The complex business of PNG LNG market

By: Andrew A Arthur

After 200 shipments of LNG from Papua New Guinea and still we have not seen an profit nor have we seen any developments in Papua New Guinea!

This just one of the many comments by frustrated landowners and citizens in Papua New Guinea about the commercial viability of the PNG LNG.

Recent protests by landowners of Portion 152 for unpaid royalties also aired the same sentiments.

But why is there a delay on any inflows into the Government coffers and into the Government operating accounts to fund the national budget??

There are many answers to that but the root cause is how the agreement was structured and who gets what percentage and how did they fund their share percentages.

See below the share structure of the PNG LNG agreement;

  • Exxon Mobil (US) 33.201%
  • Oil Search (Aus) 29.003%
  • Santos (Aus) 13.532%
  • Nippon Oil Exploration (Japan) 4.680%
  • PNG Govt (NPC + Petromin) 16.779%
  • Landowner 2.805% 

Inorder to take up shares in the PNG LNG, you need to fund your percentage in those shares. PNG Government had to take an IPIC loan of over $1billion to fund its shares. All other parties would have done the same and taken out loans.

When the gas are sold, the parties start repaying their debt, these would equate to at least 3-7 years of loan repayments until they start to earn a profit from the sale of the gas.

It is estimated that by 2017, Papua New Guinea Government would be turning some profit in the 2nd quarter of the year when major loan repayments are done.

Papua New Guinea is on track to seeing huge profits from the sale of its LNG….

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Japan is major LNG buyer
By: Post Courier -1st March 2017
JAPAN is the largest buyer of liquefied natural gas in the region and is ready to share its experience of LNG and expand into the Asia-Pacific LNG market.
Yuki Sadamitsu from the Japanese Ministry of Economy, Trade and Industry, said Japan remains the largest buyer of LNG in the rapidly growing LNG market in Asia.
Mr Sadamitsu made these remarks in his keynote address yesterday at the Petroleum and Energy Summit at the Stanley Hotel in Port Moresby.


“Japan remains to be a large buyer of LNG for the foreseeable future.
“LNG demands will be larger than the government estimate.
“Japan is ready to collaborate with global, especially Asia-Pacific partners to develop and expand the LNG market.
“This of course, includes cooperation between the energy producing and the consuming countries,” he said.
Japan is a consumer of mixed energy sources such as fossil fuel, oil, coal, LNG and others and is looking at reforming its energy market.
“Japanese LNG market is under drastic reform of liberalisation,” Mr Sadamitsu added.

As part of Japan’s strategy for LNG market development, they are looking at three pillars which are tradability, infrastructure, and price discovery including market expansion to move forward.
“If you look globally, Asia is the most rapidly growing LNG market.
“Asia LNG import will almost double by 2030.
“We, the Japanese government and companies are ready to cooperate with Asian countries to share know-how of LNG and expand the Asia-Pacific LNG market.
“We will work on the LNG strategy for Asian countries this year,” Mr Sadamitsu said.

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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 

 

Court approves ExxonMobil buyout of InterOil’s assets in Elk-Antelope gas fields

BY: Cedric Patjole – 15:00, February 21, 2017

ExxonMobil will by the end of this week takeover InterOil after the commercial arrangement between the two companies, worth more than K6 billion, was approved yesterday.

ExxonMobil will now own InterOil’s assets in the undeveloped Elk-Antelope gas fields, in the Gulf Province, and exploration licenses covering about 16,000sqkm.

In a statement today, InterOil announced that the Supreme Court of Yukon in Canada, granted a final order approving the arrangement between InterOil and ExxonMobil.

In November 2016 the Yukon Supreme Court had initially upheld an appeal by InterOil founder, Phil Mulacek, against an original takeover offer.

Last week InterOil shareholders overwhelmingly approved a revised transaction agreement with Exxon Mobil with more than 91 per cent of  votes cast in favour.

Previously 80 per cent of shareholders voted to approve the original transaction  at a Special Meeting on September 21, 2016.

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According to the amended agreement Exxon Mobil lifted the maximum price payable for InterOil by about 10 per cent to US$78.94 (K236) per share.

The offer was structured as a US$45 (K135) per share flat cash payment, plus an extra US$7.07 (K21) per share for each trillion cubic feet (tcf) of gas certified as being held in Elk-Antelope.

Under the approved arrangement, ExxonMobil now becomes a Joint Venture in the Papua LNG Project, operated by Total SA, and the PNG Government, with expected first gas in the early 2020s.

