International Trade in Papua New Guinea

News Related to International Trade in Papua New Guinea

Business outline for Papua New Guinea

Economic Overview

After several consecutive years of contraction, the GDP of Papua New Guinea (PNG) made a progress of almost 7% in 2008, due to the good performance in  prices of raw materials of the mining and agricultural sectors and to the success of the discipline in budget policies. After slowing down by 4.5% in 2009 due to the international financial crises, groth recovered in 2010, reaching 8%. The vast project of liquefied natural gas production has recently started and gives hope for future years of strong growth.

A difficult topography, poor quality infrastructures and the state's control over its facilities have obstructed the development of the economy. The priority of the government is to preserve the economic stability and to counter the effects of the crisis by managing strict monetary policies. It also pursues a previously defined middle-term program concerning the management of its debt, development and taxing system. In a more long-term perspective, the government is also conscious of the progress which must be made in terms of education, healthcare, the justice system, infrastrucures and transport.

Papua New Guinea has one of the highest birth rates of the Oceania region (4.6 children per woman), the population also has one of the lowest life expectancy (53.7 years for men and 54.8 years for women) and the literacy rate is among the lowest of the region (56%).

FDI in Figures

Already weak, FDI stocks as a percentage of GDP registered further decline in 2008-2009 as a consequence of the degradation of the international economic situation. The FDI influx however clearly rose in 2009.

In spite of its richness in natural resources, insufficient equipment, state monopolies and political instability are hindrances to the inflows of FDI. 

The mining and oil sectors attract most of FDI coming from the main investing countries which are Australia, Bahamas, the United Kingdom and Malaysia.

Foreign Trade Overview

Foreign trade represented 115% of the country's GDP in 2009. Papua New Guinea is liberalizing its trade and investment regime. The country provides MFN treatment to WTO members and benefits from preferred rights of access to the European Union market since the signing of an interim agreement on economic partnership in July 2009. Therefore, imports from Papua New Guinea have, from now on, duty-free access to the EU market. 

Customs duties are relatively low. However, in order to protect domestic producers, high tariff rates are applied to certain food and plastic products. Unprocessed products are subject to the highest tariffs. The economic instability, inefficient state institutions and the vulnerability to international commodity prices are some trade deterrents. However, transparent and non-discriminatory trade measures are the main trade boosters. 

The trade balance of the country, positive during the recent years, worsened considerably in 2009, due to the falling exports. It should nevertheless remain positive in the coming years.

Its main trading partners are Australia, Japan and China.