PAPUA NEW GUINEA - Business Advantage International

BUSINESS AND INVESTMENT GUIDE
Business Advantage
PAPUA NEW GUINEA
2013
• 2013 PNG 100 CEO Survey results
• Special mining and petroleum supplement
• Papua New Guinea’s fisheries boom
• Economic update
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businessadvantagepng.com/annual

CONTENTS
6ECONOMIC UPDATE
Papua New Guinea enters 2013 with a new government,
a major gas project nearing completion and some ambitious
development goals, reports Andrew Wilkins.
The
10
PNG 100
CEO survey
THE PNG 100 CEO SURVEY
At a time when some are wondering if PNG’s boom is coming
to an end, its largest companies still have an appetite for
investment, according to our exclusive annual survey.
25
Mining and Petroleum in PNG:
a special supplement
With the ExxonMobil-led PNG LNG gas project close to completion,
we look ahead at what’s next for hydrocarbons in PNG.
Meanwhile, the mining sector has some major projects of its own.
FEATURES
13 Papua New Guinea’s investment advantage
We report on PNG’s first ever international
investment summit.
17 Papua New Guinea’s fisheries boom
The northern coast of PNG is experiencing a boom
in international investment. We examine why.
OPINION & ANALYSIS
20 Business leaders’ perspectives on PNG
21 PNG’s services sector:
the next wave of opportunities
23 Commercial disputes in PNG
24 Doing business in PNG
INDUSTRY SECTORS
37 Financial services
41 Infrastructure & transport
47 Manufacturing
48 Agribusiness & trade
50 Forestry
52 Tourism
DIRECTORY
54 Who’s who in PNG
57 Business travel guide to PNG
Business Advantage Papua New Guinea was made possible by the support of the following organisations:
RD TUNA CANNERS LIMITED
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Welcome
Credit: PNG TPA
Welcome to the eighth annual edition of Business Advantage Papua New Guinea, PNG’s flagship business
and investment guide.
Designed to provide a snapshot of the country’s
economy and the business opportunities it offers,
this publication spreads the good news about what is
now being described as the Pacific’s tiger economy, while at
the same time providing a realistic assessment of business
conditions on the ground.
Papua New Guinea has achieved levels of economic
growth over the past decade unparalleled in its brief history
as an independent nation.
The best way of understanding what it’s like to do business
in a country is to hear from people who are already doing
business there. In the course of our research, we interview
dozens of PNG-focused business leaders each year, giving
you access to their insights, wisdom and experience. This is
the main reason why Business Advantage Papua New Guinea
has become the most respected resource for PNG-focused
business people wherever in the world they are.
With this edition, we are embarking on the most significant
expansion in our coverage of PNG business since our launch
in 2006.
In addition to this annual publication and its sister publication
Made in PNG, we are launching an entirely new type of
business media for PNG—a free online business review service
at www.businessadvantagepng.com.
This online service follows the country’s economy all
year round, providing analysis, commentary, expert opinion,
context and a wide range of tools and resources for business
people. The site will be updated daily, with weekly email
bulletins delivering insight and understanding to your inbox.
Together with our highly successfully Papua New
Guinea Advantage International Investment Summit,
which we will co-host again with the Port Moresby Chamber
of Commerce and Industry on 9 and 10 September 2013,
www.businessadvantagepng.com will make it even easier
for you to keep abreast of the business and investment
opportunities in one of the world’s fastest-growing economies.
Business Advantage Papua New Guinea 2013 is published by
Business Advantage International Pty Ltd
Level 23, HWT Tower, 40 City Road, Southgate, Victoria 3006, Australia
Tel +61 3 9674 7129, fax +61 3 9674 0400.
www.businessadvantageinternational.com
A digital edition of this publication is available free online at www.
businessadvantagepng.com. Additional printed copies can be purchased
for AUD$35 (incl GST and postage) from the above address or by emailing
info@businessadvantageinternational.com.
© Copyright 2013 Business Advantage International Pty Ltd and contributors
ISSN 1836-7895 (print)/1836-7909 (online)
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Project Director: Robert Hamilton-Jones (rhj@businessadvantageinternational.com)
Publishing Director: Andrew Wilkins (aw@businessadvantageinternational.com)
Editorial: Kevin McQuillan, Samantha Magick, Rod Myer, Tim Coronel,
Jacqueline Bennett, Helen Clark
Design: Alicia Freile
Cover images: PNG Tourism Promotion Authority, Steamships, Business Advantage
International
Printed in Australia. Both printer and paper manufacturer for this publication are
accredited to ISO14001, the internationally-recognised standard for environmental
management. This publication is printed using vegetable inks and the stock is
elemental chlorine free and manufactured using sustainable forestry practices.
DISCLAIMER
Business Advantage Papua New Guinea is a general guide to some potential business opportunities in Papua
New Guinea and is not designed as a comprehensive survey. The opinions expressed herein are not necessarily
those of the publisher and the publisher does not endorse any of the business or investment opportunities
featured, nor does it accept any liability for any costs or losses related to dealings with entities mentioned in this
publication. Readers are strongly advised to pursue their own due diligence and consult with investment advisors
before making any investment decisions.

ECONOMIC UPDATE
Port Moresby Harbour, viewed from ‘Town’. Steamships’ multi-storey
office and marina development—which will open up the waterfront to
the CBD for the first time—is under construction in the foreground.
Papua New Guinea’s year of implementation
Papua New Guinea enters 2013 with a new government in place, a major gas project nearing completion and
some ambitious development goals, reports Andrew Wilkins.
The Independent State of Papua New Guinea, the Pacific’s
largest and most populous economy, has now completed
a decade of positive economic growth, peaking in the last
two years at around 10% GDP growth per annum.
Having successfully navigated its way through national
elections in mid-2012, it now looks set for a period of
consolidation. Economic growth is expected to slow (to 4.5%
in 2013), and political attention is shifting to the bottlenecks
and impediments that are holding the country back.
Political stability restored
A new government led by Prime Minister Peter O’Neill was
elected in August 2012, providing a welcome return to political
stability after a period of constitutional uncertainty. The stability
has been consolidated by a new law extending the period
before a new government can be challenged by a vote of
no confidence to 30 months.
The O’Neill Government, seen as broadly pro-business, has
since made a series of strong commitments: to the reform of
state-owned enterprises, to increased support for indigenous
business and, crucially, increased expenditure on education,
health and much-needed infrastructure.
Indeed, its National Budget for 2013—at 13.03 billion kina
(US$6.22 billion), the largest in PNG’s history—will go into deficit
by 2.55 billion kina (US$1.28 billion) in order to fund additional
expenditure in these crucial areas. It is expected that the
nation’s future earnings from resources projects will cover
any shortfalls over the next few years. In addition, the O’Neill
Government has negotiated a six billion kina (US$2.86 billion)
loan with the Export-Import Bank of China to help fund its
investments in roads and ports.
6
‘I’ve an open mind on the deficit,’ says Garth McIlwain,
a former banker who is Chairman both of national airline
Air Niugini and finance company Credit Corporation. ‘PNG’s
fiscal position is not onerous, although you wouldn’t want
the deficit to go on continuously.’
The year of implementation
Prime Minister O’Neill has been keen to emphasise the ‘can do’
approach of his government, suspending overseas travel
for ministers and bureaucrats while declaring 2013 ‘the year
of implementation’.
An increased amount of government expenditure will be
disbursed not at a national level or through PNG’s 20 provinces
but at the lower district level of government—a response to
concerns that the benefits of PNG’s resources boom have yet
to reach many ordinary Papua New Guineans.
How far can PNG go?
Construction of the US$19 billion ExxonMobil-led PNG LNG
gas project will be completed in 2014 and, anecdotally, there
is already evidence of a slowdown, as construction tasks
are completed. Indeed, Peter Graham, Managing Director
of ExxonMobil subsidiary Esso Highlands, has flagged
demobilisation of the PNG LNG project workforce as a major
challenge for his organisation over the coming year (see our
interview with Graham on page 29).
This slowdown is reflected in recent Bank of Papua New
Guinea figures, which reported a slowing of employment growth
in the September 2012 quarter, although employment growth
of 7% in the previous 12 months was encouraging. (Only about
15% of Papua New Guineans work in the formal sector.)

Economic update
T O R R
E S
BALIMO
S T R A
I T
MT HAGEN
PAPUA NEW GUINEA
CAPE YORK
AUSTRALIA
G U
KEREMA
L F O F P A P U A
ADMIRALITY ISLANDS
MADANG
PORT MORESBY
C O R A L
B I S M A R C K S E A
LAE
S E A
H U O N
G U
NEW BRITAIN
L F
K I M B E B A Y
KIMBE
D’ENTRECASTEAUX ISLANDS
ALOTAU
NEW IRELAND
RABAUL
S O L O M O N S E A
TROBRIAND ISLANDS
PAPUA NEW GUINEA IN BRIEF
LIHIR GROUP
BOUGAINVILLE ISLAND
Population
7.01 million (2011, source:
World Bank)
Capital
Port Moresby
Surface area
463,000 sq km
People
Melanesian, Papuan, Negrito,
Micronesian, Polynesian
Time zone
GMT +10 hrs
Business language English
Political status
parliamentary democracy
GDP US$12.94 billion (2011)
GDP growth
4.5% (2013 projected, source:
Asian Development Bank)
Inflation
8% (2013 projected, source:
National Budget)
Currency
PNG kina
Major industrial mining, crude oil petroleum
sectors
refining, copra crushing, palm oil,
plywood and wood chip
production, construction,
fisheries, tourism, manufacturing
Exports
oil, gold, copper ore, logs, palm oil,
coffee, cocoa, seafood
Major export markets Australia, Japan, Philippines,
China
Imports
machinery and transport
equipment, manufactured
goods, food, fuels, chemicals
Major import markets Australia, Singapore, China
World Bank Ease of 104 out of 185 countries
Doing Business
Ranking 2013
‘There is a mild stabilisation in the market currently, nothing
more,’ notes David Purcell, Chief Executive Officer of local Toyota
subsidiary Ela Motors. ‘There will be a decline but when and by
how much remains to be seen.’
Any decline is certainly not deterring Ela Motors’—and many
other larger companies’—investment plans. The company is
building a new service centre in Lae, and new training and
pre-delivery centres in Port Moresby, with demand so high that
most vehicles are sold before they are taken into inventory.
Eugene David, who heads Pacific operations for global food
manufacturer Nestlé, explains the thinking of many of PNG’s
larger companies:
‘It’s slowing down a bit but you don’t want to be too
cautious. If anything, I think the view is it’s the time to invest
ahead of the curve.’
Other sectors compete for resources
Another reason for slower economic activity was the
considerable drop in the prices of commodities such as coffee
and palm oil in 2012, combined with sluggish demand from
Europe and North America, which affected export revenues
for PNG’s agricultural and forestry sectors in 2012.
While the Coffee Industry Corporation expects 2013 to be
a better year, there is concern among many business leaders
we talked to for this publication that PNG’s success in minerals
is overshadowing the need to develop other sectors of its
economy. Manufacturers and agribusinesses, for example,
have struggled to compete for skilled workers and other
resources in a business environment in which the costs of
doing business are already high.
7

Economic update
‘Markedly greater attention is needed than over recent years
to safeguard and improve the prospects of domestic agriculture,’
observes Paul Barker, Director of industry think-tank, the Institute
of National Affairs. (For more on agribusiness, see page 48.)
One non-mineral industry sector that is moving ahead
in spite of the many challenges is onshore fish processing,
with thousands of jobs being created along PNG’s northern
coastline (turn to page 17 for our in-depth article).
Pizza to go
In addition to cranes on Port Moresby’s skyline and previously
unheard-of traffic jams, another feature of PNG’s recent
economic boom has been the emergence of a monied and
aspirational middle class.
‘The market is definitely changing,’ confirms Mahesh Patel,
Chairman of CPL Group, which experienced a ‘healthy increase’
in its bottom line performance in 2012. Having introduced
PNG’s consumers to Port Moresby’s first multiplex cinema and
the Boncafé chain of coffee shops, Patel has plans to launch
PNG’s first pizza chain, and to open both a second cinema and
a showcase supermarket in Port Moresby’s Waigani suburb.
CPL is one of a number of retailers expanding and upgrading
their operations, with PNG’s only shopping mall, Vision City in
Waigani, significantly expanding its list of tenants since opening
in 2010. Where once service was ‘one size fits all’, PNG’s banks
too have developed premium services to cater for a more
prosperous customer base. Another indicator of an expanding
consumer market is the rapid growth of PNG’s first and only
credit bureau (see box on page 9).
Challenges facing business
As our annual PNG 100 CEO Survey reveals (see page 10),
operating in PNG is not without its challenges. Security and law
and order are ongoing problems. According to Chris De Silva,
Chief Operating Officer at G4S Secure Solutions (PNG), crime
in PNG is typically opportunistic rather than organised and the
security situation has neither deteriorated or improved in the
past year. It is hoped that initiatives like Port Moresby’s Safe
City project, which will see cameras installed in key parts of the
capital over the next three years, may improve the situation.
The PNG Government itself has announced a major new
initiative to deal with another issue affecting businesses in
PNG—corruption. An anti-corruption task force has been
in operation for the past year while the Government has
announced plans to establish a ‘well-resourced’ Independent
Commission Against Corruption in 2013.
Well-placed for the Asian century
Even if growth slows somewhat, PNG is still looking a good bet.
‘I’m optimistic,’ said Mike Smith, Chief Executive Officer of ANZ
during a February 2013 address to the Port Moresby Chamber
of Commerce and Industry. ‘Not only because of the size of the
opportunity in resources and agriculture and the opportunity
this presents for sustained economic growth and improved living
standards, but also because I sense there is also an increasing
focus on the major issues PNG needs to overcome to ensure it
takes advantage of the Asian century.’
Andrew Wilkins is Publishing Director of Business Advantage
International.
8

Economic update
Credit bureau a sign of PNG’s growing consumer market
One indication of Papua New Guinea’s expanding
consumer base is the growth of the country’s
first and only credit bureau, Credit & Data Bureau
(CDB).
CDB provides credit histories on almost 150,000 Papua
New Guineans and more than 16,000 local businesses
to a membership that includes the country’s major
financial institutions.
‘The number of individual credit histories on our database
is increasing on a daily basis, and now covers around
150 million kina (US$71 million) in listed debt,’ says Bruce
Mackinlay, CDB’s Managing Director.
The Bureau has been in operation since 2008 and already
has helped members recover more than 35 million kina
(US$16.7 million), much of it from consumers who have found
it hard to get further credit until existing debts are settled.
‘Consumers now have an incentive to have a clean credit
record. It’s put a stop to a lot of scams. Also important,
although harder to measure, are the savings our members
make when they turn away someone with a bad credit
history,’ says Mackinlay.
While the majority of Papua New Guineans still operate
outside the formal economy, Mackinlay feels that, with
microfinance and mobile phone banking expanding,
the need for reliable information on consumer credit can
only increase in the future.
‘The sky’s the limit here,’ he says.
CDB’s Bruce Mackinlay (left) with Michael Koisen of founding member,
Teachers Savings & Loan Society.
Credit: CDB
9

Survey
The PNG 100 CEO Survey 2013
The
PNG 100
CEO survey
At a time when some are wondering if PNG’s boom is coming to an end, its largest companies still have an
appetite for investment, according our exclusive annual survey.
In last year’s edition of Business Advantage Papua New
Guinea, we launched a unique survey for PNG: the PNG 100
CEO Survey.
Designed to gauge business confidence among PNG’s largest
companies, the survey seeks to uncover their profit, investment and
recruitment expectations. It also encourages the nation’s leading
executives to identify the key issues facing their businesses.
One year on, we’ve repeated the exercise, allowing us to compare
the results year-on-year and identify trends where they emerge.
So, do they feel 2013 will be a more profitable year than 2012?
In 68% of cases they do—a remarkable vote of confidence
in Papua New Guinea’s economy, even though this year we had
12% of companies predicting lower profits for 2013. Last year,
there were no companies predicting this.
How much investment (e.g. in plant, equipment,
land or other assets) are you planning in 2013?
Looking back on your business’s performance in 2012,
did your profits
30.3%
24.2%
15.2%
Greatly exceed
expectations?
Slightly exceed
expectations?
Meet expectations?
25.7% 17.1%
5.7%
8.6%
42.9%
A substantial
increase on 2012
A slight
increase on 2012
About the same
as 2012
Slightly less
than 2012
Substantially less
than 2012
30.3%
In 2013, do you anticipate that your profits will
41.2%
26.5%
20.6%
11.8%
Fall slightly short
of expectations?
Substantially fall short
of expectations?
Profits exceeded expectations in 2012
Overall, 2012 was a good year for PNG’s largest companies. An
impressive 60% of those surveyed reported their 2012 profits
had exceeded their expectations. In 30% of cases, profits had
‘substantially’ exceeded expectations.
By contrast, only 15% reported that profits had fallen short
of expectations, and then only ‘slightly’ short. Significantly, no
company we surveyed said its profits had missed the mark by
a ‘substantial’ margin.
In our previous survey, conducted one year ago, there was
a more polarised result: while more businesses reported doing
better than they had expected (67%), more also reported that
profits had fallen short of target (22%).
Substantially
exceed 2012?
Somewhat
exceed 2012?
Be about the
same as 2012?
Be slightly
less than 2012?
Be substantially
less than 2012?
What will 2013 bring?
In our last survey, PNG’s business leaders were extremely bullish
about their profit expectations for 2012, with a massive 89%
anticipating they would surpass the profits they made in 2011.
10
Investment set to grow even further
It seems as though increased profits are encouraging PNG’s
major businesses to invest further in Papua New Guinea. Almost
70% (compared to 57% in our last survey) told us they were
planning to spend more on plant, equipment and other assets
in 2013 than they did in the previous year, with a further 17%
saying they would match last year’s investment.
Only 14% said they were planning to reduce their investment
during 2013, a similar number to last year.
What level of recruitment are you planning in 2013?
37.1%
45.7%
11.4%
2.9%
2.9%
A substantial
increase in staff
A slight increase
in staff
Enough to maintain
2012 staffing levels
A slight reduction
in staff
A substantial
reduction in staff
Jobs growth, but maybe slower
Last year, 52% of PNG’s major companies said they intended to
take on more staff in 2012. This evidently proved to be the case:
the Bank of Papua New Guinea’s September 2012 Quarterly
Economic Bulletin reported employment growth of 7% over
the 12 months preceding.
This year, we have more good news for new graduates
and those hoping for a new job once the PNG LNG project
construction phase comes to an end. Just under half of
employers we surveyed said they were again expecting to
increase their headcount this year.

