PNG has become the prime real estate in the big geopolitical rivalry in the Pacific.
In a short span of time, the prime ministers of India and Australia, the presidents of Indonesia and France, US Secretary of State and Secretary of Defence, and Chinese envoys have all paid visits to PNG. Even the Pacific leaders descended on Port Moresby when Biden’s now cancelled visit was announced.
Why is PNG a very important piece of real estate in the region?
Four factors:
Geographical location in the Pacific
PNG is the buffer between the formerly communist part of the world, which turned to authoritarianism and now having mixed successes with democracy – the Asian region – and democracies of New Zealand and Australia.
PNG is also geostrategically located between the largest Muslim country in the world in Indonesia, the quintessential enemy of the West in China, and a irrational nuclear loving dictator up north in the Korean Peninsula.
World War II has shown that in a war that involves an Asian country and the West, the battle will be won or lost on PNG soil.
PNG was the buffer between Asian and Southeast Asian countries that fell to the communist dominio effect.
And with the perception that terrorism is associated with the Muslim religion, PNG becomes important in containing Indonesia, the world’s largest Muslim population.
PNG’s leadership in the Pacific
Apart from Fiji, PNG is the most dominant player in the Pacific islands regional institutions. PNG is is the Big Brother among the Melanesian Spearhead Group (MSG). PNG is is a very influential member of the Pacific Islands Forum. To gain regional influence, every country that is interested in the Pacific are courting PNG.
Multinational Companies
PNG’s natural resources attracts established multinational companies from ExxonMobil to Total. Countries investing in PNG include US, Australia, China, France, Japan, and many more.
If for nothing, these world superpowers would still be interested in PNG because of their companies’ investments.
Poor and weak
Despite its rich natural resource endowments, PNG is poor, and has weak institutions. Due to the extractive and enclave nature of the resource companies, most of the proceeds of these mines and LNG companies are siphoned out of the country, leaving the populace to fight over fragments.
It’s weak institutions makes it vulnerable to exploitation.
The foreign powers then offer PNG resources and support that are irresistible. China offers loans, US provides resources to monitor PNG maritime borders against transnational crimes and illegal fishing. Australia and IMF provide grants and further loans.
For everything these superpowers give to PNG, it comes with conditions that advances their interests.
Intertwined: Geopolitics, access, commercial
So why are powerful countries interested in the PNG?
The answer would be: a combination of all the factors listed above. China wants to get a strong foothold in the Pacific. PNG’s geographical position, it’s influence among the Pacific island countries, and it’s vast population makes it the most important Pacific country. The United States, Australia, New Zealand, France and Japan are all interested in PNG for the same reason. Gaining access to a geostrategically important piece of real estate.
It’s also commercial. PNG has massive natural resources. LNG is becoming the more important since the Russian invasion of Ukraine caused fuel prices to skyrocket, but also with the emphasis on moving away from coal and oil. LNG has relatively less carbon emissions than oil and coal.
The opportunity to gain access in PNG presents itself in the form of a poor nation with vulnerable institutions and weak capabilities needing help.
Many have criticised a recent post on the awarding the PNG VC trophy to Unitech without a finals being played. But the main message of the post was how rules are bent in PNG at their convenience, and then rationalised after the fact. Sadly many missed the main message. So here’s another example of bending the rules in PNG:
Last month the Constitutional Law Reform Commission (CLRC) completed a nationwide consultation gauging views on whether the prime minister should be elected directly by the people as in a presidential system. The directive to do this came from the national government.
Why the need to change the current system?
Because the government thinks that the unicameral parliamentary system is “not working”?
The obvious question therefore is: is the current parliamentary system not working for PNG because it’s a bad system, or because PNG is not using the parliamentary system as it is supposed to be used?
The latter is true. You see, in a parliamentary system elsewhere, the politicians (MPs) are lawmakers. They are NOT service deliverers! In PNG, MPs are both lawmakers and service deliverers.
Why does this dual role matter?
