Agriculture and Extractive Industries Projected to Expand in 2021

by PNG Business News - May 03, 2021

According to the Asian Development Bank's 2021 forecast, the extractive and agricultural industries are projected to expand in 2021.

Mine and quarry production could rise in 2021 and 2022, according to the ADB's recently issued forecast for 2021, as favourable international metal prices spur production.

The Lihir and Ok Tedi mines, both multibillion-dollar ventures, are projected to increase gold production in 2021 after a tough year in 2020, while oil and gas production is expected to plateau. However, two new mineral and petroleum developments on the horizon, the Wafi-Golpu gold and copper mine and the Papua LNG project, both multibillion-dollar projects, have the potential to drive substantial development. In 2021, Papua LNG is scheduled to begin front-end engineering and design.

Meanwhile, the agriculture, forestry, and fisheries sectors are projected to rise by more than 3% in 2021, owing to low demand in 2020.

If conditions improve, transportation and storage, hotels and lodging, and renovation can all improve.

Capital spending is expected to increase by 16.9% in 2021 and another 9.7% in 2022, according to the National Budget for 2021.

The resulting stimulus would boost growth and local industries, but successful implementation would depend on development partners' support, according to the outlook.



Related Articles

Events

PNG Business News - March 09, 2021

INVITATION TO THE 36TH AUSTRALIA PAPUA NEW GUINEA BUSINESS FORUM AND TRADE EXPO

The Australia Papua New Guinea Business Council and the Business Council of Papua New Guinea are pleased to be re-launching the 36th Australia Papua New Guinea Business Forum and Trade Expo, which was deferred from 2020 to 24 to 26 May 2021. For the first time ever, this event will be held concurrently in Brisbane (at the Royal International Convention Centre), Port Moresby (at Hilton Port Moresby Hotel) and also online, with a shared speaking program. The Forum theme for this year is “Reimagining the Future Papua New Guinea”. The theme aims to capture the important message that Australia and Papua New Guinea along with the rest of the world, must move and pivot with the times and circumstances in order to prosper. It also looks to advance discussion about greater diversity in the PNG economy.  Coronavirus and all its related restrictions and issues, along with advancements in technology mean that we must, collectively, think of different ways to work in trade, economy and indeed life. Online connectivity appears to be one of the important forms of communication that will continue for the foreseeable future. This Forum is distinctly established as the leading annual bilateral business meeting between Australia and Papua New Guinea, and builds on the work both Councils have done over more than three decades in growing the bilateral business relationship. The program for the Forum includes an overview of the political and economic climate, particularly issues which affect business and investment, and will include specific sessions by expert presenters on topics such as the Covid-19 Pandemic, emerging economic business opportunities in PNG, agribusiness, infrastructure, SME growth, Papua New Guineans in the Australian labour market, and resources.  Key government ministers from Australia and Papua New Guinea, and a range of other expert speakers, have been invited to address the Forum to inform business representatives of policy issues in their portfolio relevant to business, and they will be able to join us from whichever location they are in, whether Brisbane, Port Moresby or elsewhere. Delegates will be able to engage in lively interaction with presenters in most sessions either live in person, or via the online platform with a Q&A feature. Video recordings of presentations will become available online soon after they are given so that delegates may go back and revisit portions they may have missed. There is something in the program for just about anyone who has an interest in the bilateral business and economic relationship and in the economy of Papua New Guinea. Delegates will be able to connect via the online platform by sending messages and/or booking appointment times with each other, particularly if they are not attending the Forum at the same venue. The Forum will again feature a Trade Expo for Australian and Papua New Guinean companies wishing to use the opportunity to match their goods and services to clients and purchasers in each country, and to broaden their business relationship. An innovative development this year is that all the trade booths will be online, with a limited number of physical booths at each location (as well as online) due to Covid restrictions. Booth exhibitors will be able to display their corporate logo, upload documents and short videos for visitors, include links to their own website, and chat one-on-one with delegates online, who can request meeting times with them via the online platform. This is a new, exciting and pioneering way to do things, and we will endeavour to have answers for you immediately should you encounter any problems while using the online platform. Register early for this conference as in-person spots at each location are limited and demand will be heavy.  To register, complete the online booking process at https://events.apngbc.org.au/event/36APNG/.  Please take care to show where/how you wish to participate. There are many new features that we will be introducing during this Forum as we look to resume regular business to business engagement, which has been so disrupted during the last year. This is a very good value conference. Enquiries about registration, Trade Expo bookings and accommodation should be directed to the secretariat of the Australia Papua New Guinea Business Council, on telephone + 61 7 3348 5142 or by e-mail at info@apngbc.org.au or to the Business Council of Papua New Guinea on telephone + 675 323 8465, fax + 675 323 5162 or by e-mail at admin@bcpng.org. We look forward to hosting you at the 36th Australia Papua New Guinea Business Forum and Trade Expo on 24-26 May 2021, whether in Brisbane, Port Moresby, or Online.

