Oxford Business Group - Paupa New Guinea 2012

THE REPORT
Papua New Guinea 2012

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7

Country Profile
A nation of many cultures and thousands of languages
Resource wealth is set to transform the country
Assertive policies engage international trade partners
The regional focus builds cooperative agreements

8 COUNTRY PROFILE SNAPSHOT

The nation’s peoples and languages are as numerous as its islands

Land of plenty
History, tradition and a diverse range of natural resources
Occupying the eastern half of the island of New Guinea Western and Eastern Highlands provinces. The highest
and hundreds of adjacent smaller islands, Papua New mountain in the country is Mount Wilhelm, which stands
Guinea is an important exporter of metals (particular- 4509 metres high. The country is located in the aptly
ly gold and copper) and agricultural products such as named ring of fire, the Pacific rim’s belt of numerous
coffee and palm oil. The country is also set to become active volcanoes. Among these are PNG’s Ulawun,
a major exporter of gas, which expected to significant- Rabaul and Lamington. Earthquakes are relatively com-
ly increase the size and strength of the economy. mon and sometimes accompanied by tsunamis.
The primarily rural population is highly diversified, FEDERAL GOVERNMENT: PNG is a constitutional par-
comprising thousands of distinct ethnic communities liamentary democracy. Reflecting the country’s colo-
that together account for approximately one-tenth of nial past (it was long ruled by Australia), the British
the world’s known languages, and PNG remains heav- monarch remains the official head of state and is rep-
ily marked by the indigenous cultural traditions of its resented through a local governor elected by the par-
peoples. Geographically, the interior of PNG is moun- liament, though the role is largely ceremonial. A prime
tainous, while the country’s tropical rainforest is famous minister serves as head of the government, elected by
for the diversity of its flora and fauna. the country’s 109-member unicameral parliament,
GEOGRAPHY: Whilst the eastern half of the island of which is itself elected by popular vote every five years.
New Guinea is the country’s mainland, PNG also includes The most recent elections were held in June 2012.
three large islands (New Britain, New Ireland and LOCAL GOVERNMENT: The country is divided into 18
Bougainville), in addition to more than 600 small islands provinces, the autonomous region of Bougainville (made
and archipelagos off New Guinea’s coast. It is located up of Bougainville Island and a number of other adja-
approximately 160 km north of the north-eastern tip cent islands) and the National Capital District, where
of Australia, and several hundred kilometres south of Port Moresby is located. Each province has an elected
the equator, with the Solomon Sea to the east and the assembly and local government, headed by a provin-
Coral Sea to the south and south-east. cial prime minister as well as a system of local gover-
The country has a geographical surface area of nors. In addition, the country has around 160 elected
462,840 sq km and a coastline of 5152 sq km, as well councils at the local level of government.
as an 820 km-long border with the Indonesian province POPULATION: As of July 2011 the country had an esti-
of West Papua – formerly Irian Jaya – that makes up mated population of 6.2m. The populace is fairly young,
the western half of New Guinea. The capital, Port Mores- with a median age of just under 22 years, and is esti-
by, is located on the south-eastern coast of the main- mated to be growing at a rate of just under 2% a year.
land, and as of 2009 was home to 314,000 people. The PNG remains a largely rural country, with only 13% of
country’s population is largely rural, though other main the population living in towns as of 2010. Moreover,
towns include Lae, which has a population of around Papua New Guinean society is extremely diverse, thanks
200,000 and Mount Hagen, with about 40,000 people. in part to the long-standing isolation of many local
PNG is geographically diverse, with terrain ranging communities in the hard-to-reach mountain areas of
from high interior mountains to jungle lowlands, in the country’s highlands region (and the Southern High-
addition to tiny island archipelagos. Rainforest covers lands province in particular), where around 40% of the
approximately 75% of the country. The highlands region population lives. Some isolated communities did not
is located in the north and is made up of five provinces, have contact with the outside world until as late as the
namely Enga and Simbu provinces, and the Southern, 1970s. Among the major ethnic groups are the Papuan,

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COUNTRY PROFILE SNAPSHOT 9

Melanesian, Micronesian and Polynesian peoples, how-
ever, the country is thought to host several thousand
smaller ethnic communities whose members mostly
number in the hundreds, giving rise to the local saying
“for each village, a different culture”.
RELIGION: Christianity was introduced to PNG in the
late 19th century by missionaries, and just under 97%
of Papua New Guineans identified themselves as Chris-
tian in the national census in 2000. Yet the country is
highly diverse in terms of denominational adherence
and many Papua New Guineans combine elements of
indigenous religions with Christianity. The largest Chris-
tian denomination is Roman Catholicism, to which 27%
of the population subscribes, followed by Evangelical
Lutheranism (20%), the United Church (12%) and Sev-
enth-day Adventism (10%). All other denominations
account for less than 10% of adherents. The country
also still has a small number of followers of the region’s
indigenous belief systems, and Islam, Baha’ism and oth-
er faiths are also practised. The constitution guaran-
The traditional holidays are marked by indigenous festivals, competitions, music and feasts
tees freedom of religion and there is no state religion.
LANGUAGE: The country has three official languages, Daily average lows remain steady at 23-24°C, while
namely Tok Pisin (Melanesian Pidgin English), a creole daily average highs vary between 28°C in July and 32°C
that is widely used as the lingua franca; English, which in December and January. Humidity levels in the capi-
is the official language of business and government, tal are high for most of the year, with a slight respite in
and widely spoken in urban areas; and Hiri Motu, a July and August. Average rainfall levels vary between a
trade language spoken mainly on the southern coast. low of 18 mm in August, which on average sees around
In addition to these, more than 850 indigenous lan- two wet days, to 198 mm in February, with seven.
guages – or by some estimates more than 1000 – and NATURAL RESOURCES: PNG is an important produc-
amounting to around a tenth of all languages world- er and exporter of metals and minerals. Total mineral
wide, are thought to be spoken in the country, many exports in 2009, excluding crude oil, were worth approx-
by communities of just a few hundred people. imately $2.8bn, amounting to around 62% of all exports.
CULTURE & HERITAGE: As an overwhelmingly Chris- Mineral exports were overwhelmingly dominated by cop-
tian country, PNG observes Christian holidays such as per and gold, with gold exports alone amounting to just
Christmas and Easter, though traditional indigenous over $2bn in value in 2009, and copper exports stand-
festivals are often celebrated more intensely. Commu- ing at approximately $770m.
nities often mark local holidays and special occasions The country will host the world’s first offshore met-
with days-long feasts accompanied by music and danc- als mining project, which is being developed to mine
ing as well as the distribution of gifts such as pigs. copper, gold and other metals at a depth of 1600
Important non-religious national festivals include the metres below sea level in the Bismarck Sea, to the north
Mount Hagen cultural festival, begun by missionaries of the country. In 2009 the country had oil reserves of
in the 1950s, during which several dozen local tribes around 90m barrels, ranking it the 61st in the world,
and communities congregate for competitions, music, and proven gas reserves of roughly 230bn cu metres,
agricultural fairs and displays of traditional dress, often the world’s 40th-largest. A $15.7bn, 6.6m-tonnes-per-
involving elaborate body and face painting. Since 1995 annum liquefied natural gas (LNG) facility is currently
the country has also hosted an annual mask festival being constructed and is due to begin operations in
focusing on the culture of mask-making that is found 2014. The LNG plant will allow the country to begin gas
particularly in the Gulf Province, Momase and New exports that are expected to increase national export
Guinea Islands regions of the country. revenues three-fold. While minerals and hydrocarbons
Traditional food includes tropical fruits such as dominate exports, around 85% of the country’s popu-
coconuts, mangos and a variety of bananas; vegeta- lation is employed in the agricultural sector, which com-
bles such as sweet potatoes, yams and breadfruit; and prises approximately one-third of total GDP.
meat such as pork, fowl and turtle, as well as seafood The country’s primary agricultural exports are cof-
in the country’s coastal regions. fee, tea, cocoa, coconuts and palm oil. PNG ranked as
CLIMATE: Climactic conditions are broadly tropical but the world’s 17th-largest producer of coffee in 2010,
vary widely by region. While much of the country receives accounting for roughly 0.7% of global production. In addi-
frequent and heavy rainfall, conditions in Port Mores- tion, the country was the world’s seventh-largest pro-
by more closely resemble those of northern Australia, ducer and third-largest exporter of palm oil in 2008,
being primarily dry during the year with a short rainy with its 395,000 tonnes of foreign sales – accounting
season. Given its proximity to the equator, annual tem- for 1.3% of global exports. Forestry is also a substan-
peratures in Port Moresby do not vary substantially. tial sector, amounting to approximately 4% of GDP.

