The successful completion of Papua New Guinea’s ExxonMobil-led PNG LNG gas project has turned the focus onto where new investment opportunities lie. Senior representatives from the IFC, Austrade and Nambawan Super got together at the recent Papua New Guinea Advantage Investment Summit to share their thoughts.

Austrade’s David Knapton, Nambawan Super’s Michael Block and IFC’s Carolyn Blacklock.

Despite the clear success of the ExxonMobil-led PNG LNG project, where the ‘next wave’ of opportunities lie is varied and the resources sector doesn’t feature highly for either Carolyn Blacklock or Michael Block.

Block lists energy (‘we’re looking at solar farms right now’), agriculture (in particular safe, renewable forms), telecommunications, finance, tourism and education.

‘They’re all the areas that we think will be areas that will have a divergent and different return,’ he says.

Blacklock says the IFC is also looking for the development outcomes:

‘So we want it all basically. We want job creation, particularly creation of good jobs for people.’

Catalyst

‘We want companies where, when our name and their name are together, something magical happens and we create more good than working by ourselves, and we help those companies enter into new markets around the region.’ she continues.

Blacklock says the goal is to own a portfolio of diversified investments ‘where we have good exit strategies’.

‘Remembering that if we’re catalytic, we’re investing because we know that at some point in time we’re no longer going to be needed.

Austrade Commissioner David Knapton says Australian companies involved in resources, mining, power, water roads, telecommunications, health and education have a lot to offer Papua New Guinea.

‘We advise people to be patient and realise they’re not going to come up on a visit, score business in the first trip, and then walk away rubbing their hands, saying this is an easy market.

‘If you don’t get the relationships right, if you don’t talk to the right people, you don’t connect to the right people, you usually don’t get very far.

Block says the main thing Namabawan’s analysts look for is good governance, and secondly, good planning.

SMEs

He also says the greatest obstacle to SMEs moving forward is the lack of finance available.

‘Right now with the banks having lost a lot of revenue from foreign exchange they are falling over themselves to lend to the corporates with good names, good security, to the detriment of SMEs.

‘So, there needs to be some form of encouragement and some form of subsidy for SMEs, because after all they really are the lifeblood of any economy.’

Infrastructure

But for Blacklock, the priority is to invest in big infrastructure projects which provided the backbone for business to operate projects which create power, for example, she says.

‘I’m not sure how we go about really transforming SMEs if they can’t run an iron, if they can’t fix a motor car because they haven’t got a light to see underneath the bonnet, if they can’t bank because the electricity’s not working so they can’t add up what their returns are.

‘I see women in PNG having a particularly difficult plight, yet on the other hand, women are generally more reliable, and have better governance standards inherently.

‘So if we are going to see women in PNG become business owners, we need to make the place safer.’

Investment criteria

‘What we’re really looking for is companies where we can add value,’ says Carolyn Blacklock, Country Coordinator for the IFC, the private sector division of the World Bank.

Despite being a bank, she says, the IFC doesn’t compete with local banks. Rather, it invests in up-and-coming companies, aiming at earning a minimum 15 per cent return per annum.

The priority for Nambawan Super, says Michael Block, is protecting members’ retirement funds.

‘We take a more conservative approach than the IFC, aiming ‘to make CPI-plus-two per cent on a rolling basis’.

‘So, if we think CPI in PNG will average around six per cent, we want to make 8–9 per cent after tax, going forward,’ says Block.

Carolyn Blacklock, David Knapton and Michael Block were panelists at the 2014 Papua New Guinea Advantage Investment Summit.