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Business and investment opportunities in New Guinea



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SP=CH BY TFL T:IIIIIS

TER POR EXTERI AL T. RRITORIES

i'HE IIOI ± C B. ATiaES,I.i. `-

I.TELBO URIIE C1 A-i1. nE R OF COI:L. RCE S ' Ii i IIAR

BUS IlTESS AND Ill 'E STI,]m '' OF OI TUNITIES IN RE! CUIIEA

12TI-I JI E, 1969

Thank you for your very kind welcome, r•ir. Chairman,

and for the opportunity to give this address. I`,Iy Department

and I v elcome the interest that has been shown by the

Melbourne Chamber of Commerce in organising this Seminar.

The Chairman has given you a very excellent background of

the situation in New Guinea and it saves me travassing this

ground.

I would like to put it on record, that this is our

responsibility, Australia's responsibility, to bring an

undeveloped country; up to at least a reasonable standard of

living, somewhere comparable to our own at the same time

to help it progress towards gradual self-sufficiency, self-tovernnent and possibly if the people so will, to eventual.

independence.

I do not think we. have to dwell on the political

side of it : much has been written and much has been speculated

on it, but basically the people of the Territory themselves,

like Australians, are interested in economic development.

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These people have never been humbled like those of many

other undeveloped countries. They have never Imown

starvation. They have provided an.ple food for themselves.

They have a fertile country. They are not over-populated

and they are very skilled agriculturalists.

I suppose people suggest that they could be left

in this sort of happy situation out ve must not forget the

disorder, the massacres and fights between so many different

tribes and clans hostile to one another over centuries, nor

the diseases, malaria and so on which have decimated the

population.

You cannot guarantee isolation to a community in in a sense

the world today. So this is our endeavour - to advance them/

in the pattern of our own advancement because our advancement

has been successful, whatever the theorists might say. So

why not go along vile way that have found o successful

in developing Australia as a developed country if you look

back over the last couple of hundred years.

How vie are progressing in this regard. The

Territory is basically primary producing and has many of

the products - coffee, cocoa, copra - produced in other

undeveloped countries in the Equitorial regions. Therefore,

with keen competition on vrorld markets, wages have to be

kept low because otherwise producers will be priced out of

the world market. I#' we preserve an economy such as this

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based on this limited range of ? products, the future

expectations of the great mass of the people would be-low.

Therefore. it is our great aim to develop

whatever resources there are in this country. We

fortunately have prospects of a very large copper and

gold mining operation on Bougainville which offers great

prospects for this country. If we can get two or three

more such mining enterprises and find some oil, this will

lout New Guinea well on the way to self--sufficiency.

In the meantime, there are many opportunities for

investment in the Territory. There are many firms already

there which are enjoying quite satisfactory returns and I

believe it would be much in your interests to examine the

situation further. You have to put the matter into

perspective.

At the end of the War, Pew Guinea, had been fought

over pretty well and there ryas one hospital and two schools

left in the whole of the Territory. There were practically

no roads.

Today you can arrive by road from 1.1ount Hagen in

the Western Highlands 351 ?,Tiles to Lae. This has changed

the economy. Previously aircraft carried all the products to

and from the Western Highlands to I.Iadang. So this has

changed, road transport has taken over. All sorts of

subsidiary industries have come into operation.

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We ourselves, as Australians, particularly the

Australian taxpayer, has shouldered a very considerable

burden. Our contribution to the economy through our grant

and our operations from froni various Departments amounted to

about 110 million during the current financial year. I:ov;

this is a very considerable supplement to a population of

2, 200, 000. The prese=t financial year is the first year

of our five-year programmes during vihich about $1000 pillion

will be spent in Papua and Nev f Guinea. This is a very

considerable sun;. Obviously there will be a lot of activity,

a lot of investment with the spending of this tremendous

amount.

We believe, the Government believes, that it is

the responsibility of the Administration to provide the

infrastructure -- the roads, the wharves, the telecommunications,

the schools, and training institutions, all the things that

are the foundations for investment or economic activity

in the Territory. We have progressed very considerably in

this regard. I Imon many of you have had very considerable

experience in the Territory, and perhaps some of you may

at times be a little bit distressed with delays of one thing

or another . But I ,could point out that this sort of thing

is not unusual even in Australia, and more so in under-developed countries.

We are catching up on these sort of things. We

welcome any sort of criticisms of what is happening and

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any suggestions for improvement. G'e are endeavouring to

correct such things and we are spending, as I said, very

considerable sums in our endeavours to do this.

With regard to communications and roads, v:e have

extensive road programmes and we hope to get further World

Bank assistance in this regard. We embarked an a very

considerable telecommunications operation - 14 million over

three years, pretty well half subscribed by the World Ban1k,

half by ourselves. VTe have got the Seacom cable by a very

good chance touching the shore of Papua/Nerd Guinea at I adang

and all our telecommunications system will be joined here.

As this system progresses throughout the Territory we will

have up-to-date communications.

Now that is the Government's responsibility in a

few brief words. We look to private enterprise to provide

job opportunities by investment in the Territory. Vie realise

in this country that we have to depend on overseas investment.

We would not have had a hope in the world of developing this

country without foreign loans. We had to get this enormous

foreign investment here. We are still getting; it in Australia

although v,e are contributing a considerable amount of our own.

