With Papua New Guinea’s government deciding that the country must now to learn to live with COVID-19, one could argue that the first chapter of PNG’s encounter with the global pandemic has come to an end.

BAI’s Andrew Wilkins

There will undoubtedly be further, perhaps even graver, challenges ahead but, after months punctuated by changing emergency measures, special orders and lockdowns, at least businesses can now settle into the niupela pasin, or new normal.

The impact on PNG’s economy can’t be dismissed, however. The World Bank, ANZ, Fitch and the Asian Development Bank have all released sobering assessments of PNG’s economy in the past six weeks, predicting negative GDP growth this year of between -1.5% and -2%.

Most had suggestions for how the situation might be improved, however, with the ADB arguing for tax reform, the World Bank suggesting a ‘gradual adjustment’ of the kina, and ANZ lobbying for the Papua LNG and P’nyang gas projects, warning that investors could look elsewhere if PNG doesn’t act to finalise these projects.

As the World Bank’s PNG Country Economist Ilyas Sarsenov said during a special online briefing for our readers held last month, ‘the economy requires foreign direct investment and not only into the resources sector. The non-resource sector would benefit from foreign investment, knowledge and other benefits that external investors bring to the country.’

With this in mind, some business people are telling us that the increase of tariffs on agriculture and the fight over the Porgera gold mine could have been better timed.

Reasons to be cheerful

While the situation for business is far from rosy, there are at least some encouraging developments:

• Firstly, PNG’s multilateral and bilateral partners are stepping up their investments, not only to shore up government finances but also to counter falling private sector investment. The K4.96 billion Australian Infrastructure Finance Facility for the Pacific is finally getting some traction, while the International Monetary Fund, World Bank and Asian Development Bank are also expected to play key roles in PNG. Significant investment in PNG’s energy and telecommunications sectors is not far away, if our sources are to be believed.
• Secondly, we are starting to see movement in the resources sector. The granting of a mining lease to Mayur Resources’s cement and lime project outside Port Moresby will trigger some US$350 million (K1.125 billion) in investment. Just this month, the Chairman of the state’s nominee for the Wafi-Golpu copper-gold project, Kumul Minerals Holdings’ Peter Graham, told us the approval for a Special Mining Lease could come as early as September.
• Finally, there are encouraging signs that both the government and the private sector are finally coming to grips with the potential of technology. The launch of online payments for land leases this week is an important milestone for e-government, while both Bank South Pacific and Kina Bank have recently launched platforms aimed at driving the adoption of ecommerce by both business and consumers.

Doing Business in PNG

Our own commitment to PNG remains unchecked. I hope you are enjoying our ongoing series of online business briefings. Our next will be an update on infrastructure, happening soon.

If you are a paying subscriber, you may also have noticed the Doing Business in PNG section of our website has grown into a comprehensive, 60,000-word guide on how to do business in the country. We welcome your suggestions on how it can be further improved and expanded.

You can expect more announcements from us in coming weeks. We’ve been busy.

In the meantime, please stay safe and well. I wish you every good fortune in these challenging times.

Andrew Wilkins is Publishing Director at Business Advantage International.