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Subject: Price protest! by Unitech Students


Author:
tony
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Date Posted: Sat, Sep 06 2008, 08:02:17am

Strike by Unitech students for what??? Engans students should refrain from boycotting classes or ever dream about participating...

I was there on Thursday attending a business meeting and tell you what, the place is no way near a learing institution that I once enjoyed in the early 80's.

They should consider going on strike to improve their univeristy instead because the buildings and academic staff are sub standard. The buildings need a major refurbishment.

Heard alot of the good national staff have left and the recruitment of academic staff are only to fill in the vacancies??? Is that what you want at the highest learning institution? This is not good for employers who recruit graduates from Unitech??

Why go on strike when you have just one month before the exams? Don't tell me that the strike is initiated by poor performing students?
_______________________________________________________
Price protest!

STUDENTS at the Papua New Guinea University of Technology are on an indefinite strike over the high cost of goods and services.
More than 2000 students at the Taraka campus in Lae, Morobe Province, boycotted classes on Wednesday. The boycott is to continue until the Government explains why the price of basic foods, services and products in the country have gone sky high.
“We have a situation here where the kina today does not have any value, however we are told that PNG is flushed with cash,’’ Student Representative Council (SRC) president Jackson Kiakari said during a open forum at the campus yesterday.
“How can that happen? Everyone in this country is bearing the pain silently and the Government and MPs do not seem to care.’’
Mr Kiakari, who is also president of the National Union of Student, said he was talking with the student leaders from the University of Goroka, University of Vudal, University of PNG and other tertiary institutions to get them involved in the protest.
Mr Kiakari said the students had decided to take this course of action to draw the attention of the Government to the plight of the ordinary people.
“Our parents, our relatives and our workers in town are not able to get a lot of food for K100. This money has no value now,” he said.
“This is affecting our school fees and our survival as students.”
The Unitech administration yesterday said the forum was part of a NUS movement, not related to issues at Unitech.
Acting vice chancellor Wilson Tovirika said the NUS at its congress held at Unitech two weeks ago, had agreed to pursue this matter and raise awareness on corruption and bad governance which was leading to issues of poverty, high prices of goods and services, drop in basic service such as education, health etc.
“As Unitech SRC president, Mr Kiakari is current NUS chair. It was then left to him to lead the action. They are hoping other universities also join in the protest,” Mr Tovorika said.
He said students should refrain from boycott of classes.
“There is just five weeks before the exams, which start on October 17 to 24, and boycotting classes would disrupt preparations towards that,” Mr Tovorika said.
“The issues between the students and Kuima Security are still fresh, and the administration does not want any outflow that could occur if any protests got out of hand, driven by opportunists.”

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[> Subject: Re: Price protest! by Unitech Students


Author:
Eagles Eyes
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Date Posted: Sat, Sep 06 2008, 02:17:23pm

Tony, this issue raised by the Unitech students is not a personal issue that concerns their studies. I just want you to see into the main motive of this boycot. Im sure the students who have made to the higher learning institutions in the country are not similar to ordinary people in the streets. The Price issue raised from the higher learning institutions like Lae Unitech signals worst disaster if not addressed collectively with the support of the general citizens of the country.

I salute the Engas who are taking the lead on this national issue. Bro Tony, you gotta understand that only one or certain people can talk on behalf of the bulk and Engans know the concept better, hence I urge you for support rather than critism.

The current Somare Govt have closed all the avenues to fight corruption and issues like raising prices of goods and service. Just take a look at the living standard in the town, I have bills to pay, school fees for kids, food for the house, transport fees ect,with K500.00 earned forthnightly. The prices seems to increase every time and I guess you dont pay K6.00 for a Trukai Rice packet now.

Please lets give the students a moral support and lets solve this raising price phenomenon. If you are still unsure of the issue at Unitech then wait rather than drawing conclusions too early without knowing the real intentions of the students. The SRC union of PNG is still woking around the clock so please support.

______________________
Tax payee na skul magi

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
.
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Date Posted: Sun, Sep 14 2008, 02:00:25pm

It was terrible that shit was presented to govt; what a shame to get such shit product from Unitech.

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[> Subject: Re: Price protest! by Unitech Students


Author:
.
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Date Posted: Sat, Sep 06 2008, 10:11:07pm

Eagles Eyes, you are not needed. instead of eagles eyes you should be rather named "dogs rectum".

An ENGAN

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
.
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Date Posted: Sat, Sep 06 2008, 10:43:52pm

i would cut enga provincial government's subsidies to those engan students who participate in any perpective regardless of its scope and magnitude in this strike for this academic year and in for future academic years, even after 10 years too.[should be an advice to ipatas administration]

engans don't f**kin play with crafts.

An Engan

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[> [> [> Subject: Re: Price protest! by Unitech Students


Author:
X -Unitech
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Date Posted: Sun, Sep 07 2008, 08:46:48pm

The Engan who made this personal interest coment about the Unitech students going against price rise must understand that they are sacricifying their studies times for you, your family, and everyone of us Papua new Guineans.

You keep your mouth shut because your statement to the media was nonsense to every Engan and Papua New Guinea as a whole. We x-unitech are morally behind you Unitech Students.