Survey
Existing jobs seem safe, too: only 6% of companies surveyed
were expecting to lay off staff.
Significantly, though, only 11% of employers surveyed said they
were planning a ‘significant’ increase in staff in 2013—much less
than last year. If these expectations tally with national statistics, we
might anticipate a slight slowing of employment growth in 2013.
What are the critical issues facing your business in 2013?
Security/law and order
Unreliable utilities
Shortage of expertise/skills
Logistics
High employment costs
Lack of Government capacity
High real estate rental costs
Inflation
Competition
Government red tape
All Other Responses
4.37
4.11
4.09
3.89
3.86
3.83
3.63
3.49
3.34
3.29
2.67
0 1 2 3 4 5
Issues affecting business
Which issues are affecting PNG’s largest companies the most?
There are certainly plenty of them, according to our CEOs, and
they affect almost all companies to a greater or lesser extent.
Top of the list were security and law and order concerns, with
every company we surveyed ranking them as either ‘very important’
or ‘mission critical’ to their business. This is a similar result to last
year’s survey, suggesting the situation is not improving.
Is PNG’s widespread skills shortage getting slightly less
chronic? Last year’s top issue was rated marginally lower by
companies in this year’s survey: it is now in third place behind
the unreliability of PNG’s state-owned utilities, which received
a similar rating from CEOs as it did last year.
Corruption received a marginally lower rating this year for its
impact on business, as did access to overseas markets, government
red tape, high real estate rental costs, lack of available office and
warehouse space, and lack of market research/intelligence.
Meanwhile, competition, access to capital, lack of available
land, lack of government capacity and high employment costs
received a slightly higher rating in this year’s survey.
Another issue canvassed by some respondents, particularly
those involved in manufacturing, was the impact of lowering tariffs.
Finally, last year we asked CEOs about their concerns
surrounding PNG’s 2012 national elections. Most were not that
worried about the possible disruption to their businesses, despite
some sensationalist headlines in the international media, and
their confidence appears to have been well-founded.
Positive year ahead
With strong profits recorded, and expectations for further profit,
investment and employment growth in the year ahead, PNG’s
largest companies seem set for another good year in 2013. At
a time when some are wondering if PNG’s boom is coming to an
end, it’s a positive sign for the country and for those planning to
do business and invest there.
The PNG 100 CEO Survey 2013 was conducted by Business Advantage International between late November
2012 and January 2013. The survey included senior executives from a representative sample of Papua New
Guinea's largest companies from across all sectors of the economy.
11

Feature
How will the Pacific’s economy fare in 2013?
Business Advantage PNG spoke with the region’s three most senior bankers to get their thoughts on
the year ahead.
will be some slowness in the year ahead based
on global economic factors, but on the whole I’m
‘There
reasonably positive,’ says ANZ’s CEO Pacific, Vishnu
Mohan. ‘I think the good news for the Pacific is that our trade
is mainly within the [Asia-Pacific] region.’
While Australia and New Zealand will remain the Pacific’s
dominant trading partners, Mohan notes that China’s influence
will inevitably increase, with regional investment by the Asian
giant growing at 25% per annum over the past five years.
Indeed, as ANZ’s Chief Economist for Asia-Pacific Paul Gruenwald
has previously observed, the Pacific is now a net exporter
to China thanks to its resources sector, having exported
US$1.2 billion in 2011, which is up 10% from 2010.
Papua New Guinea
‘The Pacific as a whole is already being affected by the global
economy but PNG continues to defy trends and is performing
strongly,’ says Westpac’s Pacific General Manager, Greg Pawson.
Although he expects the Pacific’s largest economy will slow
somewhat over the next two or three years, he remains optimistic:
‘A lot of people think PNG will slow down a lot as the PNG
LNG project construction phase comes to end, but I think there
are sufficient other major resources projects in the pipeline for
us to remain confident.’ Also helping to sustain high growth is
the remarkable expansion of the banking system itself.
At the end of 2012, PNG’s largest bank, BSP, passed one
million active bank accounts for the first time, part of the
banking industry’s push towards greater financial inclusion
across the region.
‘Four years ago, when I came here, we had about 550,000
accounts, of which 100,000 were inactive,’ Ian Clyne, BSP’s
Chief Executive Officer, tells Business Advantage PNG (for our
interview with Clyne, turn to page 40).
‘I think the good news for the Pacific
is that our trade is mainly within the
[Asia-Pacific] region.’
BSP is using tablet technology to deliver banking services
to some of the most remote regions in the country.
‘This technology enables us to open new accounts within five
minutes wherever there is mobile phone coverage,’ says Clyne.
The solution was recognised as the best bank-led mobile money
program in the 2012 Connected World Mobile Money Awards.
Fiji
All three banks are also increasing their activities in Fiji, which is
projecting growth of between two and three per cent in 2013.
BSP has continued to invest since its 2009 acquisition of
the National Bank of Fiji and Colonial Fiji Life Insurance Limited,
introducing new core systems for its bank and life insurance
businesses, opening premium banking facilities and expanding
both its ATM and EFTPOS network. (Over 1000 merchants in Fiji
now carry BSP’s EFTPOS facilities.)
12
‘Fiji’s an exceptionally competitive market from a lending
perspective,’ says BSP’s Clyne, who suggests it may be overserviced
(France’s Bred Bank entered the Fiji market in 2012).
Fiji has been a regional services hub for ANZ for some years
but at the end of 2012 the bank decided officially to base its Pacific
regional head office there, with Mohan at the helm.
‘We wanted to bring our Pacific regional headquarters and
therefore decision making closer to our customers in the region.
Fiji was considered the most logical location for the position
largely because of the skill sets we have here,’ says Mohan.
While he observes that there had not been lot of new investment
in Fiji recently, Westpac’s Greg Pawson considers Fiji has a big
opportunity to become the advanced regional hub for business.
Solomon Islands
Meanwhile, the region’s true ‘shining star’, according to Greg
Pawson, is the Solomon Islands, PNG’s Melanesian neighbour:
‘There’s a significant opportunity to really capitalise on their
mining and resources prospects. They had a good year last year.’
‘Gold production in the Solomons is clearly helping the
country,’ observes ANZ’s Mohan.
‘The Solomon Islands has proved an excellent investment
for BSP since our 2007 acquisition of the National Bank of the
Solomon Islands,’ concurs BSP's Ian Clyne.
Tourism-dependent economies
With mineral production in countries such as PNG and the
Solomons driving the bulk of the region’s 4.2% projected growth
for 2013, those countries without mineral wealth to exploit will
again be looking to tourism.
‘We are seeing some upturn in tourism activities in Vanuatu
and Fiji and to a lesser extent the Cook Islands and Tonga,’
observes Vishnu Mohan. ‘Vanuatu is expecting 130 or 140 cruise
ships in 2013, which is lucrative.’
Credit: Swire Shipping

Feature
Papua New Guinea’s investment advantage
The first international summit dedicated entirely to investment in Papua New Guinea showed the way
for investors in 2012.
While Papua New Guinea
regularly hosts industryspecific
conferences and
bilateral events with neighbouring
Australia, it had not hosted its own
international investment summit before
September 2012, when more than
300 local and international delegates
assembled at Port Moresby’s Gateway
Hotel for the inaugural Papua New
Guinea Advantage Conference.
The two-day summit, designed to
encourage business and investment
in the Pacific’s ‘tiger’ economy, was
the brainchild of the Port Moresby Chamber of Commerce and
Industry and Business Advantage International (publisher of
this publication).
A bullish view
Day One provided delegates, officially welcomed by National
Capital District Governor Powes Parkop, with briefings on PNG
and its place in the wider Asia-Pacific economy.
High-profile Australian business journalist Michael Pascoe
presented a bullish view of the region’s economic future,
PNG’s Public Enterprises Minister Ben Micah samples some Boncafé coffee
with (from left) Warren Dutton (North Fly Rubber), Mahesh Patel (CPL Group)
and Ian Clyne (BSP).
Business journalist Michael Pascoe
Over 300 delegates attended the two-day Papua New Guinea Advantage
investment summit 2012.
suggesting that China’s continued growth would only be to PNG’s
advantage, while ANZ’s Chief Economist for the Asia-Pacific
region, Paul Gruenwald, backed up that assertion with a range
of encouraging statistics. PNG’s strong position as a commodity
exporter (accounting for almost 80% of Pacific exports by
volume) was a positive, he said, as was its low correlation with
volatile global markets.
All about opportunities
A range of local business leaders, including Esso Highlands
Managing Director Peter Graham, City Pharmacy Limited’s
Mahesh Patel, Deloitte PNG’s Lutz Heim and the Office of Higher
Education’s David Kavanamur, then outlined the opportunities for
business and investment across sectors as diverse as mining
and petroleum, retail, business services, agribusiness, forestry,
education and training.
The IFC, the World Bank’s private sector arm, is already
actively investing in some of these sectors, and IFC’s Resident
Representative for PNG, Carolyn Blacklock, spoke about its
private equity investment experiences, offering advice to
investors looking to invest in an emerging market. There was
an increasing demand for equity and venture capital in PNG,
she noted, with ‘well-governed companies producing a great
internal rate of return’. However, she cautioned that firms
capable of taking on such investments typically required
a high level of support.
The conference organisers were keen to emphasise that there
is more to PNG than its capital city Port Moresby, and Day One
ended with a panel of speakers outlining business opportunities
in PNG’s Gulf, Morobe and Western provinces.
Private sector gets into infrastructure
Day Two was all about infrastructure, and followed on aptly
from one of the highlights of Day One: the announcement
by Ben Micah, the Minister for Public Enterprises and
State Investment, of wide-ranging reforms to PNG’s stateowned
enterprises.
‘The Government alone is incapable of meeting legitimate
development expectations,’ he told delegates. ‘Therefore,
13

Feature
the private sector will be a partner with us—in infrastructure
projects as well as in service delivery.’
Thomas Abe, then-Managing Director of the Independent
Public Business Corporation, went into more detail about what
this might mean in practice. He indicated the planned K2 billion
(US$960,000) Ramu 2 power plant and the upgrade of Port
Moresby’s power generation, for instance, would be covered
by public–private partnerships.
Day Two also saw presentations by the Asian Development
Bank’s Country Director for PNG Marcelo Minc on the bank’s
US$1.145 billion investment in PNG’s infrastructure, mostly in
transport, and the World Bank’s Robert Aiello, who outlined the
massive potential of hydropower in PNG. He told delegates that
hydro could produce over eight times the nation’s current total
installed capacity. (For more on infrastructure, see page 41.)
Animated discussion
Break-out sessions on ports and shipping; roads and aviation;
information and communications technology; and energy allowed
delegates to discuss these areas of infrastructure in detail.
A highlight was Australia’s Dr John Hewson talking up the
potential of private sector involvement in power generation
in an animated panel discussion. Hewson told organisers he
thought the summit had ‘an excellent agenda, as well
as providing a unique opportunity to do business.’
An annual summit
‘We set out to create an investment summit of genuinely
international standards for PNG,’ said David Conn, Chief
Executive Officer of co-host the Port Moresby Chamber
Newcrest Mining’s Greg Robinson and Esso Highlands' Peter Graham
of Commerce and Industry. ‘The enthusiastic feedback we
received from delegates confirmed we achieved that.’
Preparations are now well under way for a ‘bigger and
better’ second PNG Advantage investment summit, to take
place on 9 and 10 September 2013, again at the Gateway
Hotel in Port Moresby.
Link:
www.pngadvantageconference.com
14

Feature
A tough year for stocks but positive signs ahead
The Port Moresby Stock Exchange (POMSoX) had
another challenging year, with the overall value of stocks
dropping markedly over the course of 2012, although
local stocks provided some resilience.
The Kina Securities Index (KSi), which measures the
overall health of listed stocks, reported a 20.7% fall in
2012
(following a 22.2% fall in 2011)—a sign perhaps of its heavy
weighting towards overseas-listed resources stocks. The
Kina Securities Home Index, which excludes overseas stocks,
proved more resilient however, falling by 9.5%.
Indeed, local stocks on POMSoX have outperformed
international stocks in recent times, suggesting that Papua
New Guinea’s domestic economy has developed its own
momentum. Notably, while stock exchange indices were
down, Kina Asset Management Limited (KAML), PNG’s only
listed investment company, reported an 11% gain for its
investors in its three-quarter-year results to September 2012.
‘Unfortunately, the global financial scene continues to have
an adverse overarching impact on the regional markets, but
despite the continuing dismal global economic instability
and caution, local equities continue to provide sound
investment opportunities,’ said KAML Chairman Sir Rabbie
Namaliu of the results.
There are currently 18 active stocks listed on POMSoX. Mining
and petroleum companies dominate its listings, with financial
services, agribusiness, retail and aviation also represented.
A surplus of cash in PNG’s economy has meant there has
been little incentive for local companies to list in recent
times, although General Manager of POMSoX, Geoff Mason,
expects that to change as the boom times associated with
the construction phase of the ExxonMobil-led PNG LNG gas
project comes to an end in 2014.
Anecdotally, several notable local companies are preparing
for initial public offerings over the next two or three years.
The new O’Neill Government has also signalled its interest in
encouraging more local companies to list on the exchange.
In the meantime, POMSoX is continuing a process of
modernisation, with an electronic trading platform coming
in 2013.
Billion Kina
120
100
80
60
40
20
Kina Securities Index
8000
2006 2007 2008 2009 2010 2011 2012
PNG's stock exchange performance since 2006. The red line indicates
market capitalisation; the blue the Kina Securities Index (KSi).
7000
6000
5000
4000
Dr John Hewson (far left) discusses PNG's
energy needs at the 2012 Papua New Guinea
Advantage investment summit with Lawrence
Solomon (PNG Power), consultant David
McDougall and Michael Ryan (BSP Capital).
15

update
Papua New Guinea visas and work permits
Australian Government announcement raises hopes of reducing PNG red tape.
In November 2012, the Australian Government announced a
radical overhaul of visa processing for Papua New Guineans
visiting Australia, including the introduction of a special
electronic visa arrangement.
The move, to be implemented in the middle of this year,
was welcomed by the Australian Papua New Guinea Business
Council (APNGBC), which had been lobbying for some time for
an end to the long wait times prospective visitors from PNG
currently experience.
‘Facilitating applications by Papua New Guineans for travel to
Australia for business, employment, medical and other reasons
will bring our communities even closer together,’ said Peter Taylor,
the APNGBC’s President.
It also raises hopes that the PNG Government may simplify
its own immigration procedures. PNG has the most stringent visa
regulations of any Pacific Island Forum country, with business visitors
needing a letter from a sponsoring host company for even the
shortest visits and even tourists needing to pay a fee. For the many
requiring work permits, Scott Roberts, Vice President of the APNGBC,
knows only too well just how challenging the process can be. He is
Managing Principal of Brisbane-based HR firm Cadden Crowe, which
assists companies through the painstaking process.
‘Non-nationals need to obtain a work permit from the
Department of Labour and Industrial Relations and an Employment
Entry Permit/Visa issued by the Immigration Department. The
process should take 15 working days and, in fairness, it often
does, but if there are any issues then applications can appear to
disappear and it takes considerable effort to ascertain status.
The relevant departments are under-resourced and it is very hard
to find out exactly what stage an application has reached..’
But Roberts is also in no doubt that long-held resentment
over the treatment of Papua New Guineans visiting neighbouring
Australia has played a major role in shaping current regulations.
Therefore it is no surprise that just a month after the Australian
Government’s conciliatory announcement, the following
proposals to improve access of business people to PNG were
apparently received sympathetically at the 21st Australia Papua
New Guinea Ministerial Forum:
• Taking action to streamline the current standard work
permit/visa process
• Introducing a new type of short-term work visa to avoid the
current work permit process
• Advance visa processing to be undertaken in Cairns, to reduce
queues at Jacksons Airport in Port Moresby and facilitate
direct flights from Cairns to other destinations around PNG.
It is likely that the implementation of such measures would
benefit not just Australian visitors to PNG, but many other
nationalities as well.
16

