Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...
Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...
Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...
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In the MTDP period the BPNG is expected to consolidate its policy <strong>in</strong>itiatives and reforms while at the same<br />
time lay the foundation for the sector to atta<strong>in</strong> the depth, buoyancy, and elasticity that is comparable to<br />
global best standards.<br />
The medium term strategies for consolidation<br />
· Stable <strong>in</strong>terest rates underp<strong>in</strong>ned by the pursuit of an optimal <strong>in</strong>flationary target.<br />
· Expansion of credit to the private sector, especially for productive <strong>in</strong>vestment <strong>in</strong> the construction,<br />
extractive, agriculture, and downstream manufactur<strong>in</strong>g <strong>in</strong>dustries.<br />
· Further development of f<strong>in</strong>ancial products that meet the demands of small enterprises and newcomers<br />
that have difficulty secur<strong>in</strong>g <strong>in</strong>vestment funds from commercial banks due to their higher risk<br />
premium.<br />
· Encouragement of <strong>in</strong>novation and <strong>in</strong>itiatives from the bank<strong>in</strong>g sector to improve efficiency <strong>in</strong> services<br />
by cutt<strong>in</strong>g down on transaction and overhead costs and other hidden costs, such as wait<strong>in</strong>g-costs,<br />
that add <strong>in</strong>efficiency to the economy as a whole.<br />
· Cont<strong>in</strong>ued encouragement of the outreach of f<strong>in</strong>ancial services to the grassroots level through<br />
microf<strong>in</strong>ance and other credible facilities.<br />
The medium term <strong>in</strong>itiatives for long term growth<br />
· The depth of services rema<strong>in</strong>s th<strong>in</strong> <strong>in</strong> the formal sector by <strong>in</strong>ternational comparison. As the economy<br />
grows and expands, complexity and diversification of products should be tailored to meet specific<br />
demands.<br />
· F<strong>in</strong>ancial services to rural areas are still underdeveloped and the majority of the population is cut off<br />
from the formal market system. Product diversification is to be encouraged to meet the demands of<br />
<strong>in</strong>formal bus<strong>in</strong>ess activities and, for more rural outreach, aimed at <strong>in</strong>tegrat<strong>in</strong>g the non-monetary<br />
sector to the formal sector.<br />
· A review of the f<strong>in</strong>ancial sector is to be immediately undertaken with the objective to develop strong<br />
capital markets with sufficient liquidity that will meet domestic credit demand as well as attract<strong>in</strong>g<br />
foreign <strong>in</strong>vestors.<br />
2.7 Bus<strong>in</strong>ess and <strong>in</strong>vestment<br />
The PNGDSP goal for bus<strong>in</strong>ess and <strong>in</strong>vestment is for PNG to offer an attractive environment that encourages<br />
bus<strong>in</strong>ess <strong>in</strong> PNG. The Government will ensure rules on governance, <strong>in</strong>stitutions, and legislation are enforced.<br />
The law and order problem must be kept at bay while <strong>in</strong>vestment <strong>in</strong> public <strong>in</strong>frastructure and utilities is<br />
undertaken to accommodate the growth of economic activities.<br />
The Government, <strong>in</strong> partnership with development partners and state-owned enterprises, will <strong>in</strong>vest broadly<br />
<strong>in</strong> the key enablers to pave the way for bus<strong>in</strong>ess activities and <strong>in</strong>vestment to take place <strong>in</strong> the 10 Economic<br />
Corridors outl<strong>in</strong>ed <strong>in</strong> the PNGDSP and discussed later <strong>in</strong> Part 6. The Government will cont<strong>in</strong>ue to supervise<br />
the free market to ensure it functions efficiently with clear rules and regulations, while at the same time<br />
<strong>in</strong>terven<strong>in</strong>g <strong>in</strong> areas where markets fail to work effectively to maximise the welfare of <strong>Papua</strong> <strong>New</strong> Gu<strong>in</strong>eans.<br />
Competition promotion – discussed <strong>in</strong> the next section – is a crucial <strong>in</strong>gredient to the effective operation of<br />
markets.<br />
<strong>Medium</strong> <strong>Term</strong> strategies to promote bus<strong>in</strong>ess and <strong>in</strong>vestment activities<br />
· Ensur<strong>in</strong>g adm<strong>in</strong>istrative and <strong>in</strong>stitutional systems and processes that facilitate bus<strong>in</strong>ess and<br />
<strong>in</strong>vestment atta<strong>in</strong> levels of efficiency compatible with <strong>in</strong>ternational standards. This MTDP will focus on<br />
promot<strong>in</strong>g:<br />
o a sound legal system;<br />
o well-def<strong>in</strong>ed and protected property rights;<br />
o a transparent and mature property market;<br />
o a reliable and competitive f<strong>in</strong>ancial system; and<br />
o low transaction costs <strong>in</strong> sett<strong>in</strong>g up and runn<strong>in</strong>g bus<strong>in</strong>esses.<br />
· Investment <strong>in</strong> transport <strong>in</strong>frastructure and connectivity.<br />
· Investment <strong>in</strong> utilities, energy, telecommunication, and <strong>in</strong>formation and communications technology<br />
(ICT), through PPP.<br />
· Investment <strong>in</strong> human resource to build a local skilled workforce.<br />
· Promotion of domestically owned bus<strong>in</strong>esses to <strong>in</strong>vest abroad.<br />
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