Australia buys Digicel, PNG’s mobile monopoly

by PNG Business News - October 26, 2021

Photo credit: Devpolicy

by Stephen Howes

Yesterday, Telstra announced that it was buying Digicel Pacific. Telstra itself is only paying $270 million, and the Australian government $1.33 billion. Yet, Telstra is obtaining 100% ownership. The deal is certainly an attractive one for Telstra. But does it make sense for Australia, and for the Pacific?

Digicel has had a transformational impact in the Pacific, but now has too much market power. As the Telstra release explains, it holds the dominant position in all the Pacific countries in which it operates, except for Fiji, where it is in second place.

In Papua New Guinea, which I know best, and which is by far Digicel's biggest market, the company  has a 92% share of the mobile phone market. That makes Digicel effectively a monopoly in PNG. And that is why it is so profitable: like any monopolist, it exploits its market power.

Australian and PNG researchers have been tracking mobile internet prices in PNG since Australia gifted it a new underwater cable . Their conclusion is that since the completion of that cable in December 2019 to today there has been no decrease in mobile internet prices. The reason is simple: the lack of retail competition.

Michelle Nayahamui Rooney, Martin Davies and I last year exposed Digicel PNG’s predatory loan scheme. Digicel lends phone credit to its customers. They pay it back when they next top up. Our estimate is that Digicel made a 17% return from such loans every week, which is equivalent to an unbelievable 351200% a year.

Is this really the way in which Australia want to engages in the Pacific – owning an enterprise that keeps prices high for consumers, and rips them off when they are desperate to make a call?

Any monopolist is necessarily engaged in a battle between the consumer and their profits. At some point, Telstra will end up going toe-to-toe with the PNG telecom regulator, NICTA, as Digicel has done several times. It’s going to be awkward for both Telstra and the Australian government.

Many will welcome the investment as a sign of Australian commitment to the Pacific. However, if we want to invest in the telecom sector in the Pacific, we should be backing alternatives to Digicel, to push prices down and improve services, not buying out the dominant player. Amalgamated Telecom Holdings based in Fiji is the Pacific’s second biggest telecom provider. It is currently planning to enter the PNG mobile market with support from the Asian Development Bank. This is the sort of investment we should be financing.

That Australia has bought Digicel shows the extent to which the Pacific is now viewed through a China lens. That’s unfortunate. China is a massive economic power. Its companies will have increasing stakes in economies around the world. That is a fact we have to accept.

The Australian government also needs to decide if its only goal is to counter China or if it is still seeks to promote Pacific development. When I was AusAID's Chief Economist, Digicel was the new kid on the block in the Pacific, and it was successfully challenging state-owned telcos that until then had been dominant. In 2006, in Foreign Minister Alexander Downer's flagship Pacific 2020 report, we wrote glowingly about the competition that various Pacific countries had recently started allowing in the mobile phone sector. Our analysis was right then, and remains relevant today. Yet here we are, in 2021, doing the opposite: rather than supporting greater competition in the telecom sector, subsidising the purchase of the incumbent monopolist.

The decision to buy Digicel Pacific should be reversed. If it is too late for that, the Australian government should at least – in return for all its cheap and risk-reducing finance – oblige Telstra to operate Digicel for the benefit of the people of the Pacific rather than solely for its shareholders through an agreement that makes it clear that the Australian company is not only expected to return the cheap loan it has been given, but also reduce prices, and end rip-offs.

 

This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.



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PNG Business News - October 18, 2021

