Interview: Marcelo Minc
What role should development partners play in the context of the Papua New Guinea economy?
MARCELO MINC: As part of the Country Partnership Strategy (CPS), ADB plans to invest as much as $1bn in the next five years in PNG, while the development partners’ contribution as a whole accounts for 10% of the national budget. These numbers give you an idea of the importance that partnerships hold for the country’s development. However, while the ADB concentrates on removing infrastructure bottlenecks – as we believe that this is one of the biggest stumbling blocks to alleviating poverty anywhere in the world – more could be done, in our opinion, to implement some of these major projects.
Improving implementation is the next step for development partners. If we help the government with implementation in the second half of projects, the difference can be truly substantial when it comes to the goal of achieving inclusive and environmentally sustainable growth with investments in transport and energy. It would also reduce the overall cost of doing business and create more jobs, which represents one of the biggest challenges for PNG. In general, there has been significant progress in recent years, but much more remains to be done to improve implementation, without which it will be impossible to achieve long-term strategies, for us or for any other development partner.
How could the city of Lae make the most of the new extension of the port and unblock congestion to reposition itself as a regional hub?
MINC: The completion of the first stage of Lae’s port upgrade, including a tidal basin, a multipurpose berth and terminal works, significantly boosts cargo handling capacity at PNG’s busiest port, and the government has already launched phase two of the project. In our opinion, there is great potential for Lae to be transformed into a regional transportation centre, once phase two of the upgrade is complete, meaning that the port will be able to handle Panamax-sized ships. However, the financial structure for this second phase will be more complex than just a simple loan and for this reason we think that a public-private partnership agreement would be the best formula for moving the project forward.
In fact, we have put together a package that enables the ADB to function as a guarantor, vis-avis a private sector partner, so that it can operate the port while also attracting additional private institutions in the future. This type of approach is extremely common on the international market and, as far as we have seen, there is substantial interest from large multinationals to enter into a public-private partnership structured in this manner.
What kind of legislation is needed in order for PNG to streamline the transportation sector and emerge as a regional logistics leader?
MINC: Thanks to its vast natural wealth, PNG has immense potential to emerge as a regional leader, and not only in transportation in my opinion. With the right reforms in place, we expect that new business will emerge while existing ones expand, so that the benefits of future resource exports could be spread across the economy for decades to come. Capital will unlock the potential of rural workers and that is why we believe that upgrading the national transport network to improve services delivery should be a priority – it will spur economic growth.
PNG is a large country in the Pacific region and the biggest obstacle to its development is the lack of connectivity, which could alleviate poverty if reversed. As a development partner, we implement our projects following the government’s input and initiatives, which involve long-term planning for the country. However, the fact that 68% of our investments are dedicated to infrastructure development projects indirectly suggests to the government what we think are the development priorities for PNG.
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