THE Government is more focused on the extractive industries namely mining, petroleum, forestry and fishery.
Mining and petroleum being the critical focus are non-renewable resources.
Mining provides more than 25 per cent of the budget.
If there is a fall in the metal and oil prices, the country will suffer significantly.
Thus, I firmly believe that there will be supplementary budget in 2019. Looking at our two large mines: Ok Tedi Mine will close within seven years, possibly 2022 but if lucky 2025; Porgera may close within eight years.
Mining is fast and provides quick big money but is not sustainable. While having the mines operating, we need to fix up our other industries, especially agriculture and manufacturing, or rather downstream processing industries.
If we don’t, then, in 10 years’ time our leaders will have failed our country dreadfully.
Any new mines or oil/gas project that pops up should be an added benefit – not a focus to divert us from agriculture and manufacturing industries. We know that we sell to and buy from other countries in the international market.
We must export (sell) so that we have foreign currency to import (buy). We spend kina to buy but our trading partner use their own currency, so that is where foreign exchange comes into the equation.
We must have a balance or export more so that we have enough foreign currency.
If we cannot export as much as or more than our import, the foreign reserve will take a dive.
This will provoke us to borrow so that we can have enough foreign money available to use.
This may force us to continue borrowing or get foreign loans to keep trading. This will also affect our economy significantly.
Personal tax (27.4 per cent), company tax (23.7 per cent) and GST (20.3 per cent) contributed approximately 71.4 per cent to the country’s budget followed by excise duties (8.6 per cent) in the PNG 2019 budget. (https://www2.deloitte.com/pg/en/pages/financial-services/articles/papua-new-guinea-budget-2019.html).
Mining and petroleum contributed about 4 per cent directly but a significant amount of tax is through indirect means through personal tax, company tax, import and export excise, import and export duties and others.
Thus, more than 25 per cent of the country’s budget may have come from the mining and petroleum sectors.
If two of the mines are closed within the next 10 years, we will be significantly affected.
We need to be prepared.
We need to invest in agriculture and downstream processing industries.
Personal tax raise more than 25 per cent of the budget but people need to work somewhere to pay those tax.
Therefore, Government must create conditions and environment conducive for investment and provide opportunities for employment.
There are more opportunities in the agriculture and manufacturing industries.
The Government priority sectors include health and education, law and order, nation building infrastructure, support for the development of SMEs, advancing financial inclusion through financial literacy programs and adopting digital services and spreading mobile banking capabilities (https://www2.deloitte.com/pg/en/pages/financial-services/articles/ papua-new-guinea-budget-2019.html).
I do not see any specific mention of agriculture or manufacturing industries.
Apparently, we have got more than a mile to go, if we don’t start now.
Though we can be optimistic, the path that our past and present governments were/are will not be tenable for our country.
We must have appropriate strategies and switch our focus to agriculture and manufacturing industries.