DOING BUSINESS IN PAPUA NEW GUINEA
Since 2003, Healy Consultants has assisted our Clients with business registration in Papua New Guinea. Our Services include i) Papua New Guinea company incorporation ii) government license registration iii) business bank account opening iv) visa strategies v) employee recruitment and vi) office rental solutions.
Press the link headings below to read detailed, relevant, up to date information.
Advantages and disadvantages
Advantages of Papua New Guinea company registration
- A Papua New Guinean limited liability company can be incorporated within eight weeks, with only 1 director and 1 shareholder, who both can be of any nationality and our Client does not need to travel to complete corporate bank account opening and company registration in PNG;
- PNG is country that is rich in natural resources. Its economy is distinctively dualistic- compromising of a modern economy based on mining (gold, silver, copper, Nickel), petroleum and natural gas production and a traditional economy based on fishing, forestry, coffee, palm oil, copra, cocas and vanilla;
- 2015 was the first full year of LNG production and will be the main driver of PNG’s economic growth over the next decade;
- PNG have available to them numerous incentives to assist investors in their investment decision-making. The government has a range of direct and indirect taxation based incentives for large and small proposals. According to the Asian Development Bank, PNG grew 9.9% in 2014 and is likely to continue these trends based on increased resource extraction;
- PNG is a party to various international treaties, agreement and pacts that allow manufactured goods preferential access to various export markets, including duty free and reduced tariff entry to some of the largest markets in the world.
- Papua New Guinea is a member of the Asia-Pacific Economic Cooperation (APEC) and the World Trade Organization (WTO), and therefore party to a number of agreements and understandings;
- Papua New Guinea’s economic trading and development partners include, but not limited to, the United States, Australia, Japan, New Zealand, China, Germany, Great Britain, Malaysia as well as other APEC member countries;
- Party to the Cotonou Agreement with the European Union(EU);
- The PNG government has achieved political stability since its independence and has reformed the labor market, deregulating it and offering employers and employees the opportunity to ensure productivity and wages remain in step with one another;
- PNG’s is a member of the Multilateral Investment Guarantee Agency, that guarantees foreign investors against losses caused by non-commercial risk, providing advisory and consultative services to facilitate a responsive investment climate to encourage capital flow.
Disadvantages of Papua New Guinea company registration
- Foreign entrepreneurs and investors will find starting a business in PNG difficult because:
- Government regulations, red tape and bureaucracy. PNG ranks 140th, as a “mostly unfree” economy, in the Heritage Foundation’s 2016 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labour markets. Forming a PNG company can take 8 to 12 weeks due to these restrictions;
- A major business challenge is government corruption. PNG is ranked 139th in the 2015 Corruption Perceptions Index by Transparency International, a global measure of corruption among public officials and politicians. Under-the-table bribes are sometimes requested to expedite business operations, making operations difficult for companies bound by the Foreign Corrupt Practices Act and the UK Bribery Act;
- Port Moresby ranks 137 of 140 countries in the Economist Intelligence Unit’s livability index, with a score that indicates that “most aspects of living are severely restricted.” There is high unemployment, and up to half the population reportedly lives in squatter settlements;
- The country also suffers from high corporate tax rates; Foreign companies suffer a 48% tax while resident companies are taxed at 30%;
- According to the World Bank Financial Development Report 2015, in PNG there is high cost of opening and maintaining accounts and lack of accessibility to of financial providers. This is highlighted the current banking options available in PNG.
- Our Clients find it difficult to deal with local employees because:
- The “Wantok” system, the “Wantok” is a term used to denote anyone who is from your family or anyone who is close or from your village. The system often leads to many people abusing the “Wantok” system posing a problem for business.
- Foreign enterprises must apply for registration to be allowed to undertake activities in Papua New Guinea. Registration is not automatic and certain restrictions on foreign ownership apply; Additionally, there are Exchange controls in Papua New Guinea for inward investments, registration of foreign capital, foreign currency and repatriation of capital and earnings.
Best uses for a Papua New Guinea company
Timber and other natural resources
- PNG is heavily forested with tropical trees whose wood is attractive for lumber companies. Exploitation of the country’s wood stocks and other natural resources are helping to drive an economic boom in the country;
- PNG’s agricultural industry is a source of potential investment with its resources in seafood, palm oil, coffee and cocoa.;
- PNG terrain is rich with mineral and resources and the recent development of the LNG investment has spurred international confidence in the country.
- Time to incorporate: Eight weeks
- Cost to set up: US$9,980
- Minimum capital: US$0
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 48%
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: Limited Company
Useful links for Papua New Guinea
Government and public authority websites:
- Embassy of Papua New Guinea
- Prime Minister’s Department
- Bank of Papua New Guinea
- Investment Promotion Authority
- PNG Tourism Promotion Authority
- Tax Facts & Figures 2009 – PwC
- Papua New Guinea Tax Guide 2013 – PKF
- Papua New Guinea Tax Profile 2013 – KPMG