Human cost of the Pacific’s COVID-19 recession

Women selling coconut and bottle gourd in Intoap, PNG (P. Mathur/Bioversity International/Flickr) The socio-economic impacts of COVID-19 are devastating communities in the Pacific and Timor-Leste as much as the virus itself, and sometimes to an even greater extent. World Vision surveyed 752 households (with an average of six people per household) in Papua New Guinea, Solomon Islands, Timor-Leste and Vanuatu in late 2020 to better understand the secondary impacts of the pandemic at the community level. The sample size was relatively small (because the survey was done in an emergency context under government restrictions), but still the results provide a valuable insight into the deep and sometimes unexpected knock-on effects of COVID-19 in the region. Unsurprisingly, loss of livelihoods was the number one concern for the households surveyed. Almost 60% of respondents had either lost their job, lost income, or resorted to alternative sources of income due to the economic impacts of the pandemic. The top five reasons cited by households for this loss of income were reduced demand for goods/services (29%), closed markets (20%), lack of access to livelihood inputs such as seeds and materials (18%), movement restrictions (15%), and transport limitations (10%). These disruptions are crippling the same industries that are the traditional drivers of Pacific economies – tourism, agriculture, small- and medium-sized business and money sent home by seasonal workers. Street vendors and farmers have been the hardest hit, with 56% of vendors and 55% of agriculture and livestock workers saying their work was fully or severely affected by the pandemic in the two weeks before the survey. Extent of COVID-19 impacts on livelihoods in the past fortnight (2020) Source: World Vision Report Pacific Aftershocks This data is consistent with concerns raised by the Lowy Institute that the Pacific has been particularly battered by the economic fallout of COVID-19 and that it could face a potential ‘lost decade’ of economic progress as a result. On current projections, average income per person in the Pacific will not recover to 2019 levels until 2028 unless a multi-year recovery package is urgently adopted. Loss of livelihoods isn’t just affecting consumer activity; it is having significant ripple effects across Pacific societies. The ‘Pacific Aftershocks’ survey revealed the cruel choices families are forced to make as their incomes collapse, with households resorting to selling assets and even skipping meals to cope: Only half of households surveyed were able to fully meet their food expenses, with one in four (24%) skipping meals or eating cheaper meals since COVID-19 More than half (51.7%) of households have drawn down on savings to cope with loss of income 5% of households had sold productive assets such as livestock or equipment 14% of households have sent their children to work to help make up for lost income 14% have engaged family members in begging or high-risk jobs With tourism expected to be one of the last sectors to recover from the pandemic, there is a real risk that the Pacific could face its own version of ‘long COVID’ – a protracted, slow climb back to economic normality over the next decade, during which the socio-economic impacts above could become a type of ‘new normal.’ But this doesn’t have to be the case. In the short-term (during the next six months), work is needed to urgently scale up social protection measures (such as cash and voucher assistance and, where this is not possible, food assistance) to help poor families with disrupted incomes meet their immediate needs. In many contexts across the Pacific region, assistance in the form of cash and vouchers minimises the distortion to markets while ensuring families do not resort to negative coping mechanisms such as eating less or forcing their children to work. To build back better in the medium and longer-term (the next one to five years), a suite of initiatives should be deployed to stimulate the Pacific economy and rebuild livelihoods. This could include improving access to finance for small businesses, strengthening market systems so they work better for the poor, investing in women’s economic empowerment, and restoring environments through low-cost regenerative agriculture. As a mechanism to coordinate and drive this work, it is recommended all national and donor governments in the Pacific region, including Australia, work together to develop an Economic Recovery Compact – a roadmap to rebuild the regional economy in a way that leaves no one behind. By rebuilding livelihoods, starting at the bottom of the economic pyramid, donor and national governments can increase productive capacity, broaden the consumer base, and build resilience across the market system, all while supporting those who need it most. Just as regional governments worked together to establish the Pacific Humanitarian Pathway on COVID-19, the region should again coalesce around the longer-term recovery effort – because a regional crisis like this requires a regional response. For more information, see World Vision’s report Pacific Aftershocks: Unmasking the impact of COVID-19 on lives and livelihoods in the Pacific and Timor-Leste.   This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Jonathon Gurry is World Vision Australia’s senior policy advisor, leading policy development on livelihoods, food security and climate change. He is a former lawyer with many years of international experience in the aid and development sector. Dane Moores is the Policy Manager at World Vision Australia where he oversees policy analysis and influencing on child rights, livelihoods and food security, conflict and fragility, and First Nations policy.

