Chinese Influence In PNG Should Not Be Feared: Rimbink Pato
Australia has nothing to fear from increasing Chinese influence in the country and the wider Pacific, the Papua New Guinea Government says.
The Australian government is becoming increasingly alarmed about Chinese investment and aid — usually in the form of concessional loans — to developing countries on its doorstep.
But PNG’s Foreign Affairs Minister, Rimbink Pato, has moved to reassure Australia that Papua New Guinea can manage its relationship with both countries. “Papua New Guinea remains a close, reliable and trusted friend of Australia, we’ll work through all the issues of concern together,” he said.
Australia’s International Development Minister, Concetta Fierravanti-Wells, questioned the benefits of some Chinese projects in the Pacific.
But Mr Pato said PNG would continue looking for aid and loans from nations like China, particularly to develop infrastructure.
“PNG is available to receive and to partner in where it matters most to suit the interests of our people and our country.”
Mr Pato said the country’s long history of receiving Australian aid taught it how to assess and manage foreign funding.
“Using the experience with Australia, we will work alongside all the other development partners to ensure that we get the processes right,” he said. “There’ll be some projects which have challenges, but we’ll work through those challenges.” Recent experience shows Papua New Guinea government agencies have failed to manage some key infrastructure developments funded by concessional loans. One example is the Lae Tidal Basin, a AU$390 million expansion at PNG’s biggest port built by the Chinese state-owned China Harbour Engineering Company.
The cost of the project, financed primarily through concessional loans from the Asian Development Bank — blew out by $170 million because of engineering problems.
The ADB’s assessment found the project failed tests of efficiency, effectiveness and sustainability and its overall report declared the project “less than successful”.
Sir Nagora Bogan, the former commissioner of PNG’s Internal Revenue Commission, said such projects showed the dangers of borrowing heavily without good governance procedures to manage the loan. “I think generally people want development to take place but development must be done where we have the capability to afford those developments and it must be done transparently,” he said. The increasing Chinese presence isn’t limited to government loans. Chinese businesses — many state-owned — are competing for private contracts too.
Food manufacturer Ian Chow used Chinese contractors to build his AU$40 million biscuit factory in Lae.
“I think it’s good,” he said. “To get an Australian to come work for me I have to pay them 30 per cent more than an expat from Asia.”
Australian investment in Papua New Guinea has stagnated in recent years as the country’s economy struggled, while Chinese investment has been rising. Mr Chow, an Australian citizen but long-term Papua New Guinea resident, said Australian businesses appeared to be on the way out.
“They don’t want to come here and they’ve left a big vacuum and it’s being filled by the new Chinese,” he said.
“The Chinese are going to take over. In all the major businesses, they already own the construction, they already own retail.
“Wholesale I can see, it’s changing as well, they’re taking over the wholesale.”