Finance

Finance

PNG Business News - December 05, 2022

Kina Bank Abandons Expansion Plans

Following the government's Budget 2023 proposal to hike corporation tax from 30% to 45%, Kina Bank is abandoning all of its plans to grow by opening additional offices nationally. Greg Pawson, the chief executive of Kina, stated that the bank was against any rise in corporate tax on the banking industry. “To put into perspective, it is an additional tax of K40 million for Kina based on our 2023 forecast. That is a 50 per cent increase and K40 million that we will now be forced to not invest in future growth. The additional tax is a disincentive for us to invest and grow,” he said. “The unintended consequences of such a move will be detrimental to the banking sector in Papua New Guinea (PNG) which is already structurally imbalanced,” Pawson added. Pawson also announced the suspension of its small-to-medium business and home loan concession interest rate programs. “We will be forced to reassess our capital expenditure programmes and likely cut investment,” he said. “Crazy stuff and typical of recent policy developments, it will be the average Papua New Guineans who will be impacted.” The first bank to respond adversely to Treasurer Ian Ling-Budget Stuckey's 2023 is Kina. The tax hike is anticipated to cause commercial banks to boost interest rates and fees, making PNG the second-highest tax system in the world. Ling-Stuckey announced the beginning of this tax during a business budget breakfast in Port Moresby. “This is expected to raise K240 million (for the Government) to fund vital core services. We will consult the banking industry in the first half of next year, and consider if a different type of tax, such as an additional profits tax, may be more appropriate from 2024 onwards, while still raising the required revenues,” he said. According to Ling-Stuckey, taxing banks was a good idea. “Government needs to continue to raise revenue. We might introduce some new taxes to the sector (banking), that might in the best place to afford paying tax,” he said.   Reference: Esila, Peter. The National (1 December 2022). “Kina shelves expansion plans”. 

Finance

PNG Business News - December 05, 2022

Increase in tax for banking sector in 2023

Additional company tax on the banking sector will increase from 30 to 45 percent treasurer Ian Ling-Stuckey said when presenting the 2023 budget in parliament recently. This is expected to raise K240 million in 2023 to fund core vital services. The additional company tax was initially imposed on companies declaring huge profits such as BSP and Digicel PNG LTD, for 2023 the government will repeal the tax by replacing it with a imposed increase in company tax for all commercial banks from 30 to 45 percent, according to the Treasurer the government is taking several different measures to increase revenue collection for the country and the company tax is one way that the government is expected to raise K240 million in revenue next year to fund key priority areas. "Following consultations, we have decided to change the form of the tax introduced on the banking sector in 2022, From the 1st of January 2023, the rate of company tax payable by commercial banks will increase from 30 to 45 percent, this is expected to raise K240 million in 2023 funding vital core services. We will consult closely with the banking industry for the first half of next year and consider if a different type of tax such as an additional profits tax may be more appropriate from 2024 onwards." The treasurer said this is part of the government’s efforts to reduce deficits and make way for a budget surplus by the year 2027. In relation the government will also be urging all state owned enterprises to payer higher dividends as well in order to help reduce the country's debts. Meanwhile, Bank South Pacific Financial Group Limited has assured the public that there would be no increase in its service fees CEO Robbin Fleming gave the assurance to the public after the treasurer announced the increase on additional company tax on the banking sector.

Finance

Paul Oeka - November 27, 2022

BUSINESSES EVADING TAX MUST BE INVESTIGATED: PNGTUC

The Papua New Guinea Trade Union Congress (PNGTUC) and its affiliated unions have supported the points that were raised by the Minister for international Trade and Investment, Hon Richard Maru on the urgency to investigate companies and businesses that have been operating on loss every financial year. PNGTUC Secretary, Mr Clemence Kanau said no sane person or rather a Government will condone such businesses to conduct their business while declaring nil profit to avoid paying taxes. “Where is the logic of doing business continuously whilst incurring nil profit”? He questioned. He urged the Government to immediately investigate these businesses that have been deliberately evading and bypassing our tax laws. “This matter is a very serious crime in other countries where offenders are slapped with fines or banned from doing business again. If businesses are paying due taxes on time, these taxes will be used by the Government to invest in education, Health, Law and order and most importantly it would create more employment opportunities for citizens”. Mr Kanau said He said the workers throughout the country are currently paying K4 billion in taxes annually while the country’s  extractive industries pays a mere K2 billion  when earning billions more  in profit. This shows a huge disparity. “The major oil palm companies are classical examples of those companies that evade tax. They have never paid any taxes to date while still in business but they continue to declare nil profit annually”. “The extractive industries such as mining, logging companies etc are multibillion kina industries, they obviously earn billions but they are only a minimal taxpayer in comparison to the business they operate”. Mr Kanau said. “It is a glaring disparity between our workers and businesses , where the workers are taxed through their salaries and wages automatically whilst these so called businesses keep bypassing the law by declaring nil profit to avoid paying tax” He said He added that the law must be strengthened to investigate and impose severe penalties to such businesses.