Business

PNG Business News - July 21, 2021

PNG and New Zealand PMs Sign MoU

The prime ministers of Papua New Guinea and New Zealand have signed a memorandum of agreement to further their cooperation. The leaders signed a Statement of Partnership in a virtual conference, reinforcing efforts to work through issues of trade and economics, as well as regional solidarity, amid the epidemic. PNG's Prime Minister, James Marape, has suggested that New Zealand and Australia must do more to help Pacific economies cope with Covid-19. "As I have stated to the Japanese Prime Minister at a recent meeting, and again at the recent Pacific Alliance Leaders Meeting, we would like to call on these bigger countries to step in and intervene, create 'economic bubble' or put in similar measures to assist these smaller economies. "Many of us are really stuck. Fiji, for example, survives on tourism dollars. For us, Covid19 is not just a health issue; it is also an economic issue as well," Marape explained. Ardern sounded receptive, saying the new Statement of Partnership underlined New Zealand's commitment to tight economic, cultural, and people-to-people ties with Papua New Guinea. "It is an important milestone in our relationship. By formalising the values, priorities and principles which underpin our strengthening partnership, we've set a clear pathway forward for the future engagement between our countries." "We look forward to continuing to work alongside Papua New Guinea on issues facing our Pacific region, including the ongoing management of COVID-19 and the regional economic recovery," Ardern said. The statement said the countries have committed to "a safe and stable Pacific region where Pacific sovereignty is respected, and unhindered access to open waterways and marine resources are preserved, in line with the international rules-based system". Bougainville link The two presidents also spoke about Bougainville, PNG's autonomous province, which had a historic referendum in 2019 in which over 98 per cent of voters opted for independence from PNG. Negotiations between Bougainville's autonomous administration and PNG's national government, as well as wide-ranging discussions, must take place before PNG's parliament can consider whether to accept the outcome. Marape updated Ardern on the current status of the discussions, expressing his thanks for New Zealand's long-term assistance in ending the civil conflict on Bougainville and the ensuing peace process, which the referendum is a part of. "Thank you also for your interventions in the matter of the Bougainville Referendum and under your leadership, we have been able to ramp up our warm relationship through the New Zealand and Papua New Guinea Statement of Partnership," Marape said. He also requested New Zealand's assistance in providing 'eminent individuals' to mediate the Bougainville discussions once more. Other topics discussed were PNG's public sector reforms based on the New Zealand model, as well as PNG's labour export to New Zealand. Marape and Ardern also talked about Micronesia's decision to resign from the Pacific Islands Forum, with both leaders pledging to attempt to prevent this from happening. The gathering served as a warm-up for the APEC Informal Leaders Retreat on July 16th, with Marape emphasizing the importance of the group's role in assisting smaller Pacific nations. "The APEC family of nations can also assist (us) to maintain specific niche trade while being sensitive to COVID19, as many of our island nations are dependent on these niche businesses for the sustenance of our economies."   Reference:  RNZ (15 July 2021). “'Economic bubble' idea floated as PNG and NZ sign partnership”.

