Stock Exchange Rates To Be Eased

by PNG Business News - October 04, 2021

Photo credit: PNGX

A new revised and market friendly transaction levy will be charged on all transactions on the PNG National Stock Exchange (PNGX).

Robert Minak, executive chairman of Papua New Guinea's Securities Commission (SCPNG), made the announcement.

“We have reviewed the existing levy rate of O.75 per cent and we believe that the quantum of that levy is too high and will disincentivise investors and therefore market activity.

“After meaningful consultation with relevant industry stakeholders we concluded that it was necessary to significantly ease the rate,” Mr Minak said.

“Levies are proposed as a way to raise government revenue.

But levies can harm market quality by unnecessarily burdening the economy by distorting investor’s capital allocation in reducing trade volumes, increase volatility and adversely affect price discovery”.

While weare required by law to retain a levy, its rate needs to reflect PNG’s current market conditions,” he added.

SCPNG is required by section 44(1) of the Securities Commission Act 2015 (SCA) to maintain a levy and to pay a portion of it to the Capital Market Development Fund under section 429(a) of the Capital Market Act 2015 (CMA).

As a result of the combined effect of such measures, the legislative trajectory anticipates that portions of the levies will eventually be transferred to the Capital Market Development Fund.

SCPNG agrees that any taxes imposed under section 44(1) SCA should be used to promote market development rather than as a source of revenue for the government.

The Capital Market Development Fund should be utilized for the levies of market development (CMDF).

For the time being, SCPNG admits that all of the levies are tied to capital market growth in order to provide the market with every chance to expand.

The Securities Commission has implemented meaningful governance control and transparency over the levy setting procedures, levy review mechanisms, and projected levies spending based on the findings of the review.

In the next months, the governance infrastructure and administrative system will develop.

They might include things like reporting on actual spending to industry and rebating taxes that haven't been spent.

This newly updated rate will take effect two months after the gazettal is published.

Any prior levies collected by a stockbroker or participating organization based on the now-revoked rate (0.75%) must be refunded to buyers or sellers within 14 days.

“The reviewed rate is a significant decrease (96 per cent) from the rates presently in effect.

“SCPNG hopes these changes will ease stakeholder concerns, maintain market quality and lead to restoring confidence in the market generally,” Minak said.

 

Reference: Post-Courier (1 October 2021). “Stock Exchange Rates To Be Eased”. 



Related Articles

Business

PNG Business News - April 08, 2021

Commission Places New Levy on Transactions

The Papua New Guinea Securities Commission has placed a new levy for all trades on the PNG Stock Exchange, the country's stock market (PNGX). The Securities Commission adopted the new levy on February 8 and it went into effect on March 8, according to PNGX chairman David Lawrence. Each buyer and seller are expected to pay an extra 0.75 per cent of the sale value to their stockbroker. He said that the stockbroker was required to pay the money to PNGX on a monthly basis and that PNGX was then required to pay the money to the Securities Commission on a monthly basis. PNGX was worried that the levies would disincentivize business competition at a time when it was attempting to build it up from a low base, according to Lawrence. Buyers and sellers, he added, were immune to paying the levies for on-market purchases. “We have also heard that some buyers and sellers are giving consideration to off-market transfers of listed securities rather than executing orders through the market, as off-market transfers will not be subject to the levies,” he said. PNGX has urged the Securities Commission to notify the public of its plans to reclaim any outstanding levies from investors and sellers, as well as its views on off-market transfer activities, according to Lawrence. “PNGX is concerned that the imposition of the levy at this time is counterproductive to the development of the capital markets in PNG and not aligned with the Government’s financial sector development strategy (FSDS) to create an environment that is equal in its competitiveness to the ASX,” he said. He expressed concern about the possible impediments generated by the levy, which he defined as follows: Both Investors' trader fees will be increased. This would have a negative effect on investment returns, particularly superannuation investors. It would also give other more developed foreign markets in the area and more established international markets an unexpected competitive edge. Detract from Papua New Guinea's investability;  Encourage PNG-incorporated businesses to list on existing foreign exchanges with lower sovereign risk;  Encourage the expansion of "off-market" transactions, decreasing the disclosure, pricing, openness, and investor rights inherent in the formal, controlled PNGX market, to the detriment of PNG's domestic and international investors. According to Lawrence, the outcomes could decrease competition in an already illiquid sector, eliminate incentives for market development, and raise the cost of financing for PNG companies and the government.