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[> [> [> [> Subject: Re: Price protest! by Unitech Students


Author:
.
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Date Posted: Sun, Sep 07 2008, 09:57:28pm

Enga wants better trained economists to solve inflationary pressures exerted on the economy due to imported inflation and non-responding supply-side domestic economy to expansionary fiscal policy stances.

Enga wants better trained engineers; having well rounded skills and knowledge to push forward the province as well as the country.

i hope, though be engan, you've had your plain chance in unitech.

An Engan
Tudiie Kane

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[> [> [> [> [> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Sun, Sep 07 2008, 10:40:26pm

have not had a recent look at the economic indicators but the central bank(bank of papua new guinea) should react with monetary instruments to absord excess liquidity in the system (financial system) due to expansionary fiscal policy and increased foreign investment. central bank should use the measures to control growth in inflation as well as in interest rates.

government should take an holiday with expansionary fiscal policy and focus on the supply-side economy. more have been discussed but the impediments are still there.

an appreciation in kina against major trading currencies slightly have some impacts but it is mainly due to imported inflation on consumables but oil should be ok with napa napa company but hope the artifical fiscal stimulus package by government would have temporary cushions if implementated.

am afraid in what dimension (s) would the students and any supporters be qualified to help solve this problem. as you have mentioned, i would rather improve the investment return indicator by passing the exams with better grades.

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[> [> [> [> [> [> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Tue, Sep 09 2008, 06:26:43am

just picked up a synopsis of an article so people can read to understand that its not just as we think it is but there are measures to combat such economic problems. [please, for further reading: www.imf.org]

............................................................
Statement of an IMF Mission at the Conclusion of the Staff Visit to Papua New Guinea
Press Release No. 08/107
May 12, 2008
An International Monetary Fund (IMF) mission led by Ms. Susan Creane, Deputy Division Chief in the Asia-Pacific Department, visited Port Moresby, Papua New Guinea, during May 1-7, 2008, to discuss recent economic developments, the outlook for 2008 and the medium-term.

The mission issued the following statement in Port Moresby on May 7:

"A combination of prudent fiscal and monetary policies, and high global prices for mineral commodity exports, have underpinned Papua New Guinea's recent buoyant economic growth and macroeconomic stability. Real GDP growth, at over 6 percent in 2007, was broad-based and is expected to continue to be strong in 2008. Inflation is expected to continue to rise in 2008, albeit from a relatively low level, boosted by higher global food and petroleum prices, in addition to strong domestic demand.

"The key challenge going forward will be to continue to manage the large, but temporary, fiscal surpluses to promote higher sustainable growth and maintain low inflation. Given the strength of growth in the domestic economy, the mission is concerned that an additional loosening of fiscal policy in 2008 risks sparking additional inflation pressures. In particular, proposals to accelerate a large amount of spending in the districts this year, equivalent to over 4 percent of GDP, raises an acute risk of a sharp rise in inflation and significant waste of Papua New Guinea's resources, given the weak capacity to spend at this level. This would represent a change from the prudent fiscal policies followed in recent years and raises the potential for a return to the macroeconomic instability witnessed earlier this decade.

"In this regard, the mission welcomes efforts to improve the quality of public spending and encourages the authorities to approve the proposed Medium-Term Fiscal Strategy for 2008-12. This strategy would appropriately contain the expansion of the nonmineral fiscal deficit and smooth spending of the windfall mineral revenues over the medium term, while allowing essential spending to address development needs. The mission also notes that the current positive global and domestic economic conditions present the opportune moment to introduce reforms needed to encourage private activity in the non-extractive industries sectors of the economy. Decisive action to improve basic utilities, such as power, telecommunications services, and address weak transportation and high crime is needed for Papua New Guinea catch up with its peers with higher growth on a sustained basis.

"Regarding monetary policy, the Bank of Papua New Guinea has well managed inflationary pressures to date. The possible strong fiscal stimulus, combined with higher projected mineral inflows and still rapid credit growth, would pose a considerable challenge in trying to contain rising inflation and increase the expectation of a tightening of monetary conditions."
............................................................

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[> [> [> Subject: Re: Price protest! by Unitech Students


Author:
......UL
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Date Posted: Mon, Sep 08 2008, 02:23:06pm

You grow your daughter with Ipata's subsidy and give it to him when she is due. We Engans wanna do it for the country and not fot Ipatas and you. Time to change please think outside the box.

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
Eagles Eyes
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Date Posted: Mon, Sep 08 2008, 02:16:57pm

Mate, you might be an elite above humankind. Can you think and talk on behalf the poor citizens of this nation? Your self-centered mind will kill your Engan made stomach if you cannot participate and add something supportive to the initiative taken by the Unitech students. And do not specify this issue as it’s not only for the Engan’s good. Its voluntarily initiated by Engan students of Unitech for the general good of PNG. Your one sided comments and early conclusions should not be considered here on this forum if the admin is aware of you.
No more hotairs from now please. The Engan educated elites knows better and this issue will addressed accordingly despite of your daunty, dump and jealousy brain filled with shits. If you and your in-laws are monsters behind the disasters here in the country then expect something terrible.

_______________
WWEST

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
.
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Date Posted: Mon, Sep 08 2008, 04:44:16pm

mi kisim toktok bek na yupela suppotim strike na mipela bai sanap na lukluk long em. sapos samting i go bargarap, ok, bai yupela wokim samting kamap orait gen.

