Papua New Guinea’s Investment Promotion Authority (IPA) has released data on foreign investment trends in 2020 that show the sector of most interest was agriculture. Despite the impact of COVID-19, there was significant investor interest.

The Investment Promotion Authority headquarters in Port Moresby. Credit: BAI

According to figures released by Papua New Guinea’s Investment Promotion Authority, the countries showing the most interest in Papua New Guinea have changed.

‘We have recorded increased interests from Japan given their interest to invest in the agriculture sector. Traditionally, Australia and Malaysia have been the major source of investment origins. However, we have recorded increased interest lately from China, followed by member states from the European Union.’ Japan’s 14 visits were ahead of China’s (eight) and Australia’s (seven),’ it reports in its latest newsletter.

The IPA said agriculture has been the major sector of interest for foreign investment enquiries.

‘These are mainly commodity exports such as coffee, cocoa, vanilla and copra. It included a proposal for livestock development and export. The many areas sought for investment opportunities include: ICT, consulting, tourism, finance, construction, energy, mining/petroleum/LNG and fisheries sectors.’

‘PNG faced yet another challenging year in terms of overall investment activities. Growth fell to below zero as exports tumbled, inflation surged higher, budget deficit expanded, current account surplus narrowed.’

Not surprisingly, foreign investment-related visits to PNG in 2020 fell by 87.5 per cent compared with 2019, but the number of investment enquiries rose by about a quarter.

The IPA newsletter said that, due of travel restrictions, most foreign investors and clients communicated through email and virtual platforms.

‘All face-to-face meetings with clients or visitors were ceased within the IPA premises except for the IPA front counter. Clients were encouraged to use emails or teleconference or any other electronic/ digital applications for enquiries.

‘This is still maintained as a current measure. We’ve continued to facilitate most foreign investment enquiries via email correspondences providing advisory support and assistance to our clients.’

Challenges

The IPA report said that the COVID-19 crisis has had an adverse effect on the investment environment.

‘The country’s struggles were far from over when COVID-19 emerged. Policy and industry experts predict that rebound and recovery from the corona crisis will take some time.

‘The emergence of COVID-19 pandemic has severely affected global economies and reduced much of cross-border trade and investment activities as border control measures were applied. Global foreign direct investment has been adversely affected in 2020.

‘PNG faced yet another challenging year in terms of overall investment activities. Growth fell to below zero as exports tumbled, inflation surged higher, budget deficit expanded, current account surplus narrowed, key sectors shrank, job losses doubled, and livelihoods disrupted.’

Policy

Investment enquiries in PNG 2018-2020. Credit: IPA

The IPA report said a number of proposed legislative changes are set to reshape the investment environment in PNG. These include:

• Better definitions of IPA roles and responsibilities
• New requirements for minimum investment for foreign investors
• Clearer rules for reserving businesses that are citizen-owned and operated
• New rules for local and foreign partnerships in businesses
• Improved processes for reviewing reserved and restricted activities
• The need for an improved foreign certification process
• The need for better compliance and enforcement