Is the 100 Days – 25 Point Plan Practical and Achievable ?

By Francis Hualupmomi



It appears that the government has admitted that there has to be a macroeconomic discipline in rescuing the current economic situation. And it has put forward a 100-Days 25-Point Plan economic rescue package for the country based on the Alotau Accord II. But is this package realistic and achievable? Therefore, this article seeks to respond to this question.
The Current Economic Situation

Source: ADB 2017 Outlook https://www.adb.org/countries/papua-new-guinea/economy



According to the Asian Development Bank Economic Outlook (2017), the PNG economy has slowed down to 2.0 percent compared to the last four years (see the figure above). But it is predicted to pick up again at 2.5 percent by 2017 driven by mining and agriculture. The slowdown in the economy has been attributed to low commodity prices. This has increased inflation and unemployment, decreased foreign reserves, and affected the national budget.

Macroeconomic Landscape
It appears that the economic approach undertaken by the government over the last four has been one of an Expansionary. At the fiscal policy level, it has been driving the economy with high spending and borrowing at the backdrop of a decade long economic growth. The rationale is simple – utilise the surplus to expand the economy through infrastructure development which will, in turn, stimulate the economy. As a result of this approach, the economy has experienced an infrastructure boom in the economy as has been so far.
At the monetary level, it has been responding to the fiscal policy to ensure that the economy remains stabilised. It is important to note that in a country like PNG, monetary policy approach responds to fiscal policy to ensure stability. In so doing, it controls exchange rate and interest rates which tend to influence inflationary (inflation) behaviour.
Unfortunately, this macroeconomic policy has been affected by an unfavourable condition. There are two related factors, apart from others, that affect this behaviour. First, is that our commodities have been hit hard by low prices in the global market, which we have no control over. As a result of this price fluctuation, the revenue sources have been affected to sustain the fiscal capacity (budget). Because PNG is a resource-dependent economy that relies heavily on mineral and petroleum sectors, a price fluctuation in the global market will directly affect the economy in terms of growth and development. That is one of the reasons why the budget has been cut in certain social and economic sectors.
The second factor is that while the expansionary approach has been good it has not been managed at a sustainable level. What it means is that as the commodity prices slowly began to pick up again there has been a steady increase in the spending and borrowing. The reason is that there is an expectation that price will pick up again as in normal business cycle and sustain the expansionary approach. The downside of it is that it is quite difficult to predict the price fluctuation due to the complex interaction of market forces. As a result of this fiscal behaviour, the budget spending and borrowing has increased the deficit. However, the budget deficit can be improved and incrementally restored to normalcy through a sustainable macroeconomic policy package. Therefore, the next part will discuss this.

The Viability of the New Macroeconomic Rescue Package
The new Deputy Prime Minister and Treasurer, Hon Charles Able, has realised the downside of the expansionary macroeconomic approach. And he has proposed a 100-Days economic package to rescue the economy from further sinking. In essence, this is a 25-Point Plan which has been widely consulted with the private sector and led by some of the senior ministers and economic advisors. While this package may seem unrealistic to some critical commentators, in my view, it is a workable and achievable one.
The 100-Days 25-Point Plan intervention is based on these key strategic economic priority areas:


• Maintain Fiscal Discipline and Boost Foreign Exchange; Growing Our Revenues;
• Strengthening Our Economic Base;
• Improving Our Governance Record, and;
• Acting Strategically
.
First, maintaining fiscal discipline and boost foreign through the growing of revenues. Given the issue of the fiscal problem, practically maintaining a fiscal discipline in a prudent manner will help boost the foreign exchange in many ways. That means controlling and spending behaviour as compared to previous years. And this must be balanced with growing revenues through multiple sources. Incoming revenues must be prudently managed in a sustainable way. What is collected should be spent on strategic priority areas that can bring in higher returns.
In addition, the tax cut will be a balanced strategy. This is because no new taxes will be imposed on ordinary people despite declining revenues. However, this can be recovered through those who avoid or and evade tax. The country has been missing out on the billion dollar extractive industries through tax. For instance, a lot of companies in the mining, petroleum and logging industries have been avoiding or exempted from tax. As result of this, billions of Kina have been going out of the country. These lost revenues could be recovered and help support the budget.
Secondly, strengthening of the economic base is an innovative plan to invest in economic areas that have been ignored. This implies that the economic base must be diversified to boost the economy by way of revenues sources and invested in a lot of baskets to cushion economic surprises. Apparently, the focus on agriculture is pragmatic going forward. It has been a neglected billion dollar sector. Therefore, it is hoped that this will incrementally support and sustain the budget. 
Moreover, while the plan sounds practical, the governance aspect of it is fundamentally critical. The government has been widely criticised by the public for governance issues. And this approach is a noble plan to improve its credibility and international standing. In so doing, it will help its approach in prudently governing and managing the economy. Because investor confidence attracts investment and helps build the economy. Political governance is the strategic driver of economic growth and development at this time and in the long run.
Finally, these plans must be pursued in a strategic way. Every decision requires calculated available options to maximise optimal outcome. The government has chosen the best strategy therefore, it is Directionally Correct.



In conclusion, the economy has been affected due to the changing economic conditions and governing approach. And this has been evident in the current economic situation the country is facing. But this can be arrested through a sustainable macroeconomic approach. Therefore, the 100-days 25-point plan package is a practical one and needs to be incrementally governed and managed in a strategic way.

