Papua New Guinea Capital Market and Port Moresby Stock Exchange to be Opened to Greater Competition
PM O'Neill said the changes, that have been approved by the National Executive Council, will encourage innovation in the financial sector in Papua New Guinea and lead to increased domestic and international investment.
"Reforms to legislation will enhance the financial sector in Papua New Guinea by making it more competitive in the global market," the Prime Minister said.
"There have been significant changes in global financial markets in recent years as technology has evolved and international competition has increased. Papua New Guinea must continue to grow our financial services sector to be a leader in the Pacific Islands and serious presence in the Asia-Pacific."
The new legislation will repeal the Securities Act 1997 and three new Bills will be presented during the current session of Parliament:
(a) Securities Commission Act 2015;
(b) Capital Market Act 2015;
(c) Central Depository Act 2015.
The Prime Minister said while Papua New Guinea's banking and non-banking financial institutions have grown significantly since the financial sector reforms of 2000, the capital market has not grown as had been anticipated.
"The legislation will position the Securities Commission of Papua New Guinea, as an independent Office, moving away from its current status as a Division of the Investment Promotion Authority (IPA).
"Currently, the Securities Commission does not have an independent organisational and administrative structure.
"This has meant the Commission is unable to perform its regulatory functions by providing oversight of the Papua New Guinea Capital Market.
"This includes oversight of the buying and selling of shares on the Port Moresby Stock Exchange."
The Prime Minister said the existing Securities Act also has a number of vagaries and ambiguities that undermined the capacity of the Commission to perform duties as required under law.
"The Commission, for example, was not able to give effect to the findings of the Commission of Inquiry into the Investment Corporation Fund of Papua New Guinea due to the obvious lack of powers under the existing law.
"These reforms are intended to ensure that the Securities Commission has the necessary powers to properly regulate the capital market and deal with issues when they arise."
The Prime Minister said the legislation will provide a major boost to the Port Moresby Stock Exchange through improved competition and transparency.
The Prime Minister said the legislation will also see changes to the ownership structure and board composition of the Port Moresby Stock Exchange, that will bring greater transparency and accountability in the way exchange is operated.
"The Port Moresby Stock Exchange was established in 1998 with two stock brokers, and today there are still only two stock brokers on the exchange," Prime Minister O'Neill said.
"These two brokers also own the Port Moresby Stock Exchange so we need reform in this arrangement.
"The National Government cannot allow the Port Moresby Stock Exchange to remain a closed market, owned by only two Stock Brokers who control the stock market and its activities.
"There are many qualified Papua New Guineans and foreigners in the country who are able to provide competitive broking services and we will open the market to competition.
"The Port Moresby Stock Exchange currently has a market capitalisation of over 60 billion Kina, however, less than K1billion has been circulating within the market in the past 17 years.
"While other markets, similar to Papua New Guinea have grown significantly within the same period, Port Moresby Stock Exchange has not grown as expected.
"The Government would like to see more Papua New Guineans use the Port Moresby Stock Market as an avenue for investment.
"We also encourage Papua New Guinean companies to look to the Port Moresby Stock Exchange to raise long-term funding and capital."
Through the reforms, the Prime Minister further said the government would encourage companies to introduce new products to the market, including investment funds, unit trust funds, debentures and other capital market or financial products.
"We would like to private equity funds established to provide capital for major transformational projects in key national sectors such as agriculture."
The intended reforms are inline with similar reforms undertaken in other countries that are aimed at improving corporate governance.
The changes will also instill international best practice principles and curtail money laundering, as well as other forms of illegal activities in the financial sector.
Government Media Release
Post a Comment