THE REPORT Papua New Guinea 2012

10 COUNTRY PROFILE OVERVIEW

Tribal and Western political practices share common cause in PNG

Coming together
Ethnic diversity brings cultural richness and political challenges
With approximately 6.85m With its state motto, “Unity in Diversity”, Papua New related, with indigenous languages divided between the
people, only 12.5% of Guinea is indeed a country with outstanding ethnic, lin- Austronesian and Papuan language families.
whom reside in urban
guistic and cultural variety, resulting from the rugged This fundamental linguistic difference underpins the
areas, the population of
PNG is extremely varied and mountainous geography of the main island of New ethnic diversity of the country. The Papuan language
culturally and linguistically. Guinea, and the isolation of the smaller islands of the group is traced to people who came to the region
archipelago. PNG is a young nation, and its diversity has approximately 20,000 years ago, and the Papuan eth-
shaped efforts to address the challenges and oppor- nic group forms the majority of the country’s present
tunities related to development. day citizens. The Austronesians likely arrived later –
According to the World Bank, PNG had roughly 6.85m around 3500 years ago – settling in the offshore islands
inhabitants in 2010. As a result of the diverse back- now known as New Britain and New Ireland.
grounds and geographical spread of the people, the CIVIC ORGANISATION: Historically speaking, urbani-
political culture is vibrant and at times unsettled. Fol- sation in PNG is a very recent development. Even in 2011
lowing the election outcome in July 2012, the hope the capital Port Moresby, PNG’s largest city, was home
among many citizens and investors is that with the to only 318,128 people. Given the primarily rural and
political impasse resolved, the country may begin traditional nature of the population, tribal political
embarking on a legislative programme capable of match- organisation is common, demanding and receiving
ing and carrying forward the extraordinary economic strong loyalties from adherents. Given the relatively
growth experienced in recent years. recent development of urban centres such as Port
DIVERSITY & CHOICES: Occupying the eastern half of Moresby, rural organisations tend to also have a pow-
the island of New Guinea and a collection of islands to erful affect on city dwellers as well. PNG’s political cul-
its east, PNG has some of the greatest environmental ture is thus highly influenced by these loyalties, which
diversity of any place in the world – from savannah and often take precedence over political parties and oth-
grasslands, to highland and lowland rain forests. er storms of political alignment.
Geography has long had a major impact on the pol- Given this fundamental structure, PNG’s national pol-
itics and peoples of the nation, too. The island of New itics has often displayed highly fluid and fragmented
Guinea’s central mountain range was thrown up by a characteristics, with governments tending to comprise
collision of tectonic plates, thrusting peaks high enough alliances of clans and tribes, centred around particu-
into the air to allow glaciers to form in the Indonesian, lar leaders or figureheads, while deputies often move
western half of the island. This range also created many across party lines. This is also reflected in the civil serv-
steep and isolated valleys in the interior of PNG, where ice and other branches of the state.
indigenous populations would reside, sometimes NATION CREATION: PNG became an independent
unaware of neighbours living only a few kilometres state on September 16, 1975, making it one of the
away. Some of these communities were also unknown Asia-Pacific region’s youngest nations. But its civilisa-
to the outside world until the 20th century. tions are among humanity’s most ancient, likely dating
PNG’s diversity is reflected in the astonishing num- back to around 60,000, when humans arrived by boat
PNG achieved ber of languages spoken by its people. The ancient from South-east Asia. Little is clear about the ethnic
independence in 1975,
roots of civilisation in PNG and the country’s mountain- history of the island of New Guinea, prior to the arrival
following 61 years of
Australian rule. It is one of ous terrain have contributed to a proliferation of of Europeans, although the cultural diversity that sur-
the youngest nations in the tongues, with an average density of one language per vives today suggests a complex milieu of migration and
Asia-Pacific region. 558 sq km. Approximately half of these languages are trade. The islands of modern-day PNG were probably


