Finding Balance | 1 September 2012 | Papua New Guinea

Finding Balance: Benchmarking the Performance of State-Owned Enterprises in Papua New Guinea

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This study assesses PNG’s SOE sector and identifies performance drivers and reform strategies that can guide future policy action.

This is the first state-owned enterprise (SOE) benchmarking study to include Papua New Guinea (PNG). It has been undertaken at the request of the government of PNG in order to inform its efforts to improve SOE performance and contribute to the increased transparency in the sector.

The findings of the study reveal that while PNG's SOEs have produced net profits that are in the upper range of the SOE portfolios in the six Pacific countries benchmarked (PNG, Fiji, the Marshall Islands, Samoa, Solomon Islands, and Tonga), they have done so at a substantial cost to the government in terms of ongoing fiscal transfers and other subsidies, and to the detriment of the poorer segments of the population due to the generally poor quality of the services provided and limited range of delivery. By absorbing large amounts of scarce capital stock on which they provide very low returns, crowding out the private sector, and diverting public funds that could otherwise be invested in such high-yielding social sectors as health and education, SOEs act as a drag on economic growth.