Business

PNG Business News - September 24, 2021

PNG Delegates Leaves For Dubai Expo

Nine members of the PNG delegation to the Dubai Expo, led by deputy commissioner Jacinta Manua, have already departed the country. They will erect the Papua New Guinea pavilion. “This is an important exercise which will go right throughout the world,” Manua said. “We have been preparing for over a year or so and are now ready for Dubai.” Foreign Affairs, the Department of Information and Communications Technology, the Investment Promotion Authority, the Tourism Promotion Authority, the Finance Department, and the Defence Force were where the officials were picked. The event will take place from October 1, 2022, through March 31, 2022. “We are hoping to show the world that Papua New Guinea is ready to do business with them in trade, investment as well as sharing of knowledge and ideas,” she said. “Papua New Guinea is in the sustainability thematic area that reflects the importance of our policies in terms of environmental sustainability and sustainable development.” Manua stated that the Apec Haus in Port Moresby will serve as the virtual conference venue for the exhibition, which would feature programmes from Dubai.   Reference: The National (20 September 2021). “Nine leave for Dubai Expo to promote country’s businesses”.


Recent Articles

Agriculture

Paul Oeka - September 29, 2022

AGRICULTURE HAS HUGE ECONOMIC POTENTIAL

Photo credit: Oxford Business Group The creation of the new ministries by the current government for both major agricultural commodities, Coffee and Oil Palm is a huge step forward in achieving the agriculture sectors economic potential. For the past years the agricultural sector had not been fully utilized by consecutive governments as the focus had mostly been centered on the extractive industry and Mining & Petroleum sector. This important and vital sector is eventually and currently being recognized as an economic pillar to boost the state coffers. Prime Minister Hon. James Marape said the allocation and restructure of the four newly created ministries concentrating on Horticulture (Fresh produce), Coffee, Oil Palm, and Livestock to the agricultural sector is a complete paradigm shift to get agriculture moving again. The focus of the Marape Government on ‘Taking Back PNG’ is deeply rooted and aligned with the mechanisms and functions of the agricultural sector as most of the country’s population are situated in rural settings and largely depend on subsistence agriculture to sustain themselves. Coffee, Cocoa, Oil palm and Fresh produce have been a mainstay that this rural population rely on for income for so many years. As far as many Papua new Guineans can recall and relate, Agriculture has always been the foundation and backbone of the country and it can surely drive the economy forward. Although the agricultural does not match in monetary turnovers for the country, it is an economic foundation and is here to stay. In comparison over monetary benefits with other sectors, Agriculture had not been performing to expectation due to so many underlying issues concerned and faced with the value chain of agricultural commodities prompting a decline in agricultural activities over the years. The Prime Minister said it was no secret that agriculture had declined since independence in 1975, and the current allocation of the four agricultural ministries was to revive the sector for it to be a major income generator for PNG. PM Marape said this when explaining the concept and rationale for his allocation of four ministries to the agricultural sector. This direction by the Marape/Rosso Government to emphasize more on agriculture will boost agricultural activities in and around the country. Mostly the sector had not been given proper recognition for decades and had been lacking government intervention from past successive governments. Now with the current Government’s backing, the respective agricultural ministries and its industries are expected to flourish dramatically and are likely to bring more benefits. The new ministries will also empower provinces that currently do not have mining and petroleum resources. This will certainly build stronger local economic activities for future generations. “We want to see import replacement and more exports within the agriculture sector, which is why we have allocated four separate ministries to agriculture,” PM Marape said. The recognition of this agricultural industries will also ease and slowdown rural-urban drift. The number of people migrating from rural areas into towns and cities in search for better opportunities have risen in the past couple of years due to inequality in the distribution of wealth and lack of government services. Thus, the governments focus on agriculture will encourage many unemployed Papua New Guineans living in urban areas to go back to their home Provinces or villages and be self-reliant. As economic opportunities arise in rural areas from vibrant and innovative policy interventions within these newly created agricultural ministries, it will attract many to contribute meaningfully and be productive on their own customary land. Prime Minister Marape said over the last three years prior to the creation of the new agricultural ministries, his government has given millions of kina to support agriculture through price and freight subsidies and SME support. “We are now targeting specific commodities through the establishment of the four ministries. Over the next term of government, we will give specific production targets for Coffee, Oil Palm and all other major agricultural Commodities” he said. The government also plans to revive and rehabilitate once thriving agricultural hubs in the country such as Cattle farming in the Central Province and the Coffee plantations of the Highlands region that produced quality organic Coffee and grew the fledgling industry pre-independence in the 1960’s.   Now that the agricultural sector has been categorized into four industries, there will be room for much improvement in economic activity within the agricultural sector as people will start contributing meaningfully to the economy.

