Cloudy test for ‘national interest’

 A NEW Papua New Guinea law which says that foreign share purchases must be in the

‘national interest’ has raised concerns in the international business community, writes ROWAN CALLICK

THE Papua New Guinea government has moved to limit the operations of foreign companies and individuals in its economy.

It amended the Takeovers Code to include a new, undefined “national interest” test that its Securities Commission must apply to the acquisition of any shares.

The new restriction says that the commission “shall issue an order preventing a party from acquiring any shares, whether partial or otherwise, under this code if the commission views that such acquisition or takeover is not in the national interest of PNG”.

In a note on the change, Norton Rose Fulbright lawyers Anthony Latimer, Steve Johns and Steven Moe warn that the new amendment “has the potential to discourage foreign investment in PNG companies and is likely to have a negative impact on the share price of such companies”.

MEDIA

Tevita Gonelevu, chief executive of Fiji Television, the owner of PNG’s national TV broadcaster, EMTV, said senior ministers had discussed the government’s intention of limiting the foreign ownership of media.

He said: “They would be enacting a law, something like the Fiji Media Decree, where (the media) would be majority owned by locals.”

This would affect every major mass media organisation in PNG, except for the government’s radio broadcaster, the National Broadcasting Corporation.

It would concern not only EMTV – until 2005 owned by the Packer company Publishing and Broadcasting –  but also the two daily newspapers, The National, owned by Malaysian conglomerate Rimbunan Hijau and the 44-year-old Post-Courier, 63% owned by News Corp (publisher of The Australian) and three FM radio stations owned by Fiji Communications.

PNG Chamber of Commerce and Industry president told The National the introduction of such a “national interest” test was not of itself necessarily  a problem. 

“The problem comes about because there is little guidance as to what factors would be taken into account in determining the national interest. 

“This has the potential to discourage foreign investment due to the uncertainty that it creates.” 

Leahy said the chamber was urging the Government to issue guidelines which would make it clear that this new rule will not interfere with economic efficiency by forcing people who want to sell their shares to keep them because of the new rules.

“Also, takeovers that creates jobs or provide an opportunity for  much-needed capital or technical skills to be made available should always be regarded as being in the national interest.”

BLOCK

The amendment has already been used to block one high-profile transaction.

The government has barred blue-chip Malaysian agribusiness Kulim from extending its stake in New Britain Palm Oil (NBPOL), PNG’s leading rural corporation, from 49% to 69%  for about A$250 million (K555 million).

PNG Trade, Commerce and Industry Minister Richard Maru claimed in announcing the block on Kulim that 90%  of the economy was controlled by foreigners. 

“As a responsible government we’re going to take some very drastic steps to create more opportunities for our own citizens to enjoy the wealth of our nation.”

He said the government would also “ask Kulim to sell down some of its shares to the respective provincial governments where the assets of NBPOL are located”. – The Australian