity industry reviews this year.

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Oil Search has been commended by the PNG Extractive Industries Transparency Initiative for being more financially transparent in its operations last year with its release of a report that consolidates information on the company’s approach to tax transparency and its socio-economic contributions.

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The Institute of National Affairs’ Paul Barker

The head of the Institute of National Affairs, Paul Barker, has told RNZ Pacific the introduction of a new financial system, the Integrated Financial Management System, should make the country’s economy more effective and transparent.

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Santos has lowered its full-year production and sales guidance due to the seven-week shutdown after February’s earthquake. The company’s March quarter production was 13.8 million barrels of oil equivalent (mmboe), down from 15 mmboe in the preceding quarter. Santos is the target of a US$10.4 billion takeover offer by US-based investor Harbour Energy.

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The new Coral Sea Cable, linking Australia and PNG, will mean higher speeds and band width (10 terabits per second on each fibre compared to 1000 gigabits per second), according to Communications Minister Sam Basil. He said it will also mean a more reliable and affordable IT telecommunication service.

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Photograph of the week

Young people in Sopu, Central Province, have set up businesses, and are keeping out of mischief, by selling rocks following the commissioning of the Koura Way Highway. Buyers use them for stone walls at home, and say they cost a tenth of rocks sold by other companies. Credit: Loop PNG.