Economy
From The Report: Papua New Guinea 2018
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Although 2017 was another challenging year for Papua New Guinea, with subdued GDP growth against a backdrop of falling government revenues, cuts to public spending and rising fiscal challenges, economic recovery is gradually gathering steam in 2018. A steady uptick in commodity prices supported export growth and augmented the country’s trade surplus, while agriculture and mining recovered from severe drought that significantly impacted economic activity in 2016. Maintaining growth after a boom period – which was driven by construction of the country’s first major liquefied natural gas facility, PNG LNG – has proven challenging for policymakers. However, the economic slowdown has pushed the government to implement fiscal and policy reforms aimed at fostering domestic growth and the non-extractives economy. This chapter contains interviews with Charles Abel, Deputy Prime Minister and Treasurer; Hulala Tokome, Chairman, National Superannuation Fund; and David Toua, Chairman, APEC Business Advisory Council.

Articles from this Chapter

Overview

Towards recovery: Regulatory reforms aim to boost government revenues and develop the non-extractive industries
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Although 2017 was another challenging year for Papua New Guinea, with subdued GDP growth against a backdrop of falling government revenues, cuts to public spending and rising fiscal challenges, economic recovery is gradually gathering steam. A steady uptick in commodity prices supported export growth and augmented the country’s trade surplus, while agriculture and mining recovered from severe drought that significantly impacted economic activity in 2016. Maintaining growth after a boom period…

Interview

Positive prospects: Charles Abel, Deputy Prime Minister and Treasurer, on efforts to diversify the economy and boost domestic consumption
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Interview :Charles Abel How would you assess the economic outlook for Papua New Guinea in 2018? CHARLES ABEL: In two words, I would describe it as recovering and positive. Global factors are improving, and we are implementing reforms aimed at achieving greater fiscal discipline. This process began in 2017 with the 25-Point, 100-Day Economic Stimulus Plan, which kick-started the government strategy set out in the Alotau Accord II. When the O’Neill-Namah and then the O’Neill-Dion coalition…

Overview

Business Barometer: PNG CEO Survey
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Papua New Guinea’s chairmanship of APEC in 2018 comes at a time when the nation is still grappling with a foreign exchange shortage and high public debt, as well as persistent problems with law and order. Despite these issues, C-suite executives appear optimistic for 2018, as shown by the more than 100 participants in Oxford Business Group’s second Business Barometer: PNG CEO Survey. The vast majority (77%) think that hosting APEC 2018 will have a positive or very positive effect on the economy. For more information on the OBG Business Barometer, please visit www.oxfordbusinessgroup.com/ceosurveys.…

Overview

What business leaders expect from: PNG’s chairmanship of APEC in 2018
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Papua New Guinea’s chairmanship of APEC in 2018 comes at a time when the Pacific Island nation is still grappling with a foreign exchange shortage and high public debt, as well as persistent problems with law and order. Despite these challenges – and, in some quarters, grumblings that hosting APEC 2018 is an unnecessary drain on public finances – OBG’s Business Barometer: PNG CEO Survey indicates that a majority of chief executives see the country’s chairmanship of the multilateral organisation in a positive light. Indeed, 77% of business leaders who participated in our survey feel that APEC 2018 will have a positive or very positive…

Interview

Spread the word: Hulala Tokome, Chairman, National Superannuation Fund, on raising awareness on the benefits of savings
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Interview :Hulala Tokome What kind of role can superannuation funds play in financing the economy? HULALA TOKOME: Superannuation funds are important for generating capital in Papua New Guinea. The combined funds currently represent around PGK11bn ($3.5bn), or 16% of the country’s GDP. When these funds are invested into the economy, not only does it provide a return for investors, it also acts as a catalyst for socio-economic development, such as employment generation, wealth creation and…

Analysis

Clear objectives: A new government strategy and the budget target fiscal deficits
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Papua New Guinea is facing several fiscal challenges in the wake of falling government revenues and the end of a liquefied natural gas-driven construction boom, with GDP growth falling by about two-thirds between 2015 and 2016. Though the budget deficit narrowed in 2017, this was largely owing to a supplementary budget that slashed capital expenditure. Public spending remains constrained by low levels of tax collection, even as recurrent salary expenditure remains high. Public debt has soared in…

Interview

A shared goal: David Toua, Chairman, APEC Business Advisory Council (ABAC), on establishing mutually beneficial relationships for economic and cultural exchange
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Interview :David Toua How can APEC help member economies achieve smarter globalisation? DAVID TOUA: The primary objectives of APEC are to promote open trade between its 21 member economies and to facilitate the agencies working towards this goal. Ultimately, this should result in an inclusive business environment with enhanced regional integration. That said, APEC members have to create policies and pathways to implement open trade and investment. An example of this would be the Trans-Pacific…

Analysis

Alternative paths: Diversification efforts target infrastructure upgrades
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In an effort to reduce dependency on extractive industries, the government has increasingly focused on non-mineral diversification as an economic growth strategy, with an emphasis on domestic industry, tourism and new special economic and industrial zones aimed at attracting foreign investment. Government efforts, including the publication of Papua New Guinea’s first-ever National Trade Policy (NTP) 2017-32, should help support this agenda, although severe infrastructure challenges will likely…

Overview

Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economies
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Recent decades have seen a downward convergence in corporate tax regimes as advanced, emerging and developing economies moved to grab a bigger slice of the global investment pie. Headline corporate tax rates have fallen by 20 percentage points since the early 1980s. Alongside lower average rates, special tax incentives aimed at capturing investment have emerged, further reducing the effective rates paid by transnational corporations. In the aftermath of the 2007-08 global financial crisis, many countries were compelled to slash spending and raise revenue in order to rein in precipitous budget deficits. Even as tax revenues as a share of GDP in…

Overview

Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economies
OBG
plus

Recent decades have seen a downward convergence in corporate tax regimes as advanced, emerging and developing economies moved to grab a bigger slice of the global investment pie. Headline corporate tax rates have fallen by 20 percentage points since the early 1980s. Alongside lower average rates, special tax incentives aimed at capturing investment have emerged, further reducing the effective rates paid by transnational corporations. In the aftermath of the 2007-08 global financial crisis, many countries were compelled to slash spending and raise revenue in order to rein in precipitous budget deficits. Even as tax revenues as a share of GDP in…