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U.S. Department of State
Papua New Guinea Country Commerical Guide
Office of the Coordinator for Business Affairs



                          1996 Country Commercial Guide
                                 Papua New Guinea

Table of Contents

Chapter I.      Executive Summary
Chapter II.     Economic Trends and Outlook
Chapter III.    Political Environment
Chapter IV.     Marketing U.S. Products and Services
Chapter V.      Leading Sectors for U.S. Exports and Investment
Chapter VI.     Trade Regulations and Standards
Chapter VII.    Investment Climate
Chapter VIII.   Trade and Project Financing
Chapter IX.     Business Travel
Chapter X.      Appendices




Chapter I.  Executive Summary

Papua New Guinea's (PNG) population of more than four million and land 
area of 463,000 square kilometers make it by far the largest Pacific 
Island nation.  PNG's rich natural resource base, including gold, 
copper, hydrocarbons, tropical timber, and fisheries, along with 
treecrops (coffee, cocoa, copra, and palm oil) provide the country's 
principal business opportunities, both for investment and as a market 
for exports of equipment and other inputs.

Although natural resources and treecrops generate significant export 
revenues, 85% of the population resides in isolated villages, engaged in 
subsistence and smallholder agriculture.  As a result of the limited 
linkages of much of the economic activity in PNG with the bulk of the 
population, the country continues to exhibit the labor-market structure 
and standard social indicators (such as literacy, infant and maternal 
mortality, and life expectancy) of a very low-income nation.

One of PNG's strongest attractions is political stability.  The country 
is democratic to the core; its traditional village society is based on a 
natural democracy where all important decisions are made by consensus.  
Since independence from Australia in 1975, all changes of government 
have followed peaceful parliamentary procedures and/or free and fair 
national elections.  The most recent change of government, in August 
1994, was also peaceful and followed a Supreme Court decision that 
overturned the irregular Parliamentary re-election of the previous 
government.  With more than 1,000 ethnic groups and more than 800 
distinct languages, however, a sense of nationhood is still building 
among the populace.  Some evidence of this can be seen in the occasional 
tribal wars still occurring in the Highlands.  

Land disputes are endemic because most land is communally held and there 
is no established system of land registration in most areas.  Investors 
must therefore pay particular attention to landowner concerns and 
community relations.  Crime, especially in urban areas, is a serious 
problem which adds to the cost of doing business in PNG.  Demands for 
compensation by landowners are increasingly accompanied by threats of 
violence, usually against property owned by developers or the government 
or, less frequently, by actual vandalism or destruction of such 
property.

While disputes over land ownership and compensation continue to 
complicate mineral development and exploration, several new  projects 
are moving ahead.  One is construction, on Lihir Island, of one of the 
largest gold mines outside South Africa, scheduled to commence in late 
1995.  Another is the pre-development phase of the Gobe and Southeast 
Gobe oil fields in the Gulf and Southern Highlands provinces, 
construction on which could begin in early 1996.  Several other new 
small and medium-size mining projects are planned or under way.  These 
projects could provide market opportunities for American exporters of 
equipment, supplies, and services.

Growth of U.S. exports of consumer goods to PNG has long been inhibited 
by the small size of the market; the distance to the market; the lack of 
frequent, regular and inexpensive shipping service from the U.S.; and 
dominance of the market by neighboring Australia, the largest donor of 
development aid to the country.

After several years of strong real GDP growth, the PNG economy began to 
undergo serious fiscal and balance of payments crises in 1994 caused by 
government overspending in previous periods.  Late in the year, 
increasing depletion of the country's international reserves forced the 
GPNG to devalue and then "float" the kina, which has since depreciated 
almost 30% against the U.S. dollar.  Foreign exchange remains scarce and 
domestic credit is restricted by tight monetary policy designed to curb 
inflation.  In addition, the GPNG still owes an unknown, but probably 
substantial, sum in arrears on debt to the domestic private sector.  All 
these factors restrict the ability of both the government and the 
private sector to import.

In May 1995, the GPNG announced agreement with the IMF and World Bank, 
at the officials level, to macroeconomic targets and a series of policy 
reforms designed to restore economic stability and achieve strong future 
growth.  Once the structural adjustment program (SAP) is finalized, PNG 
is to receive loans totalling US$ 350 million over the next 2 years.  
This should help to ease the foreign-exchange situation.  One of the key 
reforms required by the SAP is significant liberalization of trade and 
investment policies.  Also of interest to exporters is the government's 
commitment to shift resources from consumption to investment 
expenditure.  The many capital projects envisioned over the next several 
years could offer significant opportunities for suppliers of equipment, 
materials, and services to the construction sector.
     
Country Commercial Guides are available on the National Trade Data Bank 
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the Internet, please use the following World Wide Web address: www.stat-
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on diskette from the National Technical Information Service (NTIS) at 1-
800-553-NTIS.



Chapter II.  Economic Trends and Outlook

Major Trends and Outlook

PNG has experienced sharp swings in economic performance since the 
closure in 1989 of the Panguna Copper Mine -- then a major source of 
export earnings -- in Bougainville due to violent civil unrest.  The 
mine closure coincided with a sharp and sustained deterioration in 
prices for the country's principal agricultural exports.  In response to 
these economic shocks, the government initiated a program of structural 
adjustment and stabilization with the support of the World Bank, 
International Monetary Fund and other donors.
  
Between 1991 and 1993 there was a strong recovery in economic growth, 
with real GDP increasing by 9.5% in 1991, 11.8% in 1992 and 16.6% in 
1993.  The recovery was largely driven by a mineral and petroleum boom 
centered in the Highlands region.  The new gold and oil revenues eased 
the immediate financial pressure on the GPNG and the policy reforms 
initiated under the structural adjustment program did not take root. 
Instead, the GPNG embarked on expansionary spending and tax-reduction 
policies which culminated in a fiscal deficit that ballooned to an 
annualized rate of over 10% of GDP by June 1994. 

"Expenditure-control measures" instituted in July 1994 slowed spending 
and curtailed the reported 1994 deficit to an estimated 2.3% of GDP.  
However, a substantial amount of government arrears  to the private 
sector, from 1994 and prior years, was carried over into 1995.  

Real GDP growth slowed to about 3% in 1994. The GPNG has predicted that 
1995 will see the deepest recession in PNG's 20-year history, with 
overall real GDP contracting 5.4%.  The decline is primarily 
attributable to an anticipated drop in production from PNG's aging mines 
and oil fields.  Overall real GDP growth is expected to remain well 
below the population growth rate (estimated at between 2.3% and 2.8% 
annually) for the remainder of the decade.  

PNG is heavily dependent on imported goods and services, both for 
consumption and as inputs for its exports.  According to the Central 
Bank, year-on-year inflation reached 12.2% for the quarter ending March 
31, 1995.  Actual 1995 inflation will probably exceed the 15% forecast 
in the GPNG's 1995 budget assumptions, primarily due to greater than 
anticipated depreciation of the kina.

In May 1995, the GPNG announced agreement, at the officials level, with 
the IMF and World Bank to macroeconomic targets and a series of policy 
reforms designed to restore economic stability and achieve strong future 
growth.  Drawdowns of economic recovery loans to be offered by the World 
Bank will be strictly contingent on implementation of the agreed 
reforms.

Principal Growth Sectors

Despite the projected overall decline in real per capita GDP, the GPNG 
has forecast robust real growth in the construction sector over the next 
several years, peaking at estimated 30% and 43.5% real sectoral growth 
in 1995 and 1996, respectively.  Start-up of work on the $671 million 
Lihir gold mine project will be the principal contributor to the 
construction boom.  In addition, construction projects for airports, 
highways, disaster rehabilitation, development of the Gobe oil field, 
and a petroleum refinery are planned or in early stages of 
implementation.  

