Next year, the Papua New Guinea economy will boast the biggest growth in the world. Rowan Callick looks at what political leaders and policymakers must do to take advantage of the country’s talent and opportunities.
Papua New Guinea is a country teeming with talent and with opportunity, and with the banks claiming they have the liquidity and the desire to support viable businesses or projects.
Why, then, is the population growing rampantly faster and bigger than new jobs are being created?
How can PNG be on the verge of becoming in 2015 the champion economy in the world, with gross domestic product growth widely forecast to exceed 20 per cent, while at the same time it languishes in the United Nations’ Human Development Index?
In the rankings for 2013, published in late July, it languished at 157th of 187 countries, with 26 of the countries below it in Africa.
In this index, which includes measures such as life expectancy, years of schooling, and national income per person, it slipped backwards a notch last year.
Part of the problem has always been a lack of true leadership: politicians who pretend to their voters, that yes they can have it all, their traditional values and lives intact as well as the benefits of modernity to which they aspire, without any serious sacrifice or trade-off.
In truth, of course, people in PNG have to be prepared by their leaders for sacrificial change, if their aspirations are even to be approached, let alone fulfilled.
Engaging with Asia’s ‘A-team’
Of course, PNG is not Asia. But it has failed to understand the way in which East Asia has been transformed, rapidly emerging from deep poverty into a prosperity that retains many core values. PNG is hugely advantaged in its location close to leading sources of capital, of technical skills, of management expertise, and to the world’s most hungry markets for mining and farm commodities, and for tourism.
Yet the contact between the cultures remains thin, and often wary—limited to unpopular, low-skilled migrants and to equally unpopular high-rent corrupt contacts withoften third-grade Asian business leaders who lure politicians to provide them with protected access.
PNG needs to build new relationships with the Asian ‘A-team’, from scratch.
Special economic zones
Max Rai, the thoughtful and experienced head of the trade division of PNG’s Department of Trade, Commerce and Industry, is suggesting creating special economic zones, which should have a priority on jobs and building skills. Asian business is familiar with such zones, and could be attracted.
But this first requires first class infrastructure, including reliable, cheap power and international telecommunications, direct international air flights, quality business hotels at competitive rates (meaning below half the present tariffs), and a sense of personal safety.
Protectionist barriers need to come down, not go up. International expertise, management, capital must be encouraged and welcomed.
Tourism special zones can be created in places like Milne Bay and the Gazelle Peninsula in East New Britain—again, requiring direct flights and top class infrastructure.
And farm exports should be encouraged, such as fresh vegetables that can be sold to north Asia during their unproductive winter, with a specialisation in niche, high quality products. Many value-added drinks and foods and spices can also be big employers, especially if land is able to be leased and aggregated to provide commercially-viable space.
Culture change needed
This all requires a huge culture change on the part of PNG’s elite, who are prospering from the revenues from the readily-taxed gas, oil and mineral exports, but are leaving inadequate amounts to trickle down.
It can happen. And surprisingly swiftly.
Countries to the north and west of PNG have shown that.
But PNG must take serious note of what has worked best there, and tailor those routes for itself.
Time is running out, as the population explosion threatens to overrun such opportunities. Opening doors and reducing barriers have always achieved more than protecting—well, what? Thriving industries and jobs? Hardly … with the exception of the resources and energy sector.
Rowan Callick is the Asia-Pacific editor of The Australian newspaper.