Finance

Paul Oeka - November 27, 2022

DUMA ANNOUNCES APPROVAL OF NEW COMMERCIAL BANK

The Minister for state enterprises, William duma has announced the approval that there will be a new commercial bank to be established in the country next year, He stated this when responding to the NCD Governor, Powes Parkop regarding banking related issues in the country in parliament recently. Minister Duma stated that the Marape-Rosso Government has decided to apply for and establish another commercial bank in the country; he explained that when taking into consideration and comparison with other countries such as Fiji and that they have more than 8 commercial banks. “In a country of more than 10 million people we need more commercial banks because if you consider current commercial banks like Westpac and ANZ, they have not been quite keen in expanding their presence and services to other parts of the country”, Minister Duma said. “We must be considerate of our people and take into account that we have a lot of people in remote areas and such it is incumbent upon us as leaders to establish another commercial bank”. “Major commercial banks such as BSP have not been able to provide the services that our people need, many of our people are unbanked due to BSP’s conduct in charging and setting a lot of fees”. Minister Duma said. Minister Duma further said that it is the responsibility of the National Government to set another commercial bank in the country. “I can announce that cabinet has already approved in principle for a new commercial bank to be established and be called The National Banking Corporation”, Minister Duma announced. Minister Duma concluded that under the leadership of our Prime Minister all necessary requirements have been completed and we are now 85 per cent through in reaching that goal, and before the end of next year this country should have a fully fledged commercial bank.

Finance

PNG Business News - October 17, 2022

Foreign Reserves At K11.6B As Of June 2022

Photo credit: Pixabay The amount of gross foreign exchange reserves at the end of June this year, according to acting Bank of Papua New Guinea governor Benny Popoitai, was US$3.2 billion (about K11.6 billion). At the end of December of last year, there were US$3.2 billion (about K11.3 billion) available. In the bank's March 2022 Quarterly Economic Bulletin, Popoitai stated that this was enough to fund non-mineral imports for 16.3 months. Gross foreign exchange reserves climbed to US$3.3 billion (approximately K11.6 billion) as of September 30 as a result of high mineral and petroleum taxes, mostly owing to tax collections from liquefied natural gas (LNG). “The outbreak of the Russia-Ukraine war in February started to impact the global economy and raised concerns of a slowdown,” Popoitai said. The supply disruptions on oil and gas, and food (wheat) have resulted in high international commodity prices and inflation, hence affecting domestic prices and activity. “The higher prices and production of export commodities have resulted in a significant increase in export receipts and a higher surplus in the current account balance. “The exchange rate remained stable against the US dollar but appreciated against other major currencies. “Data from the Bank’s business liaison survey show that the total nominal value of sales in the formal private sector increased by 7.6 per cent in the March quarter of 2022, compared to an increase of 19.1 per cent in the December quarter of 2021. “The weighted average kina price of Papua New Guinea’s exports, excluding LNG, increased by 38.9 percent in the March quarter of 2022, from the corresponding quarter of 2021 reflecting higher international commodity prices. “There was an increase of 17.7 percent in the weighted average kina price of mineral exports, accounted for by higher kina prices of all mineral commodities, except copper.”   Reference: The National (13 October 2022). “Foreign reserves at K11.6 billion, says Bank of PNG governor”. 

