High cost of business in PNG


A senior United States government official says Papua New Guinea will continue to have development issues unless it brings its internet rates down like other Asia Pacific Economic Cooperation (Apec) member countries.

We do not need to wait for somebody from the outside to come to tell us that unpalatable truth, of course.
PNG’s own Communication and Information Minister, Jimmy Miringtoro, has told us as much in recent days.
Information and communication technology charges are way too high in Papua New Guinea.

And there is a long list of other important socio-economic sectors where costs remain extremely high.
Minister for Trade, Commerce and Industry Richard Maru announced on Monday that the cost of travelling internally and internationally is too expensive. He called for more competition on international routes with carriers from other countries.

Maru, as the man charged with growing trade and the economy, is extremely concerned about the high cost of doing business in PNG.

 “PNG is part of the global economy,” Maru said. “It must be competitive to be successful in a global economy. With high costs, PNG just cannot be competitive.”

Cost of accommodation is unrealistically high.

Real estate rates today make it impossible for any person, expatriate or national, even in management positions to afford housing on their own salaries. Housing, therefore, has to be written into contracts as a condition of employment and paid for by the employer.

Security costs much more in Papua New Guinea than in most other countries in the region. Companies have to pour in hundreds of thousands of kina to pay for static guards or put up high-tech security devices to secure premises and personnel from marauding criminals day and night.

Maru is right. How can he or his department promote commerce, trade and industry if the cost of doing business is prohibitive?

It is uncertain where PNG’s high cost structure has its beginnings but it might have to do with emulating our nearest neighbour and former colonial administrator, Australia, from whom much of PNG’s experience derives from across every sector.

Australia is not a good example in this sense. Recent surveys have found Australia to be one of the most expensive places to do business in, placing it 40% above the United States.

The International Monetary Fund has found that Australia was the third most expensive place in the world to do business after Norway and Switzerland.
Attitudes towards doing business globally, particularly towards the expanding Asian market, is not altogether friendly.

A survey of 6,000 business decision-makers, of which more than 4,000 were from Australia, found Australians typically placed a relatively low level of importance on access to, and knowledge of, Asian markets and bilingual staff.

If this attitude and the prevailing high cost business atmosphere is a big issue for businesses in Australia and for those businesses looking at Australia, then it must be doubly important for Papua New Guinea.

Australia is a first-world economy, PNG is not. There are aspects to Australia that are attractive to the overseas businessmen or women which are not present in PNG.

Taken together, PNG’s high levels of crime, under-developed or failing infrastructure and high cost structure are a deadly combination that hinders PNG’s ambition to become a successful economy or a destination of choice for the foreign investor. It prohibits international competitiveness.

It behooves government to start introducing policy interventions to lower the extremely high costs which run across the entire economy.

OP/ED

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