The creation of a registry of personal assets to be used as loan security will boost the small business sector, according to Moses Liu, the Managing Director of the National Development Bank.

The Asian Development Bank-supported registry of personal assets was formally launched earlier this month.

The ADB’s Andrea Iffland

‘The registry is the final step in the creation of a new legal framework designed to promote commerce within PNG by simplifying and safeguarding lending processes,’ ADB Regional Director, Andrea Iffland, said at the launch of the registry by Treasurer Patrick Pruaitch.

It will allow anyone to see if a piece of moveable property had a registered security against that item, and will be used by lenders to register their security interest, Terry Reid, ADB Business Law Reform Expert, told Business Advantage PNG.

Items that could be used as collateral for loans include vehicles, machinery, or stock.

‘The new lending framework will assist anybody seeking access to credit using non-land assets as security, but it will be most beneficial to smaller businesses, poorer people and women—that is, those without landholdings,’ says Reid.

The NDB’s Moses Liu

‘It’s these people whose access to credit has most been impeded by the complications of using moveable assets as collateral under the previous system and the consequent absence of associated loan products.

‘The online registry will also be of particular benefit to those in rural areas as they will no longer need to travel to the capital to lodge filings, or hire an agent to do so.’

Moses Liu says in the past ‘a lot of small businesses could not obtain capital due to unavailability of security, particularly personal property’.

‘We will use the registry to register all securities offered for loans,’ he told Business Advantage PNG.

The registry is designed to help small business owners access credit. Photo credit: ABD

The convenience and accessibility of the registry will also encourage non-bank suppliers, such as wholesalers, agricultural stores and vehicle dealerships, to extend credit, ‘as this can now be secured against their customers’ business assets or outputs,’ added Iffland.

The CEO of Bank South Pacific, Robin Fleming, says the registry will reduce the cost to government and improve services to lenders and borrowers.

‘The lenders will also be able to undertake online searches for any encumbrances on personal assets offered as a security in support of a loan application,’ he said.

Fleming says the functions of the Lands Department and the registration process of the banks’ interest on land titles remains unchanged, because the registry will not list mortgages over land securities.

Similar registers operate in the United Kingdom, Australia and New Zealand.