ADB signs first Papua New Guinea deal
The Asian Development Bank (ADB) has completed its maiden trade finance deal in Papua New Guinea.
A credit guarantee facility has been signed with Kina Bank, a local lender, which will support US$4mn of annual trade in Papua New Guinea, specifically local SME importers and exporters.
Kina is the first bank from Papua New Guinea to sign onto the ADB’s trade finance programme and the third from the Pacific islands. The bank’s CEO Syd Yates says they were “very excited” to “leverage the AAA rating of ADB to add value to our client’s international trading activity”.
The ADB’s director for private sector financial institutions was present at the signing. Christine Engstrom said: “With ADB’s backing, Kina will be able to grow its trade finance operations and increase financial support to local importing and exporting businesses, including small and medium-sized enterprises.”
Papua New Guinea’s economic growth slowed to 2% last year, following two consecutive years of double digit growth. The predominant exports are minerals-based, with the country also possessing plentiful offshore energy resources. The slowdown can be attributed, for the most part, to falling prices for these key exports.
The country is frequently referred to as a “frontier market”, particularly by Australian banks, which have been present there for many years. However, it is also considered volatile and a difficult place to do business. For this reason, the bulk of companies doing business there and banks financing it, process it offshore.
Last year, however, Norton Rose Fulbright bucked the trend, when the law firm announced a new office in Papua New Guinea, which will focus on infrastructure, power, ports, roads, property, mining (particularly gold and copper), oil and gas and financial services.
Speaking at the time, managing partner for Australia Wayne Spanner commented on the demand from clients in Papua New Guinea for permanent international legal services onshore.
“We have been encouraged for some time by our clients to set up a permanent base in PNG and are pleased to have settled on a winning combination of local experience and broad regional support. We now have considerable depth of experience in advising on PNG oil and gas projects, which along with other resources and infrastructure-led investment, present a tremendous opportunity for the PNG people, its economy, and the local and international clients that work there,” he said.take me back