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Investment sentiment shaken by law and order issues and high cost to business

Wednesday, May 8, 2024

Investor confidence is affected by law and order, Foreign Exchange shortages and heightened inflation, according to BSP’s Quarter 1 2024 Pacific Economic & Market Insights report.

BSP’s Group General Manager for Corporate Banking, Peter Beswick, says that investor sentiment is beginning to be impacted by law and order and inflation concerns, despite the positive resumption of Porgera’s operations.

“Adding to these concerns is the rising cost and irregularity of utilities which are essential for business operations. The reliance on back-up water and electricity has shifted up the baseline costs of many businesses,” Mr Bewick added.

The nation’s primary fuel supplier ceasing supply in February and March exacerbated business costs and introduced new supply risks that materially impacted investment decisions.

He further said the business community, especially in Port Moresby, are still awaiting the promised relief to businesses affected by the ‘Black Wednesday’ riots. The loss of business impacts employment, consumption and the flow of cash throughout the economy, which will have a longer term impact if these businesses choose to downsize or even cease operations.

“As businesses grapple with rising costs, many are forced to reassess their strategies and are reluctant to invest however, the country’s resource project pipeline remains positive with businesses focused on the potential upside in the medium-term.” Mr. Beswick concluded.