Investment in PNG has stalled as the future of access to LNG export facilities has hampered the commercial potential of the underlying asset bases.
June 16, 2021
Asia - Pacific
Oceania, group of islands including the eastern half of the island of New Guinea between the Coral Sea and the South Pacific Ocean, east of Indonesia
The fiscal regime that applies in Papua New Guinea (PNG) to taxation of income derived by petroleum and gas companies consists of a combination of corporate income tax (CIT), royalties and development levies, additional profits tax (APT) and infrastructure tax credits.
PNG is the largest economy among the Pacific Islands and offers enormous trade and investment potential. Key investment prospects are in infrastructure development, a growing urban-based middle-class market, abundant natural resources in mining, oil and gas, forestry, and fisheries. Under the banner of “Take-Back PNG,” Prime Minister James Marape’s government endorsed a fair, open, and collective approach in its decision-making processes, especially decisions concerning the proper management of the country’s resources and investment returns. Hoping to distance itself from a history of poor business and investment trade-offs that eventually triggered the ouster of Prime Minister Peter O’Neill in May 2019, Marape also announced that the government would increase its share of revenues from the country’s resources. Under Marape, PNG reaffirmed its openness to trade and investment, is stepping up reforms to recover from high debt levels, and seeks to attract more FDI to stimulate its economy. However, the Marape Administration’s inability to reach agreement with multinational companies in the resources sector has cast a shadow over this strategy.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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