Last week the Pacific Island economist for the A.N.Z. Bank urged Samoa to look west to Papua New Guinea (P.N.G.) and capitalise on its “booming economy”.

Dr. Kishti Sen is of the view that developments in the Pacific Islands’ largest economy point to a massive boom in the agriculture, oil and gas sectors. 

He suggested that P.N.G. will be the region’s “next China” – with its population at nine million out of the Pacific’s 11 million people and its US$20 billion contribution to the region’s US$25 billion gross domestic product (G.D.P.) – and Samoa should place itself in a position to capitalise on any opportunity.

According to Dr. Sen, the growth in the P.N.G. economy will lead to an expansion in the country’s middle class, who are set to make the most of a US$5 billion ($13.06 billion) expansion in the country’s L.N.G. facilities and prepare for another $15 million investment.

But it is in the construction phase of the second P.N.G. L.N.G. Project where Dr Sen see opportunities for Samoa, and he makes reference to the construction phase of the first P.N.G. L.N.G. Project led by ExxonMobil, where close to 10,000 workers were recruited from Asia to build the plants.

But are there really any opportunities for Samoa in P.N.G. and is this the right time to look west to the region’s largest economy?

Firstly, let us look at the analysis of Dr. Sen, and compare that with the realities on the ground in P.N.G. 

He was correct in highlighting the transformational effect of the country’s oil and gas sectors, and alerting Samoa to the opportunities that could come from the second L.N.G. Project (Papua L.N.G. Project led by the French major Total and its partners).

But unlike PNG’s first ExxonMobil-led P.N.G. L.N.G. Project – the narrative has changed to one of anger and frustration amongst Papua New Guineans since the first export of liquified natural gas to Japan in May 2014 – at the failure by the Government of the then Prime Minister Peter O’Neill and ExxonMobil and its partners, to ensure tangible benefits from the gas project reached the impacted communities in the Highlands of P.N.G. 

Failure by the O’Neill Government to establish a sovereign wealth fund, to capture proceeds from the sales of liquified natural gas, added to the growing public anger in P.N.G. 

In April last year Australian non-government organisation Jubilee Australia released a report titled “Double or Nothing: The Broken Economic Promises of PNG LNG”. It was a damning assessment of the success of the ExxonMobil-led L.N.G. Project. Its conclusions were the size of the PNG economy did not double; household incomes did not increase and actually fell by 6 per cent; employment did not increase by 42 per cent but actually fell by 27 per cent; government expenditure on education, health, law and order and infrastructure did not increase by 85 per cent and fell by 32 per cent; and imports did not increase by 58 per cent and actually fell by 73 per cent. 

In May this year O’Neill resigned as PNG Prime Minister, following pressure from MPs within his own People's National Congress Party, and defections of senior ministers to the opposition. A week later former finance minister James Marape was elected the new P.M., who revealed frustration over O’Neill’s handling of negotiations in the Papua L.N.G. Project forced his exit from cabinet.

With the waters still murky following O’Neill’s resignation, and Marape entering office with a nationalist agenda to ensure Papua New Guineans directly benefit from the country’s natural resources, it would be some time yet before the region’s largest economy considers sharing the benefits of its wealth with others.

However, we concur with Dr Sen’s reference to the growing importance of P.N.G’s middle class and the role they will play in that country’s development. 

He said the P.N.G. middle class is not only young but well informed and more globally connected than their seniors.

“They understand a lot more and they want prosperity for P.N.G. now, they don’t want to wait another 20 years before they see the benefits of the huge endowment of their resources,” he said. 

“If you look at Papua New Guinea’s growing middle class, what do they need?

“This is where [Samoa] could come in, whether it is manufacturing, or supplying products to meet consumer demand.”

In the next decade, that group of affluent citizens will start looking outside P.N.G. for cheap travel destinations for rest and relaxation, and Samoa would be ideal with its famous tourist attractions and cheap airfares out of ports such as Brisbane. 

Throw in the crime-free life that Samoans live, cheap cost of living (compared to P.N.G.), and some of the lowest housing rental rates in the Pacific Islands, you can be assured of affluent Papua New Guineans checking out opportunities in this island paradise. 

Have a lovely Tuesday Samoa and God bless.