The agriculture, forestry, and fisheries sector is expected to enjoy 
real growth in the 5 to 6% range for the remainder of the decade.  
Export-volume increases are expected in cocoa, coffee, palm oil, tea, 
and fisheries.  Export-volume declines are expected in copra.  Relative 
stability is anticipated in log- export volumes as the result of a 
government commitment to sustainable development of the forestry sector.

Government Role in the Economy

The government has a prominent role in the PNG economy. Government 
expenditure accounts for about 30% of GDP.  Government also accounts for 
about a third of formal employment.  A relatively young country, PNG has 
not developed a large number of government-owned or -subsidized 
enterprises.  However, the government has intervened heavily in economic 
activity through an extensive system of licensing and approval 
requirements and through trade restrictions and price controls.  The SAP 
under negotiation with the World Bank calls for privatization, 
liberalization of trade and investment, and decontrol of prices.  While 
the government has committed itself publicly to specific reforms, the 
SAP has yet to receive Board approval by the Bank or Fund.

Balance of Payments Situation

As a result of the expansionary fiscal policies pursued from 1991 
through the first half of 1994, the most significant constraint facing 
the economy has been the persistent loss of international reserves.  The 
continuing declining trend in international reserves culminated in a 12% 
devaluation of the kina against the U.S. dollar in September 1994.  The 
devaluation failed to restore foreign-exchange levels, so the GPNG 
decided in October to allow the kina to "float."  The currency has 
depreciated about 18% since that time.  As of this writing (July 10, 
1995), the kina continues to depreciate steadily at the rate of US$ 
0.001 per trading day.

The fall in the kina's value thus far has not been sufficient to 
increase the demand for the currency, and foreign exchange continues to 
be in short supply.  Foreign reserves slumped to K42.8 million by the 
end of March 1995, just 3 weeks of total import cover.  Reserves have 
not improved since.  The Central Bank has expressed confidence that the 
situation will improve in the second half of 1995 due to a fall-off in 
imports; expected significant foreign exchange inflows with the 
commencement of the coffee season, which has been delayed due to 
prolonged wet weather; and as economic support loans become available 
for drawdown.

The GPNG has forecast modest balance of payments surpluses after 1995 
but continued low levels of reserves (less than 2 months of total import 
cover) for the remainder of the decade.

Infrastructure Situation

Because PNG lies off the major sea routes and generates little cargo 
itself, sea freight costs to and from PNG are high, and service to and 
from the rest of the world is infrequent.  Transportation by road within 
the country is difficult and expensive due to the mountainous terrain.  
The capital, Port Moresby, is accessible from the rest of the country 
only by sea or air.  In the center of the country, the Highlands Highway 
links the port of Lae to major centers in the Highlands.  Little 
additional road development has taken place, and maintenance of existing 
roads is poor.  Road transportation is further complicated during wet 
weather when roads and bridges can be closed due to landslides and 
floods.  

Because of the lack of roads between the major population centers, 
products must be unloaded at various ports and then transported inland 
by road.  The ports of Port Moresby and Lae together handle 70% of the 
country's imports.  Port Moresby is the focal point for the National 
Capital District and Central Province.  Lae serves Morobe province and 
the Highlands.  Other important ports are located at Madang, Wewak and 
Rabaul.

Electric power reaches only about 12% of PNG's population.  Although 
telephone service is sophisticated and quite reliable, especially in the 
urban areas, only about 1% of the population currently has telephone 
equipment.  Expansion of the telecommunications network and rural 
electrification therefore represent long-term trade opportunities for 
exporters of necessary technology and equipment.


Chapter III.  Political Environment

The Independent State of Papua New Guinea is a Westminster-style 
parliamentary democracy within the British Commonwealth system.  The 
British monarch is recognized as the Head of State, and is represented 
by a Governor General.  The three branches of government are the 
Legislature, the Executive, and the Judiciary. 

The National Parliament is the law-making institution in PNG.  The 
National Executive Council, or Cabinet, determines policy for the 
country.  An independent Judiciary interprets the Constitution and 
protects the people's basic rights which are embodied therein.   The 
laws of PNG include: the Constitution; the Organic Laws; acts of 
Parliament; emergency regulations; subordinate enactments; and the 
Underlying Law (traditional/customary laws).  

The country is divided into 20 provinces.  Under the constitutional 
amendments of the "Organic Laws" of 1976, these provinces were granted 
some political autonomy.  However, with the passage of the Provincial 
Government Reform Bill in June 1995, the provinces will lose much of 
their autonomy.  The reforms are controversial, and their implementation 
could be destabilizing if not well managed by the national government.

Since Independence, PNG has enjoyed peaceful democratic transitions of 
its government.  National elections are held every five years; the next 
is scheduled to take place in 1997.  There are at least 10 political 
parties active in PNG.  Since no party has ever achieved a clear 
majority in Parliament, governments are formed through negotiated 
coalitions.  Alliances are fluid and pragmatic, and most of the parties 
take similar stances on many issues.  The frequency of changes in 
government has been reduced by the enactment of a "grace period" giving 
a new government 18 months in office before it is subject to a vote of 
"no-confidence" and a one-year "grace period" before a scheduled 
national election.  

September 1995 will mark the 20th Anniversary of PNG's independence.  
Prior to 1975, the country was under Australian trusteeship.  PNG has a 
friendly political relationship with the United States which began 
during World War II.



Chapter IV.  Marketing U.S. Products and Services

Distribution and Sales Channels

The total potential market for consumer products is small, and extremely 
fragmented.  The main townships are isolated from each other by 
inadequate communications, and many people with cash to spend still live 
in outlying villages.  In the major urban centers of Port Moresby, Lae, 
Goroka and Mount Hagen, retail shopping is dominated by the major 
supermarket chains and a small number of independent stores.  In fact, 
the major supermarket chains are both importers and wholesalers for a 
wide range of imported, Western-type products.  Through their wholesale 
operations, the chains also serve as a type of distribution network to 
the villages.    

Finding a Partner

Accountancy and law firms in Port Moresby probably have the best 
contacts and access to information necessary to locating a suitable 
partner in PNG.  In addition, "match-making" of potential joint-venture 
partners is one of the key functions of the Investment Promotion 
Authority (IPA).  To this end, IPA lists foreign and Papua New Guinean 
investors seeking joint-venture partners in its monthly newsletter and 
will give more personalized assistance to the prospective exporter or 
investor.  The Small Business Development Corporation and the various 
Chambers and Industry Associations also can be helpful in this regard.

Steps to Establishing an Office

All foreign enterprises that carry on business in PNG must be certified 
by the IPA.  All businesses must be registered with the Office of the 
Registrar of Companies.  Companies intending to set up an office in PNG 
should consult a local attorney regarding these and other requirements.

Selling Factors/Techniques

The most significant barriers to U.S. exports are the small size of the 
market, the distance to the market, infrequent shipping schedules, and 
Australia's market dominance.  Because of ingrained habits, colonial 
ties, and the monopolistic nature of several industrial sectors, many 
importers continue to buy from Australia, even when other countries 
offer more competitive pricing.

To counter Australia's geographical and historical ties, U.S. exporters 
need to visit PNG often.  They must also be committed to follow up on 
their visits by phone, letter, and facsimile contact.  Competitive 
financing is a key factor in large projects.  For consumer goods, the 
ability to consolidate cargo and ship mixed containers will be an 
important plus.  

