May 09, 2021 Last Updated 7:04 AM, May 7, 2021

Sope's history lesson

Vanuatu’s former Roving Ambassador and former Prime Minister, Barak Sope, has disputed claims that the late Sir Michael Somare was a supporter of West Papua.

Sope says it is important that original political leaders including PNG former Prime Minister, Sir Julius Chan, former Commander of the PNG Kumul Force, Commander Ted Diro who led his army to crush the Santo Rebellion, and former Fiji Prime Minister Sitiveni Rabuka—who are still alive today—know that their contributions towards peace and freedom in the Pacific are recognised and respected.

He says while Sir Michael was in Opposition, he did not agree to send PNG troops to Vanuatu to quell the Santo Rebellion.

“Recently Mr. Somare was wrongly described as someone who stood with Vanuatu to achieve our Independence because that was not the case at all”, he says.

“Before 1980, we had already connected with West Papua and West Timor through West Papua’s Mr. Rex Rumakiek who is still alive today in Australia and Mr. Somare did not like some of us. That was why West Papua Leaders Mr. Rex Rumakiek and Mr. Andy Ayamiseba (deceased) came to Vanuatu because the Somare Government had deported them from PNG due to their struggle for the freedom of West Papua”.

It was then that Sope and the VP Government under Father Walter Lini gave them a home in Port Vila because by then, Vanuatu was already a staunch supporter of political freedom for the remaining colonies in the Pacific.

At the time Father Lini uttered his most famous saying, that Vanuatu would not be completely free of colonialism until the remaining handful of colonies were also given their God given freedom from colonialism.

Now after ‘Yumi 40’, Sope wishes to correct recent social media and local media reports concerning Papua New Guinea’s first former Prime Minister, saying he never supported calls for political self-determination for West Papua, East Timor or the formation of the Melanesian Spearhead Group.

“When the PNG Parliament voted to send PNG troops to Vanuatu, Mr. Somare and the Opposition voted against it, so we had to go to Port Moresby to lobby with their MPs so that when the motion went back to parliament, it was passed and the troops were flown in”, he recalls.

“It was difficult because Sir Michael Somare was too close to the Indonesians”.

He also says SIr Michael and Ratu Sir Kamisese Mara opposed the formation of the Melanesian Spearhead Group. "Up until Mr. Somare’s passing, he never attended any MSG Meeting because he insisted on having the South Pacific Forum as the only such regional body in the Pacific."

He says the MSG is headquartered in Vanuatu because the initiative belonged to Vanuatu. The man who spearheaded the idea was none other than the (late) Father Walter Lini.

After Ratu Mara’s term in Government ended, and Fiji’s military coup occurred, Sope recalls, “Father Lini sent me to go to Suva to talk to Mr. Sitiveni Rabuka. He (Rabuka) asked me for Fiji to rejoin the South Pacific Forum and I agreed.

“I chaired the first MSG Conference between Fiji, Vanuatu, the Solomons and PNG in the Port Vila Municipality Conference Room just below the Prime Minister’s Office”.

Asked if he would allow Indonesia into MSG if he were Chairman, he replies bluntly, “No, we would oppose its application! Any country that opposes Independence for colonised countries should be out!”

Sope says the purpose of the MSG is to achieve the freedom of people who hunger for freedom.

The art of listening

  • May 10, 2021
  • Published in March

At the celebration of Sir Michael Somare’s life at Suva’s Sacred Heart cathedral this month, Archbishop Peter Loy Chong spoke about the willingness to listen as one of the Grand Chief’s defining characteristics. It was a message he repeated a few times; that true leadership is about listening, and that true leaders are servants of their people.

It’s something we’ve been reflecting on this month. Was Fiji’s Prime Minister Voreqe Bainimarama, who sat in the front pew of the Cathedral as the Archbishop delivered his message, listening to the will of the people when he stopped public consultations on Fiji’s  controversial police bill? The draft bill was fiercely criticised by the opposition, community groups and the media for a number of its provisions which were seen as unconstitutional, and for the severity of the penalties it proposed. The PM could not have failed to hear the uproar. In stopping the consultations he claimed the draft bill didn’t represent government policy, and hadn’t been endorsed by cabinet or the Solicitor General’s office. He indicated he had heard the public’s concern when he stated: “We cannot preserve public safety in the 21st Century through backwards steps that erode public trust in the Fijian Police Force.”

Fijians are due to go to the polls next year, which hopefully bodes for active listening on the part of all political aspirants. In Samoa, elections are just weeks away and candidates from the governing and ascendant parties are arrayed across the nation, listening and responding to the concerns of their constituents- except where they have been banned from villages and campaigning. A close listen of the chat on social media suggests concerns over legislative changes in Samoa have not gone away for Samoans online, although we’ll have to wait to see if this is reflected at the ballot box.