Finance

PNG Business News - September 15, 2022

PNGX RECEIVES SECURITIES COMMISSION APPROVAL OF DEBT MARKET RULES

PNGX, Papua New Guinea’s national stock exchange, has received the Securities Commission’s approval of the new PNGX Debt Market Rules. The new PNGX Debt Market Rules allow a company to issue corporate bonds and have those bonds listed on PNGX where they can be traded. Corporate bonds are a type of debt security issued by a company. The company may be listed on PNGX, it may be privately owned, or it may be a State Owned Enterprise (“SOE”). Initially, bonds traded on PNGX will be limited to wholesale corporate bonds. Retail investors will not be able to invest in wholesale corporate bonds within the first year. This is to allow the market to become familiar with the products before opening it up to the retail sector. “Receipt of Securities Commission approval is very exciting for PNGX” said PNGX Chairman, Mr David Lawrence. “It is part of our ongoing commitment to develop the PNGX capital markets, provide companies with new ways of raising funding and providing Papua New Guinean investors with new investment opportunities” he said. “We are in early discussions with some potential issuers of wholesale corporate bonds. We are hopeful that we can bring at least one of them to the market soon” said Ms Elizabeth Wamsa, PNGX General Manager. “We will be publishing materials explaining this new market to both investors and companies in coming weeks” she said. As the wholesale corporate bond market is very different in its nature to the existing equities market, unlike listing on the equities market where a large number of holders are required, only one holder of a corporate bond is required for listing. Investors eligible to invest in wholesale corporate bonds include: a holder of a capital market licence;  a licensed financial institution as defined in the Banks and Financial Institutions Act, 2000;  an insurance company registered under the Insurance Act, 1995;  a superannuation fund authorised under the Superannuation (General Provisions) Act, 2000;   a unit trust scheme or a managed investment scheme; a body corporate that has net assets of at least K10 million as set out in its most recent audited annual financial statements;  an individual where the minimum amount payable for the securities on acceptance of the offer by the person to whom the offer is made is at least K250,000;  a land group incorporated under the Land Groups Incorporation Act, 1974;  a church group incorporated and existing under an Act of PNG;   any other types of investor specified by the Securities Commission. A healthy bond market brings a number of benefits to Papua New Guinea. It provides an alternative funding source for government and companies and reduced dependence on banks and secured loans. It improves access by companies to fixed-price, longer-term credit which allows companies to fund projects which have solid potential for growth and job creation, but which may find it hard to find bank funding. The ability to issue bonds with terms of up to 20 or 30 years can be attractive for funding infrastructure projects. The ability to readily issue longer term bonds also allows banks to offer longer-term loans and mortgages. From an investor’s perspective, they are able to diversify their investments to reduce both the capital risks and the volatility of returns.   PNGX has also received formal notification of approval and pending gazettal of Orders under the Capital Market Act 2015 by the Securities Commission relating to facilitating issuance of corporate bonds to wholesale investors. PNGX is awaiting approval by the new Minister for International Trade and Investment of the second set of orders which will allow PNGX to bring the new Debt Market Rules into effect for the wholesale corporate bond market.   PNGX has previously announced that it has entered into a Memorandum of Understanding with XBourse and Pacific Capital Markets Development to work together to explore the phased development of state-of-the-art digital market infrastructure and services for multicurrency post-trade settlement and registration solutions for public and private markets, including bonds.     Article courtesy of PNGX