[ if there is an enga coffin due to this strike, you are expected to be with the coffin in wabag or wanpenanmanda airstrip=bai yu pekpek blut na go]

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[> [> [> Subject: Re: Price protest! by Unitech Students


Author:
.....UL
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Date Posted: Tue, Sep 09 2008, 02:44:14pm

hi(.)nogat nem, thats an colonial Engan mentality,just enjoy ten mapu and die where you are. Let thy fight for rights of this naton when they are still young and energetic. Its worth dying for a purpose then dying in your bed.

Open up!!!!

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[> Subject: Re: Price protest! by Unitech Students


Author:
Enga Lenge
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Date Posted: Tue, Sep 09 2008, 11:08:10am

This is an important concern raised by the Unitech students and that the consequences of inflation is felt hard by everyone. These are hard economic times when the working class salary is short lived in the pockets for couple of days only due to the high prices. Parents are not able to afford school fees because at the least they can't afford a packet of rice as a delicacy.

But unfortunately inflation is driven by the global supply and demand chain and is currently felt hard even by the developed economies and are at the brink of recession. But this does not mean that PNG can't reputtably manage. The PNG economy is said to be growing due to the mineral resource boom but this may not be sustained because this growth is not decisively invested in its social infrastructure to grow other sectors of the economy and alleviate poverty.

The people of PNG and enga in this case are suffering from lack of essential social services and honest leadership. One mere fact will remain clear for decades through the spectrum of time and that is PNGuineans have been robbed and denied development by their own claimed leaders. Innocent PNGuineans are dying in poverty from the corrupt sins of some of our own leaders.

And this calls for oneness in thought!!! For both students and the working class to think alike and work together for the common good on issues like this, especially for the good of the bulk rural population. The SRC/NUS should try to lobby support from the trucking companies, chamber of commerce etc. In order to do this, the NUS/SRC should be forward thinking and make prudent strategies that the students don't jeopardise their studies, because you do want to fight for a worth cause and still able to go out in flying colours at the end of this year. NUS/SRC should faciliate meetings with economists and business experts in your universities to come up with proposals to present to the government. Students are truly the future capital asset and the leaders of this young country and that you will gain respect if the student leaders do think strategically.

Finally we need to change this trend of corrupt and vissionless leadership. To be victorious, we need to first fight the battle of honesty within self and develop the virtue of patience and learn to respect; and serve with sincerity where we are called to serve in society.

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
....UL (U real Engan)
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Date Posted: Wed, Sep 10 2008, 10:34:28am

You comments acknowledged. Thats how elite Engans can think and act at these times.

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[> Subject: It's a lost cause.... it always has been....


Author:
SB
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Date Posted: Mon, Sep 15 2008, 12:06:04am

During the times that I studied at unitech I always thought that a strike at Unitech would make PNG stand still, guys would shout from the mess forum area and say we are the cream of the nation, we have to take the lead for the weak and mouthless. I led a few of those student initiated unrest at unitech as well, you know the common believe we Engans have, ol narapela lain ol girly girly yah, we Engans are born learders and we had to take the lead in evetrything. Lest did I know PNG kept doing its business, the politicians did not stop stealing, they did not even give a damn if unitech students were on strike. I didn't realise we were only putting our future at risk by fighting a lost cause.

I always thought highlanders were born to lead PNG, we took the lead as soon as a forum was called to dicuss anything. The strongest highlanders rounded up everyone, forcing guys and ladies out of their rooms to attend a very important forum. We made sure none of our coastal mates attended class secretly, everyone had to stand united to fight a just cause. However the opposite is true at the national level, the country is being ruled by our Nabis countrymen. Our highlands MPs including our own Engan MPs can't stand up and dominate parliment. They are playing second fiddle to smart coastal man who use their head instead of their strenght. Our own Don Polye who was an outspoken student leader in the early 90s at unitech is polishing Somare's shoes.

Guys don't lose focus on your numberwan priority, your studies. Remember even if the price of a rice bag was reduced, what would you gained from it. Life goes on, you may get a pat on the back for fighting for the reduction on a packet of rice. Will that get you to your destiny, to fulfil your dreams, to one day work and earn your own salary? If I had the second chance to be at unitech, I would be mindful of what I do or say, the next time I am given the mic.

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[> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Mon, Sep 15 2008, 09:47:30am

The Post Courier newspaper reported that the petition by Unitech was for hunger or ricebag; a mockery gesture-have a think about it.

Seven pages petition, as was reported, the issues presented are:

(i) Un-updated CPI Index with base year 1977
It is true it incorrectly measure CPI marginally. The government currently funds a K3.0 million project called 'Household and Economic Survey' with ADB and is being conducted by the National Statisitical Office to update the CPI.

Comment: How is this issue, a National Government issue, related to the objective of the strike. How was the cost of the strike related to the benefit of asking government to update the CPI index.

(2) Minimum Wage Board: The government has increased the wage base of the publice service sector by 3% incrementally over a two year period. Had given bonus awards to public servants.
Increasing consumption through increasing pay for public service is not a good economic instrument to attain tangible economic development when domestic supply-side of the economy is not responding. It only increases imported inflation through increased imported consumables.

