Papua New Guinea’s largest superannuation fund, Nambawan Tremendous, is a serious nationwide investor throughout the financial system. CEO Paul Sayer chats with Enterprise Benefit PNG on the impression of the COVID-19 pandemic on its investments and future tasks.
BAPNG: How has Nambawan Tremendous’s funding portfolio been impacted over the previous yr?
Paul Sayer: Clearly, the inventory markets weren’t trying very wholesome firstly of final yr. If you happen to bear in mind, huge crashes have been occurring internationally, so our worldwide portfolio had a really risky yr. He began to come back again within the second half.
About slightly below 50 % of the portfolio is invested in what we might name authorities mounted curiosity securities – treasury payments and authorities listed shares. This offers us an excellent return. In the course of the yr, the federal government carried out quantitative easing, which allowed us to promote short-term securities in opposition to longer-term securities.
It will increase returns, but it surely additionally will increase our publicity to authorities. So it is a balancing act
BAPNG: Let’s check out a few of these firms wherein you’ve got a considerable stake. How are they doing?
Sayer: SP Brewery is arguably probably the most spectacular firm within the portfolio. He had a poorer yr. The earlier yr, the federal government launched a rise in excise duties. Now, you set that in place, that makes your value go up. The worth goes up, the demand goes down. However you even have declining demand as a result of there’s a foreclosures. Nightclubs, venues, pubs are all lowered and the acquisition of beer is lowered. So the pure earnings goes down.
Now, would you say SP Brewery is an effective long run funding? We consider so. Nevertheless, we are going to scale back this lower.
We additionally produce other firms, like Westpac, going by the method of its potential sale. We personal Toyota (Ela Motors), Paradise Meals and Laga Industries. For every of those, you see the impression of an financial system that has had a tough yr.
If we take a look at nationwide shares, each unlisted and listed: the BSP share value has remained nearly secure. Their dividends went down final yr, so once more the return we’re getting can be happening.
“Our message to members is that we have been right here for 30, 40 years. We’re searching for long run investments. ‘
BAPNG: Your members’ return on the finish of final yr was just one %. Did it meet your expectations?
Sayer: I believe we began final yr with a really destructive outlook. Over the yr now we have labored exhausting, however that did not essentially translate into the top end result.
BAPNG: One of many indicators of how the financial system is shifting is whether or not your members are asking you for money advances or withdrawals from their balances. Are your outings rising?
Sayer: At first of final yr, I anticipated the releases to be greater than the yr earlier than, however in actuality they weren’t. This can be a constructive level. And members proceed to hunt entry into the fund. So now we have seen a progress in volunteer members, voluntary contributions and simply regular contributions getting into the fund. We discovered the money stream to be robust.
And it is necessary, this money stream. If you’re selecting a time to take a position, then when the going will get powerful, that is most likely the perfect time to take a position. Our message to members is that now we have been right here for 30, 40 years. We’re searching for long run investments.
BAPNG: Is the fund investing in additional properties?
Sayer: Rangeview Heights is a joint improvement between Nambawan Tremendous, Lamana Growth and the Nationwide Capital District Fee. It consists of residential elements and a shopping mall throughout from Imaginative and prescient Metropolis. It is forward of the observe. We have now a powerful pre-rental for supermarkets and retail. That is [to be] full the second half of this yr.
We introduced that we’ll assemble a brand new constructing within the area in entrance of the federal government buildings in Waigani, subsequent to the TISA constructing. This can change into the brand new headquarters of Nambawan Tremendous and one other shopper.
“If the federal government pays us our arrears, 40 to 50 % comes again to them as an funding in authorities bonds.”
BAPNG: There was a time when the federal government owed the fund some huge cash. How are you now?
Sayer: The federal government honors the cost to the tremendous funds for bi-monthly salaries. The federal government has additionally paid very nicely what we might name its unfunded pension obligations previous to 2009, as and when wanted.
Nevertheless, there’s a problem relating to cost to Nambawan Tremendous and different entities related to Nambawan Tremendous relating to leases. Authorities rental arrears are actually rising. I do not assume we’re alone with this.
We hear in every single place out there that the federal government is making an attempt to settle the arrears. We perceive that they simply acquired one billion kina from Japan. We hope he might be launched to clear the arrears.
What’s attention-grabbing with us is that if the federal government pays us our arrears, 40% to 50% of the time we repay. 100 come again to them within the type of investments in authorities bonds!
BAPNG: What are your expectations for the subsequent 12 months?
Sayer: Internationally, issues are anticipated to be extra constructive in 2021, because the vaccine spreads to main economies. Nearer to dwelling, I believe the implications of COVID and rest are going to be linked to the vaccine rollout. Sadly, I believe PNG might be lagging behind the remainder of the world with this rollout.
For us, now we have to assume long run. And that is what we inform our groups.
This yr there can even be a motion in the direction of the pre-election interval. We’re contemplating what this may imply for presidency choices and in the long run. We want to assume that the federal government is specializing in assembly its necessities to fund its present obligations reasonably than focusing an excessive amount of on new spending.
In 2024/25, we count on the PNG LNG venture to change into a river of gold returning to the nation as soon as the debt is paid off. Long run, if new useful resource tasks like Papua LNG and Wafi-Golpu get the inexperienced mild, then you must have that raise.
BAPNG: Apart from the useful resource tasks, do you see any developments within the financial system that you simply discover encouraging?
Sayer: PNG has an excellent alternative to produce meals to Asian markets – Singapore, for instance. You see, probably, nice developments within the Sepik plains with excessive manufacturing agriculture. It’s a mannequin that will be price contemplating. We have now plenty of small farms, however to get out into the world you often need to get larger tons and get the farm, the chilly chain, the transport, the whole lot is aligned to make sure a dependable provide. There are alternatives there which are price contemplating.