Finance

PNG Business News - September 15, 2022

PM Marape Announces Record K9.7 Billion Tax Revenue Performance

Photo credit: IRC Prime Minister Hon. James Marape today announced a record K9.7 billion tax revenue collection by the Internal Revenue Commission (IRC). He made the announcement as he prepares to travel to London for the funeral service of Queen Elizabeth II and as Papua New Guinea prepares to celebrate its 47th Independence anniversary on Friday, September 16, 2022. I commend the sterling performance by the Internal Revenue Commission for the last eight months, PM Marape said. Papua New Guinea could not have asked for a better 47th Independence Anniversary performance indicator of a key State energy working its heart out. This record collection is the highest ever since 1975, and most importantly, highest collection ever in a tough year. As of week ending September 9, 2022, the Internal Revenue Commission has collected around K9.7 billion with net transfers of K9.4 billion to the Waigani Public Accounts as projected by the 2022 National Budget.  This is a record achievement in a fiscal year, where IRC was able to surpass its annual target in the space of only eight months.  Compare the first eight months of this year with first eight months of last four years: IRC’s Tax Revenue Collections in 2022 was boosted by a windfall in the petroleum and gas sector directly related to the Russian-Ukraine conflict. The global supply constraint coupled with higher demand as a result of post-COVID normalcy has seen the price of oil nearly double in space of just 12 months. Total Mining and Petroleum Tax (MPT) collection in the first eight months of 2022 totalled K2.965 billion.  Whilst windfall from MPT is acknowledged, other taxes have also performed strongly in 2022 – a reflection of some of the transformational interventions introduced at IRC since 2019.  The average MPT collections for the past four years (2018-2021) was K379 million. The average total collection for first eight months of the last four years was K5.657 billion. 2022 total collection for the first eight months, less the MPT windfall, is K7.163 billion.   A total of K1.5 billion in increase revenue not attributed to MPT windfall has eventuated in the last eight months of 2022.  Non MPT taxes have performed well above the average of the last four years. IRC is beginning to see the fruits of its revenue initiatives and will continue to strive on becoming a robust and efficient tax administration by 2025.” PM Marape said some of the notable initiatives and their revenue gains were as follows: Introduced stringent Goods and Services Tax (GST) verification for refunds.  This resulted in 20 per cent increase in GST collection annually or K200 million;  Cessation of credit offsets of GST to pay Salary and Wages Tax (SWT) liability. This resulted in K30-K40 million plus /month or K500 million annually; GST s65 was rolled out. This resulted in K200 million-plus in the last eight months; Increased media presence and awareness via media, resulting in on time payment improvement; Increased support to provincial officers for tax inspections and awareness; and  The overall taxpayer awareness, improvement in efficiencies, increase in compliance activities and use of technology, amongst others, has contributed towards the sustained improved performance of IRC since 2019. The Marape Government is intentional in raising internal revenues, hence, this year the Government increased the budget of the Internal Revenue Commission, the Prime Minister said. In 2022, the Government provided K160 million. This is the biggest budget support ever for IRC.  I understand that IRC has initiated 32 major reform projects to transform IRC into a robust, modern and efficient tax administration by 2025. The Government will continue to support IRC in the next two years to ensure that those projects are implemented successfully. The Marape Government’s focus is on growing the economy, raising internal revenue and reducing borrowing over time.  The Government has intentions to introduce the immediate tax reliefs to cushion the impact of inflation. The Government is also work toward the Golden Jubilee Anniversary in 2025 where most of the taxes, especially Salary and Wages Taxes and Corporate Income Taxes, will be reduced. IRC is currently undertaking all these projects to establish a cohesive collection mechanism so that any reduction in tax rates (tax revenue forgone) will have revenue positive effect.

Finance

PNG Business News - September 05, 2022

Central Bank Encouraged To Solve Forex Problem

The Central Bank has been encouraged to take action and resolve the problem of the country's businesses having a backlog of foreign exchange, according to Prime Minister James Marape. “We’ve reached a K11 billion threshold as far as Forex is concerned. We work to ensure we bring in additional liquidity into the market and so Mr. Popoitai (Central Bank Governor) and those in the financial sector, let’s free up the space and allow free flow so that especially those that are traditional and key importers/exporters, business players in our country get their share in the queue much better and faster,” he said. Mr. Marape was replying to inquiries regarding the government's goals for addressing issues including market forces' access to foreign exchange from Ian Tarutia, head of the PNG Chamber of Commerce and Industry. While it is encouraging news that the government would concentrate on changes to boost trade and investment, particularly in the manufacturing, agricultural, and natural resources sectors, Mr. Tarutia stated there are still issues that need to be resolved. The availability of foreign exchange and the high cost of the internet as a result of wholesale market inequalities, he claimed, as well as recent import duty costs and retrospective fines and penalties, have an impact on ordering goods for finished goods like biscuits, noodles, and stock feed, some of which are exported abroad. Mr. Marape asserted that there is no free flow of funds to consumers from the bank and urged the Central Bank to collaborate with commercial banks to find a resolution to this problem. “Having K11 billion in the Central Bank is enough to cover for nine months of forex coverage in our country,” he said. “I just want us to liberate that space. Let’s liberate that space for that our businesses and are functional instead of having a long queue. Something that I will be interested to look at. I want your advice to the bank and the government and hopefully (working) together we can alleviate this problem.”   Reference: Post-Courier (31 August 2022). “Central Bank Urged To Address Forex Issue”.

