It has been a turbulent year for politics in Papua New Guinea. However, a new era began this afternoon with the election of Peter O'Neill as Prime Minister. This article brings you up to date with the latest developments and discusses how the change in the political environment could affect investors in PNG going forward.
In August 2011, Peter O'Neill replaced Sir Michael Somare as Prime Minister and there were controversial court rulings and animosity between the supporters of each side. This was damaging not only to the growth of PNG but was also causing international investors in Australia and elsewhere to think twice before they moved forward with projects.
Fortunately, that political uncertainty looks to be over as Peter O'Neill has today been elected as the next Prime Minister. It is hoped that this will introduce a period of stability in the government, its various agencies and the country of PNG generally. The new government will be made up of around 75 MPs which is more than the 56 required to form a government.
What is significant about the appointment of Peter O'Neill is that Sir Michael Somare and two other former prime ministers (Sir Julius Chan and Paias Wingti) have agreed to support the O'Neill led coalition government. This show of unity, particularly between O'Neill and Somare, is a remarkable turnaround from even a few weeks ago, and shows that there is willingness among the politicians to provide a clear mandate for the next government, and to work together in the national interest.
Prior to the 2012 election, Peter O'Neill had been leading some initiatives which were viewed positively within PNG and welcomed by the international community in the areas of education, health, infrastructure and the proposed establishment of a sovereign wealth fund. These initiatives are likely to continue with the new coalition government and will help provide a strong platform for future business investment.
What it could mean for you
The election of Peter O’Neill and formation of a new government could impact the private business sector in a number of ways. Some general examples are discussed below.
PNG is a country with many natural resources and the opportunities are well known. With the PNG LNG project due to begin in 2014 and many other oil & gas and mining projects being considered, the growth in the next few years is expected to provide a significant turning point in PNG's economic development. This should further enhance the country's role as an important contributor to the global economy.
The results of this election and the political stability it should bring in provide an opportune time for international companies to consider again whether investing in PNG now may be worth another look.
Certainty in Government policy and implementation
Since Peter O’Neill is the incumbent, the government’s position on key policy issues (e.g. with respect to ownership of minerals) will likely continue. It is likely that there will also be greater certainty going forward on how Ministerial discretion under relevant laws will be exercised.
Tabling and enactment of legislation
With such a large majority it is likely that the tabling and/or enactment of legislation relevant to the private business sector will proceed without delay now that the politicial situation has been made clear as a result of the election.
After a long period of political uncertainty it is promising to see that a government with a clear majority has been sworn in and that political rivals have agreed to work together. The future of PNG looks brighter as a result of these developments and it may be that this will herald a new era of investment into PNG.
Ensuring that new projects and the establishment of business relationships are done after considering them from a legal point of view will continue to be important. Norton Rose Australia is well placed to assist you when doing business in PNG as we have a real understanding of, and very current experience in, PNG projects and transactions across a diverse range of sectors.