1. “ Papua New Guinea Your Investment Destination” a presentation by H.E. Mr. Peter C L Eafeare High Commissioner Papua New Guinea High Commission Suva, Republic of Fiji Islands at the PIPSO Business Forum 2010 8 th December 2010 Sofitel Fiji Resort & Spa, Denarau Islands Fiji

2. Presentation Outline 1.Country Facts 2.Economy 2.1Major Economic Sectors 2.2Economic Performance 2.3Economic Outlook 3.Trade Regime 3.1Trade Relations 3.2Trade Performance 4.Investment Regime 4.1Top 10 investing countries 4.2Investment Incentive 4.3Tax Regime 5.Investment Potential & Opportunities 5.1Available Projects 6.Investment Requirements 7.Contact

3. 2. Country Facts Official name Papua New Guinea (PNG) Form of Government Democratic, (109 Members of Parliament) Head of State Governor General (Queens Representative) Head of Government Prime Minister Capital Port Moresby Business Language English Monetary Unit 1 Kina (K) = 100 toea (t), K1.00 = US$ 0.3635 Population (Year 2000 census) Approx. 5.2 million Religion Dominantly Christianity but practice freedom of religion Land Area 463,000 square kilometers Exclusive Economic Zone (EEZ) 3.2 million square kilometers Number of Offshore Islands 600 Characteristics high mountain ranges, deep valleys & swift rivers in the interior, and open plain, tropical forests and swamp inlets in the coastal regions and 600 islands.

4. 2. PNG Economy  The PNG Economy is distinctively Dualistic: (i) An Export-oriented, capital intensive mineral sector; and (ii) A semi-subsistence sector that provides livelihood for 85% of the population.

5. 2.1 Major Economic Sectors  Agriculture  Forestry  Fisheries  Mining & Petroleum  Manufacturing  Retail & Wholesale  Building & Construction  Banking & Finance  Transport & Telecommunication

6. 2.2 Economic Performance  The country has enjoyed strong economic growth benefiting from half a decade of favorable global economic conditions with strong and sustained world growth, benign inflation and surging commodity prices,.  In 2008, PNG GDP grew at 7.2%, substantially above worlds average growth rate of 4%.  Growth has been broad based, driven in particular by the non-mining sectors ( Non-Mining GDP Growth was 7.9%), especially communication, construction and retail sectors.  Inflation was around 10.6%, significantly due to the increase in oil price that was experienced globally recently,  Foreign Exchange Reserves at end of December 2008 was K5.3 Billion, sufficient for about 7.5 months of total import cover and 10.8 months of non-mineral import cover. ( see next slide on Key Economic Indicators)

7. Principle Economic Indicators

8. 2.3 Economic Outlook >Global Financial Crisis has led to severe deterioration in global economy with recession expected in advanced economies and a significant slow down in developing countries including PNG.  The crisis has translated into sharply lower commodity prices which will have an impact on PNG’s economic and fiscal outlook going forward.  Economic Growth (GDP) for 2009 is forecasted at 6.6% while Non-mining growth is forecasted at 5.6 % which indicate a significant drop in growth from 2008. (See next slides for Projection)

9. Trend and Projection for GDP Growth, Mining & Non-Mining Sector 1995-2013

10. 3. Trade Regime  PNG is dependent on international trade.  It pursues “Everything But Arms” (EBA) Trade policy which promotes fair trade with its trading partners.  PNG undertook Tariff Reform Program since 1999. All import tariffs are currently zero subject to 10% GST.  However, few goods produced in PNG and those that PNG can produce are subject to gradual tariff reduction program under three main categories (see next slide).

11. Tariff Reform Program Reduction Schedule.

12. 3.1 Trade Relation PNG has bilateral, regional and multilateral trade agreements: PNG has bilateral, regional and multilateral trade agreements: I. GATT & GATS under WTO: market access of goods and services on a non-discriminatory basis; II. ACP-EU EPA: entry of goods into EU market on a non-reciprocal basis; III. PICTA - 14 Pacific ACP countries Free Trade Agreement; IV. GSP, duty free entry of goods into certain markets of developed countries, including US and Japan;

13. …trade relation continues… V. MSG: Free Trade Region; VI. SPARTECA, allows PNG products to enter NZ and Australia duty free subject to ‘Rules of Origin’ Regulation; and VII. PACTRA, BTA with Australia provides certain PNG products to enter Australia duty free and unrestrictedly.  These agreements basically provide market access for goods into foreign markets of member countries.

