Papua New Guinea’s Prime Minister, James Marape, has issued The Marape Manifesto, a blueprint outlining his priorities in government. It flags some big changes, especially in the resource sector. David James explores.

Prime Minister James Marape making his official Independence Day address.  Credit: EMTV

The manifesto, released to coincide with PNG’s Independence Day, calls for a reassessment of PNG’s 2019 National Budget, including ensuring that the statistics are ‘anchored on solid achievable numbers,’ and there is a call to make lower priority areas redundant.

There is a strong statement of intent about improving the returns to the government from the nation’s resources projects, such as LNG projects. But the statement is likely initially to affect the Porgera and Ramu mines, which have a review coming up this year. Marape says the government will be ‘looking at a greater tax and equity take’ with these two mines.

‘All resources companies who want to participate in harvest of our resources [will need to] come up with clearer and quicker ways to do downstream processing.’

In the document, the Prime Minister elected in May this year states that his government will push to ensure all projects in the country are ‘bringing revenues back to PNG, holding accounts for distribution out of their management company’s holding account through our central bank.’ This appears to be a measure to counteract the outflows of capital that have contributed to PNG’s foreign exchange difficulties in recent months.

There is an emphasis on downstream processing of PNG’s natural resources. ‘All resources companies who want to participate in harvest of our resources [will need to] come up with clearer and quicker ways to do downstream processing.

‘Gone are the days someone was telling us: “You can’t do gold bullion in-country, or you can’t process timber in-country, or we can’t have petrochemical industries in-country, or we can’t grow rice and cattle in-country”.’

Resource laws

Porgera gold mine. Credit: Barrick

Some significant changes are flagged for PNG’s resource laws, which are to be amended to ‘ensure customary land-owning clans and provincial governments are given increased  benefits from all resource projects.’

The manifesto proposes new ways of sharing gains with resources companies and states the government will get a share of 51 per cent of the resource profits, with investors taking the remaining 49 per cent.

‘All our resource laws are to be amended to ensure customary land-owning clans and provincial governments are given increased benefits from all resource projects.’

‘After production cost is deducted, the National Government’s 51 per cent [will be] distributed with the Provincial Government and landowners, and investors will distribute their 49 percent.

‘All our resource laws are to be amended to ensure customary land-owning clans and provincial governments are given increased benefits from all resource projects.’

According to the document, a state entity Kumul Export Agency will be responsible for the marketing of the State’s share of resources.

The manifesto also flags legislative changes to ensure local content in contract procurements.

State-owned enterprises

Marape has called for clearer dividend policies for state-owned enterprises (SOEs) and ‘no entrapment of money’ within SOEs. He believes that diagnosis of the SOEs’ books is a ‘matter of priority’.

Sasindran Muthuvel, Minister for Public Enterprises and State Investments, reportedly said there are some major reforms under way on all SOEs.

Tax incentives for small and medium enterprises (SMEs) and ‘existing tax complaint businesses in-country’ are being considered. ‘Depending on the space in the 2020 Budget, we will put some funding for very soft long-term loans for PNG businesses.

The document also says the country will be divided into economic zones, something the Minister for Commerce and Industry, Wera Mori, outlined last month in the 2019 Business Advantage Papua New Guinea Investment Conference. Efforts will be made to provide ‘reliable electricity’ and a ‘modern ICT platform’ to all businesses.

The Prime Minister also said that access to international grants will be ramped up.

Other initiatives highlighted in the document

• Thirty per cent of all state revenues will be allocated to infrastructure for the next 10 years and private investors will be invited to participate.
• The education and health sectors will get 10 per cent of budget support.
• Every child is to get a ‘minimum 12 years of foundational education and post year 12 education’.
• The government will provide a life-time interest free-loan scheme for tertiary students to borrow against.
• The state will allocate resources and create enabling policies to ensure citizens are going into businesses. ‘We want to migrate 50 per cent of our citizens to some form of business, including SMEs by 2030.’