The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
Papua New Guinea (PNG) is the largest economy among the Pacific Islands and offers enormous trade and investment potential. Key investment prospects are in infrastructure development, a growing urban-based middle-class market, abundant natural resources in mining, oil and gas, forestry, and fisheries.
Prime Minister James Marape’s government is concentrating efforts towards large scale investments and trade and is looking to increase manufacturing and downstream processing to reduce dependency on imports and increase the country’s export marketplace. The Government of Papua New Guinea (GoPNG) endorses a fair, open, and collective approach in its decision-making processes, especially decisions concerning the proper management of the country’s resources and investment returns.
Under the Marape-Rosso administration, PNG aims at creating a conducive socio-economic environment for businesses to grow and flourish. Focusing efforts to build and maintain infrastructure, increase measures in safety and security, support strong regulatory practices, strengthen governance, and increase health and education access will aid in creating strong livelihoods and businesses. Current reforms are shrinking the high debt levels and foreign direct investment (FDI), especially in the natural resources sector, will stimulate the economy for many years.
The Marape-Rosso administration recognizes the high cost of logistical services, the breakdown of law and order, a cumbersome public sector, and poorly performing state-owned enterprises. “Friends to all, enemy to none,” is the administration’s rallying call to address these problems, as GoPNG regularly reaffirms its need for FDI and partnerships to stimulate its economy.
Australia was the top investing country in 2021, followed by Malaysia, the United States and China. In 2022 investment from China significantly increased. Much of the investment from China has been in Chinese-owned energy and infrastructure adding power generation to support Chinese-owned mining entities. By sector investments, the energy sector had the highest investments, and investment proposals, followed by the retail, and wholesale sectors, then manufacturing, mining and petroleum, and other sectors. Mining companies continue to see PNG as an attractive investment destination. Growth in mining industry is estimated to be 5.4 percent, underpinned by the expected reopening of the Porgera mine and improvements in OK Tedi and Wafi-Golpu production in 2023. Papua LNG enters the next phase of liquid natural gas commercialization that brings TotalEnergies, ExxonMobil, and Santos collaborating for years to come. Furthermore, telecommunication companies are also anticipating growth and seen as good foreign investment opportunities in PNG and the Pacific. Telstra Australia acquired telecommunication giant Digicel Pacific which has the largest market share in PNG. Vodafone PNG – Amalgamated Telecom Holdings Ltd started operations as the third mobile operator in PNG with an anticipated investment exceeding US$399 million.
The GoPNG recognizes the need for climate change action and has submitted its Enhanced National Determined Contributions (NDC). PNG’s proposed climate change mitigation, and adaptation strategies to achieve full carbon neutrality by 2050 are conditional. The GoPNG made climate change mitigation and adaptation strategies into its national long-term visions, plans, and strategies. As PNG is already beginning to see climate refugees on its shores, the climate change envoy at COP27, stressed, and leveraged preservation of the country’s rainforests and oceans for climate change action, and the need for economic development and sustainable FDI along these lines.
The economy has recovered from COVID-19 deficits but shipping cost, fuel fluctuations, and food insecurity are still major concerns as the Russian war of aggression in Ukraine still rages on.
To access the ICS, visit the U.S. Department of State Investment Climate Statement.