Viewpoint: Syd Yates

Promoting PNG as an investment destination on the international market has not always been an easy task, given the poor reputation that the country has been suffering from for at least the last two decades. However, when you look at the facts more thoroughly and look at what an investor should base his decision upon, PNG is in fact a success story. Despite the many challenges we have faced since independence, we have not missed a single loan payment or had a government been overthrown during this time. In fact, PNG has only had two prime ministers since 2002. I am positive that many countries around the world would welcome that level of political stability. The system of government in PNG is modelled on the Westminster system, with the Queen of England as our head of state. This fundamental respect for constitutional order and the rule of law has shaped our society, and remains the basis on which modern PNG is trying to emerge on the global arena, taking advantage of its abundant natural resources, such as hydrocarbons, minerals, tuna, timber, and at the same time boosting its appeal to tourists.

Having said that, plenty of challenges continue to exist, while questions persist about the transparency of our political system, the lack of economic diversification, and issues related to law and order. The sudden drop in the price of oil on the international market has also contributed to a shortfall in revenues. As a result, people are increasingly questioning the government’s response, which has been regarded as being too late. This assessment was reflected in the change to PNG’s sovereign credit rating undertaken by Moody’s following the 2015 budget. The government may have to make some difficult decisions when it comes to budget planning, and there have indeed been talks about raising capital through an international bond in the near future. This seems like an appropriate move as far as the financial sector is concerned, given that the country is preparing to host political elections in 2017 and to join Asia-Pacific Economic Cooperation in 2018. While some of these concerns do contain a certain degree of truth, a lot of it has been also been blown out of proportion over the years. What remains important, however, is that PNG has what the world demands in terms of natural resources. This will be able to assure the country’s sustained economic growth for many years to come, as the IMF and other international institutions have forecast. Indeed, in 2015 PNG is set to become one of the world’s fastest-growing economies.

Moreover, while ExxonMobil has led the construction of the country’s first liquefied natural gas (LNG) project, France’s Total will most likely add two additional LNG trains by 2020, alongside major mining projects like the Frieda River gold and copper project. This will turn PNG into a force to be reckoned with in the Pacific region and beyond. Mega-projects like these can spur economic growth, creating synergies with all kinds of industries. Therefore, if investors are looking to diversify their portfolio of investments, PNG offers a perfect opportunity. This is also true for the financial sector, which is why the central bank has granted us a full banking licence to compete with major players such as Bank South Pacific, ANZ and West Pac. PNG sits right in the middle between Australia and the Asia-Pacific region, and so can take advantage of the substantial level of capital flows that are expected to occur in this part of the world over the next few decades.

Up until now, asset finance has fuelled the growth of the middle classes in PNG. However, a comprehensive range of diversified financial products and services such as checking accounts and foreign exchange will be in great demand among the entire population, not only the corporate sector. Despite the challenges that PNG has faced, it has achieved a great deal in its 40 years as an independent state, reaching a level of social and economic stability that would justify whatever risks may exist for investors.