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This chapter breaks down the tax environment in Papua New Guinea, examining corporate taxation, residence rules, and other information useful for those interested in investing in PNG. It also features a viewpoint from Jonathan Seeto, Territory Senior Partner, PwC, analysing how PNG’s current tax review initiative may contribute to the economy.

Health care in PNG is poised to see major changes. Perhaps the most significant recent development has been the introduction of fee-free health care. The government committed $8.13m to the programme in 2014, which began officially on February 23 of that year. The refurbishment of Port Moresby General Hospital is receiving major government support, as it is hoped that the renewed facility will act as a catalyst for improvements throughout the country. PNG needs to put the resources being committed to good use while they are available and not waste the political capital that is being expended. If the planned reforms are successful, they could have a widespread social and economic impact. Meanwhile the government continues to view the improvement of the education system as a top priority. It has set aside $4.06m in 2014 for the Higher Education Institution Recapitalisation programme, which aims to establish a task force to improve university infrastructure. To address the shortage of teachers in PNG the government is increasing salaries and is actively recruiting foreign staff. The country is committed to the sector in terms of political will and increasing expenditure, and over time schools have seen great improvements as resource wealth enters the economy and supports the national budget. This chapter contains interviews with Pascoe Kase, Secretary of Health; Grant Muddle, CEO, Port Moresby General Hospital; and Joe Williams Lalie, Executive Director, International Education Agency.

As a country of over 600 islands, 800 languages and unmatched biodiversity, culture and nature are the primary attractions for visitors to Papua New Guinea. Although the country has a long history of tourism, the sector has remained largely undeveloped and accounts for only a small part of PNG’s economy. As the costs of travel are falling, thanks to factors such as an increase in hotel rooms and the depreciation of the kina, PNG is becoming a more attractive destination. Airport infrastructure is being upgraded and the country’s main airports are under renovation. The National Airports Corporation is also looking at the possibility of linking more of the regional airports to international destinations. Meanwhile, cruises are becoming a popular way to see the country and an increasing number of cruise operators are adding PNG to their itineraries. Still, PNG faces many challenges; given its terrain and environment it will be difficult for the country to beat neighboring Thailand and Indonesia in terms of sheer visitor numbers. However, with selective investments and the right policies, the country could find itself with a strong and growing local tourism industry. This chapter contains an interview with Tony Honey, Owner, Tufi Resort.

As part of efforts to tackle the country’s over-reliance on mineral and energy exports, the government is supporting the growth of the agriculture sector to promote diversification. Forestry, agricultural and fishery activity currently accounts for one third of the economy and remains the principle livelihood of the vast majority of Papua New Guinea’s citizens. Agriculture exports dropped from $1.54bn in 2011 to $1.1bn in 2012, according to the central bank, with much of the decline due to falling commodity prices. Looking forward, commodity prices should rebound with demand gaining momentum after a stronger first quarter in 2014. Several agricultural subsectors such as forestry, palm oil and fisheries have developed highly profitable, yet more environmentally responsible, business models. Planned improvements in transportation infrastructure are due to pave the way for more efficiency and expansion into untapped areas. This chapter contains interviews with Greg Worthington-Eyre, CEO, Trukai Industries; and John Kasu, Managing Director, National Fisheries Authority, and a viewpoint from Tommy Tomscoll, Minister of Agriculture and Livestock.

From 2008 to 2012, the construction sector posted average real annual growth of 20.4%. The value of construction projects in 2013 was estimated at $1.4bn, up from the $1.2bn in 2012, $984m in 2011 and $744m in 2010. A host of big-ticket items are listed in the 2014 budget, including $577m to construct and maintain roads and bridges; $152m to finish facilities for the 2015 Pacific Games; $25m for housing and land development; $91m for university infrastructure; and $109m for hospital redevelopments. Although there has been some sector deceleration, much of this is being offset by a substantial surge in government outlays for infrastructure. Meanwhile, growth in property values is slowing and demand is starting to cool as the unprecedented property demand surge prompted by the Papua New Guinea Liquefied Natural Gas (LNG) project has begun to subside. This decline has led to market correction in certain areas, but some real estate categories have been affected more than others. With an estimated 28% of the urban population in PNG living in informal settlements, the government has been rolling out a number of policy changes to reduce this figure to 15% by 2030. One industrial development that could become a game changer received new life in 2013: the prospect of moving forward with the long-dormant Konebada Petroleum Park. Any rebound in the kina should help stabilise property prices, with real GDP projected to grow through to 2018 as revenues from PNG LNG and other resource extraction projects begin to materialise in late 2014. This chapter contains interviews with Francis Awesa, Minister for Works and Implementation; Stuart Bowman, Country Manager & Director, Leighton PNG; and James Lau, Managing Director, Rimbuna Hijau (PNG) Group.

Although consumer spending has weakened recently, in the long term the country will benefit from economic growth and related foreign investment, which will in turn help support consumer demand. New firms are being developed, while existing business are improving their operations. The retail sector is developing rapidly, and shopping malls are proving increasingly popular compared to the traditional general stores. When returns from the Papua New Guinea Liquefied Natural Gas project begin to feed through to the economy, the retail sector is expected to grow strongly and those who have invested in their businesses will benefit. Higher demand, the growing middle class, increased competition, and the development of more and better infrastructure will reward those who are able to supply the right products and services, and who are prepared to evolve with the economy. This chapter contains an interview with Ravi Singh, CEO, CPL Group, and a viewpoint from Michael Penrose, General Manager, British American Tobacco.