Ling-Stuckey: Healthy Financial Sector Vital for Development
by PNG Business News - August 01, 2022
Photo credit: Loop PNG - Treasurer Ian Ling-Stuckey
Papua New Guinea’s financial sector accounts for K2.3 billion of its economy in 2022, Treasurer Ian Ling-Stuckey says. Ling-Stuckey said a healthy and modern financial sector was vital for development.
“This is a larger contribution than the size of the manufacturing sector (K1.705 billion), or even our transport and storage systems (K2.05 billion),” he said.
“We must ensure that this part of our economy works efficiently.
“It needs to serve the broader public interest as it helps mobilise savings into productive investment and support for SMEs (small to medium enterprises).”
The Independent Advisory Group (IAG) is conducting a review, and the second phase has begun, according to the newly re-elected Kavieng MP.
According to Ling-Stuckey, the first phase's success prompted changes to the Central Banking Act, which were overwhelmingly approved by Parliament in December.
Robert Igara, chancellor of the University of Papua New Guinea, Sir Wilson Kamit, a former governor of the central bank, and Prof. Stephen Howes of the Australian National University are leading the independent inquiry. “International comparisons suggest there is much that can be done to improve our financial sector,” Ling-Stuckey said.
“We have some of the greatest differences in the world between interest deposit rates paid to savers and interest costs charged to borrowers.
“Fortunately, there are signs that this gap is narrowing as the Marape Government has been clear that changes are required.
“The interest rate gap decreased from 8.51 per cent in 2018 down to 6.51 per cent in 2020, the best performance since 1998.”
Ling-Stuckey said PNG’s financial sector lacked adequate competition which led to monopoly-style profit levels.
“There is a serious problem of excess liquidity in which savings are not turned into investments,” he said.
“There is a need to examine the use of technology and how it can improve access to finance and insurance for many more of our people.
“We also need to address inefficiencies in our payments system which see too many people not being able to deposit funds and too many cheques bouncing due to unnecessary and bureaucratic impositions from our financial sector.”
Public responses are being requested by IAG and are due on August 26.
Ling-Stuckey stated that the Terms of Reference had incorporated the significance of a thorough public engagement process and urged organisations and others to participate.
their opinions on how
The financial system in PNG may be strengthened.
“This is an example of the major structural reforms underway by the Government to modernise the PNG economy and lift our economic growth rate.”
Reference: The National (27 July 2022). “Healthy financial sector key: MP”.
PNG Business News - March 05, 2021
Report: Strong Trade for PNG
Falling export earnings have impacted the external sector of Papua New Guinea. But surging gold prices and import compression contained the damage. According to the World Bank PNG’s economic update titled “Dealing with a triple crisis”, the current account surplus broadened in the first half of 2020, which increased by 14 per cent. This was supported by a strong merchandise trade performance. It said that even if prices for major exports were reduced, the earnings from the mining sector, especially gold exports, posted a surplus. In addition, continued import compression brought about an overall current account surplus. Meanwhile, lower export earnings were more than offset by a 24 per cent decline year-on-year during the first half of 2020. Negative was the trade services balance, caused by negative balances on education, transport, and other business services. The deficits in income and services narrowed. These developments led the current account into a positive area. Earning exports decreased by 14.3 per cent, and prices of major exports also dropped since the beginning of the pandemic. Exports from mineral resources - which includes LNG - went down to 15 per cent year on year, crude oil decreased to 22 per cent and copper, 18 per cent. In addition, agricultural commodity exports decreased by 9.2 per cent, caused by lower export values for coffee, cocoa, and logs - with a little bit offset from palm oil exports. In spite of this decrease, the increase in the cost of gold outweighed all of these impacts, giving rise to the total export earnings to 9 per cent year on year.
PNG Business News - March 05, 2021
Fleming: There Will Be Confidence in PNG Economy
There will be confidence in the PNG economy in 2021.According to Bank South Pacific Group Chief Executive Officer Robin Fleming, this was attributed to the resource sector with several major projects in the pipeline - such as the Fiscal Stability Agreement signed between the Government and Total and Joint Venture Partners of the Papua LNG Project. This also included the Environmental Permit awarded to Wafi-Golpu Joint Venture for the mine negotiations to gin on the Wafi-Golpu Mine.“Certainly we feel that by the end of this year there is going to be far more confidence within the economy. The Wafi-Golpu Mine, and there is a much higher level of confidence within Lae as well, that the business community is looking at further expectations of growth,” he said. Other drivers to this growth also included the ongoing investments in infrastructure and the improvement of State-Owned Entities. “The Government has indicated in its Budget that it’s looking to continue with some of the development of the road construction, for the business community as they know they (PNG Power) got the capability to put their capital to investments which are revenue-generating and not just investments which are protecting their own infrastructure,” he said. The World Bank Groups Papua New Guinea Economic Update of January 2021 said that the Papua LNG Project and the fast resolutions related to key mining projects can contribute to higher inflows of taxation revenue and foreign currency.