Finance

PNG Business News - August 23, 2021

PNG Stock Market Worth Over K120 Billion

Photo Credit: PNGX According to the PNG Securities Commission, the stock market in PNG is now worth over K120 billion. The PNG National Stock Exchange presently has 13 firms listed, according to acting executive chairman Robert Minak (PNGX). “The total market cap fluctuates around K120 billion,” he said. “The market tracks well and it’s steady all the time for those 13 companies despite the challenges posed by the Coronavirus. “Trading has been slow but steady.” Minak stated this after Zimcare Ltd HR Consultants presented the commission with a report on the organization's audit. The purpose of the audit was to verify that the commission took stock of its operations and that the appropriate personnel were carrying out their allocated duties. “They are elite corporations that have billions of kina,” Minak said. “They hire the best people in the world. “And for the securities commission to challenge or regulate them with people that are not qualified or skilled, is a joke. “We felt that it was fundamental that we get it right from the start. “So we had to hire Zimcare. “They (had done) the organisational structure for the securities commission so they know the commission (well). “We got them to come and fix up things that have gone wrong along the way.” Meanwhile, Minak said the country’s stock market could make money for the Government like other stock markets in the world. “The (PNG) Government does not have the money,” he said. “It gets it from the banks within or goes out and borrows. “The commission regulates an industry where the Government or anyone else can raise money from an alternative source. “In other countries, the securities commission makes money that contributes to the budget.”   Reference: Mauludu, Shirley. The National (13 August 2021). “Stock market worth K120bil”.

Finance

PNG Business News - August 30, 2021

PNGX and Securities Commission Sign MoU

Photo Credit: PNGX PNGX Markets Limited, Papua New Guinea's national stock exchange, and the Securities Commission of Papua New Guinea (SCPNG) have signed a Memorandum of Understanding on the preservation of an orderly market for listed securities. The Securities Commission may make public remarks regarding a listed business from time to time in the course of its duties and responsibilities that a reasonable person would anticipate to have a substantial impact on the price or value of the listed company's securities. Making such remarks during trading hours (10 a.m. to 4 p.m.) might jeopardize an orderly and fair market in such assets. The MoU intends to foster collaboration between the Securities Commission and the PNGX in order to support the effective performance of their respective duties and responsibilities, as well as the preservation of orderly and fair markets in Papua New Guinea. According to the MoU, the Securities Commission will avoid making public statements about a listed company that a reasonable person would expect to have a material effect on the price or value of a listed company's securities during trading hours, to the extent that it is reasonably practicable to do so. If it is not possible to avoid making such public remarks during market hours: Prior to issuing the relevant public statement, the SCPNG will inform PNGX;  PNGX will impose a trading stop on the relevant listed company's securities; and  SCPNG will provide PNGX with a copy of the relevant public statement for distribution to the market as soon as feasible. “It is fundamental that regulatory governance systems are established to ensure a fair and orderly market,” said Robert Salmon-Minak, acting executive chairman of the Securities Commission. “This MoU recognises and respects the differing but complementary roles of the Securities Commission and PNGX in achieving that outcome. “The capital market regulator in any country plays a critical function in the economy of that country,” said PNGX chairman, David Lawrence. We are pleased to be working with the Securities Commission to put in place processes that promote confidence in the PNG capital market.”   Reference: Post-Courier (27 August 2021). “Securities Commission, PNGX Sign Agreement”.


