Interview: Clarence Hoot
What synergies are expected to arise from the recent agreement between the IPA and the National Superannuation Fund (nasfund)?
CLARENCE HOOT: In March 2020 the IPA and nasfund signed a memorandum of understanding (MoU) to enable closer cooperation and allow both organisations to share relevant employer database information to ensure that companies which register with the IPA also sign up for superannuation for the benefit of their employees. It also allows nasfund to share employer data through IPA offices across the country. The partnership demonstrates the fund’s endeavours to ensure that all businesses are aware of workers’ right to superannuation as a condition of employment.
The MoU will provide the necessary bridge for vital information exchange and dissemination between the IPA and nasfund – the significance of which will be to enable collaboration and the use of statistical data to implement more meaningful reforms that benefit businesses, clients and employees. It also encourages accountability and transparency, which should in turn improve compliance. This will further assist in analysing data to make improvements in labour outlook, tax processes, business diversification and investment, company linkages and networking.
In what ways can the interests of early-stage local businesses be balanced with the need to attract foreign direct investment (FDI)?
HOOT: The economy is still in the infancy stage, although it is growing. Accelerating this expansion will require stability, and FDI is needed to ensure Papua New Guinea’s entrepreneurs meet demand as they grow.
We negotiate with foreign investors to encourage them to form joint ventures with local partners. This enables PNG firms to learn from their international counterparts, building capacity. Local businesses can also seek assistance from government or development programmes that help them gain exposure and information on how to grow their companies. Relatively new local businesses can also utilise the services of key agencies and financial institutions.
Streamlining regulations and harmonising PNG’s resource laws are other ways to safeguard local businesses in the early stages of development and enable them to grow alongside higher levels of FDI.
Which sectors offer the greatest potential for larger-scale investment, and how can the government safeguard national priorities?
HOOT: PNG is blessed with an abundance of high-quality natural resources such as minerals and hydrocarbons, and offers untapped opportunities in sectors such as agriculture, tourism, forestry and fisheries. Almost all of these segments display notable chances for larger-scale investment. The government has imposed a ban on the exploitation and trading of raw materials related to these fields, and instead has encouraged investors to focus on downstream processing and value added to boost export revenues and synthesise economic growth at home. It will be important going forwards to have streamlined and harmonised regulations in place to handle natural resources in a manner that complements PNG’s priorities.
How will the deregistration of non-compliant companies affect the business environment, and what effect could this have on corporate governance?
HOOT: The deregistration of companies will incentivise wider compliance. The costs associated with staffing and storing files is high, and as such the move will also reduce archive costs. After the mass deregulation the IPA will be able to distinguish between genuine and so-called paper businesses. We will have a transparent database that will assist us in controlling and carrying out our compliance duties. The exercise will not have an impact on the wider economy, as non-compliant companies do not contribute tax revenues to the state.
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