As part of PNG’s Vision 2050 strategy, public procurement will be used to provide economic facilities and social opportunities for PNG’s citizens, sustainably.
Through its ‘Vision 2050’ long-term strategy, Papua New Guinea (PNG) aims to become a global leader in responsible and sustainable development. PNG has a culturally diverse, young and growing population – mostly living in rural areas – and a dynamic informal market. Richly endowed with natural resources, PNG is a major exporter of tropical timber and minerals. Poverty is a chronic issue (with 37 per cent of the country’s population living below the national poverty line), as are land-grabbing and a lack of recognition of people’s sovereignty, with only some 10 per cent of formal economic production being controlled by the country’s citizens., To address some of these challenges, human development has been placed at the core of PNG’s state strategy.
State strategy: Vision 2050
As set out in its Vision 2050 document, PNG aims to:
In line with this vision, two recent reforms have given public procurement strategic purpose: the Small and Medium Enterprise (SME) Policy 2016 and the National Procurement Act 2018. The SME Policy aims to support job creation, reduce poverty, and promote economic growth outside the resources sector, with a more equitable distribution of wealth through majority citizen ownership of business activities. The aim is to increase citizen control over the formal economy from 10 per cent to 70 per cent by 2030., One of the key mechanisms of this policy is to facilitate local content in government procurement for SMEs, as well as to provide tax relief and incentives for indigenous-owned companies. Closely associated with this, the National Procurement Act stipulates margins of preference for local content and reserves certain tenders for PNG nationals, giving local companies exclusive rights to bid for state contracts valued at under 10 million kina ($3.0 million). Contracts valued at between 10 million and 30 million kina ($3.0 million–$8.9 million) are required to have at least 50 per cent national content, while contracts with a value greater than 30 million kina ($8.9 million) can be awarded to all companies and persons. In addition, bids by national companies or citizens are afforded a margin of preference ranging from 4 per cent to 15 per cent. Promoting and maximizing ‘the participation of local communities and organizations’ is one of the sustainability principles formally included in PNG’s National Procurement Act, alongside with the utilization of ‘local expertise and materials’, and ‘application of appropriate, sustainable and cost-effective technologies’. These principles are meant to be applied to all procurement ‘as far as is reasonably practicable’, which on the one hand may conceal non-compliance, but which on the other hand can also be used as a flexible guidance to be intelligently used according to current (and future) state strategies and availability of new solutions.
National forestry is one of the sectors that PNG wants to develop in a way that benefits all citizens. One third of PNG’s land is currently under foreign control through logging concessions and business leases, with most companies not paying profit taxes or royalties to landowners., Moreover, there is little investment associated with adding value and downstream processing. Roundwood logs and roughly treated wood comprise the vast majority of the country’s forest sector exports, at some 3 million tonnes and a value of $827 million in 2018. The new PNG state strategy encourages local processing, bans exports of roundwood logs, and slightly increases export taxes on all commodities – including products exported in a raw or semi-processed form., Also, to encourage the local timber industry, sawmilling, timber yards and retailing are activities under a Reserved Activity List – requiring 100 per cent PNG ownership – and prefabricated buildings, furniture-making, logging and downstream processing require a minimum of 51 per cent PNG ownership., Forest protection and sustainability are also listed in PNG’s state strategy.
The new PNG state strategy encourages local processing, bans exports of roundwood logs, and slightly increases export taxes on all commodities.
Development and sustainability
PNG’s Vision 2050 focuses on improving its ranking within UNDP’s Human Development Index, which entails dimensions of health, education and living standards. The means of delivery are based on two of the ‘development blocks’ suggested in this paper’s proposed framework, i.e. economic facilities (through the encouragement of a national industry and the development of business opportunities for SMEs and indigenous-owned businesses) and social opportunities (through improvements in education and health). In terms of the forestry sector, PNG’s state strategy tackles several ‘sustainability pillars’, at least to a degree: these include the intragenerational, intergenerational and interspecies equity aspects, as well as procedural and geographical equity. Figure 2 highlights the elements identified in this brief appraisal of Vision 2050. The actual means of implementation, enforcement capacity, specific sustainability criteria (for example, for forest protection and sustainability) and the overall results of this national strategy are yet to be seen.