Because MPs are more concerned with their service delivery roles whilst their lawmaking responsibilities suffer. In 2020, 500kg of cocaine was discovered on the outskirts of Port Moresby when the plane carrying it crashed. The pilot and those involved couldn’t be charged because cocaine at the time was not regarded an “illicit drug” by PNG’s Drug Act 1954. Imagine having a law that was outdated by more than half a century.
A year later, meth was discovered. Again, the person producing it couldn’t be charged because the Drug Act 1954 didn’t recognise meth as an illicit drug.
It gets worse: we have 370 laws in PNG, according to CLRC, that are outdated by more than half a century, and of no practical use.
Whose role is it to update these laws? Your politicians.
Why aren’t they updating it? Because they are busy delivering services.
Is delivering services the MPs role? NO
Who gave MPs the additional service delivery role? The MPs themselves. They amended the organic law in 1995, and then created the District Development Act in 2014, to make themselves service deliverers.
About K1. 5 billion is given to these MPs to deliver services. K10 million to Open MPs every year, and K5 million times the number of Districts to the Governors. These funds are commonly known in PNG as DSIP/PSIP funds.
How is the service delivery in your provinces now that your MPs are controlling more than a billion Kina?
The Auditor General this year said only 40% of the MPs submitted acquittals for the millions they spend the year before. The rest didn’t. And even for those who acquitted, we have not idea whether projects were actually implemented.
You see your MPs switching from one side of the parliament to another. Why do they do this? Because they want to be on the side of the government, which controls the DSIP/PSIP.
Your MPs have no interest in making laws, providing representation in parliament, or holding the government accountable. They made themselves services deliverers, and instead of making laws, they pride themselves in delivering services. With very low to no accountability, they spend millions through DSIP/PSIP. When they don’t have enough, they borrow and plunge the country into more debt. To get the loans, the give into conditions set by the institutions offering these loans, like the IMF.
So if you’re supporting “bending of rules” or “bending of accepted norms and conventions”, you should be happy with:
Kina devaluation
uncontrollable debts
Lack of service delivery
corrupt MPs misusing funds
outdated laws
escalating crime
The parliamentary system is not working because it’s conventions are not being followed. Now the government wants a presidential style of electing your prime minister? Nothing will stop the presidential styled prime minister from bending more rules now that he is not subject to a vote of no confidence.
We shouldn’t condone bending of rules and conventions. Whether it’s traffic rules, VC’s CUP finals, or what the role of the MPs should be.
We have a tendency to bend the rules, and when it doesn’t work, we say it was introduced by the white man. And then we bend the new system we adopt, and when it doesn’t work we blame the consultants who advised us.
We are a country that refuses to accept accountability. We rationalise our way out of every mess. We support our tribes and schools and communities against the most basic and illogical mistakes.
This country is being plundered not by foreigners (if foreigners are involved, it’s with the permission of rule bending Papua New Guineans), but by its own citizens who have no regard for rules and conventions. This country is in a mess because everyone from politicians to the streets bend the rules.
The Stanley Hotel in Port Moresby advertised that they would be holding a ‘walk-in’ interview for about 100 positions. More than 2000 showed up for the interview in early February 2023, and stood in line for hours soaked in the pouring rain. This comes after about 20, 000 applied for just 576 positions advertised by the PNG Police Department at the end of 2022. PNG SEEKJOB website, an online recruitment portal reports that 86, 262 applicants have registered for just 213 jobs advertised, and the site has 110, 000 visits per month. These statistics gives a snap-shot of the level of unemployment in a country of about nine million. What consequences lie ahead is anybody’s guess, but definitely not a good one. The PNG Trade Union Congress President called the unemployment rate a “ticking time bomb.’
