SME legislation not good for business

A senior head of the World Bank says the proposed Reserve Businesses and SME Bank legislations are bad Small to Medium Enterprise interventions.

Global Head of the World Bank’s Finance and Markets Global Practice, Simon Bell, says both policy interventions are bad legislations, which will affect the growth of SME’s.

Speaking during the SME Development Workshop in Port Moresby recently, Bell said many economies in their bid to boost their SME sectors, came up with bad legislations.

One view that the Reserved Businesses legislation is a bad intervention falls on the premise that employment will suffer and that the quality of service may drop.

The creation of SME Banks with government control or ties are seen to be worrying signs as well.


During the SME Development Workshop, SMEC Manager Business Training  and Information Services, Peter Piawu, said a work is in progress to establish a National SME Bank.

Piawu says rationale behind the move is to create more financial institutions to provide loans to SME’s.

He took note of the World Banks recommendation but said PNG will learn from its experiences and improve its strategies to grow the SME sector.

Moves for the creation of the reserve businesses legislation began in 2014.

Earlier this year SME Corporation Managing Director, Steven Maken, said the Reserved Businesses legislation was being carefully put together as there may be legal ramifications if made law.

He did point out that not all business sectors will be reserved while there will be guidelines on co-ownerships, for example locals will own a 51% share in a business or company partly owned by a foreigner of investor.

Minster for Trade, Commerce & Industry, Richard Maru, has previously stated that a list of reserved businesses for Papua New Guineans was being compiled.

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