Law review a concern for sector that helps prop up economy

The mining and petroleum resource industry contributed over 25 per cent of Papua New Guinea’s gross domestic product as of last September, according to the PNG Chamber of Mines and Petroleum.
The chamber said the industry made up around 80 per cent of the nation’s export revenue valued at K23 billion for the same period.
“The resources industry has underpinned the PNG economy for decades, providing considerable social and economic benefits that have flowed to the Government and the people of PNG,” said chamber president Gerea Aopi.
“It continues to be a key contributor to PNG’s development goals, investing millions of kina in community development in sectors such as health and education, infrastructure including roads and airstrips, employment and training, and agriculture and livelihood programmes.”
Aopi said stable Government policies and a favourable investment climate were critical for future growth in the resource sector.
He said proposed changes to the Mining Act would undermine PNG’s investment attractiveness.
“While we support the PNG Government’s prerogative to update legislation to meet the challenges of the 22st century, some of the amendments would pose significant deterrents for investment in future mining projects and would be a serious impediment to the operation of current mines in PNG,” Aopi said.
“When investors assess the investment risk and return potential of a country, they look at the legislative and policy framework as well as the total cost of doing business, including the levels of existing infrastructure to support a project.
“This calculation includes mining legislation, as well as taxation, fiscal and other policies.
“Considering this whole package, PNG has a high total government ‘take’ when compared to other countries.
“Independent modelling has shown that whilst PNG royalties in isolation might not be as high as other jurisdictions, the total take when including all taxes – including royalties, corporate tax, state equity and dividend withholding tax – is at the higher end of most countries.
“This is combined with a very low score on the World Bank’s Ease of Doing Business scale.”
The chamber continues to encourage the Government to undertake an independent review of the amendments, as envisaged in the 100-Day Plan, to ensure full understanding of the economic implications of the revised act on the economy of PNG.
The chamber believes there is huge potential for further development opportunities in the mining and petroleum sectors in the next three to five years, delivering benefits to the people of PNG, but these will not proceed unless investors are confident of the legal, fiscal and regulatory environment in PNG.
“The chamber is committed to supporting internationally-competitive legislation that ensures modern regulation of the industry, whilst encouraging and maintaining investment,” Aopi said.
“We want to work with the Government to achieve a legislative framework that will not only meet the needs of PNG, but will also continue to encourage active investment in the sector.”