PNG quest for progress

 By MIKE SMITH

Chief Executive Officer

ANZ Bank

FROM the remote copper mines high in the mountains of Papua New Guinea, the gleaming new skyscrapers of Asia’s increasingly rich cities seem nearly a world away. 

But PNG, with its significant natural endowments of minerals, energy and fertile land has a historic opportunity to harness itself to the region’s growth.

Demand from Asia is surging for the resources PNG already produces in large quantities, such as copper, gold and natural gas. 

Beyond that, Asia’s growing demand for food – and the potential for PNG to readily produce it – can assist in creating more balanced longer-term economic outcomes. 

In a major new report from ANZ on PNG’s economic future, the size of this opportunity has been quantified for the first time.  

Estimates show that by 2030 PNG could expand its exports of natural resources by four to six times or as much as US$36 billion (K87 billion)   per annum, if it can attract up to US$170 billion (K410.6 billion) in capital investment. 

This growth will have broader benefits through the creation of a skilled workforce, cross-sector infrastructure, and opportunities for local entrepreneurs to serve resource projects and their supporting communities.

With half of global growth in demand for food to come from Asia over the next 20 years, the soft commodities sector has a similar opportunity.  

The PNG government has already set ambitious targets for soft commodities, particularly for palm oil, coffee and cocoa that aim to see exports reach US$3.5 billion (K8.4 billion) by 2030, a five-fold increase from their 2010 level.

The scale of the opportunity provides a frame to re-imagine PNG’s future in the Asian Century and it highlights the need for government, business and the community to prioritise a new national development conversation.

The importance of understanding the size of the prize is that the challenges in realising this vision for PNG are many and can at times seem insurmountable.  

At a high level, PNG must use the success of the world-scale US$20 billion PNG-LNG project to build further investor confidence by converting its current resource pipeline into real projects.  

At the same time, an environment needs to be created that will ensure balanced economic development with the critical sectors of resources, infrastructure and agriculture all playing their role in a national response to the Asian opportunity.  

If there is a key message I see in this report, it’s that mobilising foreign capital will be critical to realising the opportunity that Asia’s growth is creating in PNG.  Capital goes where there is stability and certainty, and if PNG can consistently demonstrate this, the potential is enormous.  

I’m incredibly optimistic about PNG though because the Asian Century creates a unique opportunity to see the country to see itself in a very different way. 

It can’t erase the frustrations of the challenging post-Independence period but there is now a very clear reward for bold thinking and bold action.

PNG’s development trajectory is in its own hands.  

Now is the time to begin a long-term national conversation about clear and obvious issues.

 If PNG can create an attractive and sought-after place for investors to do business, its economy and civil society will flourish, to the benefit of the people of PNG.