Singapore emerging as a regional option for Papua New Guinea companies

Businesses in Papua New Guinea seeking to establish a presence in the Asian region are increasingly looking at Singapore as a stepping-stone to expand their market reach or increase their shareholder base. There is also growing interest from Singapore-based businesses looking at the PNG market.

The Singapore Merlion against the city skyline.

Singapore is being taken seriously as a location for PNG businesses. Last year, finance company Moni Plus announced it intended to conduct a reverse takeover of Jaya Holdings that would see it listed on the Singapore Stock Exchange (SGX). Once completed, the aim is diversification of the company’s shareholder base, according to Managing Director David Kelso.

PNG’s biggest bank, Bank South Pacific, has also looked at listing on the Singapore exchange, although those plans were recently shelved.

‘Singapore plays a key role for companies attempting to explore business opportunities outside of PNG.’

Digicel Group, PNG’s leading mobile provider, has also in recent years relocated its regional headquarters from Sydney to Singapore.

Key role

Deloitte’s Ben Lee. Source: Deloitte

‘Singapore’s geographical location allows it to play an important role in terms of origin of imports to Papua New Guinea and also exports from Papua New Guinea,’ Deloitte PNG’s Managing Partner Benjamin Lee tells Business Advantage PNG.

Lee says Singapore also plays a key role for companies attempting to explore business opportunities outside of PNG.

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Economist Paul Flanagan.

Director of PNG Economics, Paul Flanagan, says we can expect an increase in Singapore-registered companies that have Papua New Guinea linkages—a symptom of a ‘globalising’ world.

‘The key issue will be if Papua New Guinea’s growth rate, in such registrations or linkages, is growing faster or slower than other countries.

‘This would be a partial metric to judge the hypothetical proposition that Papua New Guinea could become a hub between Asia and the Pacific,’ adds Flanagan.

Why Singapore?

Singapore currently ranks second among 190 economies in the World Bank’s annual ease of doing business rankings. It also has one of the lowest levels of taxes, which makes the country an attractive option for companies setting up base to invest in Papua New Guinea, Lee says.

It also has a free trade agreement with Papua New Guinea, which is an attractive asset.

‘Singapore has become a global hub for businesses seeking to trade with multiple countries.’

Lee says Singapore’s favourable tax treaty with Papua New Guinea and its extensive tax treaty network with other countries, adds to Singapore’s appeal.

Hub

Westpac’s Adrian Hughes.

Singapore has become a global hub for businesses seeking to trade with multiple countries, including Papua New Guinea, says Westpac PNG’s Managing Director, Adrian Hughes.

‘Several Singaporean businesses have shown a keen interest in investing in, or starting, new businesses in Papua New Guinea. And we’ve had many inquiries from new entrants trying to enter the Papua New Guinean market.

‘The increasing number of Asian-headquartered multinationals opening operations in Papua New Guinea indicates there is interest in the region. It will assist in providing sustainable economic growth for the country.

‘While Singapore has been good for multinationals entering the Papua New Guinean market, it has also been critical for Papua New Guinean businesses offering maximum exposure through access to this global trading hub,’ Hughes explains.

Foreign exchange

Flanagan says foreign exchange shortages are a challenge for business in PNG and could be a driver for companies basing themselves in Singapore. ‘Inevitably, markets will try to grow around restrictions.

‘The tight foreign currency environment continues to impact businesses.’

‘Possibly, some Papua New Guinean exporting companies might be registering in Singapore in an attempt to pay suppliers and shareholders before bringing foreign exchange back into Papua New Guinea. However, the legalities of this may be problematic depending on the nature of the business.’

Besides the extractive industries, Lee says Asian companies have invested most in Papua New Guinea infrastructure projects over the last 10 years.

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