Whereas the private sector is the largest employer in many countries, in PNG, the state is the major employer. The state employs about 700, 000 people, whilst the private sector employs an estimated 260, 000 people (2020 estimates). The troubling news is that not only are there limited employment opportunities: there are more and more people losing their jobs as this study shows. Period for which data is available shows that there were about 305, 000 people employed in the private formal sector in 2013, but dropped to about 260, 000 in 2020. As Figure 1 below shows, this drop started before COVID-19, so COVID-19 is not the sole reason for unemployment.
The problem in PNG is threefold: first, the government focuses more on the mineral and extractive sector which provides minimum employment opportunities; second, the business environment in PNG has deteriorated significantly; and third, the COVID-19 has stunned economic growth world-wide – PNG is no exception. Below we look at each point.
Mineral sector = low employment
According to World Bank data, Papua New Guinea is the tenth most resource intensive economy in the world. Guys from Devpolicy say that “measure of underground resource rents (profits from oil, gas, coal and minerals) as a percentage of GDP, out of 205 countries puts PNG tenth at 19.3%, just below Saudi Arabia at 20%. By comparison, the global average is only 1.5%.” PNG’s economy relies on extractive industries (PNG LNG, OK Tedi etc).
Why is this a problem for PNG?
This is a problem because the resource sector employs less people than manufacturing and service sectors. Case in point is the PNG Exxon Mobil Project. According to its website, PNG Exxon Mobil, a LNG company, employs around 3,200 people, 86 percent are Papua New Guineans. Exxon Mobil’s market cap is $460 billion or K1, 643 billion.
East New Britain Oil Pam Company (ENBPO), on the other hand, employs 25, 000 people, of which only 106 are expatriates – the rest are Papua New Guineans. How much ENBPO is worth is not known, but there was a K4.319 billion bid to buy the company in 2014. This amount was the market value or how much ENBPO was worth at the time. ENBPO engages in planting and manufacturing Palm Oil products in PNG.
As these two cases show, ENBPO Company employs about seven (7) times more Papua New Guineans than Exxon Mobil. Exxon Mobil, whose worth is about 410 times bigger than ENBPO employs less people.
Why are the differences in employment so big?
Because Exxon Mobil is a company that requires more machines to do its drilling and other related jobs, whilst ENBPO needs more humans to do every things from planting, and harvesting to manufacturing. These manufacturing companies are low-skilled and labour intensive. This simply means they employ people with low education, and need more people than machinery to do the work.
Another manufacturing sector that employs many Papua New Guineans is the tuna canneries. The seven tuna canneries in PNG employ more than 10, 000 people.
The obsession of PNG politicians with minerals companies means there is more focus on the sector (mineral resource sector) that employ less people. The neglect of manufacturing companies means the sector (manufacturing) that present the highest employment opportunities in PNG is neglected. Worse still, tax holidays given to mineral companies results in low revenues coming into the state coffers. The services sector such as tourism is also labour intensive, and provides more employment than the mineral sector.
Poor Business Environment
The second factor is the poor business environment in PNG. The World Bank used to produce an annual survey on the “ease of doing business” where it ranked 190 countries based on how easy it was to start and sustain small to medium enterprises or SMEs (was discontinued since 2020 after revelations that WB manipulated data for China to make it look good). The last report on PNG was published in 2020, and can be accessed on World Bank website. There are 11 indicators, and a country is ranked out of 190 – with number 1 being the best. By 2020, PNG ranked in the top 50s in only one indicator – getting credit – where it ranked 47 out of 190, whilst the worst was enforcing contract, where it ranked 173 out of 190. Overall, PNG ranked 120 out of 190. Any aspiring entrepreneur or SME owner will tell you how hard it is to meet the requirements of starting a business in PNG.
An important consideration for businesses that the Work Bank report did not sufficiently cover is the debilitating law and order problems in PNG. According to World Population Review, PNG ranks second in the world index of countries with the highest crime rate in 2023. Overall crime rate is calculated by dividing the total number of reported crimes of any kind by the total population, then multiplying the result by 100,000 (because crime rate is typically reported as X number of crimes per 100,000 people). Only Venezuela beats PNG in the number one position. With a crime rate like this, businesses, especially foreign companies, will not invest in PNG. No investment means no jobs.
