Sunday, November 23, 2014

China, Pacific island countries announce strategic partnership


NADI, Fiji, Nov. 22 (Xinhua) -- China and eight Pacific island countries agreed here on Saturday to establish a strategic partnership featuring mutual respect and common development.

Chinese President Xi Jinping delivers a keynote speech during a group meeting with Fijian Prime Minister Josaia Voreqe Bainimarama, Federated States of Micronesia President Emanuel Mori, Samoan Prime Minister Tuilaepa Sailele Malielegaoi, Papua New Guinea's Prime Minister Peter O'Neill, Prime Minister of Vanuatu Joe Natuman, the Cook Islands Prime Minister Henry Puna, Tonga Prime Minister Siale'ataonga Tu'ivakano and Niue Premier Toke Talagi in Nadi, Fiji, Nov. 22, 2014. (Xinhua/Li Xueren)
 
The agreement was announced at a meeting between visiting Chinese President Xi Jinping and the leaders of the eight countries, namely Fiji Prime Minister Josaia Voreqe Bainimarama, Micronesia President Emanuel Mori, Samoa Prime Minister Tuilaepa Lupesoliai Sailele Malielegaoi, Papua New Guinea Prime Minister Peter O' Neill, Vanuatu Prime Minister Joe Natuman,
The Cook Islands Prime Minister Henry Puna, Tonga Prime Minister Siale'ataonga Tu'ivakano and Niue Prime Minister Toke Talagi.
Chinese President Xi Jinping (C rear) delivers a keynote speech during a group meeting with Fijian Prime Minister Josaia Voreqe Bainimarama, Federated States of Micronesia President Emanuel Mori, Samoan Prime Minister Tuilaepa Sailele Malielegaoi, Papua New Guinea's Prime Minister Peter O'Neill, Prime Minister of Vanuatu Joe Natuman, the Cook Islands Prime Minister Henry Puna, Tonga Prime Minister Siale'ataonga Tu'ivakano and Niue Premier Toke Talagi in Nadi, Fiji, Nov. 22, 2014. (Xinhua/Rao Aimin)
 
All the eight island countries have established diplomatic ties with China since the 1970s.
In a keynote speech delivered at the meeting, Xi expounded China's policy and measures to enhance relations with the island countries in a new era, stressing that China is a sincere friend and partner of those countries.
Chinese President Xi Jinping (C) poses for a group photo during a meeting with Fijian Prime Minister Josaia Voreqe Bainimarama (4th L), Federated States of Micronesia President Emanuel Mori (2nd L), Samoan Prime Minister Tuilaepa Sailele Malielegaoi (4th R), Papua New Guinea's Prime Minister Peter O'Neill (3rd R), Prime Minister of Vanuatu Joe Natuman (3rd L), the Cook Islands Prime Minister Henry Puna (2nd R), Tonga Prime Minister Siale'ataonga Tu'ivakano (1st L) and Niue Premier Toke Talagi (1st R) in Nadi, Fiji, Nov. 22, 2014. (Xinhua/Yao Dawei)
 
The Chinese people and the people of the island countries have a "natural sense of amity" toward each other and enjoy a "long history of friendship" although they are geographically far apart, Xi said.
Hailing the expanding common interests of China and the island countries, Xi said their friendly cooperation has entered a fast-track of development.
"China will attach more not less importance to its relations with the island countries and will make more input," he said.
Xi said China respects the island countries' own choices of social systems and development paths in accordance with their national conditions, and support the countries' efforts to manage and decide on regional affairs in their own way as well as to participate in international affairs to safeguard their legitimate rights and interests.
He urged China and the island countries to increase high-level interactions, saying that his country welcomes leaders of the countries to visit China and will work with them on top-level design for their relations.
"(We) stand ready to expand government-to-government, legislature-to-legislature and party-to-party interactions with the island countries, and will continue to advance the China-Pacific Island Countries Economic Development and Cooperation Forum and other regular dialogues," said the Chinese president.
Referring to his proposal on the 21st Century Maritime Silk Road, Xi said China sincerely hopes to share experience and achievement of development with the island countries and welcomes them to take a ride on the Chinese "express train" of development.
China is willing to deepen cooperation with the island countries in trade, agriculture and fishery, marine industry, energy and resources, infrastructure construction and other sectors, said Xi, adding that China will offer zero-tariff preference for 97 percent of tax items imported from the least developed countries.
China will continue to provide support for the island countries' major projects, infrastructure construction and projects involving people's livelihoods, Xi said.
On people-to-people exchanges, the Chinese president pledged to provide the island countries with 2,000 scholarships and 5,000 slots for various studies and trainings in the next five years.
China will send more medical teams to the island countries and encourage more Chinese tourists to visit the countries, he added.
In the meantime, Xi said China stands ready to enhance communication with the island countries on global governance, poverty elimination, disaster reduction, food security, energy security, humanitarian aid and climate change to safeguard the common interests of all developing countries, Xi said.
Xi arrived in Nadi on Friday for a state visit to Fiji after his trips to Australia and New Zealand.
The leaders of the island countries said they all regard China as a sincere friend and partner as the Chinese side always respects and supports the island countries.
They said China's policy and measures toward the islands countries in the new era meet the actual needs of the countries and will help the countries in their push for sustainable development.
China's proposals on the 21st Century Maritime Silk Road and the Asia Infrastructure Investment Bank generate important opportunities for the island countries, they noted.
The leaders pledged that their countries will boost exchanges and cooperation, and cement friendship with China and will join hands with

