An online registry launched today will allow Papua New Guinea lenders to readily accept moveable property such as vehicles, machinery, or stock as collateral for loans.
This will make it easier for many businesses to get credit.
Regional Director of ADB’s Pacific Liaison and Coordination Office in Sydney, Andrea Iffland who was at the launch said access to credit allowed new businesses to be formed and existing businesses to innovate and expand, spurring the creation of jobs and wealth.
“The registry is the final step in the creation of a new legal framework designed to promote commerce within PNG by simplifying and safeguarding lending processes.”
The business registry was launched by the Minister for Treasury Patrick Pruaitch at a breakfast hosted by the PNG Chamber of Commerce and Industry at Crown Plaza Hotel.
The framework, Iffland added, will advance PNG’s economic development by allowing business people and entrepreneurs to unlock the value of ‘dead capital’ and use it in ways that will help grow the private sector.
It is underpinned by the Personal Property and Security Act, which was passed by the PNG Parliament in 2011.
This important reform was led by the PNG Department of Treasury with support from the Asian Development Bank (ADB)’s Pacific Private Sector Development Initiative (PSDI).
Through the online registry, lenders can secure their claim on assets that borrowers have pledged as collateral and verify the same asset has not been pledged elsewhere.
Moreover, under the new framework lenders will often not require the services of a lawyer and a court order to repossess a pledged asset in the event of non-repayment.
The convenience and accessibility of the registry will also encourage non-bank suppliers, such as wholesalers, agricultural stores and vehicle dealerships, to extend credit, as this can now be secured against their customers’ business assets or outputs.
PSDI is assisting the Government of PNG to raise awareness of the new system among both lenders and potential borrowers.
Picture courtesy by Luke Dunstan/ADB