Lower Commodity Prices to reduce Foreign Exchange Inflows
by PNG Business News - May 03, 2023
Photo: BSP Group General Manager Treasury Rohan George
“Lower commodity prices and the delay in Porgera’s resumption is expected to prolong distress in PNG’s foreign exchange market,” according to the BSP Quarter 1 2023 Economic Insight report.
BSP’s Group General Manager for Treasury, Mr. Rohan George said “FX market turnover in the March Quarter fell 2.4%, from the December Quarter 2022”. He noted, “a pullback in commodity prices, in particular oil, copper and palm oil, and the January holiday season reduced FX market turnover volumes”.
According to Mr. George, “FX turnover for 2023 increased by 8.9%, compared to prior year”. However, he also advised that outstanding FX orders with BSP increased seven fold (700%) in the past quarter, with post-Christmas import orders increasing rapidly, whilst FX inflows fell.
The kina mid-rate was stable against the U.S. dollar at 0.2840. The Australian dollar fell 1.5%, reflecting weaker commodity prices, concerns of an economic slowdown and a pause in interest rate increases.
Mr. George noted that BPNG FX intervention in the March Quarter remains unchanged, but rose 59% from one year ago. He further added, “despite increased BPNG intervention, the PNG FX market continues to miss the foreign currency contribution from Porgera.”
“After subdued FX inflows in the March quarter, we do not expect a pickup in FX inflows in the June quarter. BPNG will continue to support the market, however subdued commodity prices and the uncertain global environment will see outstanding FX orders remain at high levels and subsequent FX order execution times lengthy,” Mr. George concluded.
To manage volatility in foreign currency flows, businesses should place FX orders (with correct documentation), as soon as possible, ensure orders are cash backed whilst awaiting execution, tax clearance certificates are current and reflect the expected FX order execution time.
PNG Business News - May 26, 2021
BSP Group Records Net Profit of K203 Million
In the first quarter of 2021, South Pacific Financial Group Ltd recorded a net profit of K203 million. According to the bank, this is a 2.6 per cent decrease from the first quarter of 2020, owing to a decrease in net insurance revenue and a rise in computing costs. Some highlights included net assets of K3.6 billion, a cost to income ratio of 40.3 per cent, a capital adequacy ratio of 25 per cent, a provision coverage ratio of 5.7 per cent, a market capitalisation of K5.6 billion, and earnings per share of 43 toea. The last 12 months had been tough, according to Group Chairman Sir Kostas Constantinou, "but we did well with the profits that we achieved." “We have an excellent staff, everybody’s committed,” he said. “It is unfortunate with the Covid-19, but we progress forward now with the inoculation of our staff who are behind it. The intention is to do most of the branches. We have had problems through the Pacific, places like Samoa, Tonga which have been restricted because of tourism. The Cook Islands have opened up so we are yet to see what happens. In spite of this, Sir Kostas remained positive. “Good times are coming for Papua New Guinea with the recent announcements on the progress of some of the country’s resource projects,” he said. “We are fortunate that we have the Papua LNG project that has been successfully completed and is proceeding with Total who’s the lead partner doing the upstream and Exxon doing the downstream. These projects are K48 billion and right on our doorstep and there’s not a lot of countries in the world that have these types of projects.” The news about P'Nyang was also embraced, according to Sir Kostas. Reference: The National (24 May 2021). Bank records first quarter profit of K203 million
PNG Business News - May 26, 2021
Bank South Pacific Joins ASX
The Bank South Pacific Financial Group Ltd has had its application to join the Australian Securities Exchange (ASX) accepted. The bank will be listed on the ASX this week, according to Group Chief Executive Officer Robin Fleming, and shareholders will be able to transfer partial shares to the ASX. “We were listed on the PNGX (PNG Stock Exchange) in 2003 but because of the size of BSP, that market capitalisation was close to K5.6 billion,” he said. “And because of the size of BSP, it was difficult for shareholders to have larger partials of shares and actively trade their shareholdings. Being listed on the Australian Stock Exchange, shareholders can move their shares either in full or in parts to the ASX and, therefore, trade their shares far more easily on a very liquid stock exchange market. PNG resident shareholders still have to go through a process in making sure their compliant with the Internal Revenue Commission (IRC) and Bank of PNG guidelines in respect to exchange control as to how they deal with any share sales. But once they move to the Australian stock exchange, they then have the capability to trade their shares far more readily and in a far more accessible format than is the case for PNG. He added, “While we have a good shareholding base in PNG because of BSP’s success, the composition of BSPs investment and the portfolio of some of the superannuation funds which is very high, we’ve been successful. Our portfolio continues to increase and even if they want to trade more actively, it is constrained by the absence of liquidity in PNG.” Sir Kostas Constantinou, the bank's chairman, said it was a watershed moment for the bank, allowing it to collect money and grow more. “It gives us liquidity, it gives our shareholders liquidity so that they can buy and sell shares and trade on the Australian Stock Exchange,” he said. Reference: The National (24 May 2021). BSP set to start trading on ASX