Finance

PNG Business News - August 22, 2022

Lack of Foreign Exchange Continues to Pose A Threat

For many of the country's main importers, the problem of lack of foreign exchange availability continues to pose a danger to supply security in the nation. According to Hulala Tokome, Country General Manager and Director of Puma Energy, they are hopeful that a strong framework in terms of government policies would be in place to address these concerns with the creation of the new government and the Minister leading the industry moving ahead. “This is to ensure that we can be able to maintain fuel supply security and make sure we have the required foreign currency in the market to bring in the much-needed fuel products into the country,” he said. He said that Puma has continued to collaborate effectively with the government, and they would do so in the future, with the relevant Minister and BPNG. According to Mr. Tokome, having a solid foundation will be beneficial for the government programmes already in place. “’ This is to instill investor confidence, that there are no surprises of increased fee structures and importantly the charges that are being levied through to businesses are value adding and can be recovered especially in a price-controlled market,” he said. The Treasurer has stated that there is a chance the government's current gasoline subsidy might be prolonged. “It’s pleasing to have the government committed to continuing the fuel subsidy as a lot of discussions on making fuel cheaper for consumers continue to take place and it is important to keep on working with the government who are the policy/decision makers,” Mr. Tokome said.   Reference: Wohi, Lorraine. Post-Courier (12 August 2022). “Fuel Supply Security Important For Country, Says Puma Country Boss

Finance

PNG Business News - August 22, 2022

Government Debt Sits at K48.1B

By the end of December 2021, the total public (government) debt still due was K48.1 billion, or 51.6% of the nation's GDP. The present outstanding debt is made up of K25.2 billion from local sources and K22.9 billion from external sources, according to the acting governor of the Bank of PNG Benny Popoitai. Total government deposits at depository firms rose by K1.3 billion to K5.2 billion, according to Mr. Popoitai, mostly during November and December of 2021. “This increase reflected drawdowns of external budget support as well as financing from domestic sources,” he said. According to him, the total domestic credit provided by financial institutions to the public sector, non-profit organisations, and "province and local level governments (P & LLGs)" declined by 0.2% to K17.7 billion from the previous quarter's gain of 0.9%. According to him, loans to the public and private non-financial firms fell by K205.1 million and K53.5 million, respectively, to K15.6 billion and K1.8 billion. “The increase in lending to the ‘P & LLGs’ of K224.5 million reflects a reclassification of a loan during the quarter,” he said. According to Mr. Popoitai, the National Government's budgetary operations in 2021 indicated a deficit of K6.2 billion, down from K6.6 billion in the same time of 2020. This amounts to 6.7% of the nominal GDP. According to him, overall revenue and grants in 2021 were K13.8 billion, a 14.6% increase over 2020 and 101.4% of the 2021 Supplemental Budget amount. “The outcome reflected higher than projected grants from development partners and tax revenue collections, which more than offset lower collections in Other Revenues (Dividends, Statutory Transfers, and Fees & Charges). Total expenditure in 2021 was K20.1bn, 3.8 per cent higher than the 2020 outcome, and 0.8 per cent lower than the Supplementary Budget appropriation,” he said. “As a result of these developments in revenue and expenditure, the budget deficit was K6.2 billion which was financed from domestic and external sources totaling K2.6 billion and K3.6 billion, respectively.”   Reference: Post-Courier (15 August 2022). “Govt Debt Sits At K48.1k

Finance

PNG Business News - August 01, 2022

Ling-Stuckey: Healthy Financial Sector Vital for Development

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”.

Finance

PNG Business News - June 22, 2022

PNGX Markets and XBourse Australia sign MOU for use of blockchain technology to accelerate Pacific Islands’ capital markets