Francis Hualupmomi is a PhD Student in Public Policy in the School of Government, Victoria University of Wellington. He is a Political Scientist in the area of political economy of energy security, geopolitics of resources, international security, and strategic policy. Views expressed here are his own. francishualupmomi270@gmail.com 

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Moody’s downgrades Papua New Guinea’s rating to B2 with stable outlook

Global Credit Research – 25 Apr 2016

Singapore, April 25, 2016 — Moody’s Investors Service has today downgraded the Government of Papua New Guinea’s (PNG) foreign currency and local currency issuer ratings to B2 from B1. The outlook on these ratings is stable. This concludes the review for downgrade initiated on 25 February 2016.

The key drivers of the downgrade are:

• Strains on foreign currency reserve adequacy due to heightened balance of payments pressures that will continue over the next two years; and

• The persistence of unfavorable domestic funding conditions for the government that have increased refinancing risks and eroded debt affordability.

The stable outlook is based on Moody’s view that PNG’s medium-term economic growth prospects remain robust, although lower commodity prices and the consequent fiscal and economic adjustment will weigh on growth outcomes in 2016 and 2017. In addition, a reduction in fiscal deficits has helped to slow the rise in government debt, which remains low among similarly-rated countries.

While the review was prompted in part by the impact of structurally weaker prices of oil and related commodities on PNG’s economy and fiscal accounts, we have determined that the continuation of the pressures on government and external liquidity first flagged when we assigned a negative outlook in 2015 were more relevant.

 

RATINGS RATIONALE

DOWNGRADE TO B2

First driver: Continued deterioration in foreign currency reserve adequacy

PNG’s gross foreign currency reserves have fallen sharply to $1.69 billion at end-2015, down from a peak of $4.26 billion at end-2011, reflecting the continuation of the balance of payments pressures that prompted our assignment of a negative outlook on PNG’s rating last year. Liquefied natural gas (LNG) production drove the large rise in exports and the restoration of the current account surplus since 2014. However, this has failed to stem the deterioration in PNG’s external payments position as cross-border debt servicing and other demands for foreign currency as represented by the large financial account outflows have overwhelmed the supply of hard currency available to the central bank, the Bank of Papua New Guinea (BankPNG).

BankPNG has intervened to stem a disorderly adjustment of the exchange rate, and placed the costs of this intervention at $828.5 million in 2015 alone. It also introduced exchange controls last year that effectively rationed foreign currency.

Although production at the country’s largest gold and copper mine resumed in March 2016, associated export receipts will only mitigate, not eliminate, the ongoing balance of payments pressures. Reserve adequacy has weakened accordingly, with our estimate of short-term external debt repayments rising to over 140% of the stock of foreign currency reserves as compared to 83.7% in 2014. Moreover, the challenging environment for external liquidity has fed back to the real economy through weaker sentiment, which is already suffering from the decline in global prices for PNG’s commodity exports.

Second driver: Pressures on the government’s liquidity position due to unfavorable funding conditions

Declining fiscal revenue and constrained domestic financing conditions have weakened the government’s liquidity position. Although commencement of LNG production supported economic activity in 2015, it has not benefited revenue to the same degree, because of lower LNG prices which track oil price trends with a lag of a few months. We estimate revenue as a share of GDP fell to 17.1% in 2015, the lowest level in at least a decade, and project a further decline in this ratio this year.

Wide deficits in recent years have led to higher interest rates for government securities, as domestic investors have lowered their exposure to sovereign risk by either shortening duration or limiting their holdings of government debt. Refinancing risks have thus risen as the proportion of domestic market debt comprised of short-term obligations has increased, and debt affordability has deteriorated rapidly on account of the higher interest rates demanded in primary auctions. Short-term debt now accounts for 48.1% of total domestic market debt as of end-2015, while interest payments as a share of revenue—our preferred measure of debt affordability—has nearly doubled to 9.8% in 2015 from 5.3% in 2013.

Central bank absorption has offset somewhat the decreased local appetite for government bonds—BankPNG held 21.0% of domestic market debt as of September 2015, up from 7.1% two years earlier. Nevertheless, poor funding conditions have led the government to curtail spending, further weighing on economic growth.

 

STABLE OUTLOOK

The stable outlook balances the weak near term growth outlook against more robust economic prospects over the longer-term. In particular, the successful implementation of the PNG LNG Project has demonstrated operational efficiencies, profitability, and a relatively low cost structure, which enhance PNG’s competitive advantage in extractive industries, and bolster the prospects of similarly large projects, even against the backdrop of structurally lower commodity prices. Such projects include a potential expansion of the preexisting PNG LNG Project, an entirely new development called the Papua LNG Project, and the Wafi-Golpu gold mine. While we do not expect material progress on the implementation of these projects until late 2017, the resulting upturn and stabilization in growth will, in our view, alleviate external and fiscal pressures from escalating. In the interim, however, Moody’s expects the government’s fiscal consolidation efforts to maintain low government debt levels compared to similarly rated peers, while funding conditions and external liquidity will remain tight. An upturn and stabilization in growth and exports will, in our view, keep external and fiscal pressures from escalating. In addition, Moody’s expects the government’s fiscal consolidation efforts to keep government debt levels low as compared to similarly rated peers.

 

WHAT COULD CHANGE THE RATING UP

Moody’s would consider upgrading the rating if increased non-debt creating external inflows lead to a material build-up in foreign currency reserves and improve reserve adequacy. A sustained improvement in the government’s fiscal and liquidity position accompanied by the restoration of the trend in debt consolidation would also be credit positive. Over the longer term, enhancements to potential growth and government revenue through the development of large projects, such as potentially significant additions to LNG and gold production, would also lead to upward pressure on the rating.

