Scovell discusses economy

By DALE LUMA
THE country’s current economic outlook at present is a difficult one, PNG Manufacturers Council chief executive officer Chey Scovell says.
Responding to questions from The National, Scovell said the economic downturn was a result of public policy decisions of past and present.
He said foreign exchange supplies had tightened and the State’s creditors’ list was increasing.
There is also a decline in quality education and infrastructure with no reports of increased productivity in the labour market.
“While there is always a small number of firms that do well in recessions, depressions, crisis etc, such periods of economic decline or underperformance are named thus, because for most, it’s dire to bleak at best,” Scovel said.
“Albeit that many businesses are doing their best to be hopeful – this positive mindset is in contrast to performance.
“On a positive note, the Covid-19 continues to leave us relatively unscathed.
“Our economic downturn is the result of public policy decisions – past and present.
“The PNG LNG wasn’t used as a springboard to boost our productive capacity outside of the extractive, therefore, we’ve had no shock absorbers during this period in which output fell.
“While recent times saw significant increases in school enrolments, the quality of education and the quality of education infrastructure went backwards.
“There are no reports on increased productivity in our labour market.
“Foreign exchange supply is tightening, again, so we’ve had seven years of choking on our economic performance.
“Concurrent to all of these concerns has been big borrowing, big spending government – which is also at stark odds with its ability to pay its suppliers.
“The size of the States creditors’ list has spiralled and seems to have lost control.
“The outlook for surviving businesses is that should (when) we’re saved by the major projects getting underway, is to be ready for little relief of our staggeringly high tax regime.
“We’ll continue to be in a position in which we discourage investment, discourage productivity yet expect it to come in spades.”
He said it would take a “courageous Government” to make right our tax regime.
“The State has found itself in a position in which it has, itself, taxed into existence and incentivised the massive non-compliance now prevalent throughout PNG,” Scovel said.
“We keep saying we’re open for business, but the only investment that comes seeks protections and exemptions.
“A positive outlook will need to be earned.
“It is yet to be seen if the Marape-Basil government will be the first to take the much-needed steps or pass the buck to a post 2022 Parliament.
“It is increasingly unlikely to see major works underway between now and next April.
“The only way we see confidence returning will be by courageous leadership.
“Yes we moved beyond that, but the recession we’ve largely been in since 2014 has seen no recovery.
“Like I said, there are always a few that do well in a crisis, but the facts are that employment is down, almost are sectors are down, commercial real estate is down and revenues are down.
“The only sector that seems to have been stable is the public service.
“We have not seen much of a contraction, but they appear to be unable to fund their operations.
“Whereas a business cuts costs and trades endeavours to trade their way out, our State continues to carry a huge headcount and is accruing its debts – debts that the tax payers will pay the States’ way out of for a long, long time.”