Boosting business literacy skills and opening up access to markets are at the heart of a successful SMEs policy for PNG, two influential business leaders tell Business Advantage PNG.

The PNG Business Coalition for Women’s Lesieli Taviri

The O’Neill Government has announced its aim to have 500,000 small and medium sized businesses (SMEs) by 2030. In a parallel move, Trade and Industry Minister Richard Maru has indicated he is in favour of creating a Reserve List of businesses that could only be owned by PNG nationals.

But the Executive Director of the Business Council of PNG, Douveri Henao, says the challenges in the SME sector tend to be more basic.

‘The greatest need for SMEs is not access to capital or a Reserve List,’ he tells Business Advantage PNG. ‘The greatest need is as basic as business literacy.’

‘The best way to explain this is to look at how some of the country’s leading corporates have gone out of their way to ensure suppliers know how to manage their books,’ he observes.

Access to supply chain

The Chair of the PNG Business Coalition for Women, and General Manager of Origin Energy PNG, Lesieli Taviri, agrees that some of the crucial areas are business and financial literacy, and access to supply chains.

She adds that ‘making access to land, affordable leases, low interest finance, mentoring and government support’ are also important.

‘There are more programs now that support women-owned SMEs than ever before.’

‘A growing SME (sector) grows the private sector which grows a country. There is a clear business case. There are more programs now that support women-owned SMEs than ever before,’ she tells Business Advantage PNG.

The Business Council of PNG’s Douveri Henao

Henao says business is moving away from supporting SME growth ‘as a corporate social activity’ and focusing instead ‘on a business relationship’ between larger companies and SMEs.

‘For example, Trukai Industries is developing business relationships with local suppliers and, in doing so, is teaching them those business skills,’ he notes.

‘In the retail space, Mahesh Patel [at CPL Group] and others are looking at a larger agricultural footprint to source local supplies for their supermarkets.

‘I see this trend increasing in the coming years.’

Joint ventures

Henao says business people see joint ventures with overseas companies as the best way to increase the number and size of SMEs .

‘There is a temptation to look at this (Reserve List) as a protectionist measure, and that’s partly because there hasn’t been a lot of detailed discussion.’

He also regards e-commerce and the creation of ‘intermediary markets’—wholesalers who provide links between growers and sellers—as important parts of the SME sector structure.

Reserve list

Henao says the Business Council of PNG wants to see greater clarity about the nature of the proposed Reserve List of small businesses that Trade and Industry Richard Maru has been advocating for several years.

‘We have to thank Minister Maru for his passion on this issue,’ says Henao. ‘He’s opened up the door for companies and investors to think deeply about local content.

‘There is a temptation to look at this as a protectionist measure, and that’s partly because there hasn’t been a lot of detailed discussion about what this would look like in a business sense.

‘The approach we are taking to our discussions with the IPA and Minister Maru is (to ask): “Where exactly in the current SME space can a Reserve List function and why?”’

The government needs to ‘create the relevant framework and reforms.’

He doubts that the introduction of a list would result in ‘wholesale confusion and the withdrawal of businesses’.

‘I think a compromise will be identified as to what can work and what can’t work, but the last thing we need is a similar situation that which happened with the implementation of prudential rules in the financial sector.

‘The larger PNG entities could absorb these changes, but the smaller entities literally had to shut down because they couldn’t adhere to the new prudential rules.’

Government role

Taviri says the government needs to ‘create the relevant framework and reforms—through legislation, policy, regulation—to integrate SMEs into the larger supply chains’.

‘The public service machinery has to be effective to support this.’