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Grappling with new wealth There is good reason to feel some confidence about the future. There has been underlying economic growth for five consecutive years, the longest such period since independence.But there is really no room, or reason, for complacency because many people are also worse off than they have ever been. The downward slide of the 1990s will take some two decades to fully reverse. Growth tends to be a slow and steady process and a single negative year can wipe out gains made over two or three years. The economic story in PNG has been very patchy with growth spurts in earlier years mostly due to investments in big resource projects, which tend to go through cyclical trends. The difference today is that the resources boom could be sustained for much longer and foreign investors have had increased confidence because of fiscal changes made by the government in 2003. The PNG story is a very different one to the fast growing Asian economies. Countries such as Malaysia, Singapore and even Indonesia, at least until the 1997 economic crisis, have enjoyed consistent growth for more than three decades. Over these extended periods, there may have been three or four recessions at most, none of them extending for more than a year. Prior to the latest period PNG faced four successive years of recession, some people called it a depression. The situation in PNG is complicated by a whole host of factors from poor leadership, bureaucratic red tape and corruption to extremely low levels of productivity which is partly due to a generally poor work ethic. The latter has much to do with the transition from a village-based economy to a modern-style economy. Despite this situation there are islands of great promise. Our sizeable oil producing areas, for example, have workers that are competitive on a world scale and Oil Search uses every opportunity it gets to proclaim that its safety record at remote oilfields is better than its peer groups in Australia and elsewhere. Lihir Gold is in the same boat. On the agricultural front, New Britain Palm Oil has a model operation that is fully integrated from extensive research and planting of oil palms to their harvesting, right through to the export of refined palm oil. There is no reason to doubt that if the political will was present, the country would have a much better run bureaucracy instead of having to make incessant excuses about why it takes so long to organise passports or work permits or visas or why SoEs are in a perpetual state of flux. In this day and age, there could not be too many countries in the world where workers would go on strike because they do not want an expatriate chief executive, but that is the reality here today. Under another Government, this may not have been an issue at all because PNG Power could well have been fully privatised and indeed foreign owned. But one just has to accept that this is the way in PNG. The country is generally taking two steps forward and then one step back. In fact, in much of the 1990s, it was more akin to taking one step forward and three steps backwards every year. The unprecedented resources boom that the country is now enjoying is providing an opportunity for rapid advances to be made. Unfortunately, the problems of the past will continue to haunt us and much work has to be done to put these concerns to rest. The biggest issue of the day is probably the question of the mobile phone competition and the entry of two private sector companies, Digicel and GreenCom. Their situation remains clouded by uncertainty, as do the plans and outlook for Telikom PNG. This has to be resolved as soon as possible because the business sector, our universities and colleges and the country as a whole is in dire need of better and more competitive telephone and internet services. The power situation in Port Moresby and elsewhere is as bad as it has ever been even though there is plenty potential for various forms of electricity generation though there is great need for long-term planning since large blocks of investment will be involved. In other areas, government red tape and inefficiency remains a serious concern. It takes long enough for many companies to get their work permits approved but it may then take six months or much more for a visa to be issued. The International Monetary Fund for some years has been complaining that PNG statistics could be better and more up to date but little appears to have happened on this score. Without good information, it is usually difficult to attract investors and it is also hard to make good policy decisions. Things would certainly have been a lot better for most people if not for the lost 1990s and it is certainly no use crying over spilt milk. But at the same time, new realities have to be faced. For some years the National Government has been attempting to work through provincial governments and now the focus is shifting to the districts. But after what has happened in the 1990s, there is no capacity at these levels in the sense of qualified manpower to implement and manage projects. And for this reason there are many people, including the Ombudsman Commission, which is questioning the ability of the nation’s 89 districts to use the large amounts of funding that is being allotted to them. It appears that in many cases, serious thought has not even been given to how these funds should be spent. Imagine how problematic that is going to be when those with firm plans to get funds such as the universities and hospitals are having difficulty accessing those funds. Are we going to be inculcating a climate for even greater corruption and a period when lots of money will be stuck in various trust accounts for long periods of time? There must be better ways to move forward.
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