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BUSIN ESS AN D IN VESTMEN T G UIDE Business Advantage 2015 PNG 100 CEO SURVEY SPECIAL MINING AND PETROLEUM PAPUA SUPPLEMENT NEW 2015 ECONOMIC UPDATE INFRASTRUCTURE, CONSTRUCTION GUINEA & SERVICES businessadvantagepng.com/annual 2 CONTENTS Features 12 MAJOR EVENTS SET TO BOOST PNG’S CAPITAL CITY Port Moresby is preparing to host two major events in the next three years— the 2015 Pacific Games and the 2018 APEC Summit. We examine the likely impact. 6 14 INVESTMENT SUMMIT PROVIDES FOCUS ON ECONOMIC UPDATE INFRASTRUCTURE Papua New Guinea’s economy is now emerging from the Every year, international investors, PNG government officials and local entrepreneurs come together for the Papua New Guinea hiatus that followed the completion of its massive liquefied gas Advantage Investment Summit. In 2014, the two-day summit had project. We talk exclusively to some of PNG’s top executives to a special focus on infrastructure development. find out their views on the economy. 16 STOCK MARKET REPORT: PNG STOCKS OUTPERFORM INTERNATIONAL SHARES 17 CASE STUDY: PAPUA NEW GUINEA’S KINA GROUP LOOKS TO THE FUTURE The 19 A NEW SURGE IN CONSTRUCTION PROJECTS PNG 100 A range of new projects under way or about to start will revive the CEO survey construction sector after the completion of the ExxonMobil-led 10 PNG LNG project. THE 2015 PNG 100 CEO SURVEY Opinion & analysis Our annual survey of PNG’s major companies indicates 22 PNG PERSPECTIVES a change of mood after a disappointing 2014, with profit 24 INVESTING IN PNG FROM SOUTH EAST ASIA: MANAGING and recruitment expectations up for the year ahead. THE RISKS Industry sectors 37 INFRASTRUCTURE & TRANSPORT 44 FINANCIAL SERVICES 46 TECHNOLOGY 47 FISHERIES 48 MANUFACTURING 50 AGRIBUSINESS 25 51 FORESTRY MINING AND PETROLEUM IN PNG: 52 TOURISM A SPECIAL SUPPLEMENT Exclusive interviews with the biggest players in PNG Directory mining and gas plus updates on the country’s key 54 WHO’S WHO IN PNG BUSINESS resources projects. 57 BUSINESS TRAVEL GUIDE TO PNG Business Advantage Papua New Guinea was made possible through the support of the following organisations: RD TUNA CANNERS LIMITED 3 WELCOME Welcome to the tenth annual edition of Business Advantage Papua New Guinea, PNG’s flagship business and investment guide. his publication marks Business Advantage Far from replacing the need for a printed annual publication, International’s decade of covering one of the Asia- the online service is designed to provide a wide variety of TPacific region’s fastest growing economies, and content that we could never fit into this publication—news, showcasing the opportunities for doing business there. features, analysis, opinion and a wide range of tools and Since 2006, we have interviewed hundreds of resources for business people. PNG-focused business leaders, bringing you their It publishes all year round with a weekly email update, insights, wisdom and experience. This is why Business and it’s free. Advantage Papua New Guinea has become the most Combined with our annual Papua New Guinea Advantage respected resource for PNG-focused business people the Investment & Infrastructure Summit—which we will co-host world over. with the Port Moresby Chamber of Commerce and Industry in PNG has come a long way in the past ten years, and we've Brisbane, Australia on 27 and 28 August 2015—this publication, been delighted to follow its progress closely. combined with businessadvantagepng.com, makes it even In early 2013, we expanded this resource in a major easier for you to keep abreast of the business and investment way by launching a companion online business magazine opportunities in the Pacific’s tiger economy. on PNG and the region, businessadvantagepng.com. It has quickly become essential reading for executives Andrew Wilkins worldwide. Publishing Director, Business Advantage International Business Advantage Papua New Guinea 2015 is published by Project Director: Robert Hamilton-Jones ([email protected]) Business Advantage International Pty Ltd Publishing Director: Andrew Wilkins ([email protected]) Level 23, HWT Tower, 40 City Road, Southgate, Victoria 3006, Australia Account Manager: Anthony Leydin Tel +61 3 9674 7129, fax +61 3 9674 0400. Editorial: Kevin McQuillan, Ben Creagh, Robert Upe, Jacqueline Bennett Design: Alicia Freile, Michael Whitehead Cover image: Rocky Roe Printed in Australia. Both printer and paper manufacturer for this publication are www.businessadvantagepng.com/annual accredited to ISO14001, the internationally-recognised standard for environmental A digital edition of this publication is available free online at management. This publication is printed using vegetable inks and the stock is www.businessadvantagepng.com/annual. Additional printed copies can be elemental chlorine free and manufactured using sustainable forestry practices. purchased for AUD$35 (incl GST and postage) from the above address DISCLAIMER or by emailing [email protected]. Business Advantage Papua New Guinea is a general guide to some potential business opportunities in Papua New Guinea and is not designed as a comprehensive survey. The opinions expressed herein are not necessarily © Copyright 2015 Business Advantage International Pty Ltd and contributors those of the publisher and the publisher does not endorse any of the business or investment opportunities featured, nor does it accept any liability for any costs or losses related to dealings with entities mentioned in this ISSN 1836-7895 (print)/1836-7909 (online) publication. Readers are strongly advised to pursue their own due diligence and consult with investment advisors before making any investment decisions. 