The cost-benefit analysis of hosting APEC
meeting by PNG in 2018.
Rationale
Most Papua New Guineans don’t know what is APEC and yet to learn
the advantages and disadvantages of APEC and hosting of APEC in our country. That
is the reason why, many people are crazily supporting politicians like Bryan
Kramer who has ulterior political motives for negating the plans and procedures
of successfully hosting APEC Meeting in Port Moresby.
In here I have put together several good-bad analysis of hosting
APEC Meeting by several intellectuals, which I felt are necessary for Papua New
Guineans to read at this time, and that should start with understanding of what
is APEC, who are the APEC members and brief history of APEC.
What is APEC?
Asia
Pacific Economic Coorporation (APEC) is a regional economic forum in
Asia-Pacific region. The forum initially started as an informal dialogue of
economic leaders in 1989 in Canberra, Australia. It was formally established in
1993 with 12 members, but currently APEC has 21 member economies: Australia,
Brunei, Canada, Chile, China, Hong Kong S. A. R., Indonesia, Japan, Malaysia,
Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore,
South Korea, Taiwan, Thailand, United States, and Vietnam. Three
organizations—Association of South East Asian Nations (ASEAN), Pacific Economic
Cooperation Council (PECC), and South Pacific Forum (SPF)—hold observer status
(Source: APEC Website).
APEC
Vision as reflected on ‘Bogor Goals ’is to achieve Free and Open Trade and Investment
in the Asia-Pacific by 2010 for Developed
Economies and 2020 for Developing
Economies. Tariffs and other measures hindering competition are to be
removed whilst on the other hand, other areas of Economic Integration are
likely to include Standardization of Customs and International Trade Documentation.
The
current theme centers on Economic
Integration, Sustainable and Inclusive Growth. PNG joined APEC as a
full member in 1993. However, it has not been a very active member until APEC
approved Somare government’s proposal to host the meeting in 2018.
So
here we are and we should ask if this APEC worth It? It is also important that
we understand the advantages and disadvantages of being a member of APEC.
In
the following passage, I laid out the views of Mr. Francis Hualupmomi [Francis''Email]
who is a Political Scientist and PhD Candidate in Public Policy at the School
of Government, Victoria University of Wellington, New Zealand. He holds a BA in
Political Science and Public Policy and Management (UPNG), BA Honours in
Political Science and International Relations (UPNG), Master of International Politics
(Jilin University, P.R China) and Post Graduate Certificate in Higher Education
Policy Management (Melbourne University). He personally views the advantages
and disadvantages of hosting APEC in Papua New Guinea as follows.
ADVANTAGES OF APEC
“APEC
is often referred to as the most dynamic engine growth of the World’s Global
Economy driven by its trade and investment value and contribution. This holds
true for its population of about 2.8 billion people which represents
approximately 57% of the world's GDP and about 49% of the World Trade (as of
2013). This suggests that developing countries stand to gain increasing
benefits.
1.
‘First, APEC’s informal approach of dialogue
and collaboration encourages more participation compared to other rules-based
economic forums/organisations.
2. ‘Secondly,
not only will they benefit from the development of procedures, policy frameworks
and systems to deal with contemporary issues ranging from transparency and
governance to financial sector reform and customs procedures but the
opportunity to learn new skills and best practices from other economies.
3. ‘Third, they are able to set agendas and have
much say, just like any other bigger players in the forum.
4. ‘Moreover, it is becoming clear that the
exponential growth in the region will continue to reduce poverty across the
region with deepening trade and investment. For instance, over the last two
decades, we have observed that there has been a reduction in poverty and
growing middle class as real GDP doubled from USD 16 trillion in 1989 to USD 31
trillion in 2013.
5. ‘Finally, developing countries will benefit
from APEC’s effort in integrating the region’s economies and promoting trade
while addressing sustainability and social equity which would start in 2020. In
it, PNG has upper hand as a host nation.
Some
of these initiatives are: Promoting Regional Economic Integration and Trade; Making it Easier to Trade Across Borders; Making it Easier to do Business Faster Customs
Procedures; Structural Reform; Connecting the Region; APEC Business Travel Card;
APEC Supply Chain Connectivity; A
Sustainable Future for the Asia-Pacific; Environmental Goods List; Increasing Energy
Efficiency and Renewables; Inclusive Growth: Ensuring Everyone is On Board (Nurturing
Small Businesses, Enhancing Social Equity in the Region)”, viewed F. Hualupmomi
(2018).