 

WHAT COULD CHANGE THE RATING DOWN

Triggers for a further negative rating action include: (1) a reemergence of wide fiscal deficits that lead to a rapid rise in government debt; (2) a worsening of growth prospects that could ultimately weigh on fiscal and debt sustainability; (3) a further decline in foreign currency reserves.

 

COUNTRY CEILINGS

Moody’s has lowered Papua New Guinea’s long-term foreign currency (FC) bond ceiling to B1 from Ba3 as well as its long-term FC deposit ceiling to B3 from B2. PNG’s short-term FC bond and deposit ceilings remain unchanged at “Not Prime.” These ceilings act as a cap on the ratings that can be assigned to the FC obligations of other entities domiciled in the country.

  • PNG’s local currency bond and deposit ceilings remain unchanged at Ba2.
  • GDP per capita (PPP basis, US$): 2,470 (2014 Actual) (also known as Per Capita Income)
  • Real GDP growth (% change): 9.9% (2015 Actual) (also known as GDP Growth)
  • Inflation Rate (CPI, % change Dec/Dec): 6.4% (2015 Actual)
  • Gen. Gov. Financial Balance/GDP: -3.9% (2015 Actual) (also known as Fiscal Balance)
  • Current Account Balance/GDP: 20.9% (2015 Estimate) (also known as External Balance)
  • External debt/GDP: 69.2% (2015 Estimate)
  • Level of economic development: Low level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

On 20 April 2016, a rating committee was called to discuss the rating of the Papua New Guinea, Government of. The main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have not materially changed. The issuer’s fiscal or financial strength, including its debt profile, has not materially changed. The issuer has become increasingly susceptible to event risks. An analysis of this issuer, relative to its peers, indicates that a repositioning of its rating would be appropriate. Government and external liquidity risk have increased. Other views raised included: The issuer’s institutional strength/ framework, have not materially changed.

The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2015. Please see the Ratings Methodologies page on http://www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

 

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on http://www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see http://www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on http://www.moodys.com for additional regulatory disclosures for each credit rating.

 

Christian de Guzman
VP – Senior Credit Officer
Sovereign Risk Group
Moody’s Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

World Bank to assist PNG Sovereign Wealth Fund setup

May 14, 2017 – By ROSALYN ALBANIEL

THE World Bank will be assisting the Bank of Papua New Guinea establish PNG’s Sovereign Wealth Fund Secretariat.

This was announced last Friday by BPNG governor Loi Bakani during an update on the matter.

“We got a visit from the World Bank and have got someone on the ground to help us set up that office. This is the administrative secretariat reporting to the board of the SWF,” Mr Bakani said.
Mr Bakani said there had been some issues on the appointment of the board of directors for the fund but said this is being handled by accounting firm KPMG under the directions of the Department of Treasury.

“As far as the secretariat is concerned, we hope to have someone very experienced on the ground to set up the office that will coordinate work here and we will set up the office once everything is in order,” he said.

On the issue of revenue flow into the fund, he said the main providers would be companies in the mining and petroleum sector including the LNG projects.

In the case of the multi-billion kina PNG LNG project, he indicated that this was likely to happen round about 2021, 2022 onwards.

“The national budget is framed around that time. This is when government expects the budget will also be balanced.”

“This is when government expects the PNG LNG will start paying taxes.”

“As it is, we have not got any foreign exchange from this project.”

“Until and unless the accelerated depreciation ends, which is seven to eight years, is over since first export in 2014.

“This is when we will see some taxes. It is still a long way away,” he said.

Releasing more land key to increasing Papua New Guinea home ownership

By: Kevin McQuillan
3rd May 2017

Demand for housing in Papua New Guinea is strong but there is a shortage of supply, according to the latest survey by Hausples, a Port Moresby-based real estate company.

The Hausples.com.pg 2017 survey shows that working class Papua New Guineans are beginning to understand the value that home ownership brings to their families and they are increasingly investing in their own properties, according to CEO and founder, Mat Care.
‘Despite Port Moresby’s high prices, most people (62 per cent) feel that now is an opportune time to purchase a property,’ he tells Business Advantage PNG.

According to a report by the ratings agency S&P Global, Banking Industry Country Risk Assessment: Papua New Guinea, average growth in PNG property prices, adjusted for inflation, has been about 8–11 per cent over the past four years.
‘New constructions in PNG’s housing market are largely funded through direct foreign investment or superannuation funds, with little leverage and little direct participation from the banking sector,’ the report says.
‘We estimate around 15 per cent of the banking system’s lending exposures are to property and related services, remaining unchanged in recent years.’

 

Supply

Mat Care ‘firmly believes’ that more effort should be made to increase supply, which he says will bring house prices down and increase access and affordability.
‘Housing is a critical factor in the continued development of PNG,’ says Care.
‘The country’s urbanisation rate of 12 per cent is incredibly low by global standards. Southeast Asia’s least urbanised country is Cambodia at 24 per cent.’

‘It is critical for landowners and the government to seek novel and fair ways to release more land.’

