Being strategically located at the 'door' into the South Pacific, Port Moresby is advantaged and poised for good returns if it plays its investment cards right.
AS sleeping giant China awakens and moves to reclaim its place on the global stage, Papua New Guinea is doing well for itself by strengthening its partnership with this regional powerhouse to reap good investment rewards.
China, one of the world’s earliest civilisations, has gone through different times of expansion, fracturing and reunification under its various leadership of monarchies and governments and now is re-emerging as the fastest growing economy in the world since its economic reforms of 1978. As of 2016, China is the world’s second-largest economy by nominal GDP, making some commentators speculate its potential as the next superpower.
The country’s strategies for reforms and ‘opening up’ have been many, but none as elaborate and grand as the 2013 New Silk Road Initiative of President Xi Jinping, perhaps the most ambitious foreign policy the world has ever seen. This sweeping enterprise of world trade, cultural exchange and mutual interaction, now known as the ‘Belt and Road Initiative’ (BRI), revitalises the country’s ancient Silk Road and works at developing connectivity with countries in Europe, Central Asia and Southeast Asia. Oceania and East Africa have also been included on this gargantuan program. On land, the initiative is referred to as ‘Belt’ and on sea, it is known as ‘Road’.
China says the BRI stands to benefit over 4.4 billion people or 63% of the world’s population in up to 70 different countries and generate trade of US$2.5 trillion over the next 10 years.
As of March 2015, 42 countries including the United Kingdom, Germany, France and Italy have joined this gargantuan project by becoming founding members of the Asian Infrastructure Investment Bank – Xi’s vehicle that would drive this massive strategy. The AIIB has a capital of US$100 billion. The Silk Road Fund (US$40 billion) and the New Development Bank (US$100 billion) are also assisting in the deployment of capital to fund the program, especially the infrastructure development aspect of it.
In Papua New Guinea (PNG), the country’s 41-year-old diplomatic relation with China has taken on renewed fervour as China pulls out all the stops to make the BRI into the Pacific work.
Focusing first on connectivity, China dispersed a delegation early in 2016 to sign an agreement with national port services, PNG Ports Corporation, to have Yantian Port of Shenzhen City assist in redeveloping the country’s port infrastructure and services. This was followed up with various high-end dialogue.
“China attaches great importance to its relations with PNG. A new development opportunity is now facing us. We are ready to work together to strengthen dialogue, communication, cooperation in all areas to make further progress in our relationship,” said Chinese Ambassador to PNG Xue Bing last month in Port Moresby during his country’s 68th anniversary celebrations.
The Ambassador went on to reveal that as a result of this revitalised dialogue and trade, PNG is now China’s second largest trading partner and biggest investment destination in the Pacific.
“By the end of last year, China’s direct investment in (PNG) has reached US$1.9 billion,” said Ambassador Xue. “In 2016, the bilateral trade volume reached US$2.28 billion with China’s export to PNG totalling US$647million and China’s import totalling US$1.63 billion, with PNG enjoying a surplus.”
At this stage, some 40 Chinese companies are now operating in PNG – the biggest 25 of them employing more than 7000 Papua New Guineans in different parts of the country. All of these companies pay tax revenue and contribute to the economy of PNG.
China Harbour Engineering Company (CHEC) is one of such companies, operating in PNG’s capital, Port Moresby. CHEC has recently finished connecting Port Moresby’s south-western part to its eastern localities via the 20.18km Hanuabada-Gerehu-9 Mile road that is expected to generate a return monetary value of K4.3 billion. CHEC, the second-largest dredging company in the world, is now working on redeveloping the Ela Beach into a world-class sea park, the social value of which will be immeasurable for the people of Port Moresby, seeing as Ela Beach is the only proper surviving park in the nation’s capital.
Education and health are investment areas China is emphasising in PNG, in line with the country’s government priorities. Every year for the last 10 years, China has provided 30 government scholarships to PNG students to study in China while close to 10 medical teams have been dispersed to PNG providing health care to up to a hundred thousand patients and training thousands of PNG medical staff.
One of the latest projects is Butuka School Redevelopment Project in Port Moresby’s southern backwater district of Sabama – population: 150,000, of which 50% or 75,000 people are below the age of 18.
China State Construction Engineering Corporation Ltd Steel Structure Company (CSCEC Steel) has been contracted to build this state-of-the-art, three-in-one (elementary, primary and secondary) school which is expected to be completed toward the end of 2018.
Moses Guasa, Chairman of Butuka Primary School Board, said at the recent project ground-breaking: “We thank very much the Chinese Government for making this project happen in our part of the city. This institute guarantees a brighter future for our children by empowering them with quality education. These children will in turn create better opportunities for their own families and our community.”
The K70 million school project is a sister-city gift from the Shenzhen Municipal Government to Port Moresby and will cater to up to 3000 students every year.
The Ramu 2 Hydro Power Project is moving into its next phase after Cabinet’s recent approval. It is another investment project by the Chinese government, worth over US$600 million, expected to provide close to 200 megawatts of power to Papua New Guineans in the Highlands, and Morobe and Madang provinces.
Paul Nerau, chairman of Kumul Consolidated Holdings – the project manager – called it a “game changer” because of its capacity to elevate electricity by up to 194%.
These investment results have come about from efforts on both sides – heightened diplomatic dialogue, the state visit of Prime Minister Peter O’Neill to China to meet his Chinese counterpart in November 2015, the establishment of sister-city ties between PNG’s capital Port Moresby and China’s ‘Special Economic Zone’ city Shenzhen in May 2016, and the expected state visit of President Xi during the Asia Pacific Economic Cooperation Leader’s Summit in 2018.
Yet, even while the political will is as earnest as it has ever been in PNG in this regard, the implementation of these projects are somewhat slow on the part of Papua New Guinean machinery, as evidenced in the Butuka School Project which was delayed by up to three months because of work permit and other such logistics issues.
Prime Minister O’Neill said of this challenge at the Butuka ceremony: “It has taken a while on our part because we are not committed to making sure that these things happen on time. Opportunities like this come once in a while. Our people need to show some responsibility and make sure that we deliver (these projects).”
Mr O’Neill stressed the partnership with China as “very important”.
If PNG puts equal practical effort into its end of this deal with China and practices wise prudent spending in service delivery, there is much reward to be got from this bilateral cooperation as China consolidates its position within the region and on the global front.
Said Ambassador Xue: “China is now in a crucial time of reform and development and has entered a decisive stage of building a comprehensive, moderately prosperous society. As stated by President Xi Jinping, China is closer than ever to the centre of the global stage and to fulfilling the ‘Chinese Dream’.”
That ‘dream’ is that China should become an invigorated nation that is flourishing from within just as it engages with those around it. In a lot of ways, this is also Papua New Guinea’s dream.
*This feature article has also appeared in The National and the Post-Courier newspaper s and is also online on The National website.