Economy.
From The Report: Papua New Guinea 2012
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PNG’s GDP grew 8.9% in 2011, thanks in large part to the fact that construction work on the PNG LNG project is in full swing. While growth likely cannot sustain such a high pace, government officials hope that revenues from the LNG facility will catalyse an economic transformation. Analysts, however, are worried about Dutch disease, where resource-driven growth drives inflation and makes local manufacturing uncompetitive. The challenge will be to expand the formal economy, which accounts for just 15% of GDP. This will require major improvements in the security situation, infrastructure development, and investment in education.

This chapter includes interviews with Ivan Pomaleu, Managing Director, Investment
Promotion Authority; Karel De Gucht, EU Trade Commissioner; David Cox, Managing Director, Steamships Trading Company; Caleb Jarvis, Trade Commissioner, Pacific Islands Trade and Invest; and Surin Pitsuwan, Secretary-General, ASEAN.

Articles from this Chapter

Overview

Preparing for production: Revenues from large-scale energy and mining projects will help fund a long-term national development strategy
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Currently in the midst of its longest period of expansion since the country achieved independence in 1975, Papua New Guinea’s economy has grown every year since 2003, buoyed by developments in the energy and mining sectors. In 2011 PNG reported GDP growth of 8.9% – one of the highest rates in the world – due largely to strong domestic demand as a result of ongoing construction activity at ExxonMobil’s PNG liquefied natural gas (LNG) project, which is expected to begin producing in 2014…

Interview

OBG talks to Ivan Pomaleu, Managing Director, Investment Promotion Authority
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Interview: Ivan Pomaleu What are the top domestic priorities in 2012 in terms of attracting new investors? IVAN POMALEU: The government’s economic and industrial policies encourage the development of Papua New Guinea’s non-mining sectors, including manufacturing, renewable resources such as agriculture and fisheries, and business services. The aim is to increase the value and volume of value-added products. To push development we must deal with the various natural resources which form the…

Analysis

Starting small: New support for SMEs could lead to large-scale expansion
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The great majority of economic activity in Papua New Guinea takes place outside the formal economic system. Indeed, according to AusAID, the Australian government’s international aid entity, some 85% of PNG’s economy is informal, primarily consisting of semi-subsistence agricultural activities. A substantial percentage of the informal businesses in PNG are generally thought to be small scale, employing anywhere from one to five employees at subsistence-level wages or lower. Almost all of…

Analysis

Funding the future: A planned SWF will help the government manage a jump in revenues
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In February 2012 the Parliament of Papua New Guinea passed a bill to establish a sovereign wealth fund (SWF) for the nation. The fund is the result of more than two years of public and private sector consultation and lobbying by the government. It will be used to manage revenues from ExxonMobil’s PNG liquefied natural gas (LNG) project. The SWF is an integral part of the nation’s long-term development strategy. The fund will help manage, invest and protect revenues derived from the PNG LNG…

Interview

OBG talks to David Cox, Managing Director, Steamships Trading Company
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Interview: David Cox In which of the non-petroleum and non-minerals sectors has the private sector shown the strongest performance over the past 12 months? DAVID COX: In general, industries are growing, competition is increasing, property demand is very high and rental yields are rising continuously. Freight and shipping volumes are increasing and Papua New Guinea’s ports are becoming congested. Income levels have also improved, which has led to a rise in consumer spending. As a result both retail…

Analysis

Looking ahead: The government launches a far-reaching national development strategy
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Vision 2050, Papua New Guinea’s long-term national development strategy, is the most ambitious planning document in the county’s history. Introduced in September 2009, the plan serves as a blueprint not only for economic development through to 2050, but also addresses social and community development, foreign policy, environmental and climate issues, and spiritual and cultural growth. In short, Vision 2050 seeks to “reflect the aspirations of the people of PNG”, according to the document.…

Interview

Regional development: OBG talks to Caleb Jarvis, Trade Commissioner, Pacific Islands Trade and Invest
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Interview: Caleb Jarvis What are the major challenges in securing investments for Pacific Island countries? CALEB JARVIS: This is a time of great global investor uncertainty, a period that started with the global financial crisis and was followed by poor equity performance in various stock exchanges around the world and the continuous worsening of the European debt crisis. In Papua New Guinea there has been ongoing interest in key investment sectors, including mining and energy. ExxonMobil has…