|
Business |
Resources alone won’t spur devt: ADB
expert
Says PNG needs
effective governance to promote private sector
By BAEAU TAI
PAPUA New Guinea’s “huge” resource potential alone cannot push the
economy forward, Paul Holden, business specialist and director at
the Asian Development Bank, said last Friday.
Mr Holden said “effective governance” to promote private sector
development is what was needed to drive the economy forward.
“Sadly resources are not enough,” he said. “The central component
of a country’s business environment is stability – both in terms
of personal safety and the absence of crime, as well as the
stability of Government.”
Mr Holden was speaking at a Port Moresby Chamber of Commerce and
Industry business breakfast at the Holiday Inn.
He spoke about private sector development in PNG and the
fundamentals of a good business environment.
“In my view, foreign investors would like political stability and
governments that complete their full term.”
He referred to a draft report produced by ADB on “PNG: Private
Sector Assessment” that highlights effective governance which
promotes private sector development.
He suggested three items to promote private sector development
through effective governance:
1) Implementing stable policies with sufficient credible
commitment to assure private investors that policy will not
undergo sudden reversal or that government interference in
markets;
2) Contracts will not unexpectedly change; and
3) That rules governing business will be transparently
implemented.
Mr Holden said the Government was also faced with three challenges
with respect to dealing with business:
*The central problem of governance, particularly in countries with
a history of state interference and policy instability, is how to
bind future governments to current commitments;
*The second challenge is how to encourage the delivery of high
quality public goods while eschewing the production of private
goods through the public sector; and
*The third challenge is how to improve the Government’s technical
and administrative capacity in such areas as:
*The administrative
aspect of fiscal, the budgetary and monetary programmes;
*The regulatory bureaucracy – to administer the laws that deal
with market failures, and
*The technical bureaucracy – to administer the legal framework in
such areas as registries, licensing and financial regulation;
*The judiciary – to effectively adjudicate disputes between
private parties and with the Government.
“We need a joint vision and the challenge for the business sector
is to figure that out.
“There is a lot of resources available … any reform is going
beyond removing business impediments,” he said.
Mr Holden said so far, the PNG economy had improved “and there is
enormous change with political stability”.
However, he warned that when there was large resource potential
with the Government having big control, it results in “resource
curse”.
“Corruption thrives in an environment where rules are unclear and
where the application is arbitrary,” Mr Holden said.
 
|