Commentary

PNG Business News - October 18, 2021

Transformation of a Port Moresby settlement

Photo: Joyce Bay settlement (Desmond Narongou) by Desmond Narongou Joyce Bay settlement, formerly known as Horse Camp, is a notorious settlement in Port Moresby, Papua New Guinea (PNG). It has been known for criminal activity, and as a place where many criminals live. The settlement is located in the Port Moresby South Electorate of the National Capital District, and is one of the oldest settlements in the city. The community includes people from Gulf Province and at least 11 other ethnic groups from throughout PNG. The population was estimated at more than 10,000 in 2013, and is believed to be around 13,000 now. The rapid increase in the population (from about 7,000 in the year 2000) reflects an influx of migrants from rural to urban areas, seeking employment opportunities and access to improved health and education services. Over the last few years, some major changes have taken place within the community, which have brought radical shifts to people’s mindset and behaviour. New infrastructure development, and projects providing opportunities for youths and business development, have contributed to a transformation for the Joyce Bay settlement. According to a report by the Asian Development Bank, the Joyce Bay community had limited livelihood options in 2013. The most common jobs were security guard for males and shop assistant for females. Some women worked as market vendors, selling fresh food brought in by producers from the outskirts of Port Moresby. There were a handful of skilled people such as carpenters, plumbers and painters, who were engaged in ad hoc contracts. Wages were low, with no system to enforce minimum wages for casual or part-time workers. These workers also had limited access to credit. Starting in 2013, the Ginigoada Foundation, with City Pharmacy Ltd and the National Capital District Commission (NCDC), has opened up opportunities for youths, and others, to attend financial literacy training and small business training. This has empowered them to venture into new business activities to improve their lifestyle and sustain themselves. In that same year, Joyce Bay underwent major road works, providing much needed access to transport within the settlement after decades without. This was funded by Moresby South District Development Authority and the NCDC. This has paved the way for other infrastructural developments to take place, including a sewerage system and water supply. In 2016, a local community hall was constructed. The community hall has a conference room, store room, kitchen and toilet. It also has a multipurpose sports court that can be used for community events. In 2019, water company Eda Ranu (now merged with Water PNG) and Kumul Consolidated Holdings commissioned a multimillion kina Joyce Bay Sewage Treatment Facility, which was funded by the PNG government and the Japanese aid agency JICA. A number of local churches were also established, during the early 2000s, including my church. Taken together, this is a big impact project situated in the heart of the community. It has been championed by the local MP, Justin Tkatchenko, who is keen on rapidly transforming his electorate. Alongside these positive developments, I’ve observed changes in people’s behaviour and attitudes. Youths have been kept busy with sports, which reduces thoughts of engaging in illegal activities. The church has also attracted a lot of youths to its programs and activities, which has contributed to the big improvement in the community. When I came to Port Moresby in 2018, I met up with some of the boys from my church. Joe Alfred, Paul Kore and Sasae Ray are some of my best friends, and have been living in the area since the 1980s when their families migrated from Gulf Province. I asked them about the stories I heard about the community, and they said it was far worse before than it was now. Joyce Bay was a no-go zone, and I was so afraid to go there myself for our church fellowship. After my first visit, I was more nervous and afraid and had to ask my friends to escort me to and from the bus stop and the church. Fast forward to today, and I’ve spent three years moving around the Joyce Bay community every weekend. I’ve witnessed the improvements as well as heard about them. In Joyce Bay, there are a lot of challenges which are yet to be overcome, for example, in terms of good water supply and other sanitary solutions to improve the health and hygiene of the community, and improved drainage as the Joyce Bay area is subjected to flooding during the rainy season. Unemployment remains a challenge in the community. But the future looks much brighter for Joyce Bay inhabitants. by Desmond Narongou Joyce Bay settlement, formerly known as Horse Camp, is a notorious settlement in Port Moresby, Papua New Guinea (PNG). It has been known for criminal activity, and as a place where many criminals live. The settlement is located in the Port Moresby South Electorate of the National Capital District, and is one of the oldest settlements in the city. The community includes people from Gulf Province and at least 11 other ethnic groups from throughout PNG. The population was estimated at more than 10,000 in 2013, and is believed to be around 13,000 now. The rapid increase in the population (from about 7,000 in the year 2000) reflects an influx of migrants from rural to urban areas, seeking employment opportunities and access to improved health and education services. Over the last few years, some major changes have taken place within the community, which have brought radical shifts to people’s mindset and behaviour. New infrastructure development, and projects providing opportunities for youths and business development, have contributed to a transformation for the Joyce Bay settlement. According to a report by the Asian Development Bank, the Joyce Bay community had limited livelihood options in 2013. The most common jobs were security guard for males and shop assistant for females. Some women worked as market vendors, selling fresh food brought in by producers from the outskirts of Port Moresby. There were a handful of skilled people such as carpenters, plumbers and painters, who were engaged in ad hoc contracts. Wages were low, with no system to enforce minimum wages for casual or part-time workers. These workers also had limited access to credit. Starting in 2013, the Ginigoada Foundation, with City Pharmacy Ltd and the National Capital District Commission (NCDC), has opened up opportunities for youths, and others, to attend financial literacy training and small business training. This has empowered them to venture into new business activities to improve their lifestyle and sustain themselves. In that same year, Joyce Bay underwent major road works, providing much needed access to transport within the settlement after decades without. This was funded by Moresby South District Development Authority and the NCDC. This has paved the way for other infrastructural developments to take place, including a sewerage system and water supply. In 2016, a local community hall was constructed. The community hall has a conference room, store room, kitchen and toilet. It also has a multipurpose sports court that can be used for community events. In 2019, water company Eda Ranu (now merged with Water PNG) and Kumul Consolidated Holdings commissioned a multimillion kina Joyce Bay Sewage Treatment Facility, which was funded by the PNG government and the Japanese aid agency JICA. A number of local churches were also established, during the early 2000s, including my church. Taken together, this is a big impact project situated in the heart of the community. It has been championed by the local MP, Justin Tkatchenko, who is keen on rapidly transforming his electorate. Alongside these positive developments, I’ve observed changes in people’s behaviour and attitudes. Youths have been kept busy with sports, which reduces thoughts of engaging in illegal activities. The church has also attracted a lot of youths to its programs and activities, which has contributed to the big improvement in the community. When I came to Port Moresby in 2018, I met up with some of the boys from my church. Joe Alfred, Paul Kore and Sasae Ray are some of my best friends, and have been living in the area since the 1980s when their families migrated from Gulf Province. I asked them about the stories I heard about the community, and they said it was far worse before than it was now. Joyce Bay was a no-go zone, and I was so afraid to go there myself for our church fellowship. After my first visit, I was more nervous and afraid and had to ask my friends to escort me to and from the bus stop and the church. Fast forward to today, and I’ve spent three years moving around the Joyce Bay community every weekend. I’ve witnessed the improvements as well as heard about them. In Joyce Bay, there are a lot of challenges which are yet to be overcome, for example, in terms of good water supply and other sanitary solutions to improve the health and hygiene of the community, and improved drainage as the Joyce Bay area is subjected to flooding during the rainy season. Unemployment remains a challenge in the community. But the future looks much brighter for Joyce Bay inhabitants.   This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Desmond Narongou is a freelance researcher and writer. He graduated with a Bachelors Degree of Commerce in Information Technology from PNG University of Technology in 2017.