Feature
Papua New Guinea’s fisheries boom
The northern coast of Papua New Guinea is experiencing a boom in investment from international
companies looking to process fish onshore. Samantha Magick examines why.
> Papua New Guinea is one of the world’s major
producers of tuna.
> Major foreign investment is expanding the onshore
processing industry.
> PNG given preferential access to European Union.
‘This is not the end, as we still have further
growth in processing planned, with
thousands more jobs to be created.’
Around 18% of the world’s total tuna stock is found in
PNG’s 2.5 million sq km Exclusive Economic Zone (EEZ).
The fishing industry has grown from a dependency on
access fees in the early 1980s to a more diversified sector, with
significant downstream processing today.
Frozen tuna accounts for about half of PNG’s tuna exports. It
also produces canned tuna, cooked loins, fish meal and chilled
tuna. Annually, about three-quarters of a million tonnes of tuna
is caught in PNG waters. In late 2010, about 30% of the PNG
fleet catch was processed onshore; the remainder was sent
to facilities in Thailand, the Philippines and, to a lesser extent,
Japan and Taiwan.
The Pacific Tuna Forum estimates the raw value of PNG’s
annual catch at about US$1.5 billion and says this figure
could more than double if more value-added activities were
implemented. Indeed, PNG has a long-term goal of processing
in-country 100% of the tuna catch from within its EEZ. Domestic
sales account for 20–30% of production by local canneries.
Room for expansion
Much of the growth in the fisheries sector is taking place near
Lae, where four new plants are planned for Malahang, with broad
support from the provincial government and landowners.
Among them is Majestic Seafood, a joint venture between
Frabelle Fishing Corporation of the Philippines, Philippinebased
Century Canning Corporation and Thailand’s Thai Union
Madang Industrial Centre
Between 20% and 30% of tuna processed onshore is for domestic
consumption in PNG.
Corporation (a subsidiary of Thai Union Frozen Products—the
largest tuna canner in the world). Majestic Seafood’s K80 million
(US$38 million) tuna canning plant, scheduled to commence
operations in June 2013, is expected to create as many as 5000
local jobs when in full production.
Others planning tuna loining plants in Lae include the South
Korean company Dong Wong, Nambawan Seafoods and Haili
Sheng from mainland China. Two other operators, Malaysia’s
International Food Corporation and Frabelle already have
canneries in Lae.
Meanwhile, Managing Director Pete Celso says R D Tuna—
currently PNG’s largest canner—is about to begin construction
of another cannery in Madang, which will double its production
and employ 3000 people. The cannery is expected to be
operational in early 2014.
Credit: R D Tuna
The proposed Pacific Marine Industrial Zone (PMIZ) has been
the flagship project of PNG’s fisheries industry for several years.
Planned for a 215-hectare site 30 km north of Madang,
it is designed to create greater economies of scale and
greater efficiency for fish-processing factories, port facilities,
power generation and waste water processing. A Chinese
contractor has already been selected for the construction
work—the state-owned enterprise, Shenyang International
Economic and Technical Cooperation Company.
In recent months, the PMIZ has undergone a name change
and a shift in focus. It is now known as the Madang Industrial
Centre and activities will be broadened beyond fisheries,
according to National Fisheries Authority (NFA) Director
Sylvester Pokajam.
Niugini Tuna Limited—a partnership between R D
Corporation of the Philippines, Fairwell Fishery Group of
Taiwan and Tri Marine International of the US—plans to
operate at the zone, while the PNG Government recently
held discussions with the French Sapmer-Piriou joint
venture, which is considering a fisheries wharf, tuna
processing plant, dry dock and shipyard in the zone.
The zone is being funded by a loan of US$72 million
from China Exim Bank—a matter of contention among
some landowners that is now being challenged in the
courts. Political support for the project remains strong,
however, with Madang MP and Police Minister Nixon
Duban saying it is important for the province and must
be progressed.
17

Feature
Credit: R D Tuna
Why PNG, why now?
The surge in investment is motivated in part by the advantages
of bringing the canning process closer to the Pacific’s fishing
grounds.
R D Tuna’s Pete Celso says PNG’s duty-free access to the
European Union (EU) has also been a plus. Under its Economic
Partnership Agreement with the EU, ratified in 2011, PNG can not only
enter the European market duty-free but it has also been permitted
to export processed fish to the EU from any vessel fishing outside its
territorial waters, thus exempting PNG from the usual Rules of Origin
compliance, provided the fish is processed in PNG.
Germany, the United Kingdom and the Netherlands are PNG’s
main European markets for canned tuna. Loin exports to Spain
and Italy are also significant, and increasing.
The increased emphasis on the fisheries industry also reflects
national government priorities. The country’s Vision 2050 strategy
makes frequent reference to the fisheries sector as an area of
the economy requiring more development if PNG is to diversify
beyond its oil and gas revenue base. The EU estimates that by
2016 some 53,000 jobs will be created in the PNG tuna industry
if planned projects go ahead.
Looking ahead
The industry faces several challenges, including the need to
improve productivity, achieve greater scale, and deal with high
operating costs and infrastructure constraints. R D Tuna’s Pete
Celso says reducing the cost of freight is a major challenge, as
export is a ‘volume game'.
Sylvester Pokajam at the National Fisheries Authority says
the planned doubling of domestic tuna-processing capacity for
early 2013 is only the start of a new expansionary phase.
‘This is not the end, as we still have further growth in
processing planned, with thousands more jobs to be created.’
Marketing sustainable tuna
PNG is also looking to export sustainably caught tuna to retailers
in Europe and Australia. In 2011, PNG and other Pacific Island states
achieved the first Marine Stewardship Council (MSC) certification for
free school skipjack caught sustainably by purse seining methods.
Retailers, who expected their first shipment of this tuna under
the Pacifical label in late 2012, are still waiting. They include
Switzerland’s Coop, SPAR of Austria, Dansk Supermarked from
Denmark, Dutch seafood distributor Anova Seafood and Australian
chain Coles. In late 2012, they raised concerns about the delay in
securing ‘chain of custody’ certification, urging tuna purse seine
operators to meet the demand for sustainably sourced tuna.
Pokajam says this proves demand for the product:
‘This should put to rest any question of the actual demand
globally for MSC tuna through Pacifical, and under the terms agreed.’
Pokajam adds that negotiations over the site of processing, and
whether Parties to the Nauru Agreement control that or whether
it is in the ambit of international retailers, are also continuing.
Incentives
The PNG Government extends a number of incentives to fishing
industry participants. Expenditure on new plants or articles for
commercial fishing activities qualifies for a 100% accelerated
depreciation deduction. Profits for the export sale of canned, loined
and smoked fish are exempt from company income tax for the first
three years of export. Additional concessions apply for a further
four years. Investors may also qualify for double deductions for
export market development costs and staff training.
R D Tuna’s Pete Celso, who is also President of the PNG
Fisheries Industry Association, says the government should
consider extending tax holidays to smaller projects such as
those in the fisheries sector, and not just to large initiatives like
the PNG LNG gas project.
18

Feature
Key players in PNG’s fisheries sector
PNG’s largest tuna canner, R D Tuna first entered PNG in
1997. RD Tuna is Philippines-owned and Madang-based.
It operates 45 vessels and sells tuna under the Diana and
Dolly brands.
Managing Director Pete Celso says R D Tuna is about to
begin construction on another cannery in Madang, which will
double its production and employ 3000 people. The cannery
is expected to be operational in early 2014. R D Tuna invested
in improvements to its boats and processing faciltiies in 2012.
The new Madang cannery is a joint venture partnership with
Fair Well Fishery Group and Tri Marine International. With
an annual turnover of US$1 billion, Tri Marine’s core business
is tuna trading, but it is involved in all aspects of the canned
tuna supply chain. It is one of the founding members of the
International Seafood Sustainability Foundation.
Fair Well Fishery Group has signed a MOU with the National
Fisheries Authority and environmental group WWF to trial
the use of circle hooks, which are believed to be effective
in reducing sea turtle bycatch. Two fishing vessels will be
involved in the trial.
Malaysia’s International Food Corporation (IFC) is based
in Lae and produces Besta canned mackerel. It produces its
own cans, and dresses, cans and pressure-cooks its own
fish. IFC is adding a tuna-processing line to its factory, with
most of the product to be exported to Europe.
Frabelle Fishing Co is Philippines-owned, with a tuna loining
and canning plant in Lae. Frabelle also owns and leases
purse seine vessels, and exports canned tuna mainly to
Europe, although some product is sold locally under the
Isabella brand name.
With Thai Union of Thailand and Century Canning of the
Philippines, Frabelle is setting up the Majestic Seafoods
cannery in Lae. Some fish will be from existing sources, with
additional licences to be sought when 75% of construction
is completed. Operations are scheduled to begin in June 2013.
Other operators include South Pacific Seafood, a PNG–
Philippines joint venture with plans to invest in fishing port
facilities in Central, West New Britain, Morobe, Milne Bay
and Manus provinces, and Ailan Seafoods Ltd in Kavieng,
which exports reef fish, snapper, mackerel, crayfish and other
marine products in chilled form.
Zhoushan Zhenyang Deep-Sea Fishing Company has also
announced its desire to build a tuna-processing plant in the
Pacific Industrial Marine Zone, which it says would employ
3000 locals and process 250 to 300 tonnes of fish per day.
It reflects growing Chinese interest in PNG’s fisheries sector.
19

opinion & analysis
Perspectives on PNG
Business leaders provide their own take on Papua New Guinea’s economy.
'I was here about 20 years ago … When I left,
there was a lot of uncertainty and people
basically planned for the short term.
I feel now there’s an increasing amount of
confidence about the future, and a feeling
that tomorrow should be better than today,
which is something I experienced in China as
well. Many other markets can’t claim that. The
challenge now is converting that optimism into reality, and that’s
what makes Papua New Guinea so exciting and challenging.'
—Geoff Cundle, Chief Executive Officer, Steamships
'PNG is still a very fragile economy, but I think
there are good signs that the fundamentals
are moving in the right direction, with better
political stability. From the Nestlé standpoint,
we’d like to think we could approach it still with
a lot of optimism—albeit more cautious—just
by focusing on new opportunities where we
can be of better value and service to the
Papua New Guinean consumers.
'It’s slowing down a bit but you don’t want to be too cautious.
If anything, I think the view is it is the time to invest ahead of
the curve. I think a lot of companies were caught in a situation
where they were chasing their tails over the last two or three
years. Yes, there could be a little bit of a slow down, but it’s also
anticipated to peak in 2015, so what are you going to do? And it’s
a choice—it’s a strategic choice, I think.’
—Eugene David, Managing Director, Nestlé Pacific Islands
‘A lot of people think PNG will slow down
a lot as the [ExxonMobil-led] PNG LNG
project construction phase comes to end,
but I think there are sufficient other major
resources projects in the pipeline for us to
remain confident.’
—Greg Pawson, General Manager Pacific
Banking, Westpac
‘PNG has entered a new phase of maturity
as an economy. I think the Government is to
be congratulated on the way it’s managed
the PNG LNG project. There were always
going to be issues, but I feel the Government
and Papua New Guinea as a nation have
come out of this with a better skill set.’
—David Purcell, Managing Director, Ela Motors
‘The 2013 National Budget focuses on
restoring and upgrading infrastructure,
extending basic education and primary health
services, with an emphasis on decentralising
funding to the subnational levels. It also
provides substantial funding for small-tomedium
enterprises, and the reinforcing of
nationally owned businesses, which have
been marginalised over recent years.
‘The Government has also had discussions on simplifying
a variety of impediments to business and investment, including
the process of issuing working visas in PNG. ’
—Paul Barker, Director, Papua New Guinea Institute of
National Affairs
‘We currently have a number of investments
in agriculture projects such as palm oil as
well as a small but developing presence in
PNG’s energy sector. As with construction
and development, the energy, mining and
agriculture sectors still have a great deal of
potential for PNG’s broader economy.
‘RH has always been and remains
optimistic about the PNG economy. Yes, the end of the LNG
construction phase will mean a decline in activity related to that
project and economic growth is forecast to slow somewhat in
the next two years, but overall we firmly believe that operating
conditions will remain good. PNG is the key hub for trade and
investment in the Pacific.’
—James Lau, Managing Director, Rimbunan Hijau (PNG) Group
20

opinion & analysis
PNG’s services sector: the
next wave of opportunities
Papua New Guinea’s economy is generally under-serviced, offering opportunities to provide a wide
range of services to both businesses and consumers. Lutz Heim looks at how PNG’s services sector
is likely to develop.
Papua New Guineans are great
early adopters of technology.
Although there is still a relatively
small group of middle-class Papua
New Guineans, they are well-travelled,
literate and very comfortable with
technology.
Despite very low internet
penetration, cell phone usage is high
and growing. Cell phone usage stands
Deloitte’s Lutz Heim
at 27.8% of the population, but internet
penetration is only 1.3%, with cost remaining the main hurdle.
At our office in the Port Moresby CBD, 140 gigabytes a month
currently costs US$11,000 (whereas at my home in Australia I pay
$80 for 500 gigabytes!).
While this high cost has been addressed by the PNG
Government in its policy initiatives, a fall in the price of internet
access is a prerequisite for the viability of a lot of potential
new services.
‘As the country develops more of the
population will need specialised training of
various kinds, not just a basic education.’
Opportunities based on ICT
Bandwidth permitting, some of the global trends I see developing
in Papua New Guinea are:
• Data analytics (that is, the ability to draw conclusions from
a huge range of data). For instance, in retail that means
making decisions based on analysing purchasing patterns
at different times of the day, the demographics of the
suburb, the weather ...
• Cloud technology and software development/
implementation
• Online delivery of business services
• Online advertising.
21

opinion & analysis
Education and training services are likely to be in demand in the future in PNG.
Government and financial services
There have been significant gains in transparency in the financial
sector over the past decade. Since 2002, the superannuation
sector has been well-run and successful. One of the reasons for
this is that superannuation companies are required to outsource
their investment advisory functions to third parties. Given how
well outsourcing has worked in the development of a workable
22
superannuation sector, it would be good to see that model
extended across a number of other areas of government.
Sooner or later, the Government may conclude that
outsourcing may help deliver more efficient public services—for
example in healthcare.
Likewise, the PNG Government is responsible for a huge
amount of funds that have to be distributed to landowners,
but at the moment there simply is not the mechanism to do
so efficiently.
Although the financial sector is itself likely to grow over the
next few years, this will require more outsourcing given the
current dearth of financial managers and advisors. Right now,
there are very few personal financial advisors in the country,
although companies are already outsourcing some work to
overseas companies.
Education and training
Another key sector will be education and training. We’ve already
seen that Papua New Guineans can compete—many hold
down jobs in the Australian mining industry. But, as the country
develops, more of the population will need specialised training of
various kinds, not just a basic education. So I think there’s going
to be a significant market in PNG for many years in vocational
and other types of professional training.
Supporting agribusiness
Despite its growing urban middle class, 87% of Papua New
Guineans are rural-based, and rural economies still tend
to revolve around agriculture. Although this is an area with
potential growth, most farmers are still smallholders. Government
assistance in the development of the sector is important and this
may be another area for expansion of outsourcing or third-party
involvement. That may consist of consulting, extension or export
market development services to transform the agricultural sector
into something larger and more commercially viable.
Lutz Heim is Managing Partner of consulting firm Deloitte Touche
Tohmatsu PNG.

opinion & analysis
Commercial disputes in Papua New Guinea
Regardless of your field of business in Papua New Guinea, you need to know what to do when there is
a dispute over a contract. Veteran commercial disputes lawyer Erik Andersen looks at the major avenues
for dispute resolution in PNG.
Gadens Lawyers’
Erik Andersen
The rapid increase in economic
activity in PNG over the past several
years has inevitably resulted in
countless contracts, understandings,
dealings and agreements, including
those strange PNG creatures—the MOU
(memorandum of understanding) and MOA
(memorandum of agreement).
These contractual dealings could arise
in any form, from major project document
suites a metre high that have taken
armies of lawyers to construct, to the most apparently casual
conversation between relatively new acquaintances.
Equally inevitably, a proportion of those dealings will become
contentious, and it is probably fair to say the proportion that
becomes contentious is likely to be higher in environments
such as PNG, where getting things done can take a degree of
persistence and flexibility unfamiliar to people and organisations
only recently drawn to the country.
Commercial court
The National Court is PNG’s original court of unlimited jurisdiction,
and the court’s form and format would be familiar to practitioners
in Australia.
Two particular aspects of the court process should be noted.
The first is that there is a ‘Commercial Track’, which equates with
the Commercial Lists maintained in Australian jurisdictions.
Unsurprisingly, the judges in this track tend to have both wider
and deeper commercial experience than many on the bench
(who may have come from a primarily criminal-law background)
and generally speaking commercial matters, even quite difficult
ones, can be progressed satisfactorily in this track.
PNG court lists contain a larger number of nuisance claims
than are likely to be found elsewhere and inevitably some quite
fierce contests arise when nuisance claimants desperately seek
to avoid this track.
Compulsory mediation
The second point I would mention is that mediation rules have
been introduced prima facie, requiring all matters to go through
a mediation process before trial.
The reasoning behind the introduction of compulsory
mediation is not necessarily unsound, and to an extent it reflects
a Melanesian dispute resolution methodology. (For anyone
interested, there is an excellent exposition of traditional tribal
dispute resolution and the differences between common law and
customary law in Francis Fukuyama’s The Origins of Political Order.)
However, for the National Court in 2013 mediation is very
much a work in progress. Judges’ attitudes to mediation vary
considerably, from some who will absolutely insist on it to others
who are very happy to bypass it—and everything in between.
Further, there is not yet a reasonable pool of qualified
mediators, nor are many practitioners genuinely helpful or
practised in guiding their clients through mediation. At present
mediation is too often simply another expensive and timeconsuming
hoop that must be negotiated.
Arbitration
Arbitration is the other principal mode of dispute resolution.
Domestic arbitration is all but defunct.
The Arbitration Act is of very elderly vintage and while there
have been attempts to develop a stronger local arbitration
capacity, those efforts have generally been ineffectual to date.
International arbitrations are preferred, and many larger
contract documents submit the parties to arbitration under one
or other international rules such as UNCITRAL.
The selection of an arbitral body and process at the time of
contract negotiation is not necessarily straightforward as there
are some peculiarities in PNG’s enforcement regime which need
to be understood and appropriately finessed at that time. Failure
to do this can lead to considerable difficulties if the parties do
become antagonistic.
By way of final observation, effective dispute resolution
in PNG depends upon the advisor having a long and deep
appreciation of PNG.
Erik Andersen is a Partner in Gadens Lawyers Litigation Group
and has practised in PNG for more than 20 years.
23

