Tourism Boosts Pacific Economic Outlook, but COVID-19, Rising Prices Pose Risks
by PNG Business News - August 04, 2022
Photo credit: ADB
A revival in tourism is expected to boost economic growth in the Pacific in 2022 and 2023, but the COVID-19 pandemic, rising commodity prices, and climate change continue to pose risks, according to the Asian Development Bank.
After an average economic contraction of 0.6% in 2021, ADB’s Pacific Economic Monitor (PEM), released today, says the Pacific is expected to grow by 4.7% this year and 5.4% next year. The turnaround reflects rising visitor arrivals in the tourism-dependent economies of the Cook Islands, Fiji, and Palau, as well as expectations for Papua New Guinea’s minerals sector to benefit from the higher international commodity prices being driven by the Russian invasion of Ukraine.
But the PEM says the Russia–Ukraine war also poses a risk to the subregion through rising import and transport costs, accelerating inflation, and increasing trade and fiscal deficits across the Pacific. Other risks to the Pacific’s recovery include community transmission of COVID-19 and some challenges in vaccine rollouts, as well as the region’s vulnerability to climate change and disasters.
“This outlook for the Pacific is welcome after more than 2 years of negative growth caused by COVID-19, but significant risks to this recovery remain,” said ADB Director General for the Pacific Leah Gutierrez. “It is vital that development partners, stakeholders, and policy makers work closely together to ensure the continued recovery.”
The latest PEM forecast represents an improvement on that seen in the Asian Development Outlook (ADO) 2022 released in April, which projected the Pacific’s economic growth to be 3.9% in 2022.
The PEM identifies Pacific economies as among the most vulnerable in the world to climate change and disasters, and that the impact of these shocks—compounded by the fallout from COVID-19 and commodity price spikes—has been sizable. Ensuring sustainable growth will hinge on investing in climate and disaster resilience, the cost of which can exceed the governments’ own resources. The policy briefs in this issue of the PEM examine how the Pacific is pursuing climate financing from innovative sources, and how ADB is helping to respond to climate change and better manage disaster risk. Continuing efforts to strengthen public financial management will support fiscal sustainability, restore resource buffers, and re-establish a strong foundation for the next potential crisis.
The PEM also examines a wide range of issues affecting Pacific economies, including:
- The role of climate finance in sustaining Fiji’s recovery amid rising inflation
- The North Pacific’s preparedness for sustainable investing
- Climate finance and water security in Kiribati and Tuvalu
- Climate adaptation and budgeting amid volatile revenue in Nauru
- Fiscal challenges of climate financing in Papua New Guinea
- Promoting climate and fiscal resiliency in Solomon Islands
- Counting the costs and preparing for the future of South Pacific economies
- The challenge of financing a climate emergency in Vanuatu
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
Article courtesy of the ADB
PNG Business News - March 01, 2021
Reforms Needed in the Tourism Industry: Minister
Crucial reforms have to be made so that the tourism industry can move forward.According to Minister for Tourism, Arts and Culture Isi Leonard, they need to ensure that the environment for the tourism industry is significant to these changing times. He added that the enforcement of standards will add value to competitive advantage as a destination to ensure that the process of tourism goes smoothly. “Papua New Guinea’s tourism industry is a sleeping giant and has a huge potential to generate considerable wealth for our country,” he said. “The tourism industry will play a vital role in growing Papua New Guinea’s economy by harnessing the huge untapped tourism potential and open doors to the outside world into our shores to a million different journeys."He is confident that the national tourism plan will give the guidelines and frameworks for the tourism industry to get back on track. “We have to take back our tourism industry at the local level to the national level,” he said. “Every citizen in the Informal Sector, MMSEs, SMEs and big corporate organizations in all sectors of the economy can effectively participate and contribute to the overall growth and productivity of the Tourism Industry in Papua New Guinea.”
PNG Business News - February 17, 2021
COVID Has Affected the Tourism Industry
The pandemic has indeed affected the tourism industry in the country.This was according to Tourism, Arts and Culture Minister Isi Henry Leonard who said that the travel restrictions has brought less international tourists to enter the country and has caused fewer tourism activities. However, he said that it is important to promote local tourism and activities in the country. “Our local tourism sector is also affected but not to that extent,” he said. “So we should now put more emphasis on local tourism by ensuring support in terms of travel and mobility within the country.”He added that a national plan was already in the works to align tourism in the country after the ill effects of the pandemic. “I think the plan should provide the way forward for tourism to rise above the Covid-19 challenges in the tourism sector,” he said. “We need to protect the tourism sector by devising possible solutions and strategies to ensure the sector continues to be promoted and maintained. So for me, I think we should emphasis more on local tourism by bringing programs and activities back to where the people are.” Once the plan is finalised, he said that they will seek the support of the National Executive Council.
