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PORT MORESBY, Papua New Guinea (The National, Mar. 29) – Papua New Guinea business and government leaders yesterday met with their Australian counterparts, hoping that a planned law-and-order drive in PNG will help entice private investment back to the struggling economy.

Australian private sector interest in PNG is near an all-time low, even though government aid to the former colony is due to reach record highs under a five-year crime and corruption fighting plan set to get underway this year.

PNG industry leaders said they were hopeful the 20th Australia Papua New Guinea  Business Forum in Cairns yesterday and today will be able to use the promise of improved law and order to help draw investment after the country’s decade-long recession.

"Our image is so bad in Australia we have to go there to promote ourselves," said the executive director of the PNG Chamber of Petroleum and Mining, Greg Anderson, prior to the Cairns meeting. "It is hard to get the message across, even though in our industry, Australia is a leading mining nation."

As part of a more aggressive policy towards struggling nations in the Pacific, Australia has proposed deploying some 300 police and bureaucrats in PNG to fight rampant crime and corruption and improve government finances.

The five-year, A$800 million (US$590 million) plan needs the approval of the PNG parliament and has run into problems over Australian demands that personnel deployed under the program receive full criminal immunity, something the PNG government has so far ruled out.

Parliament is expected to consider the plan when it returns from recess in June.

Mr Anderson said it was ironic that while Australia pumps record amounts of aid into PNG, direct investment lags far behind that from other Asian nations.

"Australian mining companies are working all over Africa but most won’t come here," he said, adding that mining and exploration opportunities were now being taken up by South African and Canadian investors.

"Even China is planning to invest 650 million US dollars in the Ramu nickel project," he said. "This is of significance to us because they could look at other opportunities, including those in oil and gas developments."

The executive director of the PNG Forest Industry Association, Dick McCarthy, said Australian investment had also fallen off dramatically in his sector.

"Compared to 20 years ago, there is very little Australian investment in natural resource sectors, including agriculture, forestry and fisheries," he said. "We are being held back because of adverse media publicity and law and order problems that have caused Australian investors to run away."

After three successive years of negative growth, the PNG economy last year grew by 2.4 percent, although prospects of even stronger growth this year have been hurt by severe floods and infrastructure damage in parts of the country.

Although there has been minimal job growth sector since independence in 1975, the PNG central bank last week reported that employment outside mining and oil had grown 9.6 percent in the nine months to September.

Bank governor Wilson Kamit said inflation had fallen to 8.4 percent last year, from 14.8 percent in 2002, while foreign exchange reserves were heading to a comfortable US$550 million.

Trade with Australia is currently worth around two billion Australian dollars annually.

March 30, 2004

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