Up to 50% of Papua New Guinea’s residents live in extreme poverty. Yet despite having access to vast natural resources—including gold, copper, nickel, gas, and timber—just 10% of households have regular electricity.
That is according to Pope Francis—the second Pontiff to visit the heavily Christian country – with the 87-year-old Head of the Catholic Church who has challenged the highly fragmented country to share the proceeds from tens of billions made from logging, drilling, and digging with its population.
Speaking at the APEC Haus, a controversial conference centre built for the 2018 Asia-Pacific Economic Co-operation Forum, Pope Francis challenged PNG’s top foreign donors (namely China and Australia) to do more to end poverty and escalating violence in the region:
In addition, the Pope said that natural resources (including logging) should be developed in a “sustainable manner” that “improves the well-being of all, excluding nobody, through … international co-operation, mutual respect and agreements beneficial to all parties.”
China dominates PNG’s foreign direct investment flows
As it stands, China is responsible for the vast majority of foreign direct investment (or FDI) into PNG, with K 2.5 billion (or US $625 million) invested (in 2018) as part of Belt and Road projects, ahead of Australia (K 1 billion or US $250 million), Malaysia, the Philipines and Singapore.
Up to 10,000 foreign enterprises are registered in PNG, with Chinese-owned businesses heavily connected to the trade of tropical timbers – with 90% of all timbers cut in the Pacific (namely PNG, the Solomons, Tonga, and Vanuatu) traded into China, where they are processed before being sold into global markets.
According to data obtained from the International Tropical Timber Organization, PNG is the world’s largest exporter of tropical logs – with concessions covering 11 million hectares or about 25% of the country’s land area, which is increasingly, according to Mongabay, used as a tool by politicians to building personal wealth.
In 2021, a report by Global Witness revealed that this trade in largely illegal timber could see PNG timbers end up in floorboards, bookcases and decking:
From there, “the timber travels another couple of hundred kilometres up the Yangtze River, past the financial centre of Shanghai, and the vessel pulls in where the river widens and starts to curve at Zhangjiagang, a vast commercial import zone which receives 75% of China’s log imports.”
PNG’s “hugely important” timber industry is in crisis
Pope Francis’s comments come as Wood Central exclusively reported that the late Bob Tate, PNG’s long-time CEO of the Forest Industries Association, warned that the country’s US $271 million forest products industry – one of the country’s biggest money spinners – was now drowning in red tape.
“The years 2022-23 have been a disaster, followed by restrictions by the PNG Forest Authority in an attempt to end all exporting activities,” Mr Tate warned Wood Central. “These measures are unnecessary and demonstrate the complete lack of understanding by the authority of the disastrous economic outlook facing the country.”
“If the government’s intention is to move away from log exports, they should conduct this in a responsible manner and give investors ample opportunity to either move into domestic processing if it’s viable or shut their operations with ample lead time rather than simply increasing export tax and wiping the industry out,” Mr Tate said.
- To learn more about the PNG forest products industry – and its role in the global trade of tropical timbers, click here for Wood Central’s special feature.