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Posts Tagged ‘Chinese’

Chinese banks to bail out the PNG government?

June 17, 2016 Leave a comment

Papua New Guinea cooks up bond debut

Source:  Finance Asia

The Independent State of Papua New Guinea (PNG) is set to embark on international roadshows next week for what it hopes will be its debut international bond deal. 

The B2/B+ rated nation has hired ANZ, Bank of China, JP Morgan and Societe Generale for a dollar-denominated transaction. 

Central bank governor Loi Bakani and Department of Treasury secretary Dairi Vele will lead presentations in London on June 21, followed by Boston on June 22 and New York on June 23.

The prospective deal comes at a critical time for the country, which is running short of US dollars and wants to raise funds to manage government finances, which are under pressure as a result of low oil prices.

PNG will be hoping it is third time lucky given it has made at least two active attempts to raise dollar bonds over the past decade-and-a-half, both of which failed. Has it got the ingredients right to serve up a successful deal this time round?

One new addition to the mix is the presence of Bank of China on the syndicate. 

Its inclusion underscores a new stage in the internationalisation of Chinese banks as they become more active in the global capital markets. Historically, they have only been able to win mandates from their own credits before, with the exception of ICBC, which was joint global co-ordinator on a deal for the Republic of Angola due to oil-related ties between the two countries. 

Bank of China’s inclusion also reflects the greater role Chinese companies are playing in PNG too. Over the past few years, Chinese companies have started to build up their presence in the country, particularly in the mining sector; something that was not the case when the sovereign last tried to access the market in 2013.

That year state-owned Guangdong Rising Assets Management purchased a $3.6 billion copper project from Glencore (PanAust), which it is still seeking approval for, while Zijin Mining purchased Barrick Gold’s Porgera gold mine in 2015. China Metallurgical Group also has a $2.1 billion nickel-cobalt project.

As such, Chinese investors may well provide some form of backstop for the deal, especially given they have a reputation for being far less bothered about political risk than the emerging and frontier market investors PNG will still need to win over.

In PNG’s case, that may be just as well since political risk will be one of international investors’ chief considerations.

Even by Asian standards, PNG has had a colourful time trying to launch itself into the international capital markets. 

Its first attempt occurred in early 1999 when the then B1/B+ rated sovereign awarded JP Morgan and UBS a mandate to bring a $250 million five-year bond.

But its plans rapidly fell apart when the leads discovered proceeds might end up being used for re-payment of mercenaries. The previous government had hired one such group, Sandline International, to deal with a crisis in Bougainville where protests relating to environmental damage by a Rio Tinto copper project had provoked an attempt at secession.

London-based Sandline had a legally binding contract with the government and had been awarded costs of $18 million by an international tribunal after the government failed to pay its fees in full.

PNG similarly failed in its efforts to get a bond deal off the ground in 2013 after mandating Barclays, BNP Paribas and JP Morgan.

A second key variable, which may act in its favour this time round, is the completion of a $19 billion liquefied natural gas (LNG) project run by ExxonMobil, which is now operational and has the potential to help transform the country over the longer-term. Revenues from the project, which account for 118% of GDP, had been earmarked to lift the country to a new stage of development but have been hit by falling oil prices.

As a result, the government has had to rein in spending by 17% so far this year. Standard & Poor’s believes it will be successful and achieve a budget deficit of 4.6% compared to 5.6% in 2015. 

In terms of pricing a new bond deal, there are a number of Asian nations with ratings close to PNG including Sri Lanka with its B+/B1 rating, Pakistan on B3/B-/B- and Mongolia on B2/B.

Sri Lanka and Pakistan both have 2019 bonds outstanding, which yield 5.1% to 5.2%. However, it seems far more likely that Mongolia will provide a better comp given it is also struggling with an economy that has been hit by declining commodity prices.

Its 2021 bonds are currently trading at the 10.2% level and it seems highly unlikely PNG will be able to better this given Mongolia already has an established track record.

PNG’s credit ratings are also heading in the wrong direction. Earlier this year it was downgraded by Moody’s from B1 to B2 and is now on stable outlook.

However, it has been on negative outlook with S&P since 2007.

In its most recent ratings release, S&P said low global energy prices are “weighing on the economy, export receipts and government revenues”. It added that this is coinciding with large increases in external and fiscal imbalances but noted the government is responding “forcibly” to deal with them.

