APNGBC BLOG : 10th Apr 2016

APNGBC Business Mission to Bougainville

It has been 5 years since the APNGBC last took a business mission to Bougainville. As you will read in Executive Director, Frank Yourns report, there has been much improvement and Bougainville offers many opportunities to Australian businesses.

— By Frank Yourn

The Council’s Business Mission to Bougainville from 4 to 9 April 2016 comprised 14 members and non-members including three members of the executive committee and one member of the PNG Branch executive committee.

Participants were: Peter Taylor (Rio Tinto)(Past President) (Mission Leader, Ian Clarke (Gadens) (Past President), Mark Delmonte (International SOS), George Griffin (Cadden Crowe), Gary Aylward (Hot Croc Advertising, Cairns), Craig Waters (Genesis Engineering, Cairns), Bruce Avenell (AIG), Emmanuel Pindao (Austrade), Jim Bitomsky (Kleinhardt, Cairns), Mark Hitchcox (Rio Tinto) Wesley Smith (Rio Tinto), Brad Stone (Rio Tinto), and Frank Yourn (Executive Director).

The mission had a very comprehensive program in Buka and Arawa. Some participants only undertook the Buka portion of the visit. Eight participants proceeded on the Arawa section of the itinerary. 

A copy of the program undertaken by the mission can be found here.

The mission was accompanied in Buka by David Bloch (Australian High Commission, Buka Office) and throughout by James Marshall and Tara Collins (Australian High Commission, Port Moresby) as well as other support staff (Ian Tavore and Edwin Benny) from the Australian High Commission, Buka. High Commission staff were excellent in planning and managing the visit on the ground. We could not have done it without them. The Executive Director has written to the High Commissioner commending the work of his staff.

The mission found marked improvements have occurred in Bougainville since the last mission in 2011. The reconstruction of all the bridges on the road between Buka and Arawa and sealing of some sections of the road make it feasible to drive in three hours or so between the two locations. It’s not the Pacific Motorway, but it’s a big step forward and many provinces in Papua New Guinea have much worse roads. The re-opening in 2015 of Aropa (Kieta) airport near Arawa means visitors can, as mission participants did, fly in to Buka, travel by road to Arawa and then fly out from Kieta without having to return to Buka as was previously the case. 

The mission came at a potentially important point in Bougainville’s history as the Autonomous Bougainville Parliament was discussing the removal of the mining moratorium which has been in place since 1971. It is understood there is agreement on lifting the moratorium, the debate essentially being about whether it is a full or partial removal. A final decision on this matter is expected before the end of the year  

The removal of the moratorium, if all goes to plan, will open the way for exploration activities in all or some of Bougainville and if taken up by mining companies could generate renewed economic activities in Bougainville starting in 2017. But the opening of mines will take longer.

The elephant in the room for any potential large scale investor remains the uncertainty of Bougainville’s constitutional future with a non-binding referendum due by 2020.

The mission met in Buka with President Momis and several members of his cabinet and a range of ABG senior officials as well as key business representatives including senior management of the Bank of South Pacific Buka Branch and members of the financial services, tourism, agriculture, construction sectors. 

Buka is at the south end of Buka Island. It is separated from Bougainville Island by the Buka Passage. Buka has been the temporary capital of Bougainville since The Crisis. It is the seat of the ABG, but at some time in the future it appears likely that Arawa will be re-established as the capital.

Travelling by road from Buka to Arawa the mission visited the recently re-established Bougainville Technical College which has 36 students. Like all schools in Papua New Guinea the school struggles for resources, but the committed and passionate staff make the most of what they have. It is small but important start to re-establishing tertiary education in Bougainville

The mission also visited a cocoa plantation and gained an understanding of the important cocoa industry in Bougainville.

In Arawa the mission met with a range of business representatives including senior management of the Bank of South Pacific Arawa Branch and members of the financial services, tourism, agriculture, construction sectors. At least two of the business representatives the mission met in Arawa at a quite large gathering of business representatives are senior landowners from the Panguna area, and it was interesting to hear their views and to observe the respect they appeared to hold from other meeting participants.

The town of Arawa shows many signs of the ten year conflict with the skeletons of many destroyed business and residential buildings everywhere but mixed in with undamaged and rebuilt and redeveloped sites. The town has a layout not unlike an Australian country town, with many open public spaces which appeared quite clean and well kept. The main roads through the town have been sealed and have installed drainage in which respect they appear better than most towns in Papua New Guinea. The market appeared modern and was well populated with vendors.  People in the street appeared smiling and welcoming towards mission participants.  Aropa (Kieta) Airport, reopened in 2015, has a clean and functional terminal including an Executive Club lounge!