Engaging India in the Pacific Islands Region

Foreign Minister Rimbink Pato has carried forward a number of significant issues at a meeting of Pacific Island Countries and the Prime Minister of India, Narendra Modi, this week in Fiji.
The meeting took place following Modi’s attendance the G20 Leaders meeting in Brisbane, Australia, and was intended as a way for India to engage more closely with the governments of Pacific Island States.
Pato said the forum created an opportunity for Papua New Guinea and Pacific Island States to deepen engagement with one of the largest countries in the world.
“India has one of the biggest economies and populations in the global community, and is seeking to engage more closely with the Pacific through trade in goods and services,” Pato said.
“India is also growing as a support provider to developing countries and is interested to look at partnership opportunities through Papua New Guinea’s ongoing assistance with Pacific Island countries.”
Despite the population and economic size difference between India and Papua New Guinea, the Foreign Minister said two countries share a number of common concerns and challenges.
“Urbanisation is posing a challenge to India as people move from rural areas into the cities.
“This is placing significant pressure on infrastructure such as roads, water and energy.  There is scope for discussion at a working level between the two countries to share policy approaches to improving the lives of our people when these pressures are experienced.”
Pato said at a broader Pacific level, India has been acknowledged for its work on encouraging support for larger countries to confront climate change sand manage the consequences of issues such as rising sea levels.
“India’s Prime Minister is very strong in his views on climate change and has been vocal on this issue in the United Nations,” he said.
“Prime Minister Modi is aware of the affects of climate change on low-lying islands and other problems such as climate induced migration due to changing weather patterns.
“Papua New Guinea looks forward to advancing climate change issues alongside India at future UN related events.”
The Indian delegation expressed interest in discussing high level visits between Papua New Guinea and India to expand on trade, investment and other areas of mutual interest.
“There are a number of Indian companies already operating in Papua New Guinea and the two governments are looking at opportunities for expanding education opportunities, particularly in the area of information technology, where India has high-level expertise.”




How Whitlam’s self-interest sank PNG

 

·      GEOFFREY LUCK
·      THE AUSTRALIAN
·      NOVEMBER 04, 2014
 
IN all the words written about Gough Whitlam, little has been said of one of his greatest ideological and opportunistic initiatives, one of which he was inordinately proud, yet inevitably became one of his many disasters. We know it as the failed state of Papua New Guinea.
Gough Whitlam and a young Michael Somare at Independence celebrations. Credit: Whitlam Institute.
 
In the 1960s Whitlam used PNG as a lever to advance his ambitions in the Labor Party. His regular visits culminated in his 1970 tours of the territory inciting radicalism and disparaging the efforts of government, business and settlers in his crusade against what he termed Australian colonialism.
Whitlam has been seen as a visionary, but in reality he was a fashionista, shrewdly sensitive to ideas already current in the wider world to which he could sincerely subscribe and could appropriate.
So it was with anti-colonialism, the grand international theme of the 60s. It swelled to the nationalistic drumbeat as former colonies gained independence, then ­blossomed as their petty tyrants took triumphant control of the UN organs of moralistic reform.
In the first few years of that decade, 30 former colonies of France, Britain, Belgium and Italy secured independence, some after bitter and protracted bloody struggles.
The steady Australian policy of uniform development of PNG was contrasted to the frantic Dutch ­efforts to produce a political elite in West New Guinea, as Indonesia sprinkled paratroopers into the swamps of Manokwari.
Hugh Foot, the British colonial administrator who lowered the Union Jack around the world, became Britain’s ambassador to the Trusteeship Council in 1961, gamekeeper turned poacher. The next year he led the UN visiting mission that critiqued Australia’s management of PNG, ­demanding a local parliament.
In response to these growing pressures, a House of Assembly of 100 members was elected from a common electoral roll in 1964, but the Trusteeship Council and the UN Special Committee on Decolonisation increasingly demanded independence. It was a campaign Whitlam wholeheartedly endorsed, oblivious to the realities of PNG or the wishes of the great majority of the native population.
ALP policy under ­Arthur Calwell supported the Menzies government policy of uniform development. Calwell visited New Guinea regularly and was well informed on territory affairs. Whitlam set out to destroy the bi­partisan approach to PNG ­dev­elopment. It fitted ­con­ven­i­ently with his efforts to ­reform the party and replace ­Calwell as leader.
Paul Hasluck, minister for territories and author of the gradualist policy of development, told parliament in April 1961 that Whitlam was using New Guinea as “just another rung on a ­borrowed ladder” for his climb to leadership.
In 1965, Whitlam told a World Bank seminar in Goroka that “the world will think it anomalous if Papua New Guinea is not independent by 1970”.
A few days later he went much further, in a dinner speech to the 400 most influential Australians in Port Moresby. That speech has never been reported because he pulled one of his most reprehensible stunts.
Before he spoke, he called for any journalists in the room to stand up, then asked the four of us to undertake not to report what he was about to say — “otherwise I will not be saying it”, he said. What he went on to say shocked everyone in the room.
 
