Cash crops and extractive industries fuel growth in PNG

Papua New Guinea comprises the eastern half of the largest tropical island on Earth, along with hundreds of smaller adjacent islands, combining to form less than 0.5% of the world’s total land area. Culturally, linguistically and environmentally diverse, PNG is considered a true frontier when it comes to economic diversity. There is ample space for development in general business and, more specifically, tourism.

Currently, the country is an important exporter of natural resources, including gold, copper, oil and natural gas, as well as agricultural products. Signature cash crops include coffee, oil palm, cocoa, coconut and to a lesser degree tea and rubber.

Prominently, PNG became a major exporter of gas in 2014. Its completion of the $19bn PNG LNG project ahead of schedule and within budget has helped the nation significantly increase the size and strength of its economy. Since the first shipment of gas was delivered to Japan in June 2014, more than 200 have been delivered to Asian markets.

Overall, the LNG facility is expected to produce more than 9trn cu metres of gas over its 30-year lifespan and about 6.9m tonnes per year. Other extractive industries with significant export potential in the next few years include two prominent gold mines, in the Morobe and Sepik Provinces, and a projected second LNG project named Papua LNG.

Geography 

PNG is located in the Asia-Pacific region and is separated from Australia’s Cape York Peninsula by the 160-km wide Torres Strait. The Solomon Sea lies to the east and the Coral Sea stretches to the south and south-east. The country has a surface area of 462,840 sq km, a coastline of 5152 sq km sheltered by 40,000 sq km of coral reefs, and an 820-km land border with the Indonesian province of West Papua, formerly a Dutch colony, that has governed the western half of the island since 1962. While the eastern half of the island of New Guinea is the country’s mainland, PNG also governs 600 smaller islets and archipelagos off its coast, as well as the islands of New Britain, New Ireland and the Autonomous Region of Bougainville (ARB). The country is divided into four regions: the Highlands, Momase, Southern and New Guinea Islands. The capital, Port Moresby, is on the south-eastern coast of the mainland and was named after British Admiral Sir Fairfax Moresby by his son, Captain John Moresby, in 1873. As of 2017 the latest census taken by the National Statistics Office (NSO) was in 2011. At that time, Port Moresby was home to an estimated 364,125 people, although subsequent estimates reach as high as 633,881 if city settlements and the National Capital District (NCD) are included. The country’s population is largely rural, though other main towns include Lae, which has a population of around 200,000, and Mount Hagen, with 40,000. The Highlands region in the north is made up of the provinces of Enga, Simbu, Hela and Jiwaka, as well as the Southern, Western and Eastern Highlands.

Ancient Traces 

The earliest archaeological traces of life in PNG go back some 60,000 years, with the inhabitants thought to have arrived across a long-vanished land bridge from other parts of South-east Asia. In the 14th century the Javanese Majapahit Empire had contact with a kingdom in Western Papua named Onin.

New Guinea was one of the final areas of the globe to be subjected to European colonisation. However, this seldom penetrated the land beyond coastal settlements, with colonisers mostly managing small-scale agricultural operations, primarily in palm oil and coffee. The first European to see New Guinea was probably the Portuguese navigator Antonio d’Arbreu in 1512, although unrecorded Indonesian and Chinese seafarers certainly arrived there first. Jorge de Menezes, also Portuguese, landed on the Vogelkop Peninsula in 1526, dubbing the area the Ilhas dos Papuas, from the Malay Orang papuwah, which roughly translates as “the land of the fuzzy people.” The east of the island remained virtually unexplored by Europeans until the 19th century, when, following expeditions by the Russian anthropologist Nicholai Miklukho-Maklai in the 1870s, the British Empire annexed the southeast of the island and the German Empire annexed the north-east. The western part of the island had come under Dutch influence in the 17th century, and Dutch control was recognised by Britain and Germany in 1885 and 1895, respectively.

Australian Influence 

Following the creation of the Commonwealth of Australia in 1902, the then-British New Guinea (BNG) was transferred to the control of the new Australian government – a move that signalled the start of a long-standing connection between the two countries. In 1905 Australia passed the Papua Act, renaming BNG the Territory of Papua, with direct Australian rule beginning in 1906. In the north-east, meanwhile, the German New Guinea Company exercised sovereign rights over the territory until 1899, when the German government took direct control. This lasted until the outbreak of the First World War, when Australian troops took over the colony.