The Papua LNG will be supported by the Elk-Antelope gas field, located in the Eastern Papuan Basin.

ExxonMobil now has a commanding position in the basin with a record of five successful discoveries originally by InterOil – Triceratops, Elk, Antelope, Raptor and Bobcat.

This afternoon, an ExxonMobil spokesperson informed Loop PNG that “the acquisition of InterOil as envisioned in the amended agreement continues to represent a significant value to the government and people of Papua New Guinea, as well as to InterOil shareholders.  ExxonMobil looks forward to closing the transaction in accordance with the Plan of Arrangement.”

Pictures credit: http://www.offshorepost.com/

Advance Australia unfair

By Emma Larking on February 10, 2017



Operation Sovereign Borders poster (Wikimedia Commons)Australia is pouring money into a system that targets the vulnerable in our region, and it is doing so with considerable secrecy and scant regard for the costs.
Recent evidence of its profligacy came in a report from the Australian National Audit Office claiming the immigration department spent $2.2 billion on offshore detention programs without going through adequate processes to ensure value for money, and without appropriate oversight of contracts for services.


The report found contracts had been entered into in haste to give effect to government policy decisions, and the result was higher than necessary expense for taxpayers and significant reputational risks for the Australian Government and the department.
Australia’s offshore detention camps are now notorious, but less is known about other attempts to curb irregular migration. Yet Australia invests heavily throughout the Asia-Pacific to ensure that irregular migrants – including asylum seekers – never arrive on its shores.
The Australian public has a right to know how the Government is spending public monies, to what ends and with what results. The public also deserves an explanation of how spending on border controls fits with other regional policy initiatives. These include justice programs designed to promote the rule of law, strengthen judicial independence, support national human rights institutions and counter violence against women and children.
In countries throughout the Asia-Pacific region, Australia provides funding and infrastructure to establish border controls, and personnel to draft new migration laws and policy frameworks. Members of the Australian Federal Police, defence force personnel and immigration department employees collaborate closely with their regional counterparts, often working in-country. The Australian Navy and Secret Intelligence Service are engaged in operations to intercept asylum seekers and stop people smuggling.
As well as the detention centres in Nauru and Papua New Guinea (PNG), Australia also funds detention centres in Indonesia. It funded the Nauruan and PNG Government’s defence in cases challenging the constitutionality of the detention centres. It also funds international agencies to process and oversee irregular migrants and refugees living in the community in Indonesia, Nauru, PNG, and until recently, Cambodia. Frequently, aid funding is linked to agreements to enhance border controls, repatriate nationals who have fled the country, or establish detention centres or refugee resettlement programs.
It is impossible to obtain clear financial costings, but a conservative accounting suggests Australia has spent well over a billion dollars annually since 2012 on these efforts to prevent irregular migration. With no boats known to have made landfall on Australian territory since late 2013, this might be considered money well spent – albeit a large pot of it. But what are the other costs associated with this secretive regime? There is the suffering of individuals trapped in countries where they are persecuted or live in limbo without rights. But there are also broader implications for Australia and the region.
In its collaborations with Cambodia, Iran, Nauru, PNG, Sri Lanka and Vietnam, Australia has aligned itself with authoritarian regimes implicated in serious human rights abuses. 

The funding it provides in exchange for support on irregular migration strengthens and entrenches these regimes. Australia is promoting the securitisation of irregular migration in the Asia-Pacific, putting it on what Josiah Heyman calls ‘a war footing’. In the process, the power of executive governments is enhanced, along with their immunity from public scrutiny and control. Throughout the region, rights activists have expressed dismay over these developments.
Australia’s refusal to open its borders to displaced people is also viewed with disdain by communities that are poorer and less well equipped to assist. Deni ToKunai, a political commentator in PNG, says the 2013 agreement to establish an Australian-funded detention centre contributed to “a boiling resentment [among many in PNG] against Australia and the Australian people never before seen by this generation”.
This resentment is unlikely to evaporate. PNG’s Supreme Court may have ruled the detention arrangements unconstitutional, but there are still hundreds of people living in the centre, and building work is underway on a new ‘transfer’ centre funded by Australia.
How Australia’s irregular migration policies interact with other forms of regional policy engagement has not been publicly explained or defended, but the former are inconsistent with other goals, including advancing the rule of law. Regional justice programs are unlikely to gain traction while Australia continues to fund detention and control regimes that perpetuate violence and operate outside the purview of the law. Instead, they may well contribute to regional perceptions of Australia as a nation of selfish and self-serving hypocrites.