The agency also highlighted how the country ranks a lowly 155 out of 188 on the UN’s Human Development Index and flagged a high level of urban crime: something international bankers who have visited the country are very familiar with given the presence of armed guards as escorts every time they leave their hotel. 

Something stinks! Foreign owned companies serving poison on PNG plates

February 19, 2016 1 comment

fried-rice

Under Section 3 of the Investment Promotion Regulations 1992 certain business areas are reserved for citizens, including ‘Fast Food Take-away/Kai bars of all descriptions including mobile delivery food service’.

‘Really’, you say? Yes really, that is what the regulations actually say.

Though this hasn’t prevented Chinese nationals Xing Wu Zhou and Zhongshen Zhang from setting up Kai bars through their company J & Z Trading Limited. And wait to you hear what they have been serving up to their hosts in Madang.

On 11 March 2007 husband and wife Anita and Andrew Baikisa purchased fried rice from J & Z, before enjoying their lunch under the shade of a tree. The enjoyment was short lived.

Hidden underneath the top layer of rice was a festering pit of mould. This was a free extra they could have done without!

But here is where it gets interesting. Anita and Andrew aren’t your everyday consumer. They didn’t throw away the food, go home, get sick. They got sick alight, but not before they alerted the authorities.

The couple reported the shop to Sergeant Toby Kamseboda. After Sergeant Kamseboda tasted the food, he immediately took the couple to the local health inspector to report the incident. Later that night the couple were violently ill. When they presented at the General Hospital Doctors found the couple suffering from severe abdominal pain, diarrhoea, vomiting and dehydration.

The Baikisa’s then took legal action.  Last week the National Court found J & Z Trading Limited guilty of negligence.

But why did it have to get this far?

With assets of over K10 million this Chinese business has done well out of the Kai bar trade, but this is business reserved for Papua New Guineas. Why isn’t the Investment Promotion Authority enforcing the regulations? Why aren’t the health authorities inspecting and fining these companies when their hygiene standards are so obviously low.

According to the former Chair of Political Sciences at UPNG, James Chin, J & Z are not alone. Many foreign nationals are entering the country illegally then flouting the law. Looking at Chinese mainland migrants, he writes once they have bribed their way in, they ‘immediately start small trading concerns, selling cheap Chinese consumer projects such as electronic goods and clothes. Others establish ‘kai bars’ (fast food outlets) and Chinese restaurants. All these businesses are illegal because such commercial activities are reserved for nationals … Other illegal operations run by mainland Chinese in PNG include brothels and money laundering’.

This is not about race or ethnicity, no one deserves to be judged on the colour of their skin. This is about foreign business people coming into PNG with a view to exploiting weaknesses in law enforcement and regulation. Whether it be forestry, mining or services, why are foreign entities allowed to monopolise our resources, avoid taxes, damage our environment, make our people sick and avoid justice.

Something stinks, and it isn’t just Anita and Andrew’s fried rice!

John Momis: Not the Brightest Bulb

September 26, 2014 Leave a comment

cartoon showing ASI and AusAID pulling momis's strings

Mysterious Hong Kong Consortium appointed Economic and Development Advisor to Bougainville President

September 19, 2013 2 comments

Over the past year a range of foreign operators have been courted by leaders on Bougainville, to the anger of everyday people sick of outside exploitation. Now it’s the turn (again) of Bougainville President, John Momis, who has contracted a little known Hong Kong company to advise his government on economic and development issues.

The Seagate controversy erupted with the following post on the popular Facebook ‘Bougainville Forum’:

‘Friends, a story was posted here on the Hong Kong company, Seagate Global, who is evidently planning to build a number of bridges on Bougainville. The odd thing is, I checked out their website and the following claim appears:

“Seagate Global is the economic and Development Advisor to the President of the Autonomous Region of Bougainville, the location of the Panguna mine, one of the largest copper and gold mines in the world, and a country rich in numerous resources”.

They also claim:

“Seagate Global entered the mining business as one of the best ways to help people. Seagate Global has access to capital and markets for mineral output. Many communities have resources, but no capital or expertise to develop them. Seagate Global acts as the bridge between the two”.

“Seagate controls over 10,000 acres of mineral-rich mines, including large deposits of: Gold, Copper, Iron ore, Chromite, Manganese”.

