The Member for Yangoru Saussia, Richard Maru calls on the Prime Minister to have the Reserve Business Legislation tabled in Parliament in tomorrow’s Parliament Sitting.
He said providing SME funding to National Development Bank and Bank South Pacific under the Stimulus Package falls short of what the MSME sector really needs to fuel its growth and expansion. Provision of cheaper and accessible loans is not sufficient for overall MSME sector growth.
Two critical SME sector interventions PNG needs are:
- Reserve Business Legislation; and
- Credit Guarantee Corporation.
Mr Maru said the government must take a multi-faceted approach to enable more of our economically active population segment to realize their aspirations in achieving economic independence and discovering their place in PNG society.
He gave examples of Asian economies like Malaysia and Taiwan, whose governments’ appropriate interventions helped to successfully develop their MSME sector to become engines for sustained economic growth, job creation and prosperity
“If the Government is serious and committed about taking back PNG, and reserve opportunities for Papua New Guineans, then the Reserve Business Legislation must be tabled and enacted in Parliament this week,” Mr Maru said.
The RBL will bring back a comprehensive list of businesses, which will be exclusively reserved, for PNG citizens only.
He said: “The list is already clearly spelt out in the SME Policy which was prepared and approved for tabling in Parliament over two years ago, but has been derailed by a strong lobby group.
Mr Maru is confident that both sides of Parliament will support the passage of this Bill once tabled in Parliament. As it is a legislation of national significance that deserves support.
Meanwhile, he is urging the Prime Minister to direct the Bank of PNG to set up the Credit Guarantee Corporation.
Mr Maru said 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.”
In comparison to the success of countries like Malaysia we see that their formal SME sector has over 450,000 companies and contributing over 40 per cent of the GDP. Unlike PNG, formal SMEs contribute only 10 per cent of the GDP and we only have 50,000 SMEs.
He said: “The reality is that it is difficult to save in PNG because of our extended families. The demand on the few informal employment is as high because of our “wantok” system as we have no social security system.”
The Credit Guarantee Corporation, together with the Reserve Business Legislation, is the most urgent of the MSME sector needs.