http://devpolicy.org/advance-australia-unfair-20170210/?utm_source=Devpolicy&utm_campaign=07c434825b-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_082b498f84-07c434825b-312063401

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

Can Social Media Transform Papua New Guinea? Reflections and Questions

by Mitchell Rooney

As of July 2012 there just over 100,000 registered facebook users in Papua New Guinea (PNG), most of whom are below the age of 35, and an increasing array of PNG related websites. The explosion in the use of social media by Papua New Guineans is changing the way that they are engaging in politics, business and social activities on the home front. It is also changing the way that the international community is engaging with Papua New Guinea (PNG). In an unprecedented style, resonant with tours made by highly public figures and dignitaries, a young PNG man (Martyn Namorong, prolific blogger, self described betel nut seller and grassroots person) undertook a privately sponsored two week visit to the Australian cities of Brisbane, Sydney, Melbourne and Canberra in 2012. This visit entailed an advance announcement and a highly publicised agenda and programme wherein he met with prominent Australian PNG experts, politicians, journalists, ordinary Australian residents and gave seminars to a variety of Australian audiences.

socialmedia

A number of recent articles and radio interviews (Radio Australia, ABC, 4 July 2012;  Radio Australia, ABC, 5th July 2012Rausim! Social media and political protest in Papua New GuineaCatherine Graue of Australia Network) with pioneering social media practitioners reveals some important features of the emergence of social media in PNG. These people include Emmanuel Narakobi (administrator of the Masalai Blog and the facebook forum Sharp talk); Tavurvur who administers the Garamut blog); Martyn NamorongAlexander Rheeney , (PNG journalist and administrator of PNG Perspective); and Nou Vada (law student, blogger and administrator of The Edebamona Blog). In recognition of this emerging form of media Malum Nalu (Journalist and administrator of the Malum Nalu blogspot) was awarded the UNESCO/Divine Word Institute Award for Communication and Development in 2011.

In her paper, Rausim! Social media and political protest in Papua New Guinea, Sarah Logan talks about the use of social media in the recent political gymnastics in PNG. Inter alia, she highlights two roles of social media. The first is the role of social media in facilitating political protest and the second is its facilitation of civil society engagement in the practice of politics. She also highlights that the limitations on the use of social media include the limited numbers of users and the general sense of “political apathy” and “fragmented political identity” associated with PNG politics (Sarah Logan).

Martyn Namorong and Alexander Rheeney highlight (ABC Radio Australia) how PNG society is very community based and many educated and urban based Papua New Guineans remain closely connected with their rural based families. They point out that this means that the current numbers of facebook users represents a significant mass of PNG society whose engagement through social media has the potential of being translated and amplified through various offline networks. The far wider coverage of basic mobile phone services (phone calls and text messages) adds to this amplification effect.

Much of the discussion is focussed on how social media is revolutionising the way in which Papua New Guineans are engaging in the political arena. For example, Narakobi highlights that during the Easter 2012 political protests membership of the sharp talk facebook forum jumped from between 3000 and 4000 to over 6000.

Yet, other questions emerge beyond the potential role of social media in political transformation. Core to these is: How do social, development and political actors (national and international) translate this social revolution into something that matters for those that need it most? In this regard, two questions emerge:

  1. How can society manage the institutions that are created to ensure the principles of democracy – accountability, transparency, fairness, justice and equality – function to protect society as it shifts and responds to new and emerging power actors that are in a position at this point in history to harness the power of social media for a specific agenda?
  2. How can the power of social media facilitate a better engagement between, not only civil society and political actors, but also between civil society and development actors to bring about tangible development outcomes?

Both these questions are particularly important within the PNG context where lack of political will, corruption and lack of implementation capacity are the main impediments to development; violence is an explicit and blatant form of power; literacy rates are below 50%; over 30% of the population live below the poverty line; there are over 700 languages; and systems of law and order and law enforcement are dysfunctional at best. They are also important for development policy where an environment of functioning democracy, political stability and protection of society is the foundation for the achievement of development outcomes.

The following paragraphs are intended to highlight just some of the dynamics emerging in the social media sphere in PNG.

That the above referred social media pioneers have chosen different forms of public representation – real name versus pseudonym – is revealing of the social and political dynamics underpinning the use of social media in PNG. Namorong says that using his real name adds credibility and accountability to his writing. Another advantage is the direct credit that one receives for their contribution via social media. One disadvantage is the security of a person who speaks out on a sensitive issue such as corruption. On the other hand, Tavurur has blogged very successfully (high quality, high number of followers and sustained over a number of years) for several years now. In other cases, such as a facebook forum, the use of a pseudonym poses questions of transparency and accountability on the part of a forum administrator.