Only deputy leader and speaking against Labor policy, he warned that as soon as Labor came to power it would announce full self-government for PNG, and immediately set the constitutional wheels in motion to grant ­independence.
Whitlam hoped to unnerve Territorians, but not let his party or Australia know. To this day I have been ashamed I didn’t break that undertaking, extorted under such disgraceful circumstances.
 
By 1967 Whitlam was leader, but he narrowly lost the 1969 election. In his notorious tour of PNG in 1969-70, he courted small radical elements such as Pangu Pati while ignoring government officers, and insulting conservative native leaders as “Uncle Toms” and their massed supporters as stooges of Australian colonialism.
The tour climaxed in Rabaul where Whitlam blundered into a land and local government dispute. At a mass gathering of more than 10,000 wildly cheering Tolais at Queen Elizabeth Park, what he said, further exaggerated by deliberate mistranslation, was interpreted as support for their rebellion and a promise of independence. Senior administration officers were furious that he had allowed himself to be used.
Six months later prime minister John Gorton faced a similar crowd at the same site, but this time raging in fury against Australian government policies. The situation became so threatening the district commissioner slipped Gorton a pistol. In the event, the tension evaporated when the sound system failed.
PNG achieved self-government in 1973 and independence in 1975. It was all too early, with too little done. The pressures had come from outside, but Whitlam forced the pace by encouraging and magnifying the ambitions of unrepresentative elites.
In his book The Whitlam Government, he wrote: “If history were to obliterate the whole of my public career, save my contribution to the independence of a democratic PNG, I should rest content.”
Last month, a New Guinean writer, Mathias Kin, marked Whitlam’s contribution to his country’s independence with this bitter comment: “It lasted only 15 years before self-interest and corruption grabbed it by the throat.”
Geoffrey Luck was the ABC’s news editor, PNG, from 1962 to 1967 and trained the first Papuan and New Guinean journalists

PNG votes against a global moratorium on the death penalty

 Amnesty International


114 of the UN’s 193 member states today voted in favour of the UN resolution to establish a moratorium on executions.
114 of the UN’s 193 member states today voted in favour of the UN resolution to establish a moratorium on executions.
© Aimee Castanell

“Today’s vote confirms that more and more countries around the world are coming around to the fact that the death penalty is a human rights violation and must end. It is also a clear message to the minority of states that still execute – you are on the wrong side of history. ”
Source: Chiara Sangiorgio, Death Penalty expert at Amnesty International       
Date:  Fri, 21/11/2014       


The vast majority of the world’s countries today threw their weight behind a UN General Assembly resolution to establish a moratorium on executions with a view to abolishing the death penalty globally, Amnesty International said.
114 of the UN’s 193 member states today voted in favour of the resolution which will go before the General Assembly Plenary for final adoption in December.
“Today’s vote confirms that more and more countries around the world are coming around to the fact that the death penalty is a human rights violation and must end. It is also a clear message to the minority of states that still execute – you are on the wrong side of history,” said Chiara Sangiorgio, Death Penalty expert at Amnesty International.
Since 2007 there have been four resolutions calling for a worldwide moratorium on the death penalty, with support increasing each time. Overall, the votes in favour of this resolution increased by three since the last time a similar vote took place in 2012.
114 states voted in favour, 36 voted against and 34 abstained compared to 111 votes in favour, 41 against and 34 abstentions in December 2012. The draft resolution was co-sponsored by 94 UN Member States from all regions of the world, the highest number yet.
New votes in favour came from Eritrea, Fiji, Niger and Suriname. As a further positive sign, Bahrain, Myanmar and Uganda moved from opposition to abstention. Regrettably, Papua New Guinea went from abstention to a vote against the resolution.
Today’s vote in the UNGA’s Third Committee, which addresses social, humanitarian and human rights issues, is an important indicator for the main vote on the resolution in the General Assembly Plenary next month, when the resolution is expected to be endorsed. Although not legally binding, UN General Assembly resolutions carry considerable moral and political weight.
“Governments around the world should seize the opportunity of today’s vote to renew their dialogue to make this moratorium call a reality – we hope we will see even stronger support come the final vote in December,” said Chiara Sangiorgio.
 Amnesty International urges all UN Member States to support the resolution when it comes for adoption at the plenary session. Those countries still retaining the death penalty should immediately establish a moratorium on executions as a first step towards full abolition.

Background

When the UN was founded in 1945 only eight of the then 51 UN Member States had abolished the death penalty. Today, 95 Member States have abolished the death penalty for all crimes, and in total 137 out of the 193 have abolished the death penalty in law or practice.
 The adoption of these ground-breaking resolutions on a moratorium on the use of the death penalty since 2007 has generated momentum to renew the commitment to the abolition of the death penalty.
Amnesty International opposes the death penalty in all cases without exception, regardless of the nature or circumstances of the crime; guilt, innocence or other characteristics of the individual; or the method used by the state to carry out the execution. 