PNG Business News - March 31, 2021
BSP Changes Group Name
BSP Financial Group has replaced Bank South Pacific Limited as the company's name. Sir Kostas Constantinou, Chairman of the BSP, revealed this last week. The shareholders approved the name change, as well as other legislative amendments, according to Sir Kostas. BSP will now proceed with the filing of its application for listing on the Australian Securities Exchange (ASX). “The notice of the meeting is currently subject to advise and approvals, which are expected to be finalised during March 2021,” Sir Kostas said. According to BSP Group CEO Robin Fleming, the proposed ASX listing would provide access to new pools of capital on Australia's largest market. “While BSP has been listed since 2003 on the PNGX, there are a number of constraints that BSP faces in sourcing new forms of equity capital,” he said. “Accordingly, BSP is pursuing the proposed listing as a means of mitigating some of these constraints. Access to new sources of capital will allow BSP to explore future growth opportunities. Another benefit of joining the ASX is that it will facilitate increased liquidity for BSP’s shareholders (trading of BSP shares). The ASX is a much deeper (larger pool of investors) and (more) active market than the PNGX. Accordingly, shareholders will find it easier to trade BSP shares on the ASX.” The visibility of BSP would increase if it joined the ASX, according to Fleming. “It will provide the opportunity to better educate the international marketplace in relation to BSP and PNG,” he said. BSP's shares would be exchanged on both the PNGX and the ASX if authorised. When asked about the name change, CEO Robin Fleming confirmed that the iconic trade name of BSP would continue to be used throughout the Pacific.
PNG Business News - June 05, 2023
PNG PM Marape Participates in PIF Leaders Breakfast Caucas
Photo: PNG PM Marape Participates in PIF Leaders Breakfast Caucas Prior to the Korean-Pacific Islands Leaders (Kor-Pic) Meeting, Papua New Guinea Prime Minister Marape joined other PIC Leaders for a breakfast caucus Chaired by Cook Islands Prime Minister and current Pacific Islands Forum Chair Mark Brown, to discuss the agenda and a common position on shared development issues. Prime Minister Marape said climate variation, being the perennial issue including sourcing appropriate development assistance from the Korean Government was high on the agenda. He said the encouragement during the caucus was for all PIC Leaders to discuss their developmental challenges and put forward their ideas on how Korean Development assistance could complement the 2050 Blue Pacific Strategy. Following this caucus, Prime Minister Marape, met with Australian Deputy Prime Minister Richard Marles. Their discussions were centered around progress of the proposed Bilateral Security Treaty (BST), the recently concluded Defense Cooperation Agreement with the US, Visa issues and the PNG NRL Bid. On the BST, Prime Minister Marape mentioned that it was work in progress and required the PNG side to consult our domestic processes and sovereign laws in relation to certain wordings and provisions. He also conveyed his apologies to Prime Minister Anthony Albanese for the delay in formalising this proposed Treaty with Australia. For the DCA with the US, Prime Minister Marape informed that it was centered around improving the PNGDF's capabilities and interoperability including protecting our frontiers and sovereignty. He said it was non-discriminatory and PNG was open to entering into similar arrangements with its bilateral partners. “In fact, the DCA would also complement domestic law enforcement,” Prime Minister Marape said. “The Ship Rider Agreement on the other hand was also vital in combating illegal fishing and transnational crimes.” For Visa issues, Deputy Prime Minister Marles informed that the current Australian Government was fully aware of the situation and following the Ministerial Forum in February this year in Canberra, had established a Joint Ministerial Team to work on bringing the Australian visa processing facility back on shore to PNG. Prime Minister Marape in his response said that all processes from both sides had to be attended to in order for smooth facilitation and for citizens and businesses to continue without much hindrance now and heading into 2050 when PNG celebrates 50 years of nationhood. On Papua New Guinea’s NRL Bid, Prime Minister Marape explained that PNG was still very keen as rugby league was a major unifying factor, bringing our 800 tribes together as one people. In closing Prime Minister Marape assured Deputy Prime Minister Marles that PNG in no way would compromise its excellent existing bilateral relations with Australia and further stressed that PNG was capable of managing its sovereign affairs on its terms, systems and processes.