Care says that, despite the low urbanisation, the survey confirms the ‘very substantial housing shortage’ throughout the country.
‘Property development on customary land with long-term, 99-year leases, is becoming more common within the NCD [National Capital District] and Central Province,’ he says, citing Edai Town as a successful example.

edai
Standalone House in Edai Town

‘Whether customary land should be converted to freehold land is a policy issue for the government and the existing customary land holders,’ he says. ‘Potentially, a voluntary system of conversion, subject to appropriate compensation, could be considered.
‘Regardless, it is critical for landowners and the government to seek novel and fair ways to release more land for much-needed housing.’

 
BSP inquiries increase

Kanawi Chapiu, Bank South Pacific’s (BSP) Home Loan Coordinator, says home loan inquiries have risen. Potential customers show interest when they see others successfully buying their own house.
Since its inception in 2014, BSP has approved 534 home loans valued at K270 million under the BSP First Home Ownership Scheme (FHOS).

BSP Home ownerships
The average purchase price in the market is under K500, 000, Chapiu tells Business Advantage PNG. The Hausples survey backs that up, revealing that 70 per cent of people intend to spend less than K500,000 on a property. Thirty per cent are intending to spend K1 million or more.
Care says just over half (56 per cent) of respondents are seeking to buy a property in the next 12 months, while over 26 per cent said they would consider buying property in the next 18 months.

 
Capital preferred

Port Moresby remains the preferred place to own a home, with more than 80 per cent of survey respondents indicating they would like to buy in the capital.
Chapiu says there are no restrictions to lending outside of Port Moresby. ‘In fact, BSP has seen an increase in home loan inquiries from other major centres in PNG such as Lae, Kokopo, Alotau and Madang’.

‘All intending home owners who apply for a home loan are subject to meeting credit risk requirements.’

The bank uses a mortgage over the house as its collateral. A mortgagee cannot spend more than 40 per cent of their income on the mortgage.
Chapiu says all intending home owners who apply for a home loan are subject to meeting credit risk requirements. ‘They must ensure that the property or land they plan to purchase must be on state lease land with the title issued.’

 

Planning needed
The Institute of National Affairs has written many research papers and run workshops on the issue of what its Director, Paul Barker, calls ‘the absence of formal management of the urbanisation process’.
This failure, he points out, has seen prospective settlers, customary landowners, businesses and opportunists ‘do their own thing, often outside the formal legal process, and following the principle that possession is nine-tenths of the law’.
Barker wants a major effort to upgrade and generate safe towns and cities, with affordable housing, amenities, utilities, public transport and recreational are

Housing boom?

Hausples CEO Mat Care estimates that 5000 to 6000 new affordable and middle-income houses will be built in Port Moresby over the next 18 months, with up to 50,000 additional homes slated to be built by 2020.

‘These comprise government initiatives such as the National Housing Commission’s mega-development at Duran Farm which will comprise 44,000 dwellings (standalone 2-3 bedroom houses),’ he says.
Other smaller private developments include:
– Mediterranean Apartments (48 units comprising bedsit and 2 and 3 bedroom homes);
– Community Housing Limited’s proposed development at 9 Mile (160 stand-alone 3 bedroom houses);
– Edai Town, 300 homes (2 and 3 bedroom homes).

The high-end domestic and expatriate housing market is predominantly apartment-focused in central Port Moresby.

This includes:
– Airway’s new 3-bedroom development specifically for the LNG Project;
– Credit Corporation’s Era Motana development (2 and 3 bedrooms)
– Ela Vista’s Gardenia Apartments (2 and 3 bedrooms);
– Nambawan Super’s Pinnacle Apartments (2 and 3 bedrooms).

Higher commodity prices the key to improving Papua New Guinea credit ratings, says Standard & Poor’s Global Ratings

By: Kevin McQuillan

High debt and deficit levels are the reasons why ratings agency Standard & Poor’s (S&P) has kept its Papua New Guinea country rating at B+/B, with a negative outlook. S&P Director, Craig Michaels, tells Business Advantage PNG that higher commodity prices are the key to lifting the rating.
Michaels, the Director of Sovereign and Public Finance Ratings, says the decision reflected the high levels of offshore debt and high government deficits.
‘These have been driven, directly or indirectly, by the large LNG project, and we thought those external and fiscal imbalances would unwind pretty quickly once the LNG project came on line,’ he told Business Advantage PNG.
‘But unfortunately, just as that happened, commodity prices globally fell very sharply.
‘So the revenues that were due to come on stream at that point have been coming in much more slowly and that’s why we have continued our negative outlook on PNG ratings.’

 
Forceful

Sovereign ratings are used as an indicator for setting a country’s base interest rate. They also have an effect on its ability to raise offshore financing, which the PNG government has been attempting.
PNG’s rating has been comparatively stable. S&P has maintained its B+/B rating for over five years, although it converted its outlook to negative in October 2015, when commodity prices began to weaken.
Michaels says the government has responded ‘forcefully’ to the revenue declines through savings decisions, and by targeting declining fiscal deficits to keep debt within its targets.
Overall spending between 2014-2016 fell by about 13 per cent over this period, with the result that the fiscal deficit narrowed to 4.4 per cent of GDP in 2016, from 6.9 per cent in 2013.

‘We project PNG’s general government net debt to remain comfortably below 30 per cent of GDP.’

‘Despite an election in mid-2017, we expect the deficit to narrow further this year to less than 3 per cent of GDP,’ he says.
‘On this basis, we project PNG’s general government net debt to remain comfortably below 30 per cent of GDP.’
Michaels warns, however, that if the government fails to continue to restrain spending adequately, or if growth in the nominal economy comes under even further downward pressure, net general government debt could rise above 30 per cent.

