The PNG 100 CEO Survey 2013


At a time when some are wondering if PNG’s boom is coming to an end, its largest companies still have an appetite for investment, according our exclusive annual survey.

Survey logoIn last year’s edition of Business Advantage Papua New Guinea, we launched a unique survey for PNG: the PNG 100 CEO Survey.

Designed to gauge business confidence among PNG’s largest companies, the survey seeks to uncover their profit, investment and recruitment expectations. It also encourages the nation’s leading executives to identify the key issues facing their businesses.

One year on, we’ve repeated the exercise, allowing us to compare the results year-on-year and identify trends where they emerge.

Profits exceeded expectations in 2012

Chart_2012 expectationsOverall, 2012 was a good year for PNG’s largest companies. An impressive 60% of those surveyed reported their 2012 profits had exceeded their expectations. In 30% of cases, profits had ‘substantially’ exceeded them.

By contrast, only 15% reported that profits had fallen short of expectations, and then only ‘slightly’ short. Significantly, no company we surveyed said their profits had missed the mark by a ‘substantial’ margin.

In our previous survey, conducted one year ago, there was a more polarised result: while more reported doing better than they had expected (67%), more also reported profits fell short of target (22%).

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What will 2013 bring?

In our last survey, PNG’s business leaders were extremely bullish about their profit expectations for 2012, with a massive 89% anticipating they would surpass the profits they made in 2011.

So, do they feel 2013 will be a more profitable year than 2012?

Chart_2013 expectationsIn 68% of cases they do—a remarkable vote of confidence in Papua New Guinea’s economy, even though this year we had 12% of companies predicting lower profits for 2013. Last year, there were no companies predicting this.

Investment set to grow even further

It seems as if increased profits are encouraging PNG’s major businesses to invest further in Papua New Guinea. Almost 70% (compared to 57% in our last survey) told us they were planning to spend more on plant, equipment and other assets in 2013 than they did in the previous year, with a further 17% saying they would match last year’s investment.

Chart_InvestmentOnly 14% said they were planning to reduce their investment during 2013, a similar number to last year. 

Jobs growth, but maybe slower

Last year, 52% of PNG’s major companies said they intended to take on more staff in 2012. This evidently proved to be the case: the Bank of Papua New Guinea’s September 2012 Quarterly Economic Bulletin reported employment growth of 7% over the 12 months preceding.

This year, we have more good news for new graduates and those hoping for a new job once the PNG LNG project construction phase comes to an end. Just under half of employers we surveyed said they were again expecting to increase their headcount this year.

Chart_recruitmentExisting jobs seem safe too: only 6% of companies surveyed were expecting to lay off staff.

Significantly, though, only 11% of employers surveyed said they were planning a ‘significant’ increase in staff in 2013—much less than last year. If these expectations tally with national statistics, we might anticipate a slight slowing of employment growth in 2013.

Issues affecting business

Which issues are affecting PNG’s largest companies the most? There are certainly plenty of them, according to our CEOs, and they affect almost all companies to a greater or lesser extent.

Top of the list were security and law and order concerns, with every company we surveyed ranking them as either ‘very important’ or ‘mission critical’ to their business. This is a similar result to last year’s survey, suggesting the situation is not improving.

Chart_IssuesPNG’s widespread skills shortage may be getting slightly less chronic, however, as last year’s top issue was rated slightly lower by companies in this year’s survey. It is now in third place behind the unreliability of PNG’s state-owned utilities, which received a similar rating from CEOs as it did last year.

Corruption received a marginally lower rating this year for its impact on business, as did access to overseas markets, government red tape, high real estate rental costs, lack of available office and warehouse space, and lack of market research/intelligence.

Meanwhile, competition, access to capital, lack of available land, lack of government capacity and high employment costs received a slightly higher rating in this year’s survey.

Another issue canvassed by some respondents, particularly those involved in manufacturing, was the impact of lowering tariffs.

Finally, last year we asked CEOs about their concerns surrounding PNG’s 2012 national elections. Most weren’t that worried about the possible disruption to their businesses, despite some sensationalist headlines in the international media, and their confidence appears to have been well-founded.

Positive year ahead

With strong profits recorded, and expectations for further profit, investment and employment growth in the year ahead, PNG’s largest companies seem set for another good year in 2013. At a time when some are wondering if PNG’s boom is coming to an end, it’s a positive sign for the country and for those planning to do business and invest there.

The PNG 100 CEO Survey will be back in 12 months to see how 2013 went in reality.

The PNG 100 CEO Survey 2013 was conducted by Business Advantage International between late November 2012 and January 2013. The survey included senior executives from a representative sample of Papua New Guinea’s largest companies from across all sectors of the economy.