Good but not good enough, PNG

Business

While things have improved slightly with the country’s ability to make doing business easier, Papua New Guinea is still ranked below the regional average within the East-Asia and Pacific region, says the INVESTMENT PROMOTION AUTHORITY.

PAPUA New Guinea is currently developing its arbitration legislation. Once implemented, this will improve its ranking and push PNG further up on the doing-business scale, according to the 2019 Ease of Doing Business Report.
The PNG Investment Promotion Authority (IPA), in its January Opportunity newsletter, said rules and laws that protected minority investors were measured in terms of strength and transparency of protection accorded, extent of conflict of interest regulation and extent of shareholder governance index.
“With recent reorganisation and amendment to enabling legislation, administered by Securities Commission of PNG, there will be positive improvement in the ranking once it is reported,” it said.
Papua New Guinea’s rating in the 2019 Ease of Doing Business Report has improved to 108 from 109.
This is due to reforms in the areas of starting a business, paying taxes, getting credit and getting electricity compared to 190 other countries.
Starting a business, getting credit, dealing with construction permits, getting electricity, registering property, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation were 11 areas in the life cycle of a business.
According to the World Bank’s 2019 Ease of Doing Business Report, the improved scoring is all largely due to reforms undertaken on online business registry and legislative amendments to business regulations, streamlined tax regime, personal property security registry (PPSR) and streamlining energy sector by allowing independent power producers (IPPs) to supply increased electricity coverage to consumers.
The IPA deployed and launched its Online Registry System (ORS) in 2013 for online business lodgment.
Amendments to the Companies Act and Business Names Act were made in 2015.
There is proof that online lodgment is more convenient and faster to register business in just one day.
The report also indicated that the improvement in getting credit indicator was the result of enactment of the Personal Property Security Act (2011) and launch of the Personal Property Security Registry (PPSR) that hosted the IPA online facility in May 2016. This reform has created avenues for SMEs to register their movable properties and encourages commercial banks to lend in a secured lending environment.
The report further revealed that there was also improved ranking to paying taxes and getting electricity.
That contributed to the overall improvement for PNG on Ease of Doing Business (EoDB) 2019, given the recent taxation reforms and implementation of electrical grid policies respectively.
However, the areas need that more attention and reform to improve PNG’s ranking on global EoDB scale include resolving insolvency and enforcing contracts, among others.
Despite making some progress in policy and regulatory space, PNG still remains below the regional average within the East Asia and the Pacific region.
By regional standard, PNG scored below the regional average with very low recovery rate and takes up to three years or more.
The cost of administering insolvency is very high.
The report states that in terms of registering property, it measures the steps, time and cost involved in registering property.
This is closely associated with land administration and property on the land which is transferable.
The Doing Business survey shows that quality of land administration is very low by regional and global best practice standards.
There are more time delays and high cost for each procedure.
Reforms on trading across borders indicator measures a number of documents, time it take to facilitate imports/exports, and the cost.
The report also indicates that the improvement in getting credit indicator was the result of the enactment of the Personal Property Security Act (2011) and the launch of the Personal Property Security Registry (PPSR) that hosted the IPA online facility in May 2016.
For enforcing contracts, it requires legislation and institutional arrangement to cater for arbitration process.
Current survey and assessment reveals that PNG is yet to accede to New York Convention on Arbitration.
It is understood that PNG is currently developing its Arbitration Legislation and once implemented, this will improve its ranking and push PNG further up on the doing business scale.
The rules and laws that protect minority investors are measured in terms of strength and transparency of the protection accorded, extend of conflict of interest regulation and extend of shareholder governance index.
With recent reorganisation and amendment to enabling legislation administered by Securities Commission of PNG, there will be positive improvement in the ranking once it is reported.
In terms of registering property, it measures the steps, time and cost involved in registering property.
This is closely associated with land administration and property (house) on the land which is transferable. The Doing Business survey shows that quality of land administration is very low by regional and global best practice standards.
There are more time delays and high costs for each procedure.
Reforms on trading across borders indicator measures a number of documents, time it take to facilitate imports/exports, and the cost.
The study outlined a number of reforms that PNG should implement to score a better rating, especially on single window concept.
Single window concept will allow for electronic filing and address issues of time delays and high cost of shipping.
Dealing with construction permits indicator measures the building quality control index, evaluating quality of building regulations, strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements.
Doing Business survey results show that PNG scored very low on quality control index and has too many procedures and takes up to 217 days to complete all procedures.
IPA is planning to host a regulators’ summit in 2019.
The intention of this proposed summit is to bring together all regulatory agencies to discuss and map out issues of doing business and provide policy recommendations for reforms.
Meanwhile, according to the latest World Bank annual ratings, PNG is currently ranked 108th among 190 economies in the ease of doing business.
The rank of PNG improved to 108 in 2019 from 109 in 2018.
Ease of doing business in PNG averaged 111.45 from 2008 until 2018, reaching an all-time high of 141 in 2014 and a record low of 95 in 2008.

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