PNG Property Fund in Australia

Editorial, Normal

The National, Thursday 6th September, 2012

IN the past 10 years, the government of Papua New Guinea passed more than K100 billion in its annual budgets.
Most of the money was spent on running the country, paying public servants, paying its debts and investing in public infrastructure programmes.
That is well and good, but one thing is certain that we have not put some of that money away for a rainy day.
Let us not cry over spilt milk. What is gone is gone.
I want to focus on the future.
That is why I want to ask the Papua New Guinea government of Prime Minister Peter O’Neill to consider seriously about investing some of our people’s wealth in viable, sustainable low risk foreign investments like investing in the vibrant property market in Australia.
The Malaysians, Singaporeans and the Chinese are investing in the property market in Australia. Why can’t we do something similar?
I would like the PNG government to establish a “PNG Property Fund” in Australia to the tune of A$1 billion.
On current trend let’s say, the government can expect a return of 6%-7%, which translates to around A$60-A$70 million per annum.
In kina terms, we can expect anywhere from K120 million-K180 million per annum from the above amount.
The rate of return is subject to the economy, exchange rates and currency movements.
Dividends will be paid to the PNG government annually for as long as the fund exists, the economic environment is relatively stable and the government allows the fund to be professionally managed without tampering with it from time to time as sometimes happens when there is a change of government in PNG.
This must be a long-term investment initiative.
We can have the “PNG Property Fund” as part of the PNG sovereign wealth fund (SWF) or it can be an independent PNG government fund.
I would like the “PNG Property Fund” to be an independent entity aimed directly at good solid direct investments, namely prime office buildings in Australian CBD locations.
Australia has a transparent business and property market, with laws that protect and promote foreign investments in addition to the stable rental growth, good tenancy covenants and an economy that is the envy of the world.
The PNG government must prioritise foreign investment initiatives such as this and take advantage of the boom time to put something away for the future.
The government can start this year by acquiring one or two key assets in Sydney, Brisbane and Perth.
We have several A Grade and prime properties that we can buy off market and manage or supervise on behalf of the PNG government.
Papua New Guineans want to forget about the period of decadence and years of hedonistic wastages and would like to move towards embracing a wise and prudent government with good investment initiatives.
Prime Minister Peter O’Neill’s maiden speech to parliament, in essence, encapsulates this noble concept.
The prime minister is serious about growing the future and I believe this concept is not only timely but compliments the government’s foreign investment outlook, which embraces diversification of investments.
We, at First National North Sydney, have come up with this concept and would like to represent the PNG government on this investment initiative as we have a wealth of experience in the property business in Sydney, Australia.