A green haven surrounded by blue, Papua New Guinea is an archipelago lying generally east of Indonesia and north of Australia. Its principal land mass is the eastern half of New Guinea island and close to 600 islands in the surrounding Melanesia region also fall within the nation. The larger territories are the New Guinea, New Ireland, New Britain, Manus, and Bougainville islands; the national capital is Port Moresby with a population of 270,000 while Lae is another major town. Papua New Guinea, which gained independence from Australia in 1975, is a culturally diverse country with a population of close to 8 million and almost 850 languages. It is the world’s third-largest island country and is made up of the New Guinea Highlands, tropical rainforests in the lower regions, and wetlands along the coastal areas. As a matter of interest, Papua New Guinea is one of the few equatorial regions that experience snowfall, in the higher parts of the country, of course!
A steadily developing country, Papua New Guinea is abundantly endowed in natural resources, both land and sea, which form the foundation of the Papuan economy. Mining is a major feature and about 72% of export revenue comes from minerals like gold, oil, silver, and copper, and the country is the world’s biggest player in deep sea mining. Papua New Guinea is 10th in world production of copper and 11th in gold; on the casual 60,000 small-scale miners produce about 4 tons of gold each year. Much of the harnessing of the major mineral field is through world-class open pit mines managed as joint-ventures with international giants.
Oil and natural gas exploration, production, and export together with liquefied natural gas are a mainstay of the economy and this in turn has given a firm boost to related activities like housing and infrastructure construction. Exxon-Mobil has a significant role in the many facets of the oil industry.
Agriculture is another major feature, offering engagement to about 85% of the population while generating 30% of Gross Domestic Production. The principal crops are coffee, cocoa, and coconut with tea estates in the highlands. Grown in extensive plantations, oil palm is increasingly visible and has now become Papua New Guinea’s principal agricultural export.
Mangrove swamps including nipa palms can be found along the coastal regions while sago palms grow more towards inland territories. In addition, there are almost 39 million hectares of forest areas which allow for various commercial activities. Tropical hardwoods are a substantial element and other species are pine, beech, cedar, and oak. All related ventures like logging and the processing of timber by-products fall under the Papua New Guinea Forest Authority.
A little-known secret is the country’s vibrant fishing industry which ranges from aquaculture, inland and coastal fishing, prawn and lobster harvesting, and deep-sea tuna fishing which is one of the world’s largest with an annual catch of about 200,000 metric tons. Tuna export is closely related to Japan, Taiwan, the United States, Great Britain, and Germany. Other marine species include beche-de-mer (sea cucumber), bislama, and barramundi.
Manufacturing in Papua New Guinea can be said to be at early stages contributing only 3% of national GDP but is gradually getting more active. This sector is presently focused on the processing of agricultural and resource-based products with palm oil, processed tuna, timber and related by-products, and refined petroleum and liquefied natural gas. Growth in manufacturing activities is handicapped by cost-inefficiencies and poor infrastructure with the result that most consumer goods are imported, mainly from Australia, Japan, China, Singapore, and America.
The economy has been performing impressively in the last 10 years with annual growth hovering around 7.5% though a setback was experienced in early 2020 as a result of the Covod-19 outbreak. The country’s balance of trade over recent years has been stable with exports marginally exceeding imports.
In view of Papua New Guinea’s strong potential for development, various agreements and incentives have been put in place to boost the local economy and also to attract foreign investors. Several cross-border treaties have been signed under which products from PNG are duty free or enjoy reduced tariffs for entry into certain countries like the European Union. Similarly under the Investment Promotion Act apart from the incentives themselves, foreign companies are protected from being nationalized except in accordance with the law. Trade agreements have also been signed with Australia, Malaysia, and China amongst others.
The administration and management of foreign investment comes under the Multilateral Investment Guarantee Agency.