4 5 ECONOMIC UPDATE Port Moresby’s port is scheduled to be relocated—a major project that will open up its central business district for redevelopment. PNG changes gear Papua New Guinea’s economy is now emerging from a period of hiatus following the completion of its massive liquefied gas project. Andrew Wilkins talks exclusively to some of PNG’s top executives to find out their views on the country's economic progress. In May 2014, Papua New Guinea achieved for 2015, can deliver to the people of PNG (85% of whom what some thought it would never do—it live outside the formal economy) and also from a business joined the exclusive club of liquefied natural sector keen to see some of the impediments to growth gas-exporting countries. addressed by government. The US$19 billion ExxonMobil-led PNG LNG As our annual survey of PNG’s leading CEOs indicates project, which achieved financial completion (see page 10), there are still many constraints to growth in Andrew Wilkins in early 2015 and is now bringing much- PNG’s economy, and many of these—unreliable utilities, law needed revenue to the country, has not only and order problems, lack of government capacity and red put PNG into the top 15 LNG producers worldwide; it has put tape—fall under the remit of government. this fast-growing economy of just six million people firmly on the global map for business. ‘If we can get the infrastructure The completion of the project has had significant consequences. development right … it will create the Not only are there more LNG projects in the pipeline, with opportunity for our manufacturing sector French ‘super major’ Total SA now in PNG (see page 27), but to start being more competitive.’ the construction over several years of such a large, world- class gas development has lifted capabilities and skills across the economy. The construction phase of the PNG LNG project, ‘We’re being encouraged that more and more people from which was given understandable priority by government, the ANZ Group want to come to PNG,’ says Mark Baker, accentuated some of these issues. Now construction is Managing Director of ANZ’s PNG operations. ‘PNG is seen complete, resources are being directed to where they are in a positive sense for people … who are mid-career, who badly needed. want to make a difference and want to get that exposure in The largest National Budget in PNG’s history was delivered a developing market.'’ by Treasurer Patrick Pruaitch at the end of 2014, with expenditure on infrastructure, education, health, and law and Great expectations order now accounting for 50% of all expenditure. PNG’s success has also, of course, raised expectations—both Improved infrastructure will have a transformative effect on of what such large GDP growth, projected to be around 15.5% PNG’s typically high-cost business environment. 6 ECONOMIC UPDATE PAPUA NEW GUINEA IN BRIEF A DMIR ALITY ISLANDS LIHIR GRO NE UP W A IRE K S E LA A R C ND B I S M Population: 7.167 million (2012, source: RABAUL World Bank) AY MADANG E B K I M B Capital: Port Moresby KIMBE B O U MT HAGEN G A IN V I Surface area: 463,000 sq km N L EW L BRITA E IN PAPUA NEW GUINEA IS L A LAE N D H U O N G U L F O N S E A People: M elanesian, Papuan, Negrito, S O L O M BALIMO Micronesian, Polynesian G U KEREMA T L RO F BR O IAN F D IS D’ENTR LAN P ECAS DS Time zone: GMT +10 hrs A TEA P UX U ISL A AN DS T O PORT MORESBY Business language: English R R E S T S T R A I ALOTAU C O Political status: parliamentary democracy CAPE YORK R A L S E A GDP: US$15.65 billion (2012) GDP growth: 15.5% (2015 projected, source: AUSTRALIA PNG Government) Inflation: 6.6% (12 months to March 2015) Currency: PNG kina Major industrial sectors: mining, crude oil petroleum refining, palm oil, coffee, plywood and wood chip production, construction, fisheries, tourism, manufacturing Exports: oil, gold, copper ore, logs, ‘If we can get the infrastructure development right— palm oil, coffee, cocoa, whether it’s PNG Power with more effective, reliable and seafood lower cost energy, or the ports for our international trade, Major export markets: Australia, Japan, Philippines, or the highways—it will create the opportunity for our China manufacturing sector to start being more competitive and Imports: machinery and transport equipment, manufactured increase their own investment in their plant infrastructure,’ goods, food, fuels, notes Robin Fleming, Chief Executive Officer of Bank of South chemicals Pacific, PNG’s largest bank.