With its majority established in Parliament and its ministry appointed, Papua New Guinea’s Marape government is now getting back to the business of running the country. Key business leaders tell Business Advantage PNG what they think its priorities should be.

Foreign exchange availability continues to be a challenge for business in PNG. Credit: VM_Studio/iStock

With 18 months before any potential parliamentary challenge can take place, the returned Marape government now has period of clear air to govern. Prime Minister Marape has already stated the priorities as he sees them – but how do they match the needs of business?

According to the heads of PNG’s two largest business chambers, availability of foreign exchange [forex] is still the key impediment facing business.

‘We must work together to find a solution to relieve the forex issue, which hampers business and affects our consumers,’ asserts John Byrne, President of the Lae Chamber of Commerce.

‘Reliability of power is a big issue.’

POMCCI’s Rio Fiocco. Credit: Rocky Roe

‘It’s been getting worse recently,’ says Rio Fiocco, President of the Port Moresby Chamber of Commerce and Industry, referring the difficulty of filling forex orders in spite of PNG’s improving forex inflows (thanks to recent higher global commodity prices).

‘The central bank has been pumping about US$50 million into the market each month. That really needs to double.’

Fiocco suggests stability of leadership at the Bank of Papua New Guinea (current Governor Benny Popoitai is only acting in the role, following the departure of previous Governor, Loi Bakani, at the end of 2021) may also boost confidence in monetary policy.

Arrears

Another measure that will provide an immediate boost to business would be for the government to pay more of its bills.

This week, superannuation fund Nambawan Super has taken the extraordinary step of locking government workers out of their premises due to K160 million in unpaid rent.

IRC HQ LOCKED OUT

The Internal Revenue Commission (IRC) regrets to inform taxpayers and the public that its headquarters in Port Moresby has been locked out by the Landlord, Nambawan Super Limited. All HQ operations therefore has been suspended indefinitely until further notice pic.twitter.com/TK9dWdolwj

— Internal Revenue Commission PNG (@IRC_PNG) October 5, 2022

While that particular tactic appears to have borne some fruit at least, Treasurer Ian Ling-Stuckey last month told Parliament that the government’s ‘cross-agency arrears vetting committee’ had identified K5.2 billion in outstanding arrears – that is, money owed to the private sector and state enterprises.

‘Reliability of power is a big issue.’

Last month’s Supplementary Budget will provide some relief – a total of K810 million to cover arrears and other outstanding bills – but business will be looking for more from the 2023 National Budget later this year.

While it waits for that money, business is moving towards more of a ‘money upfront’ approach in its dealings with government, according to Zanie Theron, Managing Partner at KPMG in Port Moresby.

Utilities

The Lae Chamber of Commerce’s John Byrne. Credit: BAI

Another pressing issue is the reliability of state utilities.

‘Reliability of power is a big issue. In Port Moresby, we’re getting interruptions twice a day,’ says Rio Fiocco. While this is nothing new and has been acknowledged by PNG Power, it does provide a burden on businesses.

‘The grid system is frail, inadequate and needs a complete overhaul,’ agrees John Byrne in Lae, where disruption and blackouts occur daily, several times a day, in some cases for extended periods. ‘The impact to business of unreliable power is failing equipment, overworked generators, increased costs and loss of production – all of which impacts the end consumer price on the shelves.’

In Port Moresby, water availability has also been an issue recently, which Fiocco puts down partly to teething problems associated with the merger of PNG’s two water utilities, Water PNG and Eda Ranu.

Meanwhile, John Byrne describes the recent disruption of PNG Dataco’s data services due to seismic activity as ‘a wake-up call’.

Major projects

Business is also hoping that the government’s planned infrastructure spending – notably the Connect PNG roads plan and the upgrade of the country’s ports – will continue.

‘I’d like to see all those projects facilitated and carried through, from now to when they plan to complete it all,’ George Constantinou, CEO of Monier, told the recent Papua New Guinea Investment Conference.

‘There is an element of all boats rise with the tide.’

Business also sees a major role for government in helping to facilitate the next wave of major resources projects – Papua LNG, Wafi-Golpu and the reopening of the Porgera mine. Not only will these projects trigger massive foreign direct investment, but there are likely to be flow-on effects across PNG’s economy.

JMP Securities’ Lars Mortensen

‘The number one thing that will lift the prospects for listed companies and the prospect for more listings is to drive economic growth,’ Lars Mortensen, Managing Director of stockbroker JMP Securities, told the conference.

‘There is an element of all boats rise with the tide. The more effort the government puts into getting the right outcome, whatever that is, in terms of driving projects to fruition, driving investments in agriculture and in other sectors that drive economic growth, that in itself will be very supportive for the market.’