PNG Business News - March 01, 2021
Tourism and Tourism-Related Businesses One of the Hardest Hit by COVID
With international borders shut down to contain the virus, PNG experienced a downfall in international travellers from January to June last year - 32,805 as compared with 75,556 of the same period n 2019, a drop of 57 per cent. In addition, tourism-related businesses and enterprises suffered major losses, and there is a dearth of tourists visiting shopping malls and recreational parks In an assessment survey conducted last September and October, tourism stakeholders and tourism product owners revealed interesting responses.According to the chief executive officer of the Port Moresby Nature Park, park visits fell from 70,346 visitors between March and August 2019 to 42,435 over the same period in 2020, a drop of 40 per cent. There were also a lot of cancellations of programs and projects for the parks. Also suffered was the souvenir shop of the park as there were no tourists anymore. However, some good samaritans also helped the park such as the Sir Brian Bell Foundation and the British High Commission paying entrance fees for their students and teachers. In addition, the earnings of local artisans were disrupted too.The hotel industry was another one of those hardest hit. Facing closure were the Ela Beach Hotel and the Holiday Inn Express because there were no tourists or visitors. Rates for room occupancy also dropped. But operations started picking up last quarter of 2020, especially with the food and beverages at the hotel. Lodges also faced some massive challenges. Aside from the airlines, travel agents such as PNG Explorers International, Mix Travel Limited also faced some losses and huge cancellations. Others such as dry cleaning, rental cars, barbershops, and florists all lacked customers.Local arts and crafts vendors also struggled.While it is believed that international travels boost the economy, domestic tourism can also contribute a lot. It is, therefore, everyone’s business to keep tourism alive in PNG.
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PNG Business News - August 12, 2022
Going Green: FAO-led EU-STREIT PNG Programme provides green-powered facility to local agricultural authorities to effectively service rural farmers
EU Funded UN Joint STREIT Programme in Papua New Guinea establishes a renewable energy-powered facility to support local government authorities in East Sepik Province, in delivering effective services to rural farmers and entrepreneurs. With generous support of the European Union, the FAO-led EU STREIT Programme officially opened a new 3 cluster office building on 10 August 2022, to host the Programme along with the East Sepik provincial divisions of Agriculture and Livestock, Cocoa Board and the National Agriculture Quarantine & Inspection Authority. The new-look office building is powered by 189 solar panels, which significantly reduce greenhouse gas emissions and reduces the collective dependence on fossil fuel. The solar panels supply the building with 90 KW of energy, relieving the resident agencies and authorities from relying on fossil-generated electricity for their needs, including lighting, ICT, water pumping, and temperature control. This zero-carbon-emission facility has the capacity to accommodate around 90 experts, technicians and extension service officers. Equipped with 120 batteries, the building can support staff’s operation for 36 hours in case of experiencing high cloud cover. The building, currently co-resided by the Programme and provincial agricultural bodies, will be transferred over to the East Sepik Provincial Administration at the end of the Programme and will continue to provide a sustainable base for sustainable support to agriculture-related services in the Province. Officiating the opening ceremony, His Excellency Ambassador Jernej Videtič, Head of the European Union Delegation to PNG, in his address, said: “I am happy to be here and to see that things are moving in the right direction to bring sustainable benefits to the people of East Sepik” Ambassador Videtič further highlighted that “with resources from the citizens of Europe to fund the EU-STREIT Programme in providing training, tools and support, the quantity and quality of cocoa, vanilla and fisheries products will increase. The objective is also to protect these quality products in international markets under the EU-STREIT introduced initiative of Geographical Indication.” The East Sepik Acting Deputy Provincial Administrator, Mr James Baloiloi, in his speech expressed his appreciation to the EU for funding the EU-STREIT Programme and the interventions that the Programme is doing in East Sepik and Sandaun provinces. “The STREIT Programme has gone ahead to introduce a culture of agribusiness that now enables the people of this Province and the people of Sandaun Province to have cash income that can sustain their livelihoods.” Mr Baloiloi added, “this infrastructure and building supports us and facilitates the service delivery to our people in this Province as well as Sandaun Province.” Thanking the EU for its generous funding support, Dr Xuebing Sun, the EU-STREIT Programme Coordinator, said: “the Programme has generated substantial impacts at beneficiary, local institutions and enabling business environment levels. This would not be possible with good partnership, increased ownerships and leaderships of the governments and implementing partners.” “This co-residing and close co-operation among UN agencies and their national partners in this integrated space reflect the partnership approach taken by the Programme to sustainably develop agri-enterprise activities in the region,” added Dr Xuebing Sun, adding “the new climate-friendly facility, which is fully powered by solar energy, also provides a space to welcome, advise and serve the farmers, including interested women and youth, who play very important roles along agri-food value chains”. “This kind of ‘green investment’ enables a shift to a more green economy for local institutions and infrastructure to meet cocoa, vanilla and fishery value chains stakeholders” advised Anthony Bennett, the FAO Lead Technical Officer of the EU-STREIT PNG Programme. United Nations’ implementing partners supporting the FAO-led EU-STREIT PNG present in the office include the International Labour Organization (ILO), International Telecommunication Union (ITU), United Nations Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP). The EU-STREIT PNG is being implemented as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as implementing partners), is the largest grant-funded Programme of the European Union in the Country and the Pacific region. It focuses on increasing sustainable and inclusive economic development of rural areas through increasing the economic returns and opportunities from cocoa, vanilla and fishery value chains and strengthening and improving the efficiency of value chain enablers, including the business environment and supporting sustainable, climate-proof transport and energy infrastructure development.