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Tourism

PNG Business News - February 05, 2023

PNG Tourism Promotions Authority (TPA) and Bougainville TPA signs MOU

The Department of Commerce, Trade and Industry reached another milestone recently when it signed a Memorandum of Understanding (MoU) with the Papua New Guinea (PNG) Tourism and Promotions Authority (TPA). The MOU paves the way forward for both parties to continue bilateral partnership based on the understanding of tourism and promotions in Bougainville. The MOU was signed by the PNG TPA and the ABG Department of Commerce, Trade and Industry on the understanding relating to a joint partnership for the protection and preservation of tangible and intangible culture, development and promotion of tourism, contemporary culture and the arts and sustainable tourism in the autonomous region of Bougainville. ABG Vice President and Minister for Commerce Trade and Industry, Hon. Patrick Nisira (MHR) acknowledged the PNGTPA for its tremendous support so far since the first MoU was signed in 2016. The support has cemented many agreements already signed and has proven that Bougainville is truly a tourism destination that is worth investing time and money on. Mr. Nisira acknowledged the PNG TPA officers for their continuous negotiation with the Bougainville partners in pushing for significant income generating programmes to proceed in the region. “Standing here today it gives me great pleasure to witness and participate in this significant event that will go down in history books of this nation to be. We are here today to mark this important event on the signing of the MOU between my ministry and the department of national government and PNG Tourism Promotions Authority (PNG TPA).” This agreement adds value to our collective vision, ideas and consultations that the local tourism and cultural practitioners in both government and private sectors, he said. “As a way forward the agreement presents a realistic and workable approach to tourism development and its sustainability in the region.” “The MOU also sets out a framework for future development for tourism emphasizing on effective and determined and holistic approaches.” He said that the agreement generally outlines the pros and cons of tourism development in Bougainville and the framework and strategy of reaching the targeted goals and vision earmarked to reaching the overarching goals of economic building and development.         Deputy Chief Secretary for Operations Anthony Koiri approved and signed the MOU on behalf of the Bougainville Public Service Chief Secretary who is on sick leave at the moment. The signing was witnessed by the staff of the PNG Tourism Promotions Authority (PNGTPA), Department of Commerce, Trade and Industry, senior officers and a small crowd at the Bel Isi park.

