Asian Investment in the Rural Industries of Papua New Guinea: What's New and What's Not?

One part of the Australian colonial legacy in Papua New Guinea (PNG hereafter) is the Australian government's attempt to forge partnerships with foreign companies in different economic sectors in order to lay the economic foundations for rural development in the newly independent nation. American and Australian capital was invited to develop the mining industry, European capital to develop the oil palm industry, and Japanese capital to develop the forest industry. Nowadays, the Australian government seems to have forgotten its late colonial enthusiasm for this form of state capitalism, and its aid to PNG is largely framed by the neoliberal policy prescriptions which the World Bank was able to impose on the PNG government through a sequence of structural adjustment programs beginning in 1990. However, members of PNG's national political elite have persistently sought refuge from this economic orthodoxy through their engagement with Asian governments and companies. In this paper I examine the way in which changing political and economic conditions have affected the actual pattern of Asian investment in PNG's forestry and agriculture sectors, and the way in which different stakeholders have responded to this changing pattern of investment. Despite the prevalence of a policy narrative which holds Asian investors responsible for the corruption of PNG's political institutions when mineral resource booms liberate national politicians from the constraints of Western economic orthodoxy, I show that Asian investment in these two sectors has taken several different forms, and there is no simple sense in which PNG's national economy and political system are subject to a concerted takeover by Asian business interests.