Saturday, November 22, 2014

Growth as Pacific tourism heats up

 

Outrigger on the Lagoon  was recently sold in Fiji.
Outrigger on the Lagoon was recently sold in Fiji.

"The South Pacific tourism market is heating up after a long period in the shade," says Dean Humphries, the national director of Colliers International Hotels.
He says the renewed optimism is a result of the easing global financial crisis and a number of geopolitical events that have occurred including the recent Fijian elections returning a democratically elected Government after eight years of military rule.
"With regional and global economies improving, we are seeing encouraging signs of increased tourism activity, culminating in improving revenue and property values," says Humphries.
"As with recent trends in New Zealand, Fiji is reporting record occupancy and room rates while other markets like PNG, Samoa and Rarotonga are also displaying strong trading conditions.
"In the past 12 months the South Pacific region's key performance metrics and transactional inquiry levels have risen as global markets recover and discretionary spending on leisure tourism increases."
Humphries says new development is also featuring in Fiji, Samoa, New Caledonia and PNG and renewed investment activity has been noted.
"This is a result of a several large transactions in the last year, and more significant assets being offered to the market as investors take advantage of counter-cyclical buying opportunities."
Colliers International's hotel division has produced a visitor-supply ranking index based on inbound visitor arrivals and the supply of hotel rooms and resorts.
"This is a very effective barometer for investors wanting to identify key markets in the region where activity is most likely to occur over the short to medium term," Humphries says.
The ranking has Fiji at number one, Tahiti second and PNG third, with other markets such as Samoa and the Cook Islands showing signs of improvement.
A first "South Pacific hotel investment cycle clock", produced in conjunction with a number of regional industry experts, also forms part of the report,
"This identifies where each market is in terms of its current revenue performance," says Humphries.
"While many countries are towards the bottom of the hotel investment cycle, there are encouraging signals that most of these will enter a growth phase over the short term."
The report includes the recent sales of large resorts in Fiji such as Sonaisali Island, Castaway Island and Outrigger on the Lagoon.
New resort developments include the resurrection of the Momi Bay development in Fiji after its collapse in 2007. Marriot International plans to open a five-star, 250-room resort there in 2016. Other notable projects are the refurbishment and rebranding of Aggie Greys Hotel and Bungalows in central Apia, Samoa, and the rebranding of Aggie Greys Lagoon Beach Resort and Spa, which is opening under the Sheraton brand next year.

Chinese president Xi Jinping signs five agreements with Fiji as part of China's Pacific engagement strategy

       

China's president Xi Jinping is in Fiji on a whirlwind visit aimed at strengthening economic and strategic ties with Pacific island nations.
Chinese president Xi Jinping has signed five agreements with Fiji's prime minister Frank Bainimarama, with the aim of strengthening economic and strategic ties with Pacific island nations.
Five memorandums of understanding (MOU) were signed following a meeting between Mr Xi and Mr Bainimarama.
They cover increased economic and defence cooperation, the "provision of goods to address climate change", and visa exemptions for Fijians travelling to China.
One of the MOUs includes the establishment of a Chinese cultural centre in Fiji.
Mr Xi is also hosting bilateral meetings with leaders from Samoa, Vanuatu, Niue, Tonga, Papua New Guinea and the Federated States of Micronesia, and a round-table discussion with all the Pacific leaders.

Pacific a diplomatic focus for China and India

His visit comes after Indian prime minister Narendra Modi stopped over in Fiji also to court regional leaders, who form one of the largest voting blocs at the United Nations.
Both leaders targeted the Pacific as a vital stop on their way home from the recent G20 summit in Australia.
During a traditional welcoming ceremony in the tourist town of Nadi last night, Mr Bainimarama said Fiji wanted China to be fully engaged in the Pacific.
In a thinly veiled swipe at Australia and New Zealand, he said China had been "a true friend of Fiji" and had never interfered in Fiji's internal politics.
Australia and New Zealand loudly criticised Mr Bainimarama and imposed sanctions on Fiji after he seized power in a military coup in 2006.
Mr Xi said that Fiji is the first Pacific island country to establish diplomatic relations with China and the two countries have witnessed ever-deepening political mutual trust and fruitful practical cooperation over the past 39 years.
"China views Fiji as a cordial friend and an important partner'" Mr Xi said.
"China supports the people of Fiji in choosing their own development path and improving livelihoods."
Before his arrival in Fiji, Mr Xi released a statement saying he would meet the leaders of all Pacific island countries that have diplomatic ties with China to draw what he called a blueprint for future mutually beneficial cooperation.
"The friendly exchanges between the people of China and Pacific Island countries date back to a long time ago," he said.
"We feel a natural kinship with each other."

Xi eyes strategic Pacific ties

AFP
 

Suva (Fiji): Chinese President Xi Jinping arrived in Fiji on a whirlwind visit aimed at strengthening economic and strategic ties with Pacific island nations.

 Xi's visit yesterday comes after Indian Prime Minister Narendra Modi, head of the world's largest democracy, stopped over in Fiji to also court regional leaders who form one of the largest voting blocs at the United Nations.

Both leaders have targeted the Pacific as a vital stop on their way home from the recent Group of 20 summit in Australia.

