O’Neill: Many success stories

Prime Minister Peter O’Neill, in recognising the various challenges and opportunities his tenure will undergo in the next five years, discussed his thoughts and priorities with the Business Council of PNG President David Toua during the Prime Minister’s breakfast event last week. Below are excerpts from their discussion.

TOUA: We have heard from some of our large industry players like ExxonMobil, Oil Search Limited and Digicel, about their business partnership with the government on the delivery of some of those social development outcomes in terms of service delivery. Is that a focus for you in terms of the partnership?
O’NEILL: There are many success stories of the government and private sector partnering in delivering basic services like health and education in the country. We are very much open to that and are happy to sit down with companies, especially in the areas that they operate in. They have an obligation to work with the community as well. So if they are better suited in delivering some of these services better than the government, we are happy to partner them in those areas. For example, Oil Search Limited were not tasked to run a hospital but they volunteered to run the Tari Hospital for us. That is a great success story. So the success is the level of service that is accessed by thousands of people in one province alone. It has made a huge difference in how we deliver health care for the province. Similarly, we operate with the other companies like Ok Tedi, Hidden Valley and a few others that are supporting the communities where they operating, in delivering education and health training programmes. We do that with churches as well.

TOUA: SMEs provide opportunities for 85 per cent of the population in these certainly interesting times. Are there specific areas of focus for your government in the SME sector?
O’NEILL: We launched the SME policy almost 12 months ago. We recently launched our trade policy aimed at giving opportunities for small to medium enterprises across the country. One area that we are focusing on now is making sure that we get the National Development Bank to fully function as a retail bank. It can go out to rural communities and provide the people the opportunity to borrow money at low interest rates to start their businesses. There is one big success that many Papua New Guineans probably are not aware of. Government has put K200 million in BSP for the home-ownership scheme. Many first-home buyers have been borrowing up to K400,000 at 4 per cent for 40 years. This is really giving Papua New Guineans the opportunity to own homes. Another of our great success stories was the Stret Pasin Stoa Scheme where a husband and a wife team if they wanted to go into business will start the store programme. Somehow, we lost our way in the mid-80s and 90s and the system sort of stopped. We are trying to revive those. It does not necessarily have to be a store. They can get into any business they want and we are supporting them with low cost financing and better management support system.

TOUA: The Stret Pasin Store scheme was very successful for some but not so successful for plenty. Why has it failed for many?
O’NEILL: The Stret Pasin Store scheme is about discipline. If the husband and wife team were able to commit themselves, they were able to run the stores quiet well.  A similar scheme that we called a National Plantation Management Agency use to be managed by the agriculture bank. It managed smallholder coffee and cocoa and copra producers and ran very successfully across the country. And again, these are successes that we can build on. Recently our government approved the establishment of the National Plantations Management Agency again which will now be supported further with resources and trying to restart that across different agricultural crops. Because when you go up to for instance up in the Highlands, large scale plantations farm say coffee is not viable because of landowner issues. So we have to be innovative. We have to get the landowners involved, engage more block owners successfully managed by each family rather than having a large scale coffee plantations that are always been facing land ownership issues that lead to the demarche.

TOUA: In terms of the cost of doing business in the country, one of its alleviation is cheaper, reliable connectivity, internet etc. Any short-term plans to address that?
O’NEILL: The business community already knows that we have been trying to merge PNG DataCo, bmobile-Vodafone and Telikom so they can use the infrastructures they have in a more cost-effective manner. Right now, the three businesses are adding cost after cost to the customer and were not able to deliver a much cheaper service. So part of the exercise is to invest in infrastructure, particularly sea-cabling between Sydney and Port Moresby and the second line that is going towards Guam and Madang. I understand from the people in Telikom that they have done the connectivity up to the Highlands through the PNG Power lines. That infrastructure when completed can provide much cheaper broadband services there. Of course we should make use of the capacity around the LNG cabling which is between Port Moresby and Hides. When you put bmobile-Vodafone and Telikom infrastructures together, you are able to compete fairly with Digicel, What we want is to have competition in the market. Not necessarily replacing a public monopoly with a private monopoly.
That’s not going to do any good for our economy.
TOUA: There has been a lot of talk about the cost of power and the very low level of provision to our citizens. Are we doing something to provide power to more people and are we doing something about the cost of it?
O’NEILL:  This sector has been of the most concern to us in government because the level of attention that has been displayed by PNG Power is certainly something that we are not happy about. Despite the numerous changes to the board and the management, we are just not seeing the attention to some of the problems out there. So our aim has been to bring in the private sector into this, especially in the supplying of power. A few proposals are before PNG Power to approve especially on power purchase agreements. I’ll give you a good example – the power generation given to us today by ExxonMobil in the LLG project. If I had left it to PNG Power to do it, we will never have a reliable power supply in Port Moresby. But the second phase is not moving fast enough. There is a proposal to supply an additional 15 megawatts to Port Moresby.

TOUA: A study by the World Bank, which ranked about 119 countries and 119 capital cities in terms of the efficiency in opening up small businesses, Port Moresby was ranked 112 in the world in terms of being able to open up small businesses, in terms of right-sizing the public service, introducing more efficiency to compliment the activity in business. Do you have any comment?
O’NEILL: On average every year, the cost to maintaining a public service structure is about K300 million. If I had this kind of savings, just imagine how many schools I can build. So if you look at it over a five-year term, that’s almost K1.5 billion. So for us as the government, we have also not pleased with that. We want to address, we want to streamline and make sure that there are cost-cutting measures put in place immediately. We’ve been talking about it for quite a while now and quite frankly, I am disappointed that it has not been addressed as well as we’d like it to be. We want the government to run as an efficient partner in delivery of services rather than becoming a bottle-neck which just builds frustration for everyone. Not only the business leaders and business communities, but also people are frustrated when they don’t get their work permits on a timely basis because somebody is sitting on their work permit somewhere in Sydney for a month or two at huge costs in doing business to try and employ them in PNG. So we are looking at creating an immigration and international border ministry to streamline some of those issues. When you get a working visa in PNG, you do not necessarily get a work permit also.

TOUA: In terms of broadening the tax base in catching some of the money that’s not being paid, how do you intend to do that?
O’NEILL: I am sure everyone will agree with me that there is a certain section of our business community who are certainly operating outside the tax regime of our country. They are not making some of the sales they have on a regular basis. Those are the on-the-spot audits that we will be doing. I know that will cause frustration among some of the members but certainly it is to try and share the burden. If they are going to use the roads that we are building to conduct businesses, they have to pay a fair share to the country so that we can all maintain those services. We are all aware of what is happening in the industry and we certainly will do more inspections on particularly fisheries and forestry. We have seen a large number of catches and we need to know what sort of revenues we are missing out. The inspection and border security will lift the level of surveys in the open sea. We are missing out on revenue that the country should receive. We are not talking about K10 million but K100 million missed by locals