Several programmes being pursued by the
Government which will have a major impact on Papua New Guinea’s
investment climate include the establishment of a stock exchange and a
By allowing increased access to capital,
skills and competition, benefits including lower prices and jobs should
accrue to consumers and the labour market.
The Government is also stepping up the
privatisation of its public corporations. This will create room for
private business to operate in key areas of the economy previously the
domain of State-owned enterprises.
Industrial Development Policies
An essential component of the Government’s
structural adjustment programme is the promotion of non-mining sectors of
the economy to ensure economic growth can be sustained after the depletion
of the mineral resources.
Government policies encourage the
development of Papua New Guinea’s non-mining sectors, including
manufacturing, renewable resources, agriculture and business services, to
promote economic self-sufficiency by the Year 2000.
The focus of these policies is on
industries and businesses where private sector investment is more likely
to contribute significantly to the Government’s desired objectives of
growth and employment.
The implementation of industrial
policies remains the responsibility of various statutory authorities which
were established for that purpose within the Ministry of Commerce and
Industry. They are the Investment Promotion Authority (IPA), the Small
Business Development Corporation (SBDC) and the Industrial Centres
Development Corporation (ICDC).
While macro-economic policy reforms are
prime objectives of the Government, micro-economic reforms are equally
crucial in facilitating the development of private enterprise. In that
context, the Government is committed to a privatisation policy that will
see Government involvement in commercial activities transferred to the
The establishment of a stock exchange
complements these initiatives. It will allow for greater opportunities for
businesses and individual investors, as new and existing investment
entities become listed on the exchange. Investors will benefit from a more
liquid and transparent capital market.
The liberal foreign exchange control
measures pursued by the Government will permit speedier remittances,
allowing investors to meet their overseas obligations on a more timely
basis. The principle of "what is due and payable is immediately
approved" will apply. Once given clearance by agencies such as the
taxation authority, the Internal Revenue Commission, investors can obtain
endorsement from the Foreign Exchange Controller to remit funds offshore.
The Government is also committed to the
provision of adequate physical infrastructure and a favourable taxation
regime. Papua New Guinea currently has one of the lowest rates of
corporate tax in the Asia Pacific region.
There are significant reforms underway
in the area of trade. Import bans and quotas are being replaced with low
tariff rates, consistent with World Trade Organisation requirements. Other
forms of protection afforded to locally-produced goods, such as price
controls, are also being removed. However, some price controls will
prevail in certain industries where a natural monopoly exists, such as
electric power, telecommunications and water. That protection may not be
expected to remain, however, when these monopolies are run by the private
Papua New Guinea ‘s three-tier
governing system comprises the national government, provincial and local
The Organic Law on Provincial
Governments and Local Level Governments passed by parliament in 1994
followed reforms aimed at enabling better cooperation of both national and
provincial politicians on development issues affecting provinces.
At the administrative level, the Law
provides for local participation and funding to district levels, enabling
local populations to be closely involved in developments affecting them,
leading to greater economic development at the district and village
The Organic Law on Provincial
Governments and Local Level Government does not affect any laws relating
to general business and investment.
Under the law, each province is headed
by a Governor who is also the Regional Member of Parliament for the
province. Each province also has a Chief Executive Officer.
The major economic sectors in Papua New
Papua New Guinea’s main imports are
sourced from Australia, Japan, the United States of America, Singapore,
New Zealand, the United Kingdom, China and Hong Kong.
The main destination of Papua New Guinea’s
exports are Australia, Japan, South Korea, China, Germany, the United
States of America, the United Kingdom and Singapore.
Papua New Guinea enjoys a surplus in its
trade account. Most exports are commodity based. The main thrust of the
Government’s economic development and industrial policies is aimed at
increasing the value and volume exports of value-added products.