Wednesday, July 28, 2010

Papua New Guinea’s economic freedom

Papua New Guinea’s economic freedom 
Score is 53.5, making its economy the 126th freest in the 2010 Index. Its score has decreased by 1.3 points from last year, mainly as a result of lower scores in monetary freedom and government spending. Papua New Guinea is ranked 25th out of 41 countries in the Asia–Pacific region, and its overall score is lower than the world and regional averages.

The Papua New Guinean economy scores relatively well in trade freedom, primarily because of low tariff barriers. The overall entrepreneurial environment has long suffered from macroeconomic instability, volatile economic growth, and low investment. Inconsistent government policies, weak property rights, poor infrastructure, lack of competition, and the dominant role of the state in the economy have contributed to the lack of economic development and widespread poverty across the country.

Private-sector growth has been minimal because of structural constraints. The government intrudes in many aspects of the economy through state ownership and regulation, raising the costs of conducting entrepreneurial activity and discouraging the development of a strong private sector. The lack of market competition has resulted in a number of highly inefficient state monopolies in key sectors of the economy.
Background Back to the top

Papua New Guinea is a democratic country with an extraordinarily diverse population of nearly 7 million people speaking hundreds of languages. The vast majority of its people depend on subsistence hunting or agriculture for their livelihood, and the formal economy is dominated by the mining of rich deposits of gold, copper, oil, and natural gas. Ongoing problems include corruption, election irregularities, weak governance, and crime.
Business Freedom59.1 Back to the top

The overall freedom to start, operate, and close a business is constrained by Papua New Guinea’s regulatory environment. Starting a business takes an average of 56 days, compared to the world average of 35 days. Obtaining a business license requires 24 procedures, compared to the world average of 18, and about the world average of 218 days.
Trade Freedom86.2 Back to the top

Papua New Guinea’s weighted average tariff rate was 1.9 percent in 2008. Some high tariffs, import and export bans and restrictions, import permits, import and export taxes, inefficient customs administration, limitations on trade infrastructure and capacity, and corruption add to the cost of trade. Ten points were deducted from Papua New Guinea’s trade freedom score to account for non-tariff barriers.
Fiscal Freedom65.0 Back to the top

Papua New Guinea has high taxes. The top income tax rate is 42 percent, and the top corporate tax rate is 30 percent (48 percent for non-resident companies). Other taxes include a value-added tax (VAT), a tax on interest, and an excise tax on fuel. In the most recent year, overall tax revenue as a percentage of GDP was 28.9 percent.
Government Spending63.3 Back to the top

Total government expenditures, including consumption and transfer payments, are moderate. In the most recent year, government spending equaled 35.0 percent of GDP.
Monetary Freedom72.6 Back to the top

Inflation has increased dramatically, averaging 7.6 percent between 2006 and 2008. Price controls are in effect for a number of consumer goods, mainly food products, although these are scheduled to be phased out. Ten points were deducted from Papua New Guinea’s monetary freedom score to adjust for measures that distort domestic prices.
Investment Freedom35.0 Back to the top

Foreign investment is screened and requires government approval. Only foreign enterprises need to be certified, but all companies must be registered with the government. Certain sectors of the economy are reserved for domestic investors. Investment-related rules and regulations are non-transparent and burdensome. Foreign investors are expected to employ locals where the expertise is available and are encouraged to train locals to fill positions held by expatriates. Other deterrents to investment include weak enforcement of contracts, corruption, crime, inadequate infrastructure, and underdeveloped private markets. Foreign exchange and capital transactions face various documentation requirements and government approvals. Ninety-seven percent of land is communally owned, but foreign investors may lease land.
Financial Freedom30.0 Back to the top

The financial system, dominated by banking, is not conducive to supporting investment and entrepreneurship. Although bank lending has expanded considerably in recent years, the system remains shallow and poorly developed. Financial intermediation varies across the country, and a large portion of the population does not use the formal banking sector. The high cost of financing and limited access to financial services impede development of the private sector. Papua New Guinea’s commercial banking sector has five major banks that have become more competitive as a result of privatization and mergers. Bank South Pacific accounts for over 50 percent of the sector’s total assets. Short-term financing dominates bank lending, and credit to the private sector accounts for about 20 percent of GDP. Capital markets remain underdeveloped.
Property Rights20.0 Back to the top

Land is held communally, and traditional communities do not recognize a permanent transfer of ownership when land is sold. The laws have provisions for extensive rights for women in dealing with family, marriage, and property disputes, but women generally are still treated as inferiors. The idea of intellectual property rights is a fairly new concept in Papua New Guinea.
Freedom From Corruption20.0 Back to the top

Corruption is perceived as pervasive. Papua New Guinea ranks 151st out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008. Corruption at all levels of government is a serious problem because of weak public institutions, lack of transparency, a lack of law and order, land tenure concerns that stifle investment, politicization of the bureaucracy, and the use of public resources to meet traditional clan obligations. Charges were filed in two cases of high-level corruption involving senior government officials in 2008, but at year’s end, no investigation reports on either case had been released.
Labor Freedom83.3 Back to the top

Papua New Guinea’s labor regulations are flexible, but the formal labor market is not fully developed. The non-salary cost of employing a worker is low, and dismissing an employee is relatively straightforward.

