Papua New Guinea's privatisation woes

Development

By Brian Tobia

The government of Papua New Guinea seems to have been blinded by the debate on the issue of privatising state-owned entities and seems to have forgotten over four million grassroots people who could be potential shareholders.

Although the government made public announcements that employees of these public enterprises (to be privatised) would be given first preference to purchase shares in the organisations, it has not come out clear on what options are there available for ordinary Papua New Guineans who make up the total grassroots population in the country.

The grassroots must also be given equal

opportunity to buy shares in privatised

entities and the only way to go about it is through some form of education.

At least one organisation, the PNG Institute of Accountants (PNGIA for short and made up of practitioners in the accounting field in both the public and private sectors) have realised this major problem and taken the task to informing the grassroots population (through a seminar) of their chances to becoming shareholders in these entities and being involved in the decision making processes to effect changes.

PNGIA believes that the involvement of simple people making decisions at board level can propel the entities (now falling apart) to becoming profit making bodies into the new century.

At least this is the vision of the PNG Accountants Association where the government failed to see while dealing with the privatisation issue.

PNGIA executive director. Bob Wheeler said; “Regardless of whether or not your state of job security will be directly impinged upon as a result of privatisation, you could well find yourself benefiting from the sale of shares in those corporate entities about to be privatised.”

He said the government had recently announced the sale of at least 20 to 30 per cent stake holding in entities concerned to PNG citizens, with pre-emptive rights to existing employees.

“But unfortunately there is a lack of knowledge on the part of grassroots people on this new phenomenon. They too have the rights as anyone to invest in the entities that would be privatised so that they can reap the benefits in the long term when profitability is realised,” he said.

Mr Wheeler added that unions have taken up arms against the government on this whole issues of privatisation but one could argue that these dissensions could well be based on the lack of knowledge or without due regard for the benefits to the economy on a macro level.

The proposed seminar is scheduled for June 10, 2000 and targeted at the prospective grass roots shareholders.

PNG Prime Minister, Sir Mekere Morauta is adamant that the proposed privatisation of government entities would still go ahead and it is an issue which is “non-negotiable”.

While opening a recent seminar titled “Privatisation and Intergrity Pact” hosted by Transparency International, Sir Mekere

expressed the view that public enterprises

have “provided fertile ground for corruption and rent-seeking behaviour” - PNG cannot escape from that fact and privatisation is the only way to remedy this situation.

“We all know that the boards of these enterprises and their chief executives have

often being appointed on political grounds

and not necessarily on merits ... privatisation of these enterprises provide the opportunity to reduce corruption and eliminate political influence,” he added.

He said that in this way the government can be able to serve money that can be used to effectively deliver services like health, education, maintenance of infrastructure and other thing which is not been done currently because it spends much of its resources owning and managing banks, airlines, logging operations, sugar farms, cement factories, logging operations or buy and sell comodities.

Sir Mekere said the Government has made a commitment to repay all domestic loans by 2002 - and all resources from the sale of public enterprises can be used

directly to look at delivering services to the people.

This is rightly where the government focus should be and not in running easily

corruptive and manipulative (by political

means) enterprises.

The issue of privatisation is then the key pillar of the government’s economic reconstruction and development strategy.

He added that the newly established Privatisation Commission (which will oversee this transition) has inbuilt preventive mechanisms that provide the natural safeguard against abuse of the community interest.

“I am confident that the structure and the processes we have put in place will ensure that privatisation occurs through a transparent, honest and fair process that will maximise the proceeds to the people of Papua New Guinea and take into account the interest of the workers and consumers,” he added.

While responding to critics, the Prime Minister explained that privatisation was being undertaken with three important considerations in mind: • A fair and full market value will be received for any public assets divested; • The proceeds will be used to provide improved welfare to both the present and future generations through reductions in domestic debts; and, • It should lead to increased economic efficiency in the use of the country’s resources.

Sir Mekere said many people misunderstood the significance of debt reduction to the economy, the budget and to improvement in the people’s living standards. “Reduction of domestic debt will lead to an easing of interest rates, stabilisation of the exchange rate and other domestic prices,” he said.

“Privatisation will achieve a structural change that will result in large amounts of financial resources for improving social services. At the same time, it will increase efficiency in the economy and in the provision of services throughout the country.” ■