Mining

PNG Business News - February 05, 2023

PNGEITI POSITION ON PORGERA MINE LEGACY TAX ISSUES

The PNGEITI Head of Secretariat Mr. Lucas Alkan says all parties to the Pogera Mine must adhere to rules governing the extractive industry, particularly when dealing with fiscal matters that must be administered and observed according to law. His comments follow a news article on The National citing the Internal Revenue Commission (IRC) that unmet tax obligations of the Pogera mine stood in the way to expedite the mine re-opening process.  Mr. Alkan says a workable and timely strategy that does not impinge on basic laws is a way forward.   Below is the full comment on this issue.  “The Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI) commends The National newspaper for attempting to bring to light what appears to be the final outstanding issue (among others) in the Porgera Mine recommencement negotiations (more on this in footnote). We’ve noted from the reporting that taxation matters are legacy issues that appear to be standing in the way for the multi-million-kina Porgera Gold Mine to re-open. We have observed that the Government was on track to conclude negotiations and re-open the Mine by June last year, however this did not eventuate as anticipated. Attempts to reopening the Mine in the second half of last year was not feasible due to the national general elections and the formation of government. It appeared that all negotiations were concluded and a new Porgera Mining Agreement Framework was in place for the Mine to be re-opened in the first quarter of this year. Surprisingly, we learn that an old Porgera Tax liability dispute is standing in the way for the Mine to be re-opened. 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If it is a significant amount of tax owed by Barrick to the Government based IRC’s audit in 2013 then it is a legal tax obligation that Barrick and its joint venture partners need to settle as required by law. We fail to understand as to why the old Porgera tax obligation/liability clause was inserted into the new Porgera Mining Framework Agreement making it a condition to resolve this legacy tax issue before reopening the Mine. If whatever was reported and commented by PM Marape recently is true then Barrick Niugini Limited and the State need to speed up the negotiation process and resolve this dispute immediately. Both parties should exercise good faith – Barrick Niugini Limited should not pull strings on this old Porgera tax liability matter and delay the re-opening of the Mine. It is understood the State (IRC) may not easily forego if there is a substantial amount of tax liability to be paid by the operator. 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PNG Business News - February 02, 2023

Weir Minerals releases the 6th edition of the Warman® Slurry Pumping Handbook, the definitive resource for slurry pumps

Photo: The Warman Slurry Pumping Handbook is the definitive guide for most slurry pumping applications. Weir Minerals, manufacturer of the industry-leading Warman®  slurry pump, has released the latest edition of their coveted Warman® Slurry Pumping Handbook. The 6th edition, compiled by the most trusted name in slurry pumps, features detailed engineering data required for most slurry pumping applications. Drawing on decades of Weir Minerals’ inhouse expertise in innovative engineering and slurry pumping technology, the new handbook has updated reference material based on new learnings, improved understanding and technological developments within the mining industry. With customers always in mind, the handbook aims to empower engineers to achieve optimal performance from their Warman® slurry pumps. An increased global focus on the environment, energy consumption and water conservation will influence slurry pump design and considerations – making this latest handbook an essential tool for all current and future pump engineers. “Pumping slurry has many challenges and I’m excited to publish our latest handbook, packed with fundamental theory, application advice, standard practices and latest Warman learnings from the field; all aimed to help our customers, present and future, deliver with excellence.” Marcus Lane, Director, Slurry Pumping Technology Group Weir Minerals are continually striving to shape the next generation of smart, efficient and sustainable solutions with cutting-edge science and innovation. The comprehensive handbook includes over 140 pages of detailed information, including performance charts, impeller design, part configuration, assembly and slurry considerations – fully supported by accurate technical renders and specifications. “The high quality of the reference material in this essential resource reflects the leading status of the Warman slurry pumps. As the industry leader, we have a responsibility to develop our future engineers; we will make the latest version of the Warman Slurry Pumping Handbook available not only to our customers, but also to the leading schools worldwide, so they can learn from the best in the industry.” John McNulty, Vice President Global Engineering & Technology. As part of Weir Minerals’ commitment to investing in STEM education and developing the next generation of engineers, copies of this essential resource will be gifted to the leading mining and engineering educational facilities around the world, including the winner of the 2022 Warman Design & Build competition, Deakin University in Australia.

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