Papua New Guinea’s economy is generally under-serviced, offering opportunities to provide a wide range of services to both businesses and consumers. Lutz Heim looks at how PNG’s services sector is likely to develop.

Deloitte’s Lutz Heim

Papua New Guineans are great early adopters of technology. Although there is still a relatively small group of middle-class Papua New Guineans, they are well-travelled, literate and very comfortable with technology.

Despite very low internet penetration, cell phone usage is high and growing. Cell phone usage stands at 27.8% of the population, but internet penetration is only 1.3%, with cost remaining the main hurdle. At our office in the Port Moresby CBD, 140 gigabytes a month currently costs US$11,000 (whereas at my home in Australia I pay $80 for 500 gigabytes!).

While this high cost has been addressed by the PNG Government in its policy initiatives, a fall in the price of internet access is a prerequisite for the viability of a lot of potential new services.

Opportunities based on ICT

Bandwidth permitting, some of the global trends I see developing in Papua New Guinea are:

• Data analytics (that is, the ability to draw conclusions from a huge range of data). For instance, in retail that means making decisions based on analysing purchasing patterns at different times of the day, the demographics of the suburb, the weather …
• Cloud technology and software development/implementation
• Online delivery of business services
• Online advertising.

Government and financial services

There have been significant gains in transparency in the financial sector over the past decade. Since 2002, the superannuation sector has been well-run and successful. One of the reasons for this is that superannuation companies are required to outsource their investment advisory functions to third parties. Given how well outsourcing has worked in the development of a workable superannuation sector, it would be good to see that model extended across a number of other areas of government.

‘As the country develops more of the population will need specialised training of various kinds, not just a basic education.’

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Sooner or later, the Government may conclude that outsourcing may help deliver more efficient public services—for example in healthcare.

Likewise, the PNG Government is responsible for a huge amount of funds that have to be distributed to landowners, but at the moment there simply is not the mechanism to do so efficiently.

Although the financial sector is itself likely to grow over the next few years, this will require more outsourcing given the current dearth of financial managers and advisors. Right now, there are very few personal financial advisors in the country, although companies are already outsourcing some work to overseas companies.

Education and training

Another key sector will be education and training. We’ve already seen that Papua New Guineans can compete—many hold down jobs in the Australian mining industry. But, as the country develops, more of the population will need specialised training of various kinds, not just a basic education. So I think there’s going to be a significant market in PNG for many years in vocational and other types of professional training.

Supporting agribusiness

Despite its growing urban middle class, 87% of Papua New Guineans are rural-based, and rural economies still tend to revolve around agriculture. Although this is an area with potential growth, most farmers are still smallholders. Government assistance in the development of the sector is important and this may be another area for expansion of outsourcing or third-party involvement. That may consist of consulting, extension or export market development services to transform the agricultural sector into something larger and more commercially viable.

Lutz Heim is Managing Partner of consulting firm Deloitte Touche Tohmatsu PNG.