As the government seeks to start disbursing the funds raised by its COVID-19 bond, the presidents of Papua New Guinea’s two largest business chambers tell Business Advantage PNG they are looking for a stimulus package ‘with teeth’.

A meeting last week in Port Moresby between business and government. Credit: POMCCI

Rio Fiocco, President of the Port Moresby Chamber of Commerce, knows that business is hurting in PNG at the moment.

‘As a general rule, you are seeing sales go down by about 30 per cent across the board for the average type of business here,’ he tells Business Advantage PNG. ‘There are some exceptions: retail, supermarkets, their sales are actually up slightly but then again they have had an increase in costs because most of them have had to provide pick-ups for their staff because buses are not running.

‘Some businesses, like restaurants, have seen their sales decimated. Hotels have shed roughly 80 per cent of their staff and some have closed. The tourism and hospitality sector has been decimated, the airlines have been brought to their knees.’

‘The first thing you can do to help businesses is to pay these long outstanding debts. Many of our members have still not been paid for goods and services provided to APEC.’

To help business recover, Fiocco has penned a letter to PNG’s Treasurer, Ian Ling-Stuckey, with a list of 11 ways the government can help small business, ahead of the much-anticipated stimulus announcement due this week.

The first and most detailed point is the payment of long overdue government debts, an issue affecting businesses not just in Port Moresby but elsewhere.

POMCCI’s Rio Fiocco

‘Some of these debts go back many years,’ Fiocco says. ‘The first thing you can do to help businesses is to pay these long outstanding debts. Many of our members have still not been paid for goods and services provided to APEC.’

The letter goes on to request more efficiency in the public service, assistance for the ailing tourism and hospitality sector and capital market reforms. He also called for an overhaul of the PNG tax system.

‘PNG should look to adopt the tax systems in place in New Zealand, which has the smallest population in the APEC economies,’ he said. Fiocco added that New Zealand also had a heavy reliance on agriculture and they could increase the GST to 14 per cent while removing stamp duty and capital gains tax.

He said that the illegal sector needs more enforcement and that investors need more confidence in PNG after the string of issues in the resources sector.

‘Hopefully, they can work through these issues. I don’t expect it in the Supplementary Budget, but put them in the end-of-year Budget,’ he said.

The view from Morobe

Lae Port.

John Byrne of the Lae Chamber of Commerce and Industry broadly supports Fiocco’s calls for tax reform but makes it clear that it will not be a quick fix.

‘If we are trying to get a short-term or medium-term fix then a tax overhaul is going to take forever to get underway,’ Byrne says.

‘But we should be looking at how to make the tax regime fairer across the board, which needs to be done because a core of business are paying most of the tax.’

‘In terms of the stimulus package for the government I would like to see it turned into big projects.’

When it comes to the stimulus package, Byrne says that while there is a need to jumpstart the economy quickly, he would like to see a longer vision too.

‘I would like to see a stimulus package that has teeth,’ he says. ‘I am a proponent for a long-term stimulus package. In Lae and Morobe, we have just set up a food security program where anybody who is now unemployed will be offered a spot in a volunteer program, like work for the dole [in Australia].

‘You will do projects around town – funded through DFAT. So in terms of the stimulus package for the government I would like to see it turned into big projects.’

Byrne says that a stimulus package that focussed on infrastructure could help maintain roads as well as capture some of the workers in the informal economy.

POMCCI’s eleven measures to support business

The Port Moresby Chamber of Commerce and Industry is asking the PNG Government to consider the following measures to support struggling businesses.

1. Payment of long overdue government debts

2. Payment for Port Moresby’s Closed Circuit TV security (CCTV) monitoring system, which is currently not operational

3. Make tax system fairer by reducing corporate tax rates and improving tax compliance

4. Increasing goods and services tax

5. Clamping down on illicit trading

6. Improve efficiency in the public service

7. Providing land rental relief

8. Providing land tax relief

9. Providing support for the tourism and hospitality sector

10. Reforming PNG’s capital markets and Securities Commission to encourage companies to list on PNGX

11. Reassure investors that PNG is still an attractive place to invest