 Xi, who has already established a rapport with Fiji after visiting four years ago as vice president of China, held talks yesterday with Fiji's 2006 coup leader and recently elected prime minister Voreqe Bainimarama.

He will then meet a delegation of up to eight Pacific island leaders today.

"An important agenda of my visit is to invite leaders of all Pacific island countries that have diplomatic ties with China to Fiji for discussions on ways to further grow China's relations with these countries and jointly draw a blueprint for the bright future of our friendly exchanges and mutually beneficial co-operation," Xi said in a statement released ahead of his arrival.

"The friendly exchanges between the people of China and Pacific Island countries date back to a long time ago.

"We feel a natural kinship with each other."

Countries involved in the talks along with Fiji include Samoa, Vanuatu, Niue, Tonga, Federated States of Micronesia, Cook Islands, and Papua New Guinea.

 Papua New Guinea Prime Minister Peter O'Neill, who missed Modi's meeting, described China as a friend of the Pacific island states.

 "China believes that all countries are equal members of the international community irrespective of their size, wealth and strength," he said.

 Sydney-based foreign policy think tank The Lowy Institute has estimated that from 2005-11 China handed out US$600mil (RM2bil) in so-called "soft loans" to Pacific countries such as Tonga, Samoa and Fiji. Fiji television showed live coverage of Xi's plane landing at Nadi airport, having made the journey from New Zealand, a country with which China agreed to expand its burgeoning trade relationship. — AFP

 

Foreign Minister Pato shares PNG perspective with G20 Ministers

Speaking at the recent Dinner for Foreign Ministers of G20 Nations, Papua New Guinea’s Foreign Minister, Rimbink Pato, presented the nation’s perspective on a number global economic engagement issues affecting Pacific Island States.

As part of his intervention, he proposed a more effective means for communication and the sharing of information between G20 states and developing nations.
Pato attended the G20 Foreign Ministers’ dinner at the invitation of Australia’s Foreign Minister, Julie Bishop.
“In discussion with Foreign Minister counterparts, I elaborated on Papua New Guinea’s engagement with close regional partners to ensure collective attention on significant challenges,” the Minister said following the meeting.
“This included discussion of collaborative efforts with Papua New Guinea’s close partners Australia, Indonesia and New Zealand to combat terrorism associated with transnational crime.
“This includes the terrible issues of human trafficking and people smuggling in the Asia-Pacific.
“I further shared Papua New Guinea’s perspective on sustainable development issues relating to matters such as climate change, and preparations to deal with Ebola if it was to ever be detected in Papua New Guinea.
“It was a frank and open discussion in which I appreciated the insight provided by G20 Foreign Ministers, and I feel the Papua New Guinea and Pacific Island perspective was enlightening to my counterparts.”
Pato advised that developing countries were looking to tangible outcomes from the G20 Leaders Meeting on sensitive development issues.
“Many of the economic issues to being considered by G20 Leaders have a direct impact on Papua New Guinea and developing economies in the Pacific.
“Papua New Guinea has recommended that G20 could adopt some practices from the APEC process where ministers meet and provide recommendations to Leaders.
“The proposal was well received by ministers and endorsed by Indonesia’s new Foreign Minister, Retno L.P. Marsudi.
“Papua New Guinea appreciates being invited to speak at this event for G20 ministers and sharing views that are representative of the interests and aspirations of developing economies around our Pacific region.”

O’Neill arrives in Nadi, Fiji for China-Pacific Islands Countries Economic Development Forum

Prime Minister Peter O'Neil arrived in Fiji yesterday for the China-Pacific Islands Countries (PIC) Leaders meeting with visiting Chinese President  Xi Jinping in Nadi, which takes place on Saturday 22 November 2014.
The China-PIC Leaders meetings take place every three years to discuss issues affecting the Pacific region and how China can partner with the island countries in addressing development issues.
Papua New Guinea and China have long standing diplomatic relations with since 1975 and the relationship has continued to be strengthened over the years through exchange of high level visits, people to people contacts, business, trade and investment.
The PNG Government strictly adheres to the "One China Policy."
China is PNG's third largest donor apart from Australia and Japan with a total value of aid estimated at USD$220 million that is provided through Grants, Technical Assistance, and Concessional Loans under the Chinese Government and PNG Economic and Technical Cooperation Program.
The meeting with President Jinping will further enhance PNG/China relationship as well as with other Pacific Islands Forum Countries that have bilateral relations with China.
The Chinese presence in the Pacific region is indicative of the strategic importance and is based on mutual respect and cooperation as is evidenced in the many development assistance programs provided by the Government of China.
O'Neill apart from the meeting will witness the signing of various Development Assistance Agreements to be formalized by Minister for Foreign Affairs Rimbink Pato and National Housing Corporation Managing Director Mr John Dege.
These Agreements are as follows:
·  Agreement on Economic and Technical Cooperation
·  Framework Agreement on the provision of Concessional Loan
·  Government Concessional Loan Agreement
·  Preferential Buyer Credit Loan Agreement
·  PNG Affordable Housing Construction Project
·  PNG Edevu Hydropower Plant Project Investment
China continues to remain an important bilateral partner for PNG and the Pacific region as a whole through its various development assistance programs.
China's growing presence in the region is evident and individual Pacific Island Countries should focus on expanding relations through business and trade and investment, capacity building, tourism, agriculture and fisheries with China.

