Thursday, October 18, 2012

O’Neill government to drive changes in state-owned enterprises


THE public forum on the future of state-owned enterprises (SOEs) that was recently hosted by the National Research Institute (NRI) from October 9-10 shows the potential of the O’Neill government to drive changes in the SOEs by exploring how public enterprises can make a bigger contribution to economic and social development.
The forum,  hosted at the request of Ben Micah, the minister for public enterprises and state investments was addressed in the context of further reforms of public enterprises, including the state’s funding and ownership structure and mechanisms, the involvement of private sector in service delivery and infrastructure provision, community service obligations, sectoral policies and community requirements.
The O’Neill government  clearly emphasised  the concerns that there are many inherit weaknesses in how public enterprises and state investments have been organised and managed since 2002 after the dethrone of the then Mekere government, the architect of the privatisation reforms. 
Minister Micah rightfully pointed out “had privatisation not been introduced at that time our nation would not have been where it is now economically”. 
The privatisation of former Papua New Guinea Banking Corporation (PNGBC) and the expansion of the current Bank South Pacific (BSP) is a success story of this policy initiative amid concerns raised by the trade unions to transfer ownership of a public property to the hands of the private sector.
However, the 10-year period between 2002 and 2012 was a waste as many public or State-owned enterprises have lost focus of their objectives to efficiently deliver quality services to our people as agents of government services. 
Many classical examples can be derived from these inefficiencies especially from those that deal with public utilities, in this case one intends to use PNG Power Limited as an example.
 PNG Power Limited (PPL) is a SOE that has never succeeded in providing maximum benefit in terms of electricity to our people in many areas since independence. 
Such remarks have generated issue of concerns such as, how would PPL achieve that mandate when it does not have the financial capacity nor a corporate plan or program to implement. 
Others would enquire if there was much political interference that took precedent over its management. 
Similar concerns were raised regarding appropriate legislations governing the operations of such State-owned Enterprises. 
One chief executive of a SOE owed up at the forum “Our hands and legs are tied....” meaning certain government legislations governing the operations of SOEs have demarcated their rights to make important and timely commercial decisions for the good of their advancement and profitability. 
These are many management dilemmas and issues SOEs have been faced with for over a decade since privatization was introduced.
Nearly all presenters and participants from a selection of public and private sectors contributed profoundly to the panel discussion. 
Due to limited space not all contributions can be highlighted herein. 
However certain specific ones worth mentioning who made meaningful presentations include Professor Satish Chand from the School of Business at the University of New South Wales who clarified the difference between State Investments and SOEs. 
He pointed out the danger to used state investments from the non renewable sector to regenerate failed SOEs.
Mr. Anthony Yauieb, the Deputy Secretary of the Department of Treasury expressed that SOEs are expected to operate within the Government Policy Framework as captured in the 2012 National Budget and why they need to be profit oriented.
 Ms Laure Darcy from the Asian Development Bank (ADB) commented on the ADB’s report on PNG highlighting the failures of SOEs, Associated Professor Charles Yala from the NRI out lined the 10 guiding principles which may set the basis for reforms to be introduced in SOEs, and Sir Mekere Morauta highlighted the importance of privatization and the need for appropriate reforms and mechanism the government could introduce to get Papua New Guineans involved in SOEs and other major private sectors as partners or shareholders. 
Others include Mr. Joshua Kalinoe, chief executive officer for Petromin, Associate Professor Billy Manoka of Independent Consumer and Competition Commission, John Mangos, chief executive officer for Digicel, Thomas Abe, managing director of Independent Public Business Commission, D. Ila Temu, president PNG Chamber of Mines and Petroleum, Dr Vele Illa’va, acting secretary of the Department of Agriculture, and couple of others.  \
Certainly, both state ministers Ben Micah and Kerenga Kua spoke eloquently and passionately on this issue of concern. 
Much of what has been said is now documented by the NRI and will be made available to the public purposely to regenerate specific discussions into the management and roles and functions of SOEs the government is embarking on.
The lessons learned from the success stories of other SOEs and corporate agencies (CAs) were clear. These SOEs and CAs corporatised their organizations in terms of policy introduction and carrying-out appropriate reforms; ensuring their operations were governed under the Company Act; formulate acts that would clearly define their roles and functions of the board, roles and functions of the minister concern, roles and functions of the chief executive officer; and most importantly, the duration of their corporate plans and their respective short and long term objectives.
Petromin and National Fisheries Authority are the current examples of such successful strategic commercial moves.
To complement the SOEs with service delivery initiatives, it is timely the government engage the private sector in the delivery of services to the people. 
That would be a vital strategic move due to the healthy economic environment the country is experiencing. 
Riding on an economy that is healthy, the involvement of the international private sector subsequently would come with relevant modern and international commercial culture and ethics of doing businesses which would be introduced into workplaces or in industries. 
PNG has experienced such engagements especially in the mining and petroleum industries and no doubt these cultures and ethics are found in the international markets and private sector industries. 
By engaging these international entrepreneurs as partners to SOEs on partnership arrangements, the opportunity to change positively would come with it.
 The former member for Unggai Bena and Defence Minister Benias Sabumei pointed out that such culture can sway our people’s current way of doing businesses to the international way of conducting modern business practices. 
This approach is vital as the world has changed and PNG is part and partial of a modern global community and as such we need to be open-minded to these changes and harnessed them in context of how efficiently we can be able to utilise them to managed SOEs. 
Thus this will enrich the development of our nation through effective delivery of vital socio-economic, political and humanitarian services to sustain growth and development.
For instance, the introduction of Digicel into PNG telecommunications market to create competition five years ago has truly changed the landscape of communication. 
Eighty percent of PNG now have access to communication via mobile phones and the Digicel PNG country manager John Mangos rightly pointed out that the private sector has an important role to assist the government by bringing services right to our people at affordable costs as part of the service delivery to our people under public private partnership (PPP) policy arrangement. 
Digicel is a testimony of this policy initiative.
At the end of the forum one important lesson was learned. 
The O’Neill government is on the move to get services right down to the people.
 It started with providing free access to health and education services, which are public goods and the government is responsible to ensure its citizens have adequate access.  
 The right to health and education services also falls under the United Nations Millennium Development Goals as essential basic human rights which all UN member countries are expected to provide to their citizens adequately. 
PNG is a signatory to these international conventions and therefore what the O’Neill Government has done domestically, is in line with our international humanitarian obligations. 
However, the O’Neill government is not limiting its development scope to these two development issues alone.
Many recently elected Members of Parliament who are Ministers in the O’Neill Cabinet like minister Ben Micah, attorney general Kerenga Kua, and foreign affairs and immigration minister Rimbink Pato are elites who are now taking firm grip to develop and modernise this nation with the drive to upgrade the business arms of the state, making necessary amendments to the appropriate laws to accommodate development changes, and who the nation can trust to address corruption meaningfully and change the mindset of our people by setting exemplary examples and walk-the-talk.
This public forum at the state function room at the parliament house has indeed exposed the kind of government PNG now has in place and many of those who attended the forum were fully appreciative of the discussions that took place. 

Emmanuel A. Mungu is a Senior Research Fellow and head of the Housing Secretariat under the Wealth Creation Pillar at the PNG National Research Institute (NRI). This article represents his own views and doesn’t necessary represent that of the NRI.

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