opinion & analysis
Doing business in Papua New Guinea
David Caradus, a Partner at PricewaterhouseCoopers, whose PNG practice has been in operation for more
than 50 years, provides answers to common questions about doing business in PNG.
Does a foreign company have
to register in PNG?
If a foreign company is ‘carrying on
business’ in PNG, it is required to register
as an overseas company in PNG and
obtain certification to carry on business
in PNG.
When is a foreign company required
to register in PNG?
PWC’s David Caradus A foreign company is required to register
as an overseas company within one
month of commencing to carry on business in PNG under the
Companies Act. This includes appointing a resident agent. The
term ‘carrying on business’ is given an extended meaning by
the Companies Act but otherwise has its ordinary meaning. It is
noted that a foreign company that enters into a contract for work
to be done in PNG and undertakes work in PNG for a period of
more than 30 days would be regarded as carrying on business
in PNG for the purposes of the Companies Act.
When is a company required to be certified to carry
on business in PNG?
Companies with foreign shareholdings of 50% or more (held or
controlled by non-citizens of PNG) are required to be certified by
the Investment Promotion Authority (IPA) before they can carry
on business in PNG. The meaning of ‘carrying on business’ for the
purposes of the Investment Promotion Act is substantially similar
to the meaning of carrying on business for the purposes of the
Companies Act. It follows that this requirement applies whether
an overseas company intends to carry on business in PNG
through a PNG incorporated company or through a company
incorporated outside PNG.
'The commercial banks in Port Moresby
will only allow a company to open and
operate bank accounts where it can
demonstrate that it is registered with
the Companies Office.'
What are the other benefits of registering in PNG?
Aside from mitigating the adverse consequences of not being
duly registered (eg fines) and ensuring compliance with the Acts
above, there are several other factors that will lead a company to
register and obtain certification to carry on business in PNG.
Firstly, the commercial banks in Port Moresby will only
allow a company to open and operate bank accounts where
it can demonstrate that it is registered with the Companies
Office and, where relevant, certified to carry on business by the
IPA. Similarly, only a company registered with the Companies
Office and, where relevant, certified to carry on business in
PNG by the IPA, can obtain work permits and entry visas for
its non-citizen employees.
24
Also, where an overseas company elects to undertake the
work in PNG itself it will be required to register for goods and
services tax (GST) purposes if it will make taxable supplies
exceeding 100,000 kina (US$47,750) in the following twelve
months. The Internal Revenue Commission (IRC) will not register
an overseas company for GST purposes unless it is provided
with a copy of the certificate of registration of the overseas
company under the Companies Act and, where required, a copy
of the certificate to carry on business under the Investment
Promotion Act. Until it is formally registered in this way, the
company will not be issued with the GST registration number,
and thus cannot issue valid tax invoices to customers.
What are the corporate tax rates in PNG?
The general corporate income tax rate is 30%. The rate of income
tax for non-resident companies, other than those engaged in
mining, petroleum or gas operations, remains 48%. As discussed
below, some companies may be taxed as ‘foreign contractors’.
Where the company’s gross salary or wages exceeds
200,000 kina (US$95,500), the company will also be liable to
a training levy at the rate of 2% (with the liability reduced by
the costs incurred in training PNG citizen employees).
How are foreign contractors taxed in PNG?
Many foreign companies providing services in PNG will be
subject to taxation in PNG under the ‘foreign contractor’
provisions of the income tax law.
As a general rule, the rate of tax applicable to income of
a foreign contractor is 12% of the gross contract income unless
the foreign contractor is granted permission to lodge an income
tax return and be assessed on an annual basis.
Where the foreign contractor provisions apply, the employees
of the foreign contractor will be liable to salary or wages tax
in PNG. Where gross salary or wages exceed 200,000 kina
(US$95,500), the foreign contractor will also be liable to
the aforementioned 2% training levy.
If the foreign contractor is resident in a country with which
PNG has a double taxation agreement, such as Australia,
Canada, China, Korea or Singapore, PNG may be prevented from
taxing the income or the rate of income tax may be reduced.
In 2012 a double taxation agreement was signed with New
Zealand and this is expected to come into force in 2013.
The taxation of foreign contractors should not be confused
with the taxation of management or technical fees paid to
a non-resident for services rendered outside PNG. Broadly,
management fee (withholding) tax applies to management fees
paid for services rendered outside PNG and foreign contractor’s
withholding tax is payable in respect of services rendered within
PNG. The rate of management fee (withholding) tax is 17% of
the gross management fee unless reduced by the operation of
a double tax agreement.
David Caradus has over 25 years’ experience advising on
taxation and investment in PNG and is the author of 2012 PNG
Tax Facts & Figures and Papua New Guinea Resource Project
Taxation: PWC’s Guide for Investors and Operators.

Mining and Petroleum in PNG
A special supplement
Credit: ExxonMobil
An aerial view of the new liquefied natural gas plant for the massive US$19 billion
ExxonMobil-led PNG LNG project. LNG exports are scheduled to start in 2014.
25

Petroleum & GAS
Credit: ExxonMobil
The PNG LNG plant from the air.
PNG closes in on its first LNG exports
Papua New Guinea is making serious steps in the transition from a nation with rich oil and gas potential
to becoming a fully-fledged liquid natural gas (LNG) exporter of global significance, as its major gas project
moves towards its production phase.
The PNG LNG behemoth that has made the petroleum
world take notice of PNG is ‘75% through the construction
phase and will achieve a 2014 startup,’ according to
Peter Graham, Managing Director of ExonMobil subsidiary Esso
Highlands, the project leader. All has not been easy for the
project’s partners—which include ExxonMobil, Oil Search, Santos,
the PNG Government and landowners—as cost blowouts of
$US3.3 billion were announced late last year, bringing the project
cost to $US19 billion.
Graham says causes of the blowouts included currency
fluctuation, inflation in PNG and rainfall that exceeded records
‘of 20 years or more’ delaying work. But on the positive side,
output projections are up from 6.6 million tonnes to 6.9 million
tonnes per year and the experience gained in the process has
built the capacity of both the private sector and the state in
managing mineral development. (See page 29 for our interview
with Peter Graham.)
‘If you’d asked me three years ago if we could have delivered
a project of this size, I wouldn’t have been sure. Now, I can
confidently say PNG is capable of delivering such projects,’
26
‘If you’d asked me three years ago if we
could have delivered a project of this
size, I wouldn’t have been sure. Now,
I can confidently say PNG is capable
of delivering such projects.’
William Duma, PNG’s Minister for Petroleum, told the PNG Mining
and Investment Conference in December 2012.
PNG, with its massive untapped resources, will get the chance
to ride the expected boom in LNG. Already between 2000 and
2010 global trade in LNG has doubled, and demand for natural
gas is expected to rise 60% by 2040, driven by increases in
population and living standards. By 2025, PNG is expected to be
exporting over 10 million tonnes of LNG per annum.
New projects
Late in 2012, InterOil, which plans the country’s second LNG
export project, won conditional approval from PNG’s National

Petroleum & gas
InterOil: towards PNG’s second LNG project
InterOil has a 15-year history in PNG, having developed
upstream exploration and production assets. It built
PNG’s only oil refining operation and recently processed
its 100th cargo of crude oil at the refinery, with over
10 billion litres of product sales. It also distributes about
60% of the country’s petroleum products.
The New York-listed group has looked to the future, building
enough refining capacity to cover expected demand for the
next 15 years. It also deals with customers at the grassroots
level, being the country’s largest distributor of refined
petroleum products.
Now it is stepping up the food chain with the development
of its Gulf LNG project that aims to be the second major LNG
InterOil’s Phil Mulacek
producer and exporter in PNG. Last year’s conditional approval
from PNG’s National Executive Council gives the project a kick
along and includes a unique arrangement under which the state
can take its 22.5% equity return in gas, which will be used to
fuel much-needed electricity generation infrastructure, bringing
a reliable power source to the Gulf region.
The project, which will be built on gas from the Elk and
Antelope fields, has the advantage of simplicity, according
to InterOil CEO Phil Mulacek:
‘It requires about 120 kilometres of pipeline (compared to over
700 km for the PNG LNG project) and is situated in less severe
terrain,’ he told Business Advantage PNG.
Proving work has shown likely gas volumes of approximately
10 trillion cubic feet and potential export LNG capacity of up
to 8.8 million tonnes per year over 15 years. The initial plan
certified by the Government aims at a more modest 3.8 million
tonnes per year and estimates development costs for the
gas field and pipeline at US$2 billion, while the LNG plant
will cost between US$450 and US$850 per tonne of LNG
production capacity.
InterOil is securing partners for the project and has investment
bankers running a selection process. A new discovery in 2012
known as Triceratops has boosted available gas and a farm-in
deal has been signed with Pacific Rubiales Energy.
27

Petroleum & gas
Executive Council for its Gulf LNG gas development for the
Gulf of Papua. The approval covers initial LNG production of 3.8
million tonnes a year and sees the state agree to take 22.5 per
cent of gas output in kind.
The third potential LNG export project, driven by Talisman
Energy’s ambition to aggregate a number of fields in Western
Province, made further progress during 2012. First there was
the formalisation of its US$280 million strategic partnership
with Japanese giant Mitsubishi, then there was internal
approval with partner Horizon Energy for the US$300 million
liquids recovery scheme at the Stanley field.
Drilling and seismic work is continuing to pay dividends
for Talisman and partners, with the company expecting to
prove reserves of between two and four trillion cubic feet of
gas by 2015. That will underpin a planned three million tonne
per year in LNG exports.
Future potential
The rich petroleum provinces in PNG’s Highlands continue to
attract exploration dollars from industry players, with some
70 oil and gas exploration licences currently making their way
through the approvals process. French oil major Total has bought
50% of a number of Oil Search Limited’s exploration licenses,
both on- and off-shore, and the two have plans to look for further
opportunities.
Oil Search, a major partner in the PNG LNG project, is also
working on the prospect of another independent gas project
in the Gulf of Papua and plans to boost drilling there over 2013.
It is also looking for opportunities in the Highlands that would
feed into the PNG LNG project.
PNG’s new petroleum company
In February 2013, the Papua New Guinea
Government revived the National Petroleum
Company of PNG (NPCP), a state-owned entity
that will be the custodian of the nation’s 16.8%
stake in the ExxonMobil-led PNG LNG Project and
other future gas projects.
A previous version of the NPCP was shelved by
the O’Neill Government in November 2011, but now
it has clear ambitions for the company.
‘We want NPCP to become the single biggest
petroleum company in the Pacific,’ Finance Minister
James Marape is reported to have told the company’s
incoming board, which is chaired by experienced
PNG businessman, Frank Kramer, who is CEO of
engineering firm Kramer Ausenco.
Meanwhile, Larus Energy is in its fourth year of a six-year
exploration both on- and off-shore in the Torres Basin and is
readying for a float on the Australian Stock Exchange. Another
junior, Kina Energy, now listed on both the Australian exchange
and PNG’s own POMSoX, is expanding its operations at a
number of sites across the country and has just completed
successful appraisal wells at Elevala and Ketu.
Government review
The resources boom, which is helping to drive PNG's economy
impressive economic growth, is leading to concerns about
the level of benefits to the wider community. In response,
the Government has announced a review into mining and
petroleum taxes and charges, and a new Petroleum and Energy
Authority to help manage the sector. Reforms are also in the
wings to clarify the rights of landholders regarding mining on
their lands.
28
The PNG LNG project required over 700 km of pipeline to be laid, often across
extreme terrain.
Credit: ExxonMobil

Petroleum & gas
Interview: Peter Graham, Esso Highlands
With gas production from the US$19 billion PNG LNG
project due to start next year, Managing Director of Esso
Highlands Limited Peter Graham talks to us about the
long-term impact of the project.
Business Advantage PNG (BAPNG): What are your
key challenges for 2013?
Peter Graham (PG): At this stage, we are 75% or thereabouts
through the project, and the challenges looking forward are
really much the same as we’ve been dealing with to date,
law and order being the major concern.
Most of the construction work at this point in time has
already been contracted out, the contractors are selected
and it’s basically heads down now to complete the
construction and get the gas to customers in 2014.
BAPNG: With your project getting close to production,
workers who have been engaged in its construction
are coming back onto the labour market ...
PG: One of the opportunities and challenges we do see going
forward is the impact of demobilisation of the construction
phase work force.
What we’d like to see is the capacity we’ve built in our
workforce—workers who have done a fantastic job for
us—move across to Government
projects or other projects
elsewhere in PNG.
BAPNG: The long-term prospects
for LNG seem to have improved
somewhat since the PNG
LNG project started. Does that
make the prospect of new
developments in PNG more likely?
PG: PNG is well positioned regionally Esso Highland’s Peter Graham
to access growing markets.
The PNG LNG project has served to strengthen infrastructure
in the country and also the Government capacity to deal
with major projects. If you wrap those things together, it
does bode well for PNG to access growth in the LNG market.
For everyone, it’s really about aggregating sufficient gas to
underpin those next steps.
That’s the challenge in front of all players in the gas sector—to
progress further exploration and hopefully record successes.
Realistically, you can’t access the market without sufficient
proved gas reserves to underpin sales. We have an active
exploration program underway in PNG and are in the early
stages of evaluating potential expansion options.
29

PNG's mining and petroleum projects
MANUS
Lorengau
Vanimo
WEST SEPIK
(SANDAUN)
Wewak
Bismarck Sea
Frieda
EAST SEPIK
IRIAN JAYA
Pnyang
Ketu
Elevala
Ok Tedi
Tabubil
Porgera
ENGA
Mt. Kare
Juha Angore
Hides
S.E. Mananda
Moran
Kutubu
Pukpuk 1
Douglas
SOUTHERN
HIGHLANDS
Kimu
Wabag
WESTERN
HIGHLANDS
Mt. Hagen
Gobe
Lehi
Barikewa
MADANG
CHIMBU
(SIMBU)
Ramu
Yandera
Bwata
Elk 2
Elk 1 &4
Antelope 1
GULF
Uramu
Madang
EASTERN
HIGHLANDS
Kerema
Kainantu
Wafi
MOROBE
Lae
Edie Creek
Hidden Valley/Hamata
WEST NEW BRITAIN
Kandrian
Hoskins
WESTERN PROVINCE
Kumui Terminal
CENTRAL
Daru
Pandora
Tolukuma
Popondetta
Gulf of Papua
Port Moresby
Laloki
ORO
Torres Strait
MILNE BAY
Alotau
AUSTRALIA
30

www.businessadvantagepng.com
Kavieng
Simberi
Lihir
Solwara
Namatanai
Rabaul
NEW IRELAND
Sinivit
EAST NEW BRITAIN
Solomon Sea
NORTH
SOLOMONS
Kieta
Mining Projects
Operating Mine
Mine Under Development
Possible Mine
Large Scale
Medium Scale
Small Scale
Petroleum Projects
Oil Project
Gas Project
Possible Oil or Gas Project
Oil Export Pipeline
Proposed Gas Pipeline
Woodlark
Imwauna
Coral Sea
Data © Copyright 2013, Papua New Guinea Chamber of Mines and Petroleum
(www.pngchamberminpet.com.pg), used by kind permission.
Map © Copyright 2013, Business Advantage International Pty Ltd
(www.businessadvantageinternational.com)
31

MINING update
Credit: Ramu Nickel/PNG Chamber of Mines
Ramu NiCo’s Basamuk refinery in Madang Province exported its
maiden shipment of nickel cobalt hydroxide in late 2012. The project
represents the first Chinese investment in PNG’s minerals sector.
High prices drive mining activity
The end of the international mining boom that has helped to drive the Papua New Guinea economy in recent
years is much predicted but shows no signs of coming to pass. Indeed, early in 2013 the Chinese dragon
began breathing more strongly, with its economy showing renewed life after a period of relative weakness.
Mineral prices continue to give confidence to investors
and producers. Copper is sitting at about US$3.80 a
pound, slightly off 2012 highs but still a happy place
for miners. Gold is around US$1700 an ounce, close to the top of
its trading range in recent years. Nickel at around US$17,000 a
tonne is 20% below February 2012 highs but is almost double
the lows plumbed during the Global Financial Crisis.
There is no doubting the importance of the mining industry
to Papua New Guinea. In 2011, it accounted for 71% of the
country’s export receipts.
The PNG Government is eyeing off the profits being won
by miners and has announced a major review of legislation
governing taxes and charges in the resource sector. The sensitive
question of landowner rights regarding resource projects is also
up for review in a process that includes mapping the boundaries
of landowner interests, an issue that can induce tensions both in
landowner and mining circles.
In a world of rising resource nationalism, PNG Prime Minister
Peter O’Neill has moved to quell concerns among mining interests
32
‘The investment and ingenuity directed
into the sector in recent years is achieving
major goals.'
over future governance in the sector. He promised the review,
while not likely to result in ‘massive cuts in taxes’ will be ‘open
and transparent’ and its results will not ‘act as a significant
disincentive to international competitiveness.’
In fact, the entire resource regulatory regime is under the
spotlight with new Mining Minister Byron Chan announcing a
World Bank-assisted review of the country’s mining legislation
in December 2012. It is likely to result in reforms to exploration
lease regulations, mine closure rules and encouragement of
downstream processing.
An efficient and effective resource regulatory regime could
make a big difference to PNG. A survey of resource regulatory
regimes by the Frazer Institute pegs PNG at 66th out of 93 in
the study. Lutz Heim, Managing Partner with Deloitte Touche