COUNTRY PROFILE OVERVIEW 11

first sighted by Portuguese or Spanish navigators in the
early 16th century. They remained free from major
imperial interference, however, until the 19th century.
The Netherlands laid claim to the western half of New
Guinea – modern day Indonesia – in 1828. In 1884, Ger-
many made the north-east part of New Guinea the
first colonial possession in the German Empire, while
Britain declared a protectorate over the south-east.
During the First World War, Australian forces, as part
of the British Empire, occupied the German territories.
The eastern part of the island, along with the German
and British possessions offshore in the Western
Solomons, was then run as an Australian external ter-
ritory until the Second World War brought about par-
tial Japanese occupation.
A particularly long and bitter campaign was fought
in this region during the war, which left lasting marks
on the landscape of the country. Following the Second
World War and the Allied victory, the territory revert-
ed to Australian control, with a UN mandate estab-
The legal system draws heavily on English and Australian codes alongside local procedures
lished to steer the nation through to independence.
That independence was also marked by a secession- Island, Buka Island and a number of smaller islands, The nation’s unicameral
ist uprising on Bougainville Island, which lies offshore including the Carterets group. Elections for the parliament is made up of
109 members who are
to the east of New Guinea. This was the first of a series autonomous government were first held in 2005, with
elected for five-year terms,
of uprisings on the island, ending only in 1997 with a the current president being John Momis. with 89 elected from single
New Zealand-brokered peace deal, which gave LEGISLATURE: The National Parliament of PNG is also constituencies and 20 from
Bougainville autonomy within PNG. a unicameral house. It currently has 109 members, all the provinces.
PROVINCES & POWERS: The uprising on Bougainville elected for five-year terms. Since 2007, elections have
Island in 1975 also led to a redrafting of the constitu- been organised under a limited preferential voting (LPV)
tion for the newly independent state. In this, the restive system, in which voters choose their three favourite can-
island and the 18 districts of PNG, as well as the Nation- didates, with votes transferring in order until one can-
al Capital District (NCD), were all given a semi-federal didate wins 50% plus one vote. The 109 members are
status. This federal-state balance has largely held since divided into two groups: 89 of the members are elect-
independence, although the districts are now known ed from single constituencies, and 20 from the provinces,
as provinces, and several have new names. one from each. These are the regional deputies that
The original provinces have also recently been joined now act as provincial governors.
by two more – Hela and Jiwaka – and are grouped with- After a general election, the leader of the majority
in four regions – the Highlands, which has the largest party or of the coalition of parties forms the govern-
population, at around 3m; the Islands, which includes ment and becomes prime minister. The prime minister
Bougainville; Momase; and Papua, which includes the then appoints a deputy and a cabinet of ministers to
NCD. These regions command loyalty as well, with polit- head the various departments of national government.
ical appointments sometimes characterised by an effort While there has been some historical variation, the
to keep a balance between them. cabinet usually has 30 members and is known as the
The province remains the key local government unit, National Executive Council (NEC). The government may
with each having its own assembly. Until 1995 these initiate legislation based on the Westminster model –
also had cabinets led by premiers, operating on a uni- with bills proposed for debate in the chamber and for
cameral, parliamentary model. The central government committees – although there is not a second chamber
retains full power over the provincial governments, to further scrutinise proposed laws.
however, via the right of suspension. This right was A key law governing parliament and the country’s
exercised often until 1995, when the provincial premiers political parties is the Organic Law on Integrity of Polit-
were abolished and a system of provincial governors ical Parties and Candidates (OLIPPAC), passed in 2001.
was introduced. Since then, it has been used much less This imposed restrictions on no-confidence votes,
frequently. The governors are the regional deputies deputies changing parties, party funding, breaking a par-
from the national parliament, who simultaneously con- ty whip, and a number of other areas, with the aim of
tinue to hold their national posts as well. strengthening government and party loyalty. Certain pro-
Each province is divided into a number of districts, visions of this were then ruled unconstitutional by the Coalition government is the
and each district is further split into local-level govern- Supreme Court in 2010, a move followed by some sig- norm in PNG, with parties
coming together to build a
ment (LLG) areas. LLGs are then divided into wards. nificant realignments in parliament.
government. The 2007
The mineral-rich Bougainville region, however, main- COALITIONS: Coalitions have generally been the rule elections saw 22 parties
tains a different organisational pattern, given its when forming a government, as no one party has yet gain representation in
autonomous status. The region includes Bougainville secured a majority on its own. The 2007 election saw the parliament.


12 COUNTRY PROFILE OVERVIEW

change in PNGs recent history. The preliminary vote
count suggests that O’Neill’s People’s National Con-
gress party has won enough seats to form a coalition
government. Somare conceded his defeat and relin-
quished control of the National Alliance Party. After
over a year of tensions between the two political lead-
ers there is finally hope that the country can return to
a period of relative political stability.
CONSTITUTIONAL COURT: The Supreme Court is
empowered with advising the government on consti-
tutional issues and is the highest court in PNG. The court
is headed by the Chief Justice – currently Salamo Injia
– who is appointed by the GG following a recommen-
dation to the post by the NEC.
Two new laws concerning the relationship between
the executive, parliament and the Supreme Court – the
Judicial Conduct Act and the Supreme Court Amend-
ment bill – are currently being hotly debated. Contro-
versy surrounding the bills may be settled after the
2012 elections, in particular the ongoing ambiguity
The prime minister heads the government, while Queen Elizabeth II of the UK is PNG’s head of state
with regard to the separation of powers.
22 parties gain representation in parliament, the largest The National Court, whose members also sit on the
being the National Alliance Party (NAP) led by Michael Supreme Court, is present in all provincial centres and
Somare, which won 27 seats. The second-largest group- has jurisdiction in hearing all serious criminal and civ-
ing (20) were independents, with 13 subsequently il cases. It also hears appeals from the district courts,
declaring for the NAP. The second-largest party was the which consist of juvenile, land and coroner’s courts.
PNG Party (PNGP), which held eight seats and is led by There are also village courts, presided over by magis-
Belden Namah, followed by the People’s Action Party trates who are elected by the village. These are usual-
(PAP), with six seats led by Gabriel Kapris. Another sig- ly specially convened Customary Courts, which allow
nificant grouping is the People’s National Congress, traditional laws more sway in many rural areas.
which won four seats in the 2007 elections and is under PNG’s code of law thus consists of both the Consti-
the leadership of Peter O’Neill. tution, the customary law of the island nation’s indige-
HEADS OF STATE: While the prime minister heads the nous peoples, and English common law, in the form it
government, as a Realm of the Commonwealth, the head took at the time of PNG’s independence in 1975. At
of state in PNG is Queen Elizabeth II of the UK. Her the same time, much of the statutory law is derived from
Majesty is represented in PNG by the governor-gener- the Australian system. The Criminal Code has been
al (GG), whom she appoints, but who is nominated by adopted from Queensland, while the Rules of Court are
parliament, via a majority vote. The GG can serve a from New South Wales, illustrating the effect of the long
maximum of two terms (the second of which must be period of Australian control of PNG.
after a two-thirds majority vote). Parliament, or the OUTLOOK: Recent years have seen PNG face the polit-
NEC, may also remove the GG via a simple majority vote. ical challenges resulting from competing claims of
In the absence of a GG, the parliamentary speaker authority, but it looks to be moving forward with the
becomes acting GG. The powers of this post are large- creation of a unified government post-elections.
ly ceremonial, and include the swearing-in of new gov- Indeed, the political landscape is bound to be a chal-
ernments and the signing of new bills into law. lenging one given the enormous diversity within the
Michael Ogio was appointed GG by the Queen in country, alongside the tensions of urbanisation and
2010, although parliamentary speaker Jeffery Nape globalisation faced by a largely rural, traditional socie-
was declared acting GG in late 2011, as the political ty. While the level of poverty remains high in some
impasse took hold. This had seen Michael Somare areas, the country has made a great deal of progress
replaced as prime minister by a government led by since independence, as the economic indicators sug-
Peter O’Neill, with Belden Namah serving as deputy gests. The country is also continuing on a path of ongo-
prime minister. This change was not recognised by ing democratisation, with general elections seen as the
Somare, however, who continued to claim status as preferred mechanism for change. As of July 2012, it
premier. The changes to the government in 2011 were appeared that even in spite of considerable political con-
The legal code incorporates also not recognised by the Supreme Court, and in late troversy, the nation’s commitment to democratic change
elements from indigenous May 2012 the Supreme Court again stepped into the remained. Bringing together the disparate communi-
customary laws and the fray in support of Somare. O’Neill rejected the court’s ties, clans and loyalties of this diverse country will con-
English common law
ruling that Somare’s government be reinstated, and tinue to be a major undertaking of national politics. The
system, while the criminal
code and rules of court are the impasse continued until the elections. challenges that will be faced by the new government
adapted from those used in At the time of going to print it appears that the 2012 are considerable, and the priorities of reconciliation and
Australia. election has delivered the most profound political reducing corruption are expected to top the agenda.


