l wilson kamit : difficulties, risks and opportunities for papua new guinea address by mr l wilson kamit, cbe, governor of the bank of papua new guinea, to the fifth annual report meeting of papua new guinea sustainable development program limited, port moresby, 25 may 2007. * * * “ the chairman of pngsdp prof. ross garnaut, members of the board, chief executive officer mr robert igara and the staff, chief secretary ambassador isaac lupari, department heads, members of the diplomatic corps representatives of the private sector, ladies and gentlemen. i thank you for inviting me to the 5th annual report meeting of png sustainable development program limited. ” there are many reasons potential investors give for not investing in papua new guinea. lack of infrastructure, scarcity of skilled labour, high cost and unreliable utilities, small urban centres result in fragmented markets, law and order problems and the non accommodating land tenure system are the causes given by those familiar with the present state of affairs in papua new guinea. as you all know papua new guinea is a very old nation but a new country. we can boast about having one of the most diversified and rich ecological systems in the world in flora and fauna. five large islands with several hundred small ones of unspoiled white beaches, outstanding sceneries of high mountains, fast flowing rivers, swamps and thousands of kilometers of waterways. we have very rich, highly diversified cultures and traditions, with more than 800 languages of which more than 200 are advanced to a stage that the bible can be translated into. there are huge tracks of arable land and tropical forests, very substantive marine resources in the 200 mile fishing zone, the most known resource is tuna but there are many other smaller ones. last but not least an abundance of mineral resources of gold, copper, nickel, oil and gas which have already been discovered, and exploration for others is on the rise. i know that there are difficulties and risks as stated in the opening paragraph of my address. now i will state the opportunities. the mining and petroleum industries are attracting many investors from all over the world. there are new substantive entrants such as the state owned chinese mining company at ramu nickel, barrick that took over the porgera gold mine from placer, and many companies investing large sums in exploration and others that have submitted exploration applications. there are undersea explorations for minerals ( gold ) with positive results. the gas developments are moving into

such competition will only result in price increases, increase in imported inputs, including materials, equipment and labour, and misallocation of the limited resources resulting in losses to the nation. therefore, my recommendation is that during the lng construction period the government should refrain from undertaking major infrastructure projects. undertaking major infrastructure projects by the government will only compete with the limited resources in equipment and manpower in the areas of earth moving, building and construction, as well as other industries that are and will be fully utilized for the lng project construction. the government should instead do work in the areas of, maintenance, upgrading and some instances complement work done by the developer of the lng project. the government should commence planning its infrastructure implementation and be ready to implement them, as and when the lng project scales down its construction operations and the highly skilled labour trained by the developer, equipment and materials, become available and can be utilized, for other infrastructure developments. during the construction phase of the lng project, the government should concentrate its efforts on areas that do not compete with the lng developer on resources, which are the social sectors of education, including the up - skilling of the workforce through vocational and on the job training, health and law and order. it is clear that the expansion of the services in these areas will require investment in classrooms, aid posts, police stations and housing for teachers, health workers and police personnel. the recommendation is not to refrain from all work in the area of building and construction, but to limit them to the bare minimum necessary to maintain the existing infrastructure and complement it with the most needed additions. once the lng project construction winds down, the opportunity to move the skilled labour trained by it, and the resources becoming available, to major infrastructure and building and construction projects should be planned. this means that the government must have a clearly designed plan, including detailed implementation plans and programs for it. iii. combating “ dutch disease ” the second important micro level proposed initiative is to invest in the agriculture sector and social infrastructure. in many presentations of the problems that the development of the lng project might create, the subject of the “ dutch disease ” which involves the pricing out of the traditional export sectors is raised. one of the most efficient ways to counteract it is, by investing and developing a competitive traditional export industry. papua new guinea is bis central bankers ’ speeches blessed with very fertile land, abundant water resources, and available labour force, and has the potential to develop a competitive