Interview : Julie Bishop
How would you characterise the relationship between PNG and Australia?
JULIE BISHOP: Australia’s relationship with PNG, our nearest neighbour, is one of our most wide-ranging and comprehensive. The geographic proximity, unique historical connections and enduring people-to-people links form the bedrock of what has become a natural strategic and economic partnership, particularly given that we face similar regional and global challenges. Affirmed by Australia’s Foreign Policy White Paper, we are committed to supporting a stable and prosperous PNG.
Our economic partnership is important to the prosperity of both countries. Australian companies have invested over A$18bn ($13.9bn) in PNG, which is twice that of our investment in Indonesia. Two-way trade between Australia and PNG was around $6bn in 2016-17, with two-thirds of those goods exported from PNG to Australia. Moreover, the importance of this economic partnership was demonstrated by the Australian government’s decision to open a consulate general in Lae.
PNG’s hosting of APEC 2018 also reminds us of its growing role in the Indo-Pacific region. Its abundant natural resources are attracting interest from the dynamic economies to its north and west. As Asia’s middle class continues to grow, PNG will have unparalleled opportunities to supply natural resources, raw materials and food. Inevitably, this means that Australian companies will have to compete harder for business in PNG.
What are the main challenges Australian companies face when entering or operating in PNG?
BISHOP: PNG’s catastrophic earthquakes in the beginning of 2018 will have a significant impact on its economy. Though the damage to critical social and economic infrastructure is great, reconstruction efforts by the PNG government and donors – including Australia – are under way. Even before the earthquakes, PNG’s resource-driven economy was challenged by a fall in key commodity prices. A tight foreign currency market, lack of predictability in the regulatory environment, variable levels of government capacity, and obstacles in infrastructure and legal procedures all affect businesses. However, we expect the economy will rebound in the next few years as major resource projects come on-line.
We are working closely with the business community to improve the environment and support the development of new enterprises by working with young entrepreneurs to develop PNG’s digital economy. In November 2017 the Australian government announced that it would deliver a high-speed, subsea fibre-optic cable to PNG. This project will increase the reliability and quality of internet, providing opportunities for significant economic growth and development benefits. This will be reinforced by comprehensive cybersecurity cooperation between Australia and PNG.
In what PNG sectors do you see the most opportunities for Australian companies to invest?
BISHOP: The investment focus of Australian companies in PNG has historically been in the resources sector, followed by the finance, legal and consulting sectors. There are also excellent opportunities in PNG’s agriculture, forestry and fishing, which collectively contributed over 23% to total GDP in 2016. The PNG government has estimated that 30% of the land has agricultural potential, yet less than 4% is used for commercial production.
PNG’s tourism sector is another investment opportunity. The number of Australian visitors has increased in recent years, and in 2016 around 24,700 Australians travelled to PNG. More than 60% of them arrived by cruise ship, which has become an increasingly popular way to see PNG’s spectacular coastlines and islands.
Furthermore, PNG’s policy theme for its APEC hosting year aligns closely with our extensive cooperation on telecoms infrastructure, cybersecurity and the digital economy. PNG is investing in a range of infrastructure projects in advance of APEC, and Australian businesses are well placed to compete for many of these contracts.
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