COUNTRY PROFILE VIEWPOINT 13

Prime Minister Peter O’Neill

The wealth of a nation
Prime Minister Peter O’Neill on the importance of investing export
revenues wisely
Papua New Guinea is at a crossroads today: the coun- PGK6bn ($2.9bn), because of very high commodity
try is poised to enter a period of unprecedented eco- prices. Unfortunately, there is little to show for all this
nomic prosperity, led by the PNG liquefied natural gas wealth. Look around PNG, and everywhere the story
(LNG) project that is being developed by ExxonMo- is the same: dilapidated hospitals and classrooms,
bil. Revenue from this project is expected to double deteriorating roads and ports, airstrips rendered unus-
PNG’s GDP growth, and a second LNG project in the able due to a lack of maintenance, and so on.
Gulf province, being developed by InterOil, is also pro- Heading a government with only 10 months to gov-
gressing well. While these developments are under ern, but so much to do, was not easy. However, I believe
way, production is expected to commence soon at a we have begun to lay the foundation for growth,
number of mines nationwide, including the Ramu improved services, and better education and health
nickel, Yandera, Wafi and Hidden Valley mines. In the for all. We have introduced free education, which we
coming years, the revenue inflows from the export of are funding with PGK700m ($333m) in 2012, and we
gas and minerals will be phenomenal and radically have also allocated PGK350m ($166.6m) to fund a free
change the level of prosperity in PNG. health care programme. We have also begun talks
However, as I have travelled the length and breadth with the Exim Bank of China for a loan of PGK7bn
of this country in the past nine months I have been ($3.33bn) to roll out a comprehensive infrastructure
shocked by the neglect that our educational and development programme, central to which is the reha-
health facilities face, and the poor state of our key bilitation of the highlands highway.
infrastructure, like roads and wharves. These have The Lae-Nadzab section of the highway will be
been allowed to deteriorate to a level where rebuild- expanded to four lanes, to complement the PGK700m
ing them will require herculean effort. ($333m) upgrade of the busy Lae Port. Once complet-
Our roads are in such bad shape that potholes are ed, the improved infrastructure will ensure business-
common and accepted. Meanwhile, the ports in many es can be more efficient and expand, and this growth
of our towns are no longer used, making sea travel will bring more revenue to government.
risky. Hospitals are run down, lack the proper staff and Tackling corruption and improving law and order
cannot provide the right drugs or treatments for cer- remain key goals as well. The recent graduation of 600
tain ailments. Finally, our schools are overcrowded police recruits demonstrates our commitment to
because of classroom and teacher shortages, and increasing police manpower to an acceptable level.
many of the nation’s airstrips have been closed due The new Task Force Sweep will identify and prosecute
to lack of proper maintenance. perpetrators of corruption in government, and sets
PNG’s economy has changed. The coffee and tea us on a path toward eradicating this cancer eating the
plantations in the Eastern and Western Highlands nation’s resources and denying our people their rights.
provinces, and the cocoa and copra estates in East The LNG and minerals beneath PNG are non-renew-
and West New Britain, New Ireland and Bougainville, able resources, and revenue from their export has to
were all once strong contributors to the economy, but be invested wisely to support the nation’s long-term
these have been neglected and fallen to ruin. In the economic growth and safeguard its future. We have
past nine years, the country enjoyed a period contin- passed legislation to establish a sovereign wealth fund
uous economic growth. Over PGK70bn ($33.3bn) that will manage these earnings. If we do not wisely
flowed into the state’s coffers and five consecutive protect and invest these revenues, we will leave behind
national budgets have recorded surpluses of over a future with little for which our children can be proud.


14 COUNTRY PROFILE ANALYSIS

For this nation of islands, seafaring and ports are the keys to trade

Lasting bonds
Shared historical, economic and political ties with Australia
The Australian government Separated only by the Torres Strait – a distance of 150 eration treaty, which is expected to be wider ranging
estimates that during the km – Papua New Guinea and Australia have translated than the current Agreement on Trade and Commercial
2011-12 period, combined
their geographic ties into political and economic coop- Relations, which was put into place in 1991. Both coun-
trade between Australia
and PNG amounted to eration. Indeed, Australia has long been PNG’s largest tries are also signatories to the 1981 South Pacific
roughly $6.95bn. export market, while also being its biggest source of Regional Trade and Cooperation Agreement, which
imports. Australian companies are also heavily repre- provides duty-free access to the Australian and New
sented in PNG and around 10,000 Australian expatri- Zealand markets for South Pacific nations.
ates currently live and work in the country. PNG is also involved in a number of political and
HISTORICAL TIES: The relationship between the coun- security-based agreements with Australia. These include
tries began in 1902, when what was then British New Australian aid to the PNG police force and armed forces
Guinea – the southern half of modern-day PNG – was – some $20.9m in aid has been earmarked to the lat-
placed under the authority of the Commonwealth of ter for 2012-13. Additionally, both countries are mem-
Australia. Formal Australian administration began in bers of the Commonwealth and regularly cooperate on
1906. When the First World War broke out in 1914, Aus- international matters via the UN.
tralian forces then occupied German New Guinea – the TRADE: According to Australian government figures,
northern half of what is now PNG – retaining this under exports to PNG stood at $2.19bn during 2010-11, while
military rule and a League of Nations mandate until 1921. imports from PNG reached $3.45bn. These Australian
In the Second World War, the island of New Guinea government’s sources indicate that year-on-year,
faced Japanese invasion, with Australian and Papua exports and imports grew 12.3% and 18.6%, respec-
New Guinean troops engaged in a particularly hard- tively, and it is expected that this trend will have con-
fought campaign for the island from 1941 to 1945. One tinued during 2011-12. Indeed, Australian government
important testimony to this is the Kokoda Trail, still hon- officials estimated in March 2012 that combined trade
oured today by many Australian visitors and veterans. stood at approximately $6.95bn for that year.
Following the war, Australia again administered the The main goods exported by Australia to PNG are
territory. In 1972 the name was changed to PNG in crude petroleum ($449.8m in 2010-11), civil engineer-
preparation for independence, which followed in 1975. ing equipment and parts ($110.2m) and goods vehi-
Nowadays, the relationship is regularly overseen by the cles ($85.4m). Meanwhile, the biggest exports from
Australia-PNG Ministerial Forum, which has reached PNG to Australia include gold ($2.13bn), crude petro-
agreements on a raft of bilateral treaties over the years. leum ($1.01bn), and silver and platinum ($209m). This
TODAY’S RELATIONSHIP: The Partnership for Devel- establishes Australia as PNG’s top export destination
opment has seen Canberra’s aid to PNG – which totals by a very high margin – the country received 27.9% of
just over $500m for 2011-12 alone – focused on edu- all PNG’s overseas sales in 2010-11, while Japan, which
cation, health, transport, and law and justice. In 2011 took the second-highest amount, received only 9.1%.
the Australian prime minister, Julia Gillard, agreed to help Australian firms are active in PNG’s resource extrac-
PNG reach its goal of producing 52,000 higher education sectors in particular, including Oil Search, Santos,
tion graduates by 2015 and making significant improve- Newcrest Mining, Sun Engineering and Highlands Pacif-
ments in basic education enrolment. Canberra also ic. In 37 years since independence, PNG and Australia
funded a project worth some $985,000 to bring more have periodically looked to shift their foreign policy
women into PNG politics. At the same time, negotia- focuses elsewhere, but given the strength of geograph-
tions have also been under way for an economic coop- ic and economic ties, the two will likely remain close.


