Capital Markets provide a supplementary source of funding to bank lending and act as a ‘spare tire’ for the economy. It serves as the pivot that moves money from those who have it to those who need it. PNGPNG Papua New Guinea has travelled with a flat for more than 20 years now.
Work to transform PNG’s Capital market began this month at the independent PNG Securities Commission (SCPNGSCPNG Securities Commission of Papua New Guinea). Under a Memorandum of Understanding (MOU) with the Asian Development Bank (ADB) signed in May this year, a suite of technical assistance work will be done at the SCPNG by embedded consultants from the ADB’s Pacific Private Sector Development Initiative (PSDI). The Australian Department of Foreign Affairs & Trade (DFAT) provides funding support to this initiative with $1.3 million.
The assistance is strategically designed to address 3 critical need segments:
1. Capacity Development – Position the SCPNG as an agile, modern and capable regulator;
2. Improve Regulatory Regime – Fine tune securities laws and regulations to allow for the creation of alternative fund raising platforms, improve governance, instill certainty, simplify provisions and ensure securities laws are best of breed.
3. Development Strategy – Create long term blueprint designed to grow the PNG market from a frontier outlier to an emerging market.
It is envisaged that in 2.5 years PNG will have a capable regulator, a worldclass regulatory framework that supports an array innovative financial services and we will have a defined blueprint upon which the PNG Capital Markets can be be evolved to a emerging market. Acting Executive Chairman of the SCPNG, Robert Salmon-Minak in welcoming the partnership said that the assistance is critical, necessary and timely.
“PNG’s Capital Markets regulator has been light on critical mass for more than 2 decades leading to a stagnant market. In that environment, SCPNG’s efforts to evolve our laws with the times and develop our long-term growth strategy would have been limited. We are super grateful to benefit from this support package from the ADB (PSDI program) at this time. It immensely leverages our vision to create robust regulatory environment to grow the PNG Capital Market from a frontier outlier to an emerging one.” Said Mr Salmon-Minak.
“The regulatory environment that supports the drive to unlock the Capital markets will be developed under this partnership. In the next 2 and half years, we hope to create an accessible, inclusive environment for financial access, particularly through the creation of alternative fundraising platforms designed to stimulate the participation of the Small to Medium Enterprise (SME) segment of our economy.” Mr Salmon Minak said that at the conclusion of the assistance, it is expected that PNG will have a capable regulator, a world-class regulatory environment, and a fully evolved growth strategy of the PNG capital Markets. Some of the exciting initiatives we are working on with industry stakeholder include, creating the framework to introduce a suite of financial services designed to expand the capital market base, boost market activity volume and increase velocity. For example, we consider the SME sector to be our lowest hanging fruit. Under this partnership, we hope to build the infrastructure framework that will create an innovative alternative fundraising platform to
allow the SME to raise additional capital away from traditional bank lending. We hope to create Peer to Peer Lending Platforms, Equity Crowd Funding platform and a Small Offers Regime, among others. These initiatives, on the back of the ADB partnership, will enable us to create a regulatory environment that support market development and will transform
the Capital Markets in PNG.
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