OBG talks to Charles Abel, Minister of Trade, Commerce and Industry

Interview: Charles Abel

What are the top priorities as far as domestic economic reform is concerned?

CHARLES ABEL: None of us are happy with the progress in terms of translating the wealth of the country into meaningful developments. We are concerned by the growth in income disparity and the rise in the poverty gap. This increasing inequality has fuelled corruption and the continued exploitation of our resources. Therefore, the fundamental question is how to reverse this trend. If we do not address this issue, we will be in the throes of the resource curse. We are already developing a heavy dependence on our natural resources – in particular, the LNG project – and this will take on an even greater importance when revenues start flowing into the budget.

My point is that we have not earned it; we have not put in the hard work of increasing the overall competitiveness of our economy by creating a balanced expansion of our various industries. The temptation to rely heavily on our natural resources for growth is easy, but if we do that, we will not learn lessons and will not try to find solutions to the problems our country could face in the future. For example, our currency has appreciated, which has impeded the further development of other export industries and the establishment of a sustainable economy.

In which ways is the ministry addressing the task of diversifying the economic base?

ABEL: The government has become serious about addressing some of the country’s fundamental challenges, such as corruption, accountability and transparency, but it has not yet focused on the longer-term issues such as developing an industrial base. We need to start thinking about the economy that we want in the future. We should use the gains from the exploitation of our resources to start building a new type of economy that would be sustainable and based on green energy, environmentally friendly industries like tourism. Investment in infrastructure and education is also important. We need to identify the industries in which our country could be competitive, such as agriculture, particularly in organic products, as well as tourism and niche export-driven sectors.

There are plenty of opportunities in our economy for short- and medium-term growth because we have so much wealth. The value is there, so we invite the world to help us unlock this potential. At the same time, we must refine our political and economic models to allow for the emergence of a development path that is sustainable and benefits everyone, not just a few individuals. Our culture values sharing wealth, while capitalism dictates accumulation of wealth. Therefore, we are forced to change either our cultural habits or our economic principles.

What will be the primary focus of the second phase of industrialisation in PNG?

ABEL: We will have to go through an interim phase of relying on our natural resources and channelling these funds into the second phase of industrialisation in PNG. We feel that the areas in which we can be competitive are primarily in agriculture and fisheries, specifically palm oil production and tuna. Gas production is obviously crucial, but even more important is to provide incentives for companies to develop the downstream and processing sectors. We also believe that we can produce hydroelectric power for both export and domestic use.

The goal of many of our trade negotiations with the US and EU is to obtain certain concessions to help develop these industries, because we need assistance in strengthening and industrialising our economy. For example, PNG has an agreement with the EU whereby our canned tuna has been granted permission to enter the EU market duty-free, and imports to the continent are expected to double in 2012.

PNG will also be allowed to export fish to the EU from outside its own territorial waters, allowing investors to source fish from elsewhere and process it in PNG.