Report: Strong Trade for PNG

by PNG Business News - March 05, 2021

Falling export earnings have impacted the external sector of Papua New Guinea. But surging gold prices and import compression contained the damage.

According to the World Bank PNG’s economic update titled “Dealing with a triple crisis”, the current account surplus broadened in the first half of 2020, which increased by 14 per cent. This was supported by a strong merchandise trade performance. It said that even if prices for major exports were reduced, the earnings from the mining sector, especially gold exports, posted a surplus.

In addition, continued import compression brought about an overall current account surplus. Meanwhile, lower export earnings were more than offset by a 24 per cent decline year-on-year during the first half of 2020.

Negative was the trade services balance, caused by negative balances on education, transport, and other business services. The deficits in income and services narrowed. These developments led the current account into a positive area.

Earning exports decreased by 14.3 per cent, and prices of major exports also dropped since the beginning of the pandemic. Exports from mineral resources - which includes LNG - went down to 15 per cent year on year, crude oil decreased to 22 per cent and copper, 18 per cent. In addition, agricultural commodity exports decreased by 9.2 per cent, caused by lower export values for coffee, cocoa, and logs - with a little bit offset from palm oil exports.

In spite of this decrease, the increase in the cost of gold outweighed all of these impacts, giving rise to the total export earnings to 9 per cent year on year.



Related Articles

Business

PNG Business News - March 05, 2021

Fleming: There Will Be Confidence in PNG Economy

There will be confidence in the PNG economy in 2021.According to Bank South Pacific Group Chief Executive Officer Robin Fleming, this was attributed to the resource sector with several major projects in the pipeline - such as the Fiscal Stability Agreement signed between the Government and Total and Joint Venture Partners of the Papua LNG Project. This also included the Environmental Permit awarded to Wafi-Golpu Joint Venture for the mine negotiations to gin on the Wafi-Golpu Mine.“Certainly we feel that by the end of this year there is going to be far more confidence within the economy. The Wafi-Golpu Mine, and there is a much higher level of confidence within Lae as well, that the business community is looking at further expectations of growth,” he said. Other drivers to this growth also included the ongoing investments in infrastructure and the improvement of State-Owned Entities. “The Government has indicated in its Budget that it’s looking to continue with some of the development of the road construction, for the business community as they know they (PNG Power) got the capability to put their capital to investments which are revenue-generating and not just investments which are protecting their own infrastructure,” he said. The World Bank Groups Papua New Guinea Economic Update of January 2021 said that the Papua LNG Project and the fast resolutions related to key mining projects can contribute to higher inflows of taxation revenue and foreign currency.

Business

PNG Business News - March 05, 2021

PNGEITI Report: Need for Greater Awareness

As a need under the EITI 2019 global practice standard, the Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI) has published its first Beneficial Ownership (BO) Report. Head of PNGEITI National Secretariat Lucas Alkan said that this has already been published on its website last December 2020. “All EITI implementing countries including Papua New Guinea are required to produce a Beneficial Ownership Report by the 1st of January 2020,” he said.Alkan said to fully comply with this requirement, PNG should have a public register that lists the beneficial owners of corporate entities who hold a particular interest in oil, gas, or mining contracts. This also includes the identity of the beneficial owner. Besides implementing the EITI Standard, PNGEITI is devoted to making sure Beneficial Ownership information disclosure is implemented through its role in; Open Government Policy National Action Plan 2018-2020; the PNGEITI Annual Workplan 2019; and the PNGEITI BO Roadmap for Implementing disclosure including existing legislation such as the Anti-Money Laundering and Counter-Terrorist Act 2015.Alkan said, however, that reporting entities did not fully understand the meaning of Beneficial Ownership Reporting. “This is because they were unable to provide complete information of what was requested in the reporting template,” he said. “In addition to the challenges faced in obtaining information for BO reporting, PNGEITI still does not have a legal basis to collect the required BO information which makes it difficult to obtain complete information from the companies.”There are, of course, many challenges that the report found. These include unfamiliarity with the BO concept especially for non-publicly listed companies; several reporting entities did not attend the BO training workshop, and complex corporate structures especially where there are multiple layers of ownership involving several jurisdictions and different types of legal entities.With these many gaps, the report recommends to have a dialogue with the following organizations: the Financial, Analysis and Supervision Unit (FASU) of the Bank of PNG, Investment Promotion Authority (IPA): and the Mineral Resources Authority (MRA).