In 1920 Australia was given a mandate from the League of Nations to run the conquered territory, which it did until the Japanese army arrived in the Second World War. Between this 1941 invasion an the end of the war in 1945, some of the toughest fighting of the conflict occurred on the island, as the Japanese advanced on Port Moresby. Eventually, Australian and US troops beat back the Japanese. The Kokoda Track, a strategic route through the Owen Stanley Range that was fiercely fought over, remains a place of pilgrimage for a large number of Australians.

Following the war, in 1949 the former Australian and German colonies were combined into the Territory of Papua and New Guinea. A legislative council and a system of local government were established, with the former replaced by the House of Assembly in 1963. A year later, a joint Australian government and World Bank mission to the territory established a road map for the economic and political progress of the territory (renamed Papua New Guinea in 1972), leading up to independence in 1975.

Topography 

PNG’s diverse interior consists of spectacular highland valleys, grasslands, vast expanses of rainforest, ancient swamps and mangroves. Primary rainforest covers around 75% of the country. The mainland’s backbone consists of undulating mountain ranges and grassy lowlands that rise to Mount Wilhelm, the highest summit. Criss-crossing the country’s surface, acting as a lifeline in terms of sustenance and access, are a collection of waterways, the largest of which are the Sepik, Purari, Markham, Morobe, Strickland and Fly rivers.

Bougainville 

Situated at the easternmost point of the New Guinea islands and in a different time zone from the rest of PNG, the Autonomous Region of Bougainville (ARB) is composed of two large islands, Buka and Bougainville, separated by a narrow tidal channel. Together with over 200 smaller islands and countless atolls, it forms an archipelago which is geographically, geologically and culturally closer to the neighbouring Solomon Islands than to PNG. Bougainville has a population of over 300,000, who speak a dozen different languages. The other major groups of islands in the autonomous province are Nukumanu, Takuu, Nuguria, Nissan, Tulun and Motlock, all located on strips of coral rising no more than one metre above sea level.

Under the terms of the Bougainville Peace Agreement, the government of PNG made amendments to the national constitution in order to guarantee a referendum on Bougainville’s future political status, to be held no sooner than 10 years and no later than 15 years after the election of the first autonomous Bougainville government. The target date has now been set for June 15, 2019.

Biodiversity 

Traversing New Guinea’s tropical topography are 4.5% of the world’s known land mammals. New Guinea is also home to more than 800 species of birds and 25,000-30,000 vascular plants. Between 1998 and 2008 at least 1060 new species were discovered in New Guinea. This includes 218 plants, 580 invertebrates, 71 fish, 132 amphibians, 43 reptiles, 12 mammals and two birds, all housed in the third-largest rainforest in the world after the Amazon and Congo, according to the World Wildlife Fund. PNG is strongly associated with birds of paradise, sheltering 38 out of the world’s 42 known species. It is also home to the world’s largest species of butterfly, Queen Alexandra’s birdwing, which was first discovered in 1906 and is found in the coastal plains of Oro Province. The world’s largest species of tree frog, lizard, pigeon and orchid plant also call PNG home, as do the world’s only poisonous birds and 12 of the 14 known species of tree kangaroo.

Climate 

Rainfall grades decline from the extreme north to the country’s south, with the highest average rainfall of over 7000 mm per year recorded in Tabubil, which borders Indonesia. An average of 1179 mm of rain falls onto Port Moresby every year. Temperature and rainfall are subject to the Intertropical Convergence Zone, the South Pacific Convergence Zone and the West Pacific Monsoon. Given its close proximity to the equator, temperatures in Port Moresby do not vary substantially. Daily lows remain steady at an average of 23-24°C, while daily highs vary from 28°C in July to 32°C in December and January.

The 12th-most disaster prone country in the World, PNG is located in the Pacific Ring of Fire. It is exposed to a variety of natural risks, including earthquakes, tsunamis, tropical cyclones, volcanoes and systemic weather risks, such as flooding. PNG currently has 14 active and 22 dormant volcanoes. According to the Humanitarian Contingency Plan, all of the dormant and 10 of the active volcanoes are located within the Bismarck Volcanic Arc, in the south-west Pacific Ocean. Between 1901 and 2000 the country suffered three droughts, 18 earthquakes, six floods, 10 volcanic eruptions and two tsunamis, according to the Asian Disaster Reduction Centre. In May 2015 an earthquake measuring 7.2 on the Richter scale struck 150 km south-west of the town of Panguna on Bougainville Island at a depth of 22 km, according to the Geophysical Observatory in Port Moresby.

