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Foreign Direct Investment Decreases By 45 Percent

by PNG Business News - June 14, 2021

Photo Credit: Loop PNG - Clarence Hoot

According to the Investment Promotion Authority, foreign direct investment into the nation has decreased by around 45 per cent in the last two years (IPA). Investment interest plummeted from over 1,000 in 2019 to roughly 300 in the first quarter of this year, said managing director Clarence Hoot.

“Global FDI (foreign direct investment) outflow has drastically reduced by 45 to 50 per cent,” Hoot said. “(It) means for us that foreign direct investments will have to be more than 10 times or 20 times than what we are currently doing. We have to relook at ourselves, what we have in place, what we want and where we want to be.” 

“We have witnessed a decline of 40 to 45 per cent in terms of FDI interest coming to PNG,” Hoot added, speaking from the perspective of a regulator.

“In 2019, the total number of foreign direct investment documents that we received was 1,116. In 2020 that reduced to about 800. And in the first quarter of 2021, it is 300. From IPA perspective, that is a real concern.  

“While we appreciate that it may be a direct result of the impacts of the Covid-19, I think we should look beyond the Covid-19. We also have to look at what we have in terms of domestic policies, laws and regulations,” Hoot said.  

He also stated that there were indicators that PNG's standing in terms of business-friendly locations has decreased. PNG was ranked 108th out of 190 countries in 2018/2019. It dropped 12 positions to 120/190 in 2019/2020.



Mauludu, Shirley. The National (9 June 2021). “Foreign investment drops by 45pc”.

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PNG Business News - June 28, 2021

Kina Asset Management Ltd Halts Investment Program in Australia

Chairman Sir Rabbie Namaliu of Kina Asset Management Ltd (KAML) said the company has halted its investment program in Australia until the impact on economic conditions is better understood. He informed the annual general meeting that Australia's reaction to the Covid-19 epidemic had been one of the most stringent in the world, involving international and state border restrictions as well as lockdowns. “As a result, the company suspended its investment programme in Australia until the impact on economic conditions became more certain,” Sir Rabbie said. “The company’s Australian investments reported capital losses of K3 million for the year, and dividend income fell from to 0.9 million in 2019 to K0.6 million in 2020. “However, the Australian dollar rose strongly against the PNG kina during the year, and foreign currency gains of K6.3 million were recorded,” he said. “The company’s shares again traded in very light volumes during 2020 and closed at year-end at a price of 95 toea per share. He said that this was a 40% discount to the company's net tangible asset backing of K1.59 per share, and that it did not reflect the company's past performance or the quality of its underlying assets. Sir Rabbie added that in the present year, a combination of fiscal and monetary stimulus, as well as quick progress in immunization programs, has resulted in a robust comeback in economic growth in most developed nations. “In Australia, the success of Federal and State governments in controlling the pandemic appears to have led to some slowness in easing restrictive measures when compared with their counterparts in the US and Europe. Global share markets have continued their recovery. “For the five months to May 31, 2021, the main stock indices in the US, Europe and Australia have all risen strongly: in the US, the S&P 500 index has risen 11.3 per cent; in Europe, the Euro Stox index is up 13.7 per cent; and in Australian, the ASX 200 has risen 8.7 per cent. “For the year to May 31, 2021, the preliminary return on the company’s investments was 9.7 per cent, and the NTA has increased to K1.68 per share.”   Reference:  The National (24 June 2021). “Firm suspends investment in Aust amid pandemic”.

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