DISADVANTAGES APEC
“While
the advantages seem highly beneficial there are also some disadvantages of
developing countries being part of APEC.
1.
‘Firstly, it seems advanced countries will
continue to benefit more than developing countries due to the advanced
technology and technical know-how that enhances their competitive and
comparative advantage power. Small economies such as PNG will continue
struggling to find their niche in the regional value chain.
2. ‘In addition, it appears that some of the “Bogor
Goals” of APEC have not been achieved to date. This suggests that there is no
guarantee that developing countries’ agendas expressed through high-level
policy goals will be achieved. This is largely attributed to the complexity of geopolitics
and interaction of other forces influencing the value chain.
3.
‘Lastly,
the rule of corporate giants will continue to influence the value chain in the
long run as it seems. Giant corporations’ interests will be politically driven
at the institutional level; they will be the ‘winners’ at the expense of
developing countries”. (F. Hualupmomi (2018))
Is Hosting of APEC Worth It?
“The
question of whether APEC is worth hosting it by the PNG government in 2018 is necessary
at this time when the country is facing an economic problem. Experiences from
other member countries such as the recent host, Philippines suggest that the
benefits will outweigh the cost initially invested. For instance, Philippines
as a host of two APEC meetings (1995 and 2015) is currently experiencing a
growth rate of 8% as a result of heavy investment in between those years.
“But,
what are the likely benefits of hosting APEC in PNG despite the current
economic situation?
1.
First, is that benefits outweigh the cost in
the long run? This implies that there is an opportunity cost; in the immediate
term the cost will seem exorbitant but over time benefit will accrue.
2. Second,
there are immediate returns through increased economic activities during the
time of the event. For instance, there will be increased investment from
tourists and businesses so as the creation of jobs.
3. Third, not
only will it bring returns in the immediate term but also restore the
credibility of the state in hosting future high-level meetings. At the same
time, investment in the meeting will boost our socio-economic infrastructures
such as modern university facilities and improve our security and defence
capability and capacity.
4. As far as
the long term benefits are concerned, this meeting will increase and deepen
PNG’s trade and investments in the region. This will further be boosted by
labour and skilled mobility, technology and knowledge transfer and financial transfer.
5. SMEs are expected
to benefit in this multi-relations.
6. Socially,
it will help increase collaboration and cooperation in combating governance and
transparency and climate change issues.
7.
Another important point is that not only will
PNG showcase its unique culture and tradition in the region but as an emerging
Pacific leader it will fulfil the Pacific dreams of connecting the small island
countries to the bigger APEC community through Pacific Islands Forum and
Melanesian Spearhead Group. If that is well executed, there is a high
possibility for PNG securing its full membership in ASEAN”, F. Hualupmomi
(2018) viewed logically.
Conclusion
‘The
analysis suggests that the opportunity cost of hosting 2018 APEC Meeting would
accrue moderate returns in the immediate term and higher returns in the long
term despite high cost in the short term.
The hosting of APEC is a strategic decision of
the government based on calculated risks. Since it takes time for investments
to maximize returns, vibrant leadership and effective good governance system is
highly necessary. Political disturbance at this time would not only embarrass
PNG’s international credibility but also jeopardize the opportunity to host
future high-level meetings and access to other regional and global
forums/organisations’, F. Hualupmomi (2018) concluded.
Therefore, as Papua New Guineans, let’s be
united, be corporative and be supportive to our government to ensure 2018 APEC
Meeting in Port Moresby is delivered successfully without mere disturbances. I
personally do not like Prime Minister, Peter O’Neill nor other like-minded MPs
in the NEC or Opposition, however, this APEC 2018 Meeting is for the worthy
course-it is the turning point whether to make or break and I personally disagree
the unnecessary and untimely strikes, protests, etc. The reputation as an APEC
Member has built in the long run, thus, such decision by Bryan Kramer, Gary
Juffa, Allan Bird and others to have APEC Meeting disturbed is a pure jealousy
over government powers, perks and privileges and will not help Papua New Guinea
in the long run all. Papua New Guineans must refrain from supporting such
people.
