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Long a mainstay of Papua New Guinea’s economy, the mining sector has not been immune to the global economic turbulence that continues to buffet the industry. Slack demand for base metal products and decreased access to cash for junior operators has curtailed exploration and development worldwide, affecting a number of PNG operators in the process. Together with local administrative and logistical hurdles, these challenges have delayed a number of high-potential mineral prospects from entering into later development and production phases. While none of these next-generation projects have come on-line as of yet, parent companies continue to show resolve in bringing them to fruition with ongoing developmental expenditures, which should in time bring new and profitable projects to the market as the older legacy mines wind down their operations. This chapter contains interviews with Greg Anderson, Executive Director, PNG Chamber of Mines and Petroleum; and Fred Hess, Managing Director, PanAust.

The long wait for the Papua New Guinea liquefied natural gas (LNG) project is now over, and the energy sector is transforming from a major investment vehicle into a primary revenue generator for the economy. In fact, the project is expected to have so much of an impact during its first full year of LNG exports that PNG was projected to lead all Asian economies in GDP growth in 2015, at nearly 15%, with the Asian Development Bank forecasting an equally robust expansion. While the government has had to revise its budgetary forecast for GDP growth from 15% to 6.9% due to the decline in oil prices, the optimism generated by the PNG LNG project has encouraged further investment. PNG’s plentiful untapped reserves and resolve to become a major regional gas exporter look to provide ample incentive and means to move forward with at least one additional LNG project. This chapter contains interviews with Grant Christie, Vice-President and Country Manager, Talisman Energy, Repsol Group; Philippe Blanchard, Managing Director, Total PNG; Brent Emmett, CEO, Horizon Oil; and Lesieli Taviri, General Manager, Origin Energy.

Due to several factors, Papua New Guinea is one of the least insured countries in the world. However, the low take-up of insurance is not, in this case, the result of a lack of experience. PNG has had an insurance sector for more than a century and it was once administered by Australia, an historically insurance-conscious society. The problem is more the result of geography, topography and income. Despite its many challenges, the PNG insurance market is healthy and competitive. PNG has no limits on foreign investment in the sector, and foreign insurers are active as investors and as indirect participants through reinsurance and brokerage. The sector is open, profitable and has great potential. Given the low penetration rate and growing economy, more policies will likely be sold and more risk can be covered. Still, the sector must develop, especially in terms of best practices and pricing. This chapter contains an interview with Philip Tolley, Managing Director, Capital Insurance.

Of all the subsectors within Papua New Guinea’s financial system, the capital markets are the least mature. The banks are strong, growing and becoming increasingly competitive; the insurance sector has been active for more than a century and is substantial for a developing country; and the superannuation funds are large, stable and vital to PNG society. On the other hand, the stock market has only two brokers, two owners, 18 securities and little liquidity. The lack of capital markets development has not gone unnoticed, and the exchange has been targeted for major upgrades, while the reform of the debt market is being discussed. These efforts have support at the highest levels, with Prime Minister Peter O’Neill backing the transformation of the stock exchange. This chapter contains a viewpoint from Syd Yates, CEO, Kina Securities; and an interview with Richard Borysiewicz, General Manager, BSP Capital.

The banking sector in Papua New Guinea is sound, growing and remarkably profitable. Its largest and only publicly traded institution, Bank South Pacific, reports return on equity 10 percentage points higher than the large Australian banks, which are among the most profitable in the world. Furthermore, continued expansion is expected. With 80% of the country unbanked, growth is almost assured as inclusiveness rises and more people open accounts. Unlike the various over-banked parts of the West and Asia, PNG’s sector is not saturated and has plenty of room to grow. While the central bank works to make commercial banks more competitive, institutions are pushing to expand into under-served areas. If these efforts are managed well, banks may experience significant growth and find margins largely intact. The increase in competition and the lowering of rates and fees, meanwhile, could have a positive effect on the economy and in turn create more business for the banks. This chapter contains interviews with Loi Bakani, Governor, Bank of Papua New Guinea (BPNG); and Robin Fleming, CEO, Bank South Pacific.

With a strong economy in recent years, the GDP growth rate rose to a high of 8.9% in 2011, after stagnating in the early 2000s, only to fall back in 2013 to around 5% and then rise again to more than 8.4% in 2014. Construction work on the Papua New Guinea liquefied natural gas (LNG) project led to the economic boom in 2011, while the slowdown was the result of the end of that phase and the hiatus before the start of production. Despite the positive impact that the PNG LNG project is expected to have, the price of LNG has been falling along with commodities worldwide, and this will feed through to PNG’s returns in the near term. The key for the country is the development of the infrastructure and the non-minerals sectors, which will require careful spending and a measured, but proactive, policy. This chapter contains a viewpoint from Shinzo Abe, Prime Minister of Japan; and interviews with James Marape, Minister of Finance; Wapu Sonk, Managing Director, National Petroleum Company; James Lau, Managing Director, Rimbunan Hijau (PNG) Group; Ben Micah, Minister for Public Enterprises & State Investments; and Frederick Reiher, Chairman, Air Niugini.