Showing posts with the label Economy

Real estate development is the push behind Port Moresby’s growth - Not Government

Descending into Jackson’s on a hot shimmering Port Moresby afternoon I see the once peculiar sun tanned brown savannah is now replaced by sprawling suburbs after suburbs of modern design of compelling style. The mirage or an optical illusion created by the hot surface below made it look like undulating waves of melting steel and glass cascading into an unforgiving white-hot furnace of the fast approaching tarmac. On the hills to the left, you see excavators carving terraces and flattening land for trenches for foundations, utility conduits, and drainage piping. And swarming with carpenters, electricians and plumbers and all manners of tradesmen eager to pitch in to permanently change the once periphery of National Capital District. This is the growth of a remarkable landmark that is now fast defining the Port Moresby landscape.

And who is behind all these concrete pouring and sounds of rhythmic hammers and whining power saws? Is it by some charity group or some long-lost…



Following are three key questions which potential investors should be seeking answers for at the PNG Investment Conference being held in Sydney on 7 and 8 September.

First, what are my peers doing?

While a good business investor will be open to finding a niche market with great potential, it is relevant to know what their investment peers are doing.

There was a rather disingenuous Bloomberg article last week titled “Australia Would Rather Invest in Papua New Guinea Than in China” – see here. A more comprehensive set of figures, based on total Australian investment in these countries is shown in the graph below.

[Source: Australian Bureau of Statistics Catalogue 5320 Table 5 issued 10 May 2017.]
Three key elements.  First, one should consider more than just direct investment.  This dominates the PNG picture but is a much, much smaller element than in China where investment options are much more diversified. Second, investments in Hong Kong are also relevant to the compa…


by PAUL FLANAGAN PNG’s new Treasurer and DPM, Charles Abel, has released the promised 100 Day Economic Stimulus Plan (see here). Overall, there are some positives in the plan. But politics is already circumscribing necessary actions to get PNG back onto the right economic path. Starting with the positives, even having a 25 point plan is a useful statement that the new government recognises PNG’s economic challenges. The five elements of the plan are appropriate. There is a focus on raising revenues as well as fiscal discipline. Population policy is given priority.  The plan announces the suspension and review of some scary micro-economic policies in areas such as land, agriculture, bio-security and mining. Some politically brave action is foreshadowed to at least temporarily reduce politicians’ discretionary electorate spending (PSIPs and DSIPs). There seems a commitment to on-going sensible strategic budgetary and planning processes. There is no mention of the absurd “gold bullion ba…


by DR JAMES NAIPAO, National Doctors Association President

The '100 DAYS RECOVERY PLAN' announced by the O'Neill-Abel Government in the 10th Parliament must not include increases in the INCOME TAX. This is an absolute NO. Income Tax in PNG is paid by a small working population in the Public and Private Sector, respectively. The majority of the 8-10 million PNGeans do not pay the income tax. Why crucifying the minority.

Any VAT/GST increases will also further burdenise the workers and eat into their purse. This too is an ABSOLUTE NO if the O'Neill-Abel Government plans on hiking it.

These two economic recovery plans if the current government is planning on taking them on board should be shelved because there will be an 'all out fall out with reproaching consequences'.

The continuous blame on the global down turn of the economy may be the reason but to excessively borrow with the knowledge of the global effect is unfounded. There should be a shift on the so calle…

PNG’s Challenges and Opportunities – 100 Day Plan

by PAUL FLANAGAN PNG’s new government is proposing a 100 day plan. What should this consider? A good plan begins by fully understanding the challenges and opportunities facing its people. This understanding is improved by seeing how one is going relative to neighbours (comparative public policy analysis).
The list below from the ADB highlights that PNG still faces massive development challenges. It is saddening to see PNG’s poor rankings. PNG’s politicians have been failing their people.
On opportunities, PNG leads the world in key areas such as its cultural richness (1st), the extent of its tropical forests (3rd for the entire island), and its extraordinary biodiversity (PNG is one of 17 megadiverse countries in the world).

