Corruption a drawback for business

IN 2017, less than one-third of firms reported that they could ‘mostly’ or ‘always’ seek recourse when they had been requested to make irregular payments by public servants.
According to the World Bank PNG Economic Update Jan 2019, corruption places a considerable burden on the private sector.
“In 2015, over 30 per cent of large firms and about 17 per cent of small firms identified corruption as the single biggest obstacle to their business,” it said.
“In a separate 2014 survey, 37 per cent of formal sector SMEs identified it as a major obstacle.
“The 2018 INA (Institute of National Affairs) survey indicates that corruption remains a key constraint, with respondents ranking it the fourth most-important hindrance to business and investment.
“In 2017, 61 per cent of firms reported that they had been either ‘fairly’, ‘highly’, or ‘very highly’ affected by instances of Government corruption involving irregular payments to officials, up from 57 per cent of firms in 2012.
“However, making payments did not necessarily lead to positive outcomes.
“In 2017, only 40 per cent of firms that made ‘irregular payments’ reported that this led to public service delivery on a regular basis.”
“In 2012, only 30 per cent reported actual service delivery without further demands for payments.
“Businesses also have little recourse when Government officials demand irregular payments.
“In 2017, less than one-third of firms reported that they could ‘mostly’ or ‘always’ seek recourse when they had been requested to make irregular payments by public servants.”
The update said focused attention on several key areas could reduce the adverse impact of corrupt practices on businesses.
“Around 44 per cent of businesses reported experiencing unscrupulous practices by public servants in Government land administration,” it said.
“Other problem areas included finance, tax, and customs.
“Among SMEs, there is a perception that practices for the allocation of Government contracts are uncompetitive and opaque, manifesting in favoritism toward family members and wantoks.
“SME business owners report concerns about the diversion of public funds, with the belief that only a fraction of funds earmarked for public works is being spent as intended, exacerbating the infrastructure shortages that have hurt private sector prospects.”