BY SATISH CHAND

I SPENT A WEEK last month in beautiful Bougainville. Despite the devastation of war, Bougainville is an extremely hospitable place to visit.

The people are nice, the food great, and the scenery simply breathtaking. It is not paradise – not yet. But the potential is there. The challenge for President John Momis and his new administration is in realising this potential.

Bougainville won autonomy from Port Moresby to run all of its affairs except defence and foreign affairs. The Autonomous Bougainville Government now has the tasks of rehabilitating the infrastructure, restoring access to basic services, and reviving trust of its people in their government.

None of these are easily achieved. And resources are limited. Some serious thinking has to be done in prioritising public expenditure. I lend a few thoughts.

Cocoa

Pre-conflict Bougainville was the largest producer of cocoa (and copra) in PNG. As the conflict intensified, the plantations were abandoned.

Farmers are back on their plantations now. Cocoa planting is expanding. I spent a day with James Rutana and his family on their recently acquired cocoa plantation in North Bougainville. This farm, while just six years old, is tangible evidence of Bougainville bouncing back.

The Rutanas provide hundred of jobs to people from the surrounding villages, and support many more indirectly. James is eager to share his knowledge with the community. He supplies seedlings to other growers, lends space on his farm for cocoa research, and hosts aspiring growers to let them learn the ropes of the trade.

Infrastructure

Considerable expense is likely to go to the restoration of roads and ports. The province is the domain of four wheel drives. I discovered, to my discomfort, that just a day long bone-jarring journey on the back of a Land Cruiser has its tolls on vehicle and passengers.

At least half a dozen wet-crossings are made on a four hour journey from Arawa to Buka. And wet crossings with pot-holes are the norm for road travel. Upgrading to all weather roads will require considerable effort and expense.

Most schools and healthcare centres that closed during the conflict are open. But more have to be built. The schools and aid posts require professional staff. The University of Papua New Guinea has an open campus in Buka, but will have to expand its courses further south onto the mainland.

Tourism has potential. World War II relics litter the landscape. A group of Japanese tourists arrived the day I departed. Tourism has the potential to become a significant source of export and employment.

Access to mobile telephony in Bougainville is exceptional, but air transportation the opposite. Air fares from Port Moresby to Buka are higher than from Canberra to Port Moresby. Seats on the flight to Buka have to be booked at least a week in advance. And incidentally, my suitcase is still to arrive on its return journey from Buka on Air Niugini.

Mining

Bougainville is already debating the recommencement of large scale mining. A number of residents told me that reopening the Panguna mine is only a matter of time. But small scale alluvial mining is booming. I visited one smelter; run from a steel shipping container with the most rudimentary equipment. This operation was smelting up to $86,000 of gold a week.

Mining is an attractive source of income for the people and the government, but considerable care would have to be taken in restarting the Panguna mine. A large mine will impact the whole economy. It will draw labour and capital from non-mining sectors of the economy. Cocoa, copra, and food production are all likely to fall as a consequence.

A large mine will create many skilled jobs, possibly more than the skilled population of Bougainville. This will put upward pressure on wages and to the inflow of workers from outside Bougainville.

Challenges for policymaking

President Momis and his administration are cognisant of the challenges. Policymakers are busy building infrastructure and restoring services. An entourage of 34 officials, led by the President, returned from China last month. The president entered seven memorandums of understandings on issues including, listed in the order of priority, commercial farming; mining; tourism; hydro-electric power; housing; shipping; and airlines.

Satish Chand is Professor of Finance at the University of New South Wales.