Paul Oeka - August 12, 2022
CPAPNG annual meet to discuss global changes
Certified Practicing Accountants of Papua New Guinea will be hosting their 23rd annual conference with about 400 participants nationwide expected to attend the two day conference organized by CPA PNG in Lae Morobe Province from August 18 to19, 2022 CPAPNG was established in 1974 and has come a long way with a lot of achievements along the way. Over the years its membership grew from mere numbers to just below 2000 which includes 40% locals and 60% non-citizens. . The CPA PNG conference is one of CPAs three significant annual events on their calendar with this year's conference theme; Is PNG prepared for the recession?" The conference will see certain key leaders in executive management roles from both the public and private sector delivering presentations in line with the conference theme. CPA PNG's Executive Director Mr. Yuwak Tau said the theme of the conference was selected because there was a decline in the global economy and the general so when that eventuates small economies tend to be affected. He added that they have basically selected the theme that was current and appropriate so that members would find relevance during the course of the conference. “The meeting is to create intellectual and interactive discussions with seasoned business leaders to present and share their ideas and experiences to find probable outcomes within their business environment and industries in times of economic uncertainty”. Some of the topics to be presented by consultants are current significant issues such as crypto currency, transport pricing, bit coin block chain technology and stress management. This were some topics that people have heard about but have not really ventured into. Mr. Tau added that it would be quite hard to measure the benefits immediately but the participants will be able to look at insights shared during the conference that would be appropriate in the areas of employment, accounting, finance, auditing and others. The conference will create an environment where participants can also share information so That they can take points to apply in their work place and industries. In relation the Kumul petroleum Holdings had also presented a cheque of K50, 000 to support the coming event at their head office. The cheque was presented by KPHL's executive General Manager Corporate Affairs, Luke Liria and was received by CPA PNG Chairman Richard Kuna. Mr. Liria said KPHL has appreciated the effort put in by CPA PNG to ensure that its members in State owned enterprises and the private sector were given appropriate level of training and as part of KPHL's corporate social responsibility and commitment they hope that their support will continue to help the organization facilitate and make sure the accounting practices is of international standards. CPA PNG's Chairman, Richard Kuna acknowledged KPHL for their support and stated that he was looking forward to seeing KPHL being a big part of the upcoming conference.
Paul Oeka - August 12, 2022
BSP: Small to Medium Enterprises Loans reaches 60% rate.
Bank South Pacific's Financial Group Ltd Chief executive officer Mr. Robin Fleming has recently announced that the bank has granted more than K200 million as loans to small to medium enterprises under its credit scheme facility that the then Marape government had released to the bank to support Small to Medium Enterprise (SME) and local businesses during the peak of the COVID-19 pandemic. Mr. Fleming said about 1523 customer loans have been approved, that is about 60% of loan approval rates since 2019. Prior to this announcement BSP and the Department of Commerce and Industry (DCI) had agreed to increase the maximum loan under the small-to-medium enterprise (SME) credit enhancement facility to K5 million. The previous limit was K3 million when the Government first released K100 million as security to the bank under its K200 million SME allocation for BSP to rollout the loan facility last year. Fleming stated that even though they have exhausted and rolled out the bulk of the governments relief funds for SME's they will still be running the SME loan program under its credit facility scheme “At this stage, BSP has not received the funding planned for this year but that is not preventing BSP from giving loans under the facility”. “There remains significant capacity for BSP to continue to assess, approve and funds loans under the facility”. “The agreement with the Government did provide for momentum in the SME facility to be maintained while allowing for the Government budget and funding process to be adhered to”. As part of the government SME relief funding, Commercial Banks were allocated K200 million with BSP Financial Group receiving K100 million, NDB K80 million and another K20 million was allocated to the department of Commerce and Industry BSP could not comment on how the National Development Bank (NDB) is dealing with the K80 million it received, but the intent, when discussions were initiated, was that BSP would be lending to more mature SMEs and NDB to startup ventures. In addition to enabling SMEs to access lower cost of funds through the facility with BSP, the bank has also made it a responsibility to ensure that Government funding is preserved by not approving loans that have a higher risk of default.