Meanwhile in our update on agriculture in this issue, we cite a regional report about COVID and Agriculture called Pacific farmers have their say. Based on surveys completed by regional farmers organisations and containing a list of recommendations about how to move from the usual rhetoric about the importance of agriculture to Pacific people and our economies, there’s some important messages in there if we not only listen, but act now, while our border are still largely closed and there is time.

Finally in PNG, there is some belated listening happening to medical professionals who have been warning for some time that COVID transmissions were likely to spiral out of control, and hospitals and the health system was going to be unable to cope. A small number of vaccines finally landed in PNG this week.  But it is a fraction of what’s needed, and it is well after vaccine programmes are well underway in many other parts of the world, including its neighbours. For months our leaders have been calling for vaccine equity so that we aren’t left behind. When will the world not just hear us, but do something about bridging the gap?

Farewell to the Chief

  • May 10, 2021
  • Published in March

After three weeks of mourning, Papua New Guinea’ founding father, Sir Michael Somare, was laid to rest at Kreer Heights in Wewak, East Sepik Province on March 16.

In Port Moresby, a national Haus Krai saw thousands of people pay their respects to Sir Michael and present their condolences to the Somare family. Sir Michael then made his final journey home, after a brief mishap when his casket had to be transported in an Australian air force plane, following protests from Papua New Guineans over the perceived disrespect shown to him when it appeared Sir Michael’s body was to travel in the cargo hold.

His state funeral bought Port Moresby and many other parts of PNG to a standstill, and Sir Michael was mourned across the region.

In her eulogy at a memorial service in Suva, Pacific Islands Forum Secretary General, Dame Meg Taylor remembered that Sir Michael “belonged to a generation of Pacific Leaders…who were tasked with pursuing self-determination and independence. They faced, head-on, the challenges of nation building and balanced the sensitivities of the western ideals of democracy and good governance with our traditional and cultural values and ethos.”

“At a time such as this, where Pacific regionalism is at its most fragile, Sir Michael's legacy reminds us of the practice of regional solidarity and cooperation where personal relations at the political level such as that enjoyed by the late Ratu Sir Kamisese Mara and Sir Michael, are paramount to fostering understanding and the pursuit of regional unity.

“Regionalism and regional cooperation is only as strong as the unity of its political leadership – this I fervently believe. Sir Michael constantly reminded all of the need to guard our unity as one regional family closely.”

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Twelve Pacific Island countries are expected to receive vaccines for the coronavirus in the first half of this year through the COVAX initiative, with the region’s largest nation Papua New Guinea expected to receive by far the largest allocation.

PNG—which is still experiencing large-scale community transmission of COVID-19— is forecast to receive 684,000 doses of the AstraZeneca vaccine manufactured at the Serum Institute of India in the first quarter of the year. Solomon Islands will receive 108,000 doses from the same source.

The other Pacific Islands nations listed by COVAX last week will also receive the AstraZeneca vaccine, but from a different manufacturing source.

They are:

  • Fiji 100,800 doses;
  • Kiribati – 48,000;
  • Marshall Islands – 24,000;
  • Micronesia (Federated States of) – 48,000;
  • Nauru – 7,200;
  • New Zealand 249,600;
  • Samoa – 79,200;
  • Tonga – 43,200
  • Tuvalu – 4,800
  • Vanuatu 100,800.

While these forecasts are subject to change, COVAX partners say the release of this information should help governments and public health leaders put into place practical steps to roll out the vaccines in-country.

The Facility aims to see total doses cover at least 3% of the total population of all 145 participant countries in the first half of this year, enough to protect the most vulnerable groups such health care workers.

While  1.2  million doses of the Pfizer-BioNTech vaccine will be available to the COVAX facility in the first three months of this year, no Pacific Islands are listed to receive it as this is the ultra-cold chain vaccine, requiring temperatures of  minus-70 degrees.

More vaccine doses are expected to be available later this year.

After last week's Pacific Islands Forum Special Leaders' retreat, Secretary General Dame Meg Taylor said  Australia and New Zealand have committed to ensuring vaccines will be shared across the region.

"They gave assurances to the leaders that supplies would come. However in terms of an exact date I would be misleading you if I said we had any clear indication of that."

In a speech in Fiji’s parliament today, Attorney General Aiyaz Sayed Khaiyum said vaccine dispersal is so far “shaping up to be a  rich countries’ race. Countries with just 16% of the world’s population have bought out 60% of the world’s vaccine supply.”

“Fiji must secure its place in the world’s economic comeback by securing vaccines as quickly as we can, not months after the rest of the world but alongside it otherwise our people will be more vulnerable than they have ever been, exposed to infection, economically disadvantaged and left behind as the rest of the world races ahead.”

