The Australia-Papua New Guinea Business Exchange (APNGBX) recently highlighted opportunities for collaboration and investment in PNG's growing economy. Key discussions focused on infrastructure development, renewable energy, and the broader economic landscape.
Key Takeaways included:
Global Economic Trends: Senior Economist Justin Smirk from Westpac Bank analyzed the global economic outlook, emphasizing the need for ongoing investment and adaptation to changing conditions.
Smirk said this in the APNGBX Breakfast meeting, recently co-hosted by the Port Moresby Chamber of Commerce and Industry (POMCCI), which informed the private sector on Australian Government investments in PNG.
In his presentation, Smirk emphasized the significance of geopolitical risks and the ongoing fragmentation of the global economy.
"We are moving to a world where we have been accustomed to low inflation and low interest rates for the past 20 years. This stable environment is shifting; we will see higher inflation and more volatility in energy prices, which means interest rates will rise and become more expensive," he said.
Smirk also noted the trend of aggressive rate cuts in major economies, including the US as a response to global inflationary pressures.
"We are loosening rates to manage inflation while allowing growth to continue," he explained, indicating a shift away from recession concerns in these regions.
Discussing China, Smirk remarked on its transition from housing investment to a focus on infrastructure development. While China continues to play a critical role in global commodity demand, its approach to energy consumption is evolving.
"They want to export electric cars and are investing in wind and solar panels, indicating a significant shift in their economic strategy," he said.
Turning to PNG, Smirk reflected on the nation's economic recovery since earlier this year, despite facing challenges such as security issues and utility constraints.
"While there were concerns about growth, we observed solid employment growth in the early part of the year. However, since then, we've seen a flattening trend."
Smirk also provided insights into currency forecasts, noting that the Australian dollar is expected to rise against other currencies, despite a weaker position against the US and UK dollars.
"On current trends, I am comfortable with how things are unfolding. We expect the Australian dollar to strengthen further," he added.
Australia's Infrastructure Investment: The Australian High Commission highlighted Australia's significant investments in PNG's infrastructure, including power, telecommunications, and transport as presented by Ms Diane Barclay, Minister-Counsellor.
Barclay, whose portfolio includes key sectors such as electrification, telecommunications, and transport, said: "I have both the privilege and challenge of looking after economic infrastructure and health engagement at the Australian High Commission here in Port Moresby."
"The Government of PNG has requested that 50% of our aid funding be directed towards infrastructure investment," she explained, reflecting PNG's urgent need for enhanced planning and development in this area.
Australia invests approximately $200 million annually in infrastructure across various sectors in PNG, alongside an additional $800 million in the pipeline through the Australian Infrastructure Financing Facility.
"Infrastructure investment is a key enabler for economic activity," Barclay said as she elaborated on current projects, particularly in the power sector, aimed at improving the reliability of on-grid power.
"We have been repairing the Rauna hydropower station, which is expected to restore around 15 megawatts of power," adding that another upgrade would bring the total to approximately 25 megawatts.
She also referenced efforts to enhance provincial grids by integrating solar and diesel power to reduce costs and improve reliability.
"In July 2023, the energy power reported less than 50 hours of power outages in our café, down from 500 hours in the same month the previous year." This achievement underscores the positive impact of Australia's infrastructure projects in local communities, she said.
Barclay noted the role of the Coral Sea Cable in improving internet connectivity. "While the Coral Sea Cable has made a significant difference, it remains underutilized," she remarked.
Reducing wholesale internet prices is essential for increasing internet penetration, currently around 25%, she said. "With a three-fold improvement in affordability, internet penetration could rise to 70%, potentially contributing around $18 billion a month to the PNG economy."
Barclay also touched on maritime investments, which are vital for enhancing transportation and trade capabilities within PNG.
Partnerships: The APNGBX24 breakfast meeting is part of a five-day event hosted by Austrade, in collaboration with the Department of Foreign Affairs and Trade (DFAT), to enhance economic ties between Australia and PNG by offering Australian businesses direct access to key players and decision-makers in PNG’s growing economy.
Key collaborators of the event include ANZ, Westpac, and the Chambers of Commerce in Lae and Port Moresby. The event gathered industry leaders, government officials, and business representatives in PNG, focused on expanding business opportunities in renewable energy, infrastructure, and construction.
Delegates attending APNGBX24 had the opportunity to participate in roundtable discussions, networking events, and business-to-business meetings, focusing on PNG’s evolving infrastructure and clean energy sectors.
The country’s development plans and vision 2050, including the Highlands Highway Investment Program and the PNG government’s Connect PNG by roads initiative, present significant opportunities for Australian companies in construction, logistics, and technology.
The delegation also focused on renewable energy projects in regards to PNG’s development-plan to electrify 70 per cent of the population by 2030.
This gave an opportunity for Australian companies specializing in solar, hydro, and other renewable energy solutions to find significant potential in partnering with local stakeholders on these long-term, sustainable projects.
The POMCCI Breakfast meeting was held in September 26th at Holiday Inn in Port Moresby. Follow and check both the PNG Business News Website and POMCCI website for the Next POMCCI Breakfast Meeting.
