• The Papua New Guinean economy is held back by limited digital communication infrastructure.
  • Remote rural areas suffer from poor connectivity, while fixed and mobile internet subscriptions only cover 11% of the population.
  • The world’s first public-private, Digital Foreign Direct Investment (FDI) working group has been created in PNG to encourage tech investment.
  • The country is now on the brink of passing an Electronic Transactions Act (ETA) that will provide a legal framework for e-transactions, including concluding contracts online, bring it up to speed with laws in many other countries.
  • The World Economic Forum is working with local stakeholders to stimulate a digital transformation.

With active volcanoes, coral reefs, rainforests and spectacular beaches, the Pacific island nation of Papua New Guinea (PNG) is a tropical paradise. It’s also one of the most challenging parts of the world to run a digital business. But this is changing.

The country’s Prime Minister, James Marape, is leading a digital transformation agenda that aims to harness the potential of technology to spur development and trade. The approach is much needed: while 80% of Papua New Guineans live within mobile coverage range, fixed and mobile internet subscriptions only cover around 11% of the population.

The World Economic Forum is also playing a role through the Facilitation 2.0 programme. Supported by the Government of Australia, the programme is working with PNG’s public and private sector stakeholders to lay the foundations for digital development, including e-commerce.

PNG, as everywhere, has been disrupted by COVID-19; its tourism industry has seen 90% of 2020 bookings cancelled. As the country recovers, digital upgrades – including a significant new undersea data cable – could help PNG identify new opportunities for growth.

Mobile internet use is forecast to expand rapidly in Papua New Guinea.
Image: Deloitte

Time to upgrade

At the moment, PNG is constrained by digital divides. According to the World Bank, around 70% of the country’s internet users live in PNG’s two largest cities – the capital, Port Moresby and Lae. Remote rural areas, where 87% of PNG’s estimated 8.42 million people live, suffer from poor connectivity.

There is also an age imbalance: 48% of internet users are young – aged between 18-24, and just 18% are over 34.

What is the World Economic Forum doing about digital trade?

What is the World Economic Forum doing about digital trade?

The Fourth Industrial Revolution – driven by rapid technological change and digitalization – has already had a profound impact on global trade, economic growth and social progress. Cross-border e-commerce has generated trillions of dollars in economic activity continues to accelerate and the ability of data to move across borders underpins new business models, boosting global GDP by 10% in the last decade alone.

The application of emerging technologies in trade looks to increase efficiency and inclusivity in global trade by enabling more small and medium enterprises (SMEs) to repeat its benefits and by closing the economic gap between developed and developing countries.

However, digital trade barriers including outdated regulations and fragmented governance of emerging technologies could potentially hamper these gains. We are leading the charge to apply 4IR technologies to make international trade more inclusive and efficient, ranging from enabling e-commerce and digital payments to designing norms and trade policies around emerging technologies (‘TradeTech’).

The infrastructure that has the potential to bring digital services is also skewed. PNG’s National ICT authority says that in 2019, just 1.2% of internet subscriptions were fixed line services.

This matters less than it did (many developing nations are now using mobiles to ‘leapfrog’ patchy fixed networks). Nevertheless, speeds are holding back potential: while the bulk of PNG’s web access is via mobile, just 20% of that is on 4G.

There is also only a small amount of Tok Pisin – PNG’s most widely read and spoken language – available online. All of these factors conspire to limit access to and take-up of digital services, including payments and utilities. In turn, that can limit investment into the market.

Working together

There are now changes happening on several fronts. One big challenge is infrastructure – but a massive new undersea data link, the Coral Sea Cable, is expected to increase capacity by 1,000 times. Leading telecoms provider, Digicel, is also upgrading the network of 2G mobile phone masts.

Political will is gathering momentum. For example, through the Facilitation 2.0 programme and working with the United Nations, steps are being taken to advance an Electronic Transactions Act, likely due before Papua New Guinea’s parliament in November.

Because it will allow contracts to be completed online, with paperwork filed electronically and electronic signatures accepted, it could stimulate new digital activities. So far, 81% of countries worldwide have adopted e-transaction laws, and Papua New Guinea will need ones of these to reap the benefits of trade facilitations among other things.

The government is also working with local stakeholders to boost digital payments access and adoption. Just 20% of Papua New Guineans have an account with a commercial bank. New initiatives taken by the Central Bank could encourage service providers to offer innovative services, while protecting customers.

Finally, PNG has set up the world’s first public-private, Digital Foreign Direct Investment (FDI) working group. The aim is to identify actions to make PNG more attractive to external funders of digital economy activities.

Papua New Guinea’s economy is expected to rebound by over 3% in 2021.
Image: World Bank

The challenges ahead

The push for a more digital future comes at a crucial moment for PNG. The economy has been hit hard by COVID-19, like many other places.

According to the World Bank, the multiple demands of COVID-19 have contributed to a rising budget deficit in PNG, not helped by falling prices for agricultural products. There are also pressures on the country’s foreign currency reserves.

But if PNG can fix its technology headaches, it may unlock gains that could move the country forward. According to a 2019 survey of leading CEOs in Papua New Guinea, unreliable telecommunications is the number one factor facing businesses.

Lower data costs and an upgraded regulatory environment, combined with PNG’s considerable human and ecological capital, could be a springboard to a new era.