Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...

In the MTDP period the BPNG is expected to consolidate its policy initiatives and reforms while at the same
time lay the foundation for the sector to attain the depth, buoyancy, and elasticity that is comparable to
global best standards.
The medium term strategies for consolidation
· Stable interest rates underpinned by the pursuit of an optimal inflationary target.
· Expansion of credit to the private sector, especially for productive investment in the construction,
extractive, agriculture, and downstream manufacturing industries.
· Further development of financial products that meet the demands of small enterprises and newcomers
that have difficulty securing investment funds from commercial banks due to their higher risk
premium.
· Encouragement of innovation and initiatives from the banking sector to improve efficiency in services
by cutting down on transaction and overhead costs and other hidden costs, such as waiting-costs,
that add inefficiency to the economy as a whole.
· Continued encouragement of the outreach of financial services to the grassroots level through
microfinance and other credible facilities.
The medium term initiatives for long term growth
· The depth of services remains thin in the formal sector by international comparison. As the economy
grows and expands, complexity and diversification of products should be tailored to meet specific
demands.
· Financial services to rural areas are still underdeveloped and the majority of the population is cut off
from the formal market system. Product diversification is to be encouraged to meet the demands of
informal business activities and, for more rural outreach, aimed at integrating the non-monetary
sector to the formal sector.
· A review of the financial sector is to be immediately undertaken with the objective to develop strong
capital markets with sufficient liquidity that will meet domestic credit demand as well as attracting
foreign investors.
2.7 Business and investment
The PNGDSP goal for business and investment is for PNG to offer an attractive environment that encourages
business in PNG. The Government will ensure rules on governance, institutions, and legislation are enforced.
The law and order problem must be kept at bay while investment in public infrastructure and utilities is
undertaken to accommodate the growth of economic activities.
The Government, in partnership with development partners and state-owned enterprises, will invest broadly
in the key enablers to pave the way for business activities and investment to take place in the 10 Economic
Corridors outlined in the PNGDSP and discussed later in Part 6. The Government will continue to supervise
the free market to ensure it functions efficiently with clear rules and regulations, while at the same time
intervening in areas where markets fail to work effectively to maximise the welfare of Papua New Guineans.
Competition promotion – discussed in the next section – is a crucial ingredient to the effective operation of
markets.
Medium Term strategies to promote business and investment activities
· Ensuring administrative and institutional systems and processes that facilitate business and
investment attain levels of efficiency compatible with international standards. This MTDP will focus on
promoting:
o a sound legal system;
o well-defined and protected property rights;
o a transparent and mature property market;
o a reliable and competitive financial system; and
o low transaction costs in setting up and running businesses.
· Investment in transport infrastructure and connectivity.
· Investment in utilities, energy, telecommunication, and information and communications technology
(ICT), through PPP.
· Investment in human resource to build a local skilled workforce.
· Promotion of domestically owned businesses to invest abroad.
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