The PNG Economy is not exempt from the tough global economic conditions as it is primarily an import-dependent Country. As such Nambawan Super Limited (NSL) expects the Country to continue experiencing high levels of inflation which will affect individual households and businesses.
The reduced spending power, resulting from inflation, is expected to flow throughout the ecosystem with businesses trading discretionary products set to be hit hard as consumers opt to spend the reduced buying power of their disposable income on essentials instead. NSL owns businesses that deal in both essentials and discretionary products so we will continue to monitor the landscape to see how these net each other off.
NSL CEO Paul Sayer said in a recent interview, “As an investor, one of the biggest challenges we faced in 2022 and now in 2023, is the shortage of Foreign currency being released to businesses and investors in PNG. This limits NSL’s ability to make further strategic investments for our Members at this very opportune time when we should be securing shares in more high-value off-shore investments that are available at lower purchase rates”.
“The availability of foreign currency is also constraining the trading and growth prospects of local businesses that we own, resulting in the Fund receiving lower dividends than it should.”
“On a more positive note, we welcome the Bank of PNG’s recent announcement of increasing its monthly release of foreign exchange by US$40 million to a total of US$100 million. We expect that this will help to ease the pressure on local businesses as they manage off-shore supplier trust and nurture their own growth locally”, Mr. Sayer added.
He also noted that PNG has benefited from the recent high commodity prices, particularly oil and natural gas prices brought on by the global energy shortage, and NSL would like to see some of these gains reflected in the local economy.
“We hope that these gains will improve foreign currency flows and tax revenue that will enable the Government to support the funding of some of its spending programs which we expect will boost economic activity and create employment on the ground”, he added.
“It is pleasing to note Total Energy and the State’s recent announcement to initiate the Front-End Engineering and Design for the Papua LNG project, with plans to finalize the Final Investment Decision later this year or early next year.”
“We are cautiously optimistic that as projects in PNG’s Oil and Gas Sector, like Papua LNG, Wafi Golpu, and Pyang Yang progress, we will see the same economic growth experienced by the Country more than a decade return.”
“Given the tough local and global economic conditions, Members should prepare for a lower return from 2022 and possibly again at the end of this year. Nambawan Super will continue working hard to minimise losses and capture any profit we can.”
“While superannuation funds generally aim to generate positive returns for their members, there is no guarantee that they will always declare a positive interest. The investment returns of superannuation funds can vary depending on market conditions, and past performance is not necessarily indicative of future performance.”
“NSL is a long-term investor utilising a strong investment strategy that aims to produce good returns over many years. Over the long term, we are optimistic that the global markets will recover and the Fund will continue generating good returns from our international and domestic investments.”
“In the meantime, NSL will continue to carefully manage the short-term market volatility and make investments that create jobs, support PNG’s economic growth, and deliver strong returns for our Members and their families over the long term.”