Other constraints include poor government policies such as currency rationing. Case in point of such policies is the Puma-Bank of PNG-Air Niugini saga in early 2023. In the first week of January 2023, Air Niugini flights were grounded because Puma Company, which supplies the aviation fuel Jet A1, did not supply the fuel to Air Niugini. Puma’s argument was that it did not have enough foreign currency to import the A1 fuel. The Bank of PNG controls the amount of foreign currency (FX) given to companies. In this case, it placed limits FX Puma requested – or rationed foreign currency. FX rationing has been an ongoing problem in PNG. If businesses are affected, employment is affected. There are other factors such as the level and quality of literacy in the country that contributes to low investment in PNG.
COVID-19
COVID-19 as a cause for unemployment is self-explanatory. COVID-19 has affected businesses world-wide, and PNG is no exception. The difficulties businesses face range from social distancing requirements, and low demands, to increasing costs of doing business. Struggling businesses lay off workers. An article on Devpolicy estimates that about 10, 000 jobs were lost in PNG in 2020. Whether this has recovered is not clear.
Conclusion
There may be many factors, but the three discussed above, in my view, are the main causes for high unemployment in PNG. Addressing these problems will take a government that is serious, and is not afraid of making unpopular decisions.
Security? Economy? How about economy and security?
Think about this:
5 Highlands provinces of PNG produce most of most of PNG’s coffee. 80% of these coffee come from smallholders (households). About 4 million Papua New Guineans are engaged in coffee farming (Care International)
In addition to that, about 1 million people are engaged in cocoa farming, mostly from the coast.
Tuna canneries in PNG employ between 15-20, 000 people, and the tuna industry contributes up to $20 billion annually to PNG GDP (The National newspaper)
Why are these statistics important?
They are important because PNG signed various economic partnerships with China, whereby PNG would export its seafood and agricultural products tariff free/quota free to the Chinese market – no caps on how much/many products are exported, and no tariffs charged.
These economic partnerships are at risk of being undone because PNG is pursuing a military deal with Australia. If the Pukpuk Treaty goes ahead, you’ll be naive, even deluded, to think China will not respond in some way, shape or form.
What does PNG get out of Australia under the Pukpuk Treaty?
10, 000 people join the Australian army (and defend Australia)
Compare the benefit of 10, 000 Papua New Guineans, to about 4 million coffee growers benefit from coffee exported to China.
Compare the benefit of 1 million cocoa farmers to 10, 000 Australian defenders.
Compare the benefit of 20, 000 workers who would benefit from tuna industry.
Question: why can’t PNG and Australia also sign an economic partnership with PNG so that in addition to 10, 000 PNGeans joining Australian defence, the PNG coffee and cocoa growers can benefit from tariff-quota free exports to Australia?
Now before anyone starts arguing about the security assistance PNG can get from the Pupuk Treaty, I’ll say this:
All the security needs that PNG has could be pursued under PNG-US Defence Cooperation Agreement, and the PNG-Australia Bilateral Agreement. PNG is not planning to invade any country, so PNG doesn’t need combat readiness trainings.
PNG’s needs training, and support to respond to tribal wars, illegal fishing, disaster response, climate change, border patrols etc. Not a disproportionately equipped military who are on standby to fight Australian wars.
We can maintain the economic access with China and pursue security assistance through the DCA with US and BSA with Australia. We just need leaders who can think of PNG as a country, and not as a tribe or clan.
We could be neutral, no need to pick a side. Somare knew well when he set it down that our foreign policy would be “friends to all, enemies to none.” He and those who came after him maintained it throughout, until the current government.
Australian money, and Australians, get corrupted in PNG.
PNG is land of the corrupt. Even Australians who are not corrupt in Australia, engage in corruption when they are in PNG or dealing with PNG.
Australian money, when it enters PNG, becomes tainted almost immediately.
