PNG urged to develop its agriculture rather than relying on periodic mineral resources
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| PNG urged to focus on Agriculter. Getty Images |
PAPUA New Guinea has been urged to focus on developing its agriculture industries to provide food for the rising Asian market rather than relying on the periodic large resources projects that have marked its history.
A study to be released on Tuesday says export revenue could rise 400 per cent to more than $20 billion by 2030 with more than $100 billion in new investment, if the country can get the development of its resources, infrastructure and agriculture right.
The recommendations mean PNG could be competing with Australia for Asian investment to develop food exports, The Australian Financial Review reports.
The report notes that the country has more under-utilised farmland and water resources than Australia.
The report is the latest in a series by Port Jackson Partners, commissioned by the ANZ Banking Group, that focuses on opportunities for Australian and regional companies from the changing demand patterns in Asia.
"The opportunity for PNG is not just about natural resources. Half of global growth in demand for food will come from Asia over the next 20 years," ANZ Pacific chief executive Vishnu Mohan said in
launching the report in PNG's capital, Port Moresby.
The study is being released as PNG expects a massive increase in economic growth in two years as the Exxon LNG project comes on stream, but also potential social problems as construction industry unemployment rises.
It also comes as the government has taken over ownership of one of the earlier major resource projects – the former BHP Billiton-owned Ok Tedi mine – raising questions about its approach to foreign investment.
The Port Jackson Partners report emphasises that the government needs to manage its own funds better, by privatising existing inefficient state-owned companies, if it is going to have the new capital for investment in roads and ports needed for increased exports.
ANZ chief executive Mike Smith said: "Mobilising foreign capital will be critical to realising the opportunity Asia's growth is creating in PNG. Capital goes where there is stability and certainty – if PNG can consistently demonstrate this, the potential is enormous."
But Port Moresby Chamber of Commerce chief executive David Conn said the privatisation message needed to be delivered to the government much more forcefully if the country was to meet the report's export projections.
The report urges PNG to look to successful African countries such as Botswana for multi-commodity development models, and to Asia for long-term export markets, in what could amount to a loosening of long-term ties with Australia just when Australia is seeking assistance for refugee settlement.
It argues that Botswana understood the role that well-planned project infrastructure could have in helping develop neighbouring agriculture industries, which employed more people than resources and provided extra economic stability through the resources price cycle.
It says that while the PNG government has set ambitious targets for infrastructure development, it needs to do more transparent cost-benefit analysis and take advantage of private sector delivery, possibly funded by Asian investors. "The task is to ensure that the critical economic sectors of resources, infrastructure and agriculture all play their role in a national response to the Asian opportunity," the report says.
"Co-ordination of project development and infrastructure, and strategically maximising the spillover effects from sector to sector, can lead to high quality and sustainable growth."
The report cites Canadian research showing PNG is now ranked 73rd by foreign investors as a resource investment location, but could be number three if it reduced land-use restrictions and adopted best-practice development policy settings.
Source: Queensland Country Life
But Port Moresby Chamber of Commerce chief executive David Conn said the privatisation message needed to be delivered to the government much more forcefully if the country was to meet the report's export projections.
The report urges PNG to look to successful African countries such as Botswana for multi-commodity development models, and to Asia for long-term export markets, in what could amount to a loosening of long-term ties with Australia just when Australia is seeking assistance for refugee settlement.
It argues that Botswana understood the role that well-planned project infrastructure could have in helping develop neighbouring agriculture industries, which employed more people than resources and provided extra economic stability through the resources price cycle.
It says that while the PNG government has set ambitious targets for infrastructure development, it needs to do more transparent cost-benefit analysis and take advantage of private sector delivery, possibly funded by Asian investors. "The task is to ensure that the critical economic sectors of resources, infrastructure and agriculture all play their role in a national response to the Asian opportunity," the report says.
"Co-ordination of project development and infrastructure, and strategically maximising the spillover effects from sector to sector, can lead to high quality and sustainable growth."
The report cites Canadian research showing PNG is now ranked 73rd by foreign investors as a resource investment location, but could be number three if it reduced land-use restrictions and adopted best-practice development policy settings.
Source: Queensland Country Life
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