More than three-quarters (77%) of executives interviewed for the 2018 edition of the Business Barometer: Papua New Guinea CEO Survey expect the country’s chairmanship of APEC this year to have a positive impact on the local economy.
As part of its second annual survey on PNG, the global research and consultancy firm, Oxford Business Group (OBG), asked over 100 C-suite executives from across the country’s industries a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment. The results of the survey are now available to view in full on OBG’s Editors’ Blog at: https://oxfordbusinessgroup.com/blog/patrick-cooke/obg-business-baromete...
Most business leaders said they thought PNG’s year at the helm of APEC, which culminates in November’s major summit in Port Moresby, would produce a positive economic outcome, even though a number of challenges, such as the country’s foreign exchange shortage and high public debt, remain problematic.
In another sign of rising business confidence, over two-thirds (70%) of respondents said they expected their company to make a significant capital investment in the next 12 months.
Executives were cautiously optimistic on PNG’s growth prospects for 2018, with 67% telling OBG that they expected the country’s economy to expand by more than 2%, similar to levels reached last year and the IMF’s forecast of 2.9%, but slightly above the Asian Development Bank’s forecast of 1.8%.
However, the delays and frustration businesses face when trying to convert kina into foreign currency were also evident; stabilising the currency was cited as the most important factor for improving PNG’s attractiveness as an investment destination by the largest share (31%) of executives, ahead of the country’s regulatory framework and quality of infrastructure.
Unsurprisingly, given PNG’s pipeline of mining ventures and plans to further develop its liquefied natural gas project, the majority (67%) of interviewees told OBG they believed fluctuations in commodity prices represented the biggest external risk to the local economy. Significantly, a further 18% opted for a slowdown in China’s economy in response to this question, indicating the Asian giant’s growing influence in the region.
Commenting on the results in his blog, Patrick Cooke, OBG’s regional editor for Asia, said that while the enforced trading band for the kina looked set to remain in place, the feeling among business leaders surveyed was that national efforts to broaden the economic base were beginning to yield results.
“CEOs generally feel that the worst is now over and the economy is slowly improving, driven by concerted government efforts towards economic diversification and gradual improvements in commodity prices, which are expected to enhance the value of exports while making extractive projects more economically viable,” he said.
Turning to APEC 2018, Cooke said the opportunities associated with having the chairmanship for the forum extended well beyond the short-term benefits that hosting up to 20,000 visitors throughout the year were expected to generate.
“In the longer term, PNG can benefit from the international spotlight, showcasing its considerable hydrocarbons and mineral resources, abundance of fertile land and natural attractions largely untouched by outsiders,” he said. “Crucially, the government and private sector have a chance to build and strengthen trade relationships, expand access to regional value chains and take a leading role in vital discussions on issues such as digital transformation, which could help the country leapfrog in previously undeveloped areas of the economy.”
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 PNG will be made available online and in print. Similar studies are also under way in the other markets in which OBG operates.
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This survey has been designed to assess business sentiment amongst business leaders (Chief Executives or equivalent) and their outlook for the next 12 months. Unlike many surveys, the OBG Business Barometer is conducted by OBG staff on a face-to-face basis, across the full range of industries, company sizes and functional specialties. The results are anonymous.
OBG Business Barometer is based on data from companies with revenue within the following parameters, among others:
• 71% of companies surveyed were private
• 31% of companies surveyed were international
• 17% of companies surveyed were regional
• 52% of companies surveyed were local
