Before he handed over the baton to incoming CEO Rajeev Sharma last month, Nasfund’s long-serving CEO Ian Tarutia, spoke to Business Advantage PNG about his time in charge of Papua New Guinea’s largest private sector superannuation fund – and where PNG’s economy might go from here.

Outgoing Nasfund CEO Ian Tarutia cuts a farewell cake during a Gala Dinner in February 2023. Credit: Nasfund

Business Advantage PNG (BAPNG): Looking back over your time restructuring Nasfund, what key milestones resonate strongest with you?

Ian Tarutia (IT): Over the decade from 2000 up to 2010, success was driven primarily through the implementation of good governance. Underpinning a good governance framework were high levels of transparency and accountability, plus strong engagement with key stakeholders.

I’m a firm believer that if you get governance right – adopting sound commercial principles, understanding risks and ensuring audited accounts are completed on time – everything else will fall into place.

BAPNG: Based on what happened with the last [resources] boom, what are your expectations over the next three years in PNG?

IT: It’s encouraging that TotalEnergies has launched the first phase of front-end engineering and design (FEED) studies for the Papua LNG project’s upstream production facilities. But, in terms of the real cash flowing in to kick start a lot of the groundwork, I believe it will be towards the back end of next year, 2024.

‘Business appreciates the sovereign rights of the state to raise taxes but, if it is implemented without adequate consultation, the outcome is counterproductive.’

Assuming things progress as expected, there should be increased demand for goods and services. Additionally, the workforce required should close existing vacancy levels for both commercial and residential buildings. But it’s important to remain cautiously optimistic.

BAPNG: How has recent economic activity flowed through to Nasfund?

IT: The employer and new member growth we’ve witnessed has more to do with compliance rather than increased economic activity. We were fortunate to pick up over 200 new employers and an additional K1.1 million per month in contributions from new members.

Our Eda Supa facility, which has over 37,000 members, has also picked up with over K74 million in voluntary savings.

BAPNG: How will last year’s return compare with this year?

IT: While business is picking up post-COVID, the sectors hardest hit during COVID restrictions were aviation, tourism and hospitality.

Our investment in Loloata Island Resort is now slowly picking up to the point where it is able to pay its loans and keep itself afloat, but the return on investment (ROI) for this asset remains some way off.

As a result, our returns won’t be as high as in 2021, despite the Brian Bell Group, in which the fund is heavily invested, doing very well, with its performance reflected in the increased dividends we received.

Overall, Nasfund’s two top-performing investments in 2022 were Government Inscribed Stock and BSP Financial Group.

This year, there’ll be less cash due to declining interest rates on fixed income Government Bonds and Treasury Bills. The newly introduced 45 per cent bank levy tax on BSP, one of our better performing investments, will lessen the dividend income we received from BSP.

Valuation losses on some of our unlisted equities and property portfolio will also have an impact on reduced returns for 2022.

I believe the defensive posture adopted by the fund over the last four years, with a strong focus on cash-yielding investments, is prudent management given the current economic environment.

BAPNG: Nasfund has assets worth K6.28 billion. How much of this is currently invested offshore?

IT: Around half a billion of the fund’s net assets (10 per cent of our investment portfolio) is spread over international markets and mostly in Australia through the Vanguard managed fund. Our international assets also include our 60 per cent holding in the Heritage Park Hotel in Honiara, Solomon Islands.

BAPNG: In your view, what public policy reforms would positively impact business?

IT: Meaningful ongoing consultation, especially when government policy creates unintended consequences for business. Business appreciates the sovereign rights of the state to raise taxes but, if it is implemented without adequate consultation, the outcome is counterproductive.

There is also the cry for SOEs to improve the reliability and affordability of power, water, airfares and internet services.