Photo credit: PNGX PNGX Markets - Papua New Guinea’s national stock exchange, XBourse Australia - a leading technology services company specialising in building innovative bespoke solutions for financial markets, and Pacific Capital Markets Development - an Australian company committed to the development of capital markets in the Pacific region, have recently signed a memorandum of understanding to explore the development of worldleading digital solutions for Pacific Islands’ capital markets, starting in Papua New Guinea. The objectives of the cooperative arrangements are to enhance capital market efficiency, promote market liquidity, attract investment and reduce market risk in the Pacific Islands region. Under the memorandum, PNGX, XBourse and PCMD will work together to explore the phased development of state-of-the-art digital market infrastructure and services:  Multi-currency post-trade settlement and registration solutions for public and private markets; including equities, bonds and climate instruments.  central securities depositories and registries;  custodial services for international investors;  integrated commercial and regulatory solutions for SMEs; and  superannuation registry solutions. “We are very excited to be working with XBourse” said PNGX Chairman and PCMD Director, Mr David Lawrence. “XBourse’s digital ledger technology (also known as blockchain) and smart contracts have the potential to turbo-charge the public and private capital markets in the Pacific region. The concepts currently being developed would be world-leading, presenting real opportunities for Papua New Guinea. “We have a vision to provide an integrated solution for Pacific companies of all sizes offering faster access to debt and equity capital, instantaneous and risk-free settlement of trades, a central securities depository to make trading easier for all market users, a custodial platform to meet the needs of international investors, and the potential for expansion into other services, such as superannuation technology services” Mr Lawrence said. “XBourse is a market leader in the financial technology sector and has been working in recent years with globally recognised technology partners to develop a range of integrated and innovative market platforms and digital solutions that can be readily deployed into all types of markets, covering both existing and new assets, such as climate, that are rapidly being digitised. These platforms deliver greater functionality, efficiency and a new way of doing business in the 21st century at a lower cost than existing incumbent legacy systems and processes. “Importantly they offer opportunities for new asset classes in the digital age. Some of the opportunities include issuance and registration of assets, trading, digital registries and other back-office systems with immutable records of ownership, transactions and provenance that provide much-needed integrity and security to support the market and regulatory confidence. “XBourse is excited to be working with PNGX and Pacific Markets Capital Development to identify ways XBourse’s technology solutions can be implemented in the PNG market. Our experience has shown that better market infrastructure is vital to promote efficient use and allocation of capital and to attract the interest of investors large and small,” said XBourse CEO and Founder, Mr Tony Mackay. “Digitisation and blockchain provide the opportunity for markets of all types and sizes to better and more efficiently access capital. Just as importantly, the new market infrastructure can reduce operational and regulatory risk for all participants and operators. “XBourse is also working on early-stage projects to tokenise carbon abatement and carbon credits, and we see enormous potential in the Pacific for these instruments where digitisation and blockchain technology can validate, regulate and tokenise these instruments and initiatives and make markets in them,” Tony Mackay said. “The input of key stakeholders in the market, such as listed companies, banks, superannuation funds and stockbrokers, is critical to the success of this project and ultimately of the PNG market” said PNGX General Manager, Ms Elizabeth Wamsa. “We will shortly be conducting industry forums to discuss user and regulator needs to enable the development of an optimal solution” she said.   Article courtesy of PNGX

Finance

PNG Business News - May 17, 2022

Partnership Between IFC and PNGX to Deepen Papua New Guinea’s Capital Market, Help Accelerate Economic Growth

Papua New Guineans stand to benefit from a modernization of the nation’s capital market that’s expected to boost investment, accelerate economic growth and help support a sustainable economic recovery. Under an agreement announced today, IFC, a member of the World Bank Group, will work with PNGX Markets Limited, the national stock exchange of Papua New Guinea (PNG), to deepen the nation’s capital market and boost access to long-term financing for companies in PNG. IFC will provide additional advisory services to PNGX, including reviewing its listing rules and other technical elements related to the issuance of corporate bonds. “We are pleased to be drawing on IFC’s global expertise to help develop PNG’s capital market,” said PNGX Chairman David Lawrence. “This crucial program is creating the potential for PNG investors and debt issuers to participate in a well-regulated, efficient and transparent corporate bond market, laying the ground for more international investment into the country and increased economic development across the nation.” The reform program will pave the way for the issuance of green and sustainability-linked bonds (SLBs), enabling PNGX to tap the rapidly growing sustainable debt market. Green bond issuance surpassed US$1.5 trillion last year, reflecting surging appetite among investors. “The market is still in its infancy in many emerging economies, or even non-existent, and so we are pleased to see PNGX taking steps that will see it offering sustainable investment options,” said Paramita Dasgupta, Manager, East Asia and Pacific, IFC Regional Advisory Services – Creating Markets. “We need to build the capacity of capital markets, which are crucial conduits for investment and economic growth and are also an absolutely essential tool to finance the transition to net zero. That means rolling out green bonds, sustainability-linked bonds and other sustainable debt initiatives much more broadly.” IFC will also provide an expert education program relating to the development of environmental, social and governance (ESG) rules which will help create appropriate disclosure standards for PNGX and its companies. This latest development comes after PNGX announced in April it had joined the United Nations Sustainable Stock Exchange initiative. Other areas of expert training will encompass board gender diversity. Strengthening PNGX’s ESG standards will lay the foundations for a new corporate governance code that, importantly, will factor in gender. “Our work with PNGX will also help enable PNG companies to operate in line with global best practices, helping their corporate debt and equity become an attractive investment for international investors,” said John Imbal, PNG-based Operations Officer, East Asia and Pacific, IFC Regional Advisory Services – Creating Markets. “Environment and social governance disclosure is becoming mainstream for listed companies around the world, and many are now including the disclosures in their annual reports. This is because investors expect it and can then use them as part of their assessment of a company’s performance.” As part of the ongoing initiative to develop the PNG bond markets, IFC and PNGX are already strengthening the market’s legal and regulatory framework, modernizing bond market infrastructure and providing training and education for regulators and market participants.   Article courtesy of PNGX