Advertising and Trade Promotion

Advertising, some of it fairly sophisticated, is carried in Port 
Moresby's two daily newspapers, the "Post-Courier" and "The National"; 
on radio stations owned by the National Broadcasting Commission; on 
PNG's one broadcast television channel, EM-TV, also government-owned; 
and on the privately-owned FM radio station, Nau-FM.  Exporters of 
consumer goods may wish to consider advertising in Melanesian Pidgin, 
the lingua franca of most Papua New Guineans.

Pricing Product

Price controls are in effect for a number of consumer goods, mainly food 
products.  These controls are poorly enforced, and are scheduled to be 
phased out under the SAP.

Selling to the Government

At present, the most important limitation on the ability of foreign 
suppliers to sell to the GPNG is the government's cash crisis and the 
foreign-currency shortage.  Initial contact should be made with the 
Department that would use the product or service.  However, final 
approval of purchases must be made by a centralized Tenders Board.

Protecting Your Product from IPR Infringement

PNG has not signed on to the major international intellectual property 
rights conventions.  Piracy of videos, broadcast television, and music 
cassette tapes occurs.  PNG has been approved for membership in the 
World Trade Organization, and the IPR situation should improve as PNG 
begins to implement its obligations under the Uruguay Round TRIPS 
Agreement.  Proprietors of trademarks may register with the Registrar of 
Trade Marks, established in 1979. 

Need for a Local Attorney

Generally speaking, routine export transactions should not require the 
services of an attorney.  If a contract is being entered into or a 
dispute has arisen, it is wise to retain a local attorney.  There are 
several reputable local firms, most of them associated with Australian 
law firms, to choose from.  A list can be obtained from the Embassy.



Chapter V.  Leading Sectors for U.S. Exports and Investment

Exports

Note:  Developers of major projects in PNG frequently commit to using 
local suppliers to the extent possible.  U.S. companies that associate 
themselves with local firms may enjoy an advantage in winning contracts 
for such projects.

Equipment/Services for Oil and Gas Exploration and Development

Significant oil reserves have been discovered in the Gobe and Southeast 
Gobe fields in the Gulf and Southern Highlands provinces.  The project 
participants have been granted predevelopment licenses.  If the project 
proceeds to development, construction could start in early 1996 and oil 
production could begin as early as 1997.  Production is estimated at 
50,000 barrels per day.  The fields will be operated by Chevron Niugini.  

Companies currently exploring for oil and gas in PNG include Chevron, 
Exxon, British Petroleum, Phillips Petroleum, Barracuda, Union Texas, 
Oil Search, and several others.  Suppliers of drilling equipment and 
services should enjoy significant export opportunities.  
 
Mining Equipment/Services

Plans are well advanced for a gold mine on Lihir Island, with 
construction to start in late 1995 and production to begin in 1997.  The 
operation's reserves, conservatively estimated at 14.6 million ounces of 
extractable gold, would make it one of the largest gold mines outside 
South Africa.  Capital expenditure for the mine and related facilities 
is estimated at US$ 671 million.  Construction of several other smaller 
mines is under way or planned.  Major expansion of the world-class 
Porgera gold mine has also begun.

Forestry Equipment and Services

PNG is blessed with a rich and abundant virgin tropical forest resource.  
Since 1990, the value of PNG's round-log exports has grown almost six-
fold, reaching US$ 410 million in 1994, while the volume of log exports 
has tripled, to 2.9 million cubic meters in 1994.  Logs are now PNG's 
third-largest export-earner, after crude oil and gold.  The GPNG has 
pledged that log exports will stabilize at around 3 million cubic 
meters, reflecting the current estimated maximum sustainable annual 
yield.  At present, only a tiny fraction of PNG's forest-product exports 
are processed.  The GPNG is actively encouraging more downstream 
processing, although its announced goal of phasing out round-log exports 
by the year 2000 may not be achievable.  

The large-scale logging industry could provide export opportunities to 
U.S. manufacturers of heavy equipment.  In addition, environmental 
groups anxious to preserve PNG's outstanding biodiversity are 
encouraging and supporting small-scale community-based operations, which 
may be of interest to manufacturers of appropriate technology such as 
portable sawmills and chain saws.  Finally, industrial loggers and 
others have announced plans to open large-scale processing facilities, 
including chip mills, saw mills and plywood plants, which will require 
imported equipment.

Aircraft and Helicopters, Parts and Service

Due to its limited road network, PNG is heavily dependent on air 
transportation.  In addition, exploration for minerals and hydrocarbons, 
which usually takes place in remote and isolated locations, is dependent 
on helicopters.  A logging company hopes to begin heli-logging in Gulf 
Province.  Several third-tier airlines and helicopter companies are 
active in PNG.  

Construction

The ground was recently broken on a 935 million-yen contract for the 
first phase of redevelopment of Jacksons International Airport in Port 
Moresby.  The contract, awarded to the local subsidiary of a New Zealand 
company, includes building and civil works for international and 
domestic passenger terminals, associated aircraft parking areas and 
taxiways, access roads and car parks.  The second phase of the project, 
which has not yet gone to tender, will include equipment and systems for 
air navigation, airfield and approach lighting, and the airport power 
system.

Two competing oil refinery projects have been approved by the PNG 
Cabinet.  Both projects have U.S. corporate involvement.  One is 
intended for the Port Moresby area, while the other would be built near 
the terminus of the Kutubu pipeline; each would have a capacity of 
30,000 barrels per day.  The promoters of both projects are currently 
seeking financing and meeting final GPNG approval requirements.  It is 
unlikely that the market in PNG can support more than one of these 
projects.

The 1995 GPNG budget allocated over US$ 100 million to highway and road 
projects.  Once under way, the projects could generate a demand for 
heavy equipment from U.S. suppliers.  Progress in implementing the 
projects has been slow.

PNG has obtained a multi-million-dollar assistance package for 
reconstruction of Rabaul, formerly the major port and population center 
in the New Guinea Islands, which was largely destroyed by volcanic 
eruptions in September 1994.  The Rabaul airport was destroyed and will 
not be rebuilt.  The Japanese Government is providing finance for 
expansion of the nearby Tokua airfield.  The effective implementation of 
donor-funded relief programs for disaster areas, including ensuring the 
full and effective operationalisation of the Gazelle (Peninsula) 
Restoration Authority, is one of the targets of the SAP.

Finally, rehabilitation of infrastructure on Bougainville Island, which 
was heavily damaged during a six-year insurgency, is scheduled to 
commence in the near future.  The Australian Government has pledged over 
US$ 7 million in assistance for the effort.  

Ethnic Hair-Care Products and Cosmetics

Several potential importers have contacted the Embassy's Commercial 
Section to locate suppliers of hair-care products.  Manufacturers of 
beauty products for the African-American market could find PNG a small 
but growing niche market.  This market will only expand as more Papua 
New Guineans enter the cash economy.

Best Prospects for Agricultural Products

Rice

PNG grows very little rice, the staple food of many Papua New Guineans.  
A single Australian company supplies all of PNG's requirements for 
imported rice, over 150,000 metric tons per year.  Several local 
importers have expressed interest in establishing a long-term 
relationship with a U.S. rice supplier prepared to make the commitment 
necessary to secure a share of this potentially profitable market.  A 
GSM-102 Program, instituted by USDA in 1994, is available to facilitate 
financing of U.S. rice exports.  

