The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Papua New Guinea (PNG) is the largest economy among the Pacific Islands and offers enormous trade and investment potential. Key investment prospects are in infrastructure development, a growing urban-based middle-class market, abundant natural resources in mining, oil and gas, forestry, and fisheries.
Under the banner of “Take-Back PNG,” Prime Minister James Marape’s government endorsed a fair, open, and collective approach in its decision-making processes, especially decisions concerning the proper management of the country’s resources and investment returns.
Under Marape, PNG reaffirmed its openness to trade and investment, is stepping up reforms to recover from high debt levels and seeks to attract more foreign direct investment (FDI), especially in the natural resources sector to stimulate its economy.
Since taking office, the Marape Administration – despite being comprised of many of the same officials as the prior O’Neill Administration – blamed the O’Neill Government for the country’s poor fiscal regime, lack of infrastructure development, the high cost of logistical services, the breakdown of law and order, a cumbersome public sector, and poorly performing state-owned enterprises. To address these problems, the government regularly reaffirmed its need for FDI to stimulate its economy, announced a fiscal stimulus package which supports funding for local business to aid PNG’s economic recovery.
The country has faced dwindling FDI compared to pre-COVID-19 years, however investments increased at the start of 2021. Business confidence increased in 2022 sparked by renewed interest in PNG and evidenced by several key mergers and acquisitions in late 2021. Mining companies continue to be an attractive investment destination. Growth in mining industry is estimated to be 5.4%, underpinned by the expected reopening of the Porgera mine and improvements in OK Tedi and Wafi Golpu production in 2022. Furthermore, telecommunication companies are also anticipating growth and seen as good foreign investment opportunities in PNG and the Pacific. Telstra Australia acquired telecommunication giant Digicel Pacific which has the largest market share in PNG. Vodafone PNG – Amalgamated Telecom Holdings Ltd which operates across Fiji, Western Samoa, American Samoa, Kiribati, Cook Island and Vanuatu started operations as the third mobile operator in PNG with an anticipated investment exceeding US $399 million. Australia was the top investing country in 2021, followed by Malaysia, the USA, Hong Kong, and the PRC. By sector investments, the energy sector had the highest investments, and investment proposals, followed by the retail, and wholesale sector, then manufacturing, mining and petroleum, and other sectors; despite recording increase in investments.
The government recognizes the need for climate change action and has submitted its Enhanced National Determined Contributions (NDC). PNG’s proposed climate change mitigation, and adaptation strategies to achieve full carbon neutrality by 2050 are conditionally. The government has mainstreamed climate change mitigation and adaptation strategies into its national long-term visions, plans, and strategies. PNG’s climate change envoy at the COP26, stressed, and leveraged preservation of the country’s rainforests for climate change action, and the need for economic development and sustainable FDI along these lines.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.