K45 BILLION INVESTMENT TO EHP: TRUTH OR FICTION?
Eastern Highlands Provincial government has made headlines again this weekend with an announcement of US $13 billion (K45 billion) investment from a Korean company. People have taken it online with so much skepticism and concern on the origin, nature, and intention of this investment.
Therefore, I decided to do a preliminary digging into this MOA and bring to light some issues to enlighten your mind so discussions on this investment must be taken objectively and with a clear mind.
As impressive as this announcement may appear to an illiterate mind, there are too many unknowns, too many compliance issues, and too many variables that do not add up. Though the coveted MOA may be in its infancy stage, it has already attracted too many praises from the illiterate people of EHP, who are known to be easily lured and fooled by sweet music.
Signing MOA of projects with such proportions and often with insignificant public awareness isn’t new to PNG. PNG politicians have previously fallen for Asian scams. In 2014, the then Communication and Information Minister Jimmy Miringtoro has been scammed by Awal Telecommunication, a mobile phone company reported to become PNGs forth mobile phone provider. In that same year, former Lae MP Loujaya Kouza made a grand announcement to have Israeli Financiers bringing US$300 billion into Lae. And just recently, we heard of the US$100 billion scams on Morobe governor Ginson Soanu by a shelf company.
What intrigues me most is that the Soanu story is similar to what is happening in EHP right now. The company that scammed Soanu has a Philippines origin with an office in the USA and has registered a PNG branch with the IPA 6months before the signing of their MOA. The company that is now involved with EHP government has a Korean origin, with an office in the USA, and has registered its PNG branch with IPA 5 months ago before signing their MOA with Peter Numu.
Mckinley Asia-PNG Limited has 2 directors of Korean origin and a company secretary of Australian origin. However, according to IPA records, Director 1 Minho HWANG, Director 2 Jaekyeum YU, and Secretary Sooil PARK all reside at Section 146, Allotment 1-2, Parani Cres, Tokarara, NCD. Coincidence or by design? But wait, it gets really interesting here. This address is the same as the company’s address! For a company trying to invest US$13 billion in Goroka, it’s quite unusual to operate out of a residence! Only start-up companies operate out of residential areas.
If this investment is even real, then the people need to be educated well on the nature of Built, Own, Operate and Transfer (BOOT) agreements. Boot investments always work in the favor of the investors. You end up leasing your prime land to the investor, who decided how long they want to operate in the land, make returns and profits on investment, and leave you with a demeaned environment, worn our machinery and a project almost non-operational.
Most of the boot investments, like the previously anticipated Agricultural industrial park at Korefeigu operates on 99-year land lease terms. This effectively gives the investor full right of ownership, management, and decision making on the project. This gives them the right to also control the profits and other economic and social benefits. And since our government is incapable of counter-funding and developing the projects, we effectively have a minimum right to complain and argue for local participation. It will be up to the mercy of the firm today to use local labor, procure raw materials locally, and allow for local participation.
The MOA is very secretive and does not demonstrate compliance with legal, accounting, and standards requirements. This MOA has no binding agreement to the investor, thus giving them unlimited power to exploit our resources. Currently, there’s no transparency in the accounting records, as the provincial government has secretly and hastily signed the MOA. This is common arround the world when the investors dont have the actual capital and are trying to scam poor countries. They fool you into believing their scam, ask you to quickly sign MOAs that transfers the land use-rights and privileges to them, as well as asking you to provide your counter funding and guarantees. They take your money, sell the MOA to a third party who in this case is a genuine investor with money. They will then create a conglomerate to hold and manage investments so accounting frauds can be concealed.
For investment this size, we have never seen its sovereign risk proposals, security/bond agreements, concept/engineering designs been made public in the last couple of weeks. This is a very disproportionate amount of money compared with the country’s annual national budget and should raise eyebrows from all government departments. However, all of a sudden, we have an MOA and who knows what is captured in it. The Treasury and Bank of PNG are required by the Public Finance Act and Fiscal Responsibility Act to vet such investment. The state solicitor too will have a way in to provide legal interpretations to ensure the investment is in compliance with legal policies. Apparently, there is no official gazette from them. So, I wonder which department will regulate and hold the money unless it’s a scam and didn’t go to their attention.
We know agriculture is a struggling industry and it is hardly profitable. Investments of this magnitude are justifiable in mining or oil and gas sectors, but for agriculture, the investor will need more than just land-use rights for over 100 years to justify. What else is Peter Numu and his government selling to this investor? The revenue of the province for the next 100years? The provincial government needs to come clear on this.
The Eastern Highlands provincial government must ask the investors what they are really after before signing such dubious agreements just because they are playing a piece of sweet music to your ears. This is insanity and has an unmistakable flavor of cult mentality.
The people of EHP must not jump on the bandwagon on this MOA. It is merely and MOA, not a contract! It's an MOA just like 2018 US$100 billion of Morobe and US$300 billion of Lae open that only attracted the media attention and tricked people into praising the government but nothing has eventuated to this day. Like any other EHP citizen, I now wait to see this dream take shape and reserve my further comments for later.