By PETER ESILA
THERE are still many non-compliant businesses operating in Papua New Guinea that need to be stopped by all stakeholders, a senior economist says.
Institute of National Affairs (INA) executive director Paul Barker said many businesses were still either unregistered or had failed to comply with their legal obligations, and avoided their tax, wages and other requirements as national or foreign businesses operating in PNG.
“This not only undermines revenue to the State, it also results in substandard and sometimes illegal produce being released on to the market, sometimes illegally imported via mafia-style cartels, or via log ships or even exclusive port facilities,” Barker said.
He added that although there was a demand for these businesses in terms of jobs and goods, they denied payment of the minimum wage, and provided unfair competition to those businesses which were paying proper wages, taxes, duties, land leases and other due charges.
“Some of these business get away with this by continuing to operate as informal sector entities, despite having turnovers that would define them as medium or even large enterprises.
“Others get away with it by working as a network, which procure goods exempt for taxes, and by paying off officials to turn a blind eye to their activities, or even engage officials in land deals or other corrupt practices.”
Barker said these illegal and unfair competition practices in the end undercut and squeezed out the legitimate businesses.
“Everyone loses out, or at least the State loses revenue, employees miss out on legitimate jobs, and legitimate businesses close down or move out of competing in these activities and perhaps disinvest entirely.”
Barker said the country needed to recognise and support genuine businesses and encourage legitimate domestic and foreign investment through fair and consistent rules and competitive fiscal conditions.
He said authorities needed to encourage larger informal enterprises to formalise by enabling an easy transition.
This would include extensive business and financial literacy training through state schools and colleges and also through non-governmental organisations (NGOs) and private educators.
He said the facilitation of mechanisms for customary landowners was important, especially those in peri-urban areas to engage them in business through customary land tenure conversion on incorporated land group (ILG) registered land.
Barker said the Government, through its various entities, needed to cooperate and coordinate to tackle the firms which were operating illegally. This would require transparent and often open online mechanisms to make it easier to expose abuse and harder for backdoor deals to be struck involving officials and other politically exposed persons.
He said the public also needed to be kept aware of the process and what to look out for regarding what was legitimate and what was not.
“The fact that some illegal trading is able to occur in very obvious places over many years, in central locations in the national capital, shows how easy it has been to conduct such illegal activities out of the main centres, where oversight is much weaker, and where these businesses may be powerful economic players,” he said.
By PETER ESILA