MOVING PNG ECONOMY TOWARDS ITS POTENTIAL

Commentary

By Brian Gomez

PORT MORESBY, Papua New Guinea (The National, Jan. 5) – Pockets of excellence within the Papua New Guinea economy include the major oil palm operations, where New Britain Palm Oil Ltd for example is adept at competing with companies around the world.

The PNG oilfields operated by Oil Search are just as efficient as most of its competitors, and boasts a safety record even better than those of its peer group in Australia.

Miners have also been efficient producers of copper and gold with a highly talented pool of workers in many fields of human endeavor – from bulldozer and haul truck drivers to mining engineers, information technology experts and mineralogists.

There is no reason to doubt that with the available skills base and the requisite level of foreign investment and technology, every sector of this economy could be humming away and growing at a much more optimal level.

Even though difficulties and problems have to be faced, none are severe enough to retard the development process over successive decades, although the task of seeking new and expanding markets is a never-ending one.

So why are we facing this state of relative uncertainty, where after three decades of independence, the national performance on many human development indicators is just so negative?

The simplest reason is that economic growth has not been consistent enough and has not been fast enough over extended periods. Much of that has to do with poor leadership.

Last week’s Bottom Line explored how greater production and higher productivity in different circumstances have propelled the growth of many countries in so many ways.

Arguably the greatest deterrent to rapid growth has been the relative stagnancy of the subsistence sector, a problem that is possibly exacerbated by the mindset of leaders who constantly urge people to return to their villages.

For want of better data, we need to accept that some 80 to 85 percent of the population is trapped in a subsistence lifestyle – [scratching] out a living from their land with little or no cash incomes.

Getting more people into the formal sector will have a dramatic impact on the lifestyles of those involved, as well as on the overall national economy. This is basically how many Malaysians, South Koreans, Thais and even Indonesians enjoyed rapid economic growth from the mid-60s at least until the 1997 economic crash.

In this increasingly globalized world, PNG should move in the same direction, sometimes starting with what may appear to be undramatic small steps – like Singapore Prime Minister Lee Kuan Yew in the 1970s creating jobs for young women handing out parking tickets!

Just this morning, a large grass-cutting machine was busily doing a good job on the fields alongside Kennedy Road in the nation’s capital. I have no idea what the machine driver was being paid, probably not a lot.

But Bottom Line would wager that if proper costing were carried out on fuel costs, maintenance, wear and tear and depreciation, there would have been enough for the hiring of maybe five to 10 people and possibly a lot more.

They may not be able to cut such a perfect lawn, but it is going to be a long time, if ever, before you would spot a machine that could mow the lawn as well as plant a tree or remove some rubbish from a clogged drain.

Such people should be on the NCDC [National Capital District Commission] payroll. Sure, with our excessive unemployment situation, they will be on rather low incomes. But if they were previously unemployed, this would be a big improvement, especially if a little bit of money is also being saved in a new NASFUND [National Superannuation Fund] or POSF [Public Officers Superannuation Fund] account.

For a city like Port Moresby, a few hundred jobs could be created this way, but with some more in Lae and Kokopo/Rabaul and Madang and Goroka and Mt Hagen. The hundreds may turn into 2,000 or more jobs, as many as one of our big mines might employ directly.

Turning to another front, nearly everyone is aware that law and order and rising criminal activities are among the biggest deterrents to job creation and economic growth.

The main reason it is this bad is because lots of people, particularly the leaders, talk a lot about the issue but do nothing constructive to solve the problem. Alternatively, they get annoyed with the suggestion that crime is excessively high. The latter reaction is common when overseas publications rate Port Moresby poorly as a place to live.

Small gains on this front will in the short to medium term bring major improvements in economic conditions. In this context, Bottom Line raises the question as to how difficult it would be to make the markets at Koki or Gordons – a microcosm of the economy at work – much safer places?

The presence of three or four policemen walking around at peak hours, aided by one or two NCDC inspectors and a few people co-opted by the very people selling poultry, vegetables and other produce could make these a very safe environment very quickly.

Sound petty? If a few hundred more Port Moresby residents do their marketing at Koki every day, not only will farmers make good sales, but also in no time, produce prices will rise enough to create greatly improved livelihoods.

With a little more similar attention to our public motor vehicles, or PMVs, and some other popular spots, it will not be long – especially if there is accompanying employment growth – before Port Moresby will be considered a relatively safe city.

That will bring with it innumerable other benefits that in totality could make a big difference. Businesses will tend to prosper and will be willing to hire more people and invest more; new businesses would be set up and there would be many more of those elusive tourists coming around.

At the moment many tourists give Port Moresby a miss as they head off to a diving resort at Kimbe, Madang or elsewhere.

With a safer environment, PMVs could extend their operating hours, giving workers greater flexibility in their movements and allowing parents to do a proper day’s work in a government or private office instead of scampering around picking up and dropping off kids and others and maybe catching a cold beer at the pokies to get rid of some stress!

Bottom Line will continue to explore opportunities in the urban environment next week before turning attention to the even more important rural arena where most of the population lives.

[Brian Gomez is acting editor-in-chief for The National newspaper in Papua New Guinea and Chairman of the Sydney-based Gateway Mining NL, a mineral exploration company. He has previously worked as a business and economics journalist in Australia, Singapore and Malaysia, and was previously Resources Editor at The Australian newspaper in Sydney (source: On Line Opinion, an Australia e-journal.]

January 12, 2006

The National: www.thenational.com.pg/

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