Correspondent's Notebook

Making the most of PNG’s business opportunities

9 May 2008

Each year, captains of industry from Australia and Papua New Guinea get together for their annual agenda setting meeting – The Australia PNG Business Forum.

The 2008 Business Forum was held in Cairns, this week, and while issues of importance to the hugely lucrative energy and resources industry were discussed, it was the small and medium sized enterprise sector that got much of the attention.

Here’s Radio Australia’s Pacific Economic and Business Reporter, Jemima Garrett.

Papua New Guinea is rich in indigenously-run micro, small and medium sized enterprises – from the betel nut sellers and PMV operators on the streets of Port Moresby, to the handicraft makers and coffee, cocoa and vegetable growers in rural areas.

Many businesses, such as tailoring, accountancy, motor mechanics and cooking, rely on the skills of their owners. Still others, such as mobile phone providers, boat operators and cleaning businesses, offer vital services.

The ingenuity of Papua New Guineans is endless. The rush to be your own boss in a micro-business was seen again in the last few weeks when landowners around the landslide-affected area of the Highlands Highway quickly established a lucrative trade carrying tonnes of cargo across the damaged area. At ten dollars per ten kilo bag for the 2 kilometre trip, locals were making a up to eighty dollars a day in their short-lived venture.

While there is no shortage of ingenuity making a go of business takes more than just a good idea or a good product.

It was great to see business and government representatives at the Australia PNG business Forum in Cairns taking the issue seriously.

As the Forum’s final communiqué, said small and medium sized enterprises are the engine of jobs growth and of poverty alleviation – not just in Papua New Guinea but across the Pacific and the Developing world.

The vast majority of businesses in Papua New Guinea are micro businesses in the informal sector. Many have the potential to transform themselves into bigger operations that employ people and even export, but to do that, they must face up to the problems of becoming official.

The World Bank ranks 178 economies for the ease of starting a business – that is for the number of steps entrepreneurs can expect to have to go through to launch their business; the time it takes and the amount of capital required.

PNG ranks 76th.

If making your business official is too complicated, time consuming and expensive many people will decide it is just not worth the effort and valuable opportunities to create badly needed jobs will be lost. Once the business is established the same holds true – if finance for expansion is too hard to get, or the hassle of obtaining permits is too onerous, business will stagnate.

Improving the business environment is hard work for government; over the past few years PNG has made some big steps forward but other countries are doing the same, and because in the past year PNG did not make any improvements it has slipped down the World Bank overall Ease-of-Doing-Business rankings, from 81st in 2007 to 84th in 2008.

When it comes to credit availability and ease of obtaining licences, PNG ranks 115th and 118th.

Reforms that lower the cost of opening a business and make it simpler are clearly in everyone’s interests, and that is what the Australia PNG Business Forum is calling for. It also wants to see mentoring programs establsihed for small business people and the strengthening or organisations which assist small and medium-sized enterprises.

Women operate well over half of all businesses in the informal sector, but much fewer of them make the transition to small business. It is for this reason that The Australia PNG Business Forum is calling for special programs aimed at assisting female entrepreneurs.

With huge new gas and resources projects due to get off the ground in PNG shortly, opportunities for indigenous business are set to boom – let’s hope the business environment and support are available for Papua New Guineans to make the most of those opportunities.