High-value Food Products

There is a considerable foreign expatriate community (estimated at up to 
40,000 people) living in the major urban centers.  This community and 
upper- and middle-income Papua New Guineans consume a wide range of 
imported, Western-type foods.  Although the market is dominated by 
Australia and New Zealand, the U.S. Agricultural Trade Office in 
Singapore has identified market opportunities for U.S. companies to 
export the following food products:  apples; frozen fries; snack foods; 
non-alcoholic beverages (particularly tetra-packed); confectionery; 
frozen entrees; frozen vegetables; and sauces, spices and salad 
dressings.  In addition, food-product exporters should not overlook 
possibilities to supply catering operations at the country's major 
mining and petroleum venues.  

Significant Investment Opportunities

Mining

PNG represents one of the most gold- and copper-enriched sections of the 
earth's crust.  In a 1994 summary of estimated total identified gold 
resources by country, PNG ranked sixth.  The combined gold production of 
Porgera, Misima, and Ok Tedi alone was sufficient to rank PNG as the 
eighth-largest gold-producing nation in 1993.  The later ranking will 
only rise when the Lihir gold mine begins production in 1997.  The 
combined copper production from Panguna and Ok Tedi in 1987 made PNG the 
twelfth-largest copper-exporter in the world.  PNG has potential as a 
producer of nickel, cobalt and chromite as well.

Given the favorable geologic setting, the likelihood of exploration 
success in PNG is considered very high.  Similarly, PNG's fiscal regime 
is competitive.  The principal impediments to further development of the 
sector are difficulties and uncertainty relating to compensation claims 
and other issues stemming from the traditional land tenure system, some 
instability in fiscal policy as the GPNG attempts to deal with these 
issues, and the rugged topography of the country. Nevertheless, major 
mining companies continue to explore, to operate and to prosper.

Petroleum

Exploration success-rates are world-class in the Highlands Fold Belt 
area of PNG and are generally above those of its neighbors in Southeast 
Asia.  Although the fiscal regime ranks in the middle range of those 
offered in the region, the projects discovered to date are financially 
attractive, due to the high production rates and low cost-base of those 
developments.  A developing infrastructure in the Highlands, including 
the Kutubu oil pipeline, makes production from small to medium-size oil 
fields profitable in the area.  The Kutubu fields produce a  light sweet 
crude oil suitable for production of transportation fuels.

Liquefied Natural Gas

PNG has an estimated 15 trillion cubic feet (TCF) in proven, probable 
and possible natural gas reserves and enjoys an ideal geographic 
location for access to the Asian liquefied natural gas (LNG) market.  
According to industry analyses, PNG could be well-poised to compete for 
the Asian market during a window of opportunity that will emerge between 
2002 and 2010, provided it acts in a timely manner to create an 
investment climate capable of attracting the capital of up to US$ 10 
billion necessary to finance such an endeavor.  Over the last several 
months, the petroleum industry has been working with the GPNG to develop 
an adequate fiscal regime to serve as a basis for additional exploration 
and development.

Fishing and Fish-Processing

PNG has significant tuna resources that are currently being exploited 
only marginally.  The primary fishers in PNG waters are the U.S., South 
Korea, Taiwan, and the Philippines.  U.S. boats operate under the U.S.-
South Pacific Tuna Treaty, which provides up to 50 licenses to purse-
seiners per year.  Other nations have made separate bilateral agreements 
with PNG.  The GPNG is actively trying to attract investors to build on-
shore fish-processing facilities and to form joint ventures with local 
fishermen.  Two tuna canneries have been approved for Madang Province.  
One of the projects is American-owned.  Neither has begun construction.  
Two mackerel canneries, which will process imported fish, are nearing 
operation.

     *************************

The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement to or 
even a necessary component of trade.  For example, roughly 60% of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. investment brings to the U.S. 
economy, the Government of the United States undertakes initiatives such 
as Overseas Private Investment Corporation (OPIC) programs, investment-
treaty negotiations, and business facilitation programs that support 
U.S. investors.



Chapter VI.  Trade Regulations and Standards

Trade Barriers

PNG became a participating economy in the Asia Pacific Economic 
Cooperation (APEC) forum in 1993.  Its bid for accession to the World 
Trade Organization (WTO) was approved in April 1995.  The accession must 
still be voted formally by WTO membership and ratified by the PNG 
Parliament.  In addition, trade liberalization is one of the key policy 
reforms required by the SAP now being negotiated with the World Bank.  
Therefore the situation with regard to tariffs, non-tariff barriers, 
import and export licenses is relatively fluid.

In late May, the GPNG reaffirmed its intention to abolish all export- 
and import-licensing requirements and import bans and quotas, especially 
for cement, rice, sugar, fresh fruits and vegetables, canned meat and 
fish.  Import-licensing quotas for beef and lamb are to be removed in 
1996, to be replaced by a prohibitive tariff.  The GPNG said it will 
soon announce details of a five-year timetable to lower duty rates on 
all imports to internationally acceptable levels. 

In November 1994, as a revenue-raising measure, the GPNG increased the 
middle band of PNG's single-column customs tariff schedule, covering 
1,064 items, to 40%.  The three basic rates are now 11%, 40% and 55%.  
Import duties were also increased on such special-item-import products 
as alcoholic beverages and tobacco products.  At the same time, all 
government departments and statutory authorities became liable to pay 
import duties at prevailing rates.

Membership in Free Trade Arrangements

PNG has a bilateral trade agreement with Australia, the PNG/Australia 
Trade and Commercial Relations Agreement (PACTRA), under which PNG 
exporters have duty-free and unrestricted entry into the Australian 
market for most of their products.

The South Pacific Regional Trade and Economic Cooperation Agreement 
(SPARTECA) is a non-reciprocal agreement between Australia and New 
Zealand on one hand and the island nations of the South Pacific Forum on 
the other.  It, too, provides duty-free, unrestricted and concessional 
access for most products originating in PNG.

PNG is a signatory to the Lomé IV Convention, an agreement between 
African, Caribbean and Pacific (ACP) countries and the European Union 
(EU).  This allows preferential access to markets within the European 
Community for most goods originating from ACP countries, including PNG.

PNG also is a beneficiary of the Generalized System of Preferences (GSP) 
under which certain tariff concessions are provided to its exports to 
the U.S.  Canada and Japan offer similar arrangements.



Chapter VII.  Investment Climate

Openness to Foreign Investment

The policy of the GPNG is to welcome foreign investment, subject to 
conditions set forth in the Investment Promotion Act.  Large-scale 
investment is concentrated in the mining and petroleum sectors.  PNG is 
also rich in renewable natural resources, including forests and 
fisheries, and the government places a premium on increasing downstream 
processing of these resources.

Though the government favors investment, many investors trying to enter 
the market remain frustrated with the process.  Potential investors 
often experience difficulties and delay in obtaining necessary 
clearances from a cumbersome bureaucracy.  Large developments are 
inevitably contentious and quickly become political issues, 
necessitating cabinet decisions.  Without consensus at this level, the 
investor faces additional delay.  Several reports in the Australian and 
local media have charged corruption on the part of decision-makers.  
Some companies have reported delays in receiving investment approvals 
which they believe were attributable to their refusal to pay bribes.

The GPNG created the Investment Promotion Authority (IPA) in 1992 to 
facilitate and certify foreign investment.  Although IPA has not yet 
become a "one-stop shop," it is often the first point of contact for 
potential investors and provides them with information and assistance in 
obtaining relevant government approvals.