PNG Business News - March 05, 2021
PNGEITI Report: Need for Greater Awareness
As a need under the EITI 2019 global practice standard, the Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI) has published its first Beneficial Ownership (BO) Report. Head of PNGEITI National Secretariat Lucas Alkan said that this has already been published on its website last December 2020. “All EITI implementing countries including Papua New Guinea are required to produce a Beneficial Ownership Report by the 1st of January 2020,” he said.Alkan said to fully comply with this requirement, PNG should have a public register that lists the beneficial owners of corporate entities who hold a particular interest in oil, gas, or mining contracts. This also includes the identity of the beneficial owner. Besides implementing the EITI Standard, PNGEITI is devoted to making sure Beneficial Ownership information disclosure is implemented through its role in; Open Government Policy National Action Plan 2018-2020; the PNGEITI Annual Workplan 2019; and the PNGEITI BO Roadmap for Implementing disclosure including existing legislation such as the Anti-Money Laundering and Counter-Terrorist Act 2015.Alkan said, however, that reporting entities did not fully understand the meaning of Beneficial Ownership Reporting. “This is because they were unable to provide complete information of what was requested in the reporting template,” he said. “In addition to the challenges faced in obtaining information for BO reporting, PNGEITI still does not have a legal basis to collect the required BO information which makes it difficult to obtain complete information from the companies.”There are, of course, many challenges that the report found. These include unfamiliarity with the BO concept especially for non-publicly listed companies; several reporting entities did not attend the BO training workshop, and complex corporate structures especially where there are multiple layers of ownership involving several jurisdictions and different types of legal entities.With these many gaps, the report recommends to have a dialogue with the following organizations: the Financial, Analysis and Supervision Unit (FASU) of the Bank of PNG, Investment Promotion Authority (IPA): and the Mineral Resources Authority (MRA).
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PNG Business News - August 12, 2022
Going Green: FAO-led EU-STREIT PNG Programme provides green-powered facility to local agricultural authorities to effectively service rural farmers
EU Funded UN Joint STREIT Programme in Papua New Guinea establishes a renewable energy-powered facility to support local government authorities in East Sepik Province, in delivering effective services to rural farmers and entrepreneurs. With generous support of the European Union, the FAO-led EU STREIT Programme officially opened a new 3 cluster office building on 10 August 2022, to host the Programme along with the East Sepik provincial divisions of Agriculture and Livestock, Cocoa Board and the National Agriculture Quarantine & Inspection Authority. The new-look office building is powered by 189 solar panels, which significantly reduce greenhouse gas emissions and reduces the collective dependence on fossil fuel. The solar panels supply the building with 90 KW of energy, relieving the resident agencies and authorities from relying on fossil-generated electricity for their needs, including lighting, ICT, water pumping, and temperature control. This zero-carbon-emission facility has the capacity to accommodate around 90 experts, technicians and extension service officers. Equipped with 120 batteries, the building can support staff’s operation for 36 hours in case of experiencing high cloud cover. The building, currently co-resided by the Programme and provincial agricultural bodies, will be transferred over to the East Sepik Provincial Administration at the end of the Programme and will continue to provide a sustainable base for sustainable support to agriculture-related services in the Province. Officiating the opening ceremony, His Excellency Ambassador Jernej Videtič, Head of the European Union Delegation to PNG, in his address, said: “I am happy to be here and to see that things are moving in the right direction to bring sustainable benefits to the people of East Sepik” Ambassador Videtič further highlighted that “with resources from the citizens of Europe to fund the EU-STREIT Programme in providing training, tools and support, the quantity and quality of cocoa, vanilla and fisheries products will increase. The objective is also to protect these quality products in international markets under the EU-STREIT introduced initiative of Geographical Indication.” The East Sepik Acting Deputy Provincial Administrator, Mr James Baloiloi, in his speech expressed his appreciation to the EU for funding the EU-STREIT Programme and the interventions that the Programme is doing in East Sepik and Sandaun provinces. “The STREIT Programme has gone ahead to introduce a culture of agribusiness that now enables the people of this Province and the people of Sandaun Province to have cash income that can sustain their livelihoods.” Mr Baloiloi added, “this infrastructure and building supports us and facilitates the service delivery to our people in this Province as well as Sandaun Province.” Thanking the EU for its generous funding support, Dr Xuebing Sun, the EU-STREIT Programme Coordinator, said: “the Programme has generated substantial impacts at beneficiary, local institutions and enabling business environment levels. This would not be possible with good partnership, increased ownerships and leaderships of the governments and implementing partners.” “This co-residing and close co-operation among UN agencies and their national partners in this integrated space reflect the partnership approach taken by the Programme to sustainably develop agri-enterprise activities in the region,” added Dr Xuebing Sun, adding “the new climate-friendly facility, which is fully powered by solar energy, also provides a space to welcome, advise and serve the farmers, including interested women and youth, who play very important roles along agri-food value chains”. “This kind of ‘green investment’ enables a shift to a more green economy for local institutions and infrastructure to meet cocoa, vanilla and fishery value chains stakeholders” advised Anthony Bennett, the FAO Lead Technical Officer of the EU-STREIT PNG Programme. United Nations’ implementing partners supporting the FAO-led EU-STREIT PNG present in the office include the International Labour Organization (ILO), International Telecommunication Union (ITU), United Nations Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP). The EU-STREIT PNG is being implemented as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as implementing partners), is the largest grant-funded Programme of the European Union in the Country and the Pacific region. It focuses on increasing sustainable and inclusive economic development of rural areas through increasing the economic returns and opportunities from cocoa, vanilla and fishery value chains and strengthening and improving the efficiency of value chain enablers, including the business environment and supporting sustainable, climate-proof transport and energy infrastructure development.
