Interview: Robin Fleming
What opportunities currently exist for expanding Papua New Guinea’s banking industry into other countries in the Asia-Pacific region?
ROBIN FLEMING: From BSP’s perspective there is a need to diversify revenue beyond our home markets and thereby tap into a much larger population base. Some of our regional neighbours are very similar to PNG in the sense that their retail customers either do not have access to many banking services or are simply underbanked.
With the right delivery model there may be opportunities for BSP to bring its retail banking experience to these markets, or bring asset finance to countries like Cambodia, for example. Following the launch of our new asset finance subsidiary, BSP Finance, countries like this could function as a point of access for our bank.
In general we have an opportunistic approach to the business, and we have a history of growing through acquisitions. However, at present our main focus is on improving access to banking and financial inclusion in PNG.
To what extent have the reopening of Ok Tedi mine and the partial recovery of oil prices helped to address currency shortage in PNG?
FLEMING: The closure of Ok Tedi in the second half of 2015 had a significant effect on PNG’s economy. As mining is a major exporter and employer, there was an impact on foreign exchange as the inflows normally associated with operations and the capital expenditure generated by Ok Tedi ceased for a period of almost nine months.
Estimates of the foreign exchange inflows that were lost during this period vary, but it would have been between $200m and $300m, which equates to a significant amount of outstanding import orders in the market. There were also fiscal impacts, with tax revenues from Ok Tedi contracting sharply. Furthermore, there were knock-on effects with subcontractors and businesses in Ok Tedi’s supply chain being negatively impacted.
With the mining operations having re-commenced, foreign exchange from Ok Tedi has started to flow in with a consequent benefit to all importers in PNG. Over time, tax revenues will also start to increase for the government.
How effective have the financial inclusion strategies being implemented in PNG been?
FLEMING: Making financial and banking services accessible to everyone so that they can participate meaningfully in the development of the national economy is a must for PNG, even though a large part of the population still lives in a largely non-monetised economy.
As an institution, BSP places great emphasis on financial inclusion in PNG. Our branch staff all participate in financial inclusion activities such as account and financial literacy training, and much of this activity takes place away from the immediate vicinity of the branch. Our staff spend a lot of time outside of normal business hours travelling to and from some of these remote areas.
How would you respond to the criticism that the major banks in PNG are too focused on businesses in cities instead of the provinces?
FLEMING: PNG’s banking sector remains sound and is not saturated, like in many other parts of the world, and that is why BSP invests significantly in banking outside of the key provincial cities and towns in PNG. This is reflected in our extensive network of 44 branches and BSP rural sub-branches. BSP is the only private sector business in PNG that has direct representation in every province in the country, and we remain committed to providing services for all of our customers across PNG.
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