A foreign enterprise (one that is 50% or more owned by non-citizens, or 
is controlled by non-citizens) must be certified by the IPA before it 
may conduct business activity.  Certain activities are reserved for 
locally-owned or joint-venture enterprises.  Generally, the restrictions 
relate to the scale of the activity; hence, small-scale agriculture, 
hunting and coastal fishing, the manufacture of artifacts, and the 
operation of small retail outlets are restricted.  Of more relevance to 
the foreign investor are restrictions on companies that provide various 
mining and construction services, and on the coastal transportation of 
bulk products or goods.

As part of the SAP, the GPNG has pledged to eliminate the Reserved List 
progressively over the next three years.  Business activities relating 
to manufacturing and construction are to be removed from the Reserved 
List in 1995; this has proved to be one of the more controversial 
aspects of the SAP.

Just as there is a list of prohibited business activities for 
foreigners, there are categories of employment which may be performed 
only by Papua New Guineans.  These are jobs for which the government has 
determined that PNG has a sufficient skilled workforce.  A foreign 
worker must have a work permit to be employed in PNG.  The sponsoring 
employer must show an intention to train local workers and to localize 
the job as soon as possible.

PNG policy favors privatization of public business entities, but 
progress toward that goal has been slow.  In March 1995, the GPNG 
announced, as a revenue raising measure, its intention to sell its 
holdings in the cement and sugar businesses, and in abattoirs and 
agricultural ventures.  In addition, a ministerial committee is 
scheduled to meet September 11 to decide whether any or all of the major 
statutory authorities -- Air Niugini, the Harbours Board, the PNG 
Electricity Commission, and the Post and Telecommunications Corporation 
-- should be privatized.

Taxation and Investment Incentives

Personal income tax is charged on taxable income at progressive rates.  
The highest rate is 35%.  Taxation of employee fringe benefits, which 
had been lifted in the 1993 budget to encourage investment, was 
reinstated as of January 1, 1995.

Company tax rates on non-mining, non-petroleum taxable income are 25% 
for resident companies and 48% for non-resident companies.  Resident 
companies are also liable to pay dividend tax at the rate of 17%, 
bringing the effective tax on distributed profits of resident companies 
to 37.75%.

Taxable income from mining operations is assessed at the rate of 35% for 
resident companies and 48% for non-residents.  The dividend tax raises 
the effective rate of tax on distributed mining income to 46.05% for 
resident companies.  Taxable income from petroleum operations is 
assessed at the rate of 50% for both resident and non-resident 
companies.  There is no liability for dividend tax with respect to 
dividends paid out of petroleum income.

PNG has retained a number of incentives that involve the exemption from 
or deferment of tax liability for investors.  These include an export-
income incentive; a pioneer-industries scheme; a rural-development 
incentive; a wage subsidy; tax relief  for staff training costs; and 
import-duty exemptions and drawbacks.  All of these incentives are 
subject to certain conditions.  A local law or accountancy firm should 
be consulted.

Conversion and Transfer Policies

The Bank of Papua New Guinea (BPNG), the country's central bank, has 
responsibility for managing the country's international reserves.  While 
a taxation clearance may be required, it is possible, in most instances, 
for a commercial bank to approve foreign-exchange transfers without 
reference to the BPNG.  The repatriation of capital due to non-residents 
is normally approved without delay.  Dividend payments to overseas 
shareholders must be supported by appropriate corporate documentation 
subject to taxation clearance.  Trading banks can authorize annual 
purchase of up to the foreign-currency equivalent of kina 500,000 by PNG 
residents, both corporate and individual, for any purpose, including 
deposit to offshore or domestic foreign currency accounts.

Except in the case of mining or petroleum enterprises, commercial banks 
may now approve offshore foreign-currency borrowing by residents of PNG 
up to a limit of K5 million.  The borrower must maintain a debt to 
equity ratio of at least 5:1 -- a significant relaxation from the 
previous general ratio of 3:1.  Various limits are placed on the 
permissible terms of such loans, including on the interest rate payable.  
New foreign-currency borrowing in excess of K5 million continues to be 
referred to the BPNG.  

In order to facilitate trade, the BPNG encouraged local banks to create 
a secondary forward exchange market for the kina, extending for 12 
months.  Demand was always limited, and the market was not terribly 
liquid.  The BPNG's tightening of monetary policy, including an increase 
in the minimum liquid asset ratio, has effectively eliminated forward 
exchange transactions since the "float" of the kina in October 1994.  
The last forward contracts expired on March 21, 1995.

Under the new "market-based" system, the value of the kina is determined 
at daily auctions conducted at the BPNG attended by the five commercial 
banks that have been authorised as dealers in foreign exchange.  
Accordingly, the value of the kina fluctuates daily.

Although the kina continues to be freely convertible, the practical 
availability of foreign exchange to local business has been limited due 
to seasonal trade imbalances and other factors since at least March 
1995.  The Embassy expends approximately K800,000 locally each year.

Expropriation and Compensation

The Constitution, echoed by the Investment Promotion Act, provides that 
property shall not be acquired compulsorily except for a public purpose 
defined by law, in accordance with law, and with just compensation paid.  
This right has seldom been formally exercised, though the land belonging 
to the Hides gas project was taken by eminent domain.

While the Government has not expropriated the tangible property of 
investors, it has been aggressive in asserting its own "property 
rights."  The Wingti Government, over a two-year period, and 
particularly in relation to the mining sector, expressed a desire to 
increase ownership in development projects.  With at least the implied 
threat of expropriation, the Government in 1993 acquired an additional 
15% stake in the Porgera gold mine.  The transaction was negotiated at 
market price, but the non-government joint-venture partners could be 
termed "willing sellers" in only a limited sense.  These tactics  
continued during negotiations over the proposal to develop the Lihir 
gold mine.  By law entitled to acquire a 30% share in the venture, the 
GPNG offered/threatened to acquire a half-interest in the project, again 
raising the specter of "expropriation."  Upon taking office, the current 
government abandoned the attempt to acquire additional equity in Lihir.  
The GPNG now seeks to restore investor confidence, particularly in the 
mineral and petroleum sectors. 


Dispute Settlement

PNG has a Western legal system inherited primarily from Australia.  The 
Courts, which are insulated from Government interference, provide a 
meaningful forum in which to enforce property and contractual rights, 
though the country does not have a written commercial code.  The 
insolvency act is the source of bankruptcy law and controls the 
dissolution of failed corporations.

PNG is a member of the International Center for the Settlement of 
Investment Disputes and the New York Convention of 1958 on the 
Recognition and Enforcement of Foreign Arbitral Awards.

Land Tenure Concerns

Land is an extremely important part of customary PNG society, is a 
contentious issue, and causes difficulty for investors and the 
government alike.  Land-usage difficulties are a serious impediment to 
development.  Approximately 97% of the total land area of PNG remains in 
the hands of customary owners, who must make decisions about land usage 
by consensus.  There are often multiple claimants to a given parcel of 
land.  There is no general registration of customary land, though the 
GPNG is working slowly to correct this situation.  Although the  
government desires to eliminate constraints to effective land 
utilization, mobilization and transfer, it cannot move appreciably 
faster than customary society.

Under the Land Act, no foreign investor or non-citizen may own freehold 
land; instead, such a person or entity may lease from the State for a 
term of years.  All leasehold and freehold land transactions are 
recorded by the Registrar of Titles.  Customary land cannot be 
mortgaged, though, with governmental permission, leaseholds are eligible 
for use as security.  (Secured interests in chattels are recognized and 
registered, but enforcement is often a practical problem.)