Fiscal-operations-of-government
PNG Government revenues, expenses and deficits/surplus – Source: Bank of PNG. 2017 Budget Papers

 
Debt financing

Michaels believes domestic banks and pension funds have nearly reached their limits for lending to the government, and that the central bank is acting as lender-of-last-resort when government bond auctions are undersubscribed.
‘The limited demand for government debt has led to a sharp rise in yields on government paper in recent years, and the government’s interest burden has risen significantly as a result.’

‘Michael says one of the key challenges for PNG’s overall growth prospects is the high level of crime.’

Gross external financing needs are currently at 80-90 per cent of current account receipts, and likely to remain at that level as ‘it appears the government is very committed to keeping debt within its own debt limits’.
Michaels laments that, despite some recent improvements, there are gaps in economic and external data, as well as a lack of transparency in public-sector accounting.

 

Growth

Michael says one of the key challenges for PNG’s overall growth prospects is the high level of crime, ‘which we think is a major deterrent for investment outside the resources sector’.

‘S&P could return the rating outlook to ‘stable’ from ‘negative’ if we become convinced that the high level of external debt and the pretty sizeable fiscal deficits will continue to decline in a reasonably quick way.’

He expects growth to be 3 per cent in 2017, up slightly from 2.6 per cent in 2016.
‘The medium-term economic outlook hinges on whether further large foreign-financed projects—such as the Papua LNG project—go ahead.’

 
Upgrade

Michaels says S&P could return the rating outlook to ‘stable’ from ‘negative’ ‘if we become convinced that the high level of external debt and the pretty sizeable fiscal deficits will continue to decline in a reasonably quick way’.
‘And that will probably largely hinge on what happens with commodity prices.’

Ela Beach gets timely Facelift

By: Jonny Andrews

I have been watching with interest the developments happening at Ela Beach.

It saddens me that most of the trees will be cut for this development but I am reminded that in order for something/someone to be remold they had to be broken into many many pieces.

Papua New Guinea is growing and with growth comes development. Development of infrastructure,  development of its tourism industry and development of its landscapes.

We continually compare ourselves to the Arab Nations but we must understand that, they reached that stage by starting off where we are right now. It was not an overnight miracle, it was a progressive development that changed their nation.

The Ela Beach Redevelopment it seems has 3 Contractors working on it.
1. Apec Haus and the Marina by OSL
2. Ela Beach Waterfront by CHEC
3. ?????  – this would be another company which will develop the area towards Koki

It is not only the Beachfront that is getting developed, the properties opposite the road would also see development. Currently, there is a plan to redevelop the IEA School, Ela beach hotel and properties inline with the whole development of Ela Beach.

This development of Ela Beach will join the Paga Hill Development and make it one of the biggest Development in the Pacific Region compared to other Pacific Island Nations.

Papua New Guinea is moving forward, it is time we also move our mindset and look forward to greater participation in our own land.

 


Port Moresby’s iconic beach to be modernized at a cost of K55 million. New developments to include APEC and a 4-lane highway
THE Hiri Moale Festival will be allocated space in the current redevelopment of the iconic Ela Beach in Port Moresby.

ela-main
Redevelopment of IEA in Ela Beach

This was made known by Member for Moresby South Justin Tkatchenko when he responded to questions on the redevelopment of the beach.

He added that the Motu-Koita Assembly, the voice piece of the Motu-Koitabu landowners of traditional Port Moresby, was in agreement of the redevelopment of the beach front which would bring in new jobs.

The annual three-day event, which culminates in the crowning of Miss Hiri Hanenamo, promotes the culture of the Motu coastal villagers

Mr Tkatchenko was also asked on the controversial issue of the land title which he fought to have extinguished after it was awarded to Awak Holdings Limited two years ago.

“I did not agree with the way the title was handed to Awak Holdings via the Lands Department.” Awaks development plan had also entailed reclamation of the shorefront about 50 metres but it met with opposition from Mr Tkatchenko and traditional landowners.

09ak_trees_0
Ela Beach Redevelopment by China Harbour Construction

“The beach front comes under National Capital District Commission and it is State land, open space and recreational.”

He added that after the extinguishing of the land title, the title was publicly tendered by NCDC and awarded to Cardno and China Harbour Engineering Company for the roadworks.

The Ela Beach Foreshore Development Plan was unveiled in September last year.

In that plan the beach front will undergo two stages of development with stage one will see completion of APEC Haus to be constructed on NCDC’s sea park land. APEC Haus will be the venue for the Asia-Pacific Economic Co-operation Leaders’ Summit next year.

The second major development would be the construction of Ela Beach Road as a four-lane road to align with Healy Parade and Paga Point Ring Road; construction of about 300 car parks; and redevelopment of Ela Beach as per the unveiled master plan.

NCDC had dedicated its land being the former sea park jetty for the construction of APEC Haus. Post Courier /ONE P

 

—————————————————

$17 million road improvement, beach extension project in Port Moresby

By Benorah Hesehing

PORT MORESBY, Papua New Guinea (The National, Feb. 10, 2017)

Work will begin today to give Port Moresby’s iconic Ela Beach a K55 million [US$17 million] facelift.

 

NCD Governor Powes Parkop said the redevelopment project involved the construction of a two-lane road and an extension of the beach by another 100 metres.

“The work will begin tomorrow (today) and I am calling on the public for their understanding and cooperation,” Parkop told a media conference yesterday.

