Barker cautions Govt on SEZs

The National Business

By PETER ESILA
INSTITUTE of National Affairs (INA) executive director Paul Barker says economic zone projects should be used in a consistent and concerted manner.
Barker said this following the announcement by Prime Minister James Marape this week on the establishment of the Manus Special Economic Zone (MSEZ) project where companies would not pay corporate tax under MSEZ as an incentive to increase economic activities.
“In a few countries, including China, special economic zones have been used quite effectively to revitalise disadvantaged or run down areas.
“In most countries, they’ve been pretty ineffective, and just become a convenient way for businesses to avoid taxes, and in some cases existing businesses to just relocate, lowering tax revenue, but generating no extra economic activity,” Barker said. “It’s a fairly inappropriate vehicle for PNG which is a developing country, where much of the country is disadvantaged; so why would you choose Manus ahead of say Nomad (Western), or Menyamya (Morobe), Goilala (Central) or Simbai (Madang) or much of Milne Bay or Oro, for example?
“We’ve long had an arrangement for special benefits for remote and relatively deprived districts and provinces, which can provide opportunities for investors, lending and others, but this mechanism has not been used in a consistent or concerted manner.
“The selection should be determined on a more systematic basis census, HIES (household income and expenditure survey) results, rather than selecting an individual province on some political basis, even though it’s certainly true that Manus suffers from its relative remoteness, not from main hubs, access routes and markets.
“We also have mechanisms for equalisation through the work of the National Economic and Fiscal Commission, which can help address inter-provincial disparities, and in the past used also integrated rural development projects to assist disadvantaged provinces or districts,” he said.
Marape told Manus locals during the opening of the Momote Airport terminal in Manus on Monday that the Government would fund a K10 million MSEZ for the establishment of a head office.