Case Studies

This important suite of work kicked off in fiscal year 2023 with the signing of a Memorandum of Understanding (MOU) between PSDI and the Securities Commission of Papua New Guinea (SCPNG)—an independent statutory body that regulates the capital market and its practices in Papua New Guinea (PNG). The MOU outlined the planned technical, operational, and policy cooperation between PSDI and the SCPNG. Key work streams include (i) strengthening the SCPNG’s role as PNG’s capital market regulator through capacity-building measures; and (ii) developing a robust capital market strategy, including policy, legal, regulatory, and technology reforms to support a vibrant PNG capital market.

On the signing of the MOU, then Bank of PNG Acting Governor and PNG Financial Services Council Chair Benny Popoitai said “This reform initiative is critically important not only for PNG’s finance sector, but also for the overall growth of the economy, given the role that financial markets play in terms of mobilizing savings and investments, as well as enabling transmission of monetary policies of the government.”

The SCPNG’s acting executive chair said that the partnership “is important for SCPNG as it strives to increase the PNG finance sector’s contribution to economic and social development. It builds on SCPNG’s foundational work on capital market development and capacity building in a way that is both strategic and pivotal for PNG.”

Following the signing of the MOU, PSDI provided the SCPNG with a host of support throughout the fiscal year. PSDI first developed a capacity-building needs assessment report for the SCPNG, which was submitted in December 2022. The report and an associated capacity-building program was agreed in February 2023, and work to implement the program is ongoing in partnership with the New Zealand Financial Markets Authority.

PSDI then supported the development of the Capital Markets Development Strategy 2023–2033 and an associated short, medium, and long-term action plan for its implementation. PSDI Financing Growth Specialist Jeremy Cleaver on 27 March 2023 presented the strategy to key stakeholders in Port Moresby.

The strategy outlined policy, legal, regulatory, and technological reforms required to support a vibrant PNG capital market, which will help attract inward investment and enable PNG residents to safely invest. It also considers the SCPNG’s leadership, capability, and capacity; the expansion of the PNG capital market; national and international cooperation; and investor education and promotion of diversity.

PSDI also supported the development of proposed amendments on the Capital Markets Act 2015 and the Securities Commission Act 2015. These amendments were submitted to the SCPNG and stakeholder consultations were completed during the fiscal year. The amendments to the Securities Commission Act are currently under consideration by the PNG State Solicitor’s Office for referral to Parliament and amendments to Capital Markets Act remain under discussion.

Separately, a new Takeover and Mergers Code, developed with PSDI support, has been approved and gazetted. This marks the first time that PNG has had such a code for many years. PSDI also drafted and submitted to the SCPNG a Corporate Governance Code for Non-Listed Companies in PNG. This significant work program is ongoing, facilitated by the provision of A$1.3 million in earmarked funding from the Government of Australia, with strong commitment from the SCPNG.

According to James Joshua, SCPNG Acting Executive Chair, “a robust, fair, and transparent capital market is critical for promoting business access to finance, and therefore economic growth. SCPNG is strongly committed to this important reform and strengthening program.”  

This case study is taken from the PSDI FY2023 Annual Progress Report. Read the full report here.