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Chapter | Industry & Retail from The Report: Papua New Guinea 2020

With the Covid-19 pandemic set to significantly slow economic growth worldwide in 2020, Papua New Guinea’s industrial sector can expect some headwinds; however, growth is forecast to return in 2021. The authorities hope the industrial sector can benefit from the rebound and help to improve national self-sufficiency in areas such as food production, while boosting export revenues in the process. Plans to fuel the creation of small and medium-sized enterprises across a wide range of industries also bode well for future expansion. If successful, this should spur the emergence of downstream activities centred around the country’s natural resources. Meanwhile, key players in the retail sector have adapted quickly to meet the challenges presented by the pandemic. In many cases, brands have transitioned from physical stores to online platforms. Supply chains have remained relatively resilient, indicating that the sector can expect to return to the growth trajectory witnessed over recent years, fuelled by urbanisation and a rapidly growing middle class. This chapter contains interviews with James Rice, CEO, Paradise Foods; and Alfred Yau, Director, Papindo.

Chapter | Construction & Real Estate from The Report: Papua New Guinea 2020

The government has demonstrated notable early enthusiasm to boost the ease and transparency of land ownership processes, which should stimulate activity in the construction sector. Recent years have seen the industry hindered by vulnerability to foreign currency shortages, limited availability of land for development, a lack of transparency and insufficient human capital. Ongoing efforts to improve road connectivity and affordable housing supply are also poised to provide steady demand for construction around urban areas, before expanding outwards into rural communities. Housing availability is indeed a pressing issue, especially as real estate prices have been driven up by the limited availability of land and high cost of construction. The government has prioritised this issue and shown its commitment to improving the supply of basic utilities to support developers and local communities. There is also potential for both affordable and high-end developments to be buoyed by large-scale extractives deals, which would increase demand for property and provide trickle-down benefits for the wider economy. This chapter contains an interview with Brian Hull, Executive Chairman, Century 21 Siule.

Chapter | Transport & Logistics from The Report: Papua New Guinea 2020

Papua New Guinea’s topography is characterised by mountainous terrain, rivers and around 600 islands. Travelling by road can be complicated and expensive, with many routes in need of maintenance; as a result, the transport of people and goods often relies on sea and air networks, which incur high costs for businesses operating in PNG. The ripple effects of improved transport infrastructure are vast – not only because the easier movement of goods and people can benefit the high-potential agriculture and tourism sectors, but also since improved connectivity will facilitate greater development opportunities for rural communities. While the full impact of Covid-19 on the sector remains to be seen, developing transport infrastructure is integral to the country’s medium- and long-term goals, and a vital stepping stone to economic diversification. Better connections and improved integration between different modes of transport will lower the cost of doing business and make the country a more attractive destination for investment. This chapter contains interviews with Robert Howden, Managing Director, Express Freight Management; and Rupert Bray, COO, Steamships Trading Company.

Chapter | Energy from The Report: Papua New Guinea 2020

Papua New Guinea’s development has been driven by its resource wealth and, while policymakers are focused on long-term diversification, extractive industries still underpin the economy. Since his election, Prime Minister James Marape has made clear his intention to secure greater revenue for the government from future extractive projects, with the aim of nurturing economic growth and investing in human capital development. As such, his first year in office has seen protracted negotiations on major new liquefied natural gas (LNG) projects, including the $13bn Total-led Papua LNG project and the expansion of the P’nyang gas field. In terms of power, meanwhile, there is political will and international support to help PNG reach its goal of 70% electrification by 2030. However, creativity will be needed to mitigate the challenges presented by the country’s difficult terrain, low population density, complex land rights framework and lack of spending power in rural communities. This chapter contains an interview with Kieran Wulff, Managing Director, Oil Search.

Chapter | Mining from The Report: Papua New Guinea 2020

Alongside the upstream energy sector, mining has long served as the backbone of Papua New Guinea’s economy. In 2019 the mining and quarrying sector accounted for 10.3% of GDP and was a major source of foreign exchange earnings. Like the other extractive industries, mining has emerged as a priority for reform under the administration of Prime Minister James Marape. The country has significant deposits of gold, copper and other precious metals, many of which remain untapped. However, the future of some mining projects in the pipeline remain uncertain, given protracted negotiations between the government and mining companies. Looking further ahead, the government appears keen to rebalance the sector towards greater public ownership of mines, although it is expected that the capital and expertise of private investors drawn to transparent regulations will still be required. This chapter contains an interview with John Lewins, CEO, K92 Mining.

Chapter | Insurance from The Report: Papua New Guinea 2020

Papua New Guinea’s insurance market is closely indexed to the country’s economy, which prior to the Covid-19 outbreak in early 2020 had been projected to grow at an average of 3% per year through to 2022. However, the pandemic effectively shuttered PNG for several months, and reduced global demand for the commodities that drive its export earnings. The insurance market therefore faces an uncertain future. On the one hand, the impact of Covid-19 may pose a substantial challenge to the country’s health system and economy in the recovery period, with repercussions for insurers. On the other hand, the economic pressures caused by the crisis may result in healthy restructuring of the industry, particularly as measures to reduce transmission drive the uptake of digital insurance services. The sector’s future will also be contingent on the government’s ability to continue important financial sector reforms, as well as the level of demand for mega-project risk-mitigation services. This chapter contains an interview with Jeremy Norton, General Manager, Tower Insurance.

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