MINING update
Mining services
The mining and petroleum boom is helping grow
the capacity of PNG’s economy as a range of local
companies move into providing the services that enable
resource development to go ahead.
One notable example is Trans Wonderland, the landownerowned
trucking business that came into being to service
the PNG LNG project. It is now among the country’s largest
transport businesses with a fleet of 100 trucks and 380
employees (see page 35).
Another landowner company, Anitua, grew up around the
Lihir gold mine and has become one of the largest providers
of services to mine owner Newcrest. Its impressive service
offer includes contract mining, road construction, property
and investment management, camp management and
catering, and hospitality and hotels.
Of course, traditional business is playing a huge role in
mining services and one of the best known is Clough
Services. Its sophisticated offer includes engineering
services such as project feasibility studies, plant design
and procurement, and process optimisation. Clough is a
market leader in ports and port development, and designs
and provides petroleum and minerals loading facilities. In
PNG it is developing support infrastructure for the Waifi-
Golpu project and providing major infrastructure including
loading facilities for the PNG LNG project. It is also doing
upstream infrastructure on the US$19 billion project
including road and bridge construction and other critical
infrastructure. Clough has been in PNG over 30 years, has
completed over 70 projects and today employs more than
1500 Papua New Guineans.
Credit: UMW
Tohmatsu PNG, said the country could move into the top ten
with well-designed and implemented reform.
Sector update—majors
The investment and ingenuity directed into the sector in recent
years is achieving major goals. The $US1.5 billion Ramu nickel
and cobalt project in Madang Province moves to full commercial
operation during 2013. Ramu is the first major PNG resource
project with Chinese investment to come to fruition. Metallurgical
Corporation of China, which currently holds 85% of the mine, will
use the mine output to produce stainless steel.
Ok Tedi The giant Ok Tedi mine in the remote Star Mountains
of Western Province will see its life extended from 2015 to 2025
under a US$822 million development plan that will facilitate extra
production of 1 million tonnes of copper and 3.3 million ounces of
gold. CEO Nigel Parker says the mine extension is ‘extraordinarily
important’ to local communities as its continued presence will
allow it to keep working on environmental remediation of damage
caused by tailings in the Fly River during the 1980s.
Lihir Newcrest Mining’s rich Lihir mine in New Ireland Province
will see significant gains in output mid-decade after rectification
of what Newcrest describes as ‘long-term underinvestment’ in
plant under previous owners. Output is expected to more than
double in five years.
Porgera Significant exploration work is being undertaken at
the rich Porgera gold mine in Enga Province, with owners Barrick
Mining drilling 41,000 metres of test holes in 2012. However, the
company says law and order remains a problem at the site with
employees feeling unsafe.
33

MINING update
Ok Tedi’s planned expansion
Mining Minister Byron Chan (left) speaks with Ok Tedi Mining’s Nigel
Parker at the 12 th PNG Mining and Petroleum Investment Conference.
In November 2012, Ok Tedi Mining Limited (OTML)
submitted a feasibility plan to extend the Ok Tedi mine’s
life to 2025. With the mine’s continuation now before
the PNG Government, we spoke with OTML’s CEO Nigel
Parker about the US$822 million extension project and
likely changes to PNG’s mining laws.
Business Advantage PNG (BAPNG): Can you talk a little bit
about the opportunity presented by the mine, not just to
OTML, but also to the community?
Nigel Parker (NP): It’s extraordinarily important to the
communities because it gives the company a continued
presence in Western Province to continue to deal with the
environmental issues that we have and it also gives us time
to work with the communities to actually get them to start to
invest the benefits from the mine wisely.
The river vessels Fly Warrior, Fly Explorer and Fly Hope are
good examples. We manage them, but they’re the
community’s vessels and we charter them. We went into
aircraft with the same concept: that Ok Tedi would charter
aircraft off the communities, therefore displacing our use
of commercial aircraft. The people can actually say they’re
leveraging their association with OTML to a far, far greater
extent by actually having physical assets.
BAPNG: OTML also has some significant assets of its own.
What is the process of handing these over once the mine
closes?
NP: That’s very much on our agenda: what we will leave for
the natural owners. The hospital in Tabubil is a very clear
example of that. We’ve made the first tentative move this
year, bringing in Madang’s Divine Word University. They are
now the managers of the hospital.
As part of this program, they are going to establish a teaching
arm, whereby they will be teaching nurses, health education
officers and village midwives. At the end of 2013, all being
well, OTML will divest the assets of the hospital into the Ok
Tedi Development Foundation, and it will become the owner
of the hospital. There’s a whole range of assets that we have
to transfer to the natural owners, such as power generation
facilities, and we want to do that sooner rather than later.
BAPNG: Some of the changes to mining laws being
proposed by new Mining Minister Byron Chan seem to
feature community and environmental schemes you
already have in place …
NP: Absolutely. The Government is very proactive in looking
at this. Minister Chan mentioned a financial assurance fund—
we have a US$230 million financial assurance fund that’s off
balance sheet. This was set up at the time BHP exited the
Ok Tedi mine. If one was to study it, you’d actually see at that
time they put world leading concepts in place, which the
then-government embedded into the enabling legislation for
Ok Tedi. Minister Chan is now looking to embed that learning
into industry-wide mining legislation.
BAPNG: Are you comfortable with the process that’s been
outlined to revise current mining laws?
NP: I’m very comfortable because the Government is looking
at a very mature, balanced approach to some very complex
issues. The mining industry shouldn’t be worried about the
culture of Papua New Guinea. We have to learn how to work
with them, understand them, and assist in the development
of their economy. What I think the Government is doing is
walking a line between a lot of cultural issues and I firmly
believe we will get a very balanced outcome, particularly
if we start looking at some of the learning from Ok Tedi in
what Minister Chan has outlined: financial assurance funds,
women and children’s funds, having environmental impact
studies done well, and establishing mine closure funds.
Bougainville What some see as the ‘Holy Grail’ of PNG
mining, the reopening of the Panguna gold and copper mine
on Bougainville Island, is firmly on the agenda. Negotiations
are underway to transfer responsibility for mining regulation
on the island to the Autonomous Bougainville Government,
which favours reopening. The mine was closed in 1989 following
social unrest.
‘What’s fundamental is the desire of local landowners for the
mine to be open. I’m encouraged that more and more landowners
are saying they want it,’ says Peter Taylor, Managing Director of
Bougainville Copper and Executive Director of Rio Tinto Australia.
34
Mining Haus, the headquarters of the Mineral Resources Authority in Port
Moresby. The authority is not only responsible for licensing mining exploration
but also provides data and support to exploration companies.

MINING update
Land owner company transports success
Trans Wonderland’s
Larry Andagali
The success of the nation’s largest
trucking company may seem
unusual. But it’s a perfect example of
how melding international business
practices with local culture and
tradition can pay off.
The ownership structure of Trans
Wonderland (TWL) is noteworthy. It is
owned by a consortium of 25 landowner
companies (‘lancos’), half from Southern
Highlands and half from Hela Province. Created to benefit
from resource projects in the Highlands, these lancos provide
support to the resources sector in civil construction, labour hire,
security, catering and maintenance. Larry Andagali estimates
they distribute monies to a total of 60,000 beneficiaries.
In the past three years, TWL (named after explorer Jack
Hides’ 1930s book Papuan Wonderland) has gone from a
moderate turnover of 15 million kina (US$7.1 million) to an
impressive 100 million kina (US$47.9 million). It now has over
100 trucks in operation and 380 staff.
Keys to success
Infrastructure, training and transparency are all key to TWL’s
ongoing success, according to Andagali.
The company has spent six million kina (US$2.8 million)
on workshops, training and development. Trainers from
Australia and New Zealand have worked with local drivers to
improve skills, often taking long journeys with them along the
Highlands Highway in company trucks.
‘This is a 24 hour operation; we monitor everything,’ says
Andagali. The company recently installed satellite tracking in all
trucks so cargo and vehicles can be pinpointed at any time.
A post-LNG world
The construction phase of the US$19 billion ExxonMobil LNG
project will finish in 2014 and a lot of work may dry up for
companies providing services to the project.
TWL is already looking ahead; there are plans to establish a
presence in Port Moresby and to turn TWL into ‘a one-stop
shop for transportation and logistics operation in the country'.
Social projects are also within TWL’s ambit. In January 2011,
TWL helped a collective of 200 women, the Hela Women’s
Upstream Limited, buy and operate a Western Star semitrailer,
part of a consortium of ten such trucks.
‘I think the future is bright,’ Andagali tells Business
Advantage. ‘There will be a lot of revenue coming in with the
LNG project and all these other mines. That money needs to
be reinvested; it needs to be recirculated in the country.’
Development
Xstrata Copper and Highlands Pacific continue to invest in their
Frieda River gold and copper deposit, completing a feasibility
study and signing a benefit-sharing agreement with local
landowners. A green light on the project will see a capital spend
of US$5.3 billion.
Marengo Mining is moving towards production at its
Yandera gold/copper-molybdenum project, where it has spent
US$150 million since 2005. It recently completed a feasibility
study and has applied for environmental and mining
approvals. Production is expected in 2016 in partnership
with China Nonferrous.
Canadian group Nautilus Minerals has halted work on its
Solwara undersea mining project after a dispute with the PNG
Government over development costs and an environmental
impact study. It had planned to mine gold, copper and silver 1600
metres down on the Bismarck seabed.
The Newcrest-Harmony Gold joint venture continues to be
productive with a pre-feasibility study and further development
work completed at Wafi-Golpu. Their Hidden Valley mine is
averaging 250,000 ounces of gold and 3.6 million ounces of
silver annually.
Kula Gold has boosted its estimates of gold reserves at
Woodlark Island deposit to 3.1 million ounces and has applied for
mining permits after a successful feasibility study.
Exploration activity remains strong with Coppermoly Ltd
signing a farm-in agreement with Barrick Gold over eight years
on three sitess in West New Britain. Indochine Mining is working
on its Mount Kare deposit near Porgera, where it plans to spend
US$60 million on exploration drilling.
Credit: MMJV/PNG Chamber of Mines/Rocky Roe
An aerial view of the Hidden Valley mine.
35

MINING & Petroleum
Conference attracts 1350 delegates
Prime Minister Peter O’Neill (right) with Dr Ila Temu, President of the Papua
New Guinea Chamber of Mines and Petroleum.
The 12 th PNG Mining and Petroleum Investment
Conference was held in Sydney in December 2012,
hosted by the PNG Chamber of Mines and Petroleum.
It was the largest conference to date with a wide
range of presenters and 1350 delegates.
‘There has never been a better time to invest and participate
in the resources sector,’ PNG’s Prime Minister Peter O’Neill
told the assembly, saying his government would ‘get serious
about the cost of doing business in PNG.’
PNG Mining Minister Byron Chan used the conference to
announce the World Bank-assisted review of the nation’s
mining legislation. He demonstrated the importance of
resources to the national economy, saying the industry
provides over 70% of export receipts, and observed
PNG has attracted new resource players including Total,
St Barbara, Vale, Mitsubishi, Rio Tinto and Indochine Mining
in recent times.
Presenters at the conference included PNG Chamber of
Mines President Dr Ila Temu and industry leaders including
Esso Highlands Managing Director Peter Graham (leader of
the PNG LNG project), Ok Tedi Mining Ltd Chief Executive
Officer Nigel Parker and Oil Search Ltd Chief Executive Officer
Peter Botten.
The conference also marked the publication of the 12 th edition
of the biennial Profile mining and petroleum investment
magazine, which documents PNG’s resource sector.
Link:
www.pnginvestment.com
36

If there are two statistics that give a clear
picture of how fundamentally PNG’s
banking system is changing, it’s these:
when Chief Executive Officer Ian Clyne started
at BSP, the country’s largest bank, in 2008, the
bank had 450,000 active bank accounts.
As of the end of 2012, it had one million.
Indeed, the bank added over 250,000
accounts during 2012 alone.
ANZ’s Mark Baker This remarkable growth is a symptom of a
major re-engineering of PNG’s banking sector
and a drive from the country’s three major banks—BSP, ANZ and
Westpac—towards greater financial inclusion for PNG’s population.
This activity is part of a concerted strategy by the central
bank, the Bank of Papua New Guinea, to increase Papua New
Guineans’ access to financial services through the development
of greater financial literacy, the deployment of mobile and
electronic banking, and improved access to microfinance.
Good business reasons
Long-term development outcomes may be the motivation for
such a push, but there are good business reasons for the banks
to respond to their regulator’s encouragement.
Banking in PNG is a demanding exercise. With the bulk of the
country’s population living in remote areas, often in the Highlands,
traditional bricks-and-mortar branch networks are hard to
establish and costly to maintain. The need to fly millions of kina
in cash around the country by plane is just one reason.
With traditional retail banking proving unprofitable outside of
PNG’s main towns and cities, banks have been driven to innovate
in order to bring the majority of Papua New Guineans into the
formal economy in a cost effective way.
‘For us, it’s not about putting in branches anymore,’ says
Mark Baker, who arrived in PNG in mid-2012 to head up ANZ’s
PNG and north-west Pacific operations. The answer, in the words
of Westpac’s Pacific General Manager Greg Pawson, is ‘making
banking electronic from end-to-end.’
BSP is already offer mobile phone banking, while ANZ and
Westpac are expecting to launch their own services in 2013. It
is worth noting that much of this investment is enabled by an
increasingly robust telecommunications network, mostly owned
and operated by Digicel.
‘Mobile phone banking is profitable over the longer term, although
it can be quite complex at the bank’s end,‘ notes Mark Baker.
Heavy investment
Underpinning these services, therefore, is major ongoing investment.
Having built a new state-of-the–art cash centre in the Port
Moresby suburb of Gordon and expanded its EFTPOS and ATM
network, BSP currently has 200 million kina (US$95 million) worth
of building projects under way, including a 7800-square metre
Pacific operational hub in Waigani, a three-storey commercial
centre in Lae and the transformation of its iconic building in
Port Moresby’s CBD into a financial services training college.
It will also deploy a new trade finance platform in 2013.
Financial services
Innovation drives financial services growth
Papua New Guinea has traditionally been a cash economy, but that is changing quickly, as PNG’s banks
deploy technology to reach out to the next generation of banking customers.
Credit: ANZ
Meanwhile, Westpac is rolling out its own enhanced merchant
terminals to trade stores, while investing in a new operations
centre and branch in Port Moresby, and its own new commercial
centre in Lae.
‘We have an aspiration to grow at a faster rate in PNG,’ says
Pawson.
Finance and microfinance
In addition to the banks, the Bank of Papua New Guinea also
licenses 10 financial institutions, including Kina Finance, PNG
Home Finance (both part of the Kina Securities group), Credit
Corporation, and a number of microfinance lenders.
‘There’s been a significant increase in the financing of trucks and
heavy equipment,’ observes Garth McIlwain, Chairman of Credit
Corporation, which supplies finance to most of PNG’s landowner
companies, among others. ‘It’s not so much due to new customers
but to existing customers expanding.’ The firm, at the time of
writing the subject of a takeover bid from BSP, has opened a new
expanded operation in Lae to handle the expanded business and
has recently upgraded back office systems across its operations in
PNG, Fiji, the Solomon Islands and Vanuatu.
Microfinance remains a major policy focus, with the National
Development Bank‘s People’s Micro Bank Ltd the latest institution
to enter this market.
‘Banktainers’—fully-functioning brand branches housed in portable shipping
containers—are increasingly being deployed to service remote commercial
centres in PNG. In December 2012, ANZ opened a container branch in the Hides
gas field in remote Hela Province. The branch will service gas field workers and
surrounding communities and was created in partnership with landowner
company, Hides Gas Development Company.
37

Financial Services
Managing risk in PNG
Optimism in PNG’s insurance sector is high with
companies seeking to expand amid the strong economic
growth of PNG.
‘The economy is very healthy,’ says Chris Giddings of Pacific
Re, a Port Moresby-based reinsurance firm, and President
of the PNG Insurance Council, the peak body for the
insurance industry.
Most growth in the insurance sector has been by Papua
New Guinean-owned companies, rather than foreign ones.
‘We have far more domestic companies than international
companies,’ says Giddings, ‘which is actually good for
the economy.’
One of the areas of growth, says Wayne Dorgan (pictured
far right), Managing Director of Pacific MMI Insurance, is the
expanding SME (small-to-medium enterprise) market and the
opportunity to develop products specifically for local businesses.
‘The National Development Bank and Nationwide Microbank
have taken up a couple of schemes we’ve come up with,’
he told Business Advantage PNG. While sold by the banks,
these life and general insurance products are underwritten
by Pacific MMI.
For overseas companies looking to move into the PNG market
things are relatively straightforward:
Credit: Mary Johns
Extreme weather conditions in PNG can have unexpected results.
‘There’s no restriction; foreign companies can come in provided
they’re licensed by the insurance commissioner and stick to
the rules and have the correct capital,’ says Giddings. ‘There are
certainly opportunities coming into PNG.’
Changes in the sector
The Independent Consumer and Competition Commission gave
regulatory approval for QBE to buy Mitsui Sumitomo in late 2012.
‘Initially, the ICCC was concerned the take-over was
going to lessen competition,’ ICCC Commissioner and CEO
Dr Billy Manoka told media. However, the ICCC eventually
determined that market concentration would only increase
38

