SOEs’ freedom backed

Business, Normal

The National, Wednesday 5th June 2013


PAPUA New Guinea should encourage competition in its reform of state-owned enterprises (SOEs) and investments, former New Zealand minister for state enterprise Richard Prebble says.

He said the government must also allow SOEs to operate with some independence if it wanted efficient state businesses.

“SOEs must have a very clear mandate and must run as efficient businesses, suggesting that they run under the Company’s Act or a similar law.

Prebble is in the country on the invitation of Minister for Public Enterprises and State Investments Ben Micah.

He is working with the Asian Development Bank (ADB) to give some insights into state-owned enterprises reforms and experiences.

“State-owned enterprises should have a very clear mandate, must run as an efficient business as they cannot give dividends if the company is not solvent. 

“If Government cannot give money, then it must open up competition and give as much independence as possible.”

Prebble said it was extremely difficult to run SOEs given the political influences and political appointment of people running SOEs especially in PNG, where the government did not pay the bills owed to the SOEs.

Prebble had reformed the SOEs in New Zealand, which saw a non-profit-making state enterprises changed to being a NZ$100 billion portfolio.

According to an ADB report, state-owned enterprises have been established to address perceived market failures and promote economic development.

“When SOEs dominate the domestic markets such as power, telecommunications and water, they can drive up the costs of doing business for the private sector, while stretching the limited financial resources of the public sector,” the report says.

Prebble said PNG’s state entities were favourable compared with other countries’ SOEs.

“I am happy with the fact that the PNG Government participated in reforming the SOEs … PNG SOEs performed quite favourably than that of other countries.

“I am here to share my experiences with SOE reforms with the government and wider public to support the drive to restructure SOEs and improve their performance.”