Despite its abundance of oil, minerals and renewable resources, Papua New Guinea is considered one of the more challenging frontier markets to invest and operate in due to its climate of social and political upheaval. But this has not scared off international interest, which has only grown in recent years, including within the legal sector. International firms are beginning to set up footholds in the island nation’s capital, and they see a bright future ahead.

As the host the 2018 APEC Summit this month, all eyes will be on Papua New Guinea, but that is not the only reason the island nation has gained international attention of late. Australia, China, and the U.S. have locked horns over PNG’s sought-after telecommunication infrastructure contract, and mining and energy projects continue to beckon interest and financial investment from around the globe. The island country, located in the Southwestern Pacific Ocean, has also cautiously played the political game, forging diplomatic relations around the region, while developing its debt markets and setting the scene for future growth.

The market’s maturing also means more work for the increasingly visible legal sector. In the past few years, international law firms started to proliferate in the capital Port Moresby (population 400,000). In 2016, Norton Rose Fulbright opened an office there and the following year, Australia’s Corrs Chambers Westgarth followed suit. In September this year, Ashurst moved to new premises in Port Moresby. And Australia’s Allens, which is an independent partnership working in alliance with Linklaters, remains a key player.

TIGHTKNIT COMMUNITY

Sarah Kuman, a partner at Allens’ PNG office, says operating in a small market with a tightknit community has its advantages – especially for those who are personally invested in the country. Running across clients at corporate breakfasts, shops and “in the departure lounge at the airport” is a regular occurrence in PNG.

“On-the-ground knowledge of government processes can be incredibly useful for companies who perhaps, might be entering the market for the first time from very different economies,” she explains.

But working in a smaller market can be double-edged sword. “The first, most obvious challenge, in dealing with international clients is that many government processes are not fully automated (including payment methods) and sometimes, foreign clients can find this difficult to comprehend that for example, we still keep a manual land titles register,” Kuman says, adding that this can cause delays and explaining delays and searchability can be “difficult to explain to clients who may be used to searching online or at least using a digitised register.”

‘LUMPY’ WORK

Richard Flynn, head of Ashurst’s Port Moresby office, says that the PNG commercial market is growing rapidly from a small base. “Work can be ‘lumpy,’ where we are sometimes running very large matters that stretch our local resources,” he says. “We are investing a lot of time in training our local legal resource of lawyers from the University of Papua New Guinea and the Legal Training Institute. We have recently moved office and have invested heavily in our onshore IT capability because cloud applications are of limited use at present.”

Understanding nuances and investing in PNG highlights the importance of establishing a physical presence in PNG says Vaughan Mills, who heads Corrs’ Port Moresby office. Apart from having a visible presence at a time where PNG is attracting global interest in its current major oil, gas and mining projects, an office in the country sends a message the firm is committed to the market and to PNG itself, says Mills. He adds: “It enhances our credibility and shows we are investing in the country and not just simply profit taking.”

Flynn agrees. “PNG does not have great communications, so it is critical to be on the ground and able to call locally or visit other parties or regulatory officials,” he says. “On the social front, it is a challenging environment for our people in Port Moresby which has transport, accommodation and crime issues like any other developing city. Though our local presence and investment we can manage these issues in a responsible way and develop our Papua New Guinea people. This is obviously the responsible and sustainable way ahead.”

To contact the editorial team, please email ALBEditor@thomsonreuters.com.