Economy.

PNG’s GDP grew 8.9% in 2011, thanks in large part to the fact that construction work on the PNG LNG project is in full swing. While growth likely cannot sustain such a high pace, government officials hope that revenues from the LNG facility will catalyse an economic transformation. Analysts, however, are worried about Dutch disease, where resource-driven growth drives inflation and makes local manufacturing uncompetitive. The challenge will be to expand the formal economy, which accounts for just 15% of GDP. This will require major improvements in the security situation, infrastructure development, and investment in education. This chapter includes interviews with Ivan Pomaleu, Managing Director, Investment Promotion Authority; Karel De Gucht, EU Trade Commissioner; David Cox, Managing Director, Steamships Trading Company; Caleb Jarvis, Trade Commissioner, Pacific Islands Trade and Invest; and Surin Pitsuwan, Secretary-General, ASEAN.