In a country where names are often synonymous with ethnicity, family and sometimes political affiliation and in a context where corruption and violence are widespread, it is understandable that some may wish to conceal their real identities when engaging in the public sphere. It is also interesting to see that many people use their real identities and openly write about issues such as corruption and violence. In one example, a woman in a forum of over 1000 people wrote how she did not support a relative who was a candidate in the election. She acknowledged that she might get in trouble with the family for speaking out but felt that she needed to have her say. In another example, in the PNGians against domestic violence forum, which has over 6000 members, women publicly plead for help to deal with violent situations. These examples reveal a civil society that is actively engaging on matters that affect their lives and that social media presents an accessible avenue to do so. Whether it is a safe and free median to engage is yet to be seen.

The table below provides a snapshot of some of the forum profiles and membership figures and reveals a variety of styles. Closed versus open groups; known administrators versus unknown administrators; provincial focus versus national or issue based focus. Membership of groups ranges from anywhere below 100 to over 6000.

 

I conclude by raising some issues for consideration in the hope of stimulating further dialogue.

  1. How does PNG society ensure that this shift in power and voice towards those who master the art of social media is made in a way that new power actors are equally held accountable for what they say and do with their skill in an evolving social context?
  2. How does society protect the rights and security of those who wish to speak up on corruption and violence?
  3. How does society respond to social demands created by the opportunities opened by social media? For example the voices of women who publically seek help in violent situations invoke a joint social responsibility for immediate support but they also create opportunities for those in the policy and development arena to formulate appropriate responses.
  4. Are issues on cyber education and safety, including the protection of children, being integrated into the formal and informal education system? Is funding being made available for organisations to run training courses on cyber safety in all communities?
  5. In terms of public and private partnership, might we see a proliferation of bill boards, TV advertisements, mobile phone alerts akin to donor supported HIV/AIDS and other billboards promoting the safe and responsible use of social media?
  6. Has the PNG Ombudsman Commission created an avenue to enable engagement with civil society through social media?
  7. Has the Royal Papua New Guinea Constabulary created an avenue to enable engagement with civil society through social media?
  8. Is there an Electoral Commission facilitated forum to enable feedback and election observation through social media?
  9. Some development agencies, including donors, multilateral agencies, international financial institutions and NGOs are already engaging with civil society through social media in some of the countries they work in. Is it time for development partners and donors in PNG to embrace this social revolution in the same way?
  10. Are those tasked with development policy formulation, implementation, and monitoring and evaluation, actively exploring ways of tapping into the opportunities presented by social media to engage with civil society?
  11. Is it possible that in the near future PNG will have an online and social media facilitated “development partner” and “civil society” forum?

Whatever the answer to these questions, it is clear that there are huge implications for the practice of development in PNG. If social media is to make a difference in PNG beyond its ability to reshape the political arena, it must be utilised as a tool by all actors interested in the development of PNG to translate this new energy into tangible development outcomes.

 

Bank South Pacific to list on ASX

By: Jonny Andrew

Papua New Guinea’s largest bank, Bank of South Pacific (BSP) would be making history for Papua New Guinea when they list on Australian Stock Exchange (ASX).

The BSP Bank — one of the largest listed on the Port Moresby Exchange — has more deposits than loans because of the limited corporate field to lend to in Papua New Guinea, according to sources.

Bankers at UBS met with fund managers in the past fortnight, testing their appetite for a dual listing of the financial operation in Australia, in addition to the Port Moresby stock exchange, where it is already listed.

It is estimated to be floated at $1 billion dollars.

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PNG’s Bank South Pacific eyes ASX listing via UBS

Papua New Guinea’s largest bank, Bank South Pacific, is heading towards a listing on the Australian Securities Exchange through investment bank UBS, with a float expected to be worth at least $1 billion.

Bankers at UBS met with fund managers in the past fortnight, testing their appetite for a dual listing of the financial operation in Australia, in addition to the Port Moresby stock exchange, where it is already listed.

The bank — one of the largest listed on the Port Moresby Exchange — has more deposits than loans because of the limited corporate field to lend to in Papua New Guinea, according to sources.

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Bank South Pacific Loan Mix

There are a number of economic headwinds in PNG — its biggest market — with inflation running at 6 or 7 per cent, while currency risk remains a factor.

Gross domestic product in PNG is shrinking due to the completion of the PNG LNG project. At the same time the weaker outlook for oil has put a question mark over other major energy projects.