The company also boasts that is has close connections with the People’s Bank of China, and the China Development Bank.

The company’s Chairman use to run a US Hedge Fund.

I am not suggesting there is anything untoward here, but its the first time I have heard about Seagate playing a key role in the ABG. Seagate has very little online footprint, given it boasts to being an innovative community centred company that places a premium on environmental protection. Also despite claiming to be a large conglomerate its company officials have gmail addresses. Odd.”

John Momis meets with his Economic and Development Advisers at Seagate Global.

John Momis meets with his Economic and Development Advisers at Seagate Global.

This posting sparked a long list of outraged comments from concerned Bougainvilleans who have had enough of these backroom deals with foreigners.

One forum member commented:

‘I just went onto the comprehensive company databases at Hoovers and Bloombergs, to check on Seagate Global’s annual financial reports. Surprisingly there is none. How is that for a company that is dressing itself as a global entity?’.

Another noted:

‘I did a Nexis news searches on Seagate Global; it produced almost nothing. I then searched Seagate’s senior corporate officialdom, once again few returns. The only name that obtains any serious traction is the head of their Malaysian operations, Haider Isnaji. Someone by the same name was done for kidnapping and money laundering … we should put this Seagate episode in context; how many times over the past couple of years have we come across stories of questionable international companies, be it Invincible Resources, Beijing Aerospace Great Wall Mineral Investment or Rio Tinto, entering into agreement with leaders in Bougainville, the contents of which are never made public. ‘.

Lawrence Daveona, Michael Pariu and other Panguna Mine Affected Landowners Association leaders hug officials from Beijing Aerospace Great Wall Mineral Investment Ltd after an alcohol fuelled MOU signing.

Lawrence Daveona, Michael Pariu and other Panguna Mine Affected Landowners Association leaders hug officials from Beijing Aerospace Great Wall Mineral Investment Ltd after an alcohol fuelled MOU signing.

The general tenor of the 40+ comments were captured by one contributor:

‘I think Mr Momis is encouraging activity with his Chinese contacts for his own gains. Im sorry – But Its Time to Go Mr Momis – There seems to be a lot of questionable activity surrounding his name and movements. Its Time to Take Bougainville Back People! and Return a 100% Bougainvillean Person to Lead Bougainville – with a vision to restore Bougainville to a productive place for Bougainvillean Peoples Interests- not for Foreigners casting shady business deals, underhand tactics, to get a piece of the action ( white elephant), by undermining the people through lack of transparency’

People are fed up with secret business deals. Its time the ABG and landowner leaders look not to foreigners, but their own people; that is where the island’s future lies.

Rice monopoly a dangerous move

January 17, 2012 6 comments

Peter Sharp, Rabaul

THE Americans would like us to believe the Arab Spring came about because the people wanted democracy. That is untrue. The people wanted food at a reasonable price and the Americans and other wanted their oil. It all came together.The criminal invasion of Iraq was as everyone sees now, for oil.

A president whose family business is oil and his vice president whose company services oil fields. The slaughter of people in Tripoli by American and Nato planes and the murder of Gadhafi was also for oil. There is no intervention in Syria because Syria has no oil of any significance and what they have is consigned to the Russians and Chinese and the Americans are not game enough to take on either of them.

In fact the Americans couldn’t find their way out of a wet paper bag as he has been amply demonstrated in Vietnam and Somalia and now in Iraq and Afghanistan. Can’t fight but they make movies like Good Morning America, Full Metal Jacket, Apocalypse, Black Hawk Down all to justify why they got their backside kicked by people they despise. What are the new movies to explain Iraq and Afghanistan?

Can’t fight but can assassinate. But this is beside the point. Put up the price of rice and there will be rioting in PNG.

The French Revolution was about Equality and Democracy and Fraternity but it was triggered by a lack of food. When Queen Marie Antoinette was supposedly told that the peasants were revolting because they could not afford bread (which is our equivalent to rice) she is supposedly, incorrectly to have replied … “then give them cake”… and peasants (workers) took her out and cut off her head.

If your people are starving they will cause problems. There were no fat Egyptians or Libyans on the TV screens.

The government cannot go down the path of previous governments in allowing outsiders to take control of food like was done so corruptly with Ramu Sugar and the planned Indonesian takeover of the cocoa industry. Is it surprising that the proposed monopoly of the rice industry is also Indonesian inspired? While we do not eat cocoa directly the proposed Indonesian takeover of the cocoa industry would have had long term disastrous effect.