Political Violence

While the Embassy can cite no politically motivated violence directed at 
U.S. investment projects, such danger (localized in nature) does exist -
- the most obvious example being the 1988-89 attacks on the Panguna mine 
in Bougainville Island by Bougainville separatists, which quickly 
resulted in the closure of the mine.  U.S. projects would not become 
special targets by virtue of their ownership, but there is a tendency 
for local landowners to strike out at convenient symbols of wealth or 
authority to gain attention for their grievances or compensation demands 
against the government or others.  Unsophisticated landowners often have 
exaggerated ideas about the value of their property.  Resource 
developers often confront claimants who believe that the project should 
reimburse them for real or imagined damages, or provide services 
normally governmental in nature.

The Law and Order Situation

Crime, including violent crime, is a serious concern in PNG.  The 
phenomenon is to some extent connected to the widespread unemployment of 
semi-educated village youth who migrate to the major towns in search of 
jobs.  Cultural factors, including a history of tribal warfare and the 
"payback" system, are also at play.  While most businesses are able to 
manage the situation successfully most of the time, the requisite 
security precautions add significantly to the cost of doing business.  
Security guards are a necessary supplement to high fences and razor 
wire. Precautions must be taken against payroll holdups.  Insurance 
costs are high.  The GPNG's current cash crisis has reduced the funds 
available to the police force, heightening the atmosphere of 
lawlessness.

Performance Requirements/Incentives

Investors sometimes agree to meet performance requirements in order to 
gain approvals to establish, maintain or expand given investments.  The 
Investment Promotion Act provides some guarantee against discrimination 
against foreign investment.  There is no general requirement that 
investors purchase from local sources, but agreements may stipulate 
local procurement of goods of equivalent price and quality.  There is no 
legal requirement that nationals own shares in foreign investment, that 
the share of foreign equity be reduced over time, or that technology be 
transferred on certain terms.  Similarly, there are no government-
imposed conditions on permission to invest in, for instance, a 
particular geographic area.  Resources for monitoring compliance with 
the Investment Promotion Act are limited.

Right to Private Ownership and Establishment

Private entities may freely establish, acquire and dispose of interests 
in business enterprises, subject to laws requiring registration and 
certification of companies.

Protection of Intellectual Property Rights

There are no laws governing patents or copyrights at present.  A UNESCO 
expert recently consulted with the government on formulating an 
appropriate copyright law.  Legislation governing the registration of 
trademarks came into force in 1979.  PNG's prospective membership in the 
WTO should, after the applicable transition period, bring the country's 
intellectual property regime within the standards mandated by the 
Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).

Regulatory System: Laws and Procedures

Any large-scale investment proposal will require consultation with and 
among a number of governmental departments and may also be regulated by 
specific sectoral legislation.  The bureaucratic procedure for resolving 
interagency differences is cumbersome; differences often cannot be 
solved except at the highest political levels.  This involves delay and 
frustration for many investors.

Though the government has not adopted anti-trust laws which might foster 
competition, it has regulated in the labor, health-and- safety, and 
environmental-protection areas.  

Bilateral Investment Agreements

PNG has bilateral investment protection agreements with Australia and 
New Zealand.

OPIC and Other Investment Insurance Programs

PNG is a member of the Multilateral Investment Guarantee Agency (MIGA).  
OPIC has, in the past, provided political risk insurance and finance for 
projects in PNG.  It is entertaining active applications for additional 
loans and insurance.

Labor

Approximately 80% of the working population in PNG engages in 
subsistence agriculture and/or smallholder cash-crop production and does 
not form part of the population engaged in formal employment.  A sizable 
pool of unskilled labor exists, but there is a shortage of skilled 
workers and management-level employees.  It is common for professional 
and technical staff to be recruited from overseas, though there is a 
strong government policy encouraging localization.  Businesses typically 
operate training programs.  Wages were essentially deregulated, subject 
to a very modest minimum wage, by a Minimum Wages Board determination in 
1992.  Nevertheless, wages, particularly for skilled employees, remain 
high by regional standards.

Dialogue between labor and management is often robust.  Strikes occur 
occasionally.  In 1994 and 1995, local unions threatened strike action 
seeking wage adjustments in response to the depreciation of the kina, 
which has caused sharp declines in real wage levels.  The wages of 
public-sector employees, approximately one-third of the estimated 
250,000 Papua New Guineans in formal employment, have been frozen 
through the end of 1995.  However, the GPNG settled a week-long strike 
by school teachers in March by agreeing to a 4.8% wage increase.  In 
order to curb inflation, the GPNG has encouraged the private sector to 
resist "excessive" wage claims.   

Foreign Trade Zones/Free Ports

There are no free trade zones in PNG.


Capital Outflow Policy

There is little PNG investment in other countries.  The repatriation of 
capital by non-residents is relatively unrestricted, subject to the 
practical availability of foreign exchange, as discussed above under 
"Conversion and Transfer Policies."   

Major Foreign Investors

The bulk of foreign investment in PNG is in the mining and petroleum 
sector.  Some major foreign-owned mining and petroleum companies active 
in PNG include: Chevron; British Petroleum; Exxon; Broken Hill 
Proprietary (BHP); Placer Pacific; Highlands Gold; Renison Goldfields; 
RTZ Corporation; Battle Mountain Gold; Japan National Oil Corporation; 
and CRA Ltd.



Chapter VIII.  Trade and Project Financing

Brief Description of Banking System

In 1994, there was a significant improvement in the profitability  of 
the banks and non-bank financial institutions due, in part, to gains 
from currency exchange transactions.  During the year, a new bank, 
Maybank (PNG) Ltd was granted a license, increasing the number of 
commercial banks in PNG to six and the number of branches to 50.  Total 
assets of commercial banks decreased from K1,979.1 million in 1993 to 
K1,839.0 million in 1994.  Total assets of merchant banks and finance 
companies were K217.6 million.  Total assets of savings and loan 
societies were K113.0 million

Foreign investors are able to obtain credit on the local market, subject 
to the equity requirements of the Central Bank.  Under current practice, 
they are limited to K50,000 for the first two years of operation.  
Interest rates have risen due to the tight monetary policy imposed at 
the time of the devaluation and "float" of the kina.  However, there 
continues to be ample liquidity in the system. 

Foreign-Exchange Controls Affecting Trading

As a matter of regulation and policy, applications for all categories of 
current payment, including payment for imports, are normally approved 
readily; the majority by the commercial banks under delegated authority.  
Application for foreign currency to pay for imports must be accompanied 
by customs entry forms and/or shipping documents.  At present, the 
foreign-exchange shortage makes importers' access to foreign currency 
problematic in practice.


General Financing Availability

In May 1995, the BPNG raised the Minimum Liquid Asset Ratio (reserve 
ratio) for commercial banks to 32%, the third such increase in the last 
nine months, in an attempt to curb the inflation that has resulted from 
the depreciation of the kina since late 1994.  This monetary tightening 
has raised interest rates.  However, there is still much liquidity in 
the system.

The November 1992 budget presentation stated the goal of opening a stock 
market in PNG, the PNGSX, to mobilize domestic saving and investment.  
Movement toward that goal is continuing, but has been slow.  A PNGSX 
coordinator is working as a consultant with the Mineral Resources 
Development Corporation, which holds PNG's equity in mineral and 
petroleum projects.  In May 1995, the  coordinator forecast opening of 
the PNGSX in April 1996, six months after the float of shares in the 
Lihir gold mine on the Australian Stock Exchange.  

Export Financing and Insurance

The Export-Import Bank of the United States (EXIM) is open for cover for 
both public-sector and private-sector risks for short-term, medium-term, 
and long-term transactions.  For short-term insurance, discretionary 
credit limits are withdrawn.  Cover is not available unless specified in 
a special buyer credit limit or issuing bank credit limit endorsement.  
Cover is not available under short-term political-risks-only policies 
unless specified in a country-limit-of-liability endorsement.

