PORT MORESBY, Papua New Guinea (The National, Oct. 27) - Papua New Guinea has great potential for economic growth despite some serious impediments, said the managing director of the Rimbunan Hijau Group, James Lau. 

He cited law and order problems as a major disincentive to doing business in Papua New Guinea with small to medium businesses spending between 8 percent to 10 percent of their turnover on private security and losses from theft.

Addressing the Malaysian Business meeting in Port Moresby on Friday, Mr Lau highlighted some key challenges and opportunities for investment.

He referred to a 2002 INA survey that showed that political uncertainty also ranked as a major disincentive with concerns about continuity in government policies and regulations.

"To some extent, political uncertainty will be solved by the constitutional law passed on the Organic Law on Political Integrity in 2002 and proposed changes to the 18 months no confidence vote to 36 months by the present government if it gets passed in parliament," Mr Lau said.

However, the rating of these factors would vary according to the size and nature of the businesses.

He said that while the PNG economy contracted in 2002 for the third successive year, it is likely to grow over 2003 largely because of the strength of the export sector.

"Agriculture produce are likely to be up this year and the oil and mining exports are likely to increase too.

"In recent months, the kina has remained stable and government's control of expenditure has been important in providing macroeconomic stability," he added. 

"Malaysians in PNG are especially active in the agriculture sector namely forestry and palm oil, financial services and the wholesale and retail sector.

"Our RH Group core investments in PNG is in timber harvesting, downstream timber processing, media and in the wholesale and retail sector," Mr Lau said.

He said that overall, PNG has great economic potential, and the government has identified three broad-based and inter-related objectives to facilitate economic and social recovery.

The objectives are to ensure good governance, embark on export-driven growth and to facilitate greater private investment and competition.

He said he would encourage Malaysian investors to look at the PNG market despite the challenges and risk factors.

"We know that no country can offer a risk-free environment. But as long as the perceived risks are manageable, there are opportunities also in PNG," he added.

October 28, 2003

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