Friday, November 21, 2014

Illuminating corruption trends in PNG


A Commentary by Sam Koim*

INTRODUCTION

Corruption flourishes in secrecy and the ignorance of the people. Shedding light on corruption trends is therefore an integral part of curtailing the spread of this pernicious social disease hence this article. 

Investigation Task-Force Sweep (ITFS) initially commenced its investigation into the expenditure of development budget at the National Planning Department. The investigation uncovered instances, amongst others, where shell companies (or sometimes called “K2 companies”) were used as fronts to squander public funds. Funds were expended with either no project undertaken or project left incomplete. Detecting the fraud in such simple trend of corruption is easy.  

A new trend of corruption appears to be emerging in the area of expenditure of development funds. It is rather a complicated and higher level of corruption. This time, well established businesses, even multi-national corporations are used to generate illicit gains for the firms and public officials. In most cases, the projects are so huge like “white elephants” that the spill out of economic rents is obscured. At the same time, the trumpeting of the unbroken economic boom is so loud that the voices of the silent suffering majority are barely audible.

This article seeks to expound on some of the common features of high level corruption and its effects on the economy and the wellbeing of the people and the country.

CORRUPTION AND ITS TYPOLOGIES IN PNG

Corruption is a global phenomenon. Corruption can be defined as “the abuse of entrusted power for private gain”. The accepted formula of Corruption equals monopoly plus discretion minus accountability. If a system gives an official monopoly power over a good or service, the discretion to decide how much a particular client receives, and is not accountable, then the system will be prone to corruption.

In Papua New Guinea (PNG), it seems that the monster rears its ugly head in nearly all facets of the society. There are many causes, typologies, levels and effects of corruption. There are four basic types of corruption, the attributes of which are seen in PNG today and they are:  petty corruption, grand corruption, political corruption and State capture. Each of them is briefly elucidated hereunder.

Petty corruption or bureaucratic corruption or administrative corruption is the everyday corruption that takes place where bureaucrats meet the public directly. Petty corruption is also described as "survival" corruption: a form of corruption which is pursued by junior or mid-level agents who may be grossly underpaid and who depend on relatively small amounts to feed and house their families and pay for their children's education.

Grand corruption is the type of corruption that takes place in higher levels of government. It is typified by the misuse of entrusted power by political leaders or senior public servants and usually involves very large amounts of public money and assets diverted for personal use.

Political corruption is corruption in, and of, the electoral and political processes including such; vote buying and selling; payments between politicians for votes on the floor of parliament; and payments for affiliation to one, or other coalition. 

State capture is corruption within the legislature, executive, ministries and the judiciary where private interests significantly influence a state's law-making and decision-making processes. It is because of State capture that we see acts such as allocation of discretionary expenditure by MPs that are corrupt though not necessarily illegal. 

The rest of this article concentrates on addressing State Capture, but before that, the legislative and administrative framework that breeds State Capture must be appreciated. 

FAIR AND EQUITABLE DISTRIBUTION OF NATIONAL DEVELOPMENT

The Second Goal of the National Goals enshrined in the Constitution of PNG calls for the equalisation of services and development projects in all parts of the country. The annual national budget is the lawful process whereby the national wealth of the country is fairly and equally distributed. The distributive powers of the people are vested in the Executive Government. The Executive Government adopts plans and policies on how to distribute the wealth of the nation. Consistent with its policy framework, the Executive Government takes the budget initiative to raise loans and revenue and allocate funds for expenditure. After the National Executive Council (NEC) is satisfied with the budget estimates and approves it, the budget is then presented on the floor of Parliament for Parliament’s deliberation and approval.  Parliamentary Approval of the National Budget takes the form of a sessional legislation called Appropriation Act.

After the legislative approval of the budget and the warrants are released by Department of Treasury, the funds are not up for grabs. The expenditure of public funds including the procurement of goods and services are regulated by the Public Finance (Management) Act (PFMA) and the Appropriation Act. The PFMA specifies a range of procurement authorities and their respective financial limits to commit expenditures. At the pinnacle of the procurement authorities is the NEC which approves all contracts above K10 million.

It goes without saying that for a project valuing K10 million and above under the current context, the Executive Government has the discretion and to greater extent monopoly on deciding the type, amount, location and the ultimate contractor of the project. Proponents of the perverse logic of political expediency would favour the existing process as it enables the Executive Government to achieve its plans and objectives within the tenure of their reign. On the contrary, having the good governance lenses on, one would see that the risks of high level corruption are very high in the current setting. There is no independent mechanism to ensure that there is correct and uncontaminated decision concerning the procurement of major projects valuing more than K10 million. That is a fertile soil for State Capture to flourish and the next topic examines how that occurs.