Financial Services
at a moderate level and that laws allow companies to set
up with relative ease.
Revisions or even an overhaul of the 1995 Insurance Act,
which has not been revised in 18 years, are anticipated this
year. In particular, a strengthening of Sections 36 and 37,
which cover exemptions to PNG’s insurance laws whereby
all companies domiciled within PNG must purchase
insurance locally.
The PNG LNG project was granted an exemption at
government level and did its insurance dealings offshore
and many companies associated with the project rode
on its coat tails, gaining exemptions in a number of areas.
‘We’re hoping that will be tightened up,’ says Giddings.
PNG idiosyncrasies
‘In the Pacific, we have a lot of idiosyncratic problems,’ says
Dorgan, explaining that thanks to, say, poor responses by the
fire brigade, buildings will be insured at higher premiums as
there is a higher chance of their burning to the ground.
Poor internet services and infrastructure also mean that
many of the calculations that are usually done online to work
out costs must be done manually in PNG. However, with
internet services slowly improving, such things may not be
the irritation they are for much longer.
What insurance
should you buy in PNG?
Pacific MMI Insurance’s
Wayne Dorgan
Business Advantage PNG asked
Pacific MMI Insurance MD Wayne
Dorgan for his recommendations.
All companies domiciled within PNG
must have third-party motor vehicle
insurance bought via the governmentowned
Motor Vehicles Insurance Ltd
and workers’ compensation supplied
via a licensed PNG insurer.
For SME’s, a business pack (a
selection of varied covers that provide
businesses more wide-ranging cover in one policy) which can
include property, liabilities, burglary cover, motor vehicle fleet
insurance, money insurance and financial lines insurance.
For those moving stock, marine cargo transit insurance
is important, given the problems and delays in shipping
and logistics.
Remember that the type of insurance you need depends
very much on your industry but health insurance is also
recommended for all.
When you analyse a business, one of its greatest assets is its
staff. If you’re not protecting your staff, you’re really exposing
your business.
39

Financial Services
BSP’s Ian B Clyne: Technology is the key
BSP, PNG’s largest bank, is being recognised globally as a major innovator with mobile technology.
In our exclusive interview, Group CEO Ian B Clyne reflects on a momentous year for the bank and its
plans for future growth.
Business Advantage PNG (BAPNG): I gather BSP opened
a record number of new accounts last year. How was
this achieved?
Ian B. Clyne (IBC): When we did a project three years ago to
streamline the account opening process, we found that it could
take up to an hour and a half for a teller to open a new account.
But now that we have the right systems in place, after investing
in state-of-the-art technologies, we have the capacity to go out
and really start to open accounts.
Thanks to the Galaxy Tablet we now use, which has wireless
Bluetooth connectivity, we can open up a bank account
anywhere around the country in five minutes, giving you a
working debit card, issue a PIN, and take a deposit. Technically,
you could then walk to the nearest EFTPOS terminal or ATM
and withdraw that deposit immediately.
BAPNG: And congratulations on winning the Connected World
Forum Award for the ‘Best Bank-led Mobile Money Programme’
in recognition of the technology you have used ...
IBC: BSP is one of the first banks in the world to utilise this
cutting-edge technology to reach more customers in the most
remote areas, to open new accounts and increase financial
inclusion. Winning this globally-recognised award is an
amazing achievement and one in which all staff of BSP have
contributed. It recognises that BSP is a world-class, innovative
bank and also very clearly puts PNG and BSP on the world
banking map for all the right reasons.
BAPNG: They say necessity is the mother of invention. Would
you say you had to be so innovative because PNG provides
such a challenging environment for retail banking?
IBC: Yes, you have no choice. If you look at the nature of the PNG
retail market, it is unprofitable in the traditional format. Only 15 of
our 41 branches used to cover direct and indirect costs. Today,
nearly all cover their direct costs.
The only way we could make a branch network profitable was
to actually re-engineer or refocus it to service the high-income
customer and the lending customer.
In short, every time a mass market person goes to our teller,
we lose money. Every time that same customer goes to an ATM
or an EFTPOS terminal, we make money. So we had to motivate
people to move away from cash as the source of doing their
business and into electronic banking.
Our whole strategy had to be built around how to service
each customer segment, and that’s why we set out some time
ago looking at electronic solutions.
But to do that you also need to have the bandwidth and
the capability of processing. Historically, PNG has had very
poor telecommunications infrastructure, based on satellite, but
in recent years Digicel has revolutionised banking in Papua
New Guinea. Thanks to their network, we’ve got ten times more
bandwidth between the main towns.
BSP’s Ian B Clyne
holds the Connected
World Award for Best
Bank-led Mobile
Money program.
BSP beat banks
from all over the
developing world to
win the award.
BAPNG: The program must be having a massive impact on
the rural economy?
IBC: We did a pilot project with agribusiness Agmark in Kokopo
(East New Britain Province). There was a woman who had been a
grower for 20 years, but when she got paid cash all her wantoks
[relatives] came and she had no cash left. If, instead, she gets a
cheque, then it just goes to the local trade store. Since we’ve done
that pilot she’s been saving a thousand kina (US$475) a month and
now she’s talking about going into chickens and pigs, you name it.
We’re also working with all the major commodity buyers, so
the commodity buyer is now using a wireless EFTPOS unit or an
electronic solution. We actually have a mobile phone solution
coming shortly, and we go out with the tablets and we open
accounts for all the growers.
BAPNG: You’re opening all these new accounts and accepting
all these deposits. Who are you going to lend this money to?
IBC: BSP has been working for some time on building a new
lending platform because you cannot cost-effectively do
retail lending on a manual basis. Therefore, BSP’s strategy is to
automate the whole retail lending process—both for retail and for
small-to-medium business lending.
We now do an enormous amount of data mining. We’re
building a scoring model, based on seven years of data on
defaults. The idea is: the client will come in to the loans office, our
staff will input the data into the computer—obviously, we have
to have the correct data—and they’ll get a decision on the spot
about whether their application is referred for review.
40

Infrastructure & transport
With most of PNG impassable by
road, air services are a critical form
of transportation for businesses
and consumers.
Credit: Lynden
Solving PNG’s infrastructure challenges
2013 has been dubbed ‘the year of implementation’ by the PNG Government, with infrastructure one of its
major priorities. This is not before time, since it is widely accepted that PNG’s crumbling infrastructure is
constraining all levels of its economy.
The Government’s budgeted development and capital
investment expenditure for 2013 is 30.6% higher than
2012, increasing to K5.8 billion (US$2.75 billion).
‘The large increase reflects the Government’s commitment to
investing in projects that will further development opportunities
for Papua New Guineans,’ according to budgetary analysis by
PricewaterhouseCoopers PNG.
In terms of power, water and roads, major projects either
underway or under consideration include the following:
The Yonki Dam Project
This aims to eliminate the constant and widespread power
blackouts suffered in Lae and Madang. Its scope includes:
• The refurbishment and upgrade of the Ramu 1 power station
by PNG Power, at a cost of K58 million (US$27.5 million),
which will return the station to full operational capacity
by late 2013. A second phase, estimated to cost about
K55 million (US$ 26 million), will be required to complete
the refurbishment.
• The second project is a mini-power station. The Toe of Dam
project is designed to generate 18 megawatts (MW) of
electricity from water flowing down the dam spillway that
would otherwise not be harnessed. PNG Power expects
the plant to be commissioned sometime in 2013.
• The third project is the construction of a new powerhouse,
Ramu 2, which would generate an additional 120 MW to
41

Infrastructure & transport
180 MW, bringing the total power generated at Yonki from
45 MW to between 180 MW and 240 MW.
The Purari River hydro project
This is estimated to be worth up to K25 billion (US$11.86 billion)
and would be the biggest power project in the Oceania region
and one of the biggest projects of any sort in PNG’s history.
PNG Energy Developments Limited, a 50/50 joint venture
between PNG Sustainable Development Program and Australia’s
Origin Energy, has signed a Memorandum of Understanding
with the PNG Government’s Independent Public Business
Corporation (IPBC) to undertake a K250 million (US$118 million)
final feasibility study.
The Port Moresby Sewerage System
Upgrade Project
This project is a joint venture between IPBC, the Japan
International Cooperation Agency/Japan Bank for International
Cooperation and the National Capital District’s water company,
Eda Ranu. It will cost an estimated K285 million (US$135 million).
It consists of a new trunk sewerage main and branch sewers,
new pump stations and refurbishment of existing stations,
a new treatment plant, a new ocean outfall and new sludge
drying beds.
Highlands Region Road Improvement
and Investment Program
The Asian Development Bank has allocated US$100 million to
rehabilitate 115 km of road in the most densely populated part
of PNG over next two to three years.
Opportunities for THE private
sector in infrastructure
The PNG Government has made it clear that it sees
increased cooperation with the private sector as
essential to achieving its infrastructure objectives.
The Asian Development Bank has singled out these
areas of particular interest:
> PNG is encouraging greater private sector involvement
in the transport sector. The Department of Works and
National Roads Authority now contracts all design
and civil works to private sector contractors.
> There are opportunities for shipping franchises
to offer passenger transport and cargo handling.
> There are increased opportunities for shipping
and port operations services surrounding the Lae
Port Development.
> Public–private partnerships in the civil aviation sector,
including for performance-based management
contracts and operation of the Jackson’s International
Airport in Port Moresby.
Source: ADB
42

Infrastructure & transport
Interview: Maersk Line puts PNG on the shipping map
BAPNG: What kind of customers are you are targeting?
NN: We target customers that put a premium on being
able get a transparent service when placing an order from
anywhere in the world. For example, goods like tools and
spare parts are very well suited for containerisation. We’re
targeting the kind of customer who says ‘I need to have
that spare part on my shelves all the time. I cannot run out
because the alternative is having to fly iit in at great expense.’
In developing countries, it is not unusual for companies
to need a stock factor of maybe six, seven, eight or
nine weeks’ worth of sales, while in countries with more
reliable supply chain they can get away with maybe
a week or two’s worth of stock. At the end of the day
someone has to pay for that extra stock—the end
customer—so it becomes more costly as a country
when you don’t have efficient logistics.
Maersk Australia’s Nicolaj Noes
Business Advantage PNG spoke to Nicolaj Noes,
Australian Managing Director of global shipping
company Maersk Line, about its new level of operations
in Papua New Guinea.
Business Advantage PNG (BAPNG): Maersk is a global
player in the shipping industry but you are a new entrant
in the PNG market. How did this come about?
Nicolaj Noes (NN): It was a case of Maersk Line spotting
an opportunity; where the product we offer wasn’t that
readily available in the PNG market.
We felt that PNG services were dominated by what we call
a sort of a ‘semi-tramp’ approach, meaning that PNG was
a stopover on services coming down from Asia and then
maybe continuing out to other Pacific islands. However,
we also believed that, as PNG was maturing and the
customers in its logistic chains were also maturing, there
was suddenly a requirement for a different kind of service
in container transportation in PNG. So we said: let’s put
PNG on a global network with a shuttle service that goes
straight into an Asian hub (Malaysia, in our case), and try
to differentiate ourselves as a more reliable service. By
removing all the variations, we can really focus on servicing
PNG and I think that has allowed us to have the best
reliability in the market.
BAPNG: How frequent are your services at present?
NN: Taking into account the operational constraints that
we have in the ports here, the frequency is a little over
two weeks.
Credit: Maersk
43

Infrastructure & transport
Ports expansion
With port traffic growing exponentially over the past
five years, Papua New Guinea’s ports have become
a bottleneck for both importers and exporters. The
situation is set to improve, however.
Lae is the most important port in PNG, accounting for
60% of the nation’s trade, and has become one of
the busiest in the south-western Pacific, receiving about
850 vessels in 2012.
The Lae Port Development Project, started in 2010, is
expected to be completed by the end of 2014. Works
currently underway include the construction of port facilities,
including a tidal basin, a multipurpose berth and terminal
works, including buildings, storage areas, roads, drainage,
water, electricity and sewerage services.
It is being funded by US$100 million from the Asian
Development Bank and a further US$45.75 million from
the PNG Government.
Reforms to improve port efficiency
PNG Ports Ltd's K200 million (US$93.6 million) program
of investment to improve efficiency at its two busiest
ports had been completed by the end of 2012. It is
minimising storage congestion and also decreasing
ship berthing times with mobile harbour cranes and
rubber-tyred gantry cranes complete with modern terminal
operating systems.
Relocation of Port Moresby’s port?
Finally, plans are moving ahead that may ultimately see
Port Moresby’s port move away from the main ‘town’
precinct. Engineering studies are currently under way, as
well as investigations into land-tenure issues.
Credit: PNGFP
PNG’s first privately built hydro electricity power station has opened in Bulolo, Morobe Province. The US$50 million Upper Baiune power project was built by PNG
Forest Products. It is the first commercial venture to supply electricity to state-owned utility, PNG Power.
44

Infrastructure & transport
Pacific Games 2015 offers opportunities for business
Papua New Guinea business is set to receive a major
boost from supplying the Pacific Games 2015, as Games
CEO Peter Stewart explains.
On 4 July 2015, 4000 athletes and officials from 22 countries
across the Pacific region will assemble in Port Moresby
for the Pacific Games 2015. The work to prepare for the
quadrennial Games has already begun, with a K760 million
(US$362 million) budget allocated, of which K200 million
(US$96 million) has already been granted.
The bulk of this budget—about K700 million (US$335
million)—has been earmarked for essential infrastructure
projects, including the major redevelopment of Sir John
Guise Stadium (itself built and donated by China for the 1991
Games), a new sports complex, new halls of residence at the
University of Papua New Guinea campus (which will serve
as athlete accommodation) and 20 other redevelopments.
Infrastructure building has already started and will be
overseen by the Games’ Venues, Infrastructure and
Equipment Committee. All work will go to tender via the PNG
Government’s Central Supply and Tenders Board.
However, Games Chief Executive Officer Peter Stewart also
expects to spend a further K120 million on ‘small things’—
everything from fleet vehicles, flights, catering and staff
through to pots and pans, cleaning and waste services, TVs,
fencing … and fireworks.
Stewart, a veteran of the 2010 Commonwealth Games and
the 2000 Sydney Olympics, advises the Games will conduct
‘best practice’ purchasing, buying first from sponsors on a
preferred-supplier basis, and then from those companies
who have registered as suppliers. If anything else is needed,
it will go to the market, with big ticket items, such as office
fit-outs, legal services and insurance, advertised.
‘This is a games for PNG and we’d like as much money as
possible to stay in PNG,’ he says.
Architect’s impression of Port Moresby’s Sir John Guise Stadium, which
will be renovated for the 2015 Pacific Games.
Credit: PeddleThorp Architects
45

Infrastructure & transport
Will 2013 be the year of broadband in PNG?
Hopes are high in Papua New Guinea’s
telecommunications industry that internet services
are finally about to become more accessible and
more affordable.
‘Mobile phone usage stands at 27.8% of the population, but
internet penetration is only 1.3%, with cost the main issue,’
lamented Managing Partner of Deloitte PNG Lutz Heim at
the Papua New Guinea Advantage Investment Summit in
September 2012.
The main reason for this is that, while the mobile phone
sector in PNG has benefited from deregulation, internet
thus far has not. As a result, state-owned Telikom PNG has
retained an effective monopoly on international access,
leaving it free to charge whatever it pleases to local internet
service providers (ISPs) and its own customers.
Prices down, speeds up
This is finally changing, though, and a dozen ISPs have now
applied for their own Individual Network (Gateway Service)
Licenses. With competition imminent, there is also pressure
on Telikom to reduce its own prices:
‘We think that in the next twelve
months there’ll be quite a boom in
broadband, quite a boom in business
connectivity'
‘The aim with the network plan is to avoid duplication
of backbone network transmission and to allow retail
service providers to concentrate on services to the people
rather than building and maintaining expensive backbone
networks,’ says Sundar Ramamurthy, a consultant on
the project (and original founder of IT services company
DataNets, now owned by Digicel). ‘Consumers should see
the benefits of lower prices and better access by mid-2014,
although everyone should keep in mind that rolling fibre
across PNG does pose a non-trivial engineering challenge.’
Indeed, the first stage of the NTN, a new fibre-optic link from
Madang to Lae, does not appear to have made much impact
so far, in Lae at least: ‘I believe there have been technical
issues and our members are frustrated,’ reports Alan McLay,
President of Lae Chamber of Commerce and Industry.
Unstoppable momentum
Nonetheless, the process does seem to have gained
unstoppable momentum and Digicel’s John Mangos is
convinced broadband’s time has finally come in PNG:
‘We think that in the next 12 months there’ll be quite a boom
in broadband, quite a boom in business connectivity. If the
Government wants to get a million people on broadband
over the next two years, then we can help them achieve it.’
Given the leading role played by Digicel in the exponential
growth of PNG’s mobile phone sector over the past five
years, few would disagree.
‘It’s our absolute priority to get prices down and speeds
up this year,’ newly appointed Chairman of Telikom PNG,
Mahesh Patel, told Business Advantage PNG.
If deregulation alone can bring prices down, significantly
improving speeds will require tangible capital expenditure,
however.
‘Even though most customers can use wireless internet
services, you still need fibre in the towns and fibre between
the towns,’ explains John Mangos, Chief Executive Officer
of telecommunications company Digicel PNG.
National transmission network
In recognition of this, PNG’s new Government announced
a major project to upgrade PNG’s telecommunications
backbone shortly after taking office last year. At a cost of
500 million kina (US$239 million), the National Transmission
Network (NTN) ‘is essentially an integrated optical fibre
network, to be controlled by a new company called PNG
DataCo Limited,’ according to Thomas Abe, Managing
Director of the Independent Public Business Corporation,
the government agency responsible for its implementation.
DataCo will own and operate the network as a wholesale
provider of telecommunications, with Telikom PNG to be
restructured into a retail-focused service provider.
46

