Informal businesses need policy

By CLARISSA MOI
POLICY intervention is needed for informal businesses to become small to medium enterprises (SMEs), according to the PNG National Research Institute (NRI).
According to its recent study, intervention must be focused on developing strategies that demonstrate promising signs of innovation and diversifying their businesses.
Innovation in this study referred to new ways of conducting common economic activities or engaging in completely new, unique or out of the ordinary economic activities, processes of production, technology or skills.
Lead author Dr Elizabeth Kopel said innovation and diversification of businesses could also create additional spin-off benefits to provide training and create employment for local communities.
She said the growth and expansion of innovative enterprises was constrained by financial, technical and other resources.
Dr Kopel said enterprises needed to be supported with appropriate financial, technical and other resources to grow and transition.
She noted that the study was conducted in three provinces: Central, National Capital District and Eastern Highlands due to time and resource limitations and it investigated innovation of informal economic activities.
Dr Kopel said the research was based on enterprises that were not registered with the Investment Promotion Authority and covered legal activities.
It showed that the informal economy was huge but had a narrow base and lacked diversity and innovation limiting its potential to grow.
According to the national informal economy policy 2011-2015, lack of growth and diversity was a key issue affecting the informal economy.