Do you feel that governments should concentrate on policy frameworks and improving infrastructure, instead of being involved in business?
BEN MICAH: I think that’s really a debatable point, because private entities also fail in business, and they don’t necessarily have all the answers to ensure economic growth and success. I could mention Enron, for instance, but the list would be much longer than that. Turning a profit for shareholders is the main task of any private sector organisation, but there is a degree of relativity to take into consideration, and it all depends on the environment in which they are operating.
In countries like Papua New Guinea, the government has to be involved in a lot of areas that are not commercially viable to the private sector. Utility services like water, power and ports are certainly among them, as the consumer base is too small to support several companies in competition. To ensure that these primary requirements are delivered to Papua New Guineans, the government has to step in, as the economy is not large enough to spread the risk too widely. Recently we brought into Parliament a new policy that also justifies the state’s involvement in the hydrocarbons and mineral sectors, as well as in large-scale agricultural developments. The idea that the government should just sit and collect taxes and royalties as a passive investor belongs to the past as far as I am concerned. We want to be active participants instead.
Do you share the view that PNG has not always had a fair deal in the extractive industries?
MICAH: I think it has happened in the past. For a long time PNG was perceived as a place to extract natural resources from and leave very little behind. Perhaps it was a legacy from the colonial period, but in general you spend money where you see a future for yourself and your family, and this didn’t always happen in PNG.
Luckily things have changed in more recent times, and our goal as an administration is to create a real value chain, from extraction to marketing of our natural resources, to maximise profit and spread the wealth accordingly. Perhaps in the past we have lacked the capacity to do so, but in an increasingly globalised workplace it is normal to import the skills you lack domestically. History abounds with successful examples and Dubai is one of them, a small city-state where the majority of its population are expatriates who have chosen to live and contribute to the growth of a new nation.
The executives that turned the PNG liquefied natural gas project into reality and launched the country’s largest telecoms company are now working for the state, and we hope to attract more top personnel in the future. Intellectual capital, like financial capital, is moving around the world, and if we can tap into that, as well as invest in our education sector and improve the skills of our workforce, it will benefit the nation.
The government has announced a number of possible privatisations of state assets. When should we expect the initial batch to be completed?
MICAH: It will depend on the appetite of specific markets. With Air Niugini we will initially issue 50% of the shares exclusively to domestic investors, and we are looking to raise at least PGK500m ($189m) before 2016. Arguably, it would have been more effective to invite other successful airlines in the region to bring expertise and capital, but the privatisation of a national airline is always a sensitive issue that touches the pride of the nation. Through the interest of superannuation funds and local landowners there will be enough capital raised domestically, and the industry’s future looks bright, with new routes being opened domestically as well as internationally, especially to Japan and the US through Guam and Hawaii. Over the next couple of years, people from the US west coast or Canada will not have to fly to Australia or Manila to reach PNG, but will be able to do so by arriving in Kavieng instead. We are also starting flights directly to New Zealand, instead of having to go through Australia, and will probably resume flights to Kuala Lumpur over the same period.
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