“There will be some disruptions for the earth work but we intend to keep the existing roads operational while the new lanes are being constructed.

Ela beach Road Map
Road Map for Ela Beach Redevelopment

“Some of the trees, shrubs and palms which provide shade would be removed to create way for construction.”

He added that the National Capital District Commission was doing all it could to retain the old trees. “We understood that the older trees were part of the Ela beach heritage and are working hard to save those, which can be saved,” Parkop said.

He said the people should not think about what they would lose, but what they would gain from the redevelopment project.

Ela-Beach-Marina-Development
Ela Beach Marina Hotel

Moresby South MP and Minister for Sports and National Events Justin Tkatchenko said the project was a “fantastic achievement for NCDC”.

“We can plant advanced trees within the landscaping for Ela Beach to ensure what is replaced is suitable or even better,” he said

Ela-Beach-Marina-Development-1
Ela Beach Marina with APEC Haus in the Middle

 

Changing the AID game in PNG

By: The Garamut 

In what has been billed as a shock announcement carried by major news outlets across the Torres Strait, it’s been reported that PNG has formally asked Australia to consider and review how it distributes its annual $AU550 million aid package.
The request was put during the 25th PNG-Australia Ministerial Forum recently held in Madang with senior PNG ministers highlighting the government’s wish to see Australian aid managed directly through the PNG budget by 2020.
Citing internal policy documents including PNG’s Medium Term Development Plan, National Strategy for Responsible Sustainability Development Plan and the 2015 Development Cooperation Policy – which all signal changes in how the government wants to manage foreign development assistance – Minister for National Planning Charles Abel said:

“We want trade not aid. We just want them to come in and support the PNG Government system. They are channeling their aid, which is recognised in our budget, but it’s not really passing through our budget.

“We want you to continue the work, you helping us, but you have to make it more strategic and more visible and thicker, not thinly spread everywhere. All we are saying is we have established our government plans, we have our targets and we want you to come in and work through our plans.”

This message is not new.
It is one that has been consistently presented to previous PNG-Australia Ministerial Forums and PM Peter O’Neil himself highlighted the issue when he addressed the National Press Club in 2012 – that is, PNG wants the way Australian aid is disbursed to be “re-aligned” with government processes and priorities.
The main concern here lies with the creation of a “parallel system” outside the scope of national budgetary, administrative, management and – importantly – maintenance processes whereby duplication of programs targeting similar outcomes exist.
This wastage of resources is compounded when some foreign development programs are discontinued leaving a delivered outcome, whether asset or service, in administrative limbo. It does not help when provincial governments are tasked with ownership of these outcomes on existing stretched budgets.
It is not unrealistic for the government to seek to funnel development cooperation resources toward helping achieve PNG’s development goals as enshrined in the constitution and supported by government policies.
This makes sense, however, presenting such a request can only be taken seriously if adequate and transparent due diligence on the utilization and application of development cooperation resources by the PNG government can be guaranteed.
A level of respect and trust in the bilateral relationship is needed here – and whether it currently exists to the depth required for the request to be granted is questionable.
Ironically, the very substance of PNG’s request that Australia respect PNG’s sovereignty in trying to direct where development assistance should be invested – a premise alluded to time and time again in the 2015 Development Cooperation Policy – flies in the face of a sovereign state’s fundamental responsibility to ensure that its most basic needs are fully met out of its own pocket and not subsidized by the goodwill of others.
And herein lies the challenge for PNG – for no matter how this government frames it, the move to ask Australia to direct fund the national budget by 2020 will be perceived by many as a money grab by a floundering state.
Indeed, news headlines in Australia have already pointed the conversation toward this context; and it follows hot on the heels of other stories reporting PNG’s struggle to meet its financial obligations.
Despite this, with each consecutive budget, total foreign aid decreases as a percentage of PNG’s annual budget. In addition, the OECD Development Cooperative Directorate estimates that Australian development assistance to PNG has undergone a 29 percent real-decline since 2009.
But, as a component of total aid received by PNG, Australian development assistance makes up 68% of all donor contributions. It is because of its proportion that PNG is interested in setting a precedent of how it wants all aid to be “re-aligned”.
With the chances of the current government being re-elected for another five year term in 2017’s National Election remaining high, the push for Australia to fall into line with PNG’s request will not be sidelined – it will only gather momentum.
https://garamut.wordpress.com/2017/03/11/changing-the-aid-game-in-png/

Australia’s ‘Boomerang’ Aid should be directed into PNG National Budget

By: Bernard Keane 



Who profits from our foreign aid?: the ‘technical assistance’ making business rich

Australia’s “boomerang aid” has been making corporate Australia very rich for years.

“Boomerang aid” is the name Michael Somare claims he invented to describe the propensity of Australian aid to PNG to end up back in Australia, courtesy of highly-paid Australian consultants and firms specialising in “technical assistance” in the delivery of aid projects. For a small number of firms, it has provided a taxpayer-funded path to massive success.