“Patiently waiting our time in the COVAX queue will be economic suicide for the country,” he said, noting that Fiji is working with bilateral partners to secure financial resources to buy vaccines now and will also be looking at making direct purchases from vaccine manufacturers.

“So far Australia  and India have stepped up with direct funding and shifted support,” Khaiyum said.

This story was updated at 5:11pm Fiji time to reflect events in Fiji's parliament today.

The much-anticipated bid for Westpac Pacific (PNG and Fiji) operations by Kina Securities (the owner of Kina Bank) was finally confirmed last month. The offer did not come as a surprise as Westpac moved its Pacific assets into a specialist business division in May 2020, and Kina Securities undertook a capital raising in October. The proposed deal is still pending regulatory and shareholders’ approval.

Currently, only four commercial banks – Bank of South Pacific (BSP), Kina Bank, Westpac and ANZ – operate in PNG with ANZ focused solely on institutional banking. BSP owns more than 50% of the total assets of the commercial sector and has a market share of 63% of loans. If the acquisition goes through, Kina Securities will have nearly all the remaining market share.

Unlike its acquisition of ANZ retail, commercial and SME operations in 2019, Kina Securities says that it intends to maintain Westpac’s commercial banking licence and run the branch network separately. It claims therefore that there will be no lessening of competition. However, this is unconvincing. Despite being run separately, there will be ample opportunity for the two banks, which serve the same shareholders, to collude for strategic purposes. In addition, there is no guarantee that any separation will be permanent.

A further weakening of banking competition in PNG would be a bad thing for several reasons.

There is already a massive spread in PNG between the very high rates at which funds are lent out by the banks and the very low rates depositors receive on their savings – in fact, one of the highest interest rate spreads in East Asia and the Pacific.

Banks are already not incentivised to transmit interest rate adjustments by the central bank (the KFR policy rate) to their consumers as there is little need to compete for loans and deposit base. If banking competition reduces further, banks will possess even more market power to set their own lending and deposit rates, and monetary transmission will be further weakened.

The two remaining bank owners may engage in anti-competitive behaviour by manipulating interbank and other market interest rates to maximise returns. For instance, they may collude to set a common interest rate floor for their lending products and promise not to undercut each other to avoid direct competition. The same applies to deposit rates.

In other countries, banks with high market concentration have been found to fix prices and rig bids in the foreign exchange interbank market to boost profits. PNG is unlikely to be an exemption.

In addition, PNG banks are already some of the unfriendliest in the region. Consumers are often required to pay for basic banking services such as account opening, ATM balance enquiries and cash withdrawals but receive poor service delivery. As banking competition decreases there will be less economic incentive to improve service delivery, and rip-offs like these could get even worse.

Further reducing banking competition will also lead to heightened risk aversion, and less lending to the private sector. There are already signs that PNG banks prefer lending to governments rather than firms. Having private investment crowded out by public investment is detrimental to economic growth and development, and will make it harder for smaller firms especially to access credit.

Financial inclusion is also at risk. Lesser banking competition has been found to reduce the supply of financial products, increase the rates and fees paid, curtail financial innovation and decrease the quality and variety of products offered. 

That said, Kina Bank made a commitment to expand its financial inclusion effort in PNG in 2019 via its investment in MiBank, a microfinance institution. The Asian Development Bank (ADB) is also currently the second largest shareholder of Kina Securities, following its $10 million investment in the company in 2019. They may use what shareholder power they have to encourage decisions that align with their own inclusion goals.

Though these are positive signs, greater profitability and expanded financial inclusion do not always go hand in hand, and economic theory would suggest that healthy competition is more likely to create sustainably lower prices and better access than does relying on the benevolence of banks.

PNG’s financial regulator should take its fair share of the blame for not making the PNG banking sector more entry friendly. A recent study by ADB shows that regulatory barriers and high costs have discouraged the growth of the banking sector. The study pointed out that the increasing compliance with regulations related to consumer registration has led to increasing documentary requirements and high compliance costs. While strong oversight is necessary to guarantee financial stability, financial regulators must tread carefully to avoid their actions leading to financial exclusion.

Of course, if Westpac wants to exit the Pacific, it needs to find a seller. But PNG needs new entrants into its banking sector. The central bank should consider encouraging new entrants from the existing non-bank financial institutions.

A competitive financial system is vital for high and sustained growth. The people of PNG will find themselves worse off if one day they wake up to just two companies serving their retail banking needs.

This article appeared first on Devpolicy Blog (, from the Development Policy Centre at The Australian National University. Accompanying graphs can be viewed on that page.

Dek Sum is an Associate Lecturer at the Development Policy Centre, based at the University of Papua New Guinea, where he is a Visiting Lecturer and Project Coordinator for the ANU-UPNG partnership.

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