14. 3.2 Trade Performance K’ million, f.o.b EXPORTS BY COMMODITY GROUPS in 2007 Source: Bank of PNG, QEB Dec 2007

15. Trade Performance cont’d… Total Quarterly Imports in 2007 K’ million Source: Bank of PNG, QEB Dec 2007

16. Export Value US$4.14 Billion Import Value US$2.24 Billion BOT (Surplus) US$1.92 Billion Balance of Trade: Dec 2007 Source: Bank of PNG, QEB Dec 2007

17. PNG’s Export Destination & Value Country2004 ( K’ Million) 2005 (K’Million 2006 (K’Million) 2007 (K’Million) Australia3, 745.94, 383.75, 183.45, 593.8 China400.2371.9466.6466.4 Germany686.3736.6569.41, 150.0 Great Britain301.1188.2180.4231.4 Japan900.51, 148.21, 822.72, 343.4 Philippines351.5533.21, 231.31, 068.8 Singapore187.2106.876.4216.6 South Korea504.9754.0562.2352.6 United States181.2146.2135.5214.0 Total8, 417.110, 147.512, 731.513, 858.1 Source: BPNG Statistics

18. PNG’s Import Origin and Value Country2004 ( K’Million) 2005 ( K’Million) 2006 (K’Million) 2007 (K’Million) Australia2, 590.72, 112.72, 071.53, 290.9 China150.693.9133.1235.2 New Zealand154.5233.8171.4216.2 Malaysia78.580.4129.4156.0 Great Britain33.320.945.429.0 Japan206.3181.6303.0327.4 Hong Kong35.254.765.396.0 Singapore279.1299.61, 162.91,139.1 Indonesia69.771.474.199.8 United States380.2650.61, 272.61, 516.9 Total4, 683.14, 712.26,064.07, 776.0 Source: BPNG Statistics

19. 4. Investment Regime  PNG aspires for an investment regime that is transparent and compatible with international best practice which is conducive for Foreign Investment.  PNG promotes a liberal investment environment, which welcomes Foreign Investment in any sector.  PNG is continuously embarking on creating a conducive environment by undertaking major reforms.  Current investment condition is also comparable as any conducive investment environment in the world.

20. 4.1 Top Ten Investing Countries (K’million) Country19971998199920002001200 2 200 3 20 04 200 5 200 6 200 7 Total Malaysia5773, 347 1, 6794104463359253, 05 4 1. 848 4, 187 5, 552 22, 360 Australia2411117914181466859548116 4 38 0 25397886511, 521 China791115599356838012735158 3 5144473376, 243 South Korea49731471348238015110052167156 9 138 6 5, 811 United Kingdom8018913082030241512912442243, 983 Philippines1162381703811622844620 2 54591211, 788 Taiwan015148001, 213 91015111, 367 New Zealand017618222673943874929 621, 307 Singapore574649945411614332 6 612561, 265 United States55115920881682014661, 041 61, 340.00 Source: IPA Certification

21. Foreign Investment in Major Sectors ( K’Million) Sector1997-2007 Petroleum2, 557.4 Manufacturing1, 475.6 Forestry1, 336.00 Agriculture1, 322.7 Mining & Quarrying878.3 Transport, Storage, Communication 856.6 Financial Intermediation554.3 Source: IPA Certification

22. 4.2 Investment Incentives  There are fiscal incentives as well as non-fiscal incentives.  There are sector specific incentives as well as general incentives.  There are 16 different tax (fiscal) incentives.  List of incentives can be obtained from PNG’s Information Desk.