(3)Increasing Competition in other sectors of the economy
The request to invite competition in other sectors is better but the government adopts thorough transition procedures and processes. Government has investment in some of these areas and also government is still regarded as public goods and service provider; clearing market distortions and regulator. In consideration of these facts, transition will be evolutionary.

Comment: Given the interests of the government over some time period, how does this issue relate to the objectives of the strike. It is good you have re-vitalized a fight which began some 10 years ago and will take some ten years to win.

(4) Balance of Payment Surplus
The petition's analysis to index the undervalued CPI to revaluing BOP surplus and deducing that budget surpluses not proper.

Comment: What is there that is the subject of the petition and the strike? You figures and calculation methods would have been wrong too. The central balance maintains the foreign reserves to control the exchange rate for the interest of the country: exchange rate does not increase or decrease at certain levels to penalize importers and exporter. It is unclear from what angle this issue was a topic of the petition.
...........................................................

The Petition should have included:

(i) Highlands highway rehabilitation and maintenance
The government should have been reprimanded to improve the HH. The option of alternative transportation system should have been requested since the HH is subjected to problems frequently. This is to ensure that materials for development and materials for the stomachs for highlands is constantly being supplied.

(ii) Subsiding food stuff
Should have requested government to subsidize basic food like rice and tin of fish for a period of 4 months so people can be assisted with the consumption choices, maintaining same amount of consumption basket as same prior to such inflation increase.

(iii) Increasing Telephone, Power, Health, Education, Water Supply and Agricultural Supports

Should have asked the government to continuous relat the budget surplus to the district level by funding the district service improvement programmes so that common people in kandep, liagaim, maramuni, porgera, kompiam have access to these essential services.

Roads services improved so that markest are supplied with local produces.
...........................................................

I should stop here but the next time, after having received a bad petition, the government will not recieve a bad petition from Unitech again.

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
.
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Date Posted: Mon, Sep 15 2008, 10:06:41am

lakapei o, plisss, ol enga yu pela kaikai kokonut na skul gut yah, plisssssss. play play wanem yah.

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[> [> [> Subject: Re: Price protest! by Unitech Students


Author:
Peles-Economist
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Date Posted: Wed, Sep 17 2008, 06:12:06pm

I would like to respond to this very interesting topic in following manner. Larsen you mentioned in your earlier statement that, Monetary polic has to respond to high liquidity in the banking system. I agree with you on this one, but, when you look at private sector credit, it is also on the increase. When private sector credit growth is pumped into an economy that is already existing at full capacity, then, the economy is said to be over-heating. In the case of PNG, yes, you are right, economy is over-heating and the Bank of PNG has done its bit by increasing the indicator lending rate to cool down the economy.

I am also of the view, that the students from unitech have a point in regard to fiscal measure to absorb external shocks, like fuel and food prices increases. In economics, monetary policy is not seen to be an effective tool in curbing inflationary pressure that is caused by supply side shocks, i.e, international price shocks. Fiscal policy is needed to curb inflationary pressures in the economy. On the other hand, monetary policy is the right policy tool to adjust given, demand push inflationary pressures. Hence, the overheating of the economy is driven by high demand, as indicated by high credit growth in the private sector.

International prices shocks can only be curbed by fiscal policy, as such, the government should have done something when crude oil prices hit US$149/barrel early this year. The government should subsidise fuel, in order to absorb shocks from this external shocks. On the other hand government was enjoying lucrative collection of tax from the mineral sector from this high prices, which the people suffered paying for the governments failed policy response to fuel price increases. The real impact of the fuel price increases havent been felt yet. Inflation in the September and December quarters will show this impact, because of price stickiness. The pass through to consumers of the increases in prices of fuel to other sectors of the economy hasnt been felt yet.

The government failed to absorb the shock through fiscal policy at the first place, hence allowing the full impact of the shock to hit the economy. As a consequence, the price increase have been felt, and the people are suffering. As pointed out by the UNitech students, real wages of people have come down, due to inflation and the employees federations should fight for wage adjustments.

The second round effect of the price shocks are not felt yet. Unitech students raised this issue, but, i dont think they were clear about the sources of inflation, and what policy tool is responsible to curb this inflatonary pressure. If they had addressed the issue properly, i think they would have got a good response. From their petition, they were beating around the bush, and they did not know what they were talking about, and that is a failure.

I think, this is an industrial issue and it should be left to the PEA and other employees associations to fight it out with their employers. As for the students, i salute them for raising the issue and they should liase with the unions to push this matter forward.

I can say that, the government through its fiscal policy failed to address the issue, when the country was hit by the international price shocks. Now it is too late, the impact of the price increase have already filtered through to the economy.

Bank of PNG has done its part, it is the government of the day that should be blamed, for pumping the economy with lots of cash into the system, and then again, did not respond to the external shocks affecting the economy.

Few thoughts

Peles-economis

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[> [> [> [> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Wed, Sep 17 2008, 10:10:14pm

Peles-economist,

Very essential reading of the inflationary economy of Papua New Guinea.

