What signs of recovery are experienced business leaders looking for in Papua New Guinea?

Lae Port. Credit: Steamships

Alan McLay, President of the Lae Chamber of Commerce, says early signs of recovery in Lae are: good numbers of shoppers in stores, a wide range of products on store shelves, fewer lay-offs of workers and more building activity.

Lae Chamber of Commerce’s Alan McLay

‘The first noticeable thing with the downturn of business was the range of goods decreased, as the foreign exchange tightened,’ he tells Business Advantage PNG. ‘The shelves are returning to being full, with a better range of goods than a few months ago. Lae City is full of people and I estimate a good number are genuine shoppers.
‘I haven’t heard of companies laying off workers, so maybe this is a positive indication. Or it could be that all the cost cutting has been done and now companies are stronger.’


McLay says there has been an increase in the number of buildings being built in Morobe. ‘There was nothing too big but numbers are up for sure.’

‘There seems to be no urgency shown by PNG Ports to get the new tidal basin operating to capacity.’
He says road projects, however, ‘have reduced to nil, except for the reconstruction of the Butibum Road, a small Morobe Provincial Government project.’
McLay adds that many road contractors, whose numbers ‘built up when the concrete roads were being done, are either not working’, have closed or have moved on.
Another important indicator is the level of activity in Lae Port. ‘There seems to be no urgency shown by PNG Ports to get the new tidal basin operating to capacity. This is an indication that imports are down, and there is no real increase in exports.’

According to one chief executive, signs in the construction industry are not especially positive. He said one important indicator is the number of bid registers: how many open tenders are listed, projects lost to others, projects pending award (and for how long), and projects won.
‘Unfortunately, I don’t see any signs of recovery at this time.’
‘In the current climate, projects pending award is high—some of which have been scrapped or postponed. And the percentage of projects awarded in comparison to past years is lower for most contractors,’ he told us.

Construction workers. Source: Anitua

‘Again, from a construction perspective,”ready-mix” concrete producers and major cement importers such as Taiheiyo and Longfa would provide an insight to raising or falling activity.
‘Another indicator would be revenue tonne data by the public ports (import volumes). Obviously, a steady increase would indicate recovery in certain sectors.
‘Unfortunately, I don’t see any signs of recovery at this time. That said, our business has certain dynamics that insulate us from the broader PNG economy which balance out areas of the business that are effected.’

According to one chief executive of an agriculture company, the signs are mixed. He says for agricultural exporters, 2017 is ‘looking like a good year’ compared with 2016. ‘Crop volumes and prices are up and year-to-date profit is better than forecast,’ he says.
”The money being spent as part of the APEC preparations is ridiculous given the state of health and education.’
The situation for importers has not improved, however. ‘There are still very long delays in obtaining foreign exchange.’

PNG agriculture. Credit: Hope

He cites many examples that indicate the economy is still under stress. These include: the Department of Works in West New Britain having no funds for road maintenance, a decline in the allocation of funds to schools per student, ‘unsatisfactory’ supply of drugs to health facilities and a lack of some medical supplies.
‘Whilst there may be some signs of recovery for the export sector, importers are struggling.’
In the second part of the series, we will talk to experienced business leaders in the finance, manufacturing and food sectors.

Copyright © 2017 Business Advantage International.

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