SEAN JACOBS  | Part 3 of 3

In 2006, the World Bank published a report titled Where is the Wealth of Nations? Measuring Capital for the 21st Century. “Countries are largely rich because of the skills of their populations,” the report noted, “and the quality of the institutions supporting economic activity.”

The IMF’s return to PNG provides the platform for a suite of institutional reforms – two of which I have focused on in my previous entries. But the IMF’s focus is not on the skills of PNG’s population and enhancing human capital.

Indeed, this is an area that has received the focus of other international donors, governments and organisations, primarily through skills training and education assistance. “PNG has a critical shortage of qualified workers with technical and vocational skills,” note the Australian Government, “with less than two percent of PNG’s population holding a vocational or technical certificate.” Only 5.5 percent of the population hold a qualification, according to the PNG Government, while only 6.6 percent have completed a high school education.

More broadly, in terms of human capital, the World Bank’s Human Capital Index notes that in PNG “a child born in 2020 today can expect to achieve only 43 percent of their potential productivity.” The PNG Government spends comparatively much less on education than other regional governments, notes further World Bank analysis, while “15 percent of 10-year-olds cannot read and understand a simple text by the end of primary school,” and only “32 percent of secondary-school age children are enrolled in secondary school.” The report also notes this is significantly less compared to other countries in the region.

Finding workers – skilled or otherwise – is a common complaint from PNG businesses across a range of industries. Yet the effects of these shortages extend much further than recruitment gripes – they have significant effects on society leading, for example, to constant flight cancellations and delays, black spot network failures that disrupt people to people contact, and banking ‘technical errors’ that limit much-needed access to money, especially when the majority of Papua New Guineans do not live near town centres or have access to internet banking. These are just a few examples that frustrate consumers of all income levels in PNG.

In taking a step back and attempting to review skills assistance measures to address these challenges, it might be useful to look at PNG’s human capital hurdles from ‘outside in’ versus ‘inside out’. There is consensus, for example, that funding for skills training is the dominant method to improve PNG’s skills shortages. But clearly other solutions need to be explored.

It is some of this alternative thinking, I sense, that motivated the O’Neill Government in 2017 – under Foreign Minister Rimbink Pato – to overhaul dual citizenship laws to enable more expatriates with a PNG connection to return and use their skills to contribute. The changes, Pato noted, provided opportunities for such individuals – long shut out from PNG – “to regain their PNG citizenship, reconnect to their roots and contribute back to PNG as their country of origin.” Indeed, acting as a form of labour competition, re-tooling citizenship laws is a practical move in the overall approach to reduce PNG’s skills deficit and enhance its human capital environment. It should be noted that the reform did not receive swift legislative passage – it took the O’Neill Government around four years to complete.

At the time of writing, it is not clear how successful the reforms have been. If unsuccessful, one reason may be the prohibitive cost for prospective citizenship candidates, which sits at around PGK 15,000 (AUD 6000). The Marape Government should look at reducing this amount to net more prospective candidates and, at the same time, lowering other financial, administrative and travel barriers to entry under PNG’s business visa regime. Other anecdotal feedback I have received from recent successful dual citizens is the prohibitive nature of the dual citizenship requirements, which limit access to certain occupations – another barrier that Marape should address. Common visa processing delays are also an administrative hurdle that further complicates a more fluid PNG business border.

While such reforms may seem small, the effects are twofold. First, they enhance business and commercial activity in PNG. Second, more fundamentally, they expose PNG’s current and future workers – in the workplace itself – to external experience and expertise, thus enhancing their human capital potential. Often times a small percentage of workers can have a strong impact on organisational performance, otherwise called the Pareto principle, which I have observed across a range of industries and operations in PNG.

Related here is the emerging concept of expanding tied arrangements, which are used by China and other nations but not Australia. While “a more direct approach,” according to former PNG Power Limited Managing Director Carolyn Blacklock, could be “designed to provide more support for Australian businesses, even on concessionary terms” and “fuel further development and help crimp the channels of graft,” it would also deliver a human capital outcome to PNG, exposing local businesses, supply chains and workers to external expertise. As I have written here, PNG enjoys a comparatively high level of shared values with Australia – and even the United States – than other nations, enhancing the potential for skills sharing and other human capital outcomes.

A more fluid pro-business migration structure does not displace PNG’s existing training assistance regime. Support here should continue and even be expanded appropriately. Additional resourcing should also be considered for PNG’s university system, although concerns have been raised about the quality of university education, especially at the University of PNG (UPNG), and the downstream effects on “maintaining quality intellectual output,” according to UNPG Vice-Chancellor Vincent Malaibe. Many students arrive at university without basic literacy skills, Malaibe notes, which reveals an even wider breakdown in the quality of PNG’s education system that needs ongoing PNG Government attention.

Ultimately, any reform to PNG’s human capital and skills regime comes with recognising that “it is the surrounding sociolegal and political conditions that matter,” to quote economist Deirdre McCloskey’s analysis of human capital. Skilled individuals with high levels of human capital can work miracles in difficult social, political and economic climates. But high functioning institutions, which PNG does not have, result in measured tangible differences for such individuals. As Matt Ridley writes in The Rational Optimist, underlining the importance of ‘intangible capital’, a Mexican worker who crosses the border into the United States can “quadruple their productivity almost immediately” by having “access to smoother institutions, clearer rules, better-educated customers, simpler forms – that sort of thing.”

In tandem with the hope of institutional reforms, humble yet realistic changes to PNG’s business borders offer positive outcomes to economic conditions in PNG. Paired with foreign exchange reform, and the rapid introduction of Independent Power Providers into PNG’s electricity sector, the Marape Government has a policy toolkit to ‘lean in’ to in 2024. This offers the opportunity to deliver desperate reform and outcomes where they matter most – among everyday Papua New Guineans.


Sean Jacobs is a Papua New Guinean-born Brisbane-based writer, government relations and public policy specialist, and Industry Fellow at the Griffith Asia Institute.