I note that the Government has been retiring its stock of Treasury bills through operating an expansionary fiscal policy regime supported by huge mineral revenue receipts due to higher international mineral prices above budget forecast. The Central Bank has use its central bank bills to absorb excess liquidity in the economy and believe the rates would now be unattractive to an investor.

(a) In the short run/term, the Government can abosrob inflationary growth as you have mentioned in various programmes; subsidize the consumers or the importers or other programmes. Fuel should be subsidize and well as basic food stuffs for a specific period of time.

(b)In the long rum, the real factor is to promote developments in the supply-side economy. The domestic food stuffs can easily substitute some of the imported goods such as rice.

The government should provide consistent and increased support to programmes/projects such as the Wheat Project in Kandep, the Rice Projects in the Coastal Regions and in Highlands Regions.

The government should develop a very efficient and effective transportaton system linking up all the regions of the country. This transportation system will reduce transportation/freight costs and also made available all nutritious food stuffs from the coastal region available in the highlands regions and vice versa. A fresh fish harvested in the coastal region would end up in the dinner plate in the highlands in just three hours.

I note your essential comments and thus stop here.

cheers,

larsen

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[> Subject: Re: Price protest! by Unitech Students


Author:
Chicko
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Date Posted: Thu, Sep 18 2008, 08:06:35am

With due respect to some useful economic discussions here, I can't recall at one instance when students won through petition to the government. May wisdom help in this one.

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[> Subject: Re: Price protest! by Unitech Students


Author:
Peles-Economist
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Date Posted: Thu, Sep 18 2008, 11:52:53am

Larsen, you have pointed out one very important factor that can contribute to development in the country. Infrastructure development is the key to building domestic capacity. Domestically, there is a huge savings and investment gap. Why is that the reason?

Several researches done in South Korea points out to one very important factor for development, i.e. infrastructure development. When South Korea build a major road net work that cut through most of the countries, the country started to flourish, because locally produced goods started flooding major Korean cities, hence, imported products no longer became attractive to korean city residents, consequently, imports were lowered, hence, foreing exchange reserves were saved. Just because of the major road work, millions of Korean won were saved, and to this day, Korea is one of the success stories, because they invested in something that would bring benefit to them for a life time.

Papua New Guineas infrastructure development is so poor that even a coffee bag rots in the remote areas of the Highlands. Locally produced food would have flooded the markets in Port MOresby and other major centres of the country, but, due to poor infrastructure, locally produced goods have become more expensive than imported goods. Good infrastructure reduces the cost of transportation, hence resulting in building domestic capacity.

Even the works department seem to have failed in maintaining the existing roads. Most often, the excuse would be, "there is no fund". I guess the fund is there but, how to manage the funds have been a major hindrance in maintaining and developing infrastructure. Australia our closest neighbour would be good place to sell our beautiful country as a tourist destination, but, most Australians find going to Europe, Asia and America more cheaper than coming here to PNG, due to less developed infrastructures that cant allow competition in the transportation industry.

Infrastructure development and maintainence is the key to every countries success. China is currently growing at a faster pace, because, the government has pumped in money to support the private sector, by developing good roads, bridges, airports, wharfs, schools, etc. Once the government is seen to clear all hindrances for the private sector to operate, the private sector becomes the engine room for development. Thats exactly what the emerging market economies of Asia have done. They are developing at a rapid pace because, they have got their fundamentals right. Development of good infrastructure by the government has become a catalyst for the private sector, hence, growth purely driven by the private sector.

As for PNG, with the current high inflow of mineral taxes into the governments cofers, the government needs to divert this funds into developmental projects, like the maintenance of the HIghlands highway, and wharfs and even try to link the country with road networks. The country has lots of potential, and once, better road networks link the country, domestic capacity would be build. Locally grown food products would replace the imported foods that the cities and towns in PNG has been depended upon. PNG is rich in so many ways, and it needs good infrastruture development to bring the much needed food products to the door steps of urban dwellers.

enough said..

peles-economist

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Thu, Sep 18 2008, 08:47:07pm

Peles economist;

Specifically, in regard to your enquiry to huge saving and investment gap.

Let me say the following:

(1) saving = investment in most cases. saving, in more case propel investment. for instance, saving is used to finance investment thus the relationship.

(2) saving is either voluntary and involutary. when the interest on saving is higher (by commercial banks), there is increased savings. thus, this follows the relationship in point (1) with investment.
(2)(a) voluntary saving are predominantly determined by the interest on the saving. bank would increase saving if interest is comparatively higher.
(2)(b) involuntary saving are such programmes as the posf for the public servants and nasfund for the private sector. these programmes encourage citizens to save more of their income. i note that saving through such has increased dramatically and is exemplified in the finanical perofrmances of these two institutions annually.

(3)there can be increased saving but the interest rate on financial credits be low to induce investment in the country. if the interest rates are very high, the investment induced by the savings will be low. when one borrow K10.00 and the interest is 50%, it is not worth but when it is lower its worth undertaking the investment.

have not seen the current interest rate for commercial banks but the kina facility rate should give a general guide.

(4) if saving is higher and interest rate is lower and investment is very low then, the problem is with other economic structures not facilitating greater investment. some of the structural issues such as poor transportation, power, water supply and hingering regulatory regimes. the government needs to eradicate these structural impediments to ensure increased investment.

