James Lau, Managing Director of Rimbunan Hijau Group, tells Business Advantage PNG that he sees positive developments with hotels, agriculture, gold and the country’s preparations for the 2018 APEC meeting. But he says continuing weakness in commodity prices will limit Papua New Guinea’s growth in the short to medium-term.

RH Group’s James Lau

Business Advantage PNG (BAPNG): The opening of The Stanley in 2016 was a milestone for PNG. How is it going so far? What does this development mean for Port Moresby and PNG?

James Lau: Since opening in October 2016, the Stanley has started out strongly and occupancy rates are improving well. Because of the hotel’s size and flexibility, Port Moresby now has a world-class conference venue. This enables the city to attract conferences and exhibitions that previously may have gone somewhere else.

This in itself will bring more overseas guests, giving them an opportunity to experience PNG. While it will take time, there will be a flow-on effect where more overseas visitors will mean more quality venues, and the opportunity to further develop the city and the country. The Stanley Hotel is a world class piece of infrastructure that will help develop Port Moresby into the future.

BAPNG: Adjacent Vision City also unveiled an expansion in 2016. What was the purpose behind this expansion?

James Lau: Vision City is growing and developing, and has really strengthened its position as PNG’s premier retail and entertainment complex. From the Hypermarket, to the numerous excellent restaurants, to the Paradise Cinema, to the countless smaller retail businesses, there really is something for everyone.

‘Export prices for tropical timber have been subdued for several years now.’

The expansion we have completed has added an additional 8000 square metres of retail space, and houses numerous exciting new businesses. The expansion also includes a walkway connecting it to the Stanley, allowing hotel guests to access more than 30 new shops, restaurants and entertainment options.

BAPNG: Times are tough in the forestry sector. Are there any pertinent developments or plans you’d like to update us on?

James Lau: Export prices for tropical timber have been subdued for several years now, and this has had an impact on profitability. Against this difficult backdrop, Rimbunan Hijau’s production volumes have been fairly consistent, including output from our processing facilities. The biggest current issue of concern in PNG’s timber sector is the proposed increase to the log export tax.

‘Ongoing weakness in commodity prices will continue to limit PNG’s growth in the short to medium-term.’

The tax increase originally proposed in late 2016 would seriously impact PNG’s forestry sector, destroying jobs and the royalties and development levies received by landowners. The industry has made its views on the proposed increase known to the government, and the Minister for Forests has recently added his voice, pointing out the significant contribution the sector makes to the national economy. A decision on this matter is expected in the coming weeks.

BAPNG: People are expecting another tough year in PNG. What is your feeling on the outlook for the PNG economy this year and in 2018?

R H Group’s Sigite Mukus oil palm project in East New Britain

James Lau: Ongoing weakness in commodity prices will continue to limit PNG’s growth in the short to medium-term; however there are some bright spots.

‘More foreign direct investment will result in greater employment opportunities for Papua New Guineans.’

Prices for natural gas have recovered by 35 per cent compared with 12 months ago, and gold prices continue to head in the right direction. PNG’s agricultural exports are set to increase, thanks to some key projects coming on line, such as Rimbunan Hijau’s Sigite Mukus Integrated Rural Development Project in East New Britain Province. PNG’s APEC year in 2018 provides PNG with the opportunity to market itself to the rest of the world as a promising investment destination.

More foreign direct investment will result in greater employment opportunities for Papua New Guineans, and build the case for greater investment in infrastructure and education. However, the Government should make more efforts in improving PNG’s overall business environment. For example, law and order is still one issue of concern.