Cautious optimism from PNG business sector

Transcript

A study suggests greater political stability in Papua New Guinea has improved the business environment but crime and corruption are still proving a significant cost.

The report drew responses from 130 firms surveyed by the PNG Institute of National Affairs, and the findings also confirm a lack of infrastructure is another major impediment to businesses.

Bridget Tunnicliffe reports:

The Challenge of Doing Business in PNG survey was released last week by the Asian Development Bank, which analysed the results of the firms surveyed. It's the third of a series of five-yearly surveys and an ADB economist Paul Holden says overall it found there has been a steady improvement in the business environment. He says businesses have responded well to policies under the Peter O'Neill government, which have reduced risk and encouraged more investment.

PAUL HOLDEN: The areas that have improved most have been political stability and macro-economic stability and there the government really needs to be commended on the steps that they have taken to do such things as budget stabilisation, reduction of inflation, reduction in exchange rate variability and so on.

Paul Holden says one of the reasons for the country's stellar growth over the past 10 years is the enormous amount of foreign investment in the natural resource sector. The survey found that crime and providing security had a significant impact on company balance sheets. Paul Barker from the Institute of National Affairs says not only do businesses lose money through crime, but they have to pay for security guards, fences and so on. He says this is stopping some sectors flourishing.

PAUL BARKER: If one could reduce that cost and reduce the level of law and order problems then obviously a range of other business opportunities would come up. PNG, for example, should have a major tourism industry like Fiji and Vanuatu but it is obviously a very sensitive industry to crime.

Paul Barker says the government has taken steps in the right direction with a commitment to strengthening the police both in terms of numbers, training, and capacity.

The vice president of the Port Moresby Chamber of Commerce, Ken Dunn, says crime and corruption issues are something constantly mentioned in relation to PNG but says it can be overstated.

KEN DUNN: I think at times it's sensationalised by the press outside PNG. As a long-term resident I fully appreciate the country does have its issues being a country that is still developing but I do believe that the current government is certainly doing their utmost to address these issues.

Ken Dunn says there's no doubt that the country is going forward and hosting events like the South Pacific Games next year and the APEC conference in 2018 will take development to another level.

Paul Barker says another major problem hurting PNG's competitiveness is a lack of infrastructure across the board.

PAUL BARKER: Basic road access, ports, airstrips and so on. These all raise the costs of doing business and make PNG that much less competitive with some of its competitors.

Last week the ADB and the government signed two loans totalling $239 million US dollars, to fund improvements to the Highlands region road network and air services in PNG.