Similarly we need investment in Papua and New Guinea

if as the Chairman said, we are to provide jobs for the

rapidly increasing work force .. In our experience in Australia

it became obvious we were not going. to support a large

population at a high standard of living based on primary

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industry. 1;Je have encouraged secondary industry and

manufacturers in Australia This has provided us with

a tremendous ork fo= rce in this country -- a riork force

with a high standard of living v;h,ich never could have been

built on a 1 rirmary producing economy

The sa me thing applies in i er Guinea and we

look to expanding employment opportunities for the native

people. The 'people in Papua and. Iew Guinea and I think

those of you who J^now'w will agree have some excellent qualities

They are highly intelligent. They have, most of them,

ambition and they have a great ability to learn. I think

those are some of the human factors that are really important.

As I said, vre do much to provide economic conditions

attractive to investment . In addition to the provision of

basic services without which private development cannot take

place the following are some of the Government's measures to

attract investment:

no restrictions on transfer of profits and

capital from the Territory;,

lots rates of taxation for companies and

individuals in the Territory;

credit for taxes paid by companies in the

Territory on profits transferred to Australia;

. special tax concessions for mining, timber

and agricultural production-,

. special tax holidays for pioneer enterprises;

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. complete exemption from Territory income tax

for a period of five years for 'pioneer operation;

. exer_intion from Territory tax of dividends paid

froi?i pioneer income from such companies;

exemption from Australian tax nay also be -ranted

in respect of dividends paid out of pioneer

income to residents in Australia;

tariff protection., \ihere rn .rrcu ted

duty-free entry of plant and materials used in

manufactures in most cases:,

availability of credit on reasonable terns

through the Papua and 1 erw Guinea Development Bank.

The Government's policy of balanced economic,

social and political development of the Territory has aimed

to create conditions favourable to investment. I might

pose the question 'GIs the Governments policy succeeding?"

The trends over recent years show it is succeeding to a

very considerable degree. Private investment is increasing

rapidly. In 1967/68 'i160 :_illion of _) ivate investment

was made in Papua and iTevl Guinea on the latest estimates.

Of course that is an estimate and probably a conservative

estimate . Time estivate also is that this investment is

increasing, at the rate of about $10 million a year. 1 thine

these figures show some degree of success in this operation.

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There have been major developments recently in

various sectors of Territory economy: in mining, agriculture,

forestry and manufacturing, a glassworks an paper packaging

plant, a motor can assembly plant, a tyro retreading and

relugging plant, a wire and nail manufacturing plant, to

mention a few. The main reason why private investment has

been increasing is because investors find investment in the

Territory profitable and in the minds of many investors this

outweighs any difficulties that may be associated 4:^ith1

investment in a developing country.

I should like to refer briefly to our policy on

wages in the Public Service, which provides for expatriates

to be paid slightly more than they would earn in a like

position in Australia. I think this is necessary and reasonable

when you want people to go and work in a very different and

maybe a little more difficult environment than the one they

are used to. At the same time vie have accelerated training

schemes and educational activity at all levels so that native

people can qualify themselves for professional, ma nagement

and the other skilled jobs both in the Administration and

private industry. In all this we have the fullest co-operation

from the native people themselves. This is of course a very

important p art of our Government's policy and most of the

companies in the Territory have been not co-operative in

stimulating job training. This helps the native people to

feel part of new activities that are taking place in tea

growing palm oil production and so on.

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The local people are keen to be associated with

enterprises in this manner. As I have said earlier the

native people have ambition, they have energy and they

have natural skills. They are, I believe, very excellent

people to be associated with in the future.

As regards the attitude of the people they are

anxious for Australian investment. We do not often hear

about this sort of thing, at least it appears we don't

in our press which seems to write on political attitudes

probably quot?ng somebody who does not represent the

Territory.

I would like to read this Motion passed on the

voices unanimously in the House of Assembly moved by

Mr. Tei Abal who is the present Ministerial Member for

Agriculture, Stock and Fisheries.

"Mr. Speaker, I move that this House recognizing that

the economic development of the Territory of Papua

and New Guinea is dependent upon the steady inflow

of outside capital and representing the people of

the Territory of Papua and New Guinea determines

that such inflow shall be encouraged for the benefit

of the Territory and its people and invites and

welcomes capital investment for developmental

purposes in the Territory of Papua and New Guinea

and guarantees to the world that expatriate capital

invested in the Territory of Papua and New Guinea

for the establishment of new industry or the

development of existing industries shall not bm

subject to expropriation, nor to discriminatory

taxation or other like levies, nor to oppressive

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trading legislation, nor to unreasonable limitation

on its repatriation and solemnly charges future

parliament of the Territory of Papua and New Guinea

with the obligation not to legislate in a manner

inconsistent with this Declaration unless that

proposed legislation has support of the majority

of the electors of the Territory expressed by a

referendum and resolves that this resolution shall

be transmitted to the United Nations Organization

and to the Parliament of the Commonwealth of

Australia shall be known as the Development Guarantee

Declaration."

On that note, Mr. Chairman, I finish my address

and I wish you a very successful termination of your Seminar.

Department of External Territories,

CANBERRA. A.C.T.