COUNTRY PROFILE ANALYSIS 15

China is PNG’s second-largest trading partner behind Australia

China comes to market
Trade reveals the symbiosis between mineral-rich PNG and the
resource-hungry Asian giant
The People’s Republic of China (PRC) has become an FINANCIAL SUPPORT: China has also funded some
active partner of Papua New Guinea in recent years, major aid and development projects in PNG, including
and the close ties have risen each to prominence in the the construction of the Usino-Yamagi road with a grant
other’s homeland. PNG is China’s largest trading part- aid investment of some PGK22m ($10.5m). This is locat-
ner among South Pacific nations, while the Asian pow- ed in Madang, where China also provided a soft loan
erhouse has climbed to second place, behind Australia, to back up the Pacific Marine Industrial Zone (PMIZ).
in terms of trade volume with PNG. As a result, politi- This $300m regional tuna fish trans-shipment and pro-
cal relations between Beijing and Port Moresby have cessing plant is financed in part by a $71m concession-
taken on new strategic significance. al loan from Exim Bank of China (see Industry chapter).
A CLOSER FIT: Behind much of this is the global surge China has also been behind aid projects such as
in Chinese overseas investment and interest that has accommodation expansion at Goroka and Vudal uni-
followed the country’s growing appetite for minerals versities, the Sir John Guise Stadium, the Wawin Nation-
and energy. This rise in demand has coincided with al High School, the Wewak Sports Stadium, the Papa
PNG’s opening to wider and more diverse internation- Lealea road upgrade and the Hagen Agriculture Tech-
al trade and diplomatic relationships in Asia-Pacific as nical cooperation project. Many local students have
a whole. PNG was among the first countries to recog- also been awarded scholarships to study in China, while
nise the PRC, and the two nations exchanged embassies many PNG civil servants have also been provided with
in 1976. Other milestones include a 1996 trade agree- training by Beijing. As both countries face many simi-
ment, followed by a Memorandum of Understanding lar challenges in development, the two have often
on the Promotion for Economic and Trade Cooperation, found areas where experiences can be exchanged and
an Agreement on Fisheries Cooperation, and an Agree- programmes improved upon.
ment on the Promotion and Protection of Investment. STRATEGIC COOPERATION: There has also been some
There are also agreements on double taxation and tax military cooperation in recent times, with the Chinese
evasion. More recently, in 2010, a treaty on economic People’s Liberation Army providing some training for
and technical cooperation was signed. the PNG Defence Force. From PNG’s point of view then,
Within the framework of these agreements, Chinese China has much to offer, and Port Moresby views rela-
investment in PNG has rapidly expanded. The flagship tions with Beijing as an important part of its widening
project for cooperation is the $1.5bn Ramu nickel and out perspective in its overseas relations.
cobalt mine in Madang Province, which is due to hit max- In this context, PNG has tried to improve its relations
imum capacity in mid-2013. At that point, the mine with others in the region as well, courting the Associ-
should be producing some 31,150 tonnes of nickel and ation of South-East Asian Nations (ASEAN), for exam-
3300 tonnes of cobalt per year, for a 20-year term. The ple. PNG gained observer status in 1976, and 10 years
Metallurgical Corp of China holds an 85% stake in the later signed a Treaty of Amity and Cooperation. Yet,
project (see Mining chapter). with ASEAN concentrating on consolidation as it tries
Meanwhile, following a 2009 contract between Chi- to move towards a single internal market, combined As a result of the economic
nese energy firm SINOPEC and ExxonMobil, the coun- with the troubled relationship with Indonesia over West agreements between China
and PNG, the Chinese
try has purchased 2m tonnes of PNG’s natural gas every Papua – expansion to include PNG, and Timor Leste,
ambassador told local
year. Indeed, at the end of 2010, the Chinese ambas- has languished. Going forward, PNG may pursue clos- press in 2011 that trade
sador to PNG told the local press that trade between er ties with China, benefitting from the countries ongo- between the two nations
the two countries had reached over $900m per year. ing expansion of economic and diplomatic influence. was over $900m per year.


16 COUNTRY PROFILE VIEWPOINT

Julie Bishop, Australia’s Shadow Minister for Foreign Affairs

Warm relations
Julie Bishop, Australia’s Shadow Minister for Foreign Affairs and Deputy
Leader of the Opposition, on bilateral relations
Australia’s relationship with Papua New Guinea must number of young people in PNG and the region more
be one of the government’s highest foreign policy pri- widely with Australian-standard trade qualifications.
orities. It is long past time for the relationship to This creates an opportunity for qualified people to
mature and transition from aid donor and aid recipi- work not only in the Southern Highlands, but also on
ent status. Australia and PNG must now engage as full mining and resource projects in Queensland and in
economic partners. Western Australia. The projected benefits from this
There is enormous good will between our two mining and resource development is a once in a gen-
nations which I have observed during my extended eration opportunity for PNG.
visits and in regular meetings with officials. These vis- While there are current demands for health, edu-
its have allowed me to see some of the challenges cation and infrastructure spending, it is vital that the
and opportunities in PNG and for our relationship. government invest part of the revenues for the ben-
As brothers and sisters in the Pacific region it is time efit of future generations. Australia has assisted in this
for us to broaden, deepen and diversify our relation- effort by providing advice through the Treasury. The
ship. We must take it to a level that better reflects the former head of our Future Fund, David Murray, recent-
contemporary reality of our nations. ly visited PNG and spoke about the potential for a sov-
One impediment to building closer links has been ereign wealth fund.
the difficulty faced by PNG businesspeople in obtain- This is an important issue and I am greatly encour-
ing visas to travel to Australia. This should be reme- aged by the discussions that I have held with officials
died. These unacceptable bureaucratic hurdles are about their plans for the future.
standing in the way of greater trade and investment Australia and PNG share a passion for sport and this
and need to be resolved immediately. is an area where great strides can be taken in build-
PNG is on the cusp of an economic transformation ing closer relations. Australia’s National Rugby League
due to development of mining and resource projects, (NRL) competition is particularly of interest to many
and particularly large liquefied natural gas projects Papua New Guineans. I have held initial discussions
currently either under way or on the drawing board. with sports administrators in Australia about how to
These projects will increase the role that PNG will take build closer links through sport.
in the global economy, as its exports from the South- Many people in PNG would love to have a team in
ern Highland – and the Hides natural gas fields in the NRL competition. That is, of course, a long-term
particular – will be used to drive the engines of Asia’s goal worth striving for, but there is much that can done
industrial heartland. in the interim. There are school team competitions and
One of the challenges for PNG will be to foster a the Queensland Cup which may provide a launching
skilled workforce to support these massive develop- pad for an eventual national PNG team in the NRL.
ments. Australia can play a role in providing educa- Another area of great potential is in the empower-
tion and training as we have faced a similar challenge ment of women in PNG. There are many outstanding
for many years. We should explore the opportunities women located within the country. Their contribution
for greater workforce mobility between PNG and Aus- will undoubtedly increase in the coming years as more
tralia as we support each other’s need for both skilled of them take leadership roles.
and unskilled labour in our respective workforces. Australia and PNG enjoy warm relations. There are
Recently I visited the Australia Pacific Technical Col- strong foundations from which to build a closer rela-
lege in Port Moresby. It has the potential to train a tionship and a true economic and social partnership.


