News Item

​Challenging times for PNG but light at end of tunnel

Imports & Exports 28 Apr 2017

The last few years have been challenging ones for Papua New Guinea, and the impact of the slowing economic growth has impacted New Zealand business and trade.

Chairman of the NZPNG Business Council Tamati Norman says the export of NZ products has fallen in 2015/16.

“The value of the exports from New Zealand to Papua New Guinea from New Zealand Trade and Enterprise statistics is $187 Million down from $200 million,” Tamati says.

However, the overall trade including consultants and infrastructure, according to sector information, is closer to $500 million per annum – this showing while there is a downturn, there is still a significant opportunity in PNG.

“This opportunity needs to be measured with the forex issues that have been occurring and the upcoming elections in PNG,” Tamati adds.

There has been some negative press about PNG business, most of which has been about payment issues, the Chairman says.

“This exposure has affected us negatively in political and business circles, unfortunately.

“As a business council, we would like to tell some of the great stories New Zealand business has engaged in to support the growth and sustainability of PNG throughout the last ten years in areas such as infrastructure, power generation, and food security.”

Business has been quiet in PNG in the first quarter of 2017, and there is very little investment from the private and government sector, with most businesses battening down the hatches to ensure long-term sustainability with an eye to continued economic growth in 2019 to 2020, Tamati explains.

In a similar pattern to 2008-2012 period, investment in the mining and gas sectors is expected to grow.

There has also been a decrease of expats operating in PNG, which is primarily due to the forex issue, Tamati says.

He anticipates there to be a "bump" in the cash economy in the build-up to the general election (which starts June 24, 2017), but not much is projected to flow through to "imported" goods and services.

“While the forex situation fluctuates, the general trend is still one of extremely restricted availability.”

Meanwhile, the banking sector in PNG has indicated it believes the kina is overvalued by 25-30 percent.

Firms looking to bring in forex for investment are waiting for the kina to devalue and it is the opinion of business observers this is unlikely to happen until after the election or even not until after APEC (Asia-Pacific Economic Cooperation) Meeting in 2018, Tamati adds.

The next 18-24 months is going to be very challenging in PNG, but the Chair is still positive there will be growth and opportunity, despite the lull ahead in the market.

“There are some opportunities in new areas for New Zealand businesses in the SME -agriculture, tourism, water, sustainable power generation and food security.

“With APEC occurring in 2018 there will be some opportunities for New Zealand businesses – and as New Zealand businesses, we encourage you to maintain a presence in the PNG market whether that is with trade missions or individual business travel to ensure sustainability of relationships and business opportunities.”

The NZ PNG Business Council had planned a trade mission to PNG in May, however, it has been postponed (dates to be confirmed).

For those interested in investing in PNG, the Business Council of Papua New Guinea and the Australia Papua New Guinea Business Council are hosting the 33rd Australia Papua New Guinea Business Forum, at Stanley International Hotel and Suites, Sir John Guise Drive, Waigani, Port Moresby from May 14 to 16.

The Forum theme is ‘Navigating the Cycle: Creating Opportunities in Challenging Times’.

The theme aims to capture the important message PNG has unprecedented opportunity to manage its way through the cycle and position itself for future growth, leveraging advantages for the prosperity to benefit its entire people.

The Forum is well established as the major annual bilateral business meeting between Australia and PNG, and builds on the work both Councils have done over more than three decades in growing the bilateral business relationship.

The event includes plenty of exciting speakers, workshops and entertainment and networking opportunities, and attendance is a must for any business operating in PNG or looking to do so.

Visit APNGBC to register for the conference.