The curse of the tiger (pussycat) economy

JEFFREY MANE FEBI

THE ECONOMY OF PAPUA NEW GUINEA has been growing at an average 8% per year for a decade – supported mostly by increased demand for raw materials and their high market prices.

The immediate future appears likely to experience further growth albeit at a forecast slightly lower growth rate until 2014.

Of late some commentators have found it fitting to brand the PNG economy a ‘tiger economy’; once a brand that the PNG nation could only wish for.

And many citizens might have smiled and, of course, bragged a bit about how we’ve grown and how good our future prospects seem.

PNG has to a certain degree, succeeded in changing perceptions and, apart from traditional partners, now appears to be romancing new, big players in the Asia-Pacific region.

How long this continues is anyone’s guess, but one thing’s for certain: there’s virtually almost nothing tangible on the ground to show as evidence for a decade of economic growth.

So there’s a question begging to be answered: Is Papua New Guinea really a tiger economy?

The phrase ‘tiger economy’ is used to define any economy that has continually experienced economic growth through its trade and industry sectors and as well as improvements in living standards of its citizens.

PNG has experienced economic growth but has this been replicated in other sectors such as education, health, infrastructure and manufacturing – the very sectors that enable citizens to improve their living standards?

Isn’t the elementary reason for a country seeking economic growth the ‘improvement of living standards and prosperity’ for its citizens? How could PNG be a tiger economy when its citizens are still living on the edges?

This ‘tiger economy’ branding may invoke images of improving education and health services, a burgeoning manufacturing (downstream processing) sector, and so on.

But these aren’t happening in PNG, although we seem to have succeeded in fooling people outside and even ourselves that they are.

It is highly likely PNG citizens will have developed illusions as to true state of the economy thus allowing the government and its thinkers to take a rather more laid-back approached towards fixing our many problems.

Although it has achieved sustained economic growth for a decade, PNG hasn’t reached that stage yet when it can be called a tiger economy. Some other name, maybe to use Tony Flynn’s ‘pussycat economy’, might fit well.

Remember the Asian economic meltdown; where the Asian tiger economies were brought to their knees. However, they were able to quickly bounce back, due partly to their solid manufacturing, education and health sectors which they had developed during happier days.

If PNG is to experience a meltdown or slowing down due to a downturn in demand for our raw materials, huge debt-servicing expenses and an inequitable distribution of wealth, what sector is there to aid PNG’s speedy recovery?

PNG needs to first build, rebuild and strengthen its appalling self.

Jeff Febi is a writer and poet. You can read more @ http://jefebi-whispers.blogspot.com or http://febijefwhispers.wordpress.com

Comments

[Joe Wasia]

Great piece there Jeff. I'm totally agreeing with you. Nothing to show on the ground.

PNG has potential to be a tiger but the chronic attitude problem and corruption are great concerns.

[Tony Flynn]

Our main roads managers are quite hopeless. The roads are useless due to overloading. They cannot even instal and maintain such basic apparatus as weighbridges at Lae and Goroka.

Overloaded vehicles are the norm. I do not have to be an engineer to understand what happens to the road structure when a heavy truck hits a pot hole at high speed.

There is no policy to employ locals to take ownership of paid maintenance of sections of the highway utilising dumps of good quality filling.

We, the travelling public, are the paymasters for groups who clear the road unofficially. Hand labour is the way to go for small repairs (a stitch in time saves nine!).

Bring back properly supervised road masters. I do not complain about K5/10 to get home, waiting for the government would get me exactly nowhere.

[Jeff Febi]

Thanks David!

[David Kitchnoge]

Jeff - I think there were both external (high commodity prices, etc) as well as internal (deliberate focus on the extractive industry) factors at play resulting in the sexy growth numbers being bandied around.

We can not control external factors but our economic focus (internal) must now turn away from the extractive industry and be placed firmly on agriculture and SMEs as you rightly said.

Addressing access issues for our people is also crucial. I hope a good proportion of the K6bn Chinese loan gets spent on infrastructures closer to our people in the districts and not totally on the main highlands highway and Moresby.

