Post PNG struggling to stay state-owned

 THE National Government has had to step in with a K40 million bail-out of one the country’s most iconic state-run enterprises, Post PNG. 

Why? Because according to Public Enterprise and State Investment Minister Ben Micah, the national postal service has been a “struggling entity” for a long time. The fact that a widely-used service such as this is in a state of decline raises questions about its management and the lack of government support over the years. 

Why is it only now that the state feels compelled to inject a significant amount of cash to prop up the postal system? Micah’s comments in relation to the intervention were both candid but indicative of the deterioration that has been allowed to take place. “This organisation was on the verge of bankruptcy. It was put into receivership. Very soon we will have it sold off or privatised,” Micah, a former staffer to Prime Minister Sir Julius Chan, said. 

But the funding does come with a string attached. Post PNG are to use the money from the state to “creatively trade itself out of a situation of difficulty and take advantage of other opportunities”. 

What does this mean exactly? To the layman, if that means improving its service then that would be a step in the right direction. But how do they go about being competitive in market where the majority of consumers are the average people on the street? 

Mail service (letters and letter boxes) and money transfer (Salim Moni Kwik) services for the public seems to be the only area Post PNG has the high ground on the competition but nowadays, especially over the last decade, with the advent of mobile phone communication, one can argue that the volume of mail will have fallen appreciably (people do not feel the need to write personal letters if they can text or send emails). 

Big business it seems has, for the most part, by-passed using the public postal system to move packages and cargo. With that revenue-earning sector of the market cornered Post PNG has been dying a slow but natural death. The reliable, no-fuss delivery of various freight including parcels and packages is where the money is to be made however instances of tampering in transit, damage to goods and time delays have eroded the public’s confidence in the national postal service. 

That niche has now been taken over by the private sector. Freight forwarding and logistical services have gone the down the road of private firms, some of which are huge international companies. Names like DHL and FedEx have entered the PNG market and this could be one of the contributing factors to the reduction in business for Post PNG. 

Other locally-owned companies are competing for the customers’ kina and this surely has placed an institution that once had what was a monopoly on the service to be in a backs-to-the-wall situation. Privatisation is inevitability for Post PNG. If this state-owned enterprise cannot cope in a semi-privatised state then it will go the way of another national icon, the PNG Banking Corporation. Micah expressed the government’s optimism on the company but along with the goodwill came a caveat. 

“It (K40m) can position the company to strengthen its trading position, enhance its balance sheet and be able to successfully venture into other businesses,” he said. It appears from the amount of assistance and the comments attached that Post PNG has been given the told indirectly to sink or swim. 

It will be interesting to see over the course of the next five to 10 years whether the company can pull itself out of the quagmire and be a trusted service provider or succumb to the realities of life in a competitive market.  

Post PNG chairman Reuben Aila said that the company would use the K40m to restructure the organisation. He said radical changes would be introduced and relationships with banks and other financial institutions would be sought so that the company could become a leader in the field again. 

After all the declarations, the bottom line is, Post PNG has been given a free – but no doubt desperately-needed – boost by the state, and it is now on Aila and his team to walk the walk.