“Technical assistance” is a billion-dollar business funded by Australian taxpayers. This year, we will spend $4.3b on foreign aid. Under the Government’s commitment to increase foreign aid to 0.5% of Gross National Income, that is scheduled to rise to $8-9b in five years’ time.
Technical assistance over the last decade has accounted for 40-50% of the entire aid budget.
A small number of Australian firms have done very well from this:

* Coffey International, the Chatswood, Sydney-based “global professional services consultancy”, garnered over $300 million in contracts in calendar year 2009 alone, Ausaid records show;

* Cardno ACIL secured at least $270 million, as did GRM, “a leading international development management company”;

* Queensland companies GHD and JTA International, both reaped over $100 million.
Boomerang aid has long been a basis for criticism of AusAID and our entire foreign aid program, particularly in relation to PNG, our largest aid recipient. In 2003, Michael Somare suggested over 60% of Australian aid simply went to Australians or Australian companies.
That year, the Senate Foreign Affairs, Defence and Trade References Committee considered the issue as part of its report on Australia’s relationship with PNG and the Pacific, saying that the “most common concern raised with the Committee in relation to the delivery of aid was for the tendency for AusAID to use consultants, typically from Australia which lead to the perception of ‘boomerang aid’.” 
A number of submissions to the committee raised the issue, including those from the Business Council of PNG and from Oxfam Community Aid Abroad.
In response, AusAID rejected any criticism, declaring the “Australian aid program ensures that PNG citizens benefit from commercial opportunities, skills formation and capacity building.”
Papua New Guinea through its planning Minister Charles Abel recognized this gap in the Australian Aid and has proposed to negotiate the new AID Agreement.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

“Budgetary support will assist in programs and activities that the Government is trying to achieve and that alone will achieve a lot more positive outcomes than what’s going on at the moment,” 

Aid to be effective needs to be channeled into PNG’s national budget as opposed to being distributed by Australian Technical Assistance Team.

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Papua New Guinea asks Australia to fund health, education during ministerial forum

BY PAPUA NEW GUINEA CORRESPONDENT ERIC TLOZEK –THU MAR 09 11:19:03 EST 2017
Australia’s increasingly tricky relationship with Papua New Guinea could be about to get more difficult.


PNG’s Government has asked Australia to directly fund its health and education spending after it suffered a severe economic downturn and was forced to make major budget cuts.

PNG used the 25th ministerial forum between the two countries to ask Australia to shift its $500 million of annual aid away from narrowly-focused programs and into helping fund its health, education and infrastructure priorities.

Planning Minister Charles Abel said the shift was something that had been discussed for some time.

“The Papua New Guinea Government has sent a signal at this meeting of our desire to move by 2020 into a budget support arrangement where the program is channelled more directly through the PNG budget process,” he said.

Australia is the dominant contributor of aid to PNG, providing 68 per cent off its development assistance.

Mr Abel said that money could be having a bigger impact.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

PNG’s Major Events Minister Justin Tkatchenko said the request arose out of concerns about the effectiveness of Australia’s aid program and the amount of money that is spent on contractors and technical assistance.
“Budgetary support will assist in programs and activities that the Government is trying to achieve and that alone will achieve a lot more positive outcomes than what’s going on at the moment,” he said.

The request came as a surprise to the Australian ministerial delegation.

It also came after PNG suffered a major drop in revenue that forced its Government to slash spending, particularly to health services, but Mr Abel rejected suggestions it was linked to PNG’s cash shortage.

“It’s a policy-based directive that has come from a series of documents … it’s not a knee-jerk reaction,” he said.

Request catches Australian ministerial delegation off guard
Australia’s aid partnership with PNG is due to be renewed this year, so the Government was already evaluating the program.

But Foreign Minister Julie Bishop said Australia did not know PNG would make the request.

“That’s apparently a matter that’s been discussed within the PNG Government, it’s been raised with us today and we’ll consider it,” she said.

The change harks back to the way Australia used to deliver aid in PNG, by funding its budget directly.

But Australia stopped doing that in the early 1990s because of concerns about corruption and mismanagement.

Those concerns have not gone away.

Ms Bishop said any change to the aid program would need to meet Australia’s accountability standards.

We want to ensure that it’s transparent, that it’s value for money and it provides the kind of outcomes that will see economic development and prosperity here in PNG,” she said.

“And of course we must be answerable to the Australian taxpayer.”

The Government fears those taxpayers are becoming increasingly sceptical about the benefits of foreign aid.

Questions over how aid spending is getting to people who need it
The timing of the request, as PNG tries to weather a severe economic downturn, makes it even harder to sell.

Australia has given $5 billion in aid over the last decade, but has been changing its approach for the past few years.

The Australian Government, which has consolidated delivery of its programs into a Papua New Guinea Governance Facility, will be investing more in infrastructure and is seeking more partnerships with agencies like the World Bank and Asian Development Bank to deliver soft loans.

Such changes reflect a broader shift in aid spending, but also an attempt to make a bigger impact and force the PNG Government to comply with the strict standards for governance and program delivery required by multilateral agencies.

Australia also agreed to focus more on private-sector growth and trade, which would help protect and increase the $6.8 billion PNG-Australia trade relationship in the face of threats from China.

But the non-government organisations working in the aid sector have criticised that approach, saying PNG is a clear example of a place where economic growth has not delivered much benefit for disadvantaged people.

Despite 15 years of continuous growth, PNG still has one of the lowest levels of GDP per capita in the region.


Manus issues causing tension
It might not say so publicly, but the PNG Government has also been recently displaying frustration with Australia in other ways.

There has been tension over the Manus Island detention centre, particularly over the need to close it to comply with a PNG Supreme Court ruling.

People within the PNG Government say they are frustrated about the impact of the centre on PNG’s reputation, the political risk to the current Government, and the social issues that the day release of detainees has created on Manus Island.

That frustration has been accentuated by a delay in Australia delivering a promised $200 million redevelopment of the Angau hospital in Lae, which was agreed upon as part of the Manus Island deal.