[Jeff Febi]

I believe the factors that incited and advanced economic growth for PNG over the past decade are external, which PNG has no control over.

The sooner PNG realises this and works quickly towards developing and strengthening small to emdium enterprises, including in the agriculture sector, the better we will be able to absorb shocks.

[Michael Dom]

"And this is where the real challenge is for PNG:

"Effective oversight of economic growth and the management, distribution and investment of its benefits over an extended period of time into priority areas based on long-term objectives with the mistakes of the past in mind.

It's harder than it sounds."

I disagree - the only thing that seems hard to get to is the political will, leadership and cooperation to get PNG into the best possible situation.

Tiger, pussy cat, what have you. Out in the sticks I'm tired of watching my people suffer and struggle while we come up with convenient excuses for our failings.

[David Kitchnoge]

Thanks Jeff - well expressed.

Unless we quickly turn around and focus on building up from the ground level (a.k.a micro economy), we have no chance of becoming a tiger any time soon.

The so called tiger is only warming the seat for a rat (not even a pussycat) which will come out and wreak havoc once all the fake glory of the tiger (a.k.a macro economy) disappears.

Builders don’t build from the roof down. Only in PNG.

[Tavurvur]

The recently held Business Advantage Conference in Port Moresby branded PNG as the "Pacific's Tiger Economy".

This is the context that must be remembered when bandying around the term "Tiger Economy".

To compare PNG to the Tiger Economies of Asia as we stand today - particularly around living standards - is unfair.

But comparatively - particularly when looking at the beginning of each of our economic growth cycles - the similarities are clear.

Tiger Economies began their transformations starting off with exceptionally high growth rates (in excess of 7%) for close to three decades.

PNG has managed to replicate that (via differing economic strategies) for one decade thus far - which is a positive sign.

The living standards of these Tiger Economies did not develop to their world-class levels today over the first decade. No - it took almost three decades (1960s-90s) before they were beginning to be accepted as being world-class.

It is also important to note that to imply that the past 37 years have been economically dismal for PNG is not true.

We have the past decade of positive growth, but we also forget the solid years 1975-80, which prompted the late Sir John Crawford to comment that PNG was running the country so well on all fronts that he could see nowhere it could go except down.

And it did indeed go downhill from 1980-2000; But the years 1975-80, and 2000-12 shows us that it is achievable.

In today's globalised world, economic growth and the improvement of living standards and quality of life are mutually dependent - but not exclusive.

There is no doubt that economic growth spurs improvement in these areas, and is probably the most effecitive tool in doing so.

Such criticisms of the benefits of economic growth and tangible returns are not new - they are expected - but it must remembered that Rome wasn't built in a day.

And this is where the real challenge is for PNG: Effective oversight of economic growth and the management, distribution and investment of its benefits over an extended period of time into priority areas based on long-term objectives with the mistakes of the past in mind.

It's harder than it sounds.

Is PNG the Pacific's Tiger Economy? Yes. Is PNG a Tiger Economy like that of SE Asia? No. Does PNG have the potential to be one? Yes. Is PNG a "mangy old tabby cat"? No. That's Eastern Europe. PNG is a Tiger Cub.

[Michael Dom]

Jeffrey, I admire the clarity in this article. Thank you so much and well done!

[Mrs Barbara Short]

It is obvious that the members of the PNG parliament over the past 35 years have not had any understanding of the country's basic "Economic Problem".

The country has obviously been exploited for its wealth.

The only way for the country to move forward is for its people to be educated and kept healthy and to be able to produce goods and services for the good of the nation.

The land, labour force, capital goods supply (roads, harbours, airports, etc) and the skills of the PNG people at organising and showing enterprise, all have to be continually improved, with the aid of the money from the royalties from the export of all the minerals, oil and gas that lie beneath the soil of PNG.

If the country borrows money it also must be invested in these things. Not in beer for the voters, posh houses, world trips, land in Cairns, posh cars, or whatever! That is called greed and corruption.

Thank you Jeffrey Febi for this excellent summing up of the situation.