19 Nov 2013

NZ company helps develop Bougainville's new foreign investment law

5:19 pm on 19 November 2013

The autonomous Bougainville government in Papua New Guinea is about to gazette new laws establishing controls on foreign investment.

The Inward Investment Bill was passed by the ABG parliament on Wednesday last week and aims to ensure that any foreign investment is responsible and meet Bougainville's cultural, economic and social needs.

New Zealand company, Tuia International, has spent more than two years in Bougainville, preparing around the law.

Chief executive of the company is Tim Gibson, and Don Wiseman asked how they became involved.

TIM GIBSON: As you know, Bougainville is a resource-rich island in the Pacific. It has suffered a terrible civil war as a consequence of challenges around the Panguna mine. Post-conflict there as they've been trying to recover their economy. A lot of less-than-savoury characters have been turning up, trying to take advantage of that situation. And the government of Bougainville was getting very concerned about how could they encourage investment that would meet their economic needs, but also protect their society?

DON WISEMAN: And you've done what?

TG: So in the last two and a half years we have worked with them to develop a policy setting around inward investment, the purpose being to create an enabling environment which would lead to responsible inward investment, but that responsible inward investment must meet the needs of Bougainvile's cultural, social and economic needs. So we developed the policy which was approved by the ABG. That policy then fed into the legislation, which we drafted. Paralell with that, we've also been building the Bougainville Inward Investment Bureau in terms of its operating policies and processes and linking, where possible, with the IPA - Inward Promotion authority of the PNG national government.

DW: So how, for instance, do you ensure that you've got bona fide foreign investors knocking on the door?

TG: They key principle of the Bougainville Inward Investment legislation is the concept of responsible investment, which is enshrined in the legislation, and that is defined as being aligned with the values and culture of the people of Bougainville - ethical, moral and fair, recognises and protects land rights, is environmentally sustainable, involves the maximum participation of the people and achieve cultural and social outcomes. So every Inward Investment proposal has to be measured against those six criteria, and they are criteria which were developed locally in conjunction with businesspeople and most importantly the landowners and people of Bougainville. And it creates quite a high hurdle in terms of a responsible investor. But if we put it into our own context they are criteria which you'd expect sensible, responsible investors to be meeting anyway. The problem has been they haven't in the past.

DW: In terms of your contact with the people, the input from the people, how did you do that?

TG: We held a series of workshops around Bougainville, meeting different affected parties - be they landowner groups, be they business groups, be they womens groups or social groups - and discussed and debated quite thoroughly with them what the issues are for them. In Bougainville, there is a strong recognition that they cannot realise their potential unless they have access to outside capital and outside expertise. That is a given. But they don't want to see a situation as has happened elsewhere in the Pacific, whereby an investor will come in and take the quick and easy pickings, create a mess and then pack up shop and leave, and then the people are left to deal with it. They want investors to come in with a secure and transparent arrangement around them and to operate and get a return on their investment, but also contribute to building Bougainville.

DW: There have been quite a number of things that the government has talked about it wants to ensure that certain retail businesses are exclusively in the hands of Bougainvilleans, this sort of thing. So is that within this...?

TG: Yes, that is correct. The legislation has a power for the Bougainville Executive Council to make regulations. And one of the first regulations they intend issuing is around restricted industries. And those are exactly as you described - businesses which should be retained for the benefit of the locals. They're things such as kai bars or food bars or local taxi services or local boat services. In a place like Bougainville there's a natural progression from growing a little bit of surplus in your garden, selling it in the local market and then progressing potentially, perhaps, to a small retail food operation. To ensure that that natural progression is retained for the benefit of the people the intention of the Bougainville government is to have some restrictions in place to reserve those activities to Bougainvilleans.

DW: It's become law. At what point is it going to be implemented?

TG: The law was passed by the ABG parliament on Wednesday. It hasn't yet been gazetted. We expect that to occur in a matter of days or possible weeks, but certainly a very short timeframe. So essentially we can assume that that is now effective. And the policy framework around it is now the policy so people will have to operate according to that.

DW: Alright. This was the first involvement, I understand, by Tuia International in Bougainville. Is it going to be the last?

TG: No, we've also been working with the government over there, doing a stocktake of their non-mining sectors. Obviously there's a lot of discussion about the potential reopening of Panguna. Whether or not that progresses, there are still many other opportunities in the Bougainville economy for local people to benefit, and they are things such as cocoa, virgin coconut oil, other vegetables, fruits, inshore fishing, potentially some more offshore fishing. So we've been working with them to identify some quick wins in those sectors with a view to implementing those projects so the Bougainville economy can get a kick-start. The key thing from our perspective, throughout our engagement in Bougainville, has been to be focused very much on things which are practical and things which are built from the ground up in terms of what the local people can do and aspire to do.