APEC HAUS – 28 MARCH 2023
Ministers of my Cabinet,
CEOs of Pacific Islands Superannuation Funds,
Business Community Leaders,
Diplomatic Corp,
Heads of Development Partner Agencies,
Distinguished Guests,
Ladies and Gentlemen.
I acknowledge Nasfund (PNG) and Nambawan Super for cohosting this event. Let me also acknowledge the leaders of all the members of the Pacific Islands Investment Forum who are present here. I want to welcome you to Papua New Guinea.
This is a land of opportunities in business and investment. You are a group of people who have their fingers on the pulse of each operating environment to be able to identify opportunities for investments which are consistent with the investment guidelines that each of you have, and your obligations to your contributors.
I want to preface my remarks by talking about the sub-regional challenges for Pacific Islands in terms of investments. COVID 19 has had a severe impact on the Pacific economies. Stephen Howes and Huiyuan Liu (The Pacific Emerging from COVID, Slowly) reported that the economies collectively contracted 5.4%. The contraction is particularly so for tourism-dependent countries.
The IMF predicts that the Pacific will grow 5.3% and reach pre COVID levels within two years’ time. The worrying trend is that the economies are still vulnerable to another COVID like attacks and must take actions to sustain it. This will be challenging as growth predictions are based on strong remittances, rapid growth in fishing fees, and increased foreign aid.
These are unsustainable sources of growth. We need to move into strong investments into the region. We need investment driven growth generated within the region and supporting the region. If we are not able to attract investment from outside the region, we should encourage investments within the region.
This is why your presence here today, and for the next couple of days, is very important. We want you to learn about our country and the opportunities that it presents. We ought to be talking to each other about what we all have to offer in terms of investment opportunities in our countries.
Like all Pacific Island countries, Papua New Guinea was severely affected in the COVID years. When we took office in 2019, the debt levels were at unsustainable levels. We took unprecedent actions to secure additional financing, delivered budget cuts to bring back the economy to fiscal discipline. In 2020 we reduced government revenues and absorbed additional expenditures to support covid relief.
We put in place a definite budget repair and rescue plan to put our country back on track. We have plans to bring back our country into positive budget outcomes over a 13-year period, and more importantly build an economy that is worth at least K200 billion over the next decade.
This is outside of our collective actions to invest in law and order, infrastructure, education, health and putting together an economy that can provide more investment opportunities in tourism, and the extractive sectors. We want to build an economy that is able to sustain itself by going outside of the traditional extractive sector and looking at the primary industry space.
More importantly, the economy will provide further opportunities for investment and growth in the different sectors.
I am mindful of the development disparities in the Pacific region due to differing economies of scale and vulnerabilities to natural calamities and remoteness. Outside of Papua New Guinea we know that the key sectors of all our collective investments and development interests are in the tourism sector, remittances, trade and exports sector, and fisheries.
These key sectors will continue to have their vulnerabilities causing a lot of uncertainty. We can offer opportunities outside of your traditional sectors of interest.
I believe the Papua New Guinea investment landscape is fair and attractive for new investments into the country. We have a predictable and non-discriminatory regulatory environment.
Our investment laws are premised on internationally accepted practice and allow investors to predict what to expect before they come into our country.
Over the last year we have seen key mergers and acquisitions with Telstra’s buyout of Digicel Pacific, and Vodafone PNG commencing as the third mobile operators. Movement within the mining and petroleum space with Porgera, P’nyang and recent announcement of the commencement of FEED for Papua LNG is a demonstration of our investment regime and its predictability.
We are building a stable macroeconomic environment that allows us to build international trading relationships.
Our government is building a reasonably stable environment which is based on the parliamentary system of government. Recent surveys by Business Advantage PNG show a very confident private sector in some of the policy initiatives of the government which predicts greater investment inflows and increasing possibilities for employment generation.
We have bilateral investment and tax treaties with Australia, China, Germany, Japan, Malaysia, and the United Kingdom. Of course with have the Free Trade Agreement with the Melanesian Spearhead Group.
We have double tax treaties with Australia, Canada, China, Fiji, Germany, Indonesia, South Korea, Malaysia, New Zealand, Singapore, and the United Kingdom. We are members of the Asia Pacific Economic Cooperation, which by its very nature gives us a direct link to countries that control over half of the world’s economy and market.
We have created a standalone Ministry of International Trade and Investment which oversees all our international interests. If we are not able to talk about investments, we can at least talk about trading opportunities using our FTA arrangements.
Papua New Guinea is endowed with sufficient and accessible resources. Our country sits in resources rich fishing grounds. The PNG fisheries zone of 2.4 million square kilometres is the largest in the South Pacific. The total market value of PNG catch is estimated at K350 to K400 million.