Source:Papua New Guinea

Friday, February 5, 2010

Police Brutality Alleged Near Papua New Guinea Gold Mine

Amnesty International says police in Papua New Guinea have burnt down homes and illegally evicted people living near a mine owned by the world's largest gold mining company. In a new report Amnesty International calls on the government to investigate what they call "police brutality".

Shanta Martin is Amnesty International's mining and human rights specialist. She says the police used violence and intimidation to clear over 100 buildings.

"Between April and July of 2009, the police who were brought in to an area in the highlands of Papua New Guinea to deal with an increase in law and order problems burnt down villages that were right next door to the operations of the Porgera Gold Mines," said Martin.

The police force says those who have been evicted from their homes were living there illegally.

But Martin says no warning of eviction was given and she says the police used excessive brutality.

Amnesty says there is no evidence that Barrick Gold, which owns 95 percent of the mine, played any part in the evictions. But it says the mining company should end their support of the police, which through a subsidiary of Barrick Gold received accommodation, food and fuel.

And, Martin says the gold producer should have done more to investigate the forced evictions.

"Even having found that, and agreed that, there were evictions by the police right next door to the mine's facilities, within the special mining lease area and within sight of personnel who were working within the minds, neither Barrick Gold Corporation nor the Porgera Joint Venture has urged for an independent investigation by the authorities and quite frankly that's just not good enough," she said.

In a statement, Barrick Gold has said Amnesty International's research into Porgera is not objective and has not taken into account complicated social and legal issues on the ground.

Martin says the government must investigate the evictions and prosecute those responsible. And, she says moves should be made to help resettle those people who are still living within the mining area.

"There's also a need to have a look at whether or not the people who are currently living within the special mining lease area really ought to be relocated to an area outside that mine lease," said Martin.

The Porgera Gold Mine, located in Papua New Guinea's Enga Province, is one of Barrick Gold's largest mining operations.


PAPUA NEW GUINEA: Cholera "going from bad to worse

PORT MORESBY, 5 February 2010 (IRIN) - Cholera continues to spread in Papua New Guinea (PNG), where government health officials are now describing the disease as a major national public health concern.

“Things are going from bad to worse,” Victor Golpak, the government’s national response coordinator for cholera, told IRIN on 5 February.

“This is now a national public health concern. We cannot ignore it any longer,” he said.

Since the first case was reported in August 2009, more than 2,000 cases have been confirmed nationwide, including 577 in Morabe Province, 885 in Madang and 602 East Sepik Province, the country’s National Department of Health reports.

As of 5 February, 45 people have died.

Much of Momase - one of four areas in the Pacific island nation comprising East Sepik, Madang, Morabe, and West Sepik provinces - is now affected.

There have also been single cases reported in the country’s Eastern Highlands Province, as well as the capital, Port Moresby, in late January.

“The disease is very much mobile,” Golpak said. “Tragically, the government has not woken up to this fact yet,” he said, referring to a lack of funding so far to curtail its spread.

On the move

Cholera was first detected in Morabe Province, and a national response team was set up by the Department of Health, supported by the National Disaster Response Centre, the World Health Organization (WHO) and other international partners.

In October 2009, cholera was detected in the northern province of Madang, followed by another outbreak in East Sepik in November.

Despite that, resources to curtail the disease’s spread are in short supply.

Of particular concern is the situation in East Sepik, with cholera cases reported in Wewak, Angoram and Ambunti districts, as well as around Murik Lake - the home of Papua New Guinea Prime Minister Grand Chief Sir Michael Somare.

There, provincial health authorities have joined forces with staff from Oxfam New Zealand, Save the Children PNG, WHO, and Médecins Sans Frontières, to help contain the disease’s spread.

Provincial health officials, together with NGO partners, have set up cholera treatment centres in affected districts, but time is of the essence, aid workers say.

Of the 602 cases treated thus far in East Sepik, there have been 16 deaths, Oxfam said on 4 February.

Photo: David Swanson/IRIN
Large parts of the population do not have access to safe drinking water
“We are getting more reports of deaths coming in from the rural areas that we have yet to confirm,” said Andrew Rankin, Oxfam’s Sepik programme manager, who also described the situation around Murik Lake as particularly bad.

Clean water at a premium

According to health experts, cholera, an acute intestinal infection, is fuelled largely by poor sanitation practices and inadequate access to safe drinking water.

About 58 percent of the country’s six million inhabitants do not have access to safe drinking water, the UN Development Programme (UNDP) reports.

“People paddle for miles to fetch water. There is hardly any fresh and safe water around,” Rankin said.

Although water tanks, buckets and other essential items have been distributed to affected communities, they are useless without any rain.

Many residents continue to use water from the Sepik river - PNG’s second largest and a primary source of water for both drinking and washing.

