Temu: Downturn will affect projects

 THE global downturn in the resource industry will have a greater impact on capital spending, exploration expenditure and financing for many existing and planned projects in the country.

Outgoing PNG Chamber of Mines and Petroleum president Dr Ila Temu said this yesterday following the annual general meeting (AGM) last week.

Temu has served three successive terms as president.

He said the significant variation in gold prices and lower mineral commodity prices will impact the 2013 national government budget “and put an upward pressure on the budget deficit”.

“The current tax review must take these global developments into account. 

“This is not the right time to increase tax,” he said.

“It is a good time to review expenditure and to cut unnecessary spending. 

“The big question for me is: How will PNG fare in this new environment?”

He told the AGM it was true that PNG had attracted some global resource industry players in recent years but all companies were facing high operating costs at a time when revenues were falling.

“PNG’s comparative advantage in terms of its favourable geology tends to diminish during an economic downturn and the government may need to assist projects in the pipeline to overcome these obstacles,” Temu said.

Like other nations, PNG is also faced with law and order issues, landowner protests, inadequate infrastructure, causing delays and bureaucratic red tape.

President Gerea Aopi noted that many issues and challenges facing the resource sector had not changed.

He said the debate about resource ownership was likely to continue as was the question of corporate and other taxes paid by the resource sector.

“The chamber believed that if the country was to continue to make significant progress in terms of social and economic development and improved service delivery much more needed to be done to improve public service efficiency and the reform and restructure of state owned enterprises,” Aopi said.