Detainees at Manus Asylum Seekers Detention Center

Australia argues the delay is due to the PNG Government withdrawing its promised contribution, but PNG said it told Australia two years ago to just “get it done”.

Recent allegations that the medical company that runs the clinic at the Manus Island detention centre failed to obtain proper registration and breached a raft of other PNG laws — something strongly rejected by the company — could be seen as PNG putting further pressure on Australia to hasten the centre’s closure.

There has been no shortage of people noting the detrimental effect of the Manus Island deal on Australia’s ability to negotiate with PNG, but with the urgency increasing to close the centre by October, PNG could be looking to squeeze even more benefit out of its relationship with Australia at this time.

That has left Australia with a problem for both its aid program and its diplomatic relationship with the most populous and arguably most influential country in the western Pacific.

Papua New Guinea – A market to be exploited 

By: Jonny Andrews

The rich market of Papua New Guinea is open to exploitation by those who have the money!

Usually, these are foreign corporates that rides on our country’s weakness in protecting its people and even with the ignorance of most of our landowners.

The case of CRAM trying to take control of HPL even with only 15% shareholding is very interesting. Why is HPL an attractive company to control an owned?

Highlands Pacific Limited has been exploring minerals and gas in Papua New Guinea since the early 1960’s. They have once of the most comprehensive database of all mineral deposits in the country.

Get your hands on those database….you on your way to making millions and expoilting Papua New Guinea


Tussle over HPL’s future control

February 27,2017, 01:40 am

A RIFT has developed between Highlands Pacific Limited (HPL) and its shareholder, Chinese group Guangdong Rising Assets Management Co Ltd (GRAM), over the future control of the Papua New Guinea company.

HPL says it is a battle with potentially major ramifications for its multi-billion kina PNG projects, including Frieda River, Ramu Nickel and Star Mountains.

Last week, GRAM subsidiary PanAust, which owns a 14 percent stake in HPL, had demanded a meeting of HPL’s shareholders to remove four of the company’s five non-executive independent directors and replace them with three GRAM nominees.

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HPL argued the highly aggressive move would deliver GRAM control of the firm which was valued at about A$60 million (K146 million), without GRAM having paid anything to the other shareholders of the company that collectively hold 86 percent.

The move also would deliver GRAM essentially full, unassailable control of the giant US$6 billion (K19bn) Frieda River project in West Sepik Province. HPL and GRAM are joint venture partners in the project, with GRAM holding an 80 percent interest and HPL 20 percent.

HPL also holds an 8.56 percent interest in the Ramu Nickel project, as well as a major shareholding in the exciting Star Mountains exploration project.

HPL directors had opposed GRAM demands, stating that handing control of the Company to GRAM/PanAust would not be in the interests of its shareholders.

Chairman Ken MacDonald said the GRAM/PanAust proposal effectively amounted to a takeover of Highlands without offering to pay shareholders.

HPL managing director Craig Lennon said the future of Highlands was vitally important for the development of its projects, and could have serious economic implications for PNG.

“We want to see these projects, especially the Frieda River project, develop in a timely fashion, creating potentially enormous economic benefits for PNG by creating jobs, generating revenues for government and earning foreign exchange income,” he said.

“With Highlands remaining as an independent company, we have the best chance of achieving that outcome.”

The special meeting to consider the matter would be held in Port Moresby, and shareholders would vote on the proposals to remove four of the five non-executive independent directors including the chairman.

The two directors who GRAM is not trying to remove for now are the managing director Craig Lennon and Bart Philemon, the highly respected former treasury minister.

http://www.postcourier.com.pg/Stories/tussle-over-hpls-future-control/#.WLOLVxJ97Vp 

 

ADB Helps PNG Expand Port Moresby International Airport Using PPP

By: The FINANCIAL

The Asian Development Bank (ADB) and the Papua New Guinea (PNG) National Airports Corporation (NAC) signed a transaction advisory services agreement to develop a new international passenger terminal at Port Moresby (Jacksons) International Airport through public-private partnership (PPP) on 2 February 2017.
“ADB has been a key development partner to NAC for several years through the landmark Civil Aviation Development Investment Program,” said Marcelo Minc, Country Director of ADB’s PNG Resident Mission. “Through this transaction advisory support to NAC for the Jacksons airport, we hope to complement the work we are doing across the PNG aviation sector, develop a regional hub for air traffic in the Pacific, and create a template for delivery of PPP projects in the region.”

The project will use a PPP scheme where the private sector will design, build, finance, operate, and maintain the airport facilities. A new international passenger terminal, the extension of the main runway, and other infrastructure enhancements will help the airport meet forecast air services growth up to 2040. The concession period and other parameters will be determined based on the feasibility study, according to ADB.
ADB’s support is part of its ongoing assistance to PNG to identify and develop PPPs in the transport sector, a key priority in ADB’s 2016-2020 Country Partnership Strategy for PNG. ADB has been supporting the government to improve 21 national airports to provide safer, more secure, and all-weather air transport services through the Civil Aviation Development Investment Program. Jacksons International Airport is part of the program.

The project will be ADB’s first PPP transaction advisory engagement in PNG and the Pacific. As part of the agreement, ADB also aims to create document and contact templates that may be used for future PPPs in the region and to build local expertise in PPP management and execution.
http://www.finchannel.com/business/63208-adb-helps-png-expand-port-moresby-international-airport-using-ppp