Currently listed, Bank South Pacific is owned by various local institutions.

Net interest margins are 7 per cent, and the long-term compound annual growth rate is 24 per cent. The bank doubled its earnings in the past six years, posting 532 million kina ($224.9m) in net profit during the 2015 financial year, and return on equity is 29 per cent.

In 2014, its revenue was 1.67 billion kina.

BSP also has 20 per cent of its earnings from tier one capital and has the largest amount of employees, branches (there are currently 35 in six countries) and ATMs.

It has 650,000 banking customers throughout the Pacific, and in December 2014, it had assets valued at 15.8 billion kina.

Originally, BSP was derived from the National Bank of Australasia, based in Port Moresby.

As independence approached for PNG, the incoming government made known its desire that all banks in PNG be locally incorporated, rather than branches of a foreign parent.

Since its inception, Bank South Pacific has had a strategy of rapidly expanding throughout the South Pacific.

It has acquired assets from the Commonwealth Bank of Australia and Westpac

Our bank regulator, the Australian Prudential Regulation Authority, has a cross-border training program with PNG authorities.

BSP’s move comes after PNG finance house Kina Securities listed in Australia last year in a dual listing to raise $97m, with a $164m market value, in an effort to offer funding power for its Malaysian-owned Maybank acquisition and enable the sell-down of 35 per cent shareholder Fu Shan Investment. Former Suncorp banking chief David Foster was appointed to the board.

Since listing at $1 per share, the company’s share price has risen to $1.06, which was its closing price on Friday.

http://www.theaustralian.com.au/business/dataroom/pngs-bank-south-pacific-eyes-asx-listing-via-ubs/news-story/b761d9a01e726132926b3c40ac2ed792

Call to Invest in Infrastructure, Industries and Technology to grow the Economy

The greatest investment experts in America have all rallied behind U.S President elect Donald Trump…….their advise is he can make American great again…..and that is to invest more in Infrastructure, Industries and Technology…..

What is Papua New Guinea waiting for? This advise is FREE!

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President Trump, You Can Make America’s Economy Great Again. Here’s How

By: Richard Duncan

I have just uploaded a Macro Watch video in the form of a presentation to President-elect Trump. I believe it is the most important video I have ever made. Here’s how it begins:

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President Trump,

You CAN make America’s economy great again. Here’s how:

INVEST, Mr. President – not only in infrastructure but also in the industries and technologies of the future.

You have been elected President at a unique moment in history that gives the government of the United States the ability to borrow and invest in the US economy on a scale not only large enough to rebuild America’s infrastructure, but large enough to also induce a new technologic revolution that would restructure the entire economy and make it great again, greater than ever!

If you grasp this opportunity, the United States will have unassailable supremacy in the industries of the future; you will lock in another American Century; and you will improve the well being of every American – and the well being of every person on this planet.

However, you have also been elected at a time when the global economy is in grave danger of collapsing into a depression, one from which it might not recover for decades – if ever. One misstep on your part and instead of making the economy great again, you will make the Great Depression again.

Here’s what you need to know and to act on to succeed.

The global economy is an enormous economic bubble that has been inflated by Credit. If the Credit contracts, the bubble will pop and the New Great Depression will begin. If interest rates go up significantly, the bubble will pop and the New Great Depression will begin. One wrong move on your part and the economy will spiral out of control into a depression. It won’t be short and sharp like 1921. It will be long and devastating like 1929 to 1945. That’s the bad news.

Here’s the good news. You are absolutely right to call for government investment in infrastructure. DON’T STOP THERE. During your administration, the government can borrow and invest trillions of dollars in the US economy without causing inflation. The combination of Globalization and Fiat Money makes this possible.

You not only have the opportunity to rebuild American infrastructure so that it is second to none as you promised to do in your victory speech. You also have the opportunity to invest in 21st century industries and technologies on a scale that is too big to fail, thereby guaranteeing that the United States remains the most prosperous and powerful country in the world for many decades to come.

In the past, the government could not run large budget deficits without causing high rates of destabilizing inflation. Today, the United States government can borrow and invest many trillions of dollars at little to no cost – and do so without causing inflation.

In this presentation, I’ll explain why. I’ll also describe the kind of government investment that is required to pull the United States and the world out of this economic crisis – and the extraordinary benefits that such investments would produce.

