Profile and Development Policies
The Papua New Guinea Government's development
objective is to provide an environment which
is conducive to community and private sector
growth and development, improved delivery
of public services, growing opportunities
for increased rural production and improved
access to services and opportunities.
The Government has taken an integrated
approach to the implementation of social,
institutional and economic policies.
The Government realizes the importance
of policies which are specifically aimed
at improving the country's competitiveness
and profitability. The aim is to create
an investment environment which encourages
The relevant Government policies with a
major impact on the private sector and which
affect investor confidence include:
A fiscal policy designed to broaden the
tax base with expenditure directed to strengthening
Maintaining public assets;
Reducing law and order problems;
Improving health and education standards;
An attractive taxation regime and low or
zero tariffs on many business inputs;
Tariff policy reform with the replacement
of quantitative restrictions by tariffs;
A progressive removal of price controls
on domestically traded goods;
A market orientated approach to monetary
policy with a non- intervention stance which
allows for appropriate private sector credit
growth and pursues internationally competitive
Further liberalization of exchange control
regulations to facilitate capital flows
and the achievement of a less regulated
investment regime; and,
A labour policy allowing for continued
deregulation of the labour market and flexibility
in the wage setting process.
Several programs are 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 securities market.
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
privatization 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 program 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 privatization policy that will see
Government involvement in commercial activities
transferred to the private sector.
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 favorable 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 Organization
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 sector.
Papua New Guinea's three-tier governing
system comprises the national government,
provincial and local level governments.
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
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 levels.
The Organic Law on Provincial Governments
and Local Level Government does not affect
any laws relating to general business and
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
Minerals and Petroleum
Retail and Wholesale
Building and Construction
Transport and Telecommunications
Finance and Business
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.