‘No deal’ affecting confidence

The National Business

By DALE LUMA
THE failure by the State and the developers of the P’nyang gas project to reach an agreement on the multi-million kina project is affecting business confidence, according to Kina Bank.
The bank’s wealth management division told The National in a statement, in response to questions sent to the bank, that the protracted negotiations had led to a deferral of capital expenditure and expansion plans for some businesses.
“Kina Bank expects that should the project not proceed, which at this point is the case, that the economy will experience ongoing low levels of growth.
“We are also concerned about the knock-on impact to investor confidence, in particular international investor confidence in the country at a time where the fiscal deficit is at historical highs and requires overseas investor support.
“The continued erosion of confidence will reflect an unwinding of the expectation built into the commencement of these projects.
“The short term investment into the economy which some have estimated in the next 18 months to be up to US$1 billion (K3.4bil) will not eventuate.
“With respect to the fiscal deficit, should international investors decide that other global opportunities are more appealing from a return for risk perspective, then the Government may have to seek domestic investment to a greater degree than it was probably hoping to do.
“That would have the impact of absorbing domestic liquidity further acting as a drag on availability of funds for the private sector to invest and create employment from.
“We believe the Government is aware of these risks and we also take some comfort from comments from Total that they believe the negotiating parties in P”nyang should continue to work to a positive resolution.”

5 comments

  • Kina Bank’s so called expert advisors need to keep their views to themselves and not coming out like this with their version on their ability to foresee PNG’s economy difficulties. Damn right our Government through the SNT had made their positions known on regarding PNG’s take in the whole of the project. Downplaying PNG’s capability in dealing with such critical issues only shows lack of respect from our Government’s perspective. what about PNG’s prosperity and growth in the medium and long term? Please refrain from pushing agenda that serve foreign entities’ interest. They are here only to make money out of our resources with aims at increasing their wealth while PNG looses all its non-renewable resources without getting maximum benefits.
    We may loose now but in the long term this country will benefit therefore some hard decisions and strong stance had to be maintained and this just what our government did.

  • Some hard decision had to be made and this is one such to be firm on. No pain, No gain. Business confidence will sure return as we stroll on.

  • Business confidence is a fickle thing…changes with the weather…so we would be really foolish to be always placing all our bets on such a fragile animal. The tough decisions made are welcome, we need to set ourselves up now for the future…so much opportunities have been lost in the past.

  • If Foreign Investors really need PNG’s non-renewable resources, then they will have to go through SNT first. No more undermining PNG’s ability to raise the business tender a set of new horizon. Kina Bank should be active with running its own agendas and leave this one to SNT alone.

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