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More than a pipe dream

More than a pipe dream

Resources, growth

One of the world’s most culturally diverse nations and Australia’s nearest neighbor is coming into its own, with businesses and law firms paying close attention to what the maturing political landscape means for its growing population and abundant natural wealth.

A majority of gross domestic product and export earnings for Papua New Guinea (PNG) hinges on its bountiful minerals and energy sectors. But according to the World Bank, the future promise for the young country’s population of 7.9 million relies on the country investing the revenue from its oil and natural gas resources, in particular for public infrastructure and inclusive growth.

One of PNG’s biggest challenges in meeting this growth agenda is the distribution of many communities scattered across remote and rural parts of the country. However, change is afoot and foreign pledges to assist with the refurbishment of key roads connecting more people with PNG’s major centres has triggered a flurry of activity in other areas.

The government, too, has slated public infrastructure initiatives as a priority and, with voting for the new Parliament underway as this article goes to print, that emphasis is only sure to come into sharper focus.

Paving a path for prosperity

For Sarah Kuman, managing associate in Allens’ Port Moresby office, there is much more legal work being undertaken in her home country, generated by projects beyond the scope of her own expertise.

Ms Kuman, who works in the energy, resources and infrastructure practice group at Allens, says that while much of the coverage that PNG receives by international press focuses on its sizeable mining and extraction works, business in the country has matured to encompass other prominent areas.

Specifically, development efforts funded by regional donors and ambitious public infrastructure projects have contributed to this new wave of business interest in PNG.

“A lot of PNG’s international type work is in the resources sector. It gets a lot of publicity because of the very large mines here and because of the PNG LNG project,” Ms Kuman says.

“But that’s not the only work that is available. We have a number of very large superannuation funds who are involved in a lot of the investment work; there is a lot of construction happening and a lot of work as a result of that construction; and there is a lot of infrastructure development.”

Ms Kuman lists a number of key development projects to have led to ongoing work in the country, including a recent government commitment to rural electrification, which has received financial backing from the Asian Development Bank (ADB). That initiative, she says, has seen a series of new power stations constructed across PNG and resulted in numerous people contracted for the build.

“As well as the refurbishment of existing power stations and building new power stations, there was a recent award of financing from the ADB for the rehabilitation of the Highlands Highway, which is the main road that goes from one of our coastal ports in Lae all the way through the highlands provinces and right around to the PNG LNG project,” Ms Kuman says.

“It’s a very large road that had been neglected and the signing off on financing for the rehabilitation of that highway is one of the largest loans in the region. So there’s a quite a bit of focus on infrastructure, development and upgrade or rehabilitation in PNG as well.”

Domestic financing work is plentiful too, Ms Kuman adds, with the significant construction projects driving large and complicated transactions for the local banks such as PNG’s Bank of South Pacific, ANZ and Westpac. The work is reflected in a greater demand for relevant legal experts in the financing space.

“With the level of projects and not just resource projects but infrastructure and construction, which is planned to happen in PNG, there is quite a bit of scope for work to be done and for lawyers to be able to do work,” she says.

Firms on the trail for legal work in PNG

A good indication of how the growing scope of work in PNG is attracting more experts from abroad is borne out in the number of international law firms establishing a presence on the ground in Port Moresby.

Allens and Ashurst were two of the leading stalwarts to have opened local office doors in PNG and as early as the ‘90s had been advising PNG clients. Norton Rose Fulbright is the latest of the mega firms to set up shop in the capital. Meanwhile, the joining of Gadens’ former Port Moresby office with Dentons means one extra global competing for a piece of the legal pie in PNG.

“As far as law firms go, there weren’t many large international firms here until very recently, with the changing from Gadens to Dentons and the opening of the Norton Rose offices.

“With the development and the ongoing production and the PNG LNG project site, I think that’s attracted the attention of some of the larger firms now with the level of work that’s available in PNG,” Ms Kuman says.

A graduate of the University of Papua New Guinea, Ms Kuman joined the Allens office as a paralegal while still in law school. With only one local higher education provider in the country producing law graduates, the firms tend to recruit students straight from university.

For those aspiring commercial lawyers, Ms Kuman adds that options are limited to a domestic mid-tier firm or one of the global players, although the big firms are gradually expanding their offices.

She says other smaller local firms tend to be tied up with litigation matters, so for those local lawyers wanting to gain experience working on large international transactions a firm like Allens is the best place to be.

“I think it can only be a good thing for more firms to be opening shop in PNG and for more lawyers to be working here because of the skills transfer, particularly to our Papua New Guinean lawyers.

“Of the people who are based on the ground in the Port Moresby office at Allens, there is only one partner who is Australian. Everybody else are Papua New Guinean lawyers,” she says.

Ms Kuman believes that the international firms that have landed in PNG are in it for the long game, pointing the cyclical nature of how major copper and gold mines in the country have performed over the years. She suggests that this doesn’t deter the big law firms who recognise a strategic incentive for maintaining a firm presence in the country.

“Around 2007 to 2009, we were constantly dealing with companies applying for new licence or renewing licences, or setting up joint ventures, or transferring exploration licences. There was a period where it was really, really busy and then after 2011, it just all of a sudden went quiet again.

“And this general slowdown in the resource sector seems to coincide with what’s happening around the rest of the world,” she says.

“I’ve only just recently, as recently as a few weeks ago, seen companies dealing with exploration licences or request for requirements for dealing with those types of licences again.

“I think a lot of work that is done overseas or by lawyers based overseas can now be done in PNG, and by teams and firms in PNG,” she says.

Taking a professional track to the Pacific

For foreign lawyers interested in seeking professional opportunities in PNG, Ms Kuman offers an encouraging perspective. She says that opportunity is plenty but interested lawyers will be served well to visit the country first and grasp for themselves what life is really like in PNG, beyond the stories they may read in newspaper headlines.

“I think that it is really important to get an understanding of how things work, seeing for yourself and creating relationships on the ground. Because you can’t really get work and work remotely from an office in an overseas jurisdiction without understand the nuances of PNG,” Ms Kuman says.

Compared to many other Pacific nations, she also suggests that PNG has a good track record for stable government, which ultimately has a bearing on business confidence and a consistent demand for legal services.

“I think a lot of people don’t realise that while things might not happen immediately, [processes] do get done. Generally, the rule of law is respected in PNG; we’ve got a stable government and we don’t have some of the problems that you would see in the news about other countries that have large resource projects with civil unrest and things like that,” Ms Kuman says.

The time is a promising one for foreign lawyers, she notes, with more work being generated by big-ticket construction, development and investment projects, and appetite for legal practitioners versed in sophisticated financial transactions and complicated contracts growing.

Ms Kuman also explains that the relatively small size of the market means junior practitioners have more exposure to important clients and government departments, with greater responsibilities and lease to sink their teeth into exciting work.

“Because of the needs of the business here, junior lawyers do get a lot of really good solid work and they do get a lot of exposure that you wouldn’t otherwise get in offices overseas,” she says.

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More than a pipe dream
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