Trade, Commerce and Industry Minister Richard Maru says he is compiling a list of businesses that may only be owned and operated by PNG nationals. While Maru has given no timeline for the reintroduction of the Reserve List, he says existing businesses will be bought out at current value.
Trade Minister, Richard Maru
The move towards the reinstatement of the Reserve List began in 2014, when Parliament passed the Small and Medium Enterprise Corporation Act.
At the time, Maru said the list would be comprehensive, and include businesses such as service stations and franchises. He added that ‘90 per cent of businesses are owned by foreigners’.
It is not yet known how this list will be implemented.
SME plan
The Reserve List is part of the government’s plan to create 500,000 SMEs by 2030. The hope is to create two million more jobs. Papua New Guineans currently own 10 per cent of SMEs operating in the country. The intention is to lift that level to 70 per cent.
According to Maru, businesses that have turnover of higher than K10 million will not be included on the Reserve List.
‘We want foreign companies who have the expertise and capital to come in and invest in priority sectors, like agriculture and tourism, which require a lot of money,’ he told EMTV.
But small businesses currently owned by foreigners, he said, would have to be purchased ‘at current rates of value.’
‘We want to do it in a civil and mature manner,’ Maru commented, adding that he hoped these small businesses would develop into larger businesses over time.
Precedent
The creation of a Reserve List is not new. The 1992 Investment Promotion Act (IPA) contains the Cottage Business Activities List (now in abeyance).
It includes activities such as growing vegetables with an annual income of less than K50,000, bilum making, hunting crocodiles, gathering wild-growing forest materials, such as balata and other rubber-like gums or cork, and coastal fishing.
Under PNG’s Mining Act, alluvial mining is also already reserved for businesses with majority PNG ownership.
National Development Bank
The National Development Bank’s Moses Liu
The fresh attempt to encourage local participation in small businesses will be led by the National Development Bank.
‘I agree that there should be “reserved businesses” that only PNG people can run, where they are able to develop skills to manage these businesses,’ the bank’s Managing Director, Moses Liu, told Business Advantage PNG.
‘The NDB (previously Agriculture Bank) had successfully operated the Stret Pasin retail chain of businesses in the 80s and 90s, where managers were trained to operate retail shops and, if found competent, were given loans to purchase the retail shops,’ he said.
‘We have now expanded this business model to include other businesses such as bakeries, motels, specialty shops and others.
‘This is being facilitated under the Business Incubation Scheme that is already operating to train, coach and support PNG people to run various types of businesses with good financial and management skills.’
Scepticism
However, the Chief Executive of the Port Moresby Chamber of Commerce and Industry, David Conn, is sceptical about the viability of a Reserve List.
‘We relaxed the rules on reserved activities and saw 12 years of sustained growth in the economy,’ he told Business Advantage PNG.
‘Like it or not, many of these “foreign” businesses have moved into very remote areas, provided quality, well-priced goods and services and added to financial inclusion with the thousands of EFTPOS machines operating in even the remotest corners of PNG.’
Conn says a similar program that is operating in Malaysia ‘was not the panacea to grow the country the government wished for.’
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Full support. Our people deserve the best chance to grow.
To David Conn. We don’t live in the colonial silenced era anymore. We want to run our country our way and give more chances to our people to grow. Were tired of being spectators in our own land.
What if it is a business that was started by someone who is PNG born but who got their Australian Citizenship because her husband was Australian. Despite that her husband dedicated 50yrs of his life to the PNG Economy and assisting the Villages and surrounding communities. They set up a successful business – still going strong after 37 years of establishment and despite the fact that her citizenship makes the business foreign owned she is one of PNG’s first born and bred successful business woman who has fought long and hard for recognition as a PNG Woman in her Country to own and run her own business yet she gets a lot of grief from – people claiming to be from the LLG.
Is this how we treat the leading Business Women in PNG who have worked hard and long against all odds to establish a business that contributes a great deal to the people in its community and to the PNG Economy.
These are my parents and their legacy will still live with me and just because I was not born in PNG does it make it alright for government or anyone else to try to buy us out. I may be foreign on paper but I grew up in PNG and my heritage means a great deal to me that I do not think it is fair to just push people out based on whether it is owned by a foreign person. I am proud to be a young mix race woman about to take on and continue my parents’ legacy. I feel that the government really needs to think about how they go about evaluating who should be bought out. They also need to do a lot more to recognise PNG Women in Business – if the US Embassy can do it why not our Government take on board what these Women at Summit bring up as Issues of concern.
I think this really needs to be thought through on a lot of counts.
Great Intentions but we have to be very careful, we might be shooting ourselves in the foot.
So how successful are the “stret pasin” retail shops doing now. How many have gone to the next stage of owning and operating a super market? What percentage are still operating today making profits and competing with the Chinese? Lets take for example, bilum making, as a worthwhile business venture. How many bilums can a woman make in a month, 1 or 5 and how much can she sell for and at what price? Can she be able to sell all and who are her customers? If for foreigners, does she know about fashion and color coordination for dressing? How could bilum making be on the reserve list if it is? Bit crazy idea if it is.
With you, Richard Maru. PNG First. Nothing is impossible.
David Conn, it’s not the eftpos in the rural areas or the economy’s standing. Our sovereignty as a nation has been compromised.