(5) my obeservation is that saving should be higher though interest (deposit interest rates) must be lower because excess liquidity but the interest rates should be lower because the commercial banks want to inject the excess liquidity in the system to the nvestors in real sector. however, investment is not responding accordingly because these structural impediments are hindering investment in the country. (foreign direct investment is included in discussion).

(6) due to such scenario there would be increased in capital outflow which the central bank needs to check and monitor. this would have adverse impact on the economy.

thank you for the enquiry and if not satisfactory please, inform.

cheers,

larsen

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[> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Thu, Sep 18 2008, 08:18:13pm

The importance of support and continuity in support for physical infrastructure development is exemplified in some of the economic achievements of some of the countries mentioned.

The country needs to be linked up by an efficient and effective transportation system. The highlands, southern and the momase regions need to be linked up by a very efficient and effective land transportation system. [If Don Polye can initiate such project the country would salute him as a good leader].
The island region needs to be linked up to the other three regions by an efficient and effective maritime transportation system too. [Don Polye would be saluted for this initiative too]

I have had the chance to support the rehabiliation and matinenace of the highlands highway by the government. Also involved in a martime and navigational project cofunded by both the png government and the asian devvelopment bank. Government is putting support in these perspectives but there are few discrepanies which needs to be ironed out.

When such efficient and effective transportation is established by the government, as mentioned, the private sector would automatically flow through the supply and demand mechanism ensuring creations of new demand and supply markets. The would be greater multiplier effects on the economy as mentioned.

After having established such efficient and effective trasnportation and ensuring the the regulatory framework of the economy is geared to supporting increased private sector engagement, the government should then assist further by improve social, law and order discrepanies that continue to erode the fibres of the country.

The government should then facilitate greater direct foreign investments in the country. This programme should have more emphasize in captial accumulation. The government need to increase the stock of physical capital by bigger margin; increasing the stock of capital-gdp ratio by more than 200 percentage points. If the capital accumulation is increased to such magnitude; increasing the capital-gdp ratio, the country has surplus labour resource/supply which would fit into this scenario easily and thus, increasing the ratios accordingly. When this happens, the country would be in a turning point for increased economic activities; further increasing economic growth.

The next thing the government needs to do is facilitate the adoption of the new techological skills available in the world. The increased level of technological skills and high stock of physical capitals, the economoy is now geared to move further.

These are some of the essential development projects and programmes which have helped the countries mentioned prosper.

There are few things the government needs to do such as re-orienting its public service to such such programmes and projects.

Enga province should not wait for decisions from waigani to adopt these essential factors of development. The province has to re-focus itself and move on. This is a greater concern.

Peles economist, thank you for the further discussion,

larsen

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[> Subject: Engan Members are Brothers and Be Brothers


Author:
larsen
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Date Posted: Thu, Sep 18 2008, 09:35:38pm

An article from the National newspaper for today.

Something to be proud of. It is good that Governor Ipatas and Minister Abal friendly. It is good that Minister Polye, Vice Minister Kikala and Member Kaoek all team up for the good of Enga Province.

Am proud, well done.
............................................................
Disciplined forces add colour to Wabag celebrations
By PHILIP KEPSON
WABAG in Enga province came alive on Tuesday as more than 100 disciplinary forces personnel marched through the town to join hundreds in celebrating the country’s 33rd Independence Day.
The pipes and drums band from the Bomana jail outside Port Moresby in NCD and 40 personnel from the PNG Defence Force Bravo Company led the march.
They were joined by locals and hundreds of uniformed children from 10 community schools within Wabag.
The marchers started assembling from the Ipatas Centre in the morning to the Wabag Primary School before they were joined by members of the public.
Foreign Affairs and Immigration Minister Sam Abal, who is also Wabag MP, and Governor Peter Ipatas were given a guard of honour by the disciplinary forces on their arrival at the school before a capacity crowd.
The celebrations ended with speeches by Mr Abal and Mr Ipatas and an inter-school soccer competition.
Similar celebrations were held at Amapiaka International School where traditional dancers from Western Highlands, Bougainville and Enga provinces performed.
Mr Ipatas, who was the guest honour, donated K5,000 to help meet the expenses during the celebration.
............................................................

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[> [> Subject: Re: Engan Members are Brothers and Be Brothers


Author:
Chicko
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Date Posted: Fri, Sep 19 2008, 06:55:21am

larsen,

What makes you say these MPs are friendly and teaming up??? I doubt so!!!....I wouldn't judge just on their public appearance!!!

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[> [> [> Subject: Re: Engan Members are Brothers and Be Brothers


Author:
larsen
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Date Posted: Sat, Sep 20 2008, 07:40:36am

Chicko,

This is my general view; the elected members' statutory responsbilies and duties should not be conflicted with personal interests. Though the former seemingly is a distorted commodity to provide in consideration of all factors of the society, a general appearance as demonstrated by Governor Ipatas and Minister Abal in this specific event produces a postive view to the general engan population.

I am more interested in all elected members of enga making appearances together which provide an initial outlook that a positive movement to demonstrating the essentials of the demarcation of the member's statutory responsibilities and duties and individual ambitions. Thus, I would be wrong to state that Governor Ipatas and Minister Abal, as individuals, may have differences in individual interests or the reverse.

