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**** Keynote Address by Hon. Peter O’Neill CMG MP, Prime Minister of Papua New Guinea, At the Papua New Guinea-Australia Business Forum, Lae, 18 May 2015 ****
May 18, 2015
Good Morning, I welcome you here to the City of Lae – especially those who have travelled from Australia to take part in this Forum. This morning I would like to provide you with an update on our Government’s priorities that are helping us to deliver a very stable and growing economy – despite global challenges. Papua New Guinea has its share of detractors and critics. But even our fiercest critics recognise that Papua New Guinea is changing for the better. We are seeing improvements across key areas of our economy which is delivering real improvements – in terms of living standards, household incomes and opportunities for large and small business. There is a new confidence amongst our people – many of them seeing real and comprehensive services delivered for the first time in their lives. This change did not happen overnight – it has and will continue to take careful planning and disciplined administration. When we formed Government in 2012 – we made it very clear that our task was to provide stability both in terms of politics and policy. At a political level our Government offered elected members leadership that is measured in its approach; responsible management of the economy; and the authority to effect real change in their communities. We now have one of the most stable Government in the history of Papua New Guinea. Our Members of Parliament want to be part of a government that takes them seriously and has their local interests at heart. Through the effective ‘devolution’ of decision-making process, and the transfer of financial resources and delivery of basic services to the levels of government closest to the people, we have empowered our communities.
When it comes to identifying and overcoming gaps in the delivery of Government services, Members and their communities are best-placed to understand local needs. Devolving this authority to the local level has further enhanced transparency because local people know exactly how much funding is due to their communities – and they demand accountability. Through ongoing political stability, our Government has the opportunity to focus on the core policy agenda items that ensure a healthy economy and sound business environment. In delivering this policy agenda – we did not over-promise to our people. At the heart of our commitment we said we would deliver basic services in a few key areas – and we are delivering on this promise. We promised free education so that all children, be they rich or poor, can attend school. We promised universal healthcare so that our people can have longer and healthier lives, and be more productive. We promised improvements in law and order around the country. We promised to re-building badly-neglected infrastructure, and we promised to build a strong economy. We are now more than half-way through this term of Parliament and we can see these policies delivering results. Now, nearly two million children are in school, which is almost double the attendance before we came to office. These children are going to be the workforce and professionals of the future. The delivery of basic healthcare has improved substantially and delivery continues to expand through regional areas – particularly with the support of our churches and NGOs. Law and order is improving. Police numbers have increased we are raising professional standards and discipline in the force. Greater funding has been allocated to the courts to facilitate the increasing number of cases that are now being heard. Increased training and capacity building is also being undertaken in our correctional services to better rehabilitate offenders. We are also improving working conditions for our Defence Force personnel and restoring pride and discipline that had been missing.
Ladies and Gentlemen, Careful fiscal management has been key to funding our core policies. Faced with the large task of restoring services – while at the same time building infrastructure – required us to cut wastage. This was not popular with officials and contractors who had been on the government ‘gravy train.’ We reallocated funding away from wastage and directed it back to the people – this was done well before a single Kina could arrive from LNG. Our Government is also adamant that our taxation regime must be transparent and understandable. We know ongoing reform is needed in this area – we have heard the concerns of business and we are working on the issues you have raised. In our national budget, over the next couple of years we will be running planned deficits – particularly as we invest in national infrastructure. These are reducing to achieve budget surplus in 2017-2018. The downturn in global energy prices has been of concern for many. There is some pressure on the budget this year, but this is manageable. We are accommodating this through rational management of current expenditure. In terms of monetary policy – the Bank of Papua New Guinea operates according to clear parameters that are intended to ensure sound and stable management of monetary policy. As a consequence we have seen stability across a range of indicators. Inflation is manageable, interest rates and currency exchange rates are no longer subject to significant fluctuations. Stability is key for this government in the management of our economy. We are providing both the political stability and the policy stability that ensures Papua New Guinea remains an attractive location for business and investment. We can see this approach is delivering results. You just have to look at the list of major international corporations who have decided to invest in Papua New Guinea since your last Forum. In the last year I have met many heads of a range of large companies who are now actively investing in Papua New Guinea. One of the world’s foremost energy companies, Total from France, has taken majority equity in our next major gas project – the Elk-Antelope Project in the Gulf Province. Early work on the project will begin next year, with first construction contracts to be awarded in 2017 and production to begin in the years soon after. This project will employ more than 10,000 people during construction and provide great benefit to local communities. Another company that is making investment is Anglo American, which is among the top six mining companies in the world and has formed a joint venture with Highlands Pacific to develop mining opportunities in the Star Mountains region. The Australian-based mining house, PanAust has also invested in Papua New Guinea through the Frieda River Copper Mine Project in a joint venture with Highlands Pacific. This might be further strengthened through investment by Guangdong Rising Asset Management, from China, through the potential takeover of PanAust. We are also in the early stages of developing Wafi Golpu with Newcrest not very far from this province. GE, one of the world’s leading energy companies and energy sector financiers, is also embarking on its own a major investment program in Papua New Guinea. We also welcomed Puma Energy, along with their major shareholder and leading global commodities trader Trafigura, to Papua New Guinea as well. This is just a snapshot of some of the new major investors who have signed up to be a partner in Papua New Guinea’s future. I add to this list the dozens of Australia businesses – large and small – who continue to invest and conduct business in Papua New Guinea. I know the Australian business community is well represented here today. I take the opportunity to thank you for your confidence, and your support. I particularly thank Australian businesses partnering with our own businesses and entrepreneurs.
