Papua New Guinea Overview
Here is all you need to know about Papua New Guinea, the country specs, key features and the latest real estate prospects and trends.
Papua New Guinea (PNG) occupies the eastern half of the island of New Guinea and shares international borders with Australia, Indonesia, Solomon Islands and the Federated States of Micronesia. It is an attractive investment destination and has immense potential in tourism, thanks to its flora and fauna and cultural and linguistic diversity. It comprises 20 provinces, the autonomous region of Bougainville and Port Moresby, the National Capital District (NCD).
Archaeological evidence suggest that the Island of New Guinea was first settled over 50,000 years ago, by humans who probably arrived in two different migration groups at different times. The humans were primarily hunters and gathers, though there is evidence in PNG’s Western Highlands Province of the settlers developing early agricultural practices at the UNESCO-listed Kuk early agricultural site.
The first European contact occurred in the 16th century when Portuguese and Spanish explorers chanced upon the main island. Jorge de Menezes, a Portuguese explorer, called it “Papua” when he visited 1526 – 1527. Spaniard Ynigo Ortiz de Retez called the island “New Guinea” in 1545 as he thought its inhabitants resembled indigenous populations on the African Guinea coast.
In 1883 the Queensland government annexed the southern part of the island and declared it British Papua. In 1884 the northern part of the island was declared a German protectorate and stayed under the administration of the German New Guinea Company until 1914, when it fell to Australian forces in the First World War. In 1902 the territory of Papua was placed under the auspices of the Commonwealth of Australia, and in 1949 both the territories of Papua and New Guinea were placed by the United Nations under the trusteeship of Australia.
The first House of Assembly of the Territory of Papua and New Guinea opened in 1964 and had a four-year term. Subsequent elections were held in 1968 and 1972 with the territory gaining self-government in December 1973 and independence from Australia in September 1975.
PNG is endowed with natural resources and is home to one of the world’s largest tropical rainforest and significant reserves of gold, silver, copper, nickel, cobalt, crude oil, natural gas and other mineral deposits. Forestry, mining, petroleum, agriculture and livestock, tourism and hospitality, fisheries and manufacturing are the major economic drivers in PNG.
The PNG economy had an average real GDP growth of close to 8% between 2007 and 2014, one of the world’s highest growth rates in that period.
According to The Observatory of Economic Activity (OEC), PNG exports and imports totaled $9.1 billion and $4.54 billion in 2015, giving the country a trade balance of $4.52 billion. Its top exports were petroleum gas ($3.46 billion), gold ($1.79 billion), crude petroleum ($915 million), rough wood ($741 million) and palm oil ($390 million). Its top export destinations are Japan ($2.4 billion), Australia ($2.21 billion), China ($1.73 billion), Asian nations ($587 million) and Germany ($290 million).
But the reliance of the PNG economy on exports from the extractive sector, which accounted for over 80% of total exports and 12.7% of government revenue in 2014, has made the local economy vulnerable to global commodity price movements. The low prices have led to a decline in government revenue in recent years, which has affected the delivery of basic services to ordinary citizens.
Moves are now afoot within the O’Neill government to diversify the national economy with Prime Minister Peter O’Neill announcing in November last year of his government’s plans to ‘move beyond the boom-and-bust cycles that comes with dependency on global energy prices’. The Bank of Papua New Guinea in September last year said it was critical that the government diversified the national economy, if it is to mitigate the effects of volatile global commodity prices.
The O’Neill government, when tabling the 2018 National Budget in the National Parliament last November, projected growth in 2018 at 2.4% to be driven by the non-mining sector. Spending on APEC-related expenses is expected to flow through the non-mining sector complimented by improvements in the agriculture, fisheries and forestry sectors.
APEC Papua New Guinea
PNG will benefit as the host of the 2018 Asia-Pacific Economic Cooperation (APEC) says experts, as it will open up trade, tourism and investment opportunities in the Pacific Islands’ largest economy. The O’Neill government has allocated K300 million to APEC in its 2018 National Budget, specifically for costs associated with administrative and logistics preparation for the year-long program of meetings. Australia has reportedly agreed to assist PNG pay for some of the costs associated with hosting the international summit, which will culminate with the November Leaders’ Summit in Port Moresby.
The country’s hosting of APEC 2018 has led to a spike in investment in high-rise buildings and eye-catching architecture that will change Port Moresby’s skyline forever. APEC Haus adjacent to the city’s Ela Beach and the CBD leads the pack and is being constructed at the cost of K120 million by Oil Search Limited under a tax credit scheme. The building will resemble a Motuan Lakatoi, a traditional double-hull canoe that the Motuans used in the days of their forefathers to trade with coastal villagers in the Gulf Province. Star Mountain Plaza is next and is PNG’s first integrated commercial development that will provide hotel, office and residential space and amenities. It has a K457 million price tag and is due for completion in August this year. Hilton Port Moresby, which will offer 212 rooms and 128 apartments, is part of the building. Other development including the OPH Commercial Towers in downtown Port Moresby, which is scheduled to be completed late this year, the Rangeview Heights mall in Waigani and the Loloata Island Resort redevelopment work outside the national capital.