PNG Business Survey Says Law & Order, Corruption Still Biggest Challenges

PORT MORESBY, PAPUA NEW GUINEA – Despite improvements in the business environment over the last decade, law and order and corruption remain the most severe constraints to doing business in Papua New Guinea (PNG), new analysis from the Asian Development Bank (ADB) reveals.

Drawn from responses from 130 firms surveyed by the PNG Institute of National Affairs (INA), the findings confirm crime – and measures to prevent it -- still contribute significantly to business costs in PNG.

Law and order was found to be the most pressing issue for business and was its highest reform priority. Most of the businesses surveyed reported they had been victims of crime and now employ private security guards and other measures to protect themselves. Confidence in law enforcement was low.

The analysis was undertaken by ADB’s Pacific Private Sector Development Initiative (PSDI) and is captured in a new joint ADB/INA publication, The Challenges of Doing Business in Papua New Guinea, to be released today in the capital Port Moresby.

“The survey confirms that the business environment has improved since 2002, but doing business in PNG remains extremely challenging,” said Andrea Iffland, Regional Director of ADB’s Pacific Liaison and Coordination Office. “Further efforts to improve the business environment will help create a foundation for sustained, inclusive, and diversified economic growth.”

Business owners believe government services have improved since 2002, but suggested major reforms are needed to make services better. Deep reforms by the Government have resulted in the most noticeable improvements in the business environment, according to those surveyed.

The INA found more than half of all businesses surveyed are concerned about the stability of rules and regulations. ADB believes closer consultation with the private sector on planned reforms would help allay these fears and improve the environment for business and investment.

The survey also found that poor quality transport and power infrastructure is a major concern for business owners. PSDI recommends reforming state-owned enterprises and more broadly including public-private partnerships (PPPs) to help to address these concerns.

PSDI is a regional technical assistance facility cofinanced by Australian Aid, New Zealand Aid Programme, and ADB. Since 2006, PSDI has been working with ADB's 14 Pacific Developing Member Countries to improve the enabling environment for business and support inclusive, private sector–led economic growth.

PNG Institute of National Affairs is a privately-funded, non-profit research institute, founded in 1979 to promote dialogue between the private sector and government.