Project Financing Available

The International Bank for Reconstruction and Development (IBRD), a 
member of the World Bank group, makes long-term loans at market-related 
rates to promote broadly based economic growth, frequently focusing on 
structural adjustment, sectoral reform, and individual project lending.  
Typically the World Bank does not finance the entire cost of a project.  
Rather, it finances the components of a project purchased with foreign 
exchange, which on average are about 40% of total project cost.  Each 
project may cover a wide variety of sectors and can involve anywhere 
from one to hundreds of separate contracts, which in turn provide export 
business opportunities for suppliers worldwide.

The Asian Development Bank (ADB), headquartered in Manila, Philippines, 
provides funding primarily to public-sector entities for the design and 
execution of projects.  ADB projects afford U.S. suppliers of goods and 
services significant export opportunities, mainly in the transportation, 
environment, health, education, urban development, tourism, agriculture, 
and energy sectors.

Information on IBRD- and ADB-financed commercial opportunities is 
available from the US Department of Commerce offices listed in Appendix 
D.

PNG also receives significant amounts of project financing from the 
Governments of Australia and Japan, and from the European Union.
 
Local Commercial Banks

  Local Bank                    Correspondent Bank
ANZ Bank (PNG)                Australia New Zealand Banking Group,
                              New York

Bank of South Pacific         National Australia Bank, New York

Indosuez Niugini Bank Ltd     Bankers Trust Company, New York

Maybank (PNG) Ltd.            Maybank, New York

Papua New Guinea Banking Corp. Commonwealth Bank of Australia, (PNGBC)
                               New York

Westpac Bank (PNG) Ltd        Chase Manhattan Bank, New York



Chapter IX.  Business Travel

Business Customs

The workday is 8:00 a.m. to 4:30 p.m. Monday to Friday for most people.  
Some retail businesses are open on Saturday and Sunday mornings from 
8:00 a.m. to 12:00 noon.  Banks are open from 9:00 a.m. until 2:00 p.m. 
from Monday to Thursday and from 9:00 a.m. to 5:00 p.m. on Fridays.  
Most business and government offices do not open on the weekends.

Business dress is moderately casual, befitting PNG's tropical climate.  
Work attire usually consists of shirt and tie or sport shirt for men, 
and light business suit or dress for women.  In most areas, lightweight 
clothing is appropriate year round, but warmer clothes may be necessary 
in the Highlands, especially in the evening.

English is the official language of government and commerce and will be 
spoken by almost all people with whom the business traveller is likely 
to deal.  However, the language understood by the majority of Papua New 
Guineans is Melanesian Pidgin.


Travel Advisory and Visas

Entry Requirements:  Tourists may obtain a 60-day visa for K10 (about 
US$ 7.50) at a Papua New Guinea diplomatic mission or for K25 (less than 
US$ 20) upon arrival at Port Moresby International Airport.  The visa 
can only be obtained upon presentation of an onward air ticket and 
evidence of funds sufficient for the proposed stay.  Business travellers 
must apply at the Embassy of Papua New Guinea to obtain a visa business.  
The one-year visa allows multiple entries not exceeding 60 days per 
visit and costs K250 (about US$ 190).  Travellers may also wish to 
obtain a visa for Australia before travelling to PNG.  This is 
particularly important for visitors who will travel through Australia en 
route to  PNG or who think they may have need to travel to Australia for 
medical treatment during their stay in PNG.

Information on Crime:  Crime and personal security are serious concerns 
in PNG.  Armed robberies and carjackings are a problem in Port Moresby 
and other urban areas.  Armed robbery is sometimes accompanied by 
gratuitous violence.  Criminals often victimize and rob persons who are 
part of large crowds.  Women should not walk alone in PNG, especially at 
night.  Travellers to PNG should avoid using taxis or buses and should 
rely instead on a sponsor or on a rented car for transportation.  Travel 
outside of Port Moresby by car at night can be hazardous.  

Statutory Holidays

New Year's Day          January 1
Good Friday             variable
Easter Saturday         variable
Easter Monday           variable
Queen's Birthday        mid-June
Remembrance Day         July 23
Independence Day        September 16
Christmas Day           December 25
Boxing Day              December 26

Travel Notes

Currency:  No restrictions are placed on bringing U.S. dollars into or 
out of PNG.  Letters of credit, travellers' checks, U.S. currency, and 
personal checks drawn on U.S banks are freely negotiable.  PNG uses a 
decimal currency system; the units are kina and toea (100 toea = 1 
kina).

Health:  Most serious endemic diseases are not a problem in PNG.  
Malaria, however, is endemic to the area and includes chloroquine-
resistant strains.  Seek medical advice prior to arrival for recommended 
precautions.  Medical facilities in Port Moresby are generally adequate 
for routine problems and some emergencies.  Equipment failures and 
sudden shortages of common medications, however, can mean that even 
routine treatments and procedures (such as X-rays) are unavailable.  The 
nearest reliable medical facilities are situated in Cairns, Australia.  

Communications:  International telephone, telegraph, telex, and 
facsimile services are available.  International telecommunications and 
postal services are reliable.

Transportation:  PNG is served by an international airport at Port 
Moresby and over 400 other airports and airstrips throughout the 
country.  Air Niugini, the national carrier, operates scheduled domestic 
cargo and passenger services within PNG and international services to 
Australia, Indonesia (Jayapura, Irian Jaya), Solomon Islands, Manila, 
Singapore and Hong Kong.  Several smaller carriers offer scheduled 
domestic service and charters.  Qantas flies regularly to Port Moresby 
from Sydney, Brisbane and Cairns.  Rental cars are available in the 
major towns.  Bus service exists in the few areas where there are 
connecting roads but is not recommended.  The longest road is the 
Highlands Highway from Lae to Mendi.  There are no railroads.

Housing:  There are hotels of moderate to good quality in Port Moresby 
and other major towns.  Suitable Western-style residential and business 
premises are available in urban areas.  Rental rates are high due to the 
shortage of alienated land available for lease.

Food:  Supermarkets stock a wide variety of fresh meat, poultry, fish, 
fruit, and vegetables as well as an extensive range of imported food 
products.  There are several good restaurants in Port Moresby and other 
major towns. 



Chapter X.  Appendices

Appendix A.  Country Data

Population:  4,100,714 (July 1993 est.)
Population Growth Rate:  2.23% (1993 est.)
Religion(s):  Roman Catholic-22%, Lutheran-16%, 
Presbyterian/Methodist/London Missionary Society-8%,
Anglican-5%, Evangelical Alliance-4%, Seventh-Day Adventist-1%, other 
Protestant sects-10%, indigenous beliefs 34%
Government System:  parliamentary democracy
Languages:  Melanesian Pidgin, English, Motu.  Note: more than 800 
indigenous languages spoken
Work Week:  Monday through Friday


Appendix B.  Domestic Economy (1994, 1995, 1996 Estimates)

                            1994        1995        1996
GDP                       4533.9        4981.0      5306.4
(millions of U.S. dollars)

GDP Growth Rate (%)          2.3          -5.4         0.3

GDP per capita (US$)      1095.0        1176.0      1225.0


Government Spending         29.6          27.7        26.8
(as a percent of GDP)

Inflation (%)                4.2          16.1         6.4
(GDP Deflator)

Employment Index September 1994 - 102.0 (June 1989 = 100)

No unemployment figures are available

Foreign Exchange Reserves   91.5         120.3       136.4
(Millions of U.S. dollars)

Average Exchange Rate*       1.18
(for US$ 1.00)

Debt Service Ratio          21.5           20.3       14.9
(Ratio of Principal and
 Interest on Foreign Debt
 to Foreign Income (capital
 account receipts))

* Closing BPNG rate on December 31, 1994.  Closing BPNG rate on July 10, 
1995 was US$ 1 = K 1.32.