Business

PNG Business News - March 04, 2021

Morobe Government Passes Budget

The Morobe government has recently passed its budget worth K662,675,000.Morobe Governor and finance chairman Ginson Saonu said that this budget is for developmental and rural growth, adding that the budget had K204,026,700 from internal revenue and K458,648,300 from the national grants.“The 2021 internal revenue total estimate is increased by 10 per cent, while the national grants total estimate is increased by 34 per cent,” he said.Included in the national grants are the following:teachers’ salaries (K165,345,800district services improvement programme (K90,000,000)special support grant (K30,000,000)staffing grant (K34,644,300)teacher leave fares (K7,210,300)public servant leave fares (K1,239,500)provincial services improvement programme (K10,000,000)grants to local level governments (K9,717,500)teachers’ leave fares – former year’s unspent (K34,700)provincial services improvement programme – former year’s unspent (K12,089,000)other public investment programme (K96,840,000)public servant leave fares – former year’s unspent (K27,200)provincial support grant – former year’s unspent (K1,500,000) totalling K458,648,300The estimates of the internal revenue from services and goods tax amount to K124,241,544.


Recent Articles

Business

PNG Business News - November 28, 2022

Port Moresby Chamber of Commerce and Industry holds 67th Annual General Meeting

The Port Moresby Chamber of Commerce and Industry (POM CCI) held its 67th Annual General Meeting at the Lamana Hotel on the 24th of November 2022 , present to witness the occasion were its members, executives and various stakeholders.  The meeting was officially opened by the President and Master of Ceremony Mr. Rio Fiocco who gave his opening remarks and report. He thanked all the POM CCI staff for their hard work this year despite the challenges faced by covid and other changes in the administration. Some of their achievements highlighted included the recruitment of two graduate accountants from the IBS University and the employment of its new membership officer. Mr. Rio Fiocco stated that by 2023 the chamber will be working with Total PNG to pre-qualify its members to be contracted to early works stage of the Papua LNG project . "All members who have issues affecting their business can feel free to come and see us so we can lobby for you through NCD or if it  government related we will also lobby for you through the PNG Chamber of Commerce and Industry", said Mr. Rio Fiocco.  The treasurer of POM CCI Ms. Akae Beach presented the chambers Financial Report stating that it had made a net surplus of k114,020 which is a 12% net profit margin despite not recouping most of its membership fees.  "The Port Moresby Chamber of Commerce and Industry Inc is in good financial position and our net asset stand at K1.49m compared with K1.38m last year , a healthy increase of 8 %. Whilst conditions remain challenging , I am confident that the chamber will continue to be in overall surplus in 2022 as we continue maintaining our current strategy ( with an increase focus on both the Corporate and SME sectors) whilst continuous improvement in our financial systems,  increase online and physical marketing efforts and increase member initiatives" stated Ms. Akea Beach. Ms. Akae Beach concluded that she will be leaving the chamber by the end of the year but will still support the chamber within her own capacity. 

Events

PNG Business News - November 27, 2022

​PM Marape, Ministers and star international business speakers headline PNG Mining & Petroleum Conference in Sydney