We’ve seen this with Australian banks accepting corrupt money from PNG politicians buying properties in Australia
We’ve seen it with Australian real estate accepting corrupt money from PNG politicians buying
We’ve seen it from PNG ports deals
We’ve seen it from Australian accountants and lawyers facilitating corrupt money from PNG to Australia
We’ve seen it with ICAC Commissioners
We’ve seenn it with Manus Detention Centre
And now we’ve seen it with $600 million NRL bid
When it comes to PNG, Australians throw their ethics out the window. Their financial transparency measures fiddles out.
The most ironic thing about the $600 million NRL bid money given to PNG by Australia is this: Australia was hoping the money would prevent PNG from engaging more with China, thereby curtailing Chinese influence in PNG. What happened was, a Chinese company became involved in the reported abuse of the very money intended to diminish Chinese influence.
Australia is really not serious about PNG. When Australia is serious, you will see these indicators:
Australia will stop giving direct budget support – how this money is spent is determined by the PNG government like any other revenue PNG generates internally. And this means the money is abused the same way internal revenue is abused.
Australian puts conditions like IMF does on the money they give. Many say IMF’s conditions are evil. Maybe IMF is evil – but IMF doesn’t impose any conditions until PNG asks for money. So what can Australia do? When PNG asks for money, Australia can say: abolish DSIP/PSIP and we’ll give you money. About K2 billions spent by 118 PNG MPs entirely at their discretion. It’s never been fully acquitted, or monitored.
Australia must re-direct majority of the funding into improving policing, investigations and prosecutions. PNG’s main problem is corruption, not lack of development. Train and equip the National Fraud & Anti-Corruption Directorate, the Police, ICAC, Ombudsman Commission, Auditor General, IRC, Commission of Inquiry, IPA and others. Don’t worry about roads and bridges. If our accountability and integrity agencies are strengthened, we will then manage our internal revenues well enough to produce the development we want.
Australia must give PNG integrity agencies the names and list of all Papua New Guineans who invest in Australia. The integrity agencies would then quantify if the money used for investments in Australia is proportional to the wages and salaries those investing in Australia earn in PNG. If they cannot explain it, investigate and confiscate.
As Natasha Turia puts it:
“Giving candy to someone you know is diabetic and hoping they will be cured” is a very diabetic solution!
The original discussions on ICAC commissioners was that PNG should appoint independent commissioners, who have not connections with PNG. Basically, those who do not have ‘wantoks’ in PNG so that they are not compromised in their work.
There were two risks associated this with:
With emphasis on “independence” they sacrificed “expertise and local knowledge.” None of the commissioners ever worked with ICAC equivalents in New Zealand or Australia. Their background is police or lawyers.
Local context matters: these commissioners, whilst independent, had no knowledge whatsoever about PNG. They don’t know the political culture, the judicial systems, the challenges investigators go through.
The result of emphasising independence over expertise and local knowledge is that:
Two gears on, there’s been only one arrest, and zero successful prosecutions
One of them allegedly excluded the other two from decision making and the other two allegedly lived a luxurious lifestyle (perhaps all three did).
The funny thing is: these three commissioners came in, and replaced Mattew Damaru and Thomas Eluh. Eluh was the acting ICAC commissioner at the time, and Damaru waa assiting.
Who are Thomas Eluh and Mattew Damaru?
Both Eluh and Damaru were long time respected police men. Eluh held various positions such as Director of Police Prosecutors, Deputy Police Commissioner Operations, and various positions. Damaru was the Director for National Fraud and Anti-Corruption Directorate.
Both men are excellent police men with deep knowledge. Both men stood firm against the assault of the O’Neill government when both went after O’Neill for corruption together with Task Force Sweep led by Sam Koim. Both were suspended, demoted, and dragged through the courts for trying to prosecute the prime minister for corruption.
The two most qualified investigators, with track record of going after the prime minister (first time ever in the history of PNG), who know the nuances of investigations in PNG, were replaced by three foreigners who had ZERO knowledge about PNG.