Although there have been few new investors in Papua
New Guinea’s manufacturing sector during the past
decade, most of the established players have invested
heavily in new capacity to meet soaring demand.
One of the country’s largest and most diversified manufacturers,
K K Kingston, is consolidating its various Lae production units into
a brand new manufacturing and distribution hub on the outskirts
of the city. The industrial supplies company hopes to move into the
26,000-square metre facility sometime in 2014.
Meanwhile, S P Brewery—which celebrated 60 years of
operations in PNG in 2012—is in the midst of a K150 million (US$71
million) expansion that will add 40% to its output. With growing
national income and beer consumption rates still only half of the
south-east Asian average, there appears plenty of room for growth.
Other significant recent investments include Lae Biscuit
Company’s K65 million (US$31 million) investment in a new
factory in Lae, while Coca-Cola Amatil PNG opened a K34 million
(US$16 million) production facility in Port Moresby in early 2012,
to complement its existing plant in Lae.
Exports
In global terms, PNG’s manufacturing sector lacks scale and
production costs are high. Though this constrains exports, local
producers have found niche overseas markets, particularly in
the neighbouring Solomon Islands and other Pacific Islands,
and to a limited extent in Australia and New Zealand.
Manufacturing
Serving the Pacific's largest market
PNG’s manufacturing sector has expanded rapidly in recent years, but the operating environment for local
producers remains challenging.
Jobs and high-quality goods
PNG’s manufacturing sector reportedly employs around
a quarter of the formal workforce, while its contribution
to GDP is estimated at between six and 11.5%. Much of
PNG’s existing manufacturing sector is centred around
Lae and, to lesser extent, Port Moresby.
‘We employ about 500 people and that number rose by
80 last year,’ Phil Kelly, General Manager of the diversified
food and condiments manufacturer Laga Industries, told
Business Advantage PNG in mid-2012.
The range of goods made in PNG is also broader than
many would believe.
Given PNG’s wealth of natural resources, it is not surprising
that downstream processing plays an important role in
the manufacturing sector. Examples include the loining
and canning of fish, converting local timber into plywood,
roasting coffee and even the refining of gold. At the same
time, the potential exists to significantly expand the scale
and scope of such processing.
The PNG Government is seeking to encourage local
production by offering incentives and concessions to
manufacturing enterprises. Incentives include export
sales exemptions and wage subsidies.
One of K K Kingston’s factories in Lae. The company is in the process of
consolidating its various sites in Lae into one large operational facility.
‘Given that PNG has the largest domestic market in the Pacific
region, its manufacturing sector enjoys certain economies of
scale that provide opportunities for our manufacturers to export
products to smaller markets in the region,’ explains Murray Woo,
President of the Manufacturers Council of PNG (MCPNG).
In particular, neighbouring Solomon Islands represents a
quasi-domestic market for PNG goods. Paradise Foods sells its
biscuits and snacks across the Pacific Islands—one of several
PNG manufacturers (including K K Kingston, Woo Textile and
PNG Taiheiyo Cement) to do so. S P Brewery now exports its
signature S P Lager to Fiji, as well as Australia.
PNG Made
Over the past three years, the MCPNG has stepped up its
‘PNG Made’ campaign to encourage PNG consumers to buy
locally made products.
The scheme deploys a ‘PNG Made’ logo that acts as a mark to
give consumers confidence that the local goods they are buying
are of good quality. To use the ‘PNG Made’ logo, 50% of a particular
product’s cost of production must have been incurred in PNG. A
wide range of locally produced goods display the logo, ranging from
food and beverages, to garments and industrial products.
Challenges
The absence of new entrants is probably due to the fact
that PNG is just such a tough place to set up and operate
a manufacturing operation.
Poor infrastructure in areas such as ports, roads and power
reduces efficiency and pushes up costs, while a lack of skilled
labour remains a significant constraint for industry development
in PNG.
Moreover, falling tariffs on imports, a strong local currency and
limited government assistance to the sector are also drawbacks,
says Chey Scovell, Chief Executive Officer of the Manufacturers
Council of PNG:
‘We’re expecting to see a continued erosion of market share
for local manufacturers due to a rise in smallholder corner shops
selling cheaply imported goods and the downturn in the LNG
project that will see lower outputs for many members, especially
those providing inputs for the [project’s] construction phase.’
47
Credit: K K Kingston

Agribusiness & trade
Palm oil is now PNG’s number one agricultural export, thanks to an
increase in global demand for sustainable, traceable palm oil. Pictured
is a first for PNG: a fractionation plant in West New Britain built under
a joint venture agreement between local producer New Britain
Palm Oil Ltd and global confectioner Ferrero.
Credit: NBPOL
A natural aptitude
Good environmental conditions, a strong history of agriculture and rising global demand has helped expand
the agribusiness sector in PNG in recent years, producing important cash crops such as palm oil and cocoa.
Agriculture has always been an important part of life in PNG,
and 85% of the population works in food production in some
capacity, usually at subsistence level on smallholder farms.
Agriculture accounts for 25% of PNG’s gross domestic
product. Competitive advantages such as good soil quality,
good seasonal rainfall and low-intensity farming methods are all
factors, as are cash crops that are seeing rising global demand,
such as sustainably produced palm oil.
Together, coffee, palm oil and cocoa make up 80% of PNG’s
agricultural exports. There are also smaller export markets for
rubber, copra, spices and tea, while poultry, livestock and sugar
are supplied to meet local demand.
Palm oil
Palm oil is PNG’s largest agricultural export by far, with its major
market at this stage being the European Union—including the
United Kingdom, where PNG’s main producer, New Britain Palm
Oil Limited (NBPOL), has processing operations. NBPOL’s success
with palm oil has been underpinned by its commitment to
producing certified sustainable and traceable product, for which
buyers will pay a premium.
While palm oil exports were worth US$700 million in 2011, up
44% from the year before, 2012 was a weaker year, with lower
international prices and poor weather conditions leading to lower
than expected profits for the sector. NBPOL, for instance, reported
2012 profits were down by 70.4%.
Jamie Graham of Ramu Agri Industries, a subsidiary by
NBPOL, told Business Advantage PNG that it is not just weather
that has been affecting profits but also the general cost of
‘Since 1976, palm oil exports have grown
exponentially from a low base and it
now outpaces all other main agricultural
areas combined.’
doing business: employment costs, high cost of services,
congested ports, poor roads, a strong local currency and
falling commodity prices.
Price volatility
While palm oil prices are volatile, there is no question of palm
oil’s viability in PNG over the longer term (indeed, diversified
Malaysian investor R H Group is also making significant
investment in palm oil production in PNG). Copra is another crop
that had a hard 2012: worldwide prices dropped 78% from 2011.
Similar problems were the root cause, although competition from
a rising soy product market was also a factor.
Coffee and chocolate
Although PNG’s overall cocoa production is only about one
per cent of the worldwide market, it holds a larger share of the
high-end, or fine and flavour, cocoa market (as opposed to the
bulk cocoa market). Much of the crop goes to big chocolate
producers who want to use sustainable, traceable ingredients
for their products. The largest markets are the United States,
Belgium, Malaysia, Singapore, Germany, United Kingdom, China,
Netherlands, Switzerland, France and Australia.
48

agribusiness & trade
Opportunities to sell to Papua New Guinea
While Papua New Guinea’s commodities are exported
all over the world, the country also imports goods worth
some K10 billion (US$4.74 billion) annually.
Here are just some of the areas of key expenditure
and demand:
> Machinery and transport equipment
> Mining and petroleum project-related services
> Construction supplies and contracting
> Food and beverages
> Health products and services
> Education and training products and services (K–12,
tertiary, technical and professional)
> ICT products and services.
Credit: Mainland Holdings
Large-scale agribusiness NGIP Agmark exports 70% of PNG’s
cocoa crop, although there are another 24 smaller exporters.
PNG’s single-origin cocoa has a reputation for particular richness
of flavour and is grown in New Britain, Bougainville, Sepik,
Kokoda, Madang and Morobe provinces. PNG is a member of
the International Cocoa Organisation (ICCO) and has its own
cocoa board, which regulates quality control, licensing and
export registration.
The PNG Government has targeted 100,000 tonnes of cocoa
exports by 2016. Smallholders are heavily involved in cocoa
production, with the average yield per family plot just 300
kilograms per year. Investment in technology, pest and disease
management, and shade management could expand that figure.
PNG has exported up to a million bags of green coffee beans
annually (both arabica and robusta varieties), much of it to
Europe. However, in 2012, production fell markedlty and only
808,000 bags were exported.
‘The lower volume was mainly attributed to an off-year
biennial production cycle as well as election-related activities
that disrupted farmers to bring coffee out onto the markets,’ said
Coffee Industry Corporation Chief Executive Officer Navi Anis.
2013 is expected to be a better year.
Domestic demand for chicken is soaring in PNG.
Coffee beans bagged and ready for market.
Key production areas are the Western and Eastern Highlands,
which produce about 80% of the country’s coffee. While
most coffee leaves PNG with minimal processing, there is an
increasing number of companies that roast and package coffee
in PNG, both for export and domestic consumption.
While a limited shelf-life for roasted coffee mitigates against
large scale exports, organic and ‘fair trade’ certification have been
identified as one way of raising the yield from PNG’s coffee crop.
The usual obstructions
Agribusiness faces the same issues that are problematic for
many of PNG’s productive sectors: poor infrastructure, law and
order issues, and poor marketing and organisation. For some
smallholders, even getting the crop to market can be hard,
although more are now turning their produce over to larger
agribusinesses.
PNG’s most profitable and much-vaunted mining and
petroleum sector has in fact been something of a drain on
the agricultural sector; labour cost availability has been
a major concern, as has basic infrastructure.
‘Infrastructure is considered a government obligation in
many economies but has to be provided by manufacturers
in PNG. PNG must fund and nurture these services if we are
to become a serious producer and a viable economy,’ Bob
Hansen, Chief Executive Officer and Managing Director of
diversified agribusiness Mainland Holdings, told the September
2012 Papua New Guinea Advantage international investment
summit in Port Moresby.
49
Credit: Mainland Holdings

Forestry
Credit: Cloudy Bay Sustainable Forestry
PNG’s expanding sustainable forestry industry
Papua New Guinea’s forestry sector has largely bounced back from its 2008–09 slump, and is looking to
value-adding, together with sustainability and traceability practices, for its growth.
While round log exports were down, the value-adding
and processing sectors of the industry saw robust
growth in 2012, with more opportunities to come:
Mike Janssen, Managing Director of Cloudy Bay Sustainable
Forestry, told Business Advantage PNG that not only would
Papua New Guinea’s growing local economy put more
disposable income into the pockets of people wanting to build
houses but that ‘the record 2013 National Budget also has a big
allocation of funding for infrastructure, which includes schools
and housing, so one would expect demand to grow.’
Round log exports—which account for the bulk of PNG’s
forestry exports—were lower in the first two quarters of 2012 and,
although the second half of the year saw improvement, exports
stayed below 2011’s high.
Bob Tate, Executive Director of the PNG Forest Industries
Association, suggests the export downturn was caused by
international factors rather than domestic ones:
‘If China or Japan has a particularly harsh winter, things slow
down; there’s no domestic reason for the drop.’
International market conditions were also important, according
to Tate, with the depressed housing sectors in the United States
and Australia meaning less demand for supplies from China.
Tropical hardwoods
PNG’s forestry sector contributes four to seven per cent of
the country’s GDP, and PNG exported 3.5 million cubic metres
of tropical hardwoods in 2011, according to SGS, the Swiss
50
‘Rising domestic demand has also driven
major new resources projects, plantations,
and forest enhancement.’
monitoring firm that tracks log exports for the PNG Government.
Exports were 3 million cubic metres in 2010.
There are 29 forest concessions covering 3.5 million
hectares and 84%of the country’s landmass is forest;
14 million acres of this are potential production forests, with
60 commercial species of timber, including valuable species
such as rosewood.
Ninety-five per cent of export comes from round logs but
there is a growing domestic production sector. China is by far
PNG’s largest market, accounting for an 89% share, followed
by Japan, Taiwan, Vietnam, South Korea and India. Australia
and New Zealand take much of PNG’s processed timber, as
do Pacific nations.
The sector is also a source of employment, with about 13,000
people employed directly, and it also generates millions of kina
in taxes, landowner royalties and infrastructure development.
SABL enquiry
With land customarily owned in PNG, acquiring land for
forestry use can be complex. Under Special Agricultural
and Business Leases (SABLs), customary owners lease

forestry
land to the Government, which then issues leases to
commercial operators.
The industry is awaiting the outcome of a Commission
of Enquiry into SABLs, following claims that certain tracts
of forest had been leased out for 99 years without the full
knowledge and consent of landowners. The report, originally
due in mid-2012, has been delayed.
Sustainability is key
Importantly, sustainable and traceable forest products are a
growing industry and five major PNG producers are already
certified, or in the process of becoming independently certified,
for legal origin and chain of custody, meaning new export
opportunities should arise in the growing number of markets
requiring third-party verification.
Rising domestic demand has also driven major new
resources projects, plantations and forest enhancement under
climate-change protocols and they, in turn, have helped spark
and drive local demand as availability grows.
The PNG Forest Authority plans to develop 240,000
hectares of commercially viable and sustainable forest
plantations by 2030. Approximately 4000 hectares are
expected to be developed by private investors, including
possible new entrants to the sector.
There are growing opportunities for companies looking
to invest in timber production as the Government has
instituted policies requiring downstream processing.
Producers already generate sawn timber, veneer sheets,
plywood and processed timber exports, but these sectors
will receive greater emphasis.
Plywood in storage
A house made from prefabricated PNG timber
Credit: R H Group
Credit: Cloudy Bay
51

Tourism
Looking at the Owen Stanley Ranges from the award-winning
Airways Hotel in Port Moresby.
A land of unexpected opportunity
Papua New Guinea’s tourism industry may still be in its infancy but it has been growing steadily over
the past several years. Although primarily a ‘soft adventure’ destination, a growing cruise ship sector
and award-winning luxury hotels are offering new and varied options, reports Helen Clark.
According to the South Pacific Tourism Organisation’s
(SPTO) second-quarter report for 2012, PNG received
the second-largest number of international arrivals in
the South Pacific, after tourism hub Fiji.
Australia remains the biggest market for incoming visitors,
with ‘Other Asia’ the second. Both the United States and
Japanese markets remain small but are seeing growth,
according to the SPTO report.
However, statistics can be deceiving: only a quarter or less
of those arrivals were for holiday purposes. Business and
employment are the number one and two reasons for visits,
respectively. Of the 38,000 arrivals recorded in 2012’s second
quarter only some 6000 came for holidays. Visits were down
overall compared to the same period in 2011, mostly due to fears
of instability in the lead-up to PNG’s national elections.
Yet, the large number of expats on business visas, and
their families, who often work in the booming extractive sector,
do provide varied opportunities for local tourism operators to
offer short-term breaks or other trips, especially as capital Port
Moresby and manufacturing hub Lae, where most expats live,
are not known for their diverse, family friendly activities.
52
‘Although only possessing one per cent of
the world’s landmass, PNG accounts for
five per cent of its original and untouched
ecosystems.’
Flying in
Air Niugini, the nation’s flag carrier, is looking at more routes and
increasing its existing ones. At the time of writing, the airline was
planning an advertising campaign in Australia for March and April
2013 to grow PNG’s strongest market. The United States Marine
bases in Darwin and Guam are also possible future target markets.
Air access to PNG continues to improve from other carriers
also. Both Qantas and POMSoX-listed Airlines PNG have regular
flights connecting PNG to Australia’s major east coast airports.
For the adventurous traveller
Despite PNG being a relatively ‘unknown’ destination, travel guide
publisher Lonely Planet produces a surprisingly detailed listing
of sights and things to do in most provinces, proving that indeed
there is plenty for tourists to see.

Tourism
What are considered barriers to doing business by
many companies—namely, low levels of development, poor
infrastructure and hard-to-get-to locations—are actually
drawcards for many of PNG’s more intrepid visitors, who look
forward to exploring somewhere ‘authentic,’ far from large crowds
of tourists. Diving, trekking, fishing and bird watching are popular
tourist activities. Surfing is also a small but growing niche market.
PNG’s exceptionally varied cultures—the nation is home to an
estimated 800 languages—and friendly people are also tourist
drawcards. Many lodges offer ‘homestays’ in traditional villages
as part of trekking packages.
Trekking has grown beyond the typical Kokoda Trail trek,
mostly taken by Australians, to take in more areas. Places such
as the Tufi Resort in Oro Province provide trekking options of
varying degrees of difficulty as well as fishing, bird watching
and all-year diving.
PNG is known for its rich biodiversity. Though only possessing
one per cent of the world’s landmass it accounts for five per
cent of its original and untouched ecosystems. The country
is unique for being home to both marsupials more commonly
found in Australia and also creatures common to Southeast Asia.
Its birdlife is also largely endemic.
Expanding hotel sector
For a long time, hotel accommodation in PNG was inadequate
to meet demand. However, inventory has gone up significantly in
Port Moresby.
Last year, the recently extended Airways Hotel won Best
Airport Hotel at the World Travel Awards for the third year in a
row, beating 14 other nominees from the United Arab Emirates,
Australia and the United States. Steamships Trading Company’s
Grand Papua Hotel—the first newly built hotel to open in Port
Moresby in more than 20 years and a 200 million kina (US$97
A new Holiday Inn under construction in Port Moresby’s Waigani district.
A cruise ship visits Madang
million) investment—opened in November 2011. More inventory
is on its way from other operators such as Holiday Inn.
In 2013, Malaysian investor R H Group will commence
construction of the Raintree Hotel and Suites at Vision City,
as well as a new hotel at Jacksons International Airport.
At the other end of the accommodation spectrum is
Villagehuts, an online service launched in March 2012 that
lists hundreds of accommodation options, deals, tours and
flight information, and provides a secure reservation system.
While some of the offerings are four-star hotels in major cities,
the majority are guesthouses and lodges that are particularly
attractive to the growing adventure market.
Rustic yet high-end accommodation is also available. The
Conflict Islands, a privately owned set of islands in Milne Bay
reached via seaplane from Alotau, has six bungalows. An onsite
chef cooks or visitors can prepare their own meals from local
produce or whatever they’ve caught during a day’s fishing.
Cruising in
Papua New Guinea has also seen an upswing in cruise ship
visits, with more than 1000 tourists visiting aboard four cruise
ships in early 2012 alone. Those numbers are set to remain
steady this year.
Operators with cruise ships visiting PNG in 2013 include
Carnival Australia/P&O (which launches its first dedicated
Papua New Guinea itineraries in 2013), Hapag-Lloyd Cruises
and Japan’s NYK Cruises.
The PNG Tourism Promotion Authority reports that cruise
ships are responsible for 90% of the revenue earned by PNG’s
coastal tourism operators. Alotau, Rabaul, Madang and the Sepik
coastlines are strategically convenient destinations for cruise
ships from Asia.
Cruise ship visits are especially helpful and lucrative for
the burgeoning industry as visitors can enjoy all PNG has to
offer—including gorgeous bays, stunning mountain scenery
and cultures that are welcoming and fascinating—without the
headaches the nation’s infrastructure and visa regulations can
give to domestic operators.
53
Credit: PNG TPA