Finance

PNG Business News - May 02, 2022

BSP Insights: PNG FX Liquidity expected to continue growing into the half-year

Quarter one of 2022 Foreign Exchange (FX) market inflow momentum is expected to continue into the half-year, assisted by firmer commodity prices, end of half-year dividend flows and foreign aid, according to BSP Group General Manager – Treasury, Rohan George. “As FX inflows can be lumpy, we expect there to be periods where outstanding FX orders build up. “To manage volatility in foreign currency flows, businesses should place FX orders (with correct documentation), as soon as possible, ensure orders are cash-backed whilst awaiting execution, ensuring tax clearance certificates are current and reflect the expected FX order execution time,” Mr. George stated in the BSP Pacific Economic and Market Insight Q1 2022 Report. He emphasised in the report that in the first quarter of 2022, FX  market turnover fell 2% from the strong December Quarter 2021, but rose 24% from March Quarter 2021 (12 months ago), supported by strong commodity prices, in particular Oil, Copper, Palm Oil, Coffee. “Firmer commodity prices offset the lost FX market inflows from the closure of the Porgera Gold Mine (Barrick FX inflows down 75%), whilst the stronger commodity prices added to transportation and input costs of imported goods increased the volume of new FX orders placed post-Christmas,” Mr George added. Meanwhile, the outstanding FX orders expectation of reopening the Porgera Gold Mine is also positive from foreign exchange perspective remained similar to levels seen 12 months ago. “BPNG FX intervention rose 8% in 2022, reducing some of the outstanding FX order backlogs, but remains unchanged from March Quarter 2021. “The Kina fell 10 basis points against the U.S. dollar to 0.2840 in 2022, the first movement for over 14 months. Stronger commodity prices, due to the invasion of Ukraine, strengthened the Australian dollar and saw the Kina fall to 0.36,” Mr. George further added.

Finance

PNG Business News - April 28, 2022

PNGX joins the UN Sustainable Stock Exchange Initiative

PNGX announces that the United Nations Sustainable Stock Exchange initiative has welcomed PNGX Markets, the Papua New Guinea National Stock Exchange, as a new member. PNGX has solidified its commitment to transparency and sustainability by becoming a partner exchange of the UN SSE initiative. The newest partner joins a network of now 114 stock exchanges around the world that are committed to promoting sustainable development. The SSE works with stock exchanges through technical assistance, consensus building, and research to contribute to the achievement of the United Nations Sustainable Development Goals (SDGs) and to stimulate investment for a sustainable future. Exchanges around the world partner with the SSE to work towards a common objective of fostering financial markets that support the growth of sustainable and responsible business practices. “Partnering with the SSE initiative compliments the goals PNGX is striving towards to help develop the Papua New Guinea capital markets and support the sustainability of the PNG economy” said Mr David Lawrence, PNGX Chairman. The Exchange recognizes the number of sustainability challenges that an emerging economy like Papua New Guinea face, which include access to capital for SMEs, corporate governance and transparency, climate change, gender equality, and environmental sustainability. Addressing sustainability factors is of increasing importance to obtaining access to finance in today’s world and PNGX is committed to it. “As part of a network of like-minded exchanges, PNGX can draw upon the resources of the SSE and its members and partners to develop locally relevant guidance and standards to support the development and sustainability of the local economy. While sustainability-based finance is not yet well developed in Papua New Guinea, joining SSE will have direct relevance by assisting PNGX to give companies the tools they will need to access future finance” Mr Lawrence said.   Article courtesy of PNGX

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