THE CAPTURE OF STATE DISTRIBUTIVE POWERS AND THE PROLIFERATION OF “WHITE ELEPHANT PROJECTS”

A large portion of government expenditure goes through the procurement process hence the risk of mismanagement and corruption is high if the processes are not structured and managed in a transparent, accountable and professional manner. Those risks can prevail throughout the budget and procurement cycles. When the Executive Government identifies projects, allocates funds and awards the contracts, the following are the likely risks and effects:-

Budgetary Process

Ø  The Executive Government or individual ministers of the NEC may use their distributive powers collectively or individually to allocate resources where the economic rents/commissions would be plentiful and easily collected.

Ø  In most cases, “white elephant projects” are identified as that would reward them with more and easy rents instead of priority projects that are needed by the majority of the people. These grand projects are too expensive to build that they exceed their usefulness.

Ø  Detecting fraud in huge projects is difficult where contracts are complex and a well-established firm is involved. That is because firstly, the transaction would not raise a lot of eye brows as it would be for a K2 company; and secondly because it is difficult to sufficiently benchmark prices of certain grand projects such as roads. For instance, a K1 million diverted from teachers’ salaries would be very obvious than the same amount defrauded in a multi-million kina road project worth K10 million. Extracting K1m from the K10 million project would not make much noise so to speak.

Ø  When projects identification is driven by rent-seeking, feasibility studies and costs benefit analysis are rarely carried out prior to the allocation of funds, as doing so would expose the real value and necessity of the projects.

Ø  Political logrolling for rent-seeking projects would be a common occurrence in Cabinet. The race would be on in Cabinet where a common unwritten understanding would subsist –“you support my proposal, I will reciprocate when it’s your turn, let’s look after each other”.

Ø  In circumstances where the Government has the numerical strength on the floor of Parliament, a budget that is otherwise contaminated with blended private interests can be sanctioned without much scrutiny.

Expenditure –Procurement

Ø  Secrecy breeds corruption. When economic rents become the motive, some white elephant projects are not publicly tendered. Instead closed tenders are preferred. In other cases, Certificate of Inexpediencies (COI) are issued on projects that do not lawfully qualify for it. Also at times, projects may be publicly tendered on a reasonable price as a smokescreen but after the contract had been awarded, ridiculous and unjustified variations are secretly executed to pour more money into the same project. 

Ø  Procurement officials and politicians in charge of the procurement process may influence the process to award contracts to the best briber instead of choosing the best price quality combination. The company in charge of building the new hospital may for instance not be the one representing the best price/quality-combination, but rather the most successful briber or the one with the best governmental connections.

Ø  The Central Supplies and Tenders Board (CSTB) can be subjected to excessive political patronage to ensure that firms with collusive connections with the government are favourably treated. If the figure is above K10 million and the NEC is captured by private corporate interests, CSTB merely becomes a facilitator than a vetting house. The vetting is supposedly conducted by the NEC prior to awarding the contract.

Ø  Selecting the best briber distorts open competitive market for State tenders. As the preferential treatment given to a few collusive firms restricts the open market to only a few favoured firms, the race for political favours would be on. More and more unwilling and unfavoured firms would then be compelled to participate and race for political favours.

Ø  Together with the grand projects, the craving for quick rents would also dictate the location of the projects. For predatory firms that have collusive connections with public officials, it is time consuming and resource intensive to mobilise equipment and machinery etc to a remote rural project site which could potentially trap the firm to a single project for a whole financial year. To avoid that and extract more rents within less time, pharaonic projects are selected at locations convenient to the contractor and not necessarily based on the necessity or economic factors. The result may be construction of projects several times as costly as necessary, or the acquisition of goods not actually needed. One that fits well with this description is a particular road in the National Capital District that has been resealed a couple of times over –from two lanes to three lanes and now they are working on the four lanes, all in a space of less than three years. One wonders how much of taxpayers’ money is actually spent on that particular stretch of road.

Ø  It can lower the quality of public goods and services and even threaten safety. Where the contractors and public officials collude, the need to conduct the appropriate level of monitoring and evaluation of the implementation of the projects may be conveniently overlooked. As a result, the poor workmanships and shabby constructions are rarely exposed. Most of the capital intensive projects are not properly monitored hence defects surface immediately after construction is completed.  

Effects of the Captured

Ø  The Appropriation Act and the Executive Government are effectively seized by corporate and personal interests to advance their greed. When the State is captured in this manner, the whole legal system becomes the opposite of what it should be, because it works to the advantage of illegal interests that are dressed up in a legal form.

Ø  The trend of rent-seeking distribution would encourage crony capitalism, where those corporations that have close relationship to the Government of the day or certain politicians would succeed in many government projects. Those crony capitalists’ positions would be reinforced by the process of corruption that gives them continued privileged access to the country’s resources and thereby sustaining their importance to the elite that wishes to maintain control. If the trend of crony capitalism continues in the size and volume, it would inevitably result in the country reaching a stage of Plutocracy, where the predatory corporations will be so powerful that they would dictate the political, economic and social discourse of the nation.

Ø  It would also lead to another form of political and government corruption known as Kleptocracy, where the government exists to increase the personal wealth and political power of its officials and the ruling class at the expense of the wider population, often with pretense of honest service.