Prime Minister Marape headlines a star line-up of speakers at the 16th PNG Mining and Petroleum Conference, in Sydney in December, to promote international investment in PNG.   Already over 1000 attendees are registered to attend, as the Conference features a dynamic and engaging program centered around Prime Minister Marape’s announcement of 4 new mega projects and the expected re-opening of Porgera gold mine. Prime Minister Marape will be providing the keynote opening address on Day 1.  He will be joined by Australian International Development Minister Pat Conroy.   Senior executives of the major international investors in PNG, including Newcrest CEO Sandeep Biswas, Harmony Gold CFO Ms Boipelo Lekubo, TotalEnergies Senior Vice President Mr Julien Pouget, Santos President Upstream Mr Brett Darlie and ExxonMobil PNG Managing Director Mr Peter Larden will be providing a global outlook for their companies’ operations around the world, how they have adapted to emerging trends and how their PNG investments fit into their global portfolios.  A highlight will be CEO of Fortescue Future Industries Dr Mark Hutchinson’s presentation of Fortescue’s vision for how green hydrogen can be a gamechanger for the world and PNG’s envisaged role supplying hydrogen to the world.   Day 1 concludes with a session featuring former Australian Foreign Affairs Minister, the respected Julie Bishop, presenting her view as to why Australia needs to invest more in PNG, and PNG’s Trade and International Investment Minister Richard Maru outlining the PNG government’s vision for investment and development in non-mining sectors.  Each session on Day 1 will feature panels moderated by well-known Australian media personality Ms Ticky Fullerton. Day 2 of the Conference features policy statements by Mining Minister Ano Pala and Petroleum and Energy Minister Kerenga Kua, presentations by Kumul Petroleum and MRDC, project updates on all of PNG’s existing mining and energy projects, and the presentations of the next wave of resource and energy projects – Papua LNG Project, Pnyang LNG Project, Pasca Gas Project and Wafi Gold-Copper Project.   Day 3 of the Conference features a unique 3 stream format focused on varied themes including Exploration growth, Climate Change & Energy, Improving Ease of Business, Infrastructure, and Business Success stories.  Day 3’s program features a significant list of speakers including heads of government regulatory agencies, CEOs of various PNG and international businesses, and includes international institutions such as the IFC.  The Conference concludes with a session that focuses on PNG success stories where resource revenues have been invested for future benefit, and a presentation on the importance of the PNG Sovereign Wealth Fund.  “It’s an engaging and dynamic Conference program with a high-profile cast of speakers. I am very grateful for the support that the Prime Minister has provided to the Conference, and the unprecedented participation of Government Ministers and heads of departments and agencies as speakers.  Industry and the PNG Government are presenting a united front in promoting PNG as an international investment destination at the Conference.  We are pleased that we can work with the Government in this regard.  The Prime Minister will be in a unique position in our history by speaking about the advancement of 4 major projects, and the potential doubling of PNG’s GDP in the near future, which can usher in significant economic benefits for our people.” Said Mr Anthony Smaré, President of the Chamber of Mines & Petroleum. “We are also very fortunate that so many high-profile leaders from some of the world’s largest companies have taken time out to come and speak at the Conference to outline why they believe PNG is an important place to invest in.  Australian Minister Pat Conroy’s speech will give us an indication of Australia’s view of PNG’s importance. I am personally looking forward to the afternoon session on Day 1 when Julie Bishop will present her view as to why Australia needs to invest more in PNG, and Minister Richard Maru will challenge international companies and countries to invest more into the PNG Government’s investment priority areas such as infrastructure and agriculture.”  “Over 1000 people are now registered to attend the Conference, but there is still some seats left, so I encourage business people not already registered, to quickly secure their seats at www.pngconference.com over the next few days.  The Conference is unique because you can meet everyone who has a role in PNG’s resources and energy sector - Government policy makers and regulators, the business movers and shakers, landowners, financiers, investors, suppliers and contractors from all over the world – all in one place over three days from 5 to 7 December 2022 at the Sydney Hilton Hotel.”

Agriculture

PNG Business News - November 27, 2022

PM Marape supports development of oil palm industry on a massive scale in PNG

Photo: PM Marape and Governor Bird in discussions with representatives of Pacific Elite Palm Oil Group in Singapore on Monday (November 21, 2022). Prime Minister Hon. James Marape has given his support to development of the oil palm industry in Papua New Guinea on a massive scale. PM Marape gave his support after he and East Sepik Governor, Hon. Allan Bird, met with representatives of Pacific Elite Palm Oil Group in Singapore on Monday (November 21, 2022). The company currently runs an oil palm project in East Sepik, which it wants to emulate in all provinces, saying that it will be an economic gamechanger for the whole country. The company aims to create the largest agriculture-based wealth in the South Pacific, as well as generate electricity for PNG, using oil palm. Governor Bird told PM Marape that if a long-term oil palm development plan was drawn up, with the aim of economic independence for PNG, one million hectares of oil palm grown all over PNG would bring in an extra K100 billion for the country. “We can double our GDP just from palm oil,” he said. “If we go into downstream processing, this K100 billion could double, so that we could be earning K200 billion on top of our current GDP. “The other flow-on to the economy is power production that fits into the grid, carbon credits, increased cattle production, as well as jobs. “Palm oil is amazing because you can do so much with it, including green energy, which can be generated from the waste of palm oil. “If we have 33 operations throughout PNG, similar to what we are doing in East Sepik, 100,000 jobs would be created “This is brilliant.” Governor Bird told PM Marape that oil palm, when made into biofuel, would save the country millions of kina. “If we produce enough palm oil, we don’t need to go out and buy fuel, as we can produce our own,” he said. “It can also bring inflation down as we are no longer importing inflation. “I’m excited because it provides us an escape plan from all these things that are affecting us.” PM Marape welcomed the proposal by Pacific Elite Palm Oil Group and the ideas of Governor Bird, who has helped to grown the vanilla and cocoa industries in East Sepik, and PNG. “As regards expanding nationwide, I invite you to come to Port Moresby, and I will run the investment figures past the super funds and Kumul Consolidated Holdings,” he told the company’s spokesperson Alexander Tho. “A family of investors can easily mobilise the money required for the project. “I also want you to have a stake in the business, and run it, as we cannot do it on our own, in like what Barrick is doing at Porgera Mine.”

Join Papua New Guinea's

Business Community

Be the "First" to get our exclusive Digital Magazine & Weekly Newsletter.