NEXT year promises to be a year that will redefine Papua New Guinea’s history and place within the Pacific region and the global economy.
Already PNG’s growing influence in the region is attracting attention from some of the world’s largest economies. The government for its part has already lined up a series of events to showcase to the world the new PNG it is planning to hatch in 2015.
The government is hoping to portray an image of a nation that is well and truly in the midst of an economic revolution.
The biggest project in its short history as a nation, the PNG LNG project, is forecast to bump up the GDP growth to 21% annually.
PNG’s rise has come at a time when much of the developed world is still getting over the impact of the recession of 2008. That PNG, a developing country, avoided a similar fate was a great achievement.
Subsequently, PNG is at a threshold of being inducted into the exclusive club of nations that has experienced a phenomenal economic growth rate. This is a major feat for a country that has been for many years plagued with so many lost opportunities as a result of economic mismanagement by previous governments.
Hoping to elevate PNG’s image and prestige, the government is pumping in millions of kina to build and upgrade facilities for next year’s Pacific Games in Port Moresby.
In addition, the government has been successful in its bid to host the 46th Pacific Islands Forum in Port Moresby in 2015 and facilitated Dame Meg Taylor’s election to the post of Forum secretary-general.
And all of these will set the stage for PNG’s hosting of the APEC Summit in 2018, a first for any Pacific island country.
2015 is also an important time for the government of PNG to reflect and chart the nation’s future through developing appropriate plans and policies. The first five year development plan (2011-2015) will come to an end and be reviewed.
This review is essential in mapping out the next plan. Key economic sectors will come under the microscope and strategies will be identified to improve their performance.
One area that needs urgent government support is the informal economy. In the current plan, the informal economy is seen as a sector, a subset of the urban economy that does not involve agriculture related activities.
That definition will have to change given that National Informal Economy Policy 2011-2015 has defined the informal economy as an important aspect of the entire PNG economic system as it covers all economic sectors as well as being very much alive in the rural areas of PNG.
Thus the policy has replaced the word “sector” with “economy” in an attempt to not only reflect the diversity and complexity of the activities within the sector but its size and magnitude in terms of number of people and its output.
Defining the informal economy as a sector could be a strategic approach towards addressing the issues that plague its growth. It is also important to understand that every sector of the economy whether agriculture, horticulture, manufacturing, construction and so forth has an informal aspect to it.
Each aspect of the informal economy has its own issues, constraints and limitations while some of the issues - such as financial inclusion and financial literacy - cut across sectors.
The government should embrace the National Informal Economy Policy and reflect its aspirations in the mid-term development plan review.
The informal economy, although is huge in terms of the number of people that participate in it, is very fragmented with limited or no economies of scale.
Therefore graduating informal economy participants into the SME (small to medium sized enterprise) sector is a huge challenge for government. This is the reason why the government needs to nurture and grow the informal economy so it has the capacity to transit to the SME sector.
Without this, the economy of PNG will be heavily dependent on the resource sector for a long time to come.