Recent Articles

Commentary

PNG Business News - October 26, 2021

Australia buys Digicel, PNG’s mobile monopoly

Photo credit: Devpolicy by Stephen Howes Yesterday, Telstra announced that it was buying Digicel Pacific. Telstra itself is only paying $270 million, and the Australian government $1.33 billion. Yet, Telstra is obtaining 100% ownership. The deal is certainly an attractive one for Telstra. But does it make sense for Australia, and for the Pacific? Digicel has had a transformational impact in the Pacific, but now has too much market power. As the Telstra release explains, it holds the dominant position in all the Pacific countries in which it operates, except for Fiji, where it is in second place. In Papua New Guinea, which I know best, and which is by far Digicel's biggest market, the company  has a 92% share of the mobile phone market. That makes Digicel effectively a monopoly in PNG. And that is why it is so profitable: like any monopolist, it exploits its market power. Australian and PNG researchers have been tracking mobile internet prices in PNG since Australia gifted it a new underwater cable . Their conclusion is that since the completion of that cable in December 2019 to today there has been no decrease in mobile internet prices. The reason is simple: the lack of retail competition. Michelle Nayahamui Rooney, Martin Davies and I last year exposed Digicel PNG’s predatory loan scheme. Digicel lends phone credit to its customers. They pay it back when they next top up. Our estimate is that Digicel made a 17% return from such loans every week, which is equivalent to an unbelievable 351200% a year. Is this really the way in which Australia want to engages in the Pacific – owning an enterprise that keeps prices high for consumers, and rips them off when they are desperate to make a call? Any monopolist is necessarily engaged in a battle between the consumer and their profits. At some point, Telstra will end up going toe-to-toe with the PNG telecom regulator, NICTA, as Digicel has done several times. It’s going to be awkward for both Telstra and the Australian government. Many will welcome the investment as a sign of Australian commitment to the Pacific. However, if we want to invest in the telecom sector in the Pacific, we should be backing alternatives to Digicel, to push prices down and improve services, not buying out the dominant player. Amalgamated Telecom Holdings based in Fiji is the Pacific’s second biggest telecom provider. It is currently planning to enter the PNG mobile market with support from the Asian Development Bank. This is the sort of investment we should be financing. That Australia has bought Digicel shows the extent to which the Pacific is now viewed through a China lens. That’s unfortunate. China is a massive economic power. Its companies will have increasing stakes in economies around the world. That is a fact we have to accept. The Australian government also needs to decide if its only goal is to counter China or if it is still seeks to promote Pacific development. When I was AusAID's Chief Economist, Digicel was the new kid on the block in the Pacific, and it was successfully challenging state-owned telcos that until then had been dominant. In 2006, in Foreign Minister Alexander Downer's flagship Pacific 2020 report, we wrote glowingly about the competition that various Pacific countries had recently started allowing in the mobile phone sector. Our analysis was right then, and remains relevant today. Yet here we are, in 2021, doing the opposite: rather than supporting greater competition in the telecom sector, subsidising the purchase of the incumbent monopolist. The decision to buy Digicel Pacific should be reversed. If it is too late for that, the Australian government should at least – in return for all its cheap and risk-reducing finance – oblige Telstra to operate Digicel for the benefit of the people of the Pacific rather than solely for its shareholders through an agreement that makes it clear that the Australian company is not only expected to return the cheap loan it has been given, but also reduce prices, and end rip-offs.   This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

Business

PNG Business News - October 26, 2021

Taureka Replaced As Managing Director

Isikeli Taureka's position as managing-director (MD) of Kumul Consolidated Holdings (KCH) was terminated by the National Executive Council (NEC) recently. Professor David Kavanamur has been appointed as interim MD until a permanent appointment is made, and Moses Maladina, the current chairman of PNG Power Ltd, has been named as acting chairman. Taureka was removed after 20 months, according to Prime Minister James Marape, due to poor performance by KCH and State-Owned Enterprises (SOEs) and missed national project deadlines. “The reforms of the SOEs were endorsed by the Government in October 2019,” he said “We see it as the most-significant reform programme to be undertaken by any Government since the corporatisation of the state utilities and the creation of the Independent Public Business Corporation (IPBC), now KCH. “Building governance and accountability must go hand in hand with successful project execution. These are viable projects that can fundamentally change the accessibility and affordability of services and benefit the welfare of our people. “Extensive unexplained delays to major projects by KCH and SOEs are not acceptable. The Government understands that SOE issues cannot be immediately resolved as they take time. “That is why the NEC provided well over a year for KCH to work with SOEs to support the development and execution of strategies. We had hoped more would have been achieved during Taureka’s tenure. We regret to take the difficult step of severing the MD’s appointment. However, the NEC felt it had to be done. “The Telikom merger and partial privatisation with majority ownership and board control to be passed onto the super funds, for example, is one major issue the Government has been pushing since 2019 when we took office. “The merger of Water PNG and Eda Ranu is another matter that has been outstanding and not yet resolved. This merger is to take on a subsidiary structure where 20 percent of Eda Ranu is to be owned by Koiari landowners and 10 per cent each by Central Province and the National Capital District. “This decision was taken in 2019 but has not been implemented to date. “As for PNG Power and its continuous performance issues, these have been ongoing and evident. “These are badly-needed reforms within the SOEs and responsive policies have been launched by the Government, yet, very little or no progress have been made. “Out of respect to Taureka as a leading Papua New Guinea son, I had reached out to him for a meeting but there was no response forthcoming. Hence, the announcement of this decision (termination),” he added. Those nominated to crucial positions, according to Marape, must grasp the larger picture and act quickly to fulfill the government's goals.“For others in key leadership roles, whether as chair, members of boards, departments or agency heads, you are not here to pass the time or warm seats. Everyone must step up. “The Prime Minister’s Department is working to take stock of work done. So, if you feel you have not met your key performance indicators, I suggest you start thinking about resigning before the NEC asks you to leave.” According to Marape, Kavanamur had previously served as the chairman of KCH and had a thorough awareness of the organization's issues as well as the government's goals.   Reference: The National (22 October 2021). “Cabinet Axes Taureka”. 