In terms of mineral and petroleum wealth, it actually does fairly poorly – even in LNG its ranks 47th and petroleum 62nd (details below).
In going forward, PNG needs to change its self-image of “mountains of gold in seas of oil”. This myth (at least in world terms…

Sri Lanka, the first Asian country to become the victim of China’s debt trap - Warning signs for PNG

Editor’s note: All Pacific nations need to read this story and heed the warning before it is too late. One of you could be next. SRI Lanka has been crippled under a severe debt problem.

In the last decade, it has invested billions of dollars in building huge infrastructure and most of the projects haven’t yet produced any adequate returns. Sri Lankan Government is now struggling to make payments and hence facing a severe debt crunch.

Sri Lanka’s total debt stands at $64bn. About a whopping 95 per cent of all government revenues go towards debt repayment. The debt to China is eight billion dollars. Many local citizens feel the country is being sold to the Chinese.

The problem is that money borrowed has been seemingly squandered on infrastructure that shows no sign of turning a profit, which is even more damaging for the Sri Lankan economy.
Sri Lanka availed easy loans from China in order to build infrastructure across the nation. China offers easy loans t…


by PAUL FLANAGAN Using PNG’s updated GDP numbers, there are new insights into PNG’s economic history. In particular, they show how bad the last four years have been: PNG’s budget deficits over the last four years are the worst in PNG’s history.From 2012 to 2016, deficits have totaled an extraordinary 23.8% of GDPThis is nearly three times higher than the next worst five-year period for spiraling deficits (8.7% from 1992 to 1996 with five-year periods based on parliamentary terms).

These daunting deficit figures are the driver behind the explosion in public debt from 17.3% of GDP in 2011 to 35.5% in 2016.In the 1992 to 1996 period, debt started at much higher levels (28% of GDP) but still didn’t reach 2016 levels (34.4% in 1996 vs the current 35.5% level using 2016 FBO numbers and IMF figures on 2016 GDP).There are two drivers for these historically high budget deficits.First, the massive increase in expenditure in 2012 was the largest in PNG’s history – and there was another substantial…



PNG politicians are failing their people. Their poor policies have led to dramatic declines in economic well-being – an extraordinary fall of over one-third since 1980.
This is revealed by applying new numbers from the PNG National Statistics Office (NSO) and International Monetary Fund to PNG’s economic history.
From 2012 to 2017, under the O’Neill government, average economic well-being for the people of PNG has declined by 2.8%.
This reverses positive economic gains of 8.4% from 2000 to 2012.
PNG is returning to the poor economic performance it experienced during the 1980s and especially the 1990s – lost decades for development. This is a shame.
From 1980 to 2017, economic well-being in PNG per citizen declined by an extraordinary 40.4%.
This is a development failure.
In contrast, the resource sector has grown strongly.  It is now 48.1% larger per capita than in 1980. The resource sector boomed by 62% during the 1990s when the non-resource se…


Prime Minister Peter O’Neill’s boast that he will increase national debt will burden all Papua New Guineans by committing future income to high interest payments, reducing the amount available for health, education and transport.
“A primary cause of the woes Papua New Guinea is currently experiencing is Mr O’Neill’s gross mismanagement of the economy and public finances, including imprudent borrowing,” Sir Mekere said. “His stated intention to increase borrowing if he is re-elected will make matters much, much worse, and will prolong by many years any attempt to rescue the nation. “It is an example of his arrogant and uncaring attitude.” Sir Mekere pointed out that under the Fiscal Responsibility Act, the K22 billion public debt already incurred by Mr O’Neill has surpassed the legal limit by more than 5 percent above the permitted 30 percent of GDP. His plan to increase debt even further is simply irresponsible.  It should be prevented and it should be investigated by the Ombudsma…