More than three-quarters (76 percent) of the executives interviewed for the 2019 edition of the Business Barometer: Papua New Guinea CEO Survey, expect the long-term economic impact of APEC 2018 to be positive or very positive.
Carried out by the Oxford Business Group (OBG), the executives expected the long-term economic impact of APEC 2018 to be positive or very positive, indicating hopes are high among decision makers that the country’s year as chair of the inter-governmental forum will boost both regional trade and inward investment.
As part of its survey to gauge business sentiment, the global research and advisory firm asked some 100 C-suite executives from across PNG’s industries a wide-ranging series of questions on a face-to-face basis.
When asked what they felt the government’s primary target should be for the coming 12 months, however, executives gave more varied responses, in a sign that the new administration of Prime Minister James Marape faces a number of challenges that are both pressing and complex.
Solving the foreign currency shortage was seen as the top priority by a relative majority (31 percent) of respondents, mirroring the percentage in our 2018 survey, despite concerted efforts by the central bank to improve liquidity in the foreign exchange (FX) market. Infrastructure development came second and improving health and education placed a close third, chosen by 21 percent and 20 percent of interviewees, respectively.
The prolonged FX shortage, combined with political uncertainty, might have slightly dampened investor sentiment, OBG’s survey suggested, with less than two-thirds (65 percent) of respondents indicating that their firm was likely or very likely to make a significant capital investment in the short term, down from 70 percent in OBG’s 2018 survey.
Skills gaps in the local workforce were another area of concern for business leaders surveyed, many of whom feel compelled to invest in hiring foreign personnel to oversee key elements of projects. Asked to identify the skill most in need among the local workforce, a sizeable majority (59 percent) selected leadership, well ahead of engineering and customer service, which placed second and third respectively.
Commenting in his blog, Patrick Cooke, OBG’s Regional Editor for Asia-Pacific, said while the foreign currency shortage remained problematic for the new administration of Prime Minister Marape, signs of improvement were now evident.
“With the government raising $500m in its debut sovereign bond issuance, the authorities have begun making progress in clearing the backlog of FX orders, and an improved export performance in the extractive industries is supporting their efforts,” he said. “Over the longer term, continued efforts to diversify the economy, lower import dependency and encourage more onshore processing in the agriculture, fisheries and forestry industries should help bring further stability to the FX market.”
Cooke noted that policymakers looking to address significant gaps in infrastructure and social services faced a unique set of challenges in the form of PNG’s vast size, mountainous and heavily forested terrain, and low population density. He added, however, that the capital Port Moresby had benefitted from accelerated infrastructure development in recent years, galvanised by PNG’s chairmanship of APEC in 2018.
“The hope now is that PNG’s year in the APEC spotlight will translate into mutually beneficial trade and investment relationships with the region’s major powers,” he said. “This in turn could help PNG address its not inconsiderable development challenges, in order to capitalise on its wealth of natural resources and promote inclusive and sustainable growth.”
Cooke’s in-depth evaluation of the survey’s results can be found on OBG’s Editor’s Blog, titled ‘Next Frontier’. All four of OBG’s regional managing editors use the platform to share their expert analysis of the latest developments taking place across the sectors of the 30+ high-growth markets covered by the company’s research.
The OBG Business Barometer: CEO Surveys features in the Group’s extensive portfolio of research tools. The full results of the survey on Papua New Guinea will be made available online and in print. Similar studies are also under way in the other markets in which OBG operates.