Interview: Peter Langslow
To what extent has the economic downturn affected Papua New Guinea’s large corporations?
PETER LANGSLOW: An economic slowdown was widely expected after the completion of a project as massive as the ExxonMobil-led PNG Liquefied Natural Gas (LNG), the value of which was more than one year’s GDP during the 2009-12 period. In reaction, the focus of many corporations has shifted somewhat more internally, to ensure that their house is in order through logistical restructuring and a quest for additional efficiency, strategic coherence and concentration on core areas of competence and expertise. This process will lead to better operational and service levels, as PNG rapidly aligns with international standards, driven by both supply and demand.
In earlier decades, corporations with the financial capacity, organisational and human resources, and presence in-country were able to pursue a broad and diverse spectrum of businesses, but as market conditions change rapidly and the economy modernises, competition is intensifying and customer and consumer requirements are becoming ever more discerning. Our own group has been involved in a vast range of commercial enterprises, but in more recent years there has been a more strategic rationalisation, and we are down to a more coherent group of businesses focused on transport and logistics, property development, hospitality and consumer products, enabling us to better respond to market demands.
What economic factors will determine the performance of the shipping industry in 2016 as PNG prepares for major energy projects?
LANGSLOW: For our shipping business, we expect 2016 will prove a year of two distinct halves, with the projects and charter side picking up business during the first half. We expect the second half to be quieter on the projects side, pending a pick-up over the next year or two from the next major phase of project-related work. As for traditional liner shipping, moving boxes and general cargoes, tonnages carried have been flat but we hope may pick up in the second half thanks to a better coffee crop – as coffee remains a sector which contributes to the levels of other economic and consumer activities in PNG.
Moving into 2017, pre-election spending will also be a positive factor boosting the general level of economic and market activity. In general we remain optimistic about the prospects for both the shipping industry and the PNG economy as a whole, especially beyond 2018. We have ridden the ups and downs over past decades and are familiar with the cyclical nature of things. But the underlying opportunities and promise continue to be huge. The resources are here, and there is also great demographic potential and other opportunities for the country to modernise and grow. To give one example, at the moment less than 20% of households have electricity, but the government’s target is to get that to 70% by 2030, which will have a tremendous impact on manufacturing and consumption, as households will be able to buy and store vastly more perishables than at present.
What are the aims behind expansions at ports, and how could this spur economic growth?
LANGSLOW: Well this is one of the main questions, really, as the bottleneck previously experienced has disappeared, especially in Lae where considerable constraints were experienced during the period of PNG LNG. The first phase of the Lae Tidal Basin expansion is now operational, with subsequent stages of expansion still in prospect. At the same time, Port Moresby is gradually relocating its port facilities to Motukea, across Fairfax Harbour. The move will enable a transformation of Port Moresby’s waterfront and central business district, in anticipation of which we have already completed a new office and restaurant development, which we intend to build upon.
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