17 Sep 2012

Reforming PNG's SOEs would see significant economic gains - ADB

4:16 am on 17 September 2012

The Asian Development Bank says significant gains could be made from reforming state-owned enterprises in Papua New Guinea, by placing them on a fully commercial and transparent footing.

A new study by the bank shows that while PNG's SOEs have produced profits, they have high associated costs and are to the detriment of the rural population which continues to have limited access to basic social services.

The study also suggests significant economic benefits if SOEs are managed more transparently and held accountable for results.

The study author, Laure Darcy, says it would involve putting the SOEs under the same pressures and operating parameters that private businesses have.

"That's requiring full transparency, that's putting them on hard budget constraints, that's essentially forcing the SOEs to operate in much the same way as private companies do, because that is the only way that the state can in fact monitor the performance of the SOEs and provide incentives for efficient performance."