Kina Bank’s plan of a K30 million (US$8.5 million) investments to extend operations across Papua New Guinea is now threatened by the 50 percent tax on commercial banks in the country.
Kina Bank chief executive officer, Greg Pawson said Kina Bank is planning for almost K30 million (US$8.5 million) of their own investment to expand their services to run over the course of 2023.
Pawson said Kina Bank welcomes the K5.2 billion (US$1.47 billion) investment to the provinces for vital capital and operational expansion.
“Our course it goes without saying that Kina is planning to be at the forefront of this investment and we are planning for almost K30 million (US$8.5 million) of our own investment to expand our services. But – and it’s a big but,” he said.
“The only risk to this investment and a rather dark shadow on the horizon for us is the Government’s recent budget announcement of a plan to increase the tax rate for the commercial banks by 50 percent which will regretfully have a profound impact not only the extent of our planned investment but also financial inclusion, innovation and of course of competition.”
Pawson said the increased tax on commercial banks will also unintentionally act to discourage their investors to support their growth aspirations and therefore access to much needed capital to continue to expand their services.
President of Business Council of PNG Nuni Kulu said from observation ranging tax measures in the banking and telecommunications sector will significantly impact expansion plans and impact other sectors that hold considerable investments for other sectors such as superannuation, impacting well over 1 million Papua New Guineans.
Meanwhile, Prime Minister James Marape has asked the banks and major players in the country to assist the Government and carry the country during these tough times.
Marape told the 13th Prime Minister’s Back to Business breakfast in Port Moresby that businesses will benefit in the long run when the economy is in a better place with major resource projects to come online soon.
“I ask the banks and the major players to assist us carry the load as we go forward,” Marape said.
“BSP posted K1 billion (US$28 million)profit in 2020, Porgera mine was shut down, and who caused the money to be spilled for BSP to post substantial gross? Government played that key role in spilling money into the economy.
The big picture must be maintained, in tough times, we all carry the economy, in good times we make interventions so that you can then pick on the upside.
So we are all going through the cycles of global economy in the upsides and downtimes.
“Today, we are all running through tough times. I just want to ask the business community, those of you who can afford a little bit of support to the economy, maybe you support right now and we carry the least fortunate, those who are toiling in the economy to be assisted and we all ride this tough time out.
“I could see easily in the three or four years, our country coming out.
“It will be assisted by Porgera starting up this year, Wafi-Golpu construction that will come on as we conclude possibly by the first half of this year and sequencing of Papua LNG construction and P’Nyang construction. Our economy will be in a far better place five years from today. As we go forward and the economy is growing, you will benefit from the upside because you are already in position,” he said.