Sale of assets a good move, economist says

 AN Australian economist says the PNG Government’s decision to sell off some of its state-own enterprises (SOEs) is a positive move.

Deloitte Access Economy partner Paul Liggins said privatisation of state assets would assist in further developing the country’s economy by building on the capacity of SOEs.

Prime Minister Peter O’Neill (pictured) announced in September last year that the Government would sell some of its stake in certain entities.

He said 49 per cent of Air Niugini would be sold to interested investors.

O’Neill said 50 per cent of PNG Power Ltd would be offloaded.

Liggins said PNG and Australia had similar issues concerning privatisation of state assets. 

“Obviously conditions are different in PNG and the SOEs are larger and much more important part of the economy here so I can see some of the motives in trying to build on the capacity in the assets that these institutions have to further develop the economy,” Liggins said.

“Selling them is definitely an option if they are going to remain in government hands and play a large role in the economy.

“It can be done but it’s a tricky thing to get right because we don’t want them crowding out by the investment, obviously that’s the key thing.

“Governments tend to be meddlesome and they will direct SOEs to do things here and there which a commercial business wouldn’t do.

Another economist Steven Smith from it’s urged the Government to be careful when privatising its assets.

“We’ve seen a lot of privatisation, particularly in the infrastructure sector in Australia,” he said. 

“Global asset prices are quite high at the moment and state governments in Australia have received record profits for assets they’ve sold in the last 24 months. 

“If state-owned enterprises are going to be privatised the same company important to get the timing right,” Smith said.