PNG does not have a social security system, so our MSME and paid employees support the bulk of our people with school fees, funerals, tithes and offerings in our church, etc so that important sector needs far greater support from the Government. – Richard Maru
GOVERNMENT MUST DO MORE FOR PNG MSME SECTOR GROWTH UNDER ITS TAKE BACK PNG AGENDA
by Richard Maru | 24 June 2021.
The Member for Yangoru Sausia and Leader of People First Party, Hon. Richard Maru said today one way the Marape Government can practically deliver on its “Take Back PNG” war cry is to differentiate itself from previous Governments by doing much more to support our citizens get into and grow their businesses. The time for talk is over.
The Marape Government cannot talk about providing seed capital to NDB and other banks on more concessional terms and stop there. They forget the previous Government gave over K500 million to NDB over 8 years it was in power and reduced interest rates from over 10 percent to 6.5 percent and that record stands.
Whilst I acknowledge and thank the Marape Government for funds it has provided to BSP and NDB under the Stimulus Package, however, that falls very short of what the MSME sector really needs to fuel its growth and expansion. Our Government must do more to support thousands more citizens get into formal businesses. Our people cannot continue to be spectators in their own land.
I also thank Prime Minister Marape for his own initiative when he was Finance Minister to enact a revised Public Finance Management Act, which specifically provides for Government contracts valued at less than K10 million to be given only to PNG Companies. This is certainly a giant step in the right direction and as a result many more PNG companies are benefiting from this shift in policy, by winning many construction contracts including large road contracts. My highest commendations to our Prime Minister for this initiative.
The provision of cheaper and more accessible loans and reserved space for road and construction contracts is not sufficient support for overall MSME sector growth. The country needs more broader SME sector intervention by the Government as seen in other countries who successfully develop their SME sector to become engines for sustained economic growth and prosperity like Malaysia and Taiwan.
The Government will not succeed in growing the SME sector from only 50,000 registered SMEs in PNG to reach our target of 500,000 by 2030 unless decisive action is taken now by the Marape Government. The country needs to grow its MSME base and reduce capital flight by supporting more citizens get into businesses.
Apart for the high demand for MSME goods and services on the foundation of sustained overall economic growth, the Marape must immediately embark on two critical SME sector interventions this year, if they are serious about Taking Back PNG.
1. RESERVE BUSINESS LEGISLATION
If the Prime Minister and his Government is serious and truly committed to take back PNG, I challenge the Marape Government to bring legislation to Parliament in the coming August session of Parliament. The legislation will bring back a comprehensive list of businesses which will be exclusively reserved for PNG citizens only.
The list is already clearly spelt out in the SME Policy. The Bill was prepared and approved for tabling in Parliament over two years ago but has been derailed by a strong lobby group with self- interest. Ministers involved in blocking the tabling of the legislation must be ashamed of themselves for failing our people.
I am sure both sides of Parliament will support the passage of this Bill once tabled in Parliament. I call on our good Prime Minister to prepare and table the Bill himself in the coming August session of Parliament as a legislation of national significant that deserves all our support.
It is time a strong and decisive and passionate Government listen to the cries of our people and take decisive action now. As far as I’m concerned, time for talk about taking back PNG is over. It’s time for action.
The Marape Government must demonstrate its commitment by passing the necessary laws and implement the SME policy. The dream to make PNG millionaires will only be a dream unless our own people are given the opportunities to own small businesses like trade stores, service stations, kai bars, hair salons, etc, in a reserved incubation space. Our people must start small and build on their experiences to build big business empires in the future.
PNG does not have a social security system, so our MSME and paid employees support the bulk of our people with school fees, funerals, tithes and offerings in our church, etc so that important sector needs far greater support from the Government.
2. ESTABLISHMENT OF THE CREDIT GUARANTEE CORPORATION
The provision of low-interest loans is not enough to get more Papua New Guinean citizens into businesses. They still need to meet the collateral and high equity requirements of the bank. Thus, any responsible Government should establish the Credit Guarantee Corporation to provide guarantees for high-prospective businesses to obtain loans to start or expand businesses.
You only have to look at the success of countries like Malaysia to see that their formal SME sector has over 450,000 companies and contributing over 40 percent of the GDP. Unlike PNG, formal SMEs contribute only 10 percent of the GDP and we only have 50,000 SMEs.
In Malaysia, the single biggest contributor to the SME sector growth is the establishment of the Malaysia Credit Guarantee Corporation owned by the Central Bank of Malaysia and all other banks. It is totally independent of any Government influence and provide guarantees to SMEs who have good business prospects but do not have collateral to meet the security requirements of banks and other financial institutions.
The reality is, generally it is difficult to save in PNG because of our extended families. The demand on the few in formal employment is so high because of our wantok system as we have no social security system.
This, apart from the reserve business legislation, is the most urgent of the MSME sector needs. More and more citizens should be in business across all sectors if they were assisted to secure loans from lending institutions by the Government ensuring BPNG take the lead and sets up the Corporation.
The previous Government approved the establishment of the Credit Guarantee Corporation over three years ago and tasked BPNG to set it up. It is now three years and BPNG and the Government has gone to sleep over the most important support it should be giving to enhance SME sector growth.
I call upon our good Prime Minister, who I know personally has a great heart for the SME sector under his Take Back PNG war cry, to give priority to immediately establishing of the Credit Guarantee this year
The Marape Government has the chance of going down in our history books as the government that has delivered for the SME sector and be responsible for the solid growth of the sector in the years ahead resulting in more employment, reduction in capital flight and innovation and sustained economic growth well into the future as we have seen clearly in countries like Malaysia who established a Credit Guarantee Corporation.
Under the SME Policy two of the most important support the Marape Government must immediately deliver this year to show its firm commitment is:
1. Enact the Reserve Business Legislation; and
2. Establish the Credit Guarantee Corporation.
I stand ready with the People First Party to assist the Marape Government deliver these two key interventions to support the growth of the SME sector in our country.
Media Statement By:
Hon. Richard Maru, BTech, MBA, OBE, MP
Member for Yangoru Saussia
Leader of People First Party