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Inside Out & Outside In

Papua New Guinea’s chairing of Apec spells progress, despite the expense on Maseratis and Bentleys

  • David Dodwell says the cynicism over Papua New Guinea’s hosting of the Apec leaders’ summit belies the tangible benefits the event can bring
  • For developing nations, learning best practices and capacity building through chairing Apec can be a rewarding experience
PUBLISHED : Friday, 16 November, 2018, 3:04pm
UPDATED : Friday, 16 November, 2018, 10:19pm

As Papua New Guinea’s challenging year of chairmanship of the 21-economy Asia-Pacific Economic Cooperation (Apec) grouping 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 Post , have homed in on the country’s poverty, its crime and 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$500 million to host Apec meetings this year.

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

“Troops pour into Port Moresby” said one Post article, noting the presence of a “multinational force of warships, fighter jets and elite counterterrorism troops” providing security to the 15,000 delegates to PNG’s “crime-plagued” capital city.

Apec’s date with Papua New Guinea: who are you calling irrelevant?

Hobnobbing with global business leaders on huge cruise ships moored in Port Moresby’s sun-drenched harbour, few delegates can hand-on-heart say they are getting a glimpse of the challenges of life in one of Asia’s poorest nations or in their own countries.

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

Enabling economies like PNG to manage the challenge of hosting a year of Apec meetings ... is actually what Apec is all about

When leaders from affluent economies like Japan, New Zealand, Singapore or Hong Kong – all with per capita GDP above US$40,000 – talk of using Apec to reduce inequality, encourage inclusive growth or assist in developing the region’s infrastructure, it is easy to feel they are paying lip service to politically correct ambitions. But it is countries like PNG they are talking about.

In a country in which average incomes are among the lowest in the world, in which almost no cities are connected to each other by road, where 37 per cent of the population lives below the UN’s poverty line, and less than one third have access to electricity, such commitments reflect a visceral reality.

If Apec’s core strengths are 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 Trump’s “America first” calls so jar with the spirit of Apec’s work.

The fact that PNG has successfully hosted Apec activity for the past year is a tribute to that process of best-practice learning and capacity building. That was true also of Vietnam as Apec chair last year, Peru in 2016 and the Philippines in 2015. These countries defied the doubters who predicted chaos or logistical incompetence. The four count as Apec’s poorest economies in GDP per capita terms, but all have used the Apec process to learn, improve governance and 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 had virtually flatlined for more than 20 years, never rising above US$4 billion, 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 fourfold, to around US$21 billion last year.

China-Australia rivalry surrounds Apec talks in Papua New Guinea

As an economy still starkly exposed to the volatility of global commodity prices, its growth track has been a roller coaster, oscillating from growth of 18 per cent some years, down to a contraction of 3 per cent in others. The export of oil and gas since 2014 that has done much to lift the economy in the past five years, but the volatility of fuel prices has kept the roller coaster going.

One gets a clear sense – despite the cynicism over rampant corruption and endemic crime – that for the PNG government, hosting Apec is a key part of a development strategy to diversify the economy, attract new investment and open further to the global economy.

There is a sense that this is a once-in-a-lifetime opportunity, and that the country’s future in very tangible terms depends on capturing it

For Apec’s developed member economies, playing host is more a duty and a burden. In contrast, for PNG, it is a profoundly important opportunity. According to a PNG CEO Survey by the Oxford Business Group, 77 per cent of chief executives believe hosting Apec this year will have a positive, or very positive, impact on the country’s economy. There is a sense that this is a once-in-a-lifetime opportunity, and that the country’s future in very tangible terms depends on capturing it.

While Chinese President Xi Jinping is in Port Moresby, he is expected to sign a 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 commitments from rival economies with longer-standing links – like Australia, Japan and even the US.

So the Apec leaders’ summit is being seen as 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 that 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