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[> Subject: Re: Price protest! by Unitech Students


Author:
Peles-Economist
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Date Posted: Fri, Sep 19 2008, 09:25:00am

Larsen, i would like to touch base on the point that you raised about the savings-investment gap. My point was in PNG, on an aggregate level the saving capacity is very low, due to under-valued domestic capacity. That means, net savings of individuals is lessened by low real income.

As you have well pointed out savings=investment, with higher domestic savings it will lead to higher investment, hence when investment increases so as economic growth. I would not think that interest rate plays a very important determining factor in PNG's savings capacity. My view is that it is a capacity factor, that is, is the real income gained in PNG allows people to save? On a micro level, an individual employee does not have the capacity to save because their real income is low, with high inflation and the cost of living in PNG's major cities and towns. Even then, we are talking about 15 percent of the population who can save, but, their real income is only sufficient to take them through to the next fortnight.

Such countries like Japan, domestic savings level is very high because disposable income is much higher and people have net savings. Consequently, Japan has been the main country financinng US budget deficits. One of the largest contributors to financing consistent US budget deficits have been Japan, because, Japanese domestic savings level is very high, primarily due to their net disposable income being very high.

I further agree that interest rate differentials can result in capital out flow. However this can happen, only when financial markets are very fluid. The stock market in PNG is not fluid, meaning buying and selling of stocks in the pomsox is not as is, when is basis, therefore it is not really that fluid, with less capital structure. For PNG, interest rates have averaged around 2-5 percent, while inflation has been around 7 - 10 percent, giving you a negative real interest rates, however, there hasnt been any significant capital flight due to negative real interest rates in the country, because, the savings capacity in the country is low, which is the main drive towards capital outflow, therefore, exchange rates have remained stable. With a flexible exchange rate regime, negavitve real interest rates would allow for capital outflow and further depreciate the currency. In PNG's case, negative real interest rates have not done that, meaning that, it isnt a major threat, because the saving capacity of PNGens, is not sufficient to surge into the financial markets, to threaten exchange rate developments and other important economic indicators.

I would say, the cost structure in PNG is very high as a result disposable incomes of people in the country is very low, hence net savings is also low, resulting in low domestic capacity to invest. Most investments that are driving economic growth is, foreign investment. In order for PNG to move forward, the government has to reveiw all existing cost structures to make sure, disposable incomes of people are increasing, so as their net savings capacity.

peles-economist

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[> [> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Wed, Oct 15 2008, 04:30:18pm

Peles economist,

In regard to your statement in your thread:

"Such countries like Japan, domestic savings level is very high because disposable income is much higher and people have net savings. Consequently, Japan has been the main country financinng US budget deficits. One of the largest contributors to financing consistent US budget deficits have been Japan, because, Japanese domestic savings level is very high, primarily due to their net disposable income being very high. "

you have had me on a search for the causes of the recent financial crisis in United States.

You were correct to mentioning external financing of the financial crisis in the US but this financing is mainly from China. Some estimates predict that the surplus current account balance of about 6% of the Chinese economy is financing deficit of 6% of current account of the US economy.

Thank you for having put me in this search which was good.

larsen

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[> [> [> Subject: Re: Price protest! by Unitech Students


Author:
peles economist
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Date Posted: Thu, Oct 16 2008, 12:05:16pm

Bro larsen, you are right, that China has recently stepped into the lime-light, financing US budget deficits. Traditionally Japan used to finance US budget deficits.

A layman might asked how this process works. Lemme explain that in here. When US government runs into budget deficits, it can either print money, or sell US treasury bonds to finance its budget deficits. Most often the US government issues treasury bonds to raise money to finance the deficit. When the trasury bond is in the market, anybody from the world can buy the bond either through primary or secondary markets.

Since Japanese government previously were running current account surpluses and the per capita income of Japanes was high, domestic savings was also high, consequently led to high investment offshore, mostly US treasury bonds. I believe thats whats happening with China now, given high economic growth and high per capita income. The Chinese people are currenly financing the huge budget deficits.

Just yesterday, i heard that the budget deficit for US government was a record high at 3-percent of GDP or around 600 billion US dollars. This has to be financed by other countries who are doing well, and i guess China and South American countries who are doing well so much would finance this deficit.

As for the bail-out, and the subsequent effect of that on the government coffers can have rippling effects on the world economy and i wont be surprised, if rates started to tumple as investment fund chase after low-risk financial assets.

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[> [> [> [> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Thu, Oct 16 2008, 02:50:10pm

Peles-economist,

(1)I concur with your concise understanding of movement of financial capitals as investment across international borders given the economic performances of the economies. China has used its current account surplus to invest in US investment banks and in US treausry bills.

(2)The investment banks have created financial derivatives such as credit account facilities to retail these funds to the household sector. It is evident that the US Federal bank has been very relaxed on such regulatory/monitoring roles over such activities of the banks in the past decades.

(3)Given huge investment in treasury bills, the interest rates have been much lower and thus note that the world interest rate being about 3% on long term government securities.

(4)Given point (2) and(3) the investment banks find that investment in real estate industry being much lucrative but pose higher risk. Thus, the investment banks invest also in the real estate industry.

