Some people not happy with the China loan

[Gator]

http://pngexposed.wordpress.com/2012/09/26/oneill-allowing-china-to-cash-in-on-png-resources-and-making-us-foot-the-bill/

O’Neill allowing China to cash in on PNG resources – and making us foot the bill!

Prime Minister Peter O’Neill claims he is trying to improve the living standards of ordinary people and ensure they have access to basic services, but this is far from the truth.

Confidential government documents show that, just like his predecessor Michael Somare, O’Neill is not only being bullied by the Chinese to give them preferential access to PNG resources – he is using PNG tax payers money to subsidize the Chinese.

The O’Neill government says the controversial Pacific Marine Industrial Zone in Madang province is one of its priorities to boost the national economy but has not revealed:

• The USD79 million dollars it is borrowing from the Chinese to fund the project will be plowed straight back into the Chinese company building the PMIZ rather than being invested in PNG companies and people

• China Shenyang International Corp has been contracted by the PNG government to design, build and supply equipment and materials for the PMIZ rather than the PNG government using local businesses

• The total PNG government contract with China Shenyang International is for USD 95 million, which means PNG taxpayers will be directly subsidizing this Chinese company to the tune of USD16 million.

• All the goods, technologies and services purchased for PMIZ will come from China – not PNG suppliers

• China Shenyang International will operate completely tax free in PNG, exempt from any “rate, charge, duty or imposition of any kind under PNG laws” – a concession the PNG government NEVER gives to PNG businesses

The PNG government has also granted Chinese officials full and unlimited rights to examine and supervise the project funding including granting a long-term multiple entry visa to the Chinese loan officer.

The government has also “irrevocably waived” any sovereign immunity for PNG in any dispute over the loan, AND agreed while PNG may not assign or transfer any of its rights or obligations China has full rights to assign or transfer any of its rights and obligations!

Finally the PNG government has agreed the loan contract, although signed in PNG and to be effected in PNG will be “governed by and construed in accordance with the laws of China” – bet you don’t even know what those laws are do you Mr O’Neill!

[Petrovale]

Gator, I smell opposition politics, which is only natural. Local entrepreneurs likely feel frustrated because their dreams are more ambitious, and want to cash in on any fun, at the earliest possible convenience. But, if a national government has to grant far reaching fiscal concessions in negotiating with a foreign export-import bank, as suggested above, then local providers may have to study a little more to be able to make content requirements and offer appropriate value, fair and square.

PNG's interest is to expedite the deployment of its LNG projects to boost the treasury. The state's % interest in those projects should, subsequently, guarantee "trickle down" to all other sectors. I'm not necessarily in favor of the philosophy, but I do believe that this is the historical sequence of events in PNG. It's easy for a local entrepreneurial elite to blame the national government for all evils. But when, if ever, did they take responsibility to help build the nation?

The "show-me-the-money logic" works on all ends, from New York, Tokyo, Shanghai, Singapore, and Hong Kong to Port Moresby and back...
And, sometimes, the learning curve hurts, especially for those who have grown accustomed to easy money.

[Gator]

What makes the US economy so great is the multiplier effect. I make money, I spend it (mostly) in my local economy and the people that get my dollars, hire other people and spend my money again. I have seen a study that for every incremental dollar that enters the economy, as many as seven people get a piece of that.
It will not happen in PNG with Chinese companies and labor. I just returned from the Bahamas. I saw a new resort being built that will put Atlantis to shame size wise. It is the largest project ever on the island. The builders negotiated with the government that they could bring in their labor. It looks like a compound in China, with thousands of workers living on the grounds in Chinese dormitories and all the signs are in Chinese. They never leave the compound; they never spend money on the island. No wealth effect for the locals, all the money is going back to China. All it cost the company was to build a new football (soccer) stadium.
China plays by a whole different set of rules than the rest of the world. They have to keep 800 million people working or they will have a revolution.

[admin]

And it will be populated by tourists who also never leave the compound (especially if they keep these signs in Chinese)

[Thylacine-2]

There is a cultural difference. Chinese tourism to Europe is big now. They go in tour groups, see the sights scheduled, never leave the group, don't mingle with the locals, and eat their meals in the tour group (provided as part of the tour) in Chinese restaurants.

[Palm]

The referenced facility is a $3.5 billion resort/casino. The Chinese are building it and it will have units for sale (of course Chinese get first chance) but there will also be resort rooms, full casino, golf course etc etc. The Chinese are expecting many of their own who will become very wealthy as China develops and they are basically providing "opportunities" for them to invest their millions. If a Chinese national buys a unit it will be exempt from taxes for life. Here's a promotional piece on it. It will of course benefit The Bahamas, but it is going to be very China friendly. Interesting that the EXIM Bank of China is providing funding.
http://www.caribbeanconstruction.com/index.php?option=com_content&view=article&id=692&Itemid=2