The stars are aligned. You instinctively understand the desperate need to invest in American infrastructure even if that means increasing the national debt AND you have the political clout to make sure that Congress funds this investment, something it was unwilling to do until now. At the same time, the combination of Globalization and fiat money makes it possible for the US government to borrow and invest trillions of dollars at little or even no cost whatsoever. Now that you have shattered the taboos that blocked fiscal stimulus and an increase in the national debt, all that remains to do is to determine is what kind of investments will generate the greatest benefits – and then to make those investments.

This is a once in history opportunity, Mr. President. Grasp it. INVEST. And make America’s economy greater than ever.

A Cost-Benefit Analysis of PNG APEC 2018

By Francis Hualupmomi, New Zealand
Oct 27, 201671

This is a Cost-Benefit analysis of the Asia-Pacific Economic Cooperation (APEC) Meeting to be hosted in Papua New Guinea (PNG) in 2018 at a cost of about K3b.
What is APEC?
APEC is a regional economic forum in Asia-Pacific region. The forum initially started as an informal dialogue of economic leaders in 1989 in Canberra, Australia. It was formally established in 1993 with 12 members. Currently, APEC has 21 member economies. APEC Vision as reflected on ‘Bogor Goals’is to achieve free and open trade and investment in the Asia-Pacific by 2010 for industrialised economies and 2020 for developing economies. The current theme centers on economic integration, sustainable and inclusive growth. PNG joined APEC as a full member in 1993. However, it has not been a very active member until APEC approved Somare government’s proposal to host the meeting in 2018.

apec-haus

Is the APEC Worth It?
It is also important that we understand the advantages and disadvantages of being a member of APEC.

Advantages
APEC is often referred to as the most dynamic engine growth of the world’s global economy driven by its trade and investment value and contribution. This holds true for its population of about 2.8 billion people which represents approximately 57% of the world’s GDP and about 49% of the world trade (as of 2013). This suggests that developing countries stand to gain increasing benefits. First, APEC’s informal approach of dialogue and collaboration encourages more participation compared to other rules-based economic forums/organisations. Secondly, not only will they benefit from the development of procedures, policy frameworks and systems to deal with contemporary issues ranging from transparency and governance to financial sector reform and customs procedures but the opportunity to learn new skills and best practices from other economies. Third, they are able to set agendas and have much say, just like any other bigger players in the forum.
Moreover, it is becoming clear that the exponential growth in the region will continue to reduce poverty across the region with deepening trade and investment. For instance, over the last two decades, we have observed that there has been a reduction in poverty and growing middle class as real GDP doubled from USD 16 trillion in 1989 to USD 31 trillion in 2013.
Finally, developing countries will benefit from APEC’s effort in integrating the region’s economies and promoting trade while addressing sustainability and social equity. Some of these initiatives are: Promoting Regional Economic Integration and Trade; Making it Easier to Trade Across Borders; Making it Easier to do Business Faster Customs Procedures; Structural Reform; Connecting the Region; APEC Business Travel Card; APEC Supply Chain Connectivity; A Sustainable Future for the Asia-Pacific; Environmental Goods List; Increasing Energy Efficiency and Renewables; Inclusive Growth: Ensuring Everyone is On Board (Nurturing Small Businesses, Enhancing Social Equity in the Region).
Disadvantages
While the advantages seem highly beneficial there are also some disadvantages of developing countries being part of APEC. Firstly, it seems advanced countries will continue to benefit more than developing countries due to the advanced technology and technical know-how that enhances their competitive and comparative advantage power. Small economies such as PNG will continue struggling to find their niche in the regional value chain. In addition, it appears that some of the Bogor Goals of APEC have not been achieved to date. This suggests that there is no guarantee that developing countries’ agendas expressed through high-level policy goals will be achieved. This is largely attributed to the complexity of geopolitics and interaction of other forces influencing the value chain. Lastly, the rule of corporate giants will continue to influence the value chain in the long run as it seems. Giant corporations’ interests will be politically driven at the institutional level; they will be the ‘winners’ at the expense of developing countries.
Is Hosting of APEC Worth It?
The question of whether APEC is worth hosting it by the PNG government in 2018 is necessary at this time when the country is facing an economic problem. Experiences from other member countries such as the recent host, Philippines suggest that the benefits will outweigh the cost initially invested. For instance, Philippines as a host of two APEC meetings (1995 and 2015) is currently experiencing a growth rate of 8% as a result of heavy investment in between those years. But what are the likely benefits of hosting APEC in PNG despite the current economic situation?
First, is that benefits outweigh the cost in the long run. This implies that there is an opportunity cost; in the immediate term the cost will seem exorbitant but over time benefit will accrue. Second, there are immediate returns through increased economic activities during the time of the event. For instance, there will be increased investment from tourists and businessmen so as the creation of jobs. Third, not only will it bring returns in the immediate term but also restore the credibility of the state in hosting future high-level meetings. At the same time, investment in the meeting will boost our socio-economic infrastructures such as modern university facilities and improve our security and defence capability and capacity.
As far as the long term benefits are concerned, this meeting will increase and deepen PNG’s trade and investments in the region. This will further be boosted by labour and skilled mobility, technology and knowledge transfer and financial transfer. SMEs are expected to benefit in this multi-relations. Socially, it will help increase collaboration and cooperation in combating governance and transparency and climate change issues. Another important point is that not only will PNG showcase its unique culture and tradition in the region but as an emerging Pacific leader it will fulfil the Pacific dreams of connecting the small island countries to the bigger APEC community through Pacific Islands Forum and Melanesian Spearhead Group. If that is well executed, there is a high possibility for PNG securing its full membership in ASEAN.
Conclusion
The analysis suggests that the opportunity cost of hosting 2018 APEC Meeting would accrue moderate returns in the immediate term and higher returns in the long term despite high cost in the short term. The hosting of APEC is a strategic decision of the government based on calculated risks. Since it takes time for investments to maximise returns, vibrant leadership and effective good governance system is highly necessary. Political disturbance at this time would not only embarrass PNG’s international credibility but also jeopardise the opportunity to host future high-level meetings and access to other regional and global forums/organisations.
The author is a Political Scientist and PhD Candidate in Public Policy at the School of Government, Victoria University of Wellington, New Zealand. He holds a BA in Political Science and Public Policy and Management (UPNG), BA Honours in Political Science and International Relations (UPNG), Master of International Politics (Jilin University, P.R China) and Post Graduate Certificate in Higher Education Policy Management (Melbourne University). The views expressed here are his own. francishualupmomi270@gmail.com