Business

PNG Business News - October 26, 2021

Digicel Pacific to be Acquired by Telstra

Telstra has announced that it will buy Digicel Pacific for $US1.6 billion, plus up to an additional US$250 million based on business performance over the next three years, subject to government and regulatory approvals. In its six South Pacific markets – Papua New Guinea, Fiji, Nauru, Samoa, Tonga, and Vanuatu – Telstra, Australia's leading telecommunications and technology company, will continue to invest in and operate the business under the Digicel brand name. Telstra International CEO Oliver Camplin-Warner said the agreement will allow Telstra to expand on Digicel Pacific's regional leadership and increase mobile connectivity in Papua New Guinea. “Denis O’Brien and the Digicel team have built a phenomenal business that’s centred on providing exceptional customer service, the best coverage and leading digital experiences. Telstra will add to these strengths and the team’s local knowledge with our more than one hundred years’ experience connecting the vast expanses of Australia to continue delivering great experiences for Digicel’s customers across the Pacific.”   “We have 19.5 million retail mobile customers in Australia and our 4G network is the largest and most reliable in country. It covers some of the remotest parts of Australia – from the coast, to the outback and the Torres Strait Islands, just off the coast of Papua New Guinea. And we’re in the process of building Australia’s largest 5G network that now stretches to more than 240 towns and 75 per cent of the population,” Camplin-Warner said.     There will be no employment losses in the region as a result of the transaction, and the present Digicel Pacific team will continue to manage the company on a day-to-day basis. Denis O'Brien, the current owner of Digicel, will continue on the Board of Directors. “We will invest our know-how and capital to further expand coverage and over time bring the benefits of 5G to Papua New Guinea. But we’ll retain the same Digicel brand the people of PNG know and love today with the same team and services they have come to rely on,” Mr Camplin-Warner said.    The purchase, according to Camplin-Warner, is in line with Telstra International's expansion plan, which now comprises operations in 20 countries outside of Australia and thousands of clients, including businesses, governments, and some of the world's largest technology firms. “Beyond Australia Telstra also has the most extensive subsea telecommunications cable network in the Asia Pacific. And we’re one of the biggest providers of voice and data services connecting the South Pacific to the rest of the world through our Southern Cross cable.”     “Network traffic is growing faster than at any other period of time and digital technology is changing our world. We are at the centre of this, and so is Digicel Pacific. We are committed to delivering the best technology on the best network for PNG,” Mr Camplin-Warner said.      The people and businesses of PNG will benefit from Telstra's experience rolling out a world-class 5G network and connecting diverse geographies, according to Colin Stone, CEO of Digicel Papua New Guinea. “Telstra’s network innovation has played a critical part in Australia being ranked first in the global Mobile Connectivity Index which assesses networks based on performance, affordability and availability. We look forward to working with Oliver and the Telstra team,” Mr Stone said.  The two firms' ideals, according to Camplin-Warner, were likewise matched.   “Digicel Pacific and Telstra are both committed to building a connected future so everyone can thrive and this includes supporting some of the most vulnerable in our communities.”   “Digicel Pacific has taken community development to the next level through the Digicel Foundation’s investment in health, education and community-based programs. We look forward to continuing this work, just as we do today with the Telstra Foundation and its commitment to using technology to support young people and help to reduce the digital divide.”    “We will also bring a commitment to addressing climate change to help drive better environmental outcomes for the people of PNG,” Mr Camplin-Warner said.   Despite the fact that the transaction is funded by the Australian government, Telstra will remain the only owner and operator of the company.   Reference: Loop (October 25, 2021). “Australia’s biggest telecommunications company to acquire Digicel Pacific”.

Join Papua New Guinea's

Business Community

Be the "First" to get our exclusive Digital Magazine & Weekly Newsletter.