Firm eyed to run, fund state investments

THE government has been urged to create a treasury corporation or a state-owned investment fund aimed at managing investment funds and lending to the state’s wholly-owned investment companies and state-owned enterprises (SOEs).
Managing director and chief executive of Petromin PNG Holdings Ltd Joshua Kalinoe said: “The state needs a fund manager and lender, something like a treasury corporation to lend to wholly-owned state investment companies like Petromin and those under Independent Public Business Corporation (IPBC).
 “We have to think outside of the box.
 “We cannot continue to rely on international financial institutions such as World Bank and Asian Development Bank to fund state investments in utility services and other commercial investments.
“Our continued reliance on international financial institutions will lead us to the dependency syndrome,” Kalinoe told economic policy students at the National Research Institute (NRI) recently.
He said there had never been any savings and investment funds put aside from dividend income from its commercial investments such as OK Tedi, Oil Search and Bank South Pacific.
Kalinoe attributed this to the absence of a clear dividend policy as the main reason why state-owned enterprises were finding it difficult to fund their activities.
 “To date, most of the state’s dividends from OK Tedi in particular have been all going to the consumption budget,” he said.
Kalinoe said whatever dividend policy the state chose, it must be aimed at growing the national economy.
He said under the hypothetical dividend model, 50% of any dividend declared could be put to national government’s consolidated revenue through Treasury for budgetary purpose; 40% for reinvestment by the respective state companies; and 10% for saving into long-term or sovereign wealth fund.
Kalinoe said an appropriate funding and dividend policy was required to facilitate a commercial environment for state investment companies and its SOEs to deliver on their mandates.
Kalinoe, an economist himself, told the students that a dividend policy based on the basic economic