Pros and Cons of Hosting the APEC Meeting in Papua New Guinea

By: Ludwig Aur Aba

Asia Pacific Economic Cooperation (APEC) is a very important international organization and PNG hosting APEC meeting will bring together very important leaders of superpower countries like USA, Russia, China, Brazil, Australia, Indonesia, Japan and others. There will also be other observer countries as well. PNG was privileged to have been awarded the hosting rights in the last meeting, mainly because of its status as one of the fastest growing economies in the Pacific and the APEC leaders at that time were impressed on the performance of PNG economy, hence the nomination and selection. It was indeed a privilege for PNG in the eyes of the world to have been selected ahead of other countries, which were also nominated.

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A good number of people have raised concerns about the benefits of hosting the APEC meeting in 2018, at a back of a suppressed economy and dilapidated state institutions and infrastructure. Several responses were provided but it does not give detailed information about how the country is going to benefit from such an important international event. At the outset, it is quite understandable why people are unhappy about hosting such an international event, when the country has cash flow problems, limited employment opportunity, dilapidated infrastructure, break-down of state institutions, poor social and health indicators. They are questioning why spending K120 million (could be more) on the event, when the economy is in bad shape.

It is worthwhile, a detailed explanation of the pros and cons of hosting such an important event is made to every concerned citizen so they are aware of the costs and benefits.

 

Pros

1. Raise profile of Port Moresby and Papua New Guinea

Raising the profile of our city can lead to lasting economic benefits, not only for POM but PNG as well. For example, cities which hosted the Olympics and other international events have seen a persistent increase in recognition and tourism. Like other international meetings, hosting the APEC raises a country’s profile, which are important in generating new economic benefits and business investments since the day PNG was selected to host the APEC. The importance of this is that it can change the views of the world on Port Moresby, and PNG, especially when POM was ranked as one of the most unlivable cities in the world and PNG has the most corrupt country. There are other aspects of Port Moresby and PNG the world does not see, let’s work together and give them these. Port Moresby is always in the front pages for the wrong reasons, PNG should capitalize on this event to get united and show the world that PNG is different from the rubbish that are published in the media. If there is going to be any chance to increase the profile of Port Moresby and PNG, it is definitely the hosting of APEC.
Why is Port Moresby given too much attention and not other centers? The first answer is Port Moresby is the capital city of PNG and as such, it must be treated as a capital city. You look at Sydney, Tokyo, London, New York, their governments and the private spend lots of resources to bring to where they are now. The country is changing and we must change and accept new developments. Most of these infrastructures have created thousands of jobs for our people. These infrastructures will still be here for our future generations to use. In my opinion, we must give Port Moresby the treatment it deserves to be our capital city, which all of us can be proud of, and our visitors can enjoy.