The sale out of our oil industry is another tale of corruption and woe but nothing affects everyone as much as unaffordable rice.

Yes, we should all be eating kaukau and taro and yams because they provide approximately 100% more energy per hectare than does rice but we are used to rice and we don’t really grow rice here so it’s not really a factor yet.

Yams are full of oestrogen and therefore good for the ladies and perhaps accounts for the peculiar behaviour of those males in areas where the consumption of yams is high. Taro provides testosterone and again may account for the belligerent attitude of the males in areas where it consumed and hirsute ladies in that area.

But even though it perhaps shouldn’t be, we all like our rice it is so easy to prepare and cook and it gives us energy without complications.

No government can allow anyone from anywhere to have a monopoly over food otherwise there will be riots.

There is enough rice on the foreign markets to make sure no one in PNG goes hungry as long as the price is low.

We consume about 200,000 tons of rice every year. World rice costs in 2004 were about K1.25 per kilo and you can ask why we pay K4 in shops and the would-be monopolies are saying prices will increase to more than K11 per kilo. In fact rice prices fell 3 % in 2011.

PNG has ‘lost control’ on illegal immigration

January 13, 2012 9 comments

PAPUA New Guinea does not have the capacity to monitor and clamp down on illegal immigrants entering the country, reports the Post Courier.

Government authorities say the problem is huge and complex as the illegal immigrants are entering through sea ports in the provinces where there is very little or no processing facilities.

Immigration and Foreign Affairs office including Customs this week told the Post-Courier that the issue has gone out of hand because of the fact that duties have been compromised, no facilities and resources to tackle the problem and those involved have already widely established themselves and working with elite leaders and MPs in the country as partners.

The country’s spy office, the National Intelligence Organisation is the worst affected because there is very little or no resources and funding to handle the task of maintaining the illegal immigrants coming into PNG.

Documents obtained by the Post-Courier details that there were allegedly three Asian triads operating in the country with their heads already into major businesses throughout PNG. The triads according to the papers obtained include the “snake head”, the “dragon” and the “scorpion” all of whom have established businesses in the field of real estate, hotels, restaurants, security companies, and the apparent, human trafficking across PNG since the 1990s.

The documents detail that an estimate of 11,000 Asians entered every five years and since the 1990 an estimate of more than 30,000 are “floating”, “squatting” and working illegally in places throughout Papua New Guinea. According to the papers, they have established businesses in Port Moresby, Oro, Mount Hagen, Lae, Gulf, Kimbe, East New Britain, Goroka, the Highlands Region, Milne Bay, New Ireland, Madang, Wewak, Vanimo, Bougainville and Manus Island.

“We have lost control of the issue of immigrants coming into the country as early as 10 years ago. It’s not because we cannot handle it, it’s because we do not have the resources and finance to tackle the issue very effectively,” immigration officials told the Post-Courier. You see, some of these people have already become naturalised citizens and some have become permanent residents overnight while others are full time citizens of PNG.”

“We have done our best in years, we have done our duties of recommending to the Government for responsible authorities to deport those heading these triads but it has become very hard because our PNG system has already crippled onto them…by this I mean they have PNG connections and these men and women are also dealing with elite leaders of these country,” Government’s spy office said yesterday.

“One big problem we have is the inability of the Department of Foreign Affairs and Immigrations to communicate with law enforcement agencies, and over the years this has posed a serious threat to Papua New Guinea’s national security. It’s one thing when we talking about the national security issues relating to visas, citizenship and migration matters where it is not communicated effectively.”

PNG blogger speaks out on explosive anti-Chinese feeling in PNG

December 9, 2011 2 comments

Radio Australia

There’s a growing anti-Chinese campaign on social networking sites in Papua New Guinea with predictions that there could be further outbreaks of violence.

The Lae rioting last month was sparked by anti-Chionese feeling and there have been instances of Chinese-owned businesses being looted or burned down.

At least six Chinese migrants have been killed in PNG in the last decade.

Outspoken Port Moresby blogger and store owner, Martyn Namorong, says the explosive situation is just waiting for a trigger before there’s more violence.

Presenter: Brian Abbott
Speaker: Martyn Namorong, Port Moresby social network blogger