We have mining and petroleum resources as the mainstay of our economy. We are working extremely hard to ensure that new projects come on stream and that our PNG stakeholder share is significant to provide an opening to other investment opportunities or partnerships.
We have large untainted forest areas which we want to sustainably harvest. We are moving into downstream processing to add value to our resources but to also address climate change concerns.
Our government is investing in relevant infrastructure and human capital. Connective and education are key pillars of our economic recovery program.
For instance, through Australian Government’s AIFFP facility, we borrowing to invest a whopping AUD621 million to upgrade and refurbish key ports in our country.
Our flag ship Connect PNG program will boast at least K1 billion investment per year over the next 10 years to address infrastructure development to increase investments. We are investing in key district roads to build business opportunities for our people and also to bring resources to the market.
In education are making sure that no child is left behind. All our PNG children will be educated to Grade twelve. We are to build capacities in schools and universities. We are deploying digital technology.
We are creating 20, 000 spaces for higher education in this decade. This is the time to build an educated workforce that is flexible to work in any industry as long as there are opportunities within the country. This educated workforce provides the best opportunities for investments to thrive in this country.
In health, our rallying call is that we will have a health facility within one hour walk, one hour by boat, one hour by plane, one hour by truck. Our people’s lives must not be compromised. Every LLG must have a health centre. Every district must have a hospital. Every provincial headquarters must have a provincial hospital. Our regions must have regional hospitals, and our nation must have specialists’ hospital.
Yesterday I opened a State-of-the-Art Hospital in Wewak, and it signals an important message. Our people and guests in our country will have access to very good health facilities.
In law and order, we have now combined the RPNGC and the CS under one Ministry called Internal Security. We will also make sure that all offences are prosecuted through the entire judiciary system, and we will support the different levels of the judiciary arm. This is to ensure we entrance the rule of law.
We are instilling discipline back to our disciplinary forces. We want to build prison industries which will enhance the skill sets of the prison population.
We are big in the fight against corruption. We have appointed the commissioners of ICAC. We are building ICAC and will ensure that it is a strong agency to fight all forms of corruption. We have enacted the Proceeds of Crime Act and ensure that undisclosed wealth is investigated. This will be a country which will address all forms of corruption at different levels of society.
We have a vibrant system of courts and law enforcement. Our judiciary is the last line of defense on all disputes, including investment cases. Based on English common law, it is widely considered to be very independent. It has stood the test of time and we are proud of the strength that it continues to display to ensure that there is fair play in the investment environment particularly.
Our investment laws are based on principles of nondiscrimination between foreign and domestic enterprises and are generally in accordance with international law. Foreign companies can be registered in the country or even as subsidiaries of foreign companies.
Foreign companies have very clear processes to be incorporated and can operate in the country without any discrimination. All companies have the right to free transfers related to an investment and protect against arbitrary expropriation. Investors have the right to healthy competition in the marketplace and the taxation system is transparent and fair to both foreign and domestic investments.
I have discussed important considerations for foreign investments and why opportunities in Papua New Guinea are work considering. With over 10 million people, we provide the largest domestic market base within the Pacific island economies outside of Australia.
These are the typical FDI discussions that you normally have when you are talking about investment opportunities in markets outside of your own. I hope you will consider my country as an important destination for investment. It is about making the best of the opportunities within the region to build your investment portfolio.
This brings me to my government’s program to industrialize through downstream processing and value-add of PNG’s vast renewable and non-renewable resources and achieve a K200 billion GDP economy by 2030.
A key part of this undertaking is to build a special economic zone where we carve a specific location within the country and build a set of incentive based programs that will help investors to go into downstream processing.
For instance we now funding in a big way the development of Pacific Marine Industrial Zone in Madang Province to process all fish caught in PNG and Western Pacific waters. And the government intends to seriously de-risk investments by companies who are willing to invest in this zone. Ideally, as the name suggest we could offer it to countries of the pacific to partner with our own investors and look into this opportunity.
I want to thank the Forum for recognizing the international opportunities for discussing investment for each of our countries. I know in the context of the Nasfund and the Nambawan Super, the governance framework and legislative reforms have led to a formidable level of funds that can be used for investments.
We have continuously encouraged them to help build economies that can through up more opportunities to grow the funds. Superannuation Funds continue to support workers in our Public Service and Private Sector to ensure that their long-term investment.
prepares them for retirement. And that is our collective goal, to add value to those who have worked so hard to help build our countries across the Pacific.
I want to wish you well in the next couple of days of your deliberations.
I am sure there will be plenty of opportunities to discuss different options. Our teams from the Ministry of International Trade and Investment and from the Ministry of Commerce and Industry are keen to talk with you.
We will be keen to understand what your needs are and help facilitate future discussions appropriately going forward.
It is now my pleasure to declare the 4th Pacific Islands Investment Forum Open.