MAN-MADE constraints to business are the real obstacles to business development in Papua New Guinea, according to Dr Charles Yala, Director of the National Research Institute.
In an address to an Australia-PNG Alumni Conference, Dr Yala said the country’s leaders need to “think outside the box and harness our natural beauty and landscape”.
The exploitation of PNG’s abundant natural resources, namely minerals, oil and gas, have not transformed the nation as we have wanted, Dr Yala said.
“I have described this paradox in some of my earlier writings as: ‘the petro-oil-gas dollars disappearing into thin air, leaving behind an impoverished nation.’
“The entry point into PNG for foreign investors is often prohibitive right from the start.
“It begins with high cost and infrequent flights into PNG and there are exorbitant costs for hotel accommodation, transportation, food, and basic communication.
Dr Yala said a small room with poor electricity, no internet and unreliable water in a run-down guest house in a provincial capital town in PNG is often more expensive than a five-star hotel room in Bangkok, Jakarta, or Manila.
He said investment is further constrained by access to land with secure titles and tenure, and reliable utilities such as water, sewerage, and electricity.
There is also the burden of an unreliable and fragmented transport network, whether road, sea or air.
The system of government facilitating businesses is also largely broken. It is a final nail in the coffin for many start-up foreign and national businesses.
“From an economic point of view, it becomes clear that these costs result in a bias in favour of large scale businesses which can afford to absorb them during start-up,” Dr Yala said.
“The implication is clear. You have to be a large enough business with the scale to overcome the costs imposed on business by the man-made problems of investing in PNG.
“The man-made constraints, which are largely reflected in the broken systems and processes of government, are in my mind the real barriers to PNG private sector development,” he said.
“Unless and until we appreciate this, our resources dollars: mineral, petro-gas, fisheries and forestry, will disappear into thin air leaving behind an impoverished nation with a struggling and under-developed private sector.”
Dr Yala suggested the creation of growth centres across PNG, with each linked to a network of transport infrastructure within the country and with Asia, Australia and New Zealand.