Directory: Who’s who in PNG
Credit: PNG TPA
This directory provides contact details for organisations featured in this edition, plus other key contacts.
AGRIBUSINESS/
MANUFACTURING
Coca-Cola Amatil PNG
+675 472 1033
Dulux PNG
+675 325 4555
Goodman Fielder International
(PNG)
+675 308 2200
www.goodmanfielder.com.au
K K Kingston
+675 472 2745
www.kingston.com.pg
Lae Biscuit Company
+675 475 9988
Laga Industries
+675 475 7344
www.lagaindustries.com.pg
Mainland Holdings
+675 472 3499
New Britain Palm Oil
+675 985 2177
www.nbpol.com.pg
Paradise Foods Limited
+675 325 0000
www.paradisefoods.com.pg
Ramu Agri Industries
+675 474 3299
S P Brewery
+675 302 8200
www.sp.com.pg
Trukai Industries Ltd
+675 321 3530
www.trukai.com.pg
BANKING, FINANCE
& INSURANCE
ANZ
+675 321 1079
www.anz.com/png
Bank of Papua New Guinea
+675 322 7200
www.bankpng.gov.pg
BSP (Bank of South Pacific
Limited)
+675 320 1212
www.bsp.com.pg
Useful online resources for Papua New Guinea
www.businessadvantagepng.com
The online edition of this publication, plus other business
resources for the Asia-Pacific region.
www.ipa.gov.pg
PNG’s Investment Promotion Authority.
www.pomcci.org.pg
The PNG Chamber of Commerce and Industry. Information
on networking, PNG business generally, useful links and
POMCCI’s training workshops.
www.pngindustrynews.net
Online/email news service—subscription required for
full access.
www.thenational.com.pg
www.postcourier.com.pg
PNG’s two daily newspapers, The National and
The Post-Courier.
www.pngchamberminpet.com.pg
The PNG Chamber of Mines and Petroleum (see page 56)
produces a number of useful publications including Profile
magazine, which coincides with its major biennial conference.
Quarterly economic bulletins
Informative quarterly bulletins are produced by the Asian
Development Bank (Pacific Monitor; www.adb.org), and
the central bank of PNG (Quarterly Economic Bulletin;
www.bankpng.gov.pg).
malumnalu.blogspot.com
www.png-gossip.com
Informal sources of information and news.
54

Directory: Who’s who in PNG
PNG Investor’s Manual by Port Morebsy Chamber of Commerce
The PNG Investors’ Manual is a handbook for those investing and doing business in Papua New Guinea.
Co-published by the Port Moresby Chamber of Commerce and Industry (POMCCI), the PNG Investment
Promotion Authority and the Asian Development Bank, the guide is designed to provide an in-depth guide
for new and existing investors.
Topics covered include PNG’s legal and tax system, profiles of PNG’s key economic sectors and information
on living and working in PNG.
To obtain the printed manual, email bizcentre@pomcci.org.pg or view it online at www.pomcci.com.
The Port Moresby Chamber of Commerce & Industry (POMCCI) is PNG’s largest Chamber and has been an active, memberbased
business chamber in PNG’s capital city since the 1920s. It is a member of the International Chamber of Commerce (ICC)
and a Lifetime Member of the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI).
As well as representing its members’ interests to Government, POMCCI provides a wide range of support services to
its membership.
BSP Capital Limited
+675 321 4333
www.bspcapital.com.pg
Kina Group of Companies
+675 308 3888
www.kina.com.pg
Nambawan Super Ltd
+675 309 5200
www.nambawansuper.com.pg
National Superannuation
Fund Limited (NASFUND)
www.nasfund.com.pg
Pacific MMI Insurance
www.pacificmmi.com
Port Moresby Stock
Exchange Limited
+675 320 1980
www.pomsox.com.pg
Westpac Bank PNG Limited
www.westpac.com.pg
BUSINESS &
GOVERNMENT
ORGANISATIONS
Asian Development Bank
+675 321 0400
www.adb.org
Australian Trade Commission
(Austrade)
+675 325 9150
www.austrade.gov.au
Australia–Papua New Guinea
Business Council
www.apngbc.org.au
Business Council of PNG
+675 320 0700
www.bcpng.org.pg
Business & Professional
Women’s Club of Port
Moresby
www.bpwpng.org
Enterprise Centre
+675 320 0445
www.ibbm.com.pg
Independent Public Business
Corporation (IPBC)
www.ipbc.com.pg
Institute of National
Affairs (INA)
Industry-funded think-tank.
+675 321 1045
www.inapng.com
International Finance
Corporation (IFC)
+675 321 7111
www.ifc.org
Investment Promotion
Authority (IPA)
+675 308 4444
www.ipa.gov.pg
Lae Chamber of Commerce
& Industry
+675 472 2340
www.lcci.org.pg
Manufacturers Council
of PNG
+675 321 7143
Ministry of Commerce &
Industry
+675 327 7350
New Zealand Pacific Business
Council
www.nzpbc.co.nz
+64 9 270 3746
Pacific Islands Trade & Invest
www.pacifictradeinvest.com
Port Moresby Chamber
of Commerce & Industry
(POMCCI)
+675 321 3077
www.pomcci.org.pg
BUSINESS SERVICES
Air Energi Pacifica
+675 320 3095
www.airenergi.com
BSP Capital
+675 321 4333
www.bspcapital.com.pg
Cadden Crowe
+675 656 0477
www.caddencrowe.com.au
Pacific-wide executive
recruitment.
Daltron
+675 302 2200
www.daltron.com.pg
Datec
+675 303 1222
www.datec.com.pg
Deloitte PNG
+675 308 7000
www.deloitte.com/pg
DHL Express (PNG)
+675 325 9866
www.dhl.com
Ela Motors
+675 322 9500
www.elamotors.com.pg
G4S Secure Solutions (PNG)
+675 325 6377
www.g4s.com.pg
Gadens Lawyers
+612 9035 7103
www.gadens.com.au
Guard Dog Security Services
+675 325 9653 (POM)/ 475
1069 (Lae)
Golder Associates PNG Ltd
+675 7211 5454
www.golder.com
International SOS
+675 323 2033
www.internationalsos.com
Maersk Line
www.maerskline.com
Media Partners
+675 323 9160
www.mediapartners.com.pg
Peddle Thorp Architects
+675 321 4688
www.peddlethorp.com
PricewaterhouseCoopers
+675 321 1500
www.pwc.com/pg
Pacific View Multimedia
+675 325 7419
www.pvm.com.pg
RdL Management
Consultants
+613 9756 7331/+675 715
73562
www.
rdlmanagementconsultants.
com.au
Remington Technologies
+675 312 3400
www.remington.com.pg
CONSTRUCTION &
ENGINEERING
Constantinou Group PNG
+675 323 2333 (c/o Lamana
Hotel)
Hornibrook NGI Ltd
+675 472 3599
www.hornibrook.com.pg
FISHERIES
Frabelle
+675 472 7663
www.frabelle.com
RD Tuna Canners Limited
www.rdtunacanners.rdgroup.
com.ph
55

Directory: Who’s who in PNG
PNG’s Investment Promotion Authority
Foreign investment in PNG is regulated by the national
government through its Investment Promotion Authority
(the IPA). The IPA’s approach is to promote and assist
foreign investment.
The IPA consists of five key divisions. These are the Business
Investment and Export Promotion, Business Information
and Facilitation, Business Registration and Regulation,
the Intellectual Property Office of PNG and the Securities
Commission of PNG.
The IPA has been designed as the first point of contact for
a potential new investor in PNG. A foreign investor should
approach the IPA during the early stages of considering
investing in PNG (along with relevant industry bodies such
as a chamber of commerce). The IPA will assist in facilitating
the proposals, identify relevant government departments and
assist investors in obtaining the required approvals, licences
and permits.
www.ipa.gov.pg
Extract from The PNG Investor’s Manual (2nd edition)
FORESTRY
PNG Forest Authority
+675 327 7919
www.forestry.gov.pg
Cloudy Bay Sustainable
Forestry
+675 328 1189
www.cloudybay.com.pg
MINING & PETROLEUM
Barrick
+675 322 4800
www.barrick.com
InterOil
+675 309 9100
www.interoil.com
Marengo Mining Ltd
+61 8 9429 0000
www.marengomining.com
Mineral Resources Authority
(MRA)
+675 321 3511
www.mra.gov.pg
Nautilus Minerals
+675 321 1284
www.nautilusminerals.com
Newcrest Mining
+675 321 7711
www.newcrest.com.au
Oil Search Limited
www.oilsearch.com
Ok Tedi Mining Ltd
www.oktedi.com
Petromin PNG Holdings Ltd
+675 325 2743
www.petrominpng.com.pg
PNG Chamber of Mines and
Petroleum
+675 321 2988
www.pngchamberminpet.
com.pg
PNG LNG project/Exxon Mobil
www.pnglng.com
Talisman Energy
www.talisman-energy.com
Xstrata Copper
+617 3295 7500
www.xstrata.com
TOURISM
Airlines PNG
+675 325 2011
www.apng.com
Air Niugini
+675 327 3444
www.airniugini.com.pg
Tourist Promotion Authority
+675 320 0211
www.pngtourism.org.pg
UTILITIES/
TELECOMMUNICATIONS
Bemobile
www.bemobile.com.pg
Digicel
www.digicelpng.com
PNG Ports Ltd
+675 308 4200
www.pngports.com.pg
PNG Power
+675 324 3200
www.pngpower.com.pg
PNG Waterboard
+675 323 5700
www.waterpng.com.pg
National Information and
Communications Technology
Authority (NICTA)
+675 303 3202
www.nicta.gov.pg
Telikom PNG
+675 300 4000
www.telikompng.com.pg
LANDOWNER
COMPANIES/FUNDS
Anitua Group
+675 986 4633
www.anitua.com.pg
Hides Gas Development
Company (HGDC)
+675 321 4360
www.hgdcpng.com
IPI Group
www.ipigroup.com.pg
LABA Holdings
+675 710 01810
www.laba.com.pg
PNG Sustainable
Development Program Ltd
+675 320 3844
www.pngsdp.com
Trans Wonderland Limited
(TWL)
+675 321 8077
www.transwonderland.com
DIVERSIFIED INDUSTRIAL
GROUPS
Rimbunan Hijau (R H) Group
+675 325 7677
www.rhpng.com.pg
Steamships Trading Company
Limited
+675 322 0400
www.steamships.com.pg
W R Carpenter Group
+675 302 4200
www.carpenters.com.pg
56

Business Travel Guide to Papua New Guinea
Steamships’ Windward 2 apartments under construction in Port Moresby.
Credit: Steamships
Practical tips and advice for the business traveller.
CLIMATE
With the exception of the Highlands, PNG has a warm tropical climate.
The wet season in Port Moresby is from December to April.
COMMUNICATIONS
Internet: Web access in Port Moresby has improved immensely in
recent years. Although it remains costly, all the Port Moresby hotels
listed below now provide a fast-speed internet service. In other urban
centres, you may still be relying on dial-up. For those staying longer,
wireless internet, via a USB modem, is now available, although download
speeds can vary considerably depending on your location.
Mobile: Roaming is possible in PNG but it is costly. It is simple to buy
a local SIM card and pre-paid credit.
Landlines: Service is inconsistent outside Port Moresby and outages
do occur. Rates for domestic calls are fairly modest. It is much cheaper
to make international calls from PNG than vice versa.
ELECTRICITY
The current in PNG is 240V AC 50Hz, using Australian-style plugs.
GETTING TO PNG
National flag carrier Air Niugini has direct flights between Port Moresby
and Australia (Brisbane, Cairns, Sydney), the Solomon Islands, Fiji and
an increasing number of Asian destinations (current schedule available
from www.airniugini.com.pg ).
Airlines PNG (www.apng.com) flies from Cairns and operates
a codeshare with Virgin Australia on the Brisbane route
(www.virginaustralia.com). Qantaslink offers flights from Cairns to
Port Moresby (www.qantas.com.au ).
GETTING AROUND
As a general rule in PNG, you need to plan your travel carefully.
Taxis: Recommended firms in Port Moresby are Ark (323 0998/7122
5522), Red Dot (+675 311 3257) and Scarlet Taxis (+675 323 4266),
although availability can vary and they do not operate late at night.
Ark also operates in Lae.
Car hire: Deal with one of the international names and ask them to
provide a driver (around K400 per day). With the poor state of roads,
especially in Lae, 4WDs/SUVs are recommended.
Airport transfers: For arrival/departure in Port Moresby, any of the
hotels listed below will provide a complimentary transfer.
Domestic Flights: Travelling within PNG often means taking an internal
flight (for instance, you cannot drive between Port Moresby and Lae).
There are regular services from Port Moresby to Lae. While the price of
domestic fares has fallen, they are still on the high side. Air Niugini now
offers passengers the chance to book online but make sure you print
out a copy of your receipt to show at the check-in counter. Airlines PNG
also operates domestic flights. Aircraft and helicopter charter services
are available for travel to remote locations.
HEALTH
Serious medical conditions typically require treatment outside the
country. Travellers should ensure they have adequate health cover (the
cost of medical evacuation alone can reach US$30,000), while foreign
companies operating in PNG should have a comprehensive health plan
in place. Visitors should also note that malaria is prevalent in PNG.
MONEY
PNG’s currency is the Kina. ANZ and Bank of South Pacific (BSP) have
branches at Port Moresby’s international airport. ATMs are located
around Port Moresby, Lae and other urban centres.
SAFETY
While the situation is not as bad as portrayed by some international
media, you should always act cautiously, especially at night.
TIME ZONE
PNG has a single time zone, 10 hours ahead of UTC/GMT.
VISAS
Business travellers require a business visa to enter PNG. There are two
types of business visa: single entry (for one visit of up to 30 days) or
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Business Travel Guide to Papua New Guinea
multiple entry (visits totalling up to 60 days over a 12-month period).
Single-entry business visas can be obtained on arrival and cost K250.
However, a multiple entry business visa must be applied for from a PNG
diplomatic mission before you travel at a cost of K500. In both cases, a
letter from a ‘business associate in PNG’ outlining the purpose, duration,
location and frequency of your visit(s) is required, as is a return ticket.
EATING, DRINKING, SOCIALISING IN PORT MORESBY
(see also hotels below)
Town: Asia Aromas in the Steamships arcade, CBD is a Port Moresby
institution serving excellent Thai and Chinese food. Reservations
recommended at lunchtime.
The coffee shop at the Crowne Plaza Hotel remains a convenient
daytime option, as are the two cafés on the ground floor of Deloitte Tower.
Duffy Café, Gabaka St: this newcomer has rapidly become very
popular among the expat community, with excellent coffee and
homemade café-style food.
Royal Papua Yacht Club: relaxed, spacious and open to non-members.
Comfort food, draught beer and an open-plan bar area showing sport
on large screens. If it’s too busy, try the Aviat Club in nearby Konedobu.
Vision City: PNG’s first major shopping mall houses an increasing array
of eateries. The cavernous Dynasty (Chinese) and the popular Ten
(Japanese) are stand-outs.
HOTELS
Airways Hotel
PNG’s only top-tier hotel, Airways is located within a large, secure compound
next to Jacksons International Airport. An inspiring setting, luxurious rooms
and amenities and excellent service make for a memorable stay. Among
an attractive selection of bars and restaurants, the deli/pizzeria is always
popular. Tel +675 324 5200, www.airways.com.pg
Grand Papua
Port Moresby’s newest hotel opened in late 2011. The hotel features
156 suite rooms (short and long stay), an executive floor, gym and
conference facilities. The separate restaurant and bar areas are popular
venues for business meetings in town. www.grandpapuahotel.com.pg
Crowne Plaza
Upmarket rooms and suites in the heart of the CBD. Decent gym,
business centre, undercover parking, thriving café and Mediterranean
restaurant. Tel +675 309 3329.
Holiday Inn
Located in the government district of Waigani. Large grounds with
walking track in a tropical garden setting. Outdoor restaurant dining and
bar area, business centre and gym. Tel +675 303 2000.
Duffy Café is proving a hit with expats.
Lamana Hotel
Also in Waigani, this modern hotel’s facilities include the popular Palazzo
restaurant (excellent steaks, pizzas and Indian cuisine), business centre,
conference facilities and the PNG’s most trendy nightspot, the Gold
Club. Tel +675 323 2333.
Ela Beach Hotel and Whittaker Apartments
On the fringe of the CDB, this hotel/apartment complex has been
renovated by Coral Sea Hotels. Its main eatery is popular at lunchtime.
Tel +675 321 2100.
Gateway Hotel
Another member of Coral Sea Hotels, located next to the airport. Recent
renovations added a large conference centre.
Other urban centres
Lae’s best hotel, Lae International Hotel, has a secure, central
location, pleasant grounds, cable TV and several dining options.
Tel +675 472 2000, www.laeinterhotel.com.pg .
Its main competitor is the nearby Melanesian Hotel, part of the Coral
Sea Hotels group that also provides business-standard hotels in other
urban centres. www.coralseahotels.com.
Note also the Alotau International Hotel in Milne Bay Province (www.
alotauinternationalhotel.com.pg) and the Gazelle International Hotel in
Kokopo (East New Britain Province; www.gazelleinternationalhotel.com).
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