(5)Due to financial problems, a houseowner in the US sells his/her house. Remember that this house houseowner has big credit account balance and also has borrowed from investment banks to buy the house as per point (4) and thus paying mortgage.

(6)When networth of selling the house (after loans and credit account balances) is very small to the houseowner. I note that most of the houseowners in US have noted that the networth of houseownership has been very small and some have even negative networth.

(7)In aggregate, due to drop in prices of houses because of the networth situation to sell a house, many houses have gone on foreclosure in the US.

(8)Remember that the investment banks are the providers of credit account derivatives and home/house loans and to lose investment due to drop in house prices triggered by the networth problem of house owners is a huge probelem for the investment banks. The investment banks have have used offshore investment funds from countries like China.

(9)This problem in point (8) has led to investment banks in US declareing financial problems which has spread through the world.

(10) The are other issues which have contributed to this financial crisis and I hope that the main problem lays in what I have just tried to describe.

I feel to understand the macro analysis of this issues with some confidence but some people would know a bit better by looking at the international flow of investment funds, investment portfolios such as treasury bills and investments banks engagement and operations, the central bank controls, the interest rates of financial investment portfolios, and the real estate industry relations with the banks.

Thank you for the discussion

larsen

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[> Subject: Re: Price protest! by Unitech Students


Author:
larsen
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Date Posted: Sat, Sep 20 2008, 09:59:54am

Peles economist,

(1)The Kina Facility Rate is 7% for September 2008. The Passbook Accounts Deposit interest rate for a 6-12 months term is about 0.75% per annum for amount less than K50,000 for March 2008 for commercial banks. The weighted average interest rate on performing loans is about 9.4% for commercial bank.(2)The headline inflation is 3.1% for March 2008 by central bank. (a)The real interest rate of 3.1% depicts economic viability for saving and investment in domestic economy. (b)The deposit rate is low due to big savings by government in commercial banks and thus is not better but the general population would still save in commercial banks at 0.75% per annum.

Generally, the real interest rate depicts that there is potential for saving and investment in the domestic economy.

(3)The capacity factor to the saving-investment gap could be examined in two ways. (a)Inflation-Real income scenario: The minimum wage rate is K37.20 per week for the country. Given the inflation rate, the real minimum wage rate be about K36.05 per week generally. The real disposable minimum wage rate would be net of the government payroll tax rate.(aii)The real disposable minimum wage rate looks better for some personal saving if unproductive spending is cut by all income earners. (b)Labour employment-Population-Saving: Formal labour employment is quite small relative to human population hence presenting a very small population-saving scenario for a small economy compared to other economies. (bii)However, inclusion of the very active informal sector in scenarios would improve the population-saving factor but still smaller but enough for a small economy.

(4)Saving-investment-structural issues.The predominate issue that present a relatively small economy with high living cost is structural. In earlier notes I outlined brief elaboration of these structural issues that hinder economic development and thus present an economy with high living cost with reckless spending human population.(a)if some of these structural issues are fixed, the economy will grow and thus, the cost of living will be lowered. I note that the government putting more resources to eradicate these structural impediments. However, its programmes need rigor and strictness its approach.(aii)current government advisors should be more active and target-oriented. (aiii)The general human population of the country should assist the government implement some of its structural programmes than challenging economic developments with very selfish and reckless mentality.

(5)I would'nt present a comparative analysis between png economy and the economic transactions of the developed economies. Rather, would study the economic transition eras of these developed economies for economic development for the domestic economy. (a) It is more better to look at historic economic transition processes of those developed economies that present similar cultural and social norms.(b)Japan-USA relation. I have not yet read a paper on Unites State's federal budget been financed by Japan. However, I know that US is operating a deficit fiscal budget to fight international terrorism. The international financial credit crunch is somewhat related to the US deficit fiscal budget.

(6)Interest rates-capital outflows: Capital ouflows is caused by some factors and thus discuss three points.(a)Real interest rate differentials. Comparatively, when the real interest rate is another country is higher than in the domestic economy, liquid assets can be injected to the other economy. If such investment is lucrative, the investors would also convert physical capital assets to increase profit margin. (aii) Careful investors are risk aversive and thus, an holistic approach is always considered for such movements in capital stock. Thus, more investors now consider international investment opportunities. (b)Negative real interest rate. As presented above, the real interest rate is still positive for png economy. When the real interest rate is negative, capital outflows be evident. (c)Other factors such as social factors due influence capital outflows. For example, a tribal fight would caused investors to change asset structures and thus move assets out of the domestic economy.(7)capital outflows would reduce foreign currencies and thus cause a downward pressure on the exchange rate.(a)png's excahnge rate is quite not full flexible. The central bank has been influencing the exchange rate for many positive considerations. It is supported.(8)Saving:POSF-Nasfund: These two institutions represent the domestic economy's saving mainly and thus, the total asset values of them has much to be talked about. I note that both have foreign investments but are very minimal due to institutions restrictive provisions. It is evident that these two instituions are now buying into any commercial assets but have to be very careful because a slight wrong factor could affect png economy.

Above all, it is recommendable that the government approach to eradicating structural impediements in the country be revitalized and re-prioritized. Huge support be demonstrated by bothe the government and the general human population.

Thankyou for the discussion.
larsen
*data source:http://www.bankpng.gov.pg/

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