Growth in Papua New Guinea still strong, but the boom is coming to an end

Lasting improvements in prosperity require smart spending and business-friendly reforms: World Bank Group

PORT MORESBY, December 20, 2012 – As a decade of strong economic growth comes to an end, Papua New Guinea’s policy makers face new challenges to achieve lasting improvements in living standards, World Bank economists said at a seminar hosted by the Business Council of PNG yesterday.
The World Bank recommended continued efforts to reduce costs of regulation; to support a dynamic private sector, and to ensure government authorities continue to translate public funds into effective goods and services. 
Economists said that this would help PNG meet its long-term employment and service delivery priorities for the years ahead, even in the face of returning economic pressures.
“Papua New Guinea has enjoyed almost 10 years’ strong, good quality economic growth but there are challenges on the horizon,” says Laura Bailey, World Bank country manager for PNG. 
“Ensuring the public sector is at its most effective and accountable will be key to ensuring the Government can continue to meet the needs of its people.”
In its latest Economic Update, released yesterday, the World Bank found that PNG's economic growth in 2012 remained high at about 8%. 
However this was around 1% slower than in 2011, attributed to the stronger Kina and weakening international commodity prices, which led to lower-than-expected rural incomes and government revenue.
The report also predicts PNG’s growth will slow markedly in 2013 and 2014. 
It says that financing spending priorities in future years will become more difficult because of slower, more heavily resource-driven economic growth, weaker public revenues, and fewer new resources investments in the pipeline.
“The government is looking to broaden and extend the boom to meet a pressing human development agenda,” said Tim Bulman, World Bank country economist for PNG. 
“Despite the projected slowdown, smart investments today will help build on PNG’s many successes in recent years - notably in achieving broadly-based growth that has benefitted more sectors of the economy.”
Spending commitments are likely to intensify as the government works to address key development challenges, economists said, including poor access to nutrition for many children, high maternal mortality and a significant exposure to violence. 
It also has goals of improving literacy and access to schools for younger Papua New Guineans, and of increasing access to finance through emerging technologies such as mobile banking.
  “Continuing vital regulatory reforms will be critical to reduce costs and save time for local businesses, a key long-term driver of jobs and the economy,” said Jonathon Kirkby, senior investment policy officer for the International Finance Corporation.
 “These reforms can be the most effective means of providing a supportive environment for PNG’s businesses to grow and develop and ensure Papua New Guineans can benefit from competitive markets.”
Ongoing construction of the PNG LNG (liquefied natural gas) project, its various spin-off private sector investments, and pre-election government spending were the key drivers of PNG's economic growth. 
Although production from PNG LNG will contribute to headline growth, the non-mineral economy will slow as construction of the project finalises, and less money comes to rural areas from cash crop production.

ADB supports maritime safety and efficiency in PNG with US$41.5 million loan

MANILA, PHILIPPINES (20 December, 2012) – The Asian Development Bank (ADB) has approved a US$41.5 million loan to improve navigational aids in Papua New Guinea, allowing ships to more safely travel through PNG’s largely unchartered and often unsafe waters.

“The Maritime and Waterways Safety Project will upgrade the existing navigational aids network, reducing risks such as the blockage of channels, which cause serious injury, loss of life, and environmental damage,” said Xianbin Yao, director general of ADB’s Pacific Department.

 “The project will also establish a safe and efficient maritime transport environment for national, regional, and international traffic.”

Remote, rural populations are expected to be the main beneficiaries of the project, which will make maritime safety information more readily available and help develop maritime safety communities of practice.

Regional and international maritime transport services will benefit as monitoring and surveillance systems are renovated and search and rescue capacity improved.

More effective beacons or lighthouses are also expected to boost local and international shipping and trade.

The National Maritime Safety Authority (NMSA) is responsible for maritime safety, search and rescue operations, and maritime environment issues in PNG.

 In 2008, the PNG Government, NMSA, and ADB through the PNG government’s Rehabilitation of the Maritime Navigation Aids System Project helped improve the shipping service environment by improving navigational aids along mainly international shipping routes.

The project established a community engagement program through which provincial and community lighthouse committees monitor and keep the navigationalaids in good condition, boosting community ownership while providing income-generating opportunities and encouraging the participation of women in the project.

“This project will have significant benefits for the 65% of PNG’s people who live in coastal regions, through improved passenger and cargo services and easier access to health, education, and other services.

“It will also provide direct support to communities in cash and service by replicating the success of the previous project,” said Chris Rupen, NMSA general manager.

Little control of Lae business boom, says chamber

By MALUM NALU

Lae Chamber of Commerce and Industry believes that there is little control of the current business boom in Lae at the moment.

Chamber president Alan McLay said this yesterday when asked to comment on the boom in business in Lae brought about by all the economic developments.

“The so called ‘business boom’ in Lae is progressing at the moment to meet the demands,” he said.

“The LNG project has certainly meant more transport and logistics type operations and we have seen major developments of these industries along the Nadzab corridor in recent years.

“The government’s inability to provide adequate land for development in Lae has meant that companies have directly negotiated land with local communities and individuals in this area, to meet the demands.

“Our concern is that this recent development has proceeded unplanned, which brings forth a whole range of issues.”

Lae's new landmark along 2nd Street, at the site of the old IPI Building, epitomises the business boom the city is currently going through.-Picture by MALUM NALU

McLay said these issues included:

•All of this development has taken place beyond the current city boundaries, which means that it is under the jurisdiction of the rural local level governments (LLGs), which do not provide sanitation and garbage, and other services to businesses;

•The unplanned development means that there is no allocation of land for schools, recreation parks, etc; and

•There is no protection for the landowner for unscrupulous dealings, and con artists who will rob them and their families of their future inheritance.

“The LCCI believes that there must be an urban development plan for the Lae Urban area,” he said.

“This plan should be used as a blueprint for the establishment of an urban authority or commission.

 “We believe that a commission is necessary to include the Nadzab corridor, as well as Malahang area where the fish factories and fishing wharf are planned, but the establishment of the urban authority should follow a proper urban plan.”

Chamber concerned at law and order in Lae

By MALUM NALU

 

Lae Chamber of Commerce and Industry yesterday expressed concern at the escalating law and order problem in Lae, especially ethnic clashes in urban settlements.

Chamber president Alan McLay said this yesterday when commenting on business in Lae in 2012, which he said had been “good”, for a number of issues including law and order.

“The overflowing settlements and the resulting clashes is a major concern, which is taking so much time and effort by the under -strength and underequipped police, who have found they are left wanting when addressing the normal crimes in the city,” he said.

The understrength China Town police station in Lae, which is expected to control Bumbu Settlement, one of the most-notorious in Lae for ethnic violence.-Picture by MALUM NALU

“The squatter problem has been allowed to develop unchecked by the previous politicians and administration and now it has become a major issue.

“The police alone cannot handle this problem as they are not trained to handle social problems – the politicians and administration must find a way to relieve tensions in the settlements.

“The police must be equipped better to combat crime, which is having an enormous upsurge at the moment.

“We understand the Morobe Governor has promised a good relief package to the police.

“Now the police headquarters must look at increasing the numbers of police and build up their equipment.

“Good business relies on a low crime rate, which is currently at an unacceptable high.”

McLay suggested:

•Morobe Governor Kelly Naru and Lae MP Loujaya Toni must look at political solutions to decrease the ethnic tensions and the crime and

•Local authorities must relax fees and license regulations, to make the process simple and effective, so that business can operate in a less-bureaucratic system.