Caption: Dr Charles Yala
By MATTHEW
VARI
RESEARCH program leader at the National Research Institute, Dr Charles Yala, called on the government to do its part in addressing the cost of doing business in the country.
His comments came in response to preliminary findings into research looking into the margin of average interest rates offered for deposits in PNG, which have been very high over the last ten years.
He pointed out that the norm of pointing blame towards the commercial and central bank (Bank of Papua New Guinea) as those responsible to the upheavals in the credit sector as an unfair judgment- adding that the issue was collective on a national front.
“We do not want to facilitate a bank bashing forum; we must critically look at the real issues here,” Dr Yala said.
“If you look at the real elephant in the room here, it is the cost of doing business. These are not Central Bank policy matters but are government responsibility.”
He referred to the biggest issue being that of the availability of land and the legal condition of titling land and the issues surrounding them.
“One of the conditions that BSP (Bank South Pacific) is imposing for the first home ownership scheme is that you must have a State Lease,” Yala explained.
“Only 3 percent in this country is owned by the State- 97 percent is owned by the people of this country operating under customary law.”
“That is the problem in this country, that percent is not been managed properly- just look at Port Moresby to see the problem we are confronted with.”
“The system of land titling processing, administrating, town planning, the whole thing is ineffective.”
He raised the issue duplicate titles for same partials of land.
“Do you expect the banks to take this as collateral? That is the problem in this country- the development bank if you want to develop SMEs in the country the land is where it starts.”
Yala said that the issue of land and other utility issues like electricity had to be sorted out first in order for the ease of business to take place.
“If you demand to produce a state lease, I tell you there is no state lease we are aware that some banks only have 400 mortgages in this country or less than that,” he said.
“Out of 7 million, roughly speaking 3.5 to 4 million adults, we only have 300 to 400 mortgages in this country.”
“They happen to be in Moresby- this country is not Moresby, there is a Rabaul, Madang Alotau also.”
He said the issue is government policy matters dealing with doing business, the blackouts in order for good effective business running to occur.
“How do we expect businesses to operate? So getting the bigger things right contributes to getting the cost of business down.”
“Many issues that are not BPNG matters nor commercial bank matters, they are government policy matters, land issues, power, PNG Ports, Customs, contractual constraints.”
“The study shows that it is not a supply but a demand problem- there is money sitting there with no profitable viable business sitting out there demanding for this money.”
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