23. Fiscal incentives  Double Deduction for Export Market Development Costs  Rural Development Incentive  Export Income Exemption  Staff Training Double Deduction  Initial year accelerated depreciation provision (amongst others)

24. Non-Fiscal Incentives  Government provides industrial infrastructure facilities for investors who want to go into light industries activities through development of Industrial Centers (Malahang & Ulaveo)  Also, Industrial Parks are created for cluster activities (Konebada Petroleum Park & Madang Marine Parks)

25. 4.3 Tax Regime Rate of Company Taxes Types of Companies Tax Rate (%) Resident Companies Non-Mining & Petroleum Companies 30 Non-Residents, including those engaged in Mining Operations 48 Resident Mining Companies Special Mining Lease & Mining Lease 30 Petroleum Companies (i) Resident & Non-Resident (ii) New Petroleum Project 50 45/30(incentive rate) Gas Companies Resident & Non-Resident 30

26. 5.0 Investment Potential & Opportunities Agriculture and its sub-sectors-coffee, tea & spices, copra, cocoa, Oil Palm, Rice, Copra Oil, Rubber and tropical fruits Agriculture and its sub-sectors-coffee, tea & spices, copra, cocoa, Oil Palm, Rice, Copra Oil, Rubber and tropical fruits Fisheries-PNG has the largest EEZ (3.2 million Square km) in the South Pacific. Fisheries-PNG has the largest EEZ (3.2 million Square km) in the South Pacific. Forestry-with 36 million hectares of enclosed forest of which 15 million hectares of high quality tropical hardwoods Forestry-with 36 million hectares of enclosed forest of which 15 million hectares of high quality tropical hardwoods Services sector-including banking and finance, telecommunication and tourism Services sector-including banking and finance, telecommunication and tourism Mining & Petroleum-extensive reserves of natural gas and oil and copper and gold Mining & Petroleum-extensive reserves of natural gas and oil and copper and gold Infrastructure Sector Infrastructure Sector

27. 5.1 Available Projects  We are currently promoting several projects in the following sectors. (i) Agro-Forestry (Oil Palm Land) (ii) Forestry (Logging) (iii) Mining (Gold Mine & Lime Stone) (iv) Fisheries (v) Agriculture (Cocoa Export & Coffee)  Project Profiles are available on request to the Investment promotion Authority.  Private sector representatives also have projects and are here to discuss also.  We are willing to meet and talk with you all.

28. PNG LNG Project Opportunities There are specific opportunities available in the development of the multi-billion dollar PNG LNG Project. There are specific opportunities available in the development of the multi-billion dollar PNG LNG Project. Look at the website: www.pnglng.com Look at the website: www.pnglng.comwww.pnglng.com

29. 6.Investment Requirements A foreign company wishing to invest in PNG needs to: Register the company with the IPA. Register the company with the IPA. Certify the foreign company with the IPA. Certify the foreign company with the IPA. Obtain respective licenses and permits with other sector responsible Authorities. Obtain respective licenses and permits with other sector responsible Authorities. Apply for Work Permit. Apply for Work Permit. Apply for Working Visa. Apply for Working Visa. Register for a tax file. Register for a tax file. The IPA is able to assist the Foreign Investor to meet these requirements.

30. 7. Summary Papua New Guinea welcomes new investments into the country. Papua New Guinea welcomes new investments into the country. There are enormous opportunities in almost all the sectors for consideration. There are enormous opportunities in almost all the sectors for consideration. Major legislative and Policy Reforms have been effected to make the investment environment conducive for foreign investment in Papua New Guinea. Major legislative and Policy Reforms have been effected to make the investment environment conducive for foreign investment in Papua New Guinea. Tax incentives are provided to Investors and we believe it to be reasonable assistance. Tax incentives are provided to Investors and we believe it to be reasonable assistance. Institutions of State like the Investment Promotion Authority stands ready to assist should you consider investing in Papua New Guinea. Institutions of State like the Investment Promotion Authority stands ready to assist should you consider investing in Papua New Guinea.

31. THANK YOU Visit the Investment Promotion Authority at: www.ipa.gov.pg or www.ipa.gov.pg orwww.ipa.gov.pg e-mail:biepd@ipa.gov.pg