Source: PNG Department of Finance and Planning, Statistical Tables 
appended to 1995 National Budget submitted March 7, 1995.  All figures 
should be treated strictly as estimates.

Appendix C: Trade (1994, 1995, 1996)

                            1994         1995         1996
                              (Millions of U.S. dollars)

Total Country Exports*      2321.7      2479.1      2449.4
Total Country Imports*       941.2      1531.4      1730.2
U.S. Exports**                65.1
U.S. Imports**               108.1


Principal U.S. Exports (millions of U S. dollars)  (top 5)**

                             1992         1993          1994

8802 (Aircraft)                .9          8.0          17.2
8704 (Motor Vehicles
      for transport
      of goods)                 0          2.6           8.7
8431 (Heavy equipment
      parts)                 18.1          3.            6.0
8803 (Aircraft parts)         3.9          3.2           3.4
8529 (Television, radio,
      radar parts)           11.7           .7           2.6


Principal U.S. Imports (millions of U.S. dollars)  (top 5)**

                            1992            1993        1994

2709 (Crude oil)            35.7           70.5         79.7
1801 (Cocoa beans)          17.5           16.9         13.3
0901 (Coffee)                4.2            6.6         11.5
0306 (Shellfish)              .7             .6          1.2
0902 (Tea)                   1.0            1.2          1.1


* Source: PNG Department of Finance and Planning, Statistical Tables 
appended to 1995 National Budget submitted March 7, 1995.  All figures 
should be treated as strictly as estimates.

** Source: U.S. Department of Commerce

Appendix D: Investment Statistics

Foreign Direct Investment Statistics

The BPNG publishes statistics on foreign equity holding in PNG 
companies.  Preliminary figures for 1994:  Australia - K1,204 million; 
United States - K94 million; United Kingdom - K166 million.  Other, 
smaller figures bring the total to K1,675. Foreign equity holding has 
fallen as a share of nominal GDP from 55% in 1990 to 31% in 1994.  The 
overall decline in foreign equity investment from K1,761 million in 1991 
to K1,675 in 1994, mainly reflected the completion of the Porgera mine 
and the Kutubu project, with some equity redemptions in the mining 
sector and the absence of any new major projects.  Start-up of the Lihir 
gold mine project and Gobe oil field development could see foreign 
equity investment increase dramatically over the next 2-3 years.  No 
reliable aggregate statistics on at-risk capital investment by 
foreigners are available.


Appendix E: US and Country Contacts

U.S. Embassy Contacts 

Ambassador:  Richard W. Teare
Deputy Chief of Mission:  Edward J. Michal
Consular Officer:  Patrick W. Walsh
Economic/Commercial Officer:  Beatrice P. Soila
Commercial Assistant:  Crescentia K. Anderson

Tel: 675-321-1455
Fax: 675-321-3423

International Address:

U.S. Embassy
P.O. Box 1492
Port Moresby, N.C.D. 121
Papua New Guinea

Via U.S. Postal Service:

Port Moresby
Department of State
Washington, D.C. 20521-4240

U.S. Agricultural Trade Office
541 Orchard Road #08-03
Liat Towers
Singapore 0923

Tel: 65-737-1233
Fax: 65-732-8307

U.S. Government Trade-Related Contacts

Papua New Guinea Desk
EAP/PIA
U.S. Department of State
Washington, D.C. 20520-6310

Tel: 202-647-3546
Fax: 202-647-0118

Office of Pacific Basin
International Trade Administration
U.S. Department of Commerce
Washington, D.C. 20230

Tel: 202-482-2954
Fax: 202-482-5330

US Department of Agriculture
Foreign Agricultural Service
Trade Assistance and Promotion Office
Washington, D.C. 20250

Tel: 202-720-7420

Multilateral Development Bank Contacts

U.S. Department of Commerce
Liaison to the U.S. Executive Director's Office
International Bank for Reconstruction and Development
1818 H Street, NW
Room D-13004
Washington, D.C. 20433

Tel: 202-458-0118
Fax: 202-477-2967

Janet G. Thomas
Senior Commercial Officer
ADB Liaison Office
U.S. Embassy, Manila
APO AP 96440
Fax: 632-816-7684

Brenda Ebeling, Director
Multilateral Development Bank Office
U.S. Department of Commerce
14th and Constitution, NW
Washington, DC 20007

Phone: 202-482-3399
Fax: 202-482-5179

PNG Trade and Industry Associations

PNG Chamber of Mines and Petroleum
PO Box 1032
Port Moresby, N.C.D. 121

Tel: 675-321-2988
Fax: 675-321-7107

PNG Chamber of Manufacturers
PO Box 2777
Boroko, N.C.D. 111

Tel: 675-325-9512
Fax: 675-325-1839


PNG Chamber of Commerce and Industry
PO Box 1621
Port Moresby, N.C.D. 121

Tel: 675-321-3077
Fax: 675-321-4203

PNG Fishing Industry Association
P.O. Box 2340
Boroko, N.C.D. 111

Tel: 675-323-1303/325-8222
Fax: 675-325-6214/325-8994

PNG Forest Industries Association
P.O. Box 5055
Boroko, N.C.D. 111

Tel: 675-325-9458
Fax: 675-325-9563

Government Offices

Embassy of Papua New Guinea
1615 New Hampshire Ave. NW
Washington, D.C. 20009

Tel: 202-745-3680
Fax: 202-745-3679

Investment Promotion Authority
PO Box 5053
Boroko, N.C.D. 111

Tel: 675-321-7311
Fax: 675-321-2819

Department of Mining & Petroleum
PO Box 352
Konedobu, N.C.D. 125

Office of the Secretary: Ph 675-322-7600/Fax 321-3701
Mining Division: Ph 675-322-7606/Fax 321-4637

Department of Mining & Petroleum
Petroleum Division
PO Box 778
Port Moresby, N.C.D. 111

Tel: 675-322-4200/321-2422
Fax: 322-4222


Internal Revenue Commission
Customs and Excise Operations
PO Box 923
Port Moresby, N.C.D. 111

Tel: 675-320-0440
Fax: 675-321-4249

National Fisheries Authority
PO Box 165
Konedobu, N.C.D. 125

Telefax: 675-321-3130

National Forest Authority
PO Box 5055
Boroko, N.C.D. 111

Tel: 675-327-7800
Fax: 675-325-4433

ELCOM (Electricity Commission)
PO Box 1105
Boroko, N.C.D. 111

Tel: 675-324-3200
Fax: 675-325-0072

PTC - Post & Telikom Corp.
PO Box 1349
Boroko, N.C.D. 111

Tel: 675-300-5000
Fax: 675-325-0665

Air Niugini
PO Box 7186
Boroko, N.C.D. 111

Tel: 675-327-3200
Fax: 675-327-3482


Country Market Research Firms

IMPS Research Pty Ltd
PO Box 986
Port Moresby, N.C.D. 121

Tel: 675-321-3283
Fax: 675-321-7360

(Publishes Petroleum & Minerals Industry Directory, The Governments of 
PNG (directory of GPNG Ministries, Departments, etc.), Petroleum 
Information Service (monthly report on developments in petroleum 
industry), and offers mining and petroleum research materials and 
services)
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