OBG talks to Ivan Pomaleu, Managing Director, Investment Promotion Authority

Interview: Ivan Pomaleu

What are the top domestic priorities in 2012 in terms of attracting new investors?

IVAN POMALEU: The government’s economic and industrial policies encourage the development of Papua New Guinea’s non-mining sectors, including manufacturing, renewable resources such as agriculture and fisheries, and business services. The aim is to increase the value and volume of value-added products.

To push development we must deal with the various natural resources which form the bulk of non-mineral and petroleum resources. In agriculture, for instance, the key intervention is in the infrastructure sector. In fisheries it is in addressing different cost areas, and developing entry requirements that give maximum consideration to domestic production and manufacturing. In forestry, the key intervention is in forming a policy that targets downstream processing instead of exporting logs. Tourism development is also important, and the government has developed new incentives to attract tourism investment.

In telecoms the all-important work in liberalising the sector has meant enormous growth in investment and efficiency development, which has led to a significant knock-on effect on the economy in general.

How would you assess the legal system with regard to dispute resolution in private sector investments? Are there guarantees protecting investor rights?

POMALEU: The government recognises the importance of the private sector to PNG’s development and guarantees the security of foreign investment. It has undertaken to minimise the perceived risks, including expropriation, repudiation of contracts and discrimination through most-favoured-nation treatment to investors, particularly from Asia Pacific Economic Cooperation and World Trade Organisation countries. The Investment Promotion Act 1992 also protects against expropriation, cancellation of contracts and discrimination through granting of most-favourednation treatment to investors. PNG’s determination to be fair and protect investors and their investments in the country has also been evident since it became a member of the World Bank’s Multilateral Investment Guarantee Agency in 1990. Investment disputes can be settled through diplomatic channels or the use of local remedies before having matters adjudicated at the International Centre for the Settlement of Investment Disputes or another appropriate tribunal of which PNG is a member. With the International Finance Corporation’s assistance, PNG’s judiciary is developing and building capacity on alternative dispute resolution mechanisms. This will go a long way to developing the arbitration framework to achieve promptness and minimise legal costs.

Can the private sector expect stability in the business climate in light of the 2012 elections?

POMALEU: In April 2012 the prime minister assured all Papua New Guineans and our international partners that the government is ready to deliver a free and fair election as scheduled by the electoral commission. The writs will be issued on May 18 and returned on July 27. Polling will be on June 26.

A government caucus met recently and agreed to hold the elections as scheduled. Representatives of the Trade Union Congress, the private sector, the Employers Federation, churches, non-governmental organisations and civil society groups welcomed the announcement and undertook to inform their members and investors that it will be business as usual. A free and fair election is an important ingredient to stable post-election government. All indications from the Electoral Commission are that the elections will take place in the same manner as in the past.

The private sector has greeted this news with relief, as it demonstrates that the government subscribes to the all-important notion that ultimately the people decide on governments, through electoral processes as prescribed in law. There is no reason why this relief should not be sustained after the election.