COUNTRY PROFILE ANALYSIS 17

Regional engagement is key to the nation’s trading capabilities

A regional player
Building relations with neighbours in the Pacific
Having enjoyed prolonged and positive relations, the the Solomon Islands and Vanuatu. This established
dominant international powers in the South Pacific preferential trading between the nations, while also
region – traditional allies like Australia, the US, the UK drawing in the independence movement in New Cale-
and France – influenced PNG’s policy throughout the donia, an issue over which PNG has received praise
20th century. However, recent years have also seen from Paris for its moderation.
an increasing recognition of the importance of Asian The country is also a member of the Pacific Islands
and South-east Asian states to PNG’s development. Forum (PIF), which includes Australia and New Zealand.
This geopolitical shift is occurring in tandem with a The forum’s island countries (FICs) have begun oper-
renewed interest from PNG’s traditional allies. West- ating more as a distinct group, however, particularly
ern powers, led by the US, are currently working to within the UN, where they are members of the organ-
rejuvenate their influence in Asia-Pacific. isation of Pacific Small Islands Developing States
FORCE OF MODERATION: Since achieving inde- (PSIDS), a grouping that does not include Australia or
pendence in 1975, PNG has earned a reputation on New Zealand. At the same time, PNG has been increas-
the international stage for exercising moderation in ing its contacts in mainland Asia. The country is an
its approach to bilateral and multilateral issues. The observer at the Association of South-East Asian
country has also signed up to a wide variety of inter- Nations (ASEAN) and a member of the ASEAN Region-
national treaties and organisations, a policy that has al Forum (ARF), while also being a member of the Asia
helped the country to establish itself as a bridge Pacific Economic Cooperation (APEC).
between Asia and the south-east Pacific. MARKET TIES: Companies from ASEAN nations have
However, since the foundation of PNG’s Ministry of also become important partners in PNG’s economy.
Foreign Affairs – now the Ministry of Foreign Affairs Malaysia’s Rimbunan Hijau, for example, is PNG’s
and Immigration – the Australian legacy has also been largest logging operator, and also owns the country’s
strong, tending to orientate PNG towards its neigh- English language newspaper, The National.
bours in ways that have often been influenced by the Relations with China have also been growing, as has
outlook from Canberra. PNG has thus traditionally been evidenced by Chinese investment in PNG’s min-
looked to Europe and the US, rather than to Asia or ing, engineering and infrastructure sectors. The mil-
other Pacific nations, for partners and models. itary has also taken part in training activities with the
As a result, PNG’s connections to its neighbour Chinese army, in an effort to improve their defensive
Indonesia, and northern Asian states such as China capabilities. Other countries neglected in Cold War
and Japan, have traditionally been weak. times have also seen relations strengthen. Cuba now
In recent times, however, there have been signs provides medical aid to PNG, while Russia has reen-
that a greater fluidity in global affairs is also motivat- gaged with the Pacific states in recent years, planning
ing a reassessment of PNG’s wider foreign relations. investment in the oil and gas sector in particular.
This is not entirely new – in the mid-1980s, for exam- The PNG government has, however, been anxious
ple, the government discussed a “Look North” policy to stress that these new engagements are not being PNG has been assertive in
that would strengthen relations with Asia. undertaken at the expense of longer-standing friend- setting a foreign policy of
engaging regional players,
ISLAND LIFE: PNG’s relations with other Pacific island ships. This greater diversification in foreign policy is,
and the list of groups with
nations have been growing in recent years. The coun- rather, to be taken as a sign of the openness of the which it is involved includes
try became a member of the Melanesian Spearhead country to foreign investment and assistance, along the MSG, PIF, ASEAN and
Group (MSG) – formalised in 2007 – along with Fiji, with a growing maturity in pursuing its own interests. APEC.