Business

Paul Oeka - September 28, 2022

TREASURER WANTS REVIEW OF ELECTION FUNDS

Treasurer Ian Ling-Stuckey is dismayed at how the 2022 National Elections were conducted and is now looking forward to a complete review of the allocated funds that were spent on the elections. Ling-Stuckey recently stated in parliament that the government had allocated and funded enough money for the election process to be conducted this year. “We provided a further K50 million to cover the costs for the 2022 election, bringing the total funding for the election to nearly double the level of expenditure in the 2017 national elections. There was enough money to support a much better election this year, so I look forward to the proposed parliamentary committee examinations of what went wrong and what can be done better” he said. The Treasurer also expressed concern that there was a decrease in the public servants’ salaries. He explained that “Once again there is a salary cost overrun. This is K201 million much lower than in previous years, and out of this, over 70 percent is related to teacher wage overruns. We contributed to bring this area under control. After no pay increases during the latest part of the Covid-19 crisis, it is now time to start increasing some salary payments”. “There is also the need to provide additional funding for the seven new districts that have been created and K3 million each has been provided. There are also new members in existing electorates, and it is appropriate that they be given some funds for commencing programs through to the end of the year. For equity reasons all districts and provinces needed to benefit the same so an additional 2 million per district and province have been allocated bringing the funding back to 10 million per districts and provinces” he said. Meanwhile there was an announcement on Thursday last week that the Department of personnel management, Treasury and Finance are working together to ensure that there will be a three percent pay increment in the salary of public servants. This pay increment is to be adjusted and effective by December this year, the welcoming news for public servants was confirmed by the Secretary of the Department of Personnel Management, Taies Sansan.

