By SHEILA LASIBORI
A MAJOR challenge for Papua New Guinea in generating more business activities is to lower the cost of doing them, the Pacific Economic Survey said.
The survey, conducted by Australia’s International Development Agency (AusAID), stressed that if the cost was brought down, it would enhance private sector development and contribute to higher and sustained economic growth.
“What we find from PNG is that the economy is growing very strong … it has had some of the highest economic growth in the Pacific region,” Dr Mark McGillivray, AusAID’s chief economist said yesterday shortly after the launch of the survey in Port Moresby.
He said the cost reduction programme should focus on making contracts easier to enforce, on enhancing access on financing and on addressing the law and order issues, among others.
“What the Pacific Economic Survey looks at is performance in economic growth and development and in regulatory and other forms that enhance economic growth not only in Pacific but particularly in PNG.”
The Pacific Economic Survey 2009, Engaging with the World was launched by AusAID’s director general Peter Baxter, who heads AusAID’s world-wide operations.
Mr Baxter said strong growth would be driven by the anticipated PNG liquefied natural gas (LNG) project.
Dr McGillivray also supported recent proposal by State Enterprise Minister Arthur Somare to set up a sovereign wealth in Australia.
“It’s about setting up a sovereign wealth fund outside of PNG … one of the risks for that is that there will be very large amounts coming to the country as a result of the LNG project, but if all that money comes into the economy quite quickly or flows into economy over a short time, there is limited capacity of the economy to absorb those funds.
“So the idea is not to bring all the money from the fund … keep some of it out of the country … invest that money, make profit and bring the fund back into the country consistent with the country’s capacity to absorb that money.”