2. Long term Trade, Investment and Jobs

A significant benefit Port Moresby and PNG benefited is the long-term investment, which comes from preparing for hosting APEC. The preparation did not start yesterday, it started when PNG was selected as the host country for APEC 2018. The POM and PNG will have a legacy of improved infrastructure including venues that should address some of our daily traffic worries. Unlike, other investments, infrastructure is very expensive to build and people should accept this fact. POM should invest heavily in infrastructure and public transport to cater for the influx of not only our visitors but our increased population. This will leave a legacy for residents of POM, they will benefit from improved public transport. Any new investment bring with it jobs, and this may proof beneficial for PNG because the several years of planning and investment will help create jobs and can revive POM and can boost economic output.
Apart from the investments infrastructure and public transport, leaders of major business corporations will be here as well. They will be looking for opportunity to invest their dollars. They may strike trade deals with PNG-based corporations or resources owners. New Business deals could be struck and the employment benefits will be immense. In the long run, such deals will continue to provide employment and tax benefits to the country. Countries may also sign trade treaties or other areas of cooperation that may benefit PNG as well.

Some of the short-term benefits of hosting such events are the logistical and transportation services, which will also benefit from hosting such events. The hotels and catering services will serve our guests (in terms of bed, food, drinks etc). The security services will be increased. These will be immense. Added to these are the inflows of foreign currency, especially US dollars. Some of the leaders will be here with their spouses and other relatives and would like to spend on something that they will remember. These will benefit cultures. We should showcase our cultures to the world. PNG should be showcasing our cultural diversity, the more than 850 different languages to the world leaders as a promotion to attract more tourists into PNG in the future. East New Britain will also host some of the APEC meetings, they will also benefit from the meetings, including hotels, security, showcasing our cultures and selling artifacts etc.

These long and short term investments and spendings are important given the state of economy, by creating jobs, and can help create economic recovery. The investment has potential for leading to higher growth and higher future tax revenues.

 

Cons

Although hosting such important events are beneficial in economic wise, there are other things which may not be so good. For example;

1. Cost of building the infrastructure

To host an Important Event like this, require huge capital investments, which should be paid for by tax payers, unfortunately. The Costs of building these infrastructures have a tendency of going up and could be much greater than expected. Associated with the cost over-runs are the over inflated contracts, and the involvement of politicians in such contracts. These are the main issues. Politicians should not get the dirty fingers in such big projects. Unfortunately, we are in PNG and cannot avoid that.

2. Short-Term use

The other important thing is that many of facilities built for the APEC can never be fully used again. It will rarely be full outside of the Olympics. This can be mitigated by careful planning.

3. Potential for negative publicity

If things go well, a POM can benefit from positive publicity, but if things go badly, it can cause the opposite.

4. Cost of Security

The budget for the security will be biggest slice of the cake. Like any major events, this APEC should increasingly implement higher levels of security. This is both costly and can restrict freedom of movement of local citizens during the meetings.

4. Borrowing and Increase in Debt

Also, one bad thing about hosting such events is that, it eats into the budget of the host country. With the current difficult economic times PNG is facing, it has no choice but to borrow and fund the activities leading up to the APEC meetings. This may add to the overall Government debt of PNG, which will eventually be paid by the tax payers.

 

Conclusion

In my view, it is understandable why people complain about the spending by the Government to host the APEC, while other areas are suffering. But developing Port Moresby is not wrong, it is our capital city and we have to develop it. In life, there are always trade-off, we can’t get all we want. We should make some sacrifices, and in the meantime, the sacrifices are being made by the 7.5 million people of PNG to host this very important economic meeting. Let’s make use of every opportunity from this meeting and try and get something out of it to compensate for our sacrifices.

The importance of this is that it can change the views of the world on Port Moresby, and PNG, especially when it is ranked as one of the most unlivable cities and the most corrupt countries in the world. There are other aspects of Port Moresby and PNG the world does not see, let us work together and give them these. Port Moresby is always in the front pages for the wrong reasons, PNG should capitalize on this event to get united and show the world that PNG is different from the rubbish that are published in the media more frequently. If there is going to be any chance to increase the profile of Port Moresby and PNG, it is the hosting of APEC.

Let us not kill the enthusiasm to host such international events. PNG has come of age, though we have problems, they are not unique to PNG. Every country has its own set of problems, it’s not only PNG. President of US, China, Japan, Russia and others will be here. PNG just had this rare opportunity to host them. We should feel privileged to host such very powerful and important leaders on earth.

I hope I make some sense here.