An overview of foreign direct investment (FDI) in Papua New Guinea, including sources of investment and relevant legislation.

Downtown Port Moresby, with the new Noble Centre under construction.

Papua New Guinea’s net foreign direct investment (FDI) stock at the beginning of 2019 was US$4.5 billion, according to the United Nations Conference on Trade and Development (UNCTAD).

This represented a 17 per cent increase from the 2010 level.

According to the Investment Promotion Authority (IPA), in 2018 China was responsible for the most foreign direct investment (FDI) at close to K2.5 billion, followed by Australia (K1 billion). (In 2016, Australia was the number one investor.)

The next countries were Malaysia, the Philippines and Singapore.

The majority of the FDI went into real estate, construction, finance and wholesale and retail. The number of foreign enterprises registered in PNG at the end of 2018 was 9859.

In 2019, the government tabled the Foreign Investment Regulatory Authority Bill but this was withdrawn. At the time of writing, June 2020, the legislation is under review.

Proposals being considered as part of reforms include:

• Non-citizen owners of foreign investments being required to show a minimum investment in PNG in order to obtain their residence visas.
• Promotion of local–foreign partnerships, which will include minimum local ownership and minimum investment levels.
• A new ‘Restricted Activities List’ to encourage PNG citizen participation in larger, more complex, and/or more capital-intensive businesses.
• Improved compliance and enforcement.
• Approval of a ‘responsible foreign investment’ to be made quicker and easier with day-to-day foreign certification approvals to be undertaken by a Registrar of Foreign Investment.
• This is to be overseen by the Investment Promotion Authority.

The encouragement of nationally-owned small-and-medium sized businesses (SMEs) is government policy, and its development plans having a stated goal of eventually reaching 500,000 SMEs.

The Companies Act 1997 and Companies Regulation 1998 oversee matters regarding private and public companies, both foreign and domestic.

All foreign business entities must have IPA approval and must be certified and registered with the government before commencing operations in PNG. While government departments have their own procedures for approving foreign investment in their respective economic sectors, the IPA provides investors with the relevant information and contacts. The regulations governing foreign investments in PNG include:

• Free Trade Zone Act 2000
• Investment Promotion Act 1992
• Companies Act 1997
• Forestry Act 1991
• Mining Act 1992 (amended 2020)
• Fisheries Act 1994 and
• Oil and Gas Act 1998