Viewpoint: Jonathan Seeto
In 2018 the local business community was waiting with anticipation for a jump-start to the economy of Papua New Guinea. A handful of significant events were expected to turn a new page: the country was gearing up for a meeting of the leaders of APEC countries, a liquefied natural gas project was being finalised and new mining developments were at hand. These tangible steps forward would be the basis for a new era of inclusive development and business confidence. In fact, CEOs in PNG were optimistic about business conditions, with 35% very confident about prospects for revenue growth in their principal economy in 2019, according to a PwC survey of APEC CEOs released in late 2018.
The situation on the international stage was slightly different. CEOs worldwide were voicing concerns about the potentially negative impact of trade tensions, a global economic slowdown, cyberthreats, among others, as highlighted in a 2019 PwC survey of CEOs from around the world. The global survey also provided insight into the nature of the perceived threats to the business climate. Specifically, CEOs expressed immediate concern over strong and growing nationalist and populist sentiments that could lead to over-regulation and policy uncertainty, and pose a clear threat to future activity.
Overall, PNG CEOs were more optimistic than their regional and global counterparts. It appeared as though PNG CEOs were anticipating a post-APECmeeting economic boost that would correspond with the emergence of a resource investment cycle through mega-projects. This would be the basis for PNG to pursue a path of growth, rather than follow the more pessimistic global sentiments.
In mid-2019 PwC conducted a business barometer survey of PNG CEOs, the results of which provided insight into whether the expectations for the year were being met or whether PNG was following the less positive global trend. Unfortunately, the results were not as optimistic as one would have hoped. Although the country received billions of kina in international funding commitments for infrastructure, health and education after hosting APEC in 2018, the impact of the event on the wider economy thus far has been muted. Even after PNG presented itself positively on the regional stage, only 16% of PNG CEOs indicated that the event provided growth opportunities for their businesses. Nevertheless, as the funding commitments to PNG will extend over a decade, some CEOs recognised that it may be too early to truly determine the impact of APEC.
Other findings from the business barometer also pointed to the fact that businesses in PNG face some of the same threats expressed by global CEOs. For example, global CEOs viewed over-regulation and policy uncertainty arising from the more populist trends in global affairs as factors that will impede business development. For PNG, this echoes with the review of potential changes to foreign investment rules and the ongoing debate about the development framework for existing and future resource projects. Indeed, almost 70% of respondents to the barometer survey indicated that changes in the foreign investment regulations would have a moderate to major impact on their organisations.
There is no denying that PNG is linked to the global economy, but it is not predetermined that we will be buffeted by the same headwinds. Looking ahead, I see that there are plenty of opportunities that can help ensure the economy meets the needs of the population, and that it provides inclusive growth and broad development. Beyond oil, gas and mining projects, there are significant opportunities in agriculture, skills development, digitalisation and small and medium-sized enterprises. Achieving robust economic growth in the years ahead will require urgency and a consistency of purpose between the government, businesses and local communities.
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