Downstream processing vital


All agricultural and natural resources must be processed to the final products here on our soil.
Our fish, timber, coffee, oil palm, copra, rubber, vanilla, cocoa, oil, gas, LNG, copper and gold must undergo downstream processing in PNG in order to add value.
PNG salutes Prime Minister James Marape for his visionary move to build a gold factory or mint in PNG so that gold, as a natural and raw resource, can undergo downstream processing in PNG in order to refine and mint it to produce the final finished product and by-product to meet the demands of the supply chain, both at domestic and international.
Likewise, the same can be said for the downstream processing of petroleum products and by-products of hydrocarbon resources, whereupon the Government has created the Konebada Petroleum Park Authority (KPPA) to pursue this objective of adding value to oil and gas commodities.
This move to undergo downstream processing of all agricultural and natural resources will add value to the economy through creation of employment opportunities and spin-off business activities in PNG.
In terms of employment, every factory or mint or plant will employ about 200-plus staff and with more factories for more commodities opening up and coming on stream, more citizens will get regular paid jobs and increase cash flow and/or cash circulation.
The demand for workforce will come from both the factories and the spin-off business activities and associated services sourced and outsourced. There will be increases in the small to medium business ventures as the demands for associated services and utilities like electricity, water and communication increases correspondingly, including security of people and their properties.
This will result in the creation of wealth as the economy will transform from contraction to growth by way of downstream processing.
This will create the need for an enabling policy and legal framework to cater for these exciting aspects of economic reforms.
Two fiscal policy shifts which become imminent to drive these fiscal reforms include:
l THAT, where possible, all agricultural and natural resources in the country shall undergo downstream processing to produce its final finished products and by-products, and only finished or manufactured products would be exported to both domestic and overseas markets; and,
l THAT for every agricultural project and natural resource project undertaken and developed onshore with foreign investors, the Government is to retain 51 per cent and above for its citizens apart from the stake or shares taken up by landowners affected by the resource project development. This includes maximisation of benefits for PNG citizens, particularly in relation to local content, from spin-off businesses and packages such as development grants, business grants, MoU/MoA grants, etc.
In a nutshell, the value of this economic policy shifts and/or reforms shall result in creation of employment opportunities, training and transfer of technical and technological know-how, creation of spin-off businesses and associated activities thus creating a more robust cash flow, whereupon at the end of the chain, our subsistence gardeners shall be able to sell their bilums of kaukau at the local market.
In order to cater for these economic and fiscal policy reforms, the Marape administration must act quickly and swiftly to review and promulgate existing fiscal regime mechanisms; so as to put into perspective every project agreement, policy and regulatory framework to align with the objectives of the reforms to enhance downstream processing of raw resources.
Whilst it may sound good for the rest of the citizens, as for the PM and his Government, it involves an enormous amount of tasks and risks, especially, when the current term of Parliament is nearing its end with the next term’s elections just around the bend.
These issues are sticky but the Marape administration has proven to the nation that it can successfully manage these reforms like what has already been done for Porgera mine pertaining to taking up increased stake for PNG and its citizens.
Marape is like no other when it comes to taking risks and making sacrifices for his beloved country and its citizens.
Amongst his peers, he alone can apply the brakes on unscrupulous exploitation and export of agricultural and natural resources that have been going on unabated and unmonitored for decades by foreign companies under the pretext of doing business purportedly as investors and business partners.
Under the existing arrangements, our raw resources have been leaving our shores for decades to feed the factories and mints or plants of other countries thus providing employment and spin-off businesses for their citizens.
This is a sad situation as it implies a great loss to PNG against a big gain for those countries.
Throughout years, this has been the order of the day for all the raw resources shipped out.
But for gold, whilst being the highly priced and the oldest commodity in PNG, it is yet to have a gold mint or factory of its own for downstream processing.
Most of our gold has been shipped out to Australia and has developed Australia for well over a century but it has been a one way traffic in favour of Australia.
For obvious reasons, Australia will not build a plant in PNG to refine and mint gold products and by-products.
The company which is proposing to build a mint plant to process gold and its by-products in PNG is most welcome because the gold factory has become overdue for a long time.
Marape and his Government is making sacrifices to ensure this gold mint comes to fruition.
This is a long term investment and PNG citizens are right behind the Marape administration to see this gold mint proposal comes to reality.
It’s about time the Government puts a stop to feeding outside factories, mints and plants with agricultural and natural resources and instead have factories and plants built here in order to undertake downstream processing.
It’s about time PNG exports finished products and by-products of our resources to overseas markets and makes a U-turn to reverse the fiscal trend of the country.
PNG is at crossroads now more than ever before and calls for politicians to take a united and bipartisan approach to make sacrifices to change the direction of our development trend, especially to be critical of the way we have been dragged along doing business in the past with foreigners.
We need to deviate from prevailing unbalanced trade relations before us to forge a smart and growth oriented fiscal policy reforms to complement change to “take back PNG”.
Marape has started well in the very short period of time to put his foot down just hard enough to negotiate equitable deals on a win-win participatory arrangements in project developments, such as what had already been done for the Porgera mine.
His name will be written and rewritten in PNG’s history books as being the first PM to change the fiscal landscape of Papua New Guinea in the management of our agricultural and natural resources sector.
As a matter of urgency, gold has to be refined and minted in PNG and the company which is here to invest in that mint or plant business is most welcome to operate unilaterally or as a partner with PNG companies.
Despite exploiting our precious gold for more than a century, the Australians oppose downstream processing, just as they thought rice cannot grow in PNG.
Marape and like-minded politicians in the Pangu-led Government, in the likes of Governors (Gary) Juffa and Dr Lino (Tom) have worked hard behind the scenes sacrificing to tilt the balance of the equilibrium around in PNG’s favour.
It is impressive to see Marape actually walking his talk to “take back PNG” in terms of downstream processing of raw resources.
Please take back PNG in other areas as well, such as in advisory roles in the bureaucracy.

Sekinolo Sawala