2014 Trade and Investment Profile
Formally, the Government of Papua New Guinea (PNG) welcomes foreign investment and on paper, the country has a liberal investment regime. In practice, reality is more complicated, PNG is rich in gold, oil, gas, copper, silver, and timber, and is home to abundant fisheries. The government has recently placed a priority on the downstream processing of these assets to drive economic growth. Strong macroeconomic management, until recently, had created the longest uninterrupted period of economic growth since the country’s independence in 1975.
Large investments to date have been concentrated in the minerals and petroleum sectors. While Exxon Mobil PNG’s US$19 billion PNG liquefied natural gas (PNG LNG) investment has been the most notable, other investments in communications, construction, and real estate, for example, have given significant impetus and created spillovers into other sectors. These investments have supported growth in formal employment, creating shortages of skilled labor.
The government supports developments in the tourism sector, and believes that the country has huge untapped potential in this area. The government gives preference to foreign investment proposals to develop renewable resources including forests, fisheries, and agricultural commodities.
The PNG government has created additional opportunities for PNG business owners and to protect certain industries from foreign investment. PNG’s largest taxpaying company, Ok Tedi Mining was expropriated in 2014 to remove foreign leadership and ensure that assets were directly benefiting the people of PNG.
Challenges to investment include weak enforcement of contracts, inconsistent government policies, corruption, crime, inadequate infrastructure (including unreliable power), underdeveloped private markets, and extremely high commodity and internet costs. Recruitment and retention of skilled workers is also an impediment to doing business in PNG.
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