My dream for a better Papua New Guinea
By Kofi Assan, Mangi Tari
Prime Minister, Deputy Prime Minster, Speaker of Parliament, Members of Parliament and Papua New Guineans.
Papua New Guinea’s economy revolves around the export of raw materials. We still export our gold, cocoa, fruits and soon our new-found liquid Natural Gas (LNG) in their raw state. We cannot indefinitely rely on this structure and these exhaustible resources to grow our economy and modernize our country. Transforming the economy will is about adding value for higher revenue by industrializing. By industrializing our economy we will facilitate significant job creation in the private sector. Above all, we must ensure that the private sector is the real engine of growth that would create opportunities and jobs for all, whilst the government provides strategic leadership and the enabling environment to make this transformation happen.
In the next two decades, the population of the Pacific is estimated to expand well beyond our control. Are we fully committed to the integration of the Pacific? This is because PNG has the potential to be at the centre of economic activities for this vast regional market.
Our leaders must strive to implement a trade policy that creates jobs. We have a tariff regime designed to maximise profit but it in fact damages local industry and PNG’s economy. The short-term revenue gains from such taxes are attained at the expense of long-term production and jobs. Consequently many of our SMEs are not in production and industry, where they can and should be. There should be a review of tax laws with a view to reducing the cost of equipment and imported raw materials for manufacturing, health, ICT, real estate, etc. In fact it is better to implement a trade policy that works for PNG in creating jobs whilst being attractive and reassuring to the investor.
Our leaders should increase agricultural production and add value to our products through agro processing. This will support and promote our industries, especially small and medium scale entrepreneurs and businesses, to be competitive in import substitution and exports.
The implementation of policies for developing and adding value to our natural resources, including oil and gas, salt, gold, bauxite, iron ore, manganese and our agricultural products should be a key priority. They must support and promote high-value services, including the penetration of ICT services, financial services, education, health and tourism, all for which PNG is competitive. They must encourage and support pharmaceutical manufacturing in PNG to make it the centre for the region and beyond.
The agriculture sector lacks sophistication and is dominated by subsistence farmers. PNG may face increasing food security challenges in the near future. This may be due to the pervasively fragmented value chain, inefficiency and obsolete farming techniques and equipment. They must target the development of all four of PNG's breadbaskets to enhance productivity and production in selected food crops (maize and rice) and high value cash crops (horticultural products).
They must adopt the integrated approach to the agricultural sector that was proposed and was executed under the Millennium Challenge Account (MCA) project in other developing countries . This integrated approach recognizes that the transversal interventions or key constraints affecting the sector will have to be tackled simultaneously to produce a sustained result.
To modernize agriculture within the framework of the structural transformation of the economy, we should undertake the following specific measures:
- Small Scale Farmers: encourage our small scale farmers to adopt new and improved agricultural technologies and seeds, mitigate their over-reliance on rain-fed agriculture through irrigation, provide them with quality and affordable fertilizer and improve land tenure and acquisition. Commercial Agriculture: we will encourage private sector investments into large-scale commercial agriculture.
- Access to Land for Agriculture: commit to complete the restructuring of the Land Title Registration and the Land Administration Project to facilitate the efficient transfer of land title and use of agricultural land.
Finance: reform security in title to land to make it possible to extend the benefits of micro-lending and other forms of finance to ordinary farmers with limited capital and resources.
Infrastructure: create more access roads to our farms and market centres to mitigate post-harvest losses and ensure availability of food to consumers. Research and Extension services: build on our earlier effort to encourage the modernisation of agriculture through education, research and mechanisation. Irrigation: expand irrigation coverage nationwide, especially in the Highlands. Develop and facilitate community-owned and managed facilities like dams, boreholes, and dugouts to expand irrigation.
- Mechanisation: encourage the establishment of 250 mechanisation centres across the country to provide mechanisation services to farmers at competitive prices.
- Education, Research and Technology Development: restructure agricultural research institutions to build on the high yielding crop varieties and technologies already developed and provide greater support to farmers.
- Input support: the use of fertilisers is low and less than 5% of farms in Papua New Guinea use any added nutrients of any kind, owing to cost and lack of easy availability.
Agro processing: encourage and support agro-processing so that domestic production will compete with imports, with the aim of replacing imports over time and promote exports.
Support local enterprises to be competitive globally. Reduce the overall cost of doing business and make PNG attractive as an investment destination by streamlining bureaucracy, and achieving macroeconomic stability. Implement fiscal and monetary policies to bring down interest rates and improve access to credit. Also implement measures to stabilize the exchange rate of the PNG Kina and have in place reliable infrastructure and a sound regulatory framework.
The value of the minerals in our country – there should be plans to add value to them and attract the necessary capital to mine our bauxite to build a multi-billion dollar integrated aluminium industry, as envisaged by the Somare government. Use a similar model to exploit our iron ore deposits and urgently build a new iron and steel industry.
Presently, our oil refinery is not working. It must meet high standards. The government is wilfully starving it only to import finished products. Change this. Use the oil & gas find to build a strong petrochemical industry in PNG, use both private and public financing, and create linkages with other local businesses to turn PNG into a centre for light industry in our region and Asia-Pacific.
Public Financial management
Implement reforms to address corruption and enhance efficiency in management of public finances. Close the loopholes in the public administration to ensure value for money and transparency in the awarding of contracts. Strengthen the Auditor General’s Department to make them more efficient for governance and accountability.
Strengthen the financial sector by implementing reforms aimed at encouraging savings, deepening the capital markets to make affordable long-term finance available to businesses, and bringing efficiency in the way we make business.
- Encourage the setting up of credit unions for teachers, health workers, security agencies, public servants, etc. as an alternative to established banking institutions.
- Facilitate the inclusion of the unbanked by the use of ICT and by encouraging mobile banking and growing online and telephone banking services. Increase the intensity in reforms to transform PNG from a cash-only economy to an electronic payments-based economy.
Now this is my dream for a better PNG let’s make it happen!