[SCMP Column] PNG's APEC coming out party

November 17, 2018

As Papua New Guinea’s challenging year of chairmanship of the 20-economy Asia Pacific Economic Cooperation grouping (APEC) comes to its climax with global leaders flying into Port Moresby, it is easy to poke fun, or disparage.

In recent weeks, many international publications, including the SCMP, have homed in on the country’s poverty, its crime, its corruption – and whether a country that is short of medicines in its hospitals, and  where police and teachers often don’t get paid, should be spending up to US$500m to host the APEC year.

Some cynics are already cruelly talking of the “Maserati meeting”, after some foolish PNG official signed off on 40 US$150,000 Maseratis and three Bentleys to be used to glide top leaders from meeting to meeting. Officials claim they will be able to sell them off at a profit after the meeting, but the optics in a country that is ranked by Transparency International as one of the most corrupt in the world look terrible.

“Troops pour into Port Moresby” said one SCMP article, counting a “multinational force of warships, fighter jets and up to 4,000 elite counter-terrorism troops” providing security to the 15,000 visitors to PNG’s “crime-plagued” capital city. Stereotypes have been easy to paint, just as they are so easily wrong.

Sitting among hundreds of global business leaders in APEC meetings on the top decks of a huge P&O cruise ship moored in Port Moresby’s sun-drenched harbour few delegates can hand-on-heart say they are getting a glimpse into the challenges of life in one of Asia’s poorest nations, nor into the challenges their people face.

Yet over four visits to the city in the past three years, I have come to the conclusion that (putting Maseratis to one side) enabling economies like PNG to manage the challenge of hosting a year of hundreds of APEC meetings, and playing a lead role in setting development priorities for the region, is actually what APEC is all about.

When leaders from affluent APEC economies like Japan or New Zealand or Singapore or Hong Kong – all with per capita GDP above US$40,000 – talk of using the 21-member APEC region to reduce inequality, encourage inclusive growth, or assist in developing the region’s infrastructure, it is easy to feel they are giving glib lip-service to politically-correct ambitions that have little local reality. But when it comes from a country in which average incomes are among the lowest in the world, in which no city is connected by road to any other, where 37 per cent of the population lives below the UN’s poverty line, and less than one third have access to electricity, then such commitments reflect a visceral reality.

When APEC members talk about reducing inequality, inclusive growth and the awesome unmet infrastructure needs of the region, it is countries like PNG they are talking about. When we talk about APEC’s core strengths being members’ commitment to best-practice learning and region-wide capacity-building, it is in countries like PNG that APEC’s value is most critically measured. That is why Trumpian calls to “put America first” so jar with the spirit of APEC’s work over the past two decades.

The fact that PNG has been able – successfully – to host APEC activity for the past year is a tribute to the success of that process of best-practice learning and capacity building. That was true also of Vietnam as APEC chair last year, Peru the year before, and the Philippines the year before that. All of them defied the cynics and doubters who predicted chaos or logistical incompetence. The four count as APEC’s four poorest economies as measured by GDP per capita, but all have used the APEC process to learn, to improve governance – and to reap the rewards of free markets and openness to trade and investment.

Nowhere is this seen more clearly than in PNG. Up to 2005, the economy virtually flat-lined for more than 20 years, never rising above US$4bn, subsisting on trade in a few commodities like palm oil, cocoa, coffee, and minerals like gold, copper and nickel. But since 2005, GDP has leapt more than four-fold, to around US$21bn last year. As an economy still starkly exposed to the volatility of global commodity prices, its growth track has been a giddying roller-coaster, oscillating from growth of 19 per cent some years, down to contraction of 3-4 per cent in others. It has been the export of oil and gas since 2014 that has done much to lift the economy in the past five years, but it has been the volatility of fuel prices that has kept the rollercoaster rolling.

One gets a clear sense – whatever the cynicism over rampant corruption and endemic crime – that for the PNG government, the task of hosting APEC is playing a key part in a development strategy to diversify the economy, attract new investment, and open further to the global economy. In most of APEC’s developed member economies, it is difficult to see this direct connection. Hosting APEC is for them more a duty and a burden.

In contrast, for PNG, it is a profoundly important opportunity. According to a PNG CEO Survey undertaken by the Oxford Business Group, an overwhelming 77 per cent of CEOs believe hosting APEC this year will have a positive, or very positive, impact on future economic growth. There is a sense that this has provided a once-in-a-lifetime opportunity, and that the country’s future in very tangible terms depends on capturing it.

While China’s Xi Jinping is in Port Moresby, he is expected to sign a formal Free Trade Agreement with PNG. That will undoubtedly underpin fresh flows of investment focused on infrastructure, linked to the Belt and Road Initiative, which in turn is likely to stimulate rivalrous commitments from economies with longer-standing links – like Australia, Japan and even the US.

So there is a sense in Port Moresby this weekend that the APEC Leaders’ meeting is something of a coming-out party. For many of APEC’s developing member economies, the organisation has for more than two decades played a major role in channelling growth and development – and there is confidence that this will continue into 2019 as Chile takes up chairmanship. Hopefully it will not include Maseratis and Bentleys.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view. Opinions expressed are entirely his own.

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