FX still an issue, says council

By DALE LUMA
THERE is still an inability for businesses to repatriate capital and dividends due to foreign exchange (FX) issues, according to the PNG Manufacturers Council.
Responding to questions from The National, chief executive officer Chey Scovell said this was problematic and a deterrent for investment.
Scovell, however, said in the last few weeks, there had been a slight easing for payment of goods.
“There has been a small improvement in the availability of foreign exchange for the payment of goods and services,” he said.
“But there still isn’t enough forex for anybody to repatriate any capital.
“That’s one of the major things that’s hurting investor confidence.
“That’s just a give and take, you want people to bring in money into the country and when they build their factories or they build their business, they have to be able to repay their finances and their shareholders.
“All of these shortages (FX) is locking capital and earnings in the country.”
Scovell said the FX shortage issue had been the case since June 2014 since the central bank came into the market.
PNG Stock Exchange (PNGX) chairman David Lawrence previously told The National that the impact on investment in the market from FX restrictions was to discourage foreign investment into PNGX listed companies.
“The reason is liquidity.
“Investors want to be able to sell their shares and receive their funds quickly,” he said.
“While they may be able to sell their shares on PNGX, the risk of delay in receiving their funds because of FX constraints means they don’t invest at all.
“So the issue acts as a barrier to incoming investment.
“We know there are investors who would invest more in PNGX companies if it were not for this risk.
“We have seen foreign investors leaving the PNG market for this reason.”