Commentary

PNG Business News - September 28, 2022

PNG’s minimum wage

Commentary by Stephen Howes, Kingtau Mambon and Kelly Samof The urban minimum wage has been an important part of Papua New Guinea’s economic history. In the last few years before independence (in 1975), it was greatly increased. In the decade or so after independence, it was widely regarded as too high. In 1992, it was slashed, merged with the rural minimum, and hardly increased again for more than a decade. We can compare the minimum wage in PNG today with other Asia and Pacific developing countries using International Labour Organization (ILO) data. As Figure 1 shows, PNG’s minimum wage is 18% below the average of the 19 countries shown if the market exchange rate is used to compare minimum wages. It is 37% below the average if differences in cost of living are also taken into account (with conversions made on the basis not of market exchange rates but so-called purchasing power parities or PPPs). The greater difference in terms of PPPs reflects PNG’s relatively high cost of living. Of the countries shown, only Samoa and Kiribati have a lower minimum wage than PNG when a PPP comparison is made. This is very different to the past. Raymond Goodman, Charles Lepani and David Morawetz in their 1985 report The economy of Papua New Guinea compared minimum wages in PNG with a subset of the countries above back in 1978. Then, the PNG minimum wage was about twice as big or more than the other comparators. Today (using market exchange rates, and the earlier authors do), PNG comes in the middle of the pack, as Figure 2 shows. So far, we have shown that around the time of independence minimum wages were very high in PNG by international standards, and that they no longer are. Figure 3 shows how this change came about – also, for interest, comparing trends in PNG with those in Australia. Both the PNG and Australian weekly minimum wages are shown in Figure 3 measured in Australian dollars. The PNG minimum wage is converted into Australian dollars using the current exchange rate. Both wages are then adjusted for inflation and expressed in 2021 prices. The two series follow diametrically opposed paths. The Australian minimum wage fell with the high inflation of the 1970s and industrial relations reforms of the 1980s, and by the early 1990s was little more than half its value in the 1970s. It then increased in the late 1990s and 2000s during the resource boom, and has continued to increase. Adjusting for inflation, it is now almost back to where it was in the early 1970s. The PNG minimum wage does the opposite. It increased in the 1970s and was then held stable due to indexation, until the big bang reforms of 1992. Adjusted for inflation, PNG’s minimum wage continued to fall until 2004. There have since been some significant increases, but today PNG’s minimum wage is only about one-third of its value at independence, and below its value even in 1972, which is when the steep minimum wage increases began. The Australian minimum wage has always been significantly higher than the PNG one, but the ratio has changed a lot over time. The lowest that ratio has ever been is 2.2 in 1986, the highest 45 in 2004. The gap between the two wages is much higher now than at independence: the ratio of the Australian to the PNG minimum wage was 14.5 in 2021, compared to only 3.2 at independence (1975). This reflects PNG’s 1992 deregulation, and the faster growth in the Australian economy, which has enabled an increase in the Australian minimum wage. The solution to low wages in PNG is not necessarily to increase the minimum. In some sectors, where there is a lot of international competition, a higher minimum wage might lead to job losses. For example, in tuna processing, one of PNG’s main competitors is the Philippines. From Figure 1, we can see that PNG’s minimum wage is lower than the Philippines' on the basis of PPPs, but actually higher on the basis of market exchange rates. While the former is what matters for the welfare of workers, the latter is what matters for international competitiveness. Whether PNG’s minimum wage should be increased will require a lot more analysis. The point of this blog is simply that PNG’s minimum wage does not look high any more by international comparisons, as it has fallen a lot since independence. PNG is often described as a high-cost economy, and this is a fair description. However, with regards to unskilled labour, it is no longer a high-wage economy.   Data note: The PNG Economic Database provides the weekly minimum wage of PNG going back to 1972, and the PGK-AUD exchange rate. Wikipedia provides the Australian weekly minimum wage data (hourly and weekly, on the assumption of a 38-hour week) starting from 1966. The Australian CPI is from the Australian aid tracker. There are some years where Australian minimum wage rates change more than once in a year. For such cases, we took the average as annual minimum wage rate. The data for Asia-Pacific comparisons are from the International Labour Organization and the World Bank. The different frequencies of minimum wages for each country in 2019 in the ILO’s report are adjusted to convert to weekly rates. World Bank data is used to obtain market exchange rates and PPP conversion factors. For the Goodman, et al., data go to Table 3.6 on p.61 in their report.\ Disclosure: This research was undertaken with the support of the ANU-UPNG Partnership, an initiative of the PNG-Australia Partnership, funded by the Department of Foreign Affairs and Trade. The views are those of the authors only. This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is Director of the Development Policy Centre and Professor of Economics at the Crawford School of Public Policy, at The Australian National University. Kingtau Mambon is currently undertaking a Master of International and Development Economics at the ANU Crawford School of Public Policy, for which he was awarded a scholarship through the ANU-UPNG Partnership. Kelly Samof is a lecturer in economics at the School of Business and Public Policy, University of Papua New Guinea.

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