In November, WHO confirmed large traces of the bacteria vibrio cholerae in the river.

“We found cholera in the water in more than one location and the bacterial results were very high,” Daniel Bleed, an epidemiologist with WHO, told IRIN at the time.

But even more worrying now is how to curtail the disease’s spread - and not just along the Sepik river.

“Madang and Morabe also have big river systems, but we have yet to test the water there,” Golpak noted.

Resources lacking

On the ground, Sibauk Bieb, the operations coordinator for the government’s cholera task force in Madang, says time is running out to stop the spread.

With resources largely depleted, and unable to pay his own staff, he is appealing directly to international donors for help.

“What other choice do I have?” Bieb asked reluctantly. “I continue to make representations to the government at the provincial and national level, but so far no funding is forthcoming. We need help and we need help now.”

In September, cholera was declared a public health emergency by the government, which committed more than US$4 million to combat its spread.

As of 5 February, however, just US$900,000 had been released nationwide, leaving provincial authorities and NGOs struggling to cope.

Clan killings at Papua New Guinea gasfields

FIGHTING has claimed 16 lives over the past week at villages near both ends of a planned 600km pipeline down which will flow Papua New Guinea's great new economic hope, its $16.5 billion gas project.

As a result, project leader ExxonMobil has suspended road building work by Queensland-based Curtain Brothers for the liquefaction plant near Port Moresby.

A second, $8bn project was announced recently by InterOil, which is based in Whitehorse, Yukon Territory, Canada, and is largely operated from Cairns.

The first of the latest killings came in an early morning raid by villagers from Erave district in Southern Highlands, against an enemy clan that lives in an area without road access. The attackers used high-powered guns to kill 11 people.

ExxonMobil and the police denied the incident was directly related to the gas project, but it took place close to the area of the gasfields, from which the gas will be piped 600km to Port Moresby.

Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
The second attack came in an area where deadly tribal fighting has been almost unknown for decades, between local Papuan clans within Port Moresby. Villagers from Porebada launched a raid on Boera village, near the site of the gas liquefaction plant.

Police Superintendent Andy Bawa told The National newspaper that the fight, in which five people died from gun shots, appeared to be over land ownership. Massive compensation payments are expected to be made for access to land for gas projects.

The heightening of expectations from LNG projects is intensifying conflicts over land, and over access to the massive flows of wealth that are anticipated. It is only weeks since the projects were given the go-ahead, yet the construction phase will take several years - during which such pressure from landowners, and from the large proportion of unemployed young people, is expected to keep building.

Despite receiving revenues from a succession of resource projects, PNG languishes at 148th out of 182 countries in the UN's human development index.

The police commanders of the five Highlands provinces met a few days ago to discuss plans to combat law and order problems expected to result from the LNG projects.

Acting divisional commander Thomas Eluh said these issues might include changes in attitudes of people living in the affected areas, illegal immigrants, money laundering and terrorism, and that increased police resources would thus be needed.

Wilson Kamit warned in his handover speech this week after a decade as governor of the Bank of PNG about LNG "hype".

"We should not spend any money until we have actually received it," he said. "Let's not borrow against expected income until we have realised it."

He urged the central bank be allowed to manage the revenues from these giant projects, through a fund protected from political pressures "to ensure it does not become a petty cash box for anyone".

Young Canada stun French, Argentinians

Taylor Paris needed a letter of consent from his parents to play in the IRB World Sevens Series.

The 17-year-old Canadian sevens player will need no such permission to tear into the cup quarterfinals at Westpac Stadium today.

Fairytales were in short supply on opening day of the NZI Sevens, but Canada's young side provided as close as it got.

With Paris and two 18-year-olds in the side, Canada were the lone voice for the underdogs after upsetting Argentina 26-7 and beating France 21-19 in pool play to earn a quarterfinal against England.

When Argentina bowed out with a 33-12 loss to Samoa in their final pool match, it sparked wild celebrations in the Canadian camp.

"This is huge for us," coach Morgan Williams said. "We went bowling yesterday and I tried to split them up into over-22 and under and realised the older team only had two players."

Williams, who played in Wellington a year ago, has chosen a young side with an eye to the 2016 Olympics and is thrilled how quickly the players have responded.

"We couldn't get a release of any of our pros this year, so we've gone for the future. Usually we don't get our athletes in rugby till they are 22-23 , so we want to develop talent from a younger age."

The Canadian team had to fund-raise to attend buildup tournaments.

Paris got a dream start in Wellington, scoring with his first touch of the ball in Canada's first-up win against Argentina.

The other emotional aside yesterday was the sight of sevens great Waisale Serevi coaching Papua New Guinea against his homeland.

As he was on the field, Serevi is humble as a coach and was quick to congratulate his countrymen after they had beaten his new charges 41-0.

For Papua New Guinea, it was a tough ask after being readmitted to the IRB series this year for the first time since 2006, but Serevi believes the raw talent is there to make a bid for the 2016 Olympics.