The highest number of investigations the three foreign commissioners initiated is investigating themselves!
Fire all 3 Commissioners, and bring back Thomas Eluh and Mattew Damaru. Make them deputies, and bring Sam Koim from Internal Revenue Commission to head ICAC!
Just because few corrupt officials make the news doesn’t mean there aren’t good men and women in PNG. There are many, and we know who they are.
It will take a Papua New Guinean to take on corruption in PNG. No foreigner will fight corruption in PNG.
PNG MPs decided to go with a prime minister based on integrity, and brains.
He played it cool, got in, instituted reforms in less than two years that killed the cash cows MPs relied on.
He made important institutions such as Bank of PNG independent.
He pursued and strengthened the laws that prevented MPs from yo-yoing (switching) from one party to another.
He privatised SOEs that were unprofitable and bleeding state coffers through subsidies.
And restored integrity and trust in the public institutions.
MPs suffered.
Now MPs have learnt their lesson. They will never support a PM candidate who has reform tendencies that makes stealing and corruption difficult. That is why you will never have an Allan Bird or a Tom Lino or a Bryan Kramer or a Kerenga Kua as PM in this parliament’s life time.
Your only chance is to vote as many candidates as you can in 2027, who are endorsed by political parties headed by Bird, or Kramer, or Lino, or Kua.
This also means Bird needs a freaking party. No independent MP has formed government in PNG. Even if political parties are useless in PNG, MPs usually congregate around and individual leading or belonging to a party. Snaubelt will not give up reins of National Alliance, and is probably winning Namatanai again to lead NA. Marape is also winning Tari-Pori and leading Pangu. The two parties Bird has always associated himself with are run by shenanigans. Bird needs a new party ASAP, to build a brand and following before 2027.
There’s a vote of no confidence tomorrow (15 April 2025). The opposition nominee doesn’t give much confidence and Marape may well become the second Prime Minister to defeat a VONC twice.
I’m working on a paper, looking at possible explanations of how PNG survived as a democracy despite lacking strong democratic principles / prerequisites. Came across Ron May’s book (recommended reading during my first year as a political science student but like most students didn’t read) on the first 25 years of PNG’s independence. The introduction of the book is quite interesting. Every respected “experts” of the time predicted that PNG would collapse:
“On the eve of Papua New Guinea’s independence in 1975 there were many – Papua New Guineans, resident expatriates, and overseas observers – who were sceptical about the future of an independent Papua New Guinea.
While people in the New Guinea highlands were apprehensive of being dominated by better educated coastal and Island people, and Papuans around the capital, Port Moresby feared being swamped by immigration from the highlands, well informed commentators, looking to the experience of post-colonial states elsewhere, spoke of the likelihood of political anarchy, an army coup or authoritarian single-party dominance, and of economic collapse.
Australian journalist Peter Hastings, for example, commented in 1971 on the ‘inescapable similarity between Africa and Papua New Guinea’, and suggested that after independence ‘the Army will inevitably be involved in the political direction of the country’ (Hastings 1971:32); the perceptive historian Hank Nelson wrote, around the same time:
‘After the formal withdrawal of Australian authority the new government may seem to work well, then, as corruption, inefficiency and secessionist movements become more obvious, the few educated and competent will take over, either dismissing the institutions of government established by Australia r ignoring them’, (Nelson 1972:208);
Former patrol officer, politician and planter Ian Downs wrote a novel which centred on a Mau Mau style uprising on the eve of independence.”
In the book, Ron May tries to explain how PNG defied all expectations and lasted 25 years as a democracy. What Ron didn’t know at the time, was that the next 25 years would be even worse. Yet PNG survived as a democracy.
When you think to the 2011 constitutional crisis where we had two prime ministers, two deputy prime ministers, two police commissioners, two departmental heads for almost all government departments, a failed mutiny as Taurama Barracks, just to name a few.
Academia Nomad 