The project to pipe gas to Australia, and to create some home-based industries, will create an even more significant economic base by the end of this decade. Earlier economic analysis has suggested that this gas project (the PNG development component of which will cost US$2.5 billion or K7.8 billion) will cause the PNG economy to grow by around 15 per cent annually for about five consecutive years before its impact tapers off.
Current government forecasts, and those of the World Bank and IMF, do not take the project into consideration as yet. Even that rate of growth will not help the country catch up with per capita incomes of 1975, but we will be well within sight of getting there again, leaving aside issues of equity.
Piping of gas is expected to commence towards the end of 2009. Within two to three years of that date, if all goes well, a huge Japanese consortium will also build a multi-billion kina petrochemical plant in Port Moresby, using gas as a feedstock. Other major developments are also being pursued, including manufacture of liquefied natural gas, fertilisers and possibly a gas-to-liquids facility.
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Although these projects will boost export revenues and government income they will create limited employment growth - far less than the country presently needs.But given sensible policies and good planning for improvements in other sectors of the economy, the future economic outlook appears brighter than it has ever been. Good government and good governance is needed to get there.
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About the Author
Brian Gomez is based in Sydney and is Asia-Pacific editor for The National , a daily newspaper in Papua New Guinea. He also contributes a regular column to PNGIndustrynews.net, a Perth-based website. Brian has worked as a journalist in Australia, Papua New Guinea, Singapore and Malaysia and has a special interest in development issues.