On the final afternoon the mission visited two island villages on Pok Pok Island near Kieta where members received warm traditional welcomes from villagers and were able to learn about life in the village communities including the impact of The Crisis on their lives. What was notable was the resilience of the people and their level of education and ability to articulate in English.  Many had held jobs on the main island prior to The Crisis, but were now consigned to living a village subsistence life. The villages had schools which provided education up to Grade 8 after which students are selected on academic merit to advance to Arawa High School. About 60% of students are selected for advancement to high school.

Bougainville is a spectacularly beautiful island ripe for tourism development, but at present lacking the infrastructure and financial resources to be able to develop a sustainable industry. It has a nascent tourism industry, dominated in Arawa by the guest house business (14 guest hours with a probable total of 150 to 200 rooms). A couple of small tourism operators provide inbound tourism services for visitors.  Current high pricing models and accommodation quality will be a brake on development.

The economy is currently sustained by cocoa and copra industries, and alluvial gold mining. The major copra exports appear to go to General Santos City in Mindanao, The Philippines, for processing. Sea transport is provided by Consort Lines to Buka and Kieta, as well as some other companies.  Small cruise ships occasionally call at Bougainville ports.

The Australian Government is supporting a Cocoa Festival in 2016 involving a group of Australian chocolatiers visiting Bougainville to meet with growers.

Financial services in Bougainville are very rudimentary with business and personal loans very difficult to obtain.  The micro-finance sector seems to be very well supported in the community. 

There are many opportunities for business to participate in the Bougainville economy and to share in its future growth. The best model for most businesses will be in the establishment of joint ventures with Bougainvillean participants.

Cairns business representatives on the mission identified a range of potential opportunities for collaboration between Cairns business and Bougainville business amongst the range of opportunities generally. There was enthusiasm amongst a number of the business representatives we met to attend the Australia Papua New Guinea Business Forum in Cairns in May, and some may register. The Australian High Commission is now embarked on attempting to arrange a Bougainville business and government mission to attend in Cairns at that time and if this occurs a program of appointments will be arranged in Cairns immediately following the Forum for a couple of days to enable Cairns and Bougainville business to explore possible collaboration in areas such as:

  • Off grid power and other processing equipment for the booming artisanal mining sector to shorten the value chain, enhance competitiveness and increase income generation for artisanal miners;
  • Breeding and farming high value beche de mere species to promote sustainable income generation in remote island communities;
  • Virgin coconut oil processing and export;
  • Organic certification in agricultural value chains;
  • Farming high value fish in the 3-mile limit of Bougainvillean waters;
  • Cold chain development for the export of marine products;
  • Developing and exploiting niche export markets for Bougainville’s current and future cocoa and coconut exports;
  • Investment in plantation agriculture;
  • Training opportunities in agricultural value chains;
  • Joint venture investment in vanilla and other high value spices;
  • Researching and exploiting niche tourism markets based on the strong position of Cairn’s in the global tourism market; and,
  • Direct transportation links to Cairns, and from Cairns to the broader region.

The two major issues raised by business as impediments are the lack of access to capital and the inability to obtain insurance. These two issues have mostly not moved in the five years since our last visit save for the opening by Bank of South Pacific of a branch in Arawa, and the growth of some micro-finance institutions at least one of which appears quite substantial in the scale of the economy. Most private business is financed from savings. 

It would be a good outcome from the visit for the Council to try to stimulate key parties to try to find a solution to the insurance void in Bougainville.  Resolving this will potentially assist in business and economic growth in Bougainville. Bruce Avenell committed at a meeting with business in Arawa to explore possible solutions to this problem. We need also to use our various connections to try to advance this issue, and some others identified during the visit. 

The mission received a warm welcome at all levels and in all locations visited. Interlocutors in especially Arawa commented that this was the first business group to visit which offered quality business connections. As far as we can ascertain only the Australia Papua New Guinea Business Council, in 2011 and this mission, has arranged to bring business delegations to Bougainville. We believe this will assist to re-establish Australia as a reliable and welcome business partner. But Bougainvilleans clearly want to enter into joint ventures and be able to have skills transferred to them as development takes place.

Mission participants learnt a lot about the business environment in Bougainville and the circumstances in which it operates. Many of the challenges they face are not dissimilar to those faced in many parts of Papua New Guinea, but they also have unique challenges. We were impressed by the high calibre of the people we met across both business and government which conveys the impression that if the correct decisions are made on many fronts these people have the capacity to again build a strong economy in Bougainville. But there is no illusion that this will be a straightforward task nor will change be accomplished quickly.  It will be a hard slog.

A summary of the discussion at the meetings which took place is in preparation and will be distributed to Business Mission participants when it is completed.


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