Ø  The level of corruption under consideration does distort the real value and wrongly attaches elevated status of a particular project. In the end, it results in the proliferation of “white elephant projects” because those who benefit from it would compete for more of it. Predatory corporations dictate and poach upon public purpose and will have no loyalties for the nation or its population. The predatory firms and public officials would reach this understanding “let’s look after each other as long as we put up a white elephant project to keep the critics at bay”.

Ø  Say if the actual cost of a road project is K20 million. The grease payments made to low level public officials to expedite bureaucratic process favourably might cost the firm about K100,000. The rents for final political approval may be K8 million. So in total, the taxpayers are paying K28.1 million on a project that is worth less than K20 million. The K8.1 million could be used to construct another much needed project but for corruption.

Modes of Rent transfer

Ø  The transfers of illicit gains derived from rent seeking projects occur in many ways. Where the amount is not substantial, hard cash are being delivered to the public official. Sometimes, third party fictitious subcontracts are signed between the contractor and a company that is under the control of the public official. That is done as a vehicle to transfer the rents of the public official. At other times, the rents are kept by the contractor for a delayed benefit. Another way of transferring rents/commissions to and from is the use of offshore bank accounts. Capital flights to offshore jurisdictions are also common when there is massive looting of public funds.

PNG is enjoying its unbroken economic growth as the fastest in the South West Pacific.  Be that as it may, the level of corruption in the country is an important factor to consider when projecting economic growth. Sometimes, the reality may be far from the rosy appearance.

DEBUNKING THE GDP DELUSION

Gross Domestic Product (GDP) is the market value of all final goods and services from a nation in a given year, which is calculated as the population times market value of the goods and services produced per person in the country[i]. The GDP basket contains consumption of goods and services, investments, Government purchases and exports/imports.

Although GDP is the widely recognised measure of a country’s economic performance, the GDP rating can never and does not represent the true progress of a nation. It does not measure:- equitable and fair distribution of income throughout the country; intangible valuables like feeling secure in our own country, environmental damages caused by resource exploitations, the quality of life, the atrocious living standards, quality of education and health etc.  It does not measure the level of corruption either. The GDP is therefore not a comprehensive measure and does not adequately reflect the true health and progress of a nation.

There is a correlation between Corruption and GDP. Linking GDP to corruption, the GDP can be stimulated by the proliferation of high level corruption as well. The constituents of the GDP in a particular year may be fuelled by consumerism behaviour of those who swim with effortlessly gained wealth, crony capitalism investments of predatory corporations and rent-seeking expenditures of the Government.  It therefore follows that corruption may help the most efficient firms bypass bureaucratic obstacles and rigid laws leading to a positive effect on economic growth.

A country can experience higher investment and growth rate with relatively high level of corruption. Studies conducted by the World Bank revealed that countries with more predictable corruption have higher investment rates. Thus, countries with endemic but predictable corruption, such as Thailand and Indonesia, have had strong investment growths. “When business people have confidence that after paying a bribe a return will be provided as promised, there is less motivation to seek legal alternatives” (Lambsdorff, 2001b:14). It is sufficient to suggest that when corruption is prevalent and predictable in a country such as PNG, investment and economy can also surge.

So the economic growth that PNG is experiencing does not necessarily mean that there are no leakages in the public purse. The more money poured into investment, the more chances of corruption it creates if transparent and good governance mechanisms are absent. The PNG GDP rating on the other hand may be building an entirely fictional image of the real progress of the nation, which keeps the unenlightened citizenry under continuous illusion.

CONCLUSION

Public procurement is the main area where the public and the private sector cooperate financially. Corruption in the procurement of major projects is not victimless as it enriches crony capitalists at the expense of the majority of the society who are denied the equal benefit. One effect of corruption is that it tilts public spending toward projects that make it easier to collect on bribes at the expense of priority programs, hence the proliferation of so called “white elephant projects”. Whilst corporations that benefit from corruption may consider corruption as a necessary evil, corruption does have deleterious effects on the economy and the wellbeing of the nation as a whole. There are other disastrous effects that have not been covered here.

Real and hard questions should be asked: Is the GDP a true reflection of the country’s economic capacity to improve living standards or is it a product of the unholy alliance between the government and predatory businesses. The boom mentality can affect the way the government behave, having grandiose plans and ideas to engage in excessive capital expenditure in anticipation of windfalls from the resource sectors such as the LNG. Some studies however, have proven that such booms can decrease the quality of public spending and encourage rent-seeking and we are already seeing signs of it. The public procurement process is long overdue for reform in order to ensure that there is transparency and accountability. The allocation of resources must be guided by the National Goals and Directive principles which a yardstick to ensure there is fair and sustainable economic growth. 

The writer is not against impact projects. As a growing economy, PNG needs to invest in major infrastructural impact projects. What really matters is the cost of corruption to the nation? Having said that, it is also acknowledged that there are firms that have genuinely invested and conduct clean businesses in the country despite the risky business climate posed by corruption. In the same vein, there are public officials who do their jobs honestly and serve the people.

* Sam Koim is the Chairman of Investigation Task-Force Sweep that combats high-level corruption in PNG Government sector. The views expressed in this commentary article are that of the author. Note: References are not included in this paper but are on the original article.