In the resources sector, investment is continuing to expand despite investment in the sector globally having been undermined by low commodity prices. We are on the cusp of at least three new major resource sector projects being approved with work to commence within the next 12 to 18 months. At the same time, as we undertake these new projects we have to have an eye on future opportunities. In particular, we need to plan look now at the downstream processing of resources and we have to begin that process now. Papua New Guinea is in a prime position to develop a petrochemicals industry in our region. We have the resource input to production – we need to up-grade our workforce skills and engage with experienced partners to advance this industry. Looking beyond the resources sector, we must now be actively working to strengthen other areas of our economy. For example, our country has enormous potential for tourism – from the islands to the highlands. We have to invest now, as part of a long-term plan to bring our tourism facilities up to world class standard. In our agricultural sector, we also need to improve productivity so that we have diversity of crops, have greater yields and are less exposed to shocks. With our rich fertile soils – we can become a significant net food exporter.
In Papua New Guinea we must also grow our SME sector. This is across many fields and industries. We all know that we have strong natural businesses talent in this country. Papua New Guineans can spot a business opportunity and make it work – but often they have been let down by bureaucracy. To boost business opportunity we have implemented a comprehensive program that includes affordable finance, providing advisory services, training support and reducing red tape on approval processes. We will continue to engage with small business and to clear bureaucracy so that our SMEs can thrive in our country. An important part of removing bureaucracy from business will involve reforms in our state owned enterprises. This will include the introduction of the Kumul Holding legislation in the next sitting of Parliament. This legislation will establish the Kumul Mining Holdings, Kumul Petroleums Holding Company, and Kumul Consolidated Holdings which will replace IPBC. These companies will become commercial assets – free from political interference. They will draw on private sector expertise to turn these entities around – away from the situation that has existed for many decades. In the past these SOEs had no real structure for capacity building, and they were often run by people who did not understand the business that they were in. Under this new structure, Kumul entities will have to present financial statements to parliament so that ensures accountability.
Ladies and Gentlemen, For the most part, the business, governmental and political relationships between Australia and Papua New Guinea have been very constructive, and has been mutually beneficial. Australia continues to be the main source of investment in Papua New Guinea. Total level of Australian investment in Papua New Guinea is drawing close to K50 billion, and two-way trade annually is around K15 billion. Our trade relationship, our government-to-government engagement and our cultural and educational exchange will continues to grow. But for some reason – obtaining a visa to travel to Australia is still difficult. This is an issue on which our two countries have held numerous discussions, but we have seen limited progress. I remain hopeful that this issue will be resolved this year – easing up visa access for Australians and Papua New Guineans alike. This ease of movement, for business travellers and tourists, is important for both countries – but this has to be undertaken with fairness. We hope that there can be resolution in Canberra that is based on mutual respect. Fortunately, for Papua New Guinea, I can announce today that Indonesia has agree to provide visas on arrival to Papua New Guineans. This arrangement will be in place within three months, and it will provide a very important boost for our travellers. We thank Indonesia for its foresight in negotiating this agreement. With an expanding middle class, thousands more Papua New Guineans have the means to travel for leisure, business and education. Alongside the new code-sharing arrangement between Air Niugini and Garuda, I expect economic and cultural engagement between Indonesia and Papua New Guinea to further expand even further. We are soon to announce another large economic partner will also extend improved visa arrangements for Papua New Guineans. But as I am sure you would all agree, we need to increase interaction between Papua New Guineans and Australians through travel.
Ladies and Gentlemen, Our ongoing business-to-business contact is essential for you to grow your businesses, to employ more people and contribute to economic growth in both of our countries. I am very happy to see the success once again of this forum and I applaud you for your ongoing efforts that you have made. It is important that you continue to engage with Government, and I want to assure you the door of our Government is always open to the business community. We are partners in the development of this nation and we need an ongoing exchange of ideas. May I also wish take this opportunity to inform you that Papua New Guinea will be hosting an Investment Forum in London on the 16th of June this year with the support of the British Government. This will be an important event for broadening horizons for Papua New Guinea businesses with our counterparts in Europe and I look forward to your participation. I think our Business Councils for organising this event, particularly the team from the Papua New Guinea Council who facilitated arrangements with my office. Thank you.