Paul Oeka - August 12, 2022
CPAPNG annual meet to discuss global changes
Certified Practicing Accountants of Papua New Guinea will be hosting their 23rd annual conference with about 400 participants nationwide expected to attend the two day conference organized by CPA PNG in Lae Morobe Province from August 18 to19, 2022 CPAPNG was established in 1974 and has come a long way with a lot of achievements along the way. Over the years its membership grew from mere numbers to just below 2000 which includes 40% locals and 60% non-citizens. . The CPA PNG conference is one of CPAs three significant annual events on their calendar with this year's conference theme; Is PNG prepared for the recession?" The conference will see certain key leaders in executive management roles from both the public and private sector delivering presentations in line with the conference theme. CPA PNG's Executive Director Mr. Yuwak Tau said the theme of the conference was selected because there was a decline in the global economy and the general so when that eventuates small economies tend to be affected. He added that they have basically selected the theme that was current and appropriate so that members would find relevance during the course of the conference. “The meeting is to create intellectual and interactive discussions with seasoned business leaders to present and share their ideas and experiences to find probable outcomes within their business environment and industries in times of economic uncertainty”. Some of the topics to be presented by consultants are current significant issues such as crypto currency, transport pricing, bit coin block chain technology and stress management. This were some topics that people have heard about but have not really ventured into. Mr. Tau added that it would be quite hard to measure the benefits immediately but the participants will be able to look at insights shared during the conference that would be appropriate in the areas of employment, accounting, finance, auditing and others. The conference will create an environment where participants can also share information so That they can take points to apply in their work place and industries. In relation the Kumul petroleum Holdings had also presented a cheque of K50, 000 to support the coming event at their head office. The cheque was presented by KPHL's executive General Manager Corporate Affairs, Luke Liria and was received by CPA PNG Chairman Richard Kuna. Mr. Liria said KPHL has appreciated the effort put in by CPA PNG to ensure that its members in State owned enterprises and the private sector were given appropriate level of training and as part of KPHL's corporate social responsibility and commitment they hope that their support will continue to help the organization facilitate and make sure the accounting practices is of international standards. CPA PNG's Chairman, Richard Kuna acknowledged KPHL for their support and stated that he was looking forward to seeing KPHL being a big part of the upcoming conference.
Paul Oeka - August 12, 2022
BSP: Small to Medium Enterprises Loans reaches 60% rate.
Bank South Pacific's Financial Group Ltd Chief executive officer Mr. Robin Fleming has recently announced that the bank has granted more than K200 million as loans to small to medium enterprises under its credit scheme facility that the then Marape government had released to the bank to support Small to Medium Enterprise (SME) and local businesses during the peak of the COVID-19 pandemic. Mr. Fleming said about 1523 customer loans have been approved, that is about 60% of loan approval rates since 2019. Prior to this announcement BSP and the Department of Commerce and Industry (DCI) had agreed to increase the maximum loan under the small-to-medium enterprise (SME) credit enhancement facility to K5 million. The previous limit was K3 million when the Government first released K100 million as security to the bank under its K200 million SME allocation for BSP to rollout the loan facility last year. Fleming stated that even though they have exhausted and rolled out the bulk of the governments relief funds for SME's they will still be running the SME loan program under its credit facility scheme “At this stage, BSP has not received the funding planned for this year but that is not preventing BSP from giving loans under the facility”. “There remains significant capacity for BSP to continue to assess, approve and funds loans under the facility”. “The agreement with the Government did provide for momentum in the SME facility to be maintained while allowing for the Government budget and funding process to be adhered to”. As part of the government SME relief funding, Commercial Banks were allocated K200 million with BSP Financial Group receiving K100 million, NDB K80 million and another K20 million was allocated to the department of Commerce and Industry BSP could not comment on how the National Development Bank (NDB) is dealing with the K80 million it received, but the intent, when discussions were initiated, was that BSP would be lending to more mature SMEs and NDB to startup ventures. In addition to enabling SMEs to access lower cost of funds through the facility with BSP, the bank has also made it a responsibility to ensure that Government funding is preserved by not approving loans that have a higher risk of default.