TELECOM COMPETITION BOOSTS PNG ECONOMY

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By Bibian Barreng

PORT MORESBY, Papua New Guinea (The National, Nov. 21) - The entry of Digicel into the local mobile phone industry to compete with Telikom and its subsidiary, B Mobile, has sparked a 0.7 percent boost to the growth of gross domestic product (GDP) this year.

GDP is the total market values of goods and services produced by workers and capital within the country during a given period (usually one year).

During the last six months, Digicel has invested about PGK450 million [US$167 million] in the country and generated 300 regular jobs along with over 4,000 indirect jobs around the country. Also during the last four months, the telco had generated substantial revenue from its sales of mobile handsets and call credits that also went into the local economy.

Simon Tosali, secretary for Treasury, pointed out the significant expansion in GDP when he outlined the 2008 National Budget strategy and framework during the budget discussion in Parliament yesterday.

Mr. Tosali described the entry of Digicel as a "major revision" in the country’s GDP.

"The major revision (to GDP growth) had been to the communication sector, due to the exceptionally large expansion in the mobile phone segment of the sector … which alone added 0.7 percentage points to real GDP growth," the report said.

Tosali, in the questions and answer session after his formal remarks, noted that telecommunication coverage particularly with mobile communication had improved since the entry of Digicel, a mobile phone operator with head office in the Caribbean.

Yet, he added that market forces did apply and that the telco market must be regulated.

As per the economic and development policies report, real economic growth this year was forecasted to be the strongest in over a decade at 6.2 percent which increased from 2.6 percent last 2006.

The growth, as explained by Tosali, was broad-based with strong growth in sectors such as communication with a 35 percent expansion, building and construction, 14 percent; and agricultural sector, 3.7 percent.

Tosali said the improved economic growth was the result of a combination of factors that includes commodity price boom arising from positive international developments, improved political stability, prudent macroeconomic and fiscal polices along with low interest rates and low inflation.

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