Despite a bleak outlook in Papua New Guinea presently, there is some optimism businesses will bounce back and overcome the challenges and impacts from Covid-19.
These are the views of participants in the recent Pacific Trade Invest PNG-focused Pacific Business Monitor Survey (two) available HERE, which are also shared by Rio Fiocco.
Based in Port Moresby, Rio is the current Port Moresby Chamber of Commerce and Industry (POMCCI) President, and Partner at Fiocco Nutley Lawyers, a law firm with seven lawyers in PNG’s capital city.
Rio, who is currently in self-isolation after one of his staff tested positive for Covid-19, says many businesses are struggling because of the pandemic.
Ninety-two percent of PNG businesses report it is having a negative effect in the Pacific Business Monitor Survey.
Covid-19 is obviously directly affecting Rio’s law firm, with his staff working from home and having to do an extensive office clean.
“Our Lawyer recently appeared at the National Court of Justice, so the courts have now closed for two weeks.
“Judges and Courtroom Officials have been tested for Covid-19, along with me and my staff – so it has had a direct impact on my business.”
Wearing his POMCCI hat, Rio says the organisation has adapted to the new normal by holding online executive meetings, and cancelling regular breakfast get togethers.
In the survey, 93 percent of PNG businesses report a decline in revenue due to the pandemic, but unfortunately, the Government has offered limited financial support to PNG businesses due to budgetary constraints, Rio adds.
“Some assistance by way of loans and grants to SMEs has been announced but the funding has yet to be released; and some small concessions have been offered by the Internal Revenue Commission to give businesses more time to lodge and pay their taxes.”
Nearly 70 percent of businesses report in the survey they are dissatisfied with government support available to them.
Sectors hit particularly hard in PNG as with elsewhere in the world, are tourism and hospitality.
“They are starting to pick up now that domestic flights are almost back to normal except for restricted flights to Bougainville and West Sepik regions (due to their sharing a border with Solomon Islands as well as Papua province in Indonesia),” Rio explains.
Many businesses have seen a drop in sales from 30 to 50 percent and some such as SPBrewery, have seen sales plummet due to liquor bans in place for stores.
“They have been forced to close their cassava factory in Morobe province, which makes pawa punch from cassava.
“SPBrewery is still paying the cassava farmers to produce cassava however, even though it is no longer being supplied to their closed factory.”
Other businesses such as pokies outlets and bookmakers have just reopened after being ordered closed for three months, and they must ensure patrons are socially distancing 1.5m apart, and there is a limit of 100 customers on their premises.
Businesses from Lae Port all along the Highlands Highway are being impacted by the closure of Porgera Gold Mine, ordered by the Government.
“Porgera Joint Venture is now retrenching most of its workforce of around 2700 being made redundant because of the Government not renewing the mining lease after the 30-year term expired.
“Barrick Nuigini Ltd, the operator of the mine, is challenging the Government’s decision at the National Court by way of a judicial review,” Rio says.
Meanwhile, businesses are anxiously waiting on positive news concerning the grant of a mining lease to the operators of the Wafi Golpu Copper and Gold Mine near to Wau in Morobe province.
“This will be a huge boost to businesses in nearby Lae as construction will cost over $US2.5 billion.”
“Businesses are also waiting to see if the Government will soon conclude negotiations with Exxon Mobil and its joint venture partners on the proposed Pynang LNG Project, which is estimated to cost around $US13 billion.”
While businesses have been hit hard by the pandemic, most businesses are adapting to the new normal, reducing staff and non-essential travel and hosting online meetings.
Although resilient, there are three main challenges for most PNG businesses at present – not knowing how long the crisis will last; impact of closed international borders and poor cash flow.
Over half of the survey participants are somewhat confident or greatly confident their business will survive – hope remains among the people of PNG.
Contact Trade Development Officer at PTI NZ Riley Birtwistle Riley.B@pacifictradeinvest.co.nz to register for the Pacific Business Monitor Survey.