PNG Business News - June 05, 2023
ADB Helps Launch Vocational Education Project in PNG
The Asian Development Bank (ADB) and the governments of Australia and Papua New Guinea (PNG) today launched a cofinanced project to improve the country’s technical and vocational education and training (TVET) program. PNG's Deputy Prime Minister John Rosso delivered a keynote address at the launch event at Port Moresby Technical College. PNG’s Minister of Higher Education, Research, Science and Technology, and Sports Don Polye, ADB Country Director for Papua New Guinea David Hill, and Australian High Commission Minister Counsellor Paul Lehmann all spoke at the event. The Improved Technical and Vocational Education and Training for Employment Project financed by ADB and the governments of Australia and PNG will strengthen the country’s TVET program and help prepare students to be more competitive and responsive to employment and industry demands. “We hope this project will become a model for all vocational education and skills training in TVET colleges in the country,” said Mr. Rosso. “The beneficiaries of this project—young, skilled workers, including women and men—represent PNG’s future, and through this project, the future of vocational education in PNG looks bright.” This project aims to boost the numbers of skilled workers in the construction and agriculture sectors where demand is high. “We will work with our partners to help advance reforms in the vocational education and skills training space in PNG,” said Mr.Hill. “These sought-after skills in priority sectors will help grow PNG’s economy.” The TVET sector of PNG’s education system comprises public, religious, or private institutions, including technical and business colleges offering postsecondary courses and vocational training. “The Australian government is pleased to be supporting the Government of Papua New Guinea to achieve its reform goals in technical and vocational education and training to increase the number and quality of skilled workers,” said Australian High Commission Minister Counsellor Paul Lehmann. “My vision for the TVET for Employment Project is that it will perform as an innovation and technology business incubator across PNG,” said Mr. Polye. “The project is the embodiment of a new approach—building a culture of quality education and innovation in a renewed and revitalized TVET sector.” The Improved Technical and Vocational Education and Training for Employment Project is funded through a $50 million concessional loan from ADB and a $10.6 million grant from Australia. The Government of PNG is also contributing $5.7 million. 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.
PNG Business News - June 05, 2023
PNG Forges an Innovation-fueled Partnership with South Korea in Digital Transformation
Papua New Guinea was amongst seven other Pacific Island countries to sign a partnership statement of intent with the Republic of Korea to further cooperation and partnership in digital transformation. Information and Communications Technology Minister Timothy Masiu, who also was appointed co- chair of the just concluded Korea -Pacific Islands Digital Ministerial Conference in Seoul, South Korea, signed the statement together with the meeting chairman Korean Minister for Science and ICT Dr Lee Jong-Ho. The others who signed the partnership intent are Tonga, Nauru, Samoa, Palau, Cook Islands and Kiribati. Australia and the World Bank also attended the meeting as supporting partners. The Statement of Intent states; The partnership recognize digitalization has transformed not only daily lives but also shapes innovation in all sectors including politics, economy, society, culture and environment. Recognize and note that digital technology offers great potential to address various social economic challenges that come with rapid transformation of society. Agree on continued partnership in digital transformation inclusive of sustainable development will be the key to future prosperity of the people of Korea and the pacific. Agree on sharing digital vision of policies will pave way for strong partnership to digital co-prosperity. Mr Masiu expressed deep satisfaction that Korea , the global leading innovation country, has agreed to partner with Pacific countries including Papua New Guinea in digital transformation that will greatly enhance communication in a vast area like the Pacific and more so, strengthen supporting technology to better access to health, education and business. He told the conference that Papua New Guinea has begun the digital transformation with Parliament passing the Digital Government Act 2022 and relevant policies, and welcomed the partnership with the Republic of Korea, which he says, will go a long way in progressing the digital transformation agenda for PNG and the region. Mr Masiu had bilateral meeting with his South Korean counterpart, further seeking a stronger country to country relations in digital transformation and support to the National Broadcasting Corporation proposing a partnership between the NBC and the Korean Broadcasting Services. The Minister has formally invited the Korean Minister for Science and ICT to visit Papua New Guinea for the Pacific ICT meeting in August 2023 or to accompany the South Korean President who has been invited by Prime Minister James Marape to visit PNG. Mr Marape was in Seoul also this week for the Korea- Pacific Islands Forum Leaders meeting. Minister Dr Lee Jong-Ho acknowledges the leadership of Papua New Guinea in digital transformation and reaffirmed its support to PNG and the other Pacific Island countries.