Adventure Kokoda

Economy

Economic Overview

PNG has a dual economy comprising a formal, corporate-based sector and a large informal sector where subsistence farming accounts for the bulk of economic activity. The formal sector provides a narrow employment base, consisting of workers engaged in mineral production, a relatively small manufacturing sector, public sector employees and service industries including finance, construction, transportation and utilities. The bulk of the population is engaged in the informal sector. Migration to major city centres in the past decade has contributed to urban unemployment and social problems. Papua New Guinea's social indicators, in general, are well below those of lower middle income countries (particularly in rural areas).

After several years of contraction, the PNG economy has been growing since 2003. The economy grew at 5.2 per cent in 2007, and PNG Treasury projects growth of 6.6 per cent for 2008. Other macroeconomic indicators have also improved, with inflation rates and interest rates remaining low, foreign reserves at historic levels and employment in the formal sector growing. In 2008, the PNG Government has forecast inflation to reach to 5.2 per cent.

The PNG Government has projected a budget surplus of Kina 202.3 million, or 1.1 per cent of GDP, for 2008. The surplus will be used to reduce external borrowings and PNG’s total public outstanding debt is forecast to reduce to 31.8 per cent of its GDP by the end of 2008.

Source:
Department of Foreign Affairs and Trade

Economic Profile


The major economic sectors in Papua New Guinea are: Agriculture and Livestock, Forestry, Mining and Petroleum, Tourism and Hospitality, Fisheries and Marine resources, Manufacturing, Retailing and Wholesaling, Building and Construction, Transport and Telecommunications, and Finance and Business Trade.

PNG's major exports are gold, silver, copper, crude oil, logs and timber, coffee, palm oil, cocoa and copra. PNG has experienced a relatively even balance of trade over the last five years, with exports marginally more than imports.

The waters around PNG are rich in marine life and are virtually untouched. Within the 200 mile economic zone are large varieties of fish, including migrating schools of tuna. Forest products are one of PNG's major exports but the timber resource of the country again remains largely untapped.

Papua New Guinea's main imports are sourced from Australia, Japan, the United States of America, Singapore, New Zealand, the United Kingdom, China and Hong Kong. The main destinations of PNG exports are Australia, Japan, South Korea, China, Germany, the United States of America, the United Kingdom and Singapore.

Economic Policies

The Papua New Guinea Government believes that the key to economic growth is the development of private sector investment both domestically and abroad. The Government is also aware that in order to attract that investment, it must put in place a policy framework which will bring about that development, including its plans to enhance the manufacturing sector and boost export figures under an export-led Economic Recovery Program.

National Investment Policy

The National Investment Policy provides guidelines for the pursuit of economic development through the implementation of investment projects in the country. The Policy's Volume I and Volume II were prepared i n 1998 and 1999 respectively. It is currently undergoing a review towards formulating the National Investment Policy Volume III in consultation with all the stakeholders, including the private sector. Volume III of the Policy will define the core policy objectives and strategies of the commerce sector and further boost economic growth through structural reforms that remove barriers to investment and support infrastructure development.

Medium Term Development Strategy 2005 - 2010

The Medium Term Development Strategy (MTDS) charts the course of reforms in the public sector in the 21st Century. The MTDS translates the means to overcome ineffective governance and bring about development as defined under export-driven economic growth, rural outgrowth and poverty reduction. The resource owners in Papua New Guinea are encouraged to mobilise their resources, including land, to drive the development process to achieve higher standards of living.

Industrial Development Policies

The main thrust of the Government's economic development and industrial policies is aimed at increasing the value and volume of value-added products. Government policies encourage the development of PNG's non-mining sectors including manufacturing, renewable resources such as agriculture and fisheries, and business services, to promote economic self-sufficiency. The promotion of non-mining sectors of the economy ensures that economic growth can be sustained after the depletion of mineral resources. The policies focus on the industries and business, particularly the private sector investments to create employment and achieve economic growth.

The implementation of industrial policies remains the responsibility of the various statutory authorities which are established for that purpose within the Ministry of Trade and Industry. These are the:

. Investment Promotion Authority (IPA)
. Small Business Development Corporation (SBDC)
. Industrial Centres Development Corporation (ICDC), and the
. National Institute of Standards and Industrial Technology (NISIT) through which quality control procedures can be addressed. New ventures can rely upon NISIT for research assistance and information on development and transfer of technology.

Small to Medium Enterprise Policy

The Small to Medium Enterprise (SME) Policy aims to promote the development of small to medium enterprises in PNG in relation to the transfer and adoption of appropriate technology and the encouragement and strengthening of the linkages between SMEs and their support institutions. The main objective is to instil business culture within the SMEs and ensure their long-term sustainability.

Privatisation Policy

The Government is also committed to a privatisation policy that will ensure that the Government's involvement in commercial activities are minimised or extracted and transferred to the private sector.

Source:
PNG Investment Promotion Authority