Empower MSMES

The National Letters

IT is essential to understand the economic forces at play in these tumultuous times.
Papua New Guinea has slowly evolved from a traditional economy where subsistence farming and barter system were central to the small scale economy involving individuals, tribes and clans.
However, colonisation brought with it a different value system which exposed our secluded mini tribal economies to globalisation.
The democratic and capitalistic ideas of a free market economy, where competition was an important force, quickly spread throughout our societies destabilising the already existing rural micro-economic system.
Today we see giant corporations with vast business experiences flexing their monopolistic muscles to outplay the micro, small and medium enterprises (MSME).
In PNG, the small and medium enterprises (SME) fall under three broad categories.
A micro enterprise is recognised as any company with less than five employees with an annual sales turnover and an asset value of K200,000.
A small enterprise comprises of 5-20 employees.
It should have an annual sales turnover and an asset value of between K2-K5million.
Medium enterprises employ 20-100 employees with an annual sales turnover and an asset value of between K5-K10million.
The SME master plan 2016-2030 provided a blueprint to rescue the struggling MSMEs with the aim to;

  • GROW SMEs from 49,500 to 500,000;
  • GROW formal employment up to two million;
  • INCREASE citizen control over the formal economy from 10 per cent to 70 per cent; and,
  • INCREASE MSME contribution from 10 per cent to 50 per cent.

The overreaching target was to get these goals realised by 2030, that’s 10 years from now.
Sadly, the plan has been a sitting duck because the government failed to implement strategies to empower entrepreneurial development, create legislation to strengthen MSMEs and establish policies to stimulate local companies.
The re-introduction of the IPA Amendment Act (yet to be tabled in Parliament) and the creation of a Foreign Investment Review Authority, suggested by MP Richard Maru, will definitely set the parameters to protect our MSME from the international conglomerates who are taking over the opportunities of the local companies.
Enshrined in our constitution were the national goals and directive principles (NBDP) that provided a compass for the young PNG economy.
The NGDP echoed the wishes of our founding fathers’ who envisioned an economy where there was equality and local participation.
The Government should intervene now to create an equal playing field for the MSMEs in Papua New Guinea.

Jethro Kasse,
LLB 4, UPNG, 2020