The Bank of China is on the brink of opening its first branch in the Pacific, with Papua New Guinea close to giving it the green light. PNG's Foreign Minister says he expects final approval to be granted late this year or early next year. Australia is watching the development closely with some analysts raising concerns about the strategic implications.
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00:00Look, it sounds like it's very close indeed.
00:05We understand that the licensing fee has now been paid.
00:08So all that has to happen now is the Bank of PNG, the Reserve Bank of that country,
00:12has to give the green light.
00:14Now exactly when that's likely to happen, we don't know.
00:18Justin Tuchenko, as you mentioned, the Foreign Minister of Papua New Guinea, is saying he
00:21hopes it can happen within the next couple of months before the end of this year.
00:25If not, he says, it could happen perhaps early next year.
00:29Now there's no absolute guarantee that the BPNG does give it the green light, but the
00:33broad expectation across the PNG political class is that this will happen, not least
00:39because the government has made it clear it's such a big priority.
00:42And PNG's government is really enthusiastic about this.
00:46They say that once the bank opens up a full branch, at the moment it's only got a representative
00:51office in Port Moresby, but when it opens up a full branch, it will open up all sorts
00:55of economic opportunities for the country, including making it easier for local businesses
01:00to trade in Chinese currency.
01:03They say that if they do that, then it will be easier for them to bring down the prices
01:07of everyday goods because they'll be able to purchase in bulk in Rwimimbi.
01:11All of this, they say, means it will be a huge economic boon for the country.
01:16Looking at the bigger geopolitical implications, Steve, why does it matter?
01:21Yeah, it matters for a couple of reasons.
01:24First, Australian analysts and officials are a little bit less rosy in their assessment
01:28of what this might mean.
01:30The first thing is that the Bank of China doesn't operate by the same rules that Western
01:35banks operate by, and in particular, there's a level of concern amongst analysts and officials
01:40about the strength of money laundering or anti-money laundering measures taken by the
01:46Bank of China, for example.
01:48The system is much more opaque, and so there's much less confidence amongst those people
01:53who look at these transactions closely that things like money laundering will be watched
01:58and monitored appropriately.
02:00On top of that, you've also got, perhaps by coincidence, a new casino, P&G's first opening,
02:06at least in theory, next year, the so-called Parga Hill development.
02:09Now, this is a massive, sprawling development that means not just a casino opening but also
02:14essentially a whole special economic zone with far looser customs and other restrictions,
02:20as well as hotels and a cruise ship berth.
02:23The concern amongst people who watch these things closely is that the combination of
02:27a country with relatively weak financial controls with a new bank that doesn't play by the same
02:33rules as Western banks and a casino could provide a hub for financial crime and other
02:39illicit activity, particularly money laundering.
02:42This has happened in other countries, including in Southeast Asia.
02:45The anxiety in places like Canberra is that a similar thing could happen in Port Moresby.
02:51Now, it's worth saying that P&G's government has fiercely denied that this is a risk, as
02:55have the Parga Hill developers.
02:57They say that the rules will be enforced.