18 COUNTRY PROFILE VIEWPOINT

William Hague, UK Secretary of State for Foreign & Commonwealth
Affairs

Bound together
William Hague, UK Secretary of State for Foreign and Commonwealth
Affairs, on UK-ASEAN relations in the 21st Century
Today the idea of the “developed West and developing region are strongest with our Commonwealth part-
rest” is all but irrelevant. The world has changed and ners, Singapore and Malaysia. But while strengthening
so must the UK if we are to prevent our role and influ- these we should be looking for opportunities else-
ence in international affairs from declining. Key to this where as well. We also need to continue to work along-
will be making the most of opportunities presented by side EU partners to secure free trade agreements with
a new international paradigm in which economic pow- ASEAN countries to open markets and boost trade. Fur-
er and influence is moving east and south. We are doing thermore, we need to do more to promote two-way
this by shifting our diplomatic weight to reflect these investment. International institutions rate the UK as
changes and by building our relationships with emerg- the easiest place to do business in Europe, with the
ing powers. These relationships will be increasingly vital strongest business environment on the continent and
for forging agreements on the international stage and the lowest barriers to entrepreneurship in the world.
for boosting trade and investment that support the UK. But our relationship is about more than trade and
South-east Asia epitomises the rationale for this investment. We have interests in maintaining security
approach. The ASEAN countries are already more pop- in a region that straddles some of the world’s most
ulous than the EU and the Arab world, have a larger important shipping routes and in tackling common
economy than India and absorb more UK exports than threats, such as terrorism, nuclear proliferation, cyber-
China. They hold substantial geopolitical significance, crime and climate change. There are a number of sep-
with influence on neighbouring major powers. They aratist or other conflicts within ASEAN, and tensions
should be, and are, key partners for the UK. remain in the South China Sea. The UK has a wealth of
The region deserves serious attention from global experience and we are keen to share our knowledge
partners. The UK is fortunate to draw on a foundation to promote stability. We form part of a small group of
of existing relationships, and we already enjoy multi- countries formally supporting efforts by the Filipino Gov-
billion pound trade and investment links with ASEAN. ernment and rebel groups to end their conflict.
Our largest businesses in finance, energy, life sciences The voices of ASEAN leaders will be increasingly influ-
and food and drink are establishing a regional foothold ential, both regionally and globally, in the future. Indone-
and more of our retailers are becoming household sia’s impressive democratisation and Malaysia’s strong
names, especially in Thailand. Furthermore, every year stand against violent extremism can serve as examples
over 30,000 ASEAN students study in the UK, often for the entire international community.
returning to positions of influence. They form part of We also want to work with ASEAN members on cli-
the rich people-to-people links between our countries. mate change. They are among the heaviest emitters of
We build on these links all the time. On his visit to greenhouse gases, but could also be among those most
Indonesia last month the business secretary, Vince seriously affected by the consequences of changing
Cable, launched the new UK-ASEAN Business Council temperatures. Any durable solutions will therefore
to strengthen commercial engagement with the region. require commitment and close coordination with ASEAN.
The government’s public-private partnership body, Thus, our approach will be to build up our relations
Infrastructure UK, is already in the Philippines sharing with ASEAN, to share expertise and knowledge, to pro-
expertise, and we aim to do this more widely across the mote increased and freer trade and to work together
region. Moreover, we continue to support develop- in a wide range of areas, from security to climate change.
ment, democratic freedoms and transparency. But there We will continue to look east, toward the tremendous
is more we can do. Our commercial relationships in the wealth of opportunity to be found in South-east Asia.


CONTENTS PAPUA NEW GUINEA 2012

30 Interview: David Cox, Managing Director, ISBN 978-1-907065-62-0
Steamships Trading Company Editor-in-Chief: Andrew Jeffreys
31 Looking ahead: The government launches a Editorial Director: Peter Grimsditch
Regional Editor: Paulius Kuncinas
far-reaching national development strategy Editorial Manager: Edward Gregory
33 Interview: Caleb Jarvis, Trade Commissioner, Chief Sub-editor: Alistair Taylor
Deputy Chief Sub-editor: Jennie
Pacific Islands Trade and Invest Patterson
34 Interview: Surin Pitsuwan, Secretary-General, Web Editor: Barbara Isenberg
Sub-editors: Sam Inglis, Sean Cox,
ASEAN Elyse Franko-Filipasic, Esther Parker,
William Zeman, Elise Laker, Danya
BANKING Chudacoff
Contributing Sub-editor: Miia
36 Steady on: Increased domestic involvement and Bogdanoff
solid oversight point towards future growth Analysts: Nick Anderman, Oliver Fall,
41 Interview: Loi M Bakani, Governor, Bank of Jon Gorvett, Joe Wilcox

Trickling down Papua New Guinea
42 Planning for expansion: A new development
Senior Editorial Researcher: Susan
Manoğlu
Page 20 strategy lays out the central bank’s goals Editorial Researchers: Souhir Mzali,
Owen Barron, Thomas Bacon, Adeline
through the end of 2015 Oka
Reporting 8.9% growth in 2011, Papua New 43 Roundtable: Vishnu Mohan, CEO (PNG), ANZ
Art Director: Yonca Ergin
Guinea has experienced rapid economic Banking Group; Ian Clyne, CEO, Bank South Deputy Art Director: Cemre Strugo
Art Editor: Meltem Muzmuz
expansion in recent years on the back of prepa- Pacific (BSP); and Ashleigh Matheson, Illustrations: Shi-Ji Liang
rations for ExxonMobil's LNG project, which Managing Director, Wespac Bank (PNG) Photographer: Mark Hammami
Additional photographs provided by
is expected to begin production in 2014. Min- 46 On the line: Delivering microfinance products
Nautlilus Minerals
ing – which accounts for 25% of GDP – has via mobile networks
Production Manager: Selin Bolu
also played a large role in generating wealth, Operations Manager: Yasemin Dirice
while agricultural products, especially palm CAPITAL MARKETS Logistics & Distribution Coordinator:
Esen Barin
oil, are prominent in the nation’s export base. 48 Attracting attention: Economic growth and
Operations Assistant: Oznur Usta
steadily rising incomes could translate into new
OBG would like to thank its local
market activity partners for their assistance and
COUNTRY PROFILE 54 Building capacity: The market regulator is support in the research of this project.
8 Land of plenty: History, tradition and a expected to benefit from a number of new
diverse range of natural resources initiatives
10 Coming together: Ethnic diversity brings 55 Interview: Geoff Mason, General Manager, Port
cultural richness and political challenges Moresby Stock Exchange (POMSoX)
13 Viewpoint: Prime Minister Peter O’Neill 56 Interview: Ian Mason, General Manager, BSP
14 Lasting bonds: Australia and PNG share Capital
historic economic and political ties
15 China comes to market: Trade reveals the Share analysis & data provided by BSP Capital
symbiosis between mineral-rich PNG and 57 Oil Search: Hydrocarbons
resource-hungry China 58 Bank South Pacific: Banking
16 Viewpoint: Julie Bishop, Australia’s Shadow 59 Credit Corporation: Finance
Minister for Foreign Affairs and Deputy Leader 60 City Pharmacy: Pharmaceuticals
of the Opposition 61 New Britain Palm Oil: Agriculture
17 A regional player: Building relations with 62 Highlands Pacific: Minerals
neighbours in the Pacific
18 Viewpoint: William Hague,
UK Secretary of State for Foreign and
Commonwealth Affairs Steady on
Page 36
ECONOMY
20 Trickling down: Revenues from large-scale PNG’s population is highly under-banked,
energy and mining projects to fund long-term with penetration of only 15%. Corpo-
national development strategy rate clients make up the overwhelming
26 Interview: Ivan Pomaleu, Managing Director, majority of banks’ revenues, but the ris-
Investment Promotion Authority ing middle class is seen as a growth mar-
27 Starting small: New support for SMEs could lead ket. Penetrating rural areas via mobile
to widespread expansion microfinance solutions is also being tar-
28 Funding the future: A planned SWF will geted. In late 2011 the central bank
help the government manage a jump in adopted a five-year development plan
revenues to guide the sector through what is
29 Interview: Karel De Gucht, EU Trade forecast to be a period of strong growth.
Commissioner

4 CONTENTS PAPUA NEW GUINEA 2012

Chairman: Michael Benson-Colpi 99 The long haul: Exploration activity speeds up as
Director of Field Operations: Elizabeth
new developers move in
Boissevain

Regional Director: Laura Herrero
TELECOMS & IT
Country Director: Annie Michailidou 102 On it grows: Little sign of a slowdown as
Field Operations Executive: Meltem
providers diversify products and services in line
Okur with market demand
Field Operations Coordinator: Zeynep
Akdamar
109 Interview: Jim Miringtoro, Minister for
Communication and Information Technology
Project Coordinator: Seri Baru
110 Interview: Charles Punaha, CEO, National
For all editorial and advertising Information and Communications Technology
enquiries please contact us at:
enquiries@oxfordbusinessgroup.com.
Authority (NICTA)
To order a copy of this publication 111 Banking on mobiles: Operators are rolling out
or to enquire about your subscription
please contact us at:
new services, but may face a shallow market
booksales@oxfordbusinessgroup.com. 114 Interview: John Mangos, CEO, Digicel (PNG)
All rights reserved. No part of this
What lies beneath
publication may be reproduced, stored INDUSTRY & MANUFACTURING
in a retrieval system or transmitted in Page 71 116 Advantages ahead: Strong core segments and
any form by any means, without the
prior written permission of Oxford burgeoning new ones present opportunities
Business Group. With the start of the PNG LNG initiative, pro- 121 Interview: Charles Abel, Minister of Trade,
Whilst every effort has been made to
jected to bring in up to an estimated $150bn Commerce and Industry
ensure the accuracy of the informa- over the course of its lifetime, the energy sec- 122 Interview: Murray Woo, Chairman,
tion contained in this book, the
authors and publisher accept no
tor looks set for massive expansion. Apart Manufacturers Council of Papua New Guinea
responsibility for any errors it may from this new mainstay of the economy, 123 Angling for a raise: The fishing industry looks
contain, or for any loss, financial or
otherwise, sustained by any person
other projects are continuing as well, includ- set for a hefty catch
using this publication. ing extension of the energy grid to rural 124 Building the brand: Efforts are under way to
Updates for the
areas and a revamping of the power segment. boost production and local consumption
information provided in this
volume can be found in Oxford
125 Interview: Michael Kingston, General Manager,
Business Group’s ‘Economic Updates’ INSURANCE K. K. Kingston
service available via email or at
www.oxfordbusinessgroup.com
64 Underwriting profits: The sector has expanded 126 Keeping pace: As income levels increase, the
on the back of increased economic activity and retail sector prepares for growth
rising incomes
TRANSPORT
ENERGY 130 Paving the way: Transforming the nation’s land,
71 What lies beneath: New exploration and sea and air infrastructure
production to bring the sector back to the fore 139 Interview: Wasantha Kumarasiri, CEO, Air Niugini
75 Interview: Peter M Graham, Managing Director, 140 Interview: Stanley Alphonse, CEO, PNG Ports
Esso Highlands, subsidiary of ExxonMobil Corporation (PNG Ports)
76 Interview: Phil E Mulacek, Chairman and CEO, 141 High-cost highways: Logistics firms are trying to
InterOil overcome operational challenges
77 A bright idea: Plans to extend the national grid 144 Interview: Joseph Kintau, Managing Director,
and provide power to every province are National Airports Corporation
under way
79 Interview: Tony Koiri, CEO, PNG Power CONSTRUCTION & REAL ESTATE
80 Game changer: A new LNG project is expected 146 Gas-fired growth: Despite constraints,
to have a huge impact on the economy expansion is expected to continue through
2014
MINING 151 Interview: Keith Fletcher, Managing Director,
84 A key earner: With numerous new projects Fletcher Morobe Construction
coming on-line the sector is poised for large
increases in production
91 Interview: Byron Chan, Minister of Mining
92 Interview: Greg Anderson, Executive Director,
Papua New Guinea Chamber of Mines and
Petroleum
93 Into the deep: An increasing number of
operations are starting to move offshore
95 Interview: Peter Aitsi, Country Manager,
Newcrest Mining
97 Under review: A new regulatory
framework will clarify legislation


CONTENTS PAPUA NEW GUINEA 2012 5

152 Labour crunch: A shortage of skilled workers
constrains expansion
153 At last: Inroads are finally being made on land A key earner
reform and ownership
155 Hot, hotter, hottest: Correction seems likely, Page 84
although opportunities remain in mid-market With resources in mature markets declin-
and affordable segments ing, emerging mining markets like PNG’s
are on the rise. Mining and petroleum
AGRICULTURE & PLANTATIONS extraction represented two-thirds of
163 From the roots up: Niche markets are helping
national revenue in 2011, and new devel-
make the most of production opments promise hefty gains. A surge of
169 Catching on: The fishing industry is maturing
mining contracts and extraction projects
171 Interview: James Lau, Managing Director,
are well under way to explore the vast
Rimbunan Hijau PNG potential of what still lies unearthed in PNG.
172 Interview: Pedro Celso, Managing Director, RD
Tuna; and Chairman, Fishing Industry
Association PNG
173 On the rise: Very active palm oil production
earns a spot among top exporters Advantages ahead
175 Knock on wood: Logging is a key industry Page 116
TOURISM The country is well placed to develop its
178 Untapped potential: Efforts to raise nascent industrial base into a strong eco-
international awareness for lasting growth nomic contributor. Several initiatives look
183 A sustainable model: Drive for new investment set to boost production and capacity,
requires adept community relations such as the development of a new marine
184 Taking to the seas: An increasingly popular port industrial zone. New opportunities, par-
of call for the global cruise line industry ticularly in downstream industries like
185 Interview: Peter Vincent, CEO, Papua New tuna processing and wood manufactur-
Guinea Tourism Promotion Authority (PNG TPA) ing, have accompanied economic growth.

EDUCATION
188 Seas of change: Improvement agenda focuses
on reviving the sector Gas-fired growth
192 Building up: Improving access to schools and
rehabilitating existing facilities Page 146
193 Interview: David Arore, Minister of Higher The sector has faced higher labour costs
Education, Research, Science and Technology and materials shortages, slowing construc-
194 Gender gap: Working to address disparities
tion developments while the LNG project
saps the market. However, the Mid-Term
TAX Development Plans has a $17.7bn budget
DFK Hill Mayberry to target 39 niche sectors, in addition to a
195 Facts and figures: An overview of the tax laws
$9.5bn plan to invest in road, maritime and
204 Viewpoint: Tony Canning, Partner, DFK Hill
airport infrastructure. These projects are
Mayberry expected to underpin steady future growth.

LEGAL FRAMEWORK
Leahy Lewin Nutley Sullivan Lawyers
206 Conducting business: An overview of the
present legal environment
From the roots up
213 Viewpoint: John Leahy, Partner, Leahy Lewin Page 163
Nutley Sullivan Lawyers
214 Viewpoint: Gibson Geroro, Associate, Leahy Agriculture remains a mainstay of the
Lewin Nutley Sullivan Lawyers economy, with 85% of the population
involved in semi-subsistence agricultur-
THE GUIDE al work. PNG exported around $1.31bn
216 The Kokoda Trail: Into the jungle in agricultural products in 2010. Trans-
217 Hotels: Stylish accommodations port challenges are high, driving up
219 Important telephone numbers: Contact production costs, but a focus on high-
information for foreign missions and services end products helps to compensate.
220 Facts for visitors: Tips for first-time travellers


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