Wooing PNG in right earnest
Australia and New Zealand’s
relationships with Pacific Island nations historically seem to have been
divvied along the two main sub regions of Melanesia and Polynesia. The possible
exception is Fiji, where both the Anzac nations have had more or less the same
level of involvement. Perhaps it has to do with Fiji’s acknowledged status as
the gateway to the region – the doorway to both Melanesia and Polynesia.
Geographically, too, Australia is
closer to the Melanesian nations of Papua New Guinea, the Solomon Islands and
Vanuatu while New Zealand’s proximity is to such Polynesian countries as Tonga,
Samoa, Niue, Tuvalu and the Cook Islands besides others. These old historical
and geographical relationships along sub regional lines have carried on into
the modern era with political, business and people to people relationships
having developed along these very lines.
Small wonder, then, that Auckland
is known as the world’s largest Polynesian city, which also hosts the world’s
largest Polynesian festival every year in February. Australia, though, does not
have as representative a population of Melanesian people as Auckland does
Polynesians but Australian engagement in business and investment terms in
Melanesia greatly outstrips similar engagement of New Zealand in Polynesia.
But the sheer force and pace of
development in some Melanesian nations is beginning to change that. The entire
region appears to have realised that you ignore the rapid developments
happening in countries like Papua New Guinea at your own risk. Australia has
long jumped on the bandwagon and over the past two years New Zealand has taken
tentative steps with at least half a dozen trade missions to the region’s
fastest growing economy.
This desire to get a piece of the
action in PNG is not restricted to just Australia and New Zealand in the
region. The Melanesian Spearhead Group (MSG) member nations have organised
themselves to strengthen trade and investment ties and are meeting frequently
with a view to grow into a common market in the not too distant future. (And it
doesn’t end there: reports are doing the rounds that Polynesian countries like
Samoa and Tonga have expressed desire to be a part of the newly conceived trade
bloc in a suitable shape and form.)
Last month New Zealand businesses
launched a substantial trade mission, reportedly the fifth in two years, to
PNG. A team comprising some 30 delegates under the aegis of the New Zealand
Papua New Guinea Business Council, New Zealand Trade and Enterprise and the New
Zealand Government’s Ministry of Foreign Affairs and Trade toured the MSG flag
bearer for a week.
New Zealand is rightly eyeing the
big opportunities in the infrastructure sector that are becoming available
around increased inward investment in core sector projects such as
petrochemical and mineral prospecting. While Australia has concentrated within
the core sector proper given its background and vast experience at home, New
Zealand seems to be looking at infrastructural ancillaries – something which it
has made a success of around the Pacific building ports, wharves, marinas,
roads, bridges and other infrastructure.
Michael Greenslade, Pacific Trade
Commissioner for NZTE, who also did a stint a few years ago in Fiji said, “The
challenge that PNG has is that its infrastructure is poor. The opportunity for
New Zealand companies is to not only assist in the exploitation of natural
resources, but also to build the infrastructure that is necessary for that
exploitation.”
Identifying opportunities for
Kiwi infrastructure and retail companies, Mr Greenslade added, “The
professional classes are growing in Port Moresby, as is the need for housing;
the need for first-class hotels is growing, as is the need for better and more
up-to-date supermarkets. You’ve got the opportunities around supply of water,
the processing of waste water, and you’ve also got opportunities around the
development of an energy grid.”
PNG has become a magnet for
regional and international events. In 2015 it will host both the Pacific Games
and the APEC (Asia Pacific Economic Cooperation) Summit, bringing a host of
opportunities for New Zealand companies to help with building infrastructure in
what is widely acknowledged as being their forte.
The trade delegation engaged with
several industries and businesses across the board to further opportunities for
New Zealand businesses in the fast growing PNG economy.
But it will be awhile before
there is any appreciable boost in exports from New Zealand into PNG. Though it
is the Pacific island region’s biggest market both in terms of GDP and
population, New Zealand does far more trade with Fiji than with PNG. As well as
having been out of sight, out of mind for all these decades, political and
business engagement between the two countries has not been anywhere at the
level at which PNG’s relationship with Australia is. New Zealand’s annual
assistance to PNG is NZ$35 million, relatively small beef in the bigger scheme
of things that PNG is eyeing.
For instance, Australia already
has a double tax avoidance treaty in place, which isn’t yet the case with New
Zealand. Though such a treaty has been signed, it is yet to be implemented by
Port Moresby at the PNG end of the deal. Diplomatic efforts are afoot to get on
with matter as early as possible. The slow pace of implementation at the PNG
end is perhaps symptomatic of the relatively low importance that PNG accords to
New Zealand while being wooed relentlessly by global mining giants and its far
closer and much bigger Asian neighbours. In the meantime, New Zealand companies
find themselves at a disadvantage competing with Australian companies because
of the double taxation.
Besides, New Zealand companies
have a long way to go before getting acclimatised to PNG’s rather challenging
realities such as seemingly ever widening wealth disparities, widespread
bureaucratic graft, not to speak of the widely perceived issues of law and
order that are ready grist for the mill in New Zealand’s domestic media.
But it is better late than never.
Aligning itself more closely to countries of the emerging MSG trade bloc makes
eminent sense for New Zealand in shoring up its diminishing footprint in the
Pacific Islands region in recent years.
First appeared in Islands Business magazine
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