Population 

The indigenous population is primarily of Melanesian ancestry and places a strong emphasis on kinship, extended family bonds and a strong attachment to communally held land. According to the 2011 census by the NSO, the population of PNG at that time was 7.28m, following annual growth of 3.2% since the start of the century. Males outnumbered females at 3.7m and 3.4m, respectively, though females could expect to outlive males, with an average life expectancy of 63.2 years compared to 58.5 years. The populace is fairly young, with a median age of just under 22 and an estimated 40% of Papua New Guineans under 15 years of age. Some 43% of the population inhabits the Highlands Region, with 25% residing in Mamose, 18% in the southern provinces and the remaining 14% on the islands. Around 88% of the population lives in rural areas and primarily practises subsistence agriculture. Sweet potato, cassava, taro, bananas, pork and fowl are the dietary staples. Seafood also represents a large part of the diet in the coastal regions. Much of the hinterland remains remote, and the country’s topography means pockets of the population live in complete isolation, operating a non-monetised economy. The Ministry of National Planning states the population could be as high as 7.8m, with the current estimate of population growth standing at 3.5% per annum.

Languages 

PNG has over 850 indigenous languages, each spoken by communities of just a few hundred people. However, the country has only three official languages. English is the language of government and business, and is widely spoken in urban areas. Hiri Motu, a trade language that was spread from Port Moresby by the local colonial constabulary, is spoken on the Papua side, while Melanesian Pidgin, or Tok Pisin, which borrows from a number of vernaculars serves as PNG’s lingua franca.

Religion 

Christianity first arrived in PNG in the late 19th century. According to the 2011 census, some 96% of the population is Christian. The country is highly diverse in terms of denominational adherence, and many Papua New Guineans also combine indigenous religious practices with the faith. Furthermore, the constitution guarantees freedom of religion. There is no state religion. Of the Christian population, 26% affiliate themselves with Roman Catholicism, followed by Evangelical Lutheranism (18%), Seventh-day Adventism (13%), Pentecostalism (10%) and the United Church (10%). The other 23% of adherents belong to various other Christian groups, including the Evangelical Alliance, and the Anglican, Baptist and Kwato churches.

National Government 

PNG is a constitutional parliamentary democracy. A prime minister serves as head of the government, elected by the country’s 111-member unicameral parliament, consisting of 89 members elected from open electorates and 22 governors elected from provincial electorates, every five years. The British monarch, reflecting the country’s colonial past, remains the official head of state and is represented through a local governor-general elected by the parliament. The role is largely ceremonial with several prominent members of society bequeathed with the designation of “sir”.

Local Government 

PNG is divided into 20 provinces plus ARB (made up of Bougainville Island and a number of other adjacent islands) and the NCD, where Port Moresby is located. Each province has an elected assembly and local government, headed by a provincial governor, as well as a system of local governors. In addition, the country has around 160 elected councils at the local level of government.

Natural Resources 

Current estimates see Asian demand for natural gas being met by existing projects until the year 2021 or 2022, beyond which analysts predict a shortfall in the market. These shortcomings can be offset by the proposed third LNG train by the US giant ExxonMobil, as well as the much anticipated development of the second, Papua LNG, project operated by France’s Total along with its partners Oil Search, the PNG government and ExxonMobil, which recently acquired Interoil’s shares. Initial phase construction has been estimated to begin in 2019.

While minerals and hydrocarbons dominate exports, around 85% of the country’s population is employed by the agricultural sector, which comprises approximately one-third of total GDP. PNG was the world’s seventh-largest producer and third-largest exporter of palm oil in 2008 – accounting for 1.3% of global exports. PNG ranked as the world’s 17th-largest producer of coffee in 2010, accounting for almost 1% of global production. In addition, according to the National Fisheries Authority, total annual catches of tuna averaged 150,000m-200,000m tonnes per year, representing about 10% of global catch, with potential resources at 250,000m-300,000m tonnes per year. These figures are not inclusive of illegal takes from foreign-flagged vessels fishing in PNG waters.