Papua New Guinea at risk of losing foreign investment, says head of think-tank


Papua New Guinea should seek to attract more foreign investment in the wake of the COVID-19 crisis. But many of its policies are going in the opposite direction, according to Paul Barker, Executive Director of PNG’s Institute of National Affairs.

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Barker told a recent mining industry webinar that, while other countries had responded to the COVID-19 crisis with relief measures, in PNG such measures had ‘not come into effect’.

‘What other countries are doing is introducing measures to free up foreign direct investment and domestic investment so that businesses can engage, they can register their businesses, they can defer their tax and get various support in different forms. Unfortunately, PNG has this major problem [with its approach to foreign investment].’

The INA head pointed to several pieces of legislation and proposed legislation that act as a disincentive to foreign investment.

‘We had the FIRA Bill (Foreign Investment Regulatory Authority Bill), which came in the beginning of last year. We had the SME policy. We have got the mining plans. We have got [proposed] petroleum changes. All these policies and proposed amendments to legislation pose risks and undermine investment enthusiasm and readiness.’

Last week, the Managing Director of PNG’s Investment Promotion Authority, Clarence Hoot, said a revised IPA Act would be ready for consideration by parliament next month.

‘Restoring investor confidence is paramount to the whole foreign investment question.’

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‘It is true that the government can have higher tax levels but only on the condition that they have in place that level of assurance [for] investors for a long period of time.

‘You can’t have things like K20 million that you will have to pay up front to have the privilege of being a foreign investor in PNG. No other country does that sort of thing and we are competing in a global market.’

Cost of business

The Institute of National Affairs’ Paul Barker.

Barker said that the ‘basic exercise should be to reduce the cost of doing business in PNG’ and to increase competition, which in turn will increase participation in the economy.

‘That is what we should be focusing on – and generating jobs. Because the more jobs there are, the more people are in employment who can pay tax. And then [there is] more revenue to government, which allows them to provide the services to businesses that allow them to be the drivers of the economy.

‘We have got to get the message right. Instead, the message we are putting out there is: ”No, we want to take back the economy and business”. And yet we haven’t got the mechanisms to do that.

‘Yes, we all want a lot more domestic investment but the mechanisms are not there for domestic investors.’

Government role

Barker was also critical of the government wanting to take major stakes in resource sector projects: ‘it is using up money that the government should use for its functional tasks.’

He said the private sector should be allowed to complement the government by putting in ‘the major capital’ including for resource sector activities.

‘We are reducing the size of the box at a time when we actually need to expand the size of the box through a partnership with government and the private sector, each playing a role.’

He said what is ‘fundamental’ is to give investors assurance that their investment will be safe in the long term.


  1. Emmanuel Malken says

    That is reality and I am of the same view if we are to move forward and achieve our economic goals. The move by the government is very shallow with no wider consultation on the impacts it would have on its citizens and the country as a whole. Take PNG Power for example; we are still experiencing unusual blackouts with no improvements in its service or even stratigies proposed to the government on possibities to improve its basic services. Such